Running Out Of Money Really Can Produce Some New Thinking

Who would have believed it? The pressures of declining defense budgets, reinforced by the looming threat of across-the-board cuts to defense programs as a consequence of sequestration, have generated a wave of thinking from both inside and outside the Department of Defense about reforming defense acquisition. Some observers, including at least one associated with that institution, suggested that this might be the case. They referenced a statement attributed variously to Winston Churchill or physicist Ernest Rutherford: “Gentleman, we have run out of money. Now we have to start thinking.”

This is not to imply that there was no thought given to improving the acquisition system during times of plenty. In fact, the reform campaign has been almost continuous, going back to Robert McNamara and the attempt to discipline the acquisition process through systems analysis.  Since that time, reform efforts have oscillated between two visions: one which focused on increased government oversight and control to discipline the system, prevent fraud and abuse and extract the best price from industry; and the other which sought to loosen the constraints on the defense industry, even giving them greater responsibility for managing and integrating major programs. Surprisingly, wherever the pendulum was on the arc between these two visions, the cost of weapons systems continued to increase and schedules kept getting slipped.

The problem as seen from the White House was insufficient oversight and control of the defense industry, particularly by the Office of the Secretary of Defense. The solution was something called Better Buying Power (BBP). Now on its third iteration, BBP added more activities, reports, metrics and oversight to an already overburdened system. The results, to date, have not been particularly good.  Moreover, whatever programmatic savings were achieved, were offset several fold by the additional costs to support the increased oversight, particularly the additional auditors, contract specialists, testers and analysts the Pentagon hired.

Now, rather suddenly, lots of people seem to have gotten a new version of the acquisition reform virus. What makes this bug different is that it neither advocates for more intensive scrutiny and micromanagement of industry, nor does it propose a laisse faire approach. Instead, it seeks a greater degree of collaboration between government and industry, sensible oversight, and – dare I say it – a modicum of trust.

For example, the Air Force recently unveiled its strategy to “Bend the Cost Curve.” The key to this approach is an increased focus on continuous developmental planning in which all the interested parties, including private companies, research labs and the warfighters, collaborate on the critical early research and concept development prior to actually letting a competitive Request for Proposals.

Both the Air Force and the Navy are working on new approaches to IT and software procurements that would match acquisition timelines to the fast development cycles of these two sectors. The Air Force’s “Plugfest” program and the Navy’s Innovation Cell are both designed to facilitate industry-government communications, something sorely missing in an era of intensified oversight.

Eminent defense analysts are also jumping on the sensible acquisition reform bandwagon. The Defense Business Board published a study with smart recommendations for making defense a viable and even attractive market for innovative commercial companies. The Heritage Foundation’s James Carafano put out a four-point plan calling for: reducing civilian overhead;  implementing the consistent use of performance-based logistics; right-sizing the defense department’s massive global infrastructure; and building a results-based system for buying new equipment based on clear lines of responsibility and a reduction in wasteful processes. Michael O’Hanlon of the Brookings Institution identified five crucial reforms needed to save the Pentagon money, including much greater use of Federal Acquisition Regulation Part 12 authorities, scaled back oversight, application of expedited acquisition practices such as those employed during the past two wars, less use of massive indefinite delivery/indefinite quantity contracts for IT purchases and greater protections for commercial intellectual property

Apparently, some in Congress have caught the same reformist disease. This week, Mac Thornberry (R-TX), chairman of the House Armed Services Committee, rolled out his initial set of proposed acquisition reforms. Most of his recommendations focus on undoing the damage done to the acquisition system by prior reform efforts. As one expert testifying before the HASC aptly put it, “we have regulated and legislated ourselves into a black hole.” The critical elements of this first set of reforms is to align the acquisition system with market forces, allow flexibility in the choice of contract types and increase the speed at which commercial technologies are acquired.   Thornberry also proposes changes that give greater authority and responsibility to program managers.

The reform bug hasn’t fully infected the defense acquisition system or the bureaucracies that live off of it. Even as bright thinkers both inside and outside the Pentagon advocate greater access to commercial technologies and hence the use of less restrictive and burdensome acquisition practices, several defense organizations have sent their Inspector Generals on fishing expeditions to acquire data on commercial sales worldwide of parts and systems also being sold to the Pentagon. Some offices haven’t got the message that it is time to think.