[Federal Register Volume 76, Number 33 (Thursday, February 17, 2011)]
[Page 9329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3600]



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

AGENCY: Department of Defense (DoD).

ACTION: Request for public comments.


SUMMARY: 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.

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

ADDRESSES: Submit comments to: Deputy Assistant Secretary of Defense 
for Industrial Policy, 3330 Defense Pentagon, Washington, DC 20301; or 
e-mail to [email protected].

FOR FURTHER INFORMATION CONTACT: Dr. Eugene Gholz, telephone 571-256-
2974, or e-mail [email protected].

SUPPLEMENTARY INFORMATION: 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).

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
[FR Doc. 2011-3600 Filed 2-16-11; 8:45 am]