Military service chiefs poised to gain more acquisition power

Military service chiefs and secretaries will be given more power over the acquisition process than they have had in 30 years if the President signs the fiscal 2016 Defense Authorization bill.

The bill, which was reported out of a joint committee on Sept. 29, gives service chiefs and secretaries overall responsibility for acquisition programs within their services.

The move is a delegation of powers from the Office of the Secretary of Defense for acquisition, technology and logistics (ATL), which has held milestone decision authority over programs for about three decades.

Under the bill, the service chiefs and secretaries will gain the authority starting with any new programs in 2017, said a Senate Armed Services Committee staff member during a briefing with reporters Wednesday.

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“There is a lot of responsibility and movement towards a formalization where the services chiefs and the services secretaries should play in the acquisition process,” the staffer said. “The positive on this is after 30 years the services would regain responsibility and authority over programs.”

To keep service officials from going over budget, the bill implements a set of punishments for the services.

The harshest penalty is doled out if a 2017 new start service program goes 15 percent over its estimated costs. At that point the program would be automatically transferred back to the ATL.

The bill also includes penalties for cost overruns in older programs and in new start programs.

If a program that was started after 2009 runs over cost then three percent of the total cost overrun will be put in a fund controlled by ATL to invest in risk reduction and prototyping.

The Senate staff member said three percent of cost overruns for all programs currently adds up to about $6 billion. The services can decide where to take the penalty funds from their budget.

Joint programs also will be susceptible to the three percent rule. The service that has the most stake in the program will pay the fine.

“The services don’t want to lost $6-to-$12 billion down the road if they screw up, now that might lead to program cancellations early, but OK maybe we should shoot some of the programs down early,” the staff member said.

Undersecretary of Defense for ATL Frank Kendall has expressed skepticism in giving too much power to the service chiefs in the past.

An email to the Pentagon requesting comment on the bill was not immediately returned.

Streamlining the process

Along with changing authority power over acquisition programs, the bill attempts to streamline the acquisition process.

Acquisition reform “is tied to national security in a sense that 50 years ago from a technological superiority perspective we had 20 years… [before] our adversaries would catch up. In today’s day and age we just don’t have that, we have five years, so we have to do things faster,” a House Armed Services Committee staff member said.

Part of streamlining the process is reducing the paperwork burden for program managers by reducing reporting, documentation and certification requirements.

The bill also attempts to empower program managers by giving them more control over their programs. The current process is often likened to a full bus where every passenger has a steering wheel and a brake, causing the bus to crash. The new process would give the steering wheel and brake only to the program manager.

New Authorities

The bill gives the defense secretary and other parts of the Defense Department more authorities to hire more qualified personnel and streamline acquisition processes.

DOD will have direct hiring authority for entry-level science, technology, engineering and math acquisition professionals, mid-tier professionals and program managers.

Program manager level hires will have enhanced pay authority for a limited period. The bill would let DoD pay them close to $300,000, the Senate staff member said. This puts government in line with market salaries in the private sector.

The bill also gives a waiver to the Defense Secretary to rapidly acquire anything that is a vital need to the United States. U.S. Cyber Command also is given this waiver up to $75 million.

The bill adds cyber components to the rapid acquisition process so a certain fund can be used to quickly acquire needed goods in two years or fewer.

Veto Threat

Though the bill has made it through both houses of Congress and through a joint conference, President Barack Obama has threatened to veto the bill.

Obama’s qualm with the bill is its use of an emergency fund to circumvent sequestration caps. The fiscal 2015 Defense Authorization Act uses the overseas contingency operations (OCO) fund to add $38 billion to the Defense budget.

OCO was created to pay for operations in Iraq and Afghanistan when the military needed funds for missions. However, the fund has been used less for war operations and more to pad the Defense budget in recent years. This version of the NDAA uses OCO funding to pay for operation and maintenance, for example.

Democrats have called this use of OCO a gimmick and military officials have spoken out against OCO because it only funds programs for one year leaving them unable to properly plan for the future.