Original Post Date: Wednesday, November 3, 2010

The midterm elections are finally over. The themes of reduced spending and lower taxes showed up in force at the ballot box. But what does that mean for the defense industry?

The U.S. Secretary of Defense, Robert Gates, caused quite a stir when he announced his proposals for reigning in defense spending. There are the expected assortment of eliminations (U.S. Joint Forces Command and Business transformation Agency to name two), reductions (in service support contracts, number of senior civilian executive and general/admiral military officers, and funding for intelligence community advisory contracts), freezes (of automatic replacement of departing contractors with full-time government personnel and oversight reports), and consolidations (IT assets). All of these have created so much emotional reaction that I almost missed one component of his proposal that looks like an adder – to attach a cost estimate to every new initiative proposed hereafter. It’s hard to find more detailed explanation on this. I’m reading it as: let’s figure out what our ideas are likely to cost us before we fall in love with them. And that sounds like a fiscally good idea, as well as one that needs a community of smart cost estimators, capable of producing meaningful cost-benefit analyses.

Bruce Fad
VP Professional Services, PRICE Systems