'Better buying power' can reduce costs without slashing industry profits.

• Author: Hagen Christian

Frank Kendall, undersecretary of defense for acquisition, technology and logistics, recently updated Congress on the Better Buying Power (BBP) initiative that started four years ago to improve the Defense Department's acquisition process.

The latest update, BBI) 3.0, was released on Sept. 19 to further push forward and promote this important initiative.

Kendall noted that significant progress has been made in selected areas of the should-cost analysis, a key component of BBP.

Kendall's assertion that should-cost approaches have delivered significant savings to programs is accurate. The BBP initiative has improved Defense Department acquisitions. However, as Kendall emphasized, additional work is needed to firmly embed BBP tools such as should-cost analysis into Defense Department acquisition culture.

Three key areas can help drive adoption and embed should-cost analysis into the Pentagon's acquisition system: people and training, tools and processes, and leadership.

Complex categories like software serve as a relevant case study.

Both Kendall and Richard Lombardi, now principal deputy assistant secretary of the Air Force for acquisition, have cited how the F-22 air superiority fighter program leveraged strong should-cost techniques to deliver benefits that align with many of BBP's objectives.

F-22 program leaders made the software should-cost initiative a collaborative effort between the Defense Department and its suppliers, showing how the contractors could improve profits while helping the department develop a highly advanced weapon program at a reduced cost.

The initiative resulted in profits for the suppliers and savings of $66 million for the government from the initial contractor proposal.

Acquisitions organizations across the Defense Department need well-trained employees with the appropriate technical skills to find opportunities for reducing costs within a contractor's proposal.

But today employees need more than just these skills. They also need the ability to drive a thorough should-cost analysis, not just cut a percentage off the contractor's bid.

Therefore, defense acquisitions organizations must be able to deliver training on quantitative and technical skills, domain content and should-cost skills.

The should-cost training must focus on the tools and processes employees need to understand the deep analysis and how it can benefit their program. Such training will help them circumvent the confusion generated by the many...