Procurement Chief Says DoD Won't Target Contractor Profits

November 30, 2011

Even with the Pentagon looking to make widespread cuts and improve efficiency, profitability is not a target and it may increase, the Defense Department's director of procurement and acquisition policy told an audience of investors Wednesday.

Speaking at the Credit Suisse 2011 Aerospace & Defense Conference, Shay Assad said that the Pentagon is concerned with cost reduction, not margin reduction, and that he would be surprised if profitability went down even as spending is decreased.

"It wouldn't bother us at all if operating margins go up, so long as we're paying less," he said. "We want to spend 90 and have them make 15, we don't want to spend 105 and have them make 15." 

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