Unwavering Adherence to Regulations Shortchanges Warfighters
As a professor in the National Security Affairs department at the Naval Postgraduate School in Monterey, California, for 26 years, almost all of my students from the four armed services were “warfighters.”
I cannot help but conclude that these students are put to risk as they were and are unable to have access to the latest technological means to wage — or deter — armed combat. This is due to the Pavlovian adherence by the Defense Department and its acquisition corps to the Federal Acquisition Regulation.
More than 55 percent of the roughly $800 billion annual appropriation to the department is contracted out. The mechanism whereby — as one congressman put it — “the people’s money” is awarded to private for-profit firms is acquisition authority.
The only acquisition authority listed by Google is the FAR, and the entry reads: “The Federal Acquisition Regulation is the primary regulation for use by all executive agencies in their acquisition of supplies and services with appropriated funds.”
According to the late Secretary of Defense Ash Carter, who referred to himself as the acquisition czar, 10,000 contracting officers award 10 million contracts each year. The almost total, literally sacrosanct utilization of the FAR has resulted in a broken acquisition system putting U.S. national security — and specifically the warfighters — at risk.
There is increasing awareness of this risk, which is captured in recent reports and articles ranging from the New York Times to the Center for Strategic and Budgetary Assessments and the Center for Strategic and International Studies think tanks.
Probably the most thorough assessment — and possibly with the greatest potential impact — is the Atlantic Council Commission on Defense Innovation Adoption. Chaired by Mark Esper and Deborah Lee James and including important luminaries from government and industry, the commission published, with great publicity before and after its April 12 launch, an interim report highlighting key challenges to adopting emerging military technologies. Not adopting these emerging technologies is particularly relevant as the National Defense Strategy of 2018, and the NDS and National Security Strategy of 2022, identify competition with China as the major national security challenge, requiring emerging military technologies to deter aggression.
The main relevance in the Atlantic Council’s interim report is its highlighting positive examples of defense innovation adoption by the Defense Innovation Unit and Army Futures Command. In doing so the commission is in fact, knowingly or not, citing examples of defense units employing an alternative acquisition authority from the FAR, which is Other Transaction Authority, or OTA.
The challenge in acquiring new technologies is summarized authoritatively in a July 2017 Government Accountability Office report requested by the late Sen. John McCain, R-Ariz., then chairman of the Senate Armed Services Committee.
Although the report calls attention to the laudable goals of the FAR, it makes clear that representatives of the non-traditional companies developing new military technologies interviewed by the GAO found it frustrating dealing with the complexity of the Defense Department processes and the “… time, cost and risk associated with competing for and executing a contract; and interacting with DoD’s contracting workforce.”
It is difficult to understand the sacrosanct status of the FAR in defense acquisitions as it would be for an atheist to believe the Jewish Torah, Christian Bible, Islamic Koran or any other avowedly holy scripture.
I can, however, provide some data that might be relevant in this regard. The FAR was issued in 1983, updating policies, some going back to the Lincoln administration, and is divided into 53 parts.
It is huge, in some versions 2,368 pages long. It is so extensive that the Defense Acquisition University offers a course in navigating the FAR. It stipulates guiding principles for the whole federal acquisition system, which include meeting contract requirements in terms of cost, quality and timeliness of the delivered goods and services; minimizing operating costs; business integrity standards; and fulfilling public policy objectives.
Contracting officers are trained — in fact indoctrinated — with the FAR. The acquisition system is designed primarily for FAR-type actions and has evolved this way in the spirit of doing right with taxpayer money, vetting patriotic vendors and trying to implement technologies that not only serve their functions but also are sustainable through our military systems.
Until recently, this has served the nation well because it had such technological superiority, and there was no real threat to being slow to innovate. However, an advanced private industrial base both at home and abroad that is much faster, more agile and creative has created an edge in that we cannot react to, let alone stay ahead of, these methods. Adapting to these threats does not sit well with the FAR way of doing things.
The completeness of the FAR is positive in providing a standard for all acquisitions. However, it also serves as a security blanket for contracting officers. According to a review of the responsibilities of a contracting officer by the Federal Acquisition Institute, “Contracting officers are responsible for ensuring that: the government obtains value from contracts; all requirements of law and regulation are met prior to executing an action; sufficient funds are available for obligation; contractors receive impartial, fair and equitable treatment; both parties comply with terms of the contract. Plus, the interests of the United States are safeguarded, and taxpayer’s money is spent wisely.”
Contracting officers are personally liable for the contracts they award. No wonder they, and the whole system under the FAR, are considered risk averse as they have no incentive to deviate from the rules as it would make them vulnerable to accusations and ultimately losing their jobs. In any case, generating FAR-based contracts is routine, as contracting officers have available at least three different contract writing systems for them, including: Standard Procurement System; PRISM contract writing system; and the Momentum contract writing system.
And, finally, the “industry” with which the department contracts has invested in both the technology and the personnel to enable it to meet the demands imposed by the FAR. Yet the requirements stipulated by the FAR are a disincentive for non-traditional firms, and especially startups, that are generating the new technologies.
In sum, neither the contracting officers nor the “industry” have any incentive to deviate from FAR-based contracts even if U.S. national security is put at risk.
In an earlier era of perceived peril for U.S. national security, as is the current era, during the Cold War in which the USSR in 1957 with Sputnik beat the United States into space, Congress created NASA and endowed it with “other transaction authority” to rapidly obtain goods and supplies and thereby quickly compete with the USSR.
Since that time, Congress not only extended Other Transaction Authority to the Defense Department in 1990, but in most of the subsequent annual National Defense Authorization Acts, expanded and encouraged its use in the defense community. Indeed, the NDAA for fiscal year 2018 in Section 863 requires training and education for personnel involved in OTA and other innovative contracting methods.
And Section 867 of the same NDAA requires the secretary of defense to establish a preference for OTA in the execution of science and technology and prototyping programs.
Despite encouragement in virtually all NDAAs since 1991, while the use of OTA in 2020 exceeded $16 billion, in part due to research and distribution of vaccines and protective equipment to combat COVID-19, this sum decreased in 2021 and again in 2022 to approximately $11 billion.
The congressionally defined mandate for education and training in the use of OTA has not been implemented.
Most recently, however, the committee report in the NDAA for 2023 reads, “we strongly encourage the department to invest in continuous and experiential education for management, technical and contracting personnel, as well as attorneys, to understand how to effectively and innovatively use Other Transaction Authority and explore flexible means to achieve mission results more quickly and with more value added.”
If Congress, in one authorization act after another, encourages the use of OTA, and respected authorities find it meets the tenets of public procurement, why has it not been more widely used in defense outsourcing?
The impediments to expanded use of OTA, particularly but not limited to research and development, are the flip side of the obsequious adherence to the FAR. Contracting officers perceive correctly that they will be vulnerable, penalized and maybe even fired.
There are no contract writing systems for OTA. And there is no education in its use despite virtually all proponents of OTA emphasizing the need for education, as do the NDAAs for 2018 and 2023. The contracting officer would have to develop the contract in cooperation with the provider.
Finally, industry is not interested; it is doing great financially and already has all the technical and personnel support to continue focusing exclusively on FAR-based contracts.
In sum, until and unless contracting officers receive education in the use of OTA, and are incentivized to use it, the United States will continue to miss out on new technological developments that may well make a difference in future conflict or to deter such a conflict.
And, in the meantime, the warfighters are shortchanged. ND
Thomas C. Bruneau is distinguished professor emeritus of national security affairs at the U.S. Naval Postgraduate School in Monterey, California. He is the author of Outsourcing National Defense: Why and How Private Contractors are Providing Public Services (Lynne Rienner Publishers Inc. in 2023).