Missile Defense Agency chief wants fewer sole-source contracts

As the Defense Department explores ways to trim spending from the Pentagon budget, the Missile Defense Agency is focusing more heavily on competition for multibillion-dollar contracts.

Army Lt. Gen. Patrick O'Reilly, the agency's director, said on Tuesday MDA is reviewing $37 billion in missile defense programs to determine whether to open the contracts to competitive bids. The agency previously had relied on sole-source contracts for many of its expensive systems.

"One known proven way of ensuring that we're getting the greatest value for the dollar invested is competition," O'Reilly said at a breakfast with defense writers.

The three-star general added that he plans to take "aggressive steps on every procurement we possibly can in order to achieve a cost savings."

The effort comes as Defense Secretary Gates initiates a five-year plan to cut more than $100 billion in overhead and unnecessary costs from the Pentagon budget and redirect that money to higher-priority items such as force structure and modernization.

O'Reilly said his agency's efforts to focus more on competitively awarded contracts preceded Gates' initiative. But his plans are "totally in line" with that effort as MDA works with Pentagon leaders to spend money more efficiently, O'Reilly said.

MDA plans to compete a follow-on contract for the Ground-Based Midcourse Defense program, for which Boeing Co. has been the prime contractor since 2001. The new contract, which the Pentagon expects to award next year, is estimated to be worth $600 million a year and extend over five to 10 years.

Other contracts that will be up for competition include the Standard Missile-3 Block IIB and the Precision Tracking Space System, O'Reilly said.

As he focuses on competitive contracts, O'Reilly said he does not have a specific cost-savings goal.

"I'm not going to reach a limit and then say, 'I'm stopping here'," O'Reilly said. But, considering the billions of dollars at stake, "there's a significant potential for savings from competition," he said.