Making Defense Contracts Inexpensive

Due to the poor economic situation over the past few years it is important that we pay a lot of attention to the costs being done on the weapons program. Most of the defense contracts that are being made now a days think about the economic aspect and most of the defense contractors make sure to include cost cutting in the plans for development. Recently, in an address to defense industry executives, the Pentagon?s chief weapons purchaser sent a clear message. He said that it is very important to build new weapons such as the SSBN-X, land based combat vehicles, and long rage strike weapons, keeping affordability in mind.

This was a result of trimming down of the defense budget in coming years. As long as the funds gushed in the last two decades, there was plenty of waste and abuse of these budgets. But with the difficult economic conditions, now the defense industry will also work on incentives which will help in making it more efficient and productive.

From now onwards it will become critical for contractors to make the same changes that make the rates of products and services go down in the private market. Carter said that if the rates of computer fall every year, then that must be the case for defense equipment as well.

This new outlook will ensure that the number of cost-plus contracts reduces and fixed price contracts increase. The government has decided to trim the defense budget for the coming 12 years by over $400 billion and this will have an influence on the contractors.

To make a contract more affordable you have 4 alte
atives. The first one is to enhance the level of understand and management of the schedule the requirements and incentives which will result in better management of costs. To make the product more inexpensive there are two parts, one is improving the process and the other is improving the product. Either the production procedure can be improved or new material can be used to make the product to make the contract more inexpensive. Cost cutting can also be done by making changes in the workflow an the production plan.

Promoting a lot more competition in the industry is a great way of making the contracts more inexpensive. It is important for the government to remove any worthless capabilities and make sure that there is more direct acquisition management at every level. This will also constitute removing obstacles to competition. To get more competition the government must make sure that every single bid offer should go through a cost analysis and so must non certified data. If the time it takes for the evaluation process and the assessment criteria are made better then that will be a good step as well. Competition can also be enhanced by requiring more frequent re-competes of knowledge based services.