Pentagon recoups $6.5 billion via streamlining, sale of old equipment: official

[February 10, 2020]  By Mike Stone

WASHINGTON (Reuters) - Pentagon belt-tightening efforts identified and redirected $6.5 billion worth of bloated payments, inefficiencies and overlaps last year, a senior Defense Department official said.

The Pentagon's Chief Management Officer Lisa Hershman said in an interview on Friday that the savings, equivalent to 83 F-35A fighter jets, were achieved through methods including the sale of obsolete equipment, better software licensing fee management and smarter purchasing of items such as lumber.

Since defense spending is capped at $741 billion this year, and because the Pentagon does not assume its budget will increase dramatically in the years to come, it has been looking for ways to do more with the money it has.

"We're not just cutting costs, we are transforming the way we are working. We are changing the infrastructure to support it," Hershman said.

One example, she said, was the discovery of 22 different contracts with a variety of prices for the same type of lumber. They were replaced by two multi-vendor contracts which saves time and money, while preserving competition.

Hershman's office has nine data analysts studying the Pentagon's vast pool of data for anomalies in contracts.

The Defense Department also made $407 million last year from the sale of what it described as "obsolete" equipment to allies.

For example, it sold 19 older helicopters to Afghanistan and others, four C-130 Hercules aircraft to Chile and the Philippines, and 100 MIM-104 Patriot missiles to the United Arab Emirates, the Pentagon said in a statement.

(Reporting by Mike Stone in Washington; Editing by Daniel Wallis)

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