The defense industry has launched an intensive lobbying campaign in Washington. It contends that future reductions in acquisition funding will put hundreds of thousands of jobs at risk.
Industry makes a persuasive case at a time when the government is trying to put people to work. But Defense Secretary Robert Gates has made it clear that the Pentagon will not be able to buy everything it wants. So the expected cutbacks should be viewed as a great opportunity for true acquisition reform.
Defense secretaries have put their weight behind various reform initiatives, but the long term results of those efforts have been dismal. Recent government reports noted that out of 72 major defense programs only 11 were on budget and meeting performance goals.
Any attempt at substantial reform presents a serious political problem because of the entrenched nature of the acquisition bureaucracy.
The recently signed defense acquisition regulation — DOD 5000.2 — represents one more of approximately 20 past attempts at reforming acquisition, but it is unlikely to spawn real reform because of two very simple facts: it does not address historical reasons for cost overruns in a systematic manner nor does it shorten weapons development durations.
One fundamental problem with the new DOD 5000.02 is that it does not take into account future funding constraints. It requires two competing contractors to carry out a technology demonstration program. The expectation is that technology maturity and system prototyping prior to a Milestone B engineering and manufacturing development decision will result in more confidence in what the system will cost. The best answer to that expectation is “maybe.”
One does not get high confidence levels in cost estimating unless the complete system is prototyped in the “systems of systems” environment. The engineering and manufacturing development (EMD) process is software intensive, and software is like carbon monoxide: you don’t know you’re in trouble until a heavy dose is sniffed, but by then it’s too late.
This approach pushes many of the expensive development activities into EMD where weapon system costs generally face the most severe escalation. DOD 5000.02 ignores the fact that the non-high technology stuff also drives up costs. EMD activity involves integration of the prototyped system with a platform, explosive certifications, training device development, or operation in the system-of-system environment. These activities should be pushed back into the technology demonstration phase in order to assess the non-high technology cost and risk drivers.
The new regulation ensures that the developmental cycle time is longer. The longer a system stays in development, the more it will cost and the higher the probability for cost and schedule overruns. The Defense Department supports the concept of fielding “incremental spirals” of a weapon system into the field. But this approach is likely to leave troops with the first fielded spiral for a long time. Each succeeding spiral or upgrade is subjected to a new start methodology that has to compete for resources with other programs.
The regulation forgets about manufacturing as a significant cost driver for a major system acquisition. If it can’t be produced at a reasonable price, then the technology isn’t mature. It also fails to realize that an effective reform policy has to include the total system solution. The total system includes: the management and organizational structure, the requirements generation process, the budgeting and contracting process, recruiting and training government acquisition personnel, and holding them personally accountable for their acquisition decision making. The entire acquisition system must be considered for effective reform to be realized.
A smart move would be to reform the budgeting process. The planning, programming and budgeting system (PPBS), begun in the early 1960s, is outdated and cannot respond to the reality of rapidly changing situations. Current threats do not allow a leisurely pace for weapon development. Even in wartime, with the urgent requirements for mine resistant ambush protected vehicles and unmanned aerial vehicles, the Defense Department could not rapidly respond.
The Defense Department should consider a three-year limit for major programs undergoing technology maturity demonstrations. If a promising technology cannot be matured with known risks in three years, the government should not spend the money on a technology demonstration. Currently, many budgets for major weapons get “locked” much too early in a program’s development at precisely the time when cost uncertainty is greatest.
The Pentagon should create “enterprise” centers for quick response weapon development. This has been done before, but without success. In the late 1980s, the department established the Defense Enterprise Program (DEP) to improve defense acquisition. Its purpose was to reduce micromanagement and over-regulation and thereby increase efficiency of the acquisition process.
Eleven major programs were selected as poster children for the DEP. But it wasn’t long before the DEP was recognized as a failure. The reasons for that failure were that management did not properly implement the program, did not address the bureaucracy’s resistance to a new initiative, did not address the political dynamics in the weapons acquisition process; and tried to take on too many programs.
The Defense Department should reinstitute the DEP program along its originally intended lines but expand it to include new initiatives in contracting, estimating costs, budgeting and requirements determination. It should insist on more interaction between the development and test communities and closely monitor program performance. It is also critical to make the user more engaged in a weapon development process.
The basic research and advanced development activities need reform, too. The technical base has consistently been under funded during the last decade. Studies show that it takes 20 to 25 years for technology to show up as a military application in a major new weapon system. This early tech base activity should perform a significant portion of the technology maturity before entering system prototyping.