Targeting the DOD supply chain to reduce costs represents a huge, multi-billion dollar opportunity to take cost out of the Federal budget (or redeploy it to other areas). I reached out to Raj Sharma, CEO of Censeo Consulting Group and a visiting fellow at the Center for American Progress to get his perspective on the opportunity at hand. Raj suggests that "In a Center for American Progress report on the opportunity to save $400 billion through procurement related efficiencies, I highlighted 10 key strategies that can be used to drive efficiencies. Among those, I believe that "right sizing" capacity and requirements offers one of the biggest opportunities to quickly drive savings. For example, when looking across installations for one department, we found excess capacity at food facilities was leading to tens of millions in excess costs."
Raj also says, "Additionally, improving competition across services related categories offers perhaps some of the best opportunities to apply proven commercial approaches. For example, the defense department has bundled many different types of services, thereby creating a large set of requirements that limits competition, reduces the government's ability to access expertise, and creates unwieldy supplier teams that hide true costs. By dis-aggregating some of these very large requirements, government can increase competition and improve transparency in the process."
At a time when the country is coming up against the brink of a debt ceiling extension, perhaps it's time not just to prioritize the slashing of programs and general spending, but the targeted extraction of unnecessary cost from DoD budgets which will not impact our ability to project force on a global stage. Raj's ideas, along with those in the column that inspired this Spend Matters series, should find support with elected officials, civil servants and military professionals who are serious about reigning in unnecessary and wasteful spending.
Stay tuned as we conclude this look at ways of driving DoD cost reduction with commentary from an other supply chain expert who, in a recent job role, focused on technology solutions deliver to major defense OEMs.