Lisa Hershman, chief management officer at the Department of Defense (DoD), said the CMO office’s new review of operations and spending within DoD’s “fourth estate” agencies has resulted in $11 billion in cost reductions, Federal News Network reported Thursday.
Hershman associated majority of the savings with the implementation of long-term, sustainable reform initiatives, including improvements to contract management and adoption of category management practices.
“We have about 45,000 contracting officers, and they’re all looking at contracts for commodities like a battery. We had multiple contracts for the same battery, and the price points ranged from 13 cents to $25 per unit,” she told the network in an interview.
“This gives us an enormous opportunity to look at how we’re managing contracts, and whether we can do a better job and save money. The answer is yes. In one of the agencies that [was considering] an across-the-board cut, we looked at six of their largest contracts, and if we just renegotiate those and leverage our buying power, we actually are able to realize more savings than we would with the across-the-board cut.”