Tuesday, September 21, 2010

Pentagon's Top Arms Buyer On Cutting Back

By Yochi J. Dreazen Wall Street Journal Ashton CarterUnder secretary of Defense for acquisition, technology and logisticsWhen Defense Secretary Robert Gates declared war on Pentagon bloat this summer, he put Ashton Carter, the Department of Defense's top arms buyer, in charge of the campaign. A theoretical physicist by training and former Rhodes Scholar, Carter serves as the under secretary of Defense for acquisition, technology and logistics, one of the most powerful jobs in the Pentagon. He oversees hundreds of billions of dollars' worth of programs, from the purchase of thousands of armored vehicles for Afghanistan to the hiring of the tech-savvy contractors who help manage military computer networks. Like his boss, Carter openly acknowledges that the post-Sept. 11 spike in defense spending is rapidly coming to an end. He has worked with Gates to scrap or restructure more 30 high-profile programs, halting new purchases of the expensive F-22 fighter jet and scrapping the centerpiece of the Army's $200 billion Future Combat System. This week, he announced dozens of contracting changes designed to help Gates wring $100 billion in savings out of the Pentagon's budget over the next five years. Carter sat down with National Journal to discuss what will likely be the biggest challenge of his professional career. Edited excerpts of the interview follow. NJ: Defense contractors feel like the era of the big, build-from-scratch weapons system is either over or rapidly coming to an end. Are they drawing the right conclusion? Carter: We will continue to build things from scratch. But it's probably a good insight that adapting things we have to new needs is going to be an important theme. The secretary uses the word "adaptability" all the time to indicate two things. First, that everything we buy ought to have more than one use. And second, that everything we buy ought to have a history behind it or in front of it that will allow it to adjust to changing circumstances. This is from the experience that he's had of being a secretary of Defense during war, which is the great teacher and the great driver of change. NJ: Gates told the contracting community over the summer that the gusher of post-Sept. 11 defense spending had been shut off, and would remain off for quite some time. What kind of feedback did you hear from contractors like Lockheed Martin when they heard that phrase? Carter: What they heard is that the spigot is not going to be opening wider every year. That isn't news to these CEOs. They live in the defense world and understand perfectly well that we're entering a new era. What's good if they hear that from us is that we can work together so we jointly manage what I'll call a controlled descent from the halcyon days of ever-growing defense budgets. NJ: When you look across the defense landscape, will future cost-cutting measures focus more on eliminating programs entirely or restructuring existing initiatives to make them cheaper or more efficient? Carter: We eliminated a number of systems that were unneeded or whose time had passed or who weren't performing. And we'll continue, obviously, to do that. But the thrust of the new initiative is to look at the things that we do need and do want and deliver them for the dollars we're going to get. And that's not going to be possible if we allow their costs to grow every year. We need to manage them so that they fit inside what is a flat or only slowly growing defense budget. NJ: What is it like going from an era in which money was plentiful to a new era where you can't just always throw money at problems that creep up? Carter: You have to re-sharpen your other managerial instincts. That means being relentless in your pursuit of cost control. Constantly looking for getting the same results more cheaply. Constantly looking for ways that you can reduce requirements without compromising important military capability. Those things aren't necessary if you could always use your money to get your way out of a situation. We need to get back to the discipline that comes from not having an ever-increasing budget. NJ: Gates has fired a whole lot of people in this building who he felt weren't up to par. Is it frustrating when you don't have the same capacity to fire contractors who fail to perform? Carter: Well, we are the customer, so we always have the capacity to penalize a contractor who's not performing or to cancel a program that's not performing. There's a flip side to penalties, which is rewards. People who perform well should be rewarded. Their programs will survive and enter into stable production, which will be profitable for them. NJ: You've pointed out that the Pentagon spends millions of dollars and tens of thousands of hours producing reports that few people read or need. What is it like, as the man on top, to be the recipient of so many of those reports? Carter: On Saturday afternoons when I sit in here and these big reports come in, I sometimes wonder if I'm the only human being who will ever read them. They were asked for long ago, and whoever asked for them has forgotten that he asked for them. The only reason I'm reading them is that I have to sign them and am worried about embarrassing myself. If you read many of them, you wonder if anyone read them before they sent them to me. It's illustrative of how we allow processes to accrete. NJ: Gates has faced opposition in Congress to many of his decisions about scrapping weapons systems or shuttering military commands. Going forward, do you worry about facing opposition inside the Pentagon from military leaders who like their own programs and don't want to see them cut? Carter: The reaction of everyone who has a stake in this is that they all see the writing on the wall. Everyone is looking for how we can best bend without breaking everything that we're doing, and they're pleased that we're doing this together.

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