EDITOR'S NOTES ACQUISITION
The Road to Acquisition Reform ‘Nirvana’
Ninety-nine years of magazines sit in a bookcase located in the association’s office. What began as Army Ordnance in July 1920 would eventually morph into National Defense.
It’s interesting to flip through the back issues, especially those published prior to 1970, which we will be doing more of as we prepare for the big centennial issue coming out in November.
There is one constant theme in back issue pages: no one has ever been happy with the Defense Department’s acquisition system. Complaints from association members found in the 1930s and 1940s sound similar to ones heard today: the services aren’t clear on their requirements; the system moves too slowly; payments come too late, and so on, and so on. The litany is well known.
The takeaway from this is that the road to “acquisition nirvana,” where everyone is happy with the system, will probably never be reached. But that won’t stop the defense community from trying with blue-ribbon panels, National Defense Authorization Acts and think tank reports — nor should it. Acquisition reform is a never-ending story.
With that in mind, the Government Accountability Office in June produced three separate reports related to defense acquisition. Add them to the Section 809 Panel’s final recommendations on acquisition reform and there is a lot to chew on.
The first report out of the gate: “DoD Acquisition Reform: Leadership Attention Needed to Effectively Implement Changes to Acquisition Oversight” mostly examines the recent initiative to move oversight of major defense acquisition programs from the office of the secretary of defense back to the services. GAO’s conclusion: It’s going fairly well. Of course, keep in mind that once upon a time, someone thought that the answer to the department’s woes was to move oversight of major acquisition programs from the services to the OSD. It will be interesting to see if the pendulum someday swings back in that direction.
The report also looked at the breakup of the OSD’s office of the undersecretary for acquisition, technology and logistics. One wonders if a decade or two from now, a reform-minded blue-ribbon panel or lawmaker will declare: “We need to combine the OSD’s office of the undersecretary for research and engineering with the office of the undersecretary for acquisition and sustainment so one person can have oversight of programs from beginning to end. That will fix things.”
This report’s other big reveal: The 2016 NDAA gave more freedom and cut some red tape for managers of middle-tier acquisition programs. The services’ response was to declare about everything a “middle-tier” program, which they could do because no one has clearly spelled out the definition of “middle tier.” Therefore, the Army categorized its multi-billion dollar effort to develop the next-generation combat vehicle a “middle-tier” program.
“We found that approximately half of the programs initiated to date would be categorized as major defense acquisition programs if they were not being pursued under a middle-tier pathway,” the report stated.
Perhaps the road to defense acquisition nirvana would be to declare everything “middle tier.” The Columbia-class submarine: middle tier! The F-35: middle tier! Protected communications satellites: middle tier, of course!
The next report: “KC-46 Tanker Modernization: Aircraft Delivery Has Begun, but Deficiencies Could Affect Operations and Will Take Time to Correct” drills down into one specific program, but as GAO said, it “identified a number of insights that could benefit other programs.” The Air Force and prime contractor Boeing entered into a firm fixed-price incentive contract to deliver the first four aircraft, which currently doesn’t seem to be benefitting anyone as the program is three years behind schedule and the aircraft have a number of deficiencies that will cost taxpayers $300 million. That loss will be temporarily made up as the Air Force withholds 20 percent payment on each aircraft.
However, lessons-learned about the benefits and pitfalls of firm fixed-price contracts are not in this report, and are not going to be shared by the Air Force until the program is complete in 2021. As GAO noted, that is of little help to those considering such contract vehicles now.
At the end of June, GAO published, “Contract Financing: DoD Should Comprehensively Assess How Its Policies Affect the Defense Industry.”
Great idea! Why hasn’t anyone thought of this before?
The report specifically is referring to performance-based versus fixed-price contracts and payment rates, another debate that could be found in decades-old yellowed pages of the magazine.
The last time the Defense Department comprehensively analyzed this topic was 1985, according to the GAO. Think of all the changes to the industry in the last five years, then all the way back 34 years.
“Until DoD conducts a comprehensive assessment and ensures they are done on a recurring basis, it will not be in a position to understand whether current or future contract financing policies are achieving their intended consequences,” the report said.
There is a lot more to these three reports. But they all prove that the pursuit of acquisition reform nirvana will fill the pages of National Defense for years to come.