DoD acquisition reform providing a few glimmers of progress

It’s still far too early to pop any champagne corks, but five years after Congress unanimously passed its most recent attempt to fix the Defense Department’s acquisition system, there are some signs that the reforms may be paying off.

The 2009 Weapons System Acquisition Reform Act (WSARA) was Capitol Hill’s response to a particularly bleak time for the Defense acquisition apparatus.

The year before President Obama signed WSARA into law, half of all of the Pentagon’s major weapons systems had grown so bloated that they breached the guidelines of the Nunn-McCurdy Act, an earlier law designed to warn lawmakers when Defense programs were spiraling out of control.

In 2008, the average major DoD weapons system blew past its original cost estimate by 30 percent and took two years longer to deliver than it was supposed to.

In 2013, for the first time in a decade, there were zero Nunn-McCurdy breaches, and the Government Accountability Office said 50 out of DoD’s 80 major programs actually reduced their costs, while 64 percent of them were able to find ways to buy more capability without additional funding.

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Michael Sullivan, GAO’s director for acquisition and sourcing management, said several factors appear to have led to the change in those particular metrics, including internal decisions under the department’s Better Buying Power program.

But much of the progress GAO has documented so far follows the general thrust behind WSARA, which is making sure DoD doesn’t obligate billions of dollars toward a program without an up-front understanding of what’s actually achievable, as the military did with several multibillion dollar programs that were ultimately canceled during the last decade.

“There are three points of knowledge that we think are the essential kind of ‘way points,'” Sullivan told the Senate Armed Services Committee Wednesday. “The first one is at the beginning of a program, and the department has done a lot better over the last few years in getting to the levels of mature technologies that we’ve asked for at that phase. They’re not perfect yet, but the trend is way up. The second one is at the critical design review stage, when ideally what we would like to see is reliability being worked on, prototypes that have been engineered, so that when you move from design to manufacturing, you have a very stable design that you’re going to begin to replicate. We’ve asked them to develop completed engineering designs, and they’re doing very well with that. Not perfect, but way up from where they were five years ago.”

Critical processes need more attention

Sullivan said DoD still hasn’t made much progress toward what GAO calls the third “knowledge point” — creating effective process controls over its contracts before the contracts shift into the large-scale production stage.

“As they move into production, there are key manufacturing processes that you want to be repeatable, so that you have quality as well as efficiency,” he said. “They really don’t have a lot of control over those critical processes. That’s where they really need to improve.”

History has shown that it takes years, or even decades, before any government acquisition reform effort takes hold (or doesn’t). Sullivan stressed that it’s far too early to know whether DoD has truly turned a corner on cost overruns since WSARA.

While GAO sees DoD’s movement toward reducing cost overruns as promising, there are enough depressing statistics to tamp down any enthusiasm about the progress the department has made.

Last year, 42 percent of the Pentagon’s major programs, most of whose development lifecycles span many years, still were more expensive than the military told Congress they would cost at their outset.

Frank Kendall, the undersecretary of Defense for acquisition, logistics and technology, said DoD has taken WSARA’s basic intent to heart by insisting that its managers ensure their programs will be affordable from the day they’re designed until the last model is retired from the military’s inventory, rather than only worrying about the program’s cost during the first few years of their life.

Kendall, who has worked in and around Defense acquisition for the past 40 years, also urged lawmakers to resist tackling DoD’s persistent problem of cost overruns through yet another legislative reform.

Instead, he said, Congress should practice patience and focus more on building and sustaining DoD’s acquisition workforce, rather than creating new rules for them to follow.

“My view is that many of the acquisition reforms we’ve tried so far have had little discernible impact,” he said. “The evidence, in terms of major program costs and schedule slips, shows very little statistical change over the years. I’m tempted to draw three conclusions from that fact. The first is that fixing Defense acquisition isn’t as easy as a lot of people seem to think it is. The second is that maybe we’ve been changing the wrong things. Defense acquisition is a human endeavor, and my view is that we have focused too much on organizational structures, processes and oversight mechanisms, and not enough on providing people with the skills and the incentives they need to be successful. The third possibility is we have not been patient enough or sufficiently tenacious with the acquisition policies, and we haven’t tried to leave them in place long enough to find out whether they really work or not. The frequent rotation of leadership, particularly political appointees and career military people, makes it hard to sustain a given initiative.”

Programs lack long-term management stability

Changes in leadership at the top of the acquisition system are, indeed, very frequent.

Since 1986, when Congress first devised the notion of an undersecretary of Defense whose main focus was acquisition, the average tenure of the people who have held the job has been 22 months.

Kendall, who has been in office as the undersecretary since 2012 and served as the office’s number two official for two years before that, has stated his intention to stick it out through at least the end of the Obama administration.

Constant turnover at lower levels of the DoD acquisition decision chain is also a fact of life and a problem that both GAO and DoD say should be addressed.

Take the case of the F-35 Joint Strike Fighter, the largest military acquisition program in history. Over that program’s 11-year life, it has had six different program managers.

The staff changes in that and other programs didn’t necessarily happen because of poor performance, but because that’s how the military personnel system works. Officers are expected to change billets every few years on their way to what they hope will be a promotion to a higher rank.

“In many cases, program managers will come in, they’ll have a few years with the program, and their culminating event is getting to one of the decision points on their acquisition program, so the definition of success is to get the decision approved by somebody,” Kendall said. “I’m trying to turn that around so that people come in shortly before the decision, and their real job is to execute the plan, to go out and make that plan a reality, which I think is a much, much harder job. The other thing is we have a fairly steep promotion pyramid at the level of captains and colonels, and those are the people that are our top-level program managers. They’re often forced to retire from the service, because they’re not promoted. I’m working with the services to keep those people around. I hate to see people who have built up these difficult program management skills over their careers leave the government and go to industry.”

Using civil servants to add more continuity and accountability to those program management roles is an option, Kendall said. But senior-level members of the civilian acquisition workforce already are stretched extremely thin, and their ranks are shrinking. Fifty percent of DoD’s civilian acquisition workforce will be eligible to retire within the next several years. Additionally, the pace of actual retirements has increased in the wake of sequestration and government furloughs.

“The workforce is the critical feature, I think, beyond anything else that we could do to improve the acquisition system,” he said. “The capability of our government people to oversee contracts, to get the business deal right, to understand the risks, to ensure that contractors are complying, all these things are central to our success. What we’ve been doing to our workforce, frankly, really pushes us in the opposite direction. Government service today is very different than it’s been traditionally.”

The civilian acquisition workforce, if it is charted on a line graph by age and experience, takes the shape of what Kendall described as a “two humped camel.”

The first hump is made up of a large number of fresh hires that DoD has been allowed to make since Congress created the Defense Acquisition Workforce Development Fund in 2008. The second includes people who have been working since the Cold War and are about to retire. The valley between the two includes a relatively small number of employees the department hired in the 1990s and early 2000s, when the acquisition workforce didn’t get much attention or funding.

“We’re trying to manage our way through that,” Kendall said. “But it’s a fundamental problem for the department.”

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