Cost Cutting Initiatives Affecting Government Procurement Functions

On March 14, 2011, the Secretary of Defense announced his "Efficiency Initiative" decisions to reduce duplication, overhead and excess and to instill a culture of savings and cost accountability across the Department of Defense. Overall, these decisions should cut about $4 billion out of future years budgets. Initiatives include significant cuts in the number of General/Flag Officer positions (140 of the existing 952), Senior Executive Civilians (176 positions) and Highly Qualified Experts (33 positions). Contractors will be affected by these decisions. Contractors supporting MDA (Missile Defense Agency) will be hit especially hard.

Many readers of this blog will be interested in how these efficiencies will affect DCMA (Defense Contract Management Agency) and DCAA (Defense Contract Audit Agency). Here they are:

DCMA

• Reduce non-acquisition (administrative) positions by 50.
• Reduce travel costs by $1.7 million in FY11 and $3.9 million in FY12.
• Reduce contracted out support services by 5 percent (4 contractor position).
• Perform cost-conscious procurement and management of local supplies
• Perform more studies to find more efficiencies.

DCAA

• Reduce PCS (Permanent Change of Station) costs by $1.7 million.
• Reduce overtime costs by $600 thousand.
• Eliminate 39 administrative support positions. ($5 million)
• Perform more studies to find more efficiencies.

These initiatives should not have a significant impact on the organizations' ability to conduct reviews and support contracting activities. Reductions in overtime are more than offset by the additional hiring that is occurring in both of these organizations.