Cheney Sees Savings in New Contract Plan

Predicting savings of $30 billion over the next five years, Defense Secretary Dick Cheney unveiled a new plan Tuesday to streamline the Pentagon’s procedures for awarding contracts annually worth $150 billion.

But Cheney warned that “there is no silver bullet” that will quickly eliminate fraud and waste from the Defense Department. Instead, he said, a number of steps must be taken if the Pentagon is to get well-built weapons delivered on time.

Among those steps, which were approved last week by President Bush:

--The creation of a new committee composed of top-ranking Pentagon officials responsible for coordinating weapons purchases with national security and arms control objectives.

--The establishment of a Defense Department ethics council charged with educating the department’s employees on standards of conduct.

--New hiring and promotion standards among the Defense Department’s 350,000 civilian employees involved in military contracting.

--The establishment of a separate career path with special educational requirements for about 30,000 military officers involved in acquisition.

--The increased use of multiyear commitments to the development and production of some weapons systems, which it is hoped would provide industry with an incentive to lower costs.

--Strictly defined performance standards that every Pentagon weapons system must satisfy before proceeding to a further phase of development or production.

Paper Work Burdens Cited

The defense chief echoed several of his predecessors in laying part of the blame for the department’s management ills on Congress. Cheney said his former colleagues on Capitol Hill must do their part to remove paper work burdens on the Defense Department if it is to function more efficiently.

“Our efforts will be for nought unless we can get some help from Capitol Hill,” Cheney said. He charged that Congress’ “micro-management” of defense matters appears to have driven up the number of regulations governing Pentagon acquisition to 1,600. Since 1970, the number of reports required yearly by Congress has increased 1,800%, he said.

Standing beside two 5-foot stacks of Pentagon reports delivered to Congress last year, Cheney complained that Congress’ appetite for Pentagon reports has become gluttonous and expensive, costing $35.8 million in 1988.

At the same time, Cheney and Deputy Defense Secretary Donald J. Atwood Jr. said that, in imposing new discipline on its own buying decisions, the Pentagon should make no new demands on the defense industry.

Corporate Ethical Standards

Atwood praised the defense industry for its efforts to develop corporate ethical standards and said the Pentagon’s role should be to “make sure that defense industry governs itself.”

Atwood vigorously criticized the “confrontational atmosphere” that has grown in relationships among the Pentagon, Congress and the defense industry.

“I’ve never seen anything like it,” said Atwood, a former executive at General Motors. If private industry had similar relationships with commercial suppliers, Atwood said, “they wouldn’t be able to function.”

Atwood’s day-to-day management of the Pentagon is expected to set the tone of the department’s relations with business. Under his direction, he said, the Pentagon will continue to make wide use of competitive bidding in the award of major contracts.