Half-Trillion in Defense Budget Cuts Means Targeting Sustainment Costs

January 20, 2013

Much as in the movie “Groundhog Day,” when the same day repeated over and over for the main character, the Defense Department closed out 2012 as it did 2011, staring down the barrel of another half-trillion dollars in budget cuts.

Even with the agreement to partially avert the fiscal cliff and delay cuts to planned Pentagon spending until March, the consensus is that defense budget cuts are coming. Reducing sustainment costs while maintaining performance is a national strategic priority to cushion these pending reductions and facilitate the shift to an Asian-centric strategy.

A.T. Kearney recently completed a research study of government, aerospace and defense, and industry executives to understand how defense spending reductions could affect sustainment. DoD’s policy to reduce sustainment costs and improve performance is called Performance-Based Logistics. As Project Proof Point, a recent DoD study, and Better Buying Power 2.0 have indicated, PBLs are often effective remedies. However, our research suggests PBLs are only a part of the solution.

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