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Defense Watch 

Acquisition Reform Act: The Backlash Has Begun 

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By Sandra I. Erwin 

It’s only been seven months since President Obama signed the Weapon Systems Acquisition Reform Act of 2009. Both Congress and the administration heralded the legislation as a much-needed fix to the Pentagon’s troubled procurement process.

Predictably, a chorus of disapproval already is being heard.

This is a bill that by most accounts was conceived with noble intentions — to rein in out-of-control costs of weapons systems and ensure the Pentagon does not waste billions on boondoggles. It also introduced important “organizational conflicts of interest” measures that restrict defense hardware suppliers from owning companies that also advise the government on weapons acquisitions.

 “It is a thoughtful, bipartisan piece of legislation,” says federal procurement attorney Robert A. Burton.

But military acquisition officials and contractors are privately moaning about the “unintended consequences” of WSARA. These critics say the law may inadvertently exacerbate some of the problems it was intended to fix. The complaints most often heard are that WSARA duplicates existing regulations, adds fresh layers of bureaucracy and piles of new reporting mandates that could have paralyzing effects on a system that already is sluggish and unresponsive.

One particular source of unhappiness is the creation under WSARA of a director of cost assessment and program evaluation. The DCAPE is expected to provide independent cost assessments of major weapons systems to the secretary of defense. But several insiders who discussed the matter on condition of anonymity question the usefulness of this new bureaucracy and predict it will create unnecessary complexity. They argue that independent cost estimates already were being handled by the program evaluation and analysis directorate (PA&E) and the CAIG, or cost assessment improvement group. The new office creates a chain of command that operates in parallel to the undersecretary of defense for acquisition, so there is much confusion at the Pentagon as to how programs are supposed to be certified and approved under the new regime, said one acquisition official.

“They are making it harder to deliver systems,” he said. “At the Pentagon, they’re having trouble figuring out how to implement the new law.” A combination of confusion and fear of making mistakes is fueling paranoia and creating an environment where programs will see costs rise and schedules delayed, the manager said.

The programs that will be most affected in the near term are those that are in the midst of development, or between “milestones.” Until the new rules of the game are sorted out, these programs will be running up additional costs to keep contractor teams working longer than planned. Even a relatively short delay of several weeks could translate into millions of dollars in contractor billable hours and overhead expenses.

“They’ve got this law and they are not sure how to implement it,” the program manager said. “Eventually they’ll figure it out. But it’s going to take time.”

Another point of criticism is the way WSARA deals with cost overruns. The law modifies the previous Nunn-McCurdy legislation, which required the secretary of defense to seek special approval from Congress to continue funding a program that was 15 percent to 25 percent over budget. The new process was designed to make it easier to terminate wasteful programs, but insiders say the legislation could unintentionally drive up the price of weapons by creating incentives for “bureaucratic dithering,” and for keeping alive programs by cutting quantities, which increases unit cost. Some experts note that the DOD 5000 acquisition regulations already have mechanisms in place to address cost overruns. The new law duplicates existing regulations, said one Army expert.

The way WSARA deals with Nunn-McCurdy breaches is a “huge debate” because some of the language is fuzzy, said Stan Soloway, president of the Professional Services Council and a former Pentagon official in charge of acquisition reform. “You can argue all day long whether the new legislation is value added,” he said. After hundreds of billions of dollars in cost overruns in weapons programs, Congress can’t be blamed for trying to do more to control the purse strings and demand more reports and analysis, said Soloway. “The frustration Congress feels translates into more reports, more oversight.” It remains to be seen whether WSARA will deliver real benefits. “It added a few layers of oversight and reporting but didn’t dramatically change the process,” said Soloway.

Congress often is reminded that the Pentagon and various blue-ribbon panels have produced 126 studies on how to reform the acquisition process, and none has resulted in meaningful change. It could be years before anyone can say with certainty whether WSARA bucked the trend. If critics are right and the law ends up only making the process more tortuous rather than more efficient, let’s hope that there are no urgent requirements for a new weapon system any time soon.

The flaws in defense procurement today are glaring, and the government has always struggled trying to reform the system. WSARA must at least be given credit for taking a big step forward.
Reader Comments

Re: Acquisition Reform Act: The Backlash Has Begun

If you take a hard look at what's wrong with acquistion, a big part of it is the suffocating level of oversight heaped on programs. GAO, IG, OSD, Service oversight, etc. A PM spends 95% of his or her time on compliance with non-value added oversight vice executing the program. Heaping yet more oversight is not going to solve the problem, but just make it worse. Don't get me wrong, you need oversight. You just need to rationalize and streamline the oversight. Right now the solution for poor execution is more oversight. These programs are mired in overlapping, conflicting and contradictory oversight. Moreover, the folks conducting the oversight frequently know very little about the programs or technology they are overseeing. And empowering the very orgranization that is suffocating the programs the most is not the answer. So yes, since the Packard Commission there have been studies after studies, and they have all resulted in more oversight. It's time to strip out the layers of oversight and to hold the remaining oversight accountable for mindlessly holding up programs for no good reason. It's no wonder DoD can't innovate with this model. A thousand people can say "no," and barely anyone can say "yes."

Name Withheld on 12/15/2009 at 14:44

Re: Acquisition Reform Act: The Backlash Has Begun

In IT Acquisition, less is more, and why the 2010 NDAA, Sec 804 is mandating a new streamlined IT Acquisition process that can draw from commercial best practices already, an existing mandate of the Clinger Cohen Act.

IT is not a product of the Defense Industrial Complex, and represents much lower risks and assessments. Most of today's requirements for IT business systems, health IT, infrastructure can be satisfied with integrated COTS solutions that, for the most part, have already proven to be interoperable and secure by the worlds largest financial institutions and manufacturing concerns.

It may turn out, that once the new IT Acquisition process is put in place, we will find more and more other types of acquisitions that have the same need for speed!

Frankly, the current DoD Acquisition process guidance is fine, and is flexible. The problem is that everyone's risk aversion is related to their own skin and not the risk associated with timely delivery of capabilities. As an AF CiO once said "everyone is hiding behind the process and not vested in the outcomes". Lets start paying out million dollar bonuses for IT programs that execute on time and on budget, and we will save Billions per year.

Mike Wynne's IT Acquisition Advisory Council is pulling together a Roadmap for Acquisition Reform that should help avoid the past traps and rice bowls; www.IT-AAC.org

John Weiler on 12/14/2009 at 15:33

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