As military agencies grapple with tightening budgets, a drive to purchase equipment that is “good-enough”, rather than ideal or advanced, has been gaining momentum and sending a message to the contracting community.
Analysts say the Air Force’s decision to award the long-contested $35 billion aerial refueling tanker program to Boeing last month is representative of this drive. Rather than purchase the “more capable system” presented by losing bidder European Aeronautic Defense and Space, the Air Force went with the lower-cost, fuel efficient tanker presented by Boeing.
"(The military is) not going to pay for bells and whistles," said Richard Aboulafia, a defense analyst with the Teal Group. "That’s the clear message here, and everyone should be heeding that message."
This efficiency drive began in 2009, when Defense Secretary Robert Gates called on the military to forget the “exquisite” platform and seek the “80-percent solution” equipment that can be manufactured quickly. Yet the drive for cost savings has also extended to other government agencies, as federal CIO Vivek Kundra has been pushing contractors to provide smaller, functional pieces of information technology systems in shorter time frames, rather than larger systems with big contracts that take years to perfect.
Yet some industry officials have said the new focus on cost over quality is short-sited and risky, including Malcolm O’Neill, the Army’s top acquisition official. He said he recently rejected an Army solicitation because it didn’t offer contractors incentive to push the technological envelope.
Contracting companies shouldn’t invest in new ideas because of the cost savings focus, said Alan Chvotkin, executive vice president and counsel at the Professional Services Council, an industry association.
"I don’t think companies should jettison their [research and development] work; companies still have got to differentiate themselves in the marketplace," he said.
