Military Costs Under Review in Bid to Trim Waste

Military Costs Under Review in Bid to Trim Waste
By CHRISTOPHER DREW
Published: June 27, 2010

The Pentagon’s effort to cut more than $100 billion in administrative costs over the next several years is expected to take a new direction on Monday with proposals that could lower profits for military companies.

Industry officials said that Ashton B. Carter, the under secretary of defense for acquisition, had called a meeting with contractors and lobbyists to address ways to cut waste. In addition to trimming its own bureaucracy, the Pentagon is looking for savings in how it hands out hundreds of billions of dollars in contracts for weapons and services each year.

Mr. Carter is expected to question overhead costs built into many deals and the amount of profit on certain types of contracts, the industry officials said. Congressional auditors have long criticized the Pentagon for awarding too many contracts in which it covers all the costs and pays sizable fees even when companies have trouble performing.

At the major military companies, “everyone’s apprehensive” about the meeting, said Loren B. Thompson, the chief operating officer of the Lexington Institute, a research group financed in part by the contractors.

“They’re worried about the tangible impact on profits,” he said. “But they’re also worried about the atmospherics that are conveyed to Wall Street and how investors will react.”

nt

definitely will have to see that to believe it

We could pull out now and save billions and billions.