Defense Acquisition Reform: A Case of Déjà Vu
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By Lawrence P. Farrell Jr.
Acting Deputy Defense Secretary Gordon England by the middle of
next month is expected to endorse an “action plan” that
is intended to address the Pentagon’s acquisition problems.
A
proposed acquisition-reform blueprint will result from the work
of an expert team that was hand-picked to be part of the Defense
Acquisition Performance Assessment (DAPA) project. England chartered
the group to consider every aspect of acquisition—including
requirements, organization, legal foundations (such as Goldwater-Nichols),
decision methodology, oversight, checks and balances.
Once England approves the recommendations, they will be sent to
Congress in late November.
DAPA faces a tough challenge. Currently, more than 80 new major
weapon systems are under development, with a combined cost growth
of $300 billion and total acquisition cost of nearly $1.5 trillion.
A recent Government Accountability Office study of 26 major acquisition
programs suggests the top five programs have nearly doubled in cost
during the last four years—in fact, skyrocketing from $281
billion to $521 billion.
The trend is not abating—estimates of cost growth and development
time of these same five programs grew 14.3 percent and 5.5 percent,
respectively, in the past year alone, according to GAO.
After more than 20 years of numerous attempts to improve the acquisition
system, the perception is that no reforms have addressed systemic
weaknesses in structure, process and governance of major weapon
systems development.
DAPA cites a number of issues that prompted the Defense Department
leadership to take action. One is the perception that the military
is not keeping up with a changing world—buying the next generation
of what we already have today. Another is a “conspiracy of
hope” created by an industry must-win mentality and service
advocacy for scarce resources.
DAPA also is concerned about “program demagogy” that
results from valuing sunk costs more than future options. Further
complicating the Pentagon’s ability to manage resources is
the practice of stretching out funding to support more and more
programs, each at its marginally inefficient rate. The problem of
“ever-escalating requirements” also has plagued many
defense programs.
NDIA and industry representatives had an opportunity to testify
recently at a DAPA public hearing. DAPA’s leader is retired
Air Force Lt. Gen. Ronald T. Kadish, who ran the Missile Defense
Agency before retiring from active duty.
Panel members include Gerald W. Abbott, professor of industry studies
at the Industrial College of the Armed Forces; Frank J. Cappuccio,
vice president and general manager of advanced development programs
at Lockheed Martin Aeronautics; retired Air Force Gen. Richard E.
Hawley, an independent defense industry consultant; retired Army
Gen. Paul J. Kern, former commander of the Army Materiel Command,
and Donald R. Kozlowski, aerospace industry consultant.
The consensus among top industry leaders is that DAPA faces a huge
challenge because it has to fix problems that have existed for many
years and have been pinpointed by a plethora of blue-ribbon commissions
and reports.
The issues DAPA is addressing fall into the category of “lessons
we had already learned.” Industry officials who testified
at DAPA noted the problem of diffused acquisition authority, which
often leaves program managers without the proper tools and authority
to do their job. This also makes it difficult to hold anyone accountable
when problems arise.
As we have reorganized and fixed problems in the past, we appear
to have arrived at an acquisition system with inconsistent and inadequate
levels of review and oversight, with “distributed” accountability
and a system that lacks critical skills in systems engineering and
integration.
The recommendations offered to DAPA in recent hearings include
many of the same suggestions that have been offered in years past:
Stabilize program funding, improve cost estimating and requirements
management, bolster the acquisition corps by creating an independent
systems engineering organization within the Defense Department,
encourage early industry participation, effectively use performance-based
contracts, better recognize risks, and provide proper incentives
to contractors. Also, the GAO study referenced above listed three
items we need to get right: technical maturity, design stability
and stable production processes. These conclusions, again, are not
new.
One suggestion well received by DAPA officials is the notion that
acquisition accountability should be aligned with the authority
that approves requirements and allocates resources. In other words,
each service must have oversight authority, execution responsibility
and control over resources to get the job done. This is consistent
with Title 10 legislation that requires each service to organize,
train and equip its forces. It is also in line with a recommendation
of a recent report by the Center for Strategic and International
Studies, titled “Beyond Goldwater-Nichols - Phase 2.”
It is worth noting that during the past two decades, the Defense
Department has developed acquisition processes that have worked
well. Consider: analysis of alternatives for major acquisitions,
evolutionary acquisition and spiral development, as well as a code
of ethics and standards. Many of the current problems stem from
having walked away from what worked well in the past.
What comes through loud and clear from the work DAPA is doing is
the need for a disciplined approach to acquisition. Also, the alignment
of authority with responsibility will help to ensure accountability—an
essential characteristic of effective military organizations.
The inescapable conclusion is that we know how to do it well, and
indeed there are programs that are still well managed. The question
is whether the procurement system can muster the necessary resolve
to get its groove back.
Please email me your comments to Lfarrell@ndia.org