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Efficiency Initiative Effort To Reduce Non-Value-Added Costs Imposed on Industry by Department of Defense Acquisition Practices

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Department of Defense (DoD).


Request for public comments.


The Department of Defense understands that some of its mandates, reporting requirements, and other acquisition practices encourage industry to adopt processes and make investments that increase costs, especially overhead costs, but do not contribute to value added in systems and services delivered to the Department. To implement the memorandum from Under Secretary of Defense (Acquisition, Technology, and Logistics) Dr. Ashton Carter, dated September 14, 2010, Memorandum to Acquisition Professionals, DoD is requesting information from the industrial base to identify the sources of these costs, backed by specific, credible, convincing data. DoD's goal is to develop a fact-based program to reform cost-inflating practices.


Submit written comments to the address shown below on or before March 31, 2011.


Submit comments to: Deputy Assistant Secretary of Defense for Industrial Policy, 3330 Defense Pentagon, Washington, DC 20301; or e-mail to

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Dr. Eugene Gholz, telephone 571-256-2974, or e-mail

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During the summer of 2010, industry voluntarily furnished nearly 500 suggestions to the Department of Defense as part of the first stage of Undersecretary Carter's Better Buying Power Initiative. Many of these suggestions were incorporated into the September 14, 2010, memorandum; others involved changes that can only be made over the longer term or require additional follow-up data before they are ready for possible action. DoD hopes that the current request for comments will yield the additional data that it needs along with information about some additional areas of non-value-added cost.

Submissions should specifically identify policies and practices that increase industry's non-value-added costs. They should draw on a reasonable definition of “non-value-added,” understanding that statutes and defense policies reflect persistent American values, including but not limited to, a clear focus on warfighting performance. It is not reasonable to count all costs associated with core laws governing defense acquisition as non-value added, but data on the costs of technical and administrative decisions within the statutory framework and on particular aspects of the laws would help the Efficiency Initiative move forward. As an example, earlier industry comments on the potential effects of adjusting thresholds in the Truth in Negotiations Act (TINA) for inflation seem to be at an appropriate level of analysis.

The supporting data should give a clear indication of the magnitude of the cost, so that DoD can evaluate and prioritize the information. Submissions should also explain how the data were collected and the relevant costs were counted or estimated. DoD is looking for the sort of data used in the 1994 Defense Science Board study, The DoD Regulatory Cost Premium: A Quantitative Assessment. DoD is particularly interested in data that would allow it to follow up on earlier industry submissions about the effects of particular TINA provisions, particular audit practices, and particular barriers to right-sizing industry capacity for current and projected future levels of demand.

DoD will use these submissions as part of its internal deliberations on the Better Buying Power Initiative. We expect to seek further industry comment at a public meeting where we hope that industry experts in contract management and finance will offer comments on the topic areas raised through this request for comments, ensuring that the results of this submission process are not idiosyncratic or overly influenced by particular companies' cost structures. Any information from this request shared at that future meeting will be entirely sanitized.

Submissions are likely to rely on business confidential data. Any business confidential data should be clearly labeled. The information will only be used by individuals in the Department of Defense who need it for purposes of policy development as part of Undersecretary Carter's Efficiency Initiative. Trade secrets and commercial or financial information considered by the submitter to be privileged or confidential, and marked accordingly by the submitter, will be treated as exempt from public disclosure as provided for by 5 U.S.C. 522(b)(4) (Freedom of Information Act rules).

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Ynette R. Shelkin,

Editor, Defense Acquisition Regulations System.

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[FR Doc. 2011-3600 Filed 2-16-11; 8:45 am]