Acquisition Reform: It’s Mostly Up to Congress

A new report by one of Washington’s most respected defense acquisition experts lays out a roadmap for how Congress and the Pentagon can begin to fix what everyone agrees is a broken procurement system.

Senate and House defense committees kicked things off in March when they asked the Pentagon and industry groups to get their heads together and figure out how to stop the bleeding: $300 billion in cost overruns in the top 100 programs, and nearly $50 billion in canceled programs over the past decade.

The study, written by Jonathan Etherton on behalf of the National Defense Industrial Association, offers specific legislative remedies to problems that have long been known but have been seemingly intractable. Etherton, an industry consultant and former Senate staff member who was involved in previous efforts to reform Pentagon procurement over the past two decades, warns lawmakers that his report is not a silver bullet, but does offer a foundation for future progress. 

“Of course there is no single key to reforming the defense acquisition system, otherwise it would have been discovered and the system successfully reformed long ago,” he says. “There are, however, ways to proceed step by step toward system and process transformation.”

There is no shortage of cynicism around acquisition reform. “We've done a lot of talking about it,” says Sen. Jim Inhofe of Oklahoma, the ranking Republican on the Senate Armed Services Committee. “For the eight years I spent in the House and then since the last 20 years in the Senate, we've talked about acquisition reform ...  and every time that we come up with something, they want more regulations.”

The departing chairman of SASC Sen. Carl Levin, D-Mich., echoes the frustration. “We learned that as a rule of thumb it can cost 10 times more to fix a program after you've built a weapon system than it does to get it right the first time.”

Lawmakers’ exasperation with the Pentagon bureaucracy and with military systems’ perpetual cost overruns and performance issues is nothing new, but Etherton believes that circumstances today are aligned in favor of “meaningful change.”

The inertia that has stalled change in the past may have reached its limit, says Etherton. “Conditions that have strongly resisted transformation of the acquisition system may be more susceptible to change today than at any time in the recent past.” Although Pentagon waste is a universal concern within defense committees, there is now a greater understanding on Capitol Hill of what has gone wrong in the past, and a realization that Congress sometimes makes things worse. “The process will never be perfect, but it can produce significantly better outcomes in a more affordable manner if we trace problems back to the underlying features that cause them,” Etherton writes.

His recommendations, in a72-page report titled, “Pathway to Transformation,” can be summed up in three themes: More authority should be given to decision makers and they should be held accountable for their decisions; resources should match requirements; and decisions should be based on hard data.

Although Pentagon procurement chief Frank Kendall will be front and center of any reform efforts, Etherton’s report makes it clear that administrative and regulatory reforms at the Defense Department will not be enough, and only by rewriting current laws can many of today’s problems be addressed.

“Our focus was predominantly on what the Congress could and should do through legislation,” says Will Goodman, policy director at NDIA who worked with Etherton on the acquisition reform proposal. “Like the Congress, Frank Kendall is determined to improve the acquisition process and its outcomes, and all of our recommendations would require a strong partnership between the Congress and Pentagon to be implemented effectively,” Goodman adds. “While the report speaks to the needed legislative changes, concurrence in the changes and enthusiastic and effective management of them by the Pentagon is implied.”

A central player will be the chairman-elect of the House Armed Services Committee, Rep. Mac Thornberry, R-Texas. “He recognizes that meaningful change to the acquisition system will require steady and determined effort over several years,” Goodman says. “We have heard similar statements from Ranking Member Representative Adam Smith, and the presumed future Chairman and Ranking Member of the Senate Armed Services Committee, Senator McCain and Senator Reed. There appears to be a consensus around making real and significant changes to the acquisition system to improve its outcomes.”

With Ashton Carter as defense secretary, expectations in the procurement world will soar as Carter is deeply versed in acquisition policy and, as Kendall’s predecessor, was the architect of the Pentagon’s “better buying power” procurement rulebook.

Former defense procurement official Andrew Hunter, who worked under Carter and Kendall, has called on the new secretary to make acquisition reform a top priority. 

“Defense acquisition is a massive undertaking involving the expenditure of roughly $150 billion annually for research and development and procurement of technology and total contract spending of more than $300 billion annually,” says Hunter, who is now a senior fellow at the Center for Strategic and International Studies. 

“Even a small improvement in performance of the acquisition system can make a difference of billions in the cost of equipping the military,” he says. Hunter suggests that the next secretary should “meet early with industry and set the right tone. ... There is nothing to lose and much to gain in keeping the lines of communication open.” He also should “engage with Congress on improving defense acquisition.”

It is well known within defense circles that the relationship between Pentagon officials and contractors has deteriorated in recent years and that the atmosphere has become increasingly adversarial.

This could affect future procurement reforms, analysts caution. 

“There is a lack of honest and open dialogue between buyers and suppliers,” says Tom Captain, vice chairman and principal at Deloitte’s aerospace and defense sector.

“Many middle level acquisition officials are afraid to talk with defense contractors for fear of accusations of favorable treatment, bid protests or legal challenges,” Captain says. Like others in the private sector, Captain believes Defense Department managers need to be better trained to manage programs and negotiate contracts. Inadequate skills in cost and schedule management and not enough experience and organizational clout has caused program managers to make bad decisions, he adds. For example, many program managers only are interested in the lowest price rather than in “best value.”

In the NDIA report, Etherton suggests the following fixes:
• Increase the responsibility of the service chiefs in linking the requirements, acquisition, and budget processes. The chiefs should be held accountable for requirements validation, rather than the

Joint Requirements Oversight Council, a multi-service committee.
• Changes should be made in the management of both the civilian and military acquisition workforces, making the acquisition profession more attractive to capable and talented military personnel.

The report recommends more collaboration between government auditors and vendors, and close oversight of that process by Congress.
• The Defense Department should take advantage of “big data” advances in automated information collection and analysis to improve the quality and reduce the manual burden of acquisition program reporting requirements.

Topics: Procurement, Acquisition Reform, Defense Department