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Gates outlines plans to reduce costly contracts

By Adam Levine, CNN
  • Gates announces changes to control overspending in the Defense Department
  • His goal is to reduce spending by $100 billion over five years
  • The Defense Department "must make every dollar count," Gates says

Washington (CNN) -- The Department of Defense will implement immediate changes to make its costly contract spending more effective and less wasteful, as part of the Defense Secretary Robert Gates' goal of reducing spending by $100 billion over the next five years.

In remarks Tuesday to reporters, Gates announced 23 initiatives aimed at controlling overspending. They include implementing an affordability target for every project, where the cost of the program cannot be altered without authority from the top spending official. Other initiatives will ensure contractors share in the cost of overruns and incentivize keeping costs down.

Gates said the focus on improving contract spending for everything from weapons to maintenance, which accounts for more than half of the annual budget, will "prevent us from embarking on programs that have to be canceled when they prove unaffordable."

The Pentagon also is adjusting some weapons programs to shave off costs, like trimming back the requirements for a new ballistic missile submarine to cut 27 percent off the total estimate for the program. Various weapons programs have come under criticism for ballooning in cost as new capabilities are added in development.

"Given the fiscal challenges facing the nation, the Department of Defense must make every dollar count," Gates said.

Gates said that there has not been "productivity growth" in defense that is evident in other parts of the economy.

"Consumers are accustomed to getting more for their money -- a more powerful computer, wider functionality in mobile phones every year," Gates pointed out. "When it comes to the defense sector, however, the taxpayer has had to spend significantly more in order to get more. We need to reverse this trend."