Contractor Distrust Costs DOD Billions, Study Says

July 13, 2012

In a time when defense officials are hunting everywhere for savings, a new study has found what might be the missing element that could save the Defense Department billions of dollars: Trust.

DOD's distrust of defense contractors has led to the creation of a significant bureaucracy, according to several university researchers, who released a report in May. DOD currently spends $400 billion each year acquiring products and services from its contractors. About $100 billion of the money is spent on administrative costs, according to the study, based on interviews with 80 defense contractor executives.

By cutting what the report's authors consider to be unneeded bureaucracy, defense officials could reduce the department's costs by 20 percent. That could save roughly $20 billion each year, according to the report.

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