Lack of supplier trust drives up DOD costs
- By Defense Systems Staff
- Jul 13, 2012
In a time when defense officials are hunting everywhere for savings, a new study has found that trust might be the missing element that potentially could save the Defense Department billions of dollars, reports FCW, a sister publication of Defense Systems.
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.