Penny Pinching

The White House Office of Management and Budget today released a report highlighting the government's efforts to reduce the money it spends on contracts, with federal agencies being "on track to save $19 billion through improvements to their contracting and acquisition practices."

The Pentagon was one of the highlighted departments:

The Defense Department hired a contractor to create the next-generation shoulder-fired missile, the Javelin. The missile proved successful but expensive. Its early use resulted in cracked launch tubes that cost approximately $25,000 each to repair. An in-house team of Pentagon engineers took a close look at the problem and recommended specific improvements to “ruggedize” launch tubes to make the tube less susceptible to cracks and abrasion damage in combat environments. The team designed and qualified a protective urethane coating for the Javelin launch tube. The Defense Department’s contracts now include the design change, and, as a result, taxpayers will save an estimated $10 million in hardware costs alone over the five-year life of the contract.

Additionally, the report highlights actions DOD and other government agencies have made to reduce "high-risk contracting," including the Pentagon's use of "peer-review teams":

No federal department contracts as much as the Department of Defense. Secretary Gates is adamant that dollars be spent effectively and efficiently and that they deliver quality services for our troops and our country. As a result, a new system of high-level peer reviews is in place to ensure consistent policy implementation, to improve the quality of contracting processes, and to facilitate cross-sharing of best practices and lessons learned throughout DOD, including for the purpose of mitigating the use of high risk contracts.

For larger contracts, a Deputy Director for Defense Procurement and Acquisition Policy leads the peer review team, which is comprised of senior leaders from outside the agency with experience in the type of procurement being reviewed. For smaller contracts, the Services and agencies are responsible for implementing internal peer review programs.

Already, the Defense Department has conducted reviews on 40 different supply and service acquisition programs, with several having undergone as many as three phases of peer review. Contract solicitations have been simplified and improved. In addition, the interchange between the peer review teams and the host teams has enabled invaluable mentoring opportunities to develop future senior leaders. Overall, these efforts are bolstering the quality of contracting processes and the resulting contracts. To date, programs that have undergone all three phases of peer review have not had a sustained protest. In this way, peer reviews are helping the Pentagon to achieve more effective and efficient contracting.