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Source: Breaking Defense
Date: January 16, 2025
WASHINGTON — If the incoming Trump administration is serious about using the Department of Government Efficiency (DOGE) initiative to drive cost savings and drill down on Pentagon bureaucracy, it should start by rolling back government accounting rules as well as requirements on defense contractors to serve up detailed price data, the CEO of L3Harris wrote in an open letter.
L3Harris CEO Chris Kubasik’s letter to DOGE heads Elon Musk and Vivek Ramaswamy, published on the company’s website on Wednesday, marks the first foray by an executive at a legacy defense prime into the emerging discourse on how the incoming administration can revitalize the American defense industrial base — a discussion that has typically been largely dominated by leaders from defense technology startups eager to shake things up such as Palantir, Anduril and SpaceX founder Musk.
“America’s current defense acquisition system is slow and bureaucratic and does not provide our warfighters with new capabilities at the speed of relevance to the threats they are facing. It has a structure and a culture that stifles innovation and discourages risk-taking,” wrote Kubasik, a defense industry veteran with stints at Lockheed Martin. “I write to you today to express my desire to help the DOGE make America’s national defense ecosystem great again.”
Kubasik’s letter outlines four ways he believes DOGE could reduce burdensome regulations on defense contractors and increase efficiency in the defense acquisition process.
First, he calls for the elimination of government Cost Accounting Standard (CAS) requirements, which Kubasik argues are duplicative of the Generally Accepted Accounting Principles that defense contractors are already required to follow and impose a “significant labor and cost burden on defense technology companies.” Although CAS requirements were originally established to reduce the risk of companies overcharging the government, Kubasik argues that the Pentagon’s transition from cost-plus contracts — a form of contracting used on developmental projects, where companies are paid for all expenses on a project — to fixed-price contracts — which cap the government’s financial contribution on a project — have already remedied this issue.
“Because CAS is mostly duplicative of GAAP, reasonable accounting standards and practices will still be maintained while greatly reducing regulatory burden, including a significant number of government audits that often take years to complete,” he wrote, adding that contractors will be able to reinvest audit-related savings into developing new technology.
Kubasik also suggests reducing requirements for defense contractors to provide certified cost or pricing data, stating that current regulations add up to two years to the acquisition process and that the DoD already has a base of cost data it can use. Specifically, he recommends mandating such data only for large sole source acquisitions of platforms like naval ships or aircraft, or to raise the threshold for requiring cost data from $2 million to $500 million.