Cheney Says Reforms Will Save $39 Billion : Defense: The Pentagon chief’s 5-year plan calls for management changes to simplify weapons buying. He urges cutting 42,000 acquisition officials.

Defense Secretary Dick Cheney, in the latest Defense Department management review, announced Thursday that reforms already under way will save $39 billion in the coming five years and reduce the rolls of officials who buy equipment and supplies by 42,000.

Cheney unveiled a welter of management changes designed to slash bureaucratic red tape in the weapons-buying process, create a cadre of full-time acquisition experts and salvage relationships with experienced defense contractors that are now shunning new business with the Pentagon.

In addition, Cheney warned that coming cutbacks in defense spending will force “extensive” base closings beyond those approved by Congress last year. He refused to offer specifics.

Leading lawmakers said they are “encouraged” by the Pentagon’s new focus on management but they criticized the lack of a plan for implementing it.

“The Defense Management Review issued today offers no blueprint for implementation,” said House Armed Services Committee Chairman Les Aspin (D-Wis.). “We need one. That’s where reform efforts have failed in the past.”

Aspin, Senate Armed Services Committee Chairman Sam Nunn (D-Ga.) and six other lawmakers, in a letter to Cheney, urged the defense chief to join Congress in an “acquisition summit.”

Cautioning that radical changes will not come quickly, Cheney said that “$600 toilet seats are sexy and easy to get people to focus on. The work of getting the Department of Defense to function in such a way that we don’t have $600 toilet seats is hard and complex and involves a lot of nitty-gritty detail.”

Cheney, who called on Congress to conduct a similar review of its demands on the Pentagon, likened the department’s efforts to “three yards and a cloud of dust. It’s not a 60-yard touchdown pass.”

In 1991 alone, Cheney said, the Defense Management Review is expected to save $2.3 billion and reduce the Pentagon’s payroll by 16,000 military and civilian employees. Officials said that almost all of the prospective manpower cuts could be made by not replacing employees who retire or resign.

The Pentagon’s reform efforts focus on reducing the number of people and systems needed to run the Pentagon’s $300-billion-per-year operations. Cheney said he hopes to give more responsibility to lower-level acquisition professionals and to make them more accountable for their work.

These are among the initiatives Cheney unveiled:

--Reduce regulations. Almost half of the regulations that guide Defense Department officials deal with the acquisition of goods and services. Of 400 such directives reviewed, 50% were deemed unnecessary or duplicative and will be dropped or folded into other regulations.

Similarly, about two-thirds of the 12,000 clauses regularly inserted into Pentagon contracts can be deleted “without hurting anything,” according to Deputy Defense Secretary Donald J. Atwood.

--Simplify military specifications. The “milspecs” that dictate the requirements of a defense contract have swelled to more than 50,000, which are being reviewed to determine whether they remain useful.

“No wonder it takes 20 pages of specifications to buy a fruitcake,” said John A. Betti, undersecretary of defense for acquisition.

--Make the Pentagon shoulder the risk of high-technology contracts. With some of the Defense Department’s most dependable contractors unwilling to bid on many Pentagon contracts, Atwood said that contracts must reduce unnecessary financial risks to contractors.

As a result, Atwood said the Pentagon will discontinue “wherever practical” the use of fixed-price contracts, which “tend to put contractors in the untenable position of developing high-risk programs at a fixed price.” Such contracts became common during the Ronald Reagan Administration.

--Encourage industry ethics and review financial arrangements. Defense contractors should police themselves for ethical practices, with Defense Department monitoring, Atwood said. In addition, he said the Pentagon will review its current policies on contractor profits and on progress payments--funds disbursed in regular increments to defense contractors working on long-term contracts.

Finally, Atwood said the Pentagon is developing a contractor review system that will give firms with a solid history of performance on defense contracts an edge in winning new ones.