Defense Department Creates New Position - Director of Pricing

The Defense Department created a new position a few days ago, Director of Defense Pricing. This position falls within the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics. Last Tuesday, May 31st, Defense Secretary Robert Gates announced that Shay Assad would fill the position. Previously Mr. Assad was the Director, Defense Procurement and Acquisition Policy.

The creation of this positions, according to the official press release is part of the Pentagon's quest to drive down the cost of weapons at a time when defense budgets are "constricting". Part of the administration's Better Buying Power imitative is to look beyond program cost estimates and determining what a program should cost.

The specific tasking for the new position is to help program managers hit these "should-cost" targets which will be set at levels below official budget estimates. Additionally, Mr. Assad has been tasked with improving the skills of the contracting and pricing work forces. For example, Mr. Assad hopes to transform DCMA (Defense Contract Management Agency) into a value-added resource in contract negotiations. DCMA recently hired 300 price analysts to assist contracting officers during contract negotiations. Mr. Assad estimates that it will take 18 to 24 months to bring this work force "up to speed".

Another of Mr. Assad's initiatives is to help DCMA develop a centralized database of pricing information. The idea is that when contracts are negotiated, detailed information is uploaded into the database so that any contracting officer can see what labor rates, indirect expense rates, and other pricing details  were negotiated previously. This should take some of the tedium out of the process of determining price reasonableness.

Initially, Mr. Assad will be focusing his attention on large procurements like the F-35 program.