Navy's souped-up acquisition strategy would save $35B

The Navy is targeting $35 billion in cost savings through fiscal 2016 as part of broader Defense Department efforts to shave $100 billion in spending, and much of the Navy’s budget trimming will hinge on the cancellation of some major programs and the increased competition of some of its biggest contracts, one top official said.

Robert Work, Navy under secretary, stressed that the measures are not budget cuts, but targeted efficiencies that will reallocate spending to higher-priority programs and efforts.

“Everyone calls this a cut drill. It is not a cut drill – it was never a cut drill,” Work said Jan. 26 at the AFCEA West conference in San Diego.

Work outlined plans aligned to three key goals: streamlining, buying smarter and considering the Navy’s most troubled programs and also its best programs. He said the $35 billion in savings will come from low-performing or low-priority programs and by moving spending “from tail to tooth.”

Plans for streamlining will include the dis-establishment of some Navy staff and organizations, including the shutdown of the Second Fleet, based in Norfolk, Va.

“The Second Fleet has a Cold War mission, and we don’t need it anymore,” Work said.

To buy smarter, the Navy will focus spending on high-performing and efficient programs and weapons, as well as increasing competition on contracts for some of the Navy’s most expensive efforts, including its littoral combat ship dual-buy contract, which Work said saved $2.9 billion. Spending will also be directed to high-tech unmanned aerial systems for intelligence, surveillance and reconnaissance capabilities, Work said.

The high-profile cancellation of the Marine Corps’ $12 billion expeditionary fighting vehicle is also a major part of plans to buy smarter, and Work said cuts to the Navy force are also expected by 2016.

The vehicle "would consume 100 percent of historical spending on all ground combat vehicles. We simply cannot afford it. The opportunity costs on the Marine Corps are too high,” Work said.

The belt-tightening within the Navy and across DOD is inevitable, according to Work.

“We’ve been in the midst of the largest military build-up since World War II. The tide will recede; it’s a question of how much and how fast. That keeps me up at night,” Work said.