Defense Secretary Robert Gates yesterday unveiled details of his effort to overhaul procurement processes, just ahead of Senate markups of the defense authorization and appropriations bills. Improving how the Pentagon buys goods and services is a major pillar of Gates’ plan to insulate the DOD budget from future shock, along with canceling redundant programs and shaving $100 billion from DOD’s overhead over the next five years. The new directives —incorporating input from hundreds of companies, individuals and organizations, including TCS—elaborate on ideas introduced in a June memo issued by DOD acquisition chief Ashton Carter.

On the high side, the directives endorsed our call to include cost constraints in the procurement process . This means letting contractors know how much money we have to spend on a weapon or service up front, preventing extra bells and whistles from getting larded on over the course of a program at great expense to the taxpayer. Gates admits many DOD programs “flunk this basic test from their inception,” a prime example being the recently-canceled presidential helicopter that Gates said would allow its passengers to cook dinner during a nuclear fallout. The new directives would force program managers to set an “affordability target” at a program’s launch that cannot be changed during the process without Gates’ signoff.

The directives also contained some stunning figures on the rapid bloat of services contracts. DOD estimates that “requirements creep” has increased 400 percent on such contracts—particularly those in the vague and sprawling “knowledge management” category—meaning their scope expands while frequently becoming specialized to the point where only one company is qualified to fill it. In fact, nearly one-fourth of the services contracts put out to competitive bid (worth some $31 billion) receive only one bidder, eliminating potential savings gained from competition. The new directives address this by requiring the military to re-bid single-source contracts after three years and limit the use of contract structures that discourage cost discipline.

Though such moves would seem to put the screws on contractors, the directives actually take a positive-reinforcement tack in dealing with companies who sell to the Defense Department. That means offering companies an incentive fee for meeting cost and schedule deadlines as well as sharing in savings from bringing a contact in under cost. Considering the fact that award fees are routinely awarded for underperforming contracts , such moves hardly seem disciplinary. Gates also said any money saved by overhead efficiencies will go back into the military services, rather than returning to the taxpayer.

Gates has repeatedly asserted that these reforms do not represent a reduction in the defense budget but a way to justify a continued one to two-percent future growth rate. In fact, he aimed the new directives at funding the $200 billion in new programs due to start up in the next year, including a new Navy ballistic missile submarine and long-range strike bomber program. But as every budget watcher knows, it’s pretty tough to put a price tag on preventing future screw-ups. Carter wasn’t able to say how much of Gates’ $100 billion target would come from acquisition improvements, and we wager any number that surfaces in the future won’t hold up to a drilling down—much like the $135 billion lawmakers claimed would be saved from by the IMPROVE Acquisition Act. If Gates would try applying the affordability test to military personnel, operations and our national security strategy , we might find some real savings.