Charging that the armed forces have failed to clean up their
act in weapons procurement, the Congressional Military Reform Caucus says the
time has come to strip them of that function altogether and turn it over to an
independent corps of experts. Legislation now pending would create a
centralized procurement agency for the Pentagon. It would be headed by the
Under Secretary of Defense for Acquisition, the official that Congress has long
sought to establish as an "acquisition czar."
The idea, says Sen. William Roth, Jr. (R-Del.), cochairman
of the Reform Caucus, is to "take responsibility for weapons acquisition
from the military and place it in the hands of professional men and women who
spend their careers designing and buying arms."
The reformers contend that the Department of Defense has
made little progress since 1986, when the Packard Commission called for major
action to rid the procurement process of waste and mismanagement. Senator Roth
says that "while certain structural modifications have been made, there
has been no real change in the way DoD does business. "
This accusation plays well with the public, which is
inclined to think the worst about defense procurement, but many officials and
analysts familiar with the process say the reformers are wrong. DoD response to
the Packard report went far beyond minor "structural modifications."
The services have cut headquarters manning, streamlined paperwork and reporting
channels for program directors, increased the use of competition in contracting,
eliminated most of the internal tinkering with program baselines, and improved
the qualifications of acquisition personnel.
In Air Force Systems Command, for example, program managers
now bypass AFSC headquarters on matters pertaining to their systems and report
directly to the USAF acquisition executive, Assistant Secretary of the Air
Force John J. Welch, Jr. Sixty-seven percent of the Command's contract dollars
were awarded on the basis of competitive bid in 1988, compared to twenty-six
percent in 1984.
For its part, Congress has not acted on the reform proposals
directed its way by the Packard Commission. Budgets are less stable than ever,
congressional micromanagement of programs has not decreased, and the laws
governing procurement remain as numerous and confusing as they were before.
The European Model
These considerations aside, might an independent acquisition
agency do a better job of providing weapons for US armed forces? A surprising
answer emerged from an AFA symposium on acquisition and logistics in late
April. The "European model" of centralized procurement is cited often
as an alternative to the US approach. Until recently, such comparisons were
subjective. No quantitative data were available.
To fill that gap, a leading analyst of defense procurement,
Dr. Jacques S. Gansler (author of "How the Pentagon Buys Fruitcake,"
June '89 issue of AIR FORCE Magazine), and Charles Paul Henning examined the
acquisition of fighter and attack aircraft by centralized agencies in Great
Britain, France, West Germany, and Sweden and compared them statistically with
acquisitions in the United States.
The study, Dr. Gansler told the symposium audience, does not
necessarily settle the question of which process is better. The answer varies,
depending on whether the criterion is cost, performance, or time elapsed
between a program start and the fielding of the new system.
When the yardstick is time or performance, the US approach
wins. American systems reach production and initial operational capability
about two years faster than European systems do. Performance scores (derived
from range, speed, maneuverability, payload, basing mode, target acquisition,
and fire control capability) show that US systems are, on the average, five
years ahead of Soviet systems and ten years ahead of those developed by the
The Footnote on Cost
As expected, raw measures of cost say that US systems are
more expensive. That changes, however, when such considerations as relative
performance and technology are factored in. It makes a big difference, Dr.
Gansler said, if aircraft are based on existing technology rather than pushing
the state of the art. American systems are more likely to use new technology.
"If you think about the [multinational European] Tornado, it is basically
[a US] F-111 ten years later," Dr. Gansler said.
The bottom line, Dr. Gansler said, must be the amount of
performance achieved per dollar spent. When the study plotted cost curves
against performance curves, US and European acquisition approaches achieved almost
"The US was required to stress, we felt, technological
superiority and getting [aircraft] into the field quickly, but our costs were
dramatically higher," Dr. Gansler said. The Europeans emphasized
"longer, more stable schedules and significantly lower cost systems at the
expense of lower performance. When they needed a higher performance system,
they could get that by buying it from the US."
Dr. Gansler noted that parliaments in European countries are
not as intensely involved as the US Congress is with details of the acquisition
process. Unlike Congress, the parliaments generally confine themselves to a few
long-term decisions at major milestones of an acquisition program. Their
actions seldom cause large annual perturbations. The Europeans, he said,
"use multiyear fiscal plans. They have an annual debate on the budget, but
it's the sixth year of the plan they're debating. We're usually six months into
the one-year [defense program] we're debating."
The bad news from both the US and European data, he added,
is that "we're getting less performance per unit of cost increase. Costs
are going up faster than performance is going up." He pronounced that
trend "alarming" and a clear message that "we need to do
AFSC's Commander, Gen. Bernard P. Randolph, had already
reached a similar conclusion and served notice that a "cultural
change" was in order. Preaching a philosophy he calls "Total Quality
Management," he hammers the message constantly to contractors and program
managers alike that they must do better on cost, schedule, and performance.
In recent months, General Randolph has concentrated his ire
on electronic countermeasures ("a disaster") and software schedules
("We've never made one on time"), but these are not his only areas of
concern. An AFSC study on aircraft engine bearings, for example, found that the
cost of scrap, rework, and repair in US firms was about fifteen percent of
sales, compared to less than three percent of sales for foreign producers.
"There is only one thing that's going to solve the
acquisition problem, and that is getting discipline into the system,"
General Randolph told the symposium audience.
General Randolph has told program managers in no uncertain
terms that their job is to manage acquisitions, not to carry the flag for the
systems being acquired. Advocacy, he says, is up to the using commands and the
Systems Command will concentrate its energies on such
problems as the development and maintenance of software, which General Randolph
identifies as "one of the greatest challenges the Air Force faces for the
1990s." Advancements in computer processing speed have increased the
demand for software, but productivity in software development has not kept
The requirements are astounding. Counting support software,
the Advanced Tactical Fighter will need between 4,000,000 and 6,000,000 lines
of code—more than forty times the software in the F-16A when it went
operational in 1981. "The B-2 has 200 computers on board, more lines of
code than the space shuttle, and it's the most complex airborne local area
network in the world," General Randolph said at the symposium.
By 1990, he said, the Air Force will be spending nearly $30
billion a year for embedded software—a tenfold jump since 1980. Quality and
defining the job correctly the first time will be critical. "Software
support costs over a fifteen-year cycle can be as high as eighty percent of the
original full-scale software development," General Randolph said. "It
costs thirty-six times more money to rid software of errors during operation
than during design, and eighty percent of errors are due to misunderstanding
and miscommunicating of users' requirements."
Sharing the Blame
"Our number-one problem today is poor contractor
performance," Lt. Gen. Mike Loh, Commander of the Aeronautical Systems
Division, told the symposium. "There's hardly a program out there where
we're delivering on schedule, at cost, and meeting our performance
This, he said, is not the fault of the contractors alone.
"We all share the blame. We are the ones who put industry on
contract." Consequently, ASD is trying to instill Total Quality Management
internally to ensure that specifications, requests for proposals, contracts,
and change orders are properly executed the first time.
Systems Command has consistently refused to give industry a
precise definition of what it means by Total Quality Management, preferring
that each company decide for itself how to improve productivity and quality. It
has, however, established a procedure to score contractors' results. Systems
Command has compiled Contractor Performance Assessment Reports (CPARs) on fifty
firms so far.
In six recent source selections at ASD, General Loh said,
"contractor past performance was a significant factor in all but two, and
they were early on, when we didn't have enough CPARs written."
Profit on the Table
Mr. Welch, who sees all of the Air Force's major procurement
action in his role as acquisition executive, chose "radical" as the
best term to describe the scope of changes that have taken place since the
Packard Commission report.
Acquisition responsibility has been consolidated at the
headquarters level, with direct lines of authority and communication between
program managers—more than 300 of them—said Mr. Welch. Operating and using
commands now develop requirements for weaponry and are the advocates for the
systems they say they need. Competition in contracting has increased sharply,
and, according to Mr. Welch, past performance has be come "critical and
primary" in deciding which contractor is chosen.
"[For] as long as I can remember, the Air Force has had
the best qualified acquisition personnel and the best acquisition system in the
Department of Defense," Mr. Welch said at the symposium.
Systems Command has established four levels of certification
for its military and civilian acquisition force. Level Four certification means
that an individual is eligible to manage a major program if selected to do so
by a board consisting of AFSC's product division commanders. Certification at
that level generally means the person has a master's degree, operational
experience, headquarters experience, and program experience at a lower level.
The capstone of professional development is study at the
Defense Systems Management College.
Improved management is essential to make systems less
expensive, Mr. Welch said, because "if you divide unit prices into
available dollars, we don't get what we need." Better management is also
in the interests of contractors that often fail to qualify for incentive awards
they could earn on Air Force contracts. "A lot of people are leaving a lot
of profit on the table because they aren't performing," he said.
On the proposal for a centralized acquisition corps, Mr.
Welch said flatly, ''I'm against it. I haven't found a single thing to support
it, whether I've looked domestically or internationally."
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