Ashton carter's advice to industry: affordability is your NO. 1 priority.

• Author: Erwin, Sandra I.
• Position: Defense Insider

* Deputy Defense Secretary Ashton B. Carter is worried about looming budget cuts, and says he hopes lawmakers can soon work out a deal to avert the congressionally mandated "sequester."

Regardless, Pentagon contractors have to get serious about lowering the prices they charge for their products and services, Carter cautions.

The expectation that "high-performance" systems will win contract awards even if less-costly and less-sophisticated alternatives exist must be banished from contractors' thinking, he says. Carter adds that he remains concerned about procurement officials and contractors who are still living in the world of the post-9/11 era of ever-rising budgets. Weapon systems' cost estimates are based on "self fulfilling historical estimates" that assumed expenses would soar, instead of being based on what systems should cost. That mentality has to change, Carter says. "The era we enjoyed for 10 years is over. ... What it means for managers is that you can't fix [problems] with money. You need other management tools."

The Pentagon, for instance, is now requiring that buyers of contract services...