The Jury Is Still Out On Better Buying Power

Yesterday, in an article on the Defense One blog, Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L), Frank Kendall, took a small, really premature, victory lap for his signature program, Better Buying Power. BBP is a set of policies intended to change the entire defense acquisition system from requirements generation through life-cycle support, contract management and work force professionalism. As Mr. Kendall described it, “The BBP process is analogous to the industrial “Pareto Chart” technique for identifying the most frequent and/or costly defects and addressing them as a priority.” BBP’s goal is to improve the nation’s acquisition of defense goods and services.

Secretary Kendall started his comments by declaring the four-year BBP program a qualified success. Why?  Because many of the policies are taking hold in the bureaucracy. I am not sure what his evidence for this is, but even if true it is clear that this is a mixed blessing, at best. What many in the acquisition bureaucracy appear to have taken away from BBP is that the only thing which matters is cost. Hence, defense contracting has seen the proliferation of awards based on the standard of Lowest Price, Technically Acceptable. What industry – and even some defense consumers – would tell Mr. Kendall is that this stifles innovation and creates a race to the bottom. Honestly, for someone with a reputation for requiring the facts, Secretary Kendall is relying on little evidence to support his contention that BBP is even a qualified success.

As I have written here earlier, by some of BBP’s own metrics, the policy is failing. BBP emphasizes more competition as a means to improved performance and reduced price. But the Pentagon’s own data shows that BBP hasn’t resulted in more competition. Then there is a question whether competitions actually save the Pentagon money or improve the quality of goods and services procured. There are significant costs associated with competitions, both to the government and the companies. Too many competitions occurring too frequently can result in excessive indirect spending and also a reduction in the time available for the winning company to recoup its costs, make a profit, and provide the government good value for its money.

Secretary Kendall does identify one approach with a proven record of saving money and improving outcomes. This is Performance-Based Logistics. A PBL-based sustainment contract focuses on output metrics such as platform or system availability for a fixed price. Industry is incentivized to improve its performance and the reliability of its system or platform in order to increase its profits. Despite his nice words, the needle on the number of PBL-based contracts has barely moved on Mr. Kendall’s watch. This does not constitute a “qualified success.”

The Secretary’s one example of the successful application of BBP to acquisition of a platform, the new VXX Presidential Helicopter, is not a good one. First, this is the restart of a program canceled in 2009 because of rising costs due to runaway requirements imposed by the government. In the words of T. S. Garp, “it was pre-disastered.” Second, the Pentagon’s new request for proposals was written in a manner that discouraged all potential contestants save one to respond. The current offering by Sikorsky will be a great platform, but this hardly makes the VXX a poster child for BBP. Third, it is such a small program that it hardly moves the dial one way or the other. One of the problems Mr. Kendall faces is that, as a result of the shrinking defense budget, there are fewer new program starts to which the principles of BBP can be applied and its merits proven.

If BBP truly was about fixing the most frequent or costly defects in defense acquisition it would have to start by taking a big stick to AT&L, its policies, procedures, regulations and habits. How about reducing the number of audits to which companies are subjected? Or possibly reining-in AT&L’s ongoing and ultimately counterproductive efforts to acquire certified cost and pricing data on commercial items? One of the most frequent and expensive defects of the acquisition system is the effort by both the Executive and Legislative branches to try and improve the system’s efficiency by continually adding more regulations and oversight to an already overburdened acquisition system. The simple way for BBP to have an effect is for it to do less.