Pentagon Misses Out on Metals Cost Savings

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Sourcing Strategies

Last week we caught wind of this crazy story on how the Pentagon does not have enough internal resources to take advantage of price dips for a range of metals it procures.   And though this story doesn’t have the same shock value as the hammers and toilets from the Reagan years (I seem to recall), one of the solutions seems even more outrageous than the problem.

For example, according to Shay Assad, the Pentagon’s Director of Defense Procurement and Acquisition Policy, as part of the Obama administration’s efforts to stem wasteful spending, the Pentagon plans to hire 800 pricing experts, but hiring and training will take about five years. That sounds like a classic throw bodies at it and the problem will go away strategy. 800 FTE’s at an average cost of $50,000 (not counting benefits and we know there are plenty of those) we are talking about $40+m in cost. Nobody has reported any savings targets or what the size of these missed savings might look like….just that we need 800 more people to solve the problem.

Hopefully, someone is conducting a classic Pareto analysis looking at the biggest category expenditures and hiring outside assistance, if necessary, to help the Pentagon insert contract escalator/de-escalator clauses for goods not yet procured, for example. Maybe the Pentagon has some “shovel-ready” projects it hopes to deploy with these new resources.

What a shame if cost-cutting gets placed on the back burner for a drawn out five year implementation. It seems like with all of the government’s recent spending, a few dollars allocated toward cost reduction programs would go a long way. Now that’s change we can all believe in!

–Lisa Reisman

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