A Prescription for the Air Force’s Ailing Acquisition System
By Sandra I. Erwin
Air Force Secretary Michael B. Donley and Chief of Staff Gen. Norton A. Schwartz earlier this month signed off on an “acquisition improvement plan” that articulates current flaws in the service’s weapons procurement process and proposes ways to fix them.
The plan is intended to help the Air Force “recapture acquisition excellence,” says the document, and it “builds on lessons learned from past shortfalls in the procurement processes.” Specifically, the plan alludes to two major programs -- the CSAR-X combat search and rescue helicopter and the KC-X refueling tanker -- as touchstones of the Air Force’s tarnished acquisition system.
Air Force leaders mostly agreed with the findings of a Government Accountability Office report that last year blasted the Defense Department for running up nearly $300 billion in cost overruns on major military programs.
Following the release of that report, Donley and other Air Force officials met with GAO analysts to discuss the strengths and weaknesses of the Air Force acquisition process. Donley also directed an independent assessment of Air Force acquisition, which was conducted by the Center for Naval Analyses. CNA submitted its findings to the Air Force in February 2009, and many of these findings shaped the contents of the acquisition improvement plan.
The Air Force attributes its acquisition troubles to five key root causes:
• Degraded training, experience and quantity of the acquisition workforce;
• Overstated and unstable requirements that are difficult to evaluate during source selection;
• Under-budgeted programs, changing of budgets without acknowledging impacts on program execution, and inadequate contractor cost discipline;
• Incomplete source selection training that has lacked “lessons learned” from the current acquisition environment;
• Unclear and cumbersome internal Air Force organization for acquisition and program executive officer (PEO) oversight.
One of the key goals listed this plan is to bolster the service’s acquisition workforce.
The Air Force acknowledges that it lacks sufficient expertise to deal with the complexity of procurement legislation, regulations, policies, procedures, and practices, which require specialized education and training, and many years of experience to master.
“We have failed to adequately manage their professional development and maintain sufficient numbers of these experienced professionals,” says the Air Force document. “The result is an acquisition workforce eager and willing to take on any challenge, but in many cases one that is inadequately prepared for the task at hand. In some cases, the workforce lacks the necessary training or education to accomplish the mission. In others, the workforce simply does not have the depth of experience or specific skill sets necessary to accomplish the critical tasks.”
The size of the Air Force acquisition workforce dropped from 43,100 in 1989 to about 25,000 in 2001, where it has remained since. A proposal to increase the workforce by more than 2,000 employees (247 officers, 11 enlisted and 1,804 civilian) is under consideration in areas such as systems engineering, cost estimating, program management, contracting, logistics, financial management and legal. The goal is to hire these experts between 2010 and 2013.
Another recommendation cited in the plan is the need for the Air Force to better manage its “requirements” in acquisition programs. “War fighters must resist the temptation to pursue high risk requirements that are too costly and take too long to deliver in favor of an incremental acquisition strategy that delivers most, if not all, requirements in the initial model -- with improvements added as technology matures.”
The plan recommends a “freeze” in program requirements at contract award, and proposes that any subsequent changes -- accompanied by adequate funding and schedule considerations -- be subject to approval by the chief of staff.
Budget and financial discipline also are emphasized. “Program baselines must be based on realistic schedule and technical assumptions and accurate cost estimates -- not just the cost of the lowest bid,” the plan says. “In addition, as budgeting, performance or schedule deviations occur, our acquisition process must have the flexibility to adjust requirements or cancel programs that become un-executable.”
The Air Force will seek to partner with the Defense Contract Management Agency and the Defense Contract Audit Agency to scrutinize contractor costs, “with the objective of driving improvements in contractor and subcontractor cost discipline,” the plan states. “In particular, it is time to begin a systematic review of contractor overhead costs to assure ourselves that these costs are reasonable. Contract profits will also be examined to ensure they are commensurate with risk and performance.”
The service also wants to shore up its source-selection process for choosing contractors. Errors in source selection were cited by GAO when it sided with protesting contractor Boeing in the KC-X competition last year. The successful protest derailed the program, which has yet to get back on track.
“When our process is challenged by a contractor and found lacking by the GAO or the courts, essential capability is delayed and public trust is damaged,” says the Air Force document. “In general, we know how to conduct source selections; the vast majority of Air Force source selections are performed correctly and without protest.”
But the Air Force recognizes that there are weaknesses in its procedures for large system acquisition source selections. It also became apparent in the aftermath of the KC-X protest that the training of acquisition professionals in this highly specialized, technical acquisition process was inadequate, says the acquisition improvement plan. “In the interest of perfecting the procedures, we allowed the process to become overly complicated, which led to unnecessary opportunities for error. We also found that some of the skill sets required to conduct a major source selection had become very scarce … The Air Force considers improvement of the source selection process to be one of its most critical acquisition improvement goals.”
One idea currently being considered is to appoint a team of qualified Air Force source selection experts to provide on-call consultation to source selection teams across the Air Force.
Another potentially controversial move under evaluation is to reorganize the Air Force’s byzantine chain of command in order to establish clear lines of authority and accountability in acquisition programs.
The current wing/group/squadron structure was established in the 1990s to provide additional command opportunities and promotions for experienced uniformed acquisition experts. “The structure appears to have created a number of negative unintended consequences,” the plan says. “For example, establishing a hierarchical military structure diminished the functional mentoring and support that once provided our contracting officers with the sense of authority that allows necessary independent decision-making.” The current structure also resulted in a top-heavy management organization whose staffing needs have drawn many acquisition experts out of “hands-on” acquisition work and into less connected management or command roles.
“We found that the current organization structure inhibits efficient reallocation and rotation of personnel resources, disconnects employees from what should be their functional mentors, and in many ways inhibits proper career management, including workforce training,” says the document.
The Air Force PEO arrangement has been criticized for being cumbersome and failing to eliminate what many believe to be excessive program briefings at multiple management levels before every major decision. The PEOs report to the Air Force senior acquisition executive in their role as acquisition officials, and they also report through an entirely different chain of command in their role as commanders. “This dual reporting creates the propensity for conflicting mission priorities and divided attention that can lead to ineffective acquisition leadership.”
The acquisition improvement plan notes that many of the suggested actions are already underway. The office of the assistant secretary of the Air Force for acquisition is expected to put together a detailed implementation plan by September 2009. It has asked inputs from Air Force Materiel Command, Air Force Space Command, and major command staffs by June 15.