FEATURE ARTICLE

February 2006

Pentagon Acquisition Reforms Likely to Encounter Opposition

by Grace Jean

Radical changes to the Pentagon’s acquisition system may be in place by the end of this year, according to a panel that is charged with a sweeping evaluation of military procurement.

But analysts say the panel’s propositions may encounter some resistance both on Capitol Hill and inside the Pentagon.

The recommendations have three overarching ideas: reinstituting accountability in the system by re-engaging uniformed services into the acquisition process, making combatant commanders the driving force for requirements, and placing more value on time rather than money in procurement and research and development efforts.

“The acquisition leaders in the community designed for themselves what they think would be an improvement of the system. Some of their ideas are not going to be welcome in the Pentagon,” said John Hamre, president of the Center for Strategic and International Studies and former deputy secretary of defense. The dilemma, he said, is “How do they help the entire Pentagon see that this is good for the whole, not just for the acquisition effort?”

One of the potential hot button issues is the panel’s recommendation to set up a separate fund, an “acquisition stabilization account,” to cover cost growth in weapon procurement.

“That’s a novel idea, and it could have difficulty getting through Congress,” said John Douglass, president of the Aerospace Industries Association. In the past, legislators have not been receptive to the idea of establishing separate funds to cover potential problem areas. But Douglass said that it’s a good idea, nonetheless, because it creates a way to expedite resources to a problem, curtailing the need to wait through the next appropriation process and saving money in the end.

At the Defense Acquisition Performance Assessment project’s final public meeting in December, its chairman, retired Air Force Lt. Gen. Ron Kadish, presented the group’s findings before a packed room of industry and military representatives.

The panel, he said, focused on what has been termed the “big A”— the three processes of budget, requirements and acquisition. According to the panel’s executive summary, it found that “differences in the theory and practice of acquisition, divergent values among the acquisition community and changes in the security environment have driven the requirements, acquisition and budget processes further apart and inserted significant instability in the process.”

“These recommendations are designed to attack that part of the problem,” said Kadish. “They are not perfect. They are not necessarily exactly the right ones to be implemented. But… they are very concrete; they are very detailed, and they should be dealt with.”

“I would like to make sure people understand that we’re not at all suggesting that if we can take these recommendations, that we can take ‘x’ billions of dollars out of the budget. If that occurs, we have failed,” cautioned Kadish. “This is about making better decisions in a more timely way,” he added.

Giving combatant commanders more of a role in the acquisition process has sparked some skepticism.

“I don’t believe that the combatant commanders have the depth, the resources or the focus to do a good job of acquisition. They obviously should play a part in the requirements process, but I don’t think they should play a dominant role, for the simple reason that they have other responsibilities and they often don’t see the larger picture,” said Loren B. Thompson, chief operating officer for the public policy think tank, Lexington Institute.

“From industry’s point of view, we think it could be helpful, but it could also be carried to the extreme,” said Douglass, who added that the requirements process needs to be a team effort by combatant commanders, people in the defense secretary’s office and the services.

Kadish briefed the Quadrennial Defense Review panel on his group’s findings shortly before the public release, but Hamre said he didn’t think the acquisition assessment would affect the Pentagon’s self-evaluation in any way.

“This effort was quite separate. I think they’re trying to fold this together into a series of legislative recommendations in the spring,” said Hamre.

The panel’s efforts to reform the Pentagon’s acquisition process comes after a succession of failed attempts by other groups. Many of the same issues it encountered also existed 20 years ago when the Packard Commission examined the system.

“Success depends on whether or not you’ve framed the problem. I would argue that this is a problem that is structural, not procedural,” said Hamre. Most of the panel’s recommendations are process changes, he said. For example, insulating the acquisition budget from others is a process change.

When asked what sort of structural change he would make, Hamre said he would bring the service chief of staff into the acquisition process. Currently, the chief is responsible for requirements and allocation.

“When you have a major fault line that runs up and down the department, you do not have a systematic way of holding people accountable,” he said.

Hamre also believes that the acquisition community in the office of the secretary of defense is too large and needs to return to looking at major factors in acquisition instead of “running an elaborate system.”

The office of the under secretary of defense for acquisition, technology and logistics in OSD “ought to focus on the big issues and stop dealing with the small issues. Let the services deal with small issues,” he said.

Some say the problem lies not in the structure of the acquisitions system, but rather that it is embedded in the abilities of the people who run it.

“If you’re going to have people in senior acquisition slots, or even in civil service contracting jobs, who aren’t temperamentally or experientially suited to doing those jobs, then no amount of rearranging of the acquisition system is going to compensate for that fact,” said Thompson.

“Right now, we have an under secretary for acquisition who isn’t very well qualified. It doesn’t matter what regulations or processes he’s executing. You’re either qualified or you’re not. And structural change is not going to resolve personality problems.”

Some of the panel’s other recommendations include:

• A directive to service chiefs to establish four-star service systems commands.

• Appointing the under secretary of defense for acquisitions, technology and logistics to the Joint Requirements Oversight Council.

• Replacing the joint capabilities integration and development system with a joint capabilities acquisition and divestment plan in which the services and Defense Department agencies will compete to provide solutions for capability gaps.

• Pushing contracts to be awarded based more on time rather than value — ensuring military capability is delivered within six years of milestone A.

“Things look reasonable to me. Industry’s view is, the better the Pentagon can organize itself to do this, the better off we all are,” said Douglass. “I’m hopeful some of this stuff will get implemented,” he added.

Commissions have come and gone, and usually two to three items get embraced each time, so there is an improvement in the system, if incremental, said Douglass. But this panel may encounter more luck in having its suggestions implemented because the acting deputy secretary of defense, Gordon England, asked for the assessment last July.

Hamre concurred. “I think it’s an important step ahead. It’s very important when the deputy secretary sets aside time to look at such a big issue,” he said. However, he added, “I think this is going to make a good contribution to the debate, but I think we’re a long way away from a solution.”

Whether this panel’s suggestions will have an impact on the acquisition system remains to be seen.

“It depends on whether they’re implemented or not,” said Hamre. It also depends on how high of a priority Defense Secretary Donald Rumsfeld and England make the recommendations when the suggestions are part of the legislative package in the spring.

If implemented, the recommendations “would cause considerable change to the internal dynamics of the acquisitions process,” said Hamre.

Kadish said the panel would be willing to reconvene in several months’ time to advise or clarify any suggestions for implementation.

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