Zackheim: program 'lowballing' must stop. (Washington Pulse).

The Defense Department's controller, Dov Zackheim, told industry executives that the current administration plans to crack down on the practice of "lowballing" program cost estimates, which assumes that Congress will provide a supplemental later to cover the shortfalls.

From now on, he said, the Pentagon will assess program costs based on the estimates of the Cost Accounting Improvement Group, or CAIG. The estimates from the military services are not reliable, Zackheim said. In a survey of defense programs conducted recently, the CAIG "was right 90 percent of the time," and the services were wrong.

One way to keep the costs of weapon systems down is though industry competition. Defense Undersecretary for Acquisition, Technology and Logistics Edward 'Pete' Aldridge, he added, "is concerned about having a steady stream of suppliers."

To have a healthy industrial base, three competitors would be desirable. "You have to have two U.S. competitors for every major kind of defense activity, plus one competitor overseas," said Zackheim. Having U.S. industrial capabilities for every system is necessary, he added. "You can't rely [solely] on European suppliers, because the European Community keeps issuing new directives." However, he noted that cooperation between U.S. and European industries is important, in order to have "interoperability" in weapon systems.