Mission: Just About Impossible

At an age when most executives are thinking of retirement, Robert Costello, 61, has just accepted the challenge of a lifetime. He is the new Under Secretary of Defense for Acquisition, the chief buyer for what amounts to the largest business enterprise in the world. Every day the 170,000 Pentagon employees who report to him sign some 56,000 contracts with private firms ranging from industrial giants like General Dynamics, Boeing and General Electric to tiny subcontractors. As the Pentagon's procurement czar, Costello will buy goods and services worth $170 billion this year. He must also oversee the costs of 2,600 weapons systems, as well as a bewildering variety of research and development projects. "Make no mistake," says Costello's boss, Defense Secretary Frank Carlucci, "Bob is undertaking one of the most demanding assignments in the department."

The sheer size of the job is enough, but Costello, a former General Motors executive, also faces the task of restoring efficiency and respectability to an operation riddled with waste, tarred by scandal and engulfed by criticism from Congress and the press. The stakes are enormous: unless Costello spends the Pentagon's money wisely, the Soviet Union will overtake the U.S. in the military technology race. Admiral Kinnaird McKee, director of Naval Nuclear Propulsion, has warned that Soviet submarine technology "is rapidly catching up with that in the West."

While Costello's task is to keep the U.S. ahead, he must do so at a time of serious concern about the federal deficit and severe budget constraints. Carlucci, who last November succeeded Caspar Weinberger, the freest-spending Defense Secretary in U.S. history ($2.4 trillion in just under eight years), has ordered that planned Pentagon outlays in the fiscal 1989 budget now being prepared must be cut by $33 billion, or 10%.

Congress created Costello's post in 1986 following disclosures of huge cost overruns by defense contractors and allegations that companies had, among many other offenses, billed the Pentagon for their executives' country-club fees and charged as much as $7,500 for a coffeepot used in aircraft. The principal remedy, lawmakers thought, would be to centralize all procurement authority in the hands of a single individual. Until then, such power had been spread among a myriad of departments. Said Congresswoman Patricia Schroeder, a Colorado Democrat: "We envisioned a czar who would kick trash cans and have rats jump out."