On Tap for Defense Acquisition Programs: A Two-Year Congressional Review

 Congress in 2009 passed the mother of all defense acquisition reform bills.

The Weapon Systems Acquisition Reform Act was praised by the Obama administration and congressional leaders as a much-needed antidote to complacent Pentagon bureaucracies that had become unaccountable for massive cost overruns and delays in major programs.

But there are still plenty of inadequacies in defense acquisitions, lawmakers have found. These vexing issues might not warrant another major piece of legislation but are serious enough to justify a fresh probe by the House Armed Services Committee. The panel is about to take a two-year deep dive into the Pentagon’s troubled procurement process.  

“Chairman McKeon and I have been talking about a focused defense reform effort for some time,” said House Armed Services Committee Vice Chairman Mac Thornberry, R-TX. The panel’s chairman, Rep. Buck McKeon, R-Calif., wants to focus on acquisition reform, organizational bloat and the security clearance process.

The HASC review, unlike previous efforts, recognizes that Congress often is part of the problem, Thornberry said Nov. 18 at the Center for Strategic and International Studies.

“Every few years since I’ve been in Congress, we have passed some legislation on acquisition reform. … It may be that some of it was helpful, but some may have contributed to the problem,”

Thornberry said. “Looking at the whole picture, things are certainly no better – in fact the problem is in many ways worse – than they were 20 years ago.”

Congress has to better prioritize its oversight, he said. “Wal-Mart knows it can't stop 100 percent of shoplifting because it's not worth the cost,” he said. “We are going to have to be at a point when we are willing to accept some amount of risk that someone is going to do something they shouldn't do.”

A laundry list ofailments that afflict military programs was discussed at a HASC hearing in October, where auditors noted that 39 percent of the Pentagon’s weapons programs in fiscal year 2012 were running 25 percent or more over budget, and inaccurate cost estimates continue to plague acquisition programs. Analysts have estimated that that the Defense Department spent $50 billion over the past decade on weapons systems that never were fielded.

Most all of the studies over the past 50 years make essentially the same points, Thornberry said. During that period, there were many legislative attempts to solve problems, with unsatisfactory results, he added. “We have to go deeper; learn why previous attempts have not been as successful as hoped, and get at root causes of problems, not merely symptoms.”

Lawmakers believe there are still too many troubling trends in weapon acquisitions. In 2012, the Defense Department obligated $360 billion worth of contractors, or 10 percent of the entire federal budget and 52 percent of the department’s total obligations, Thornberry said. From 2008 to 2012, development and production cost overruns accelerated, and delays worsened, he said. Legislators, he said, “have to do a better job watching for cost growth but also understanding why it happens.”

The Pentagon needs to turn this around, he said, because it will not be able to throw more money at these problems. “I know of no scenario that envisions a return to large yearly increases in the defense budget, short of some catastrophic event,” Thornberry said. “Even in the best case, we’ve got to face a dangerous, complicated world with limited resources. So we must get more defense for the dollar.”

The Defense Department’s acquisitions chief Frank Kendall said he wanted to work with Congress to try to simplify an overwhelming collection of procurement regulations that keeps getting bigger but not necessarily more helpful.

“We will be happy to sit down with him and go line-by-line through the existing regulations to thin them out and simplify,” said Thornberry. “We also need industry participation,” he said. “We are not looking at this as a two-year study, and then comes a massive bill. … Answers are not all legislation.”

Some of the findings from this study might influence next year’s defense authorization bill, he said. “But I think it's important to say that legislation is not going to solve all this.”

The skepticism about improving defense acquisition is understandable after decades of frustration, Thornberry said. Everything has been tried: management centralization and decentralization, greater flexibility and more rigid mandates, greater in-house management and more outsourcing to contractors.

“We acknowledge that what we’ve done in the past has not worked as well as we hoped and that we will not make things better by piling on new mandates, new oversight offices, or greater micromanagement,” Thornberry said. Congress wants to avoid “making it harder and harder for the people who know what they’re doing to serve in key positions effectively.”

Another thorny issue in defense acquisition is incentives, he said. “The system would rather pay $1 billion with 5 percent profit than pay $500 million with 20 percent profit for the same thing,” Thornberry said. “Those things have to change.”

Contractors have to do their part, too, he added. It has been known that companies intentionally underbid on a system’s acquisition cost knowing that they can make up the revenue with maintenance work, which is a much bigger pot of money. The government should motivate contractors to provide realistic bids, he said, and should make it less cumbersome for commercial firms to do business with the Defense Department.

Topics: Defense Contracting, Government Policy, Procurement, Acquisition Reform, Defense Department