The defense management team from the Bush Administration may
not have long—a couple of months perhaps—to stake out its position on defense
procurement reform. If the administration's opening pitch is unconvincing,
Congress is likely to take matters into its own hands.
Over the past twenty years, the defense acquisition process
has been studied, investigated, and reformed more times than anyone can remember.
Congress, however, is still far from satisfied, and it plans to tackle the
problem with fresh vigor in the new session about to begin.
Some of the discontent stems from allegations last summer
that industry consultants were privy to inside information, which their
clients then used to unfair advantage in securing defense contracts. Even
before that, though, Congress felt that the Pentagon had been slippery and
evasive in implementing procurement reform measures.
Critics on Capitol Hill charge the Department of Defense
with failure to streamline and police the acquisition process sufficiently, and
they fault DoD for reluctance to consolidate control in the hands of a powerful
"acquisition czar." They chastise the Department for allowing the
services to push more programs than reduced budgets can support.
For their part, the services and the Defense Department
contend that they have made significant changes in the full spirit of reform.
They want a legislative cease-fire and time for the accumulated adjustments to
settle. There is virtually no chance that this argument will succeed. Congress
is in no mood to back off, not even temporarily.
That's unfortunate, because the reforms already in place
are working pretty well. Reporting channels for program managers have been simplified.
Cost overruns on major systems—increasing at a rate of fourteen percent a year
in 1981—have practically disappeared. Freestyle tinkering with system design
in mid-development, once a common practice, is no longer tolerated.
Nevertheless, diagnosticians in and out of government
prescribe strong medicine, so it may be forthcoming whether the patient needs
it or not.
All sorts of proposals are kicking around. One idea would
remove the military services from the procurement process and create an
independent acquisition agency to buy weapon systems for the entire
Department. Another scheme would pull the Defense Inspector General out of the
regular chain of command to give the fraud busters a freer run. Some activists
want to shut the 'revolving door" between the Defense Department and
industry. They believe the conflict of interest is insurmountable if military
officers and civilian officials with procurement authority can accept—or
return to—jobs with defense contractors when their government tours end.
Moderates in and out of Congress, however, warn that these
are radical measures and unwise. Such proposals make interesting speeches, but
there is not much chance that they will find their way into legislation this
term. A more likely issue for action—arcane as it may sound to the general
public—is the role of the Under Secretary of Defense for Acquisition.
This position was the brainchild of the Packard Commission
on Defense Management in 1986. Congress embraced the concept enthusiastically,
envisioning a strong acquisition czar with power to deal with intramural
squabbling over resources.
Richard Godwin was the first person to hold the new
position. He quit, saying he had not been given the authority he needed to do
the job. The tenure of his successor, Dr. Robert B. Costello, has been less stormy,
but he does not exercise enough power to satisfy Congress either. In introducing
an acquisition reform bill last October, Sen. Jeff Bingaman (D-N. M.) accused
the Defense Department of 11 making the Under Secretary dominant in approving
programs, but providing others with the primary responsibility for addressing
the funding of those programs."
(A compounding factor was that while both Mr. Godwin and Dr.
Costello had some background in defense work before they came to the
Pentagon, neither of them brought along a recognized reputation in the
systems-acquisition field. This limited their effectiveness, even on matters
where their authority was not at issue. A better-known veteran of the
procurement wars might have been able to squeeze more clout from the charter.)
One interesting indication of progress is that the focus of
acquisition reform has shifted. Today, the central issues are organizational,
concerned with streamlining the hierarchy and ensuring that it is squeaky
clean. A few years ago, the problems lay closer to the bone. Cost overruns were
eating the services alive. Baseline discipline was loose. So many people were
inserting change orders into the process that some systems were almost
reinvented at the same time they were being acquired. The time it took to
convert concepts into working weapons was increasing, too. Major steps in the
recovery, everyone agreed, were to stabilize the process and eliminate some of
The situation—at least the part of it that the Defense
Department can control—has improved in nearly all of these respects.
Acquisition officials readily admit that the process isn't perfect, but they
also reject the charge that sweeping change is necessary to correct
"There isn't any other acquisition community anyplace
in the world that's providing better equipment," says Gen. Robert T.
Herres, Vice Chairman of the Joint Chiefs of Staff. "There isn't any
that's providing equipment as good for the same price. So all those critics who
say we aren't doing very well need to keep in mind: compared to what?"
Secretary of Defense Frank C. Carlucci adds that "in
DoD, we have made the term 'cost overrun' disappear. For the last two years,
acquisition costs on major systems have been going down—not up. Those in a
hurry to overhaul our system need to reflect on the fact that we now have cost underruns."
The military establishment further points out that reform
was supposed to involve Congress as well as the services. While the services
may have fallen short here and there, Congress has imposed no real changes at
all upon itself. If anything, congressional micromanagement is worse than it
The amazing thing is that a process so laden with
"oversight" works at all. Industrialist-philosopher Norman R.
Augustine says that defense procurements are "controlled by 4,000 laws
and 30,000 pages of regulations, issued by seventy-nine offices and watched
over by more than 26,000 people in the audit and oversight process, and by
twenty-nine congressional committees with fifty-five subcommittees. In a
typical year, the Pentagon responds to 720,000 inquiries from Capitol
A staple of the reform movement has been to remove middlemen
from the acquisition chains in the services. Program managers now report directly
to Program Executive Officers (PEOs), who, in turn, are straight-wired on
program matters to their service's single acquisition executive. In Air Force
Systems Command, the commanders of the product divisions (Aeronautical Systems
Division, for example) are the PEOs for most programs.
Gen. Bernard P. Randolph, AFSC Commander, is PEO for a
handful of big programs, including the National Aerospace Plane. The next level
up from the PEO is the acquisition executive—in the Air Force, the Assistant
Secretary for Acquisition. Any program manager who feels a need to talk
directly with the acquisition executive is free to do so.
Except for matters central to their system acquisitions,
though, program managers and PEOs are still responsible to Systems Command.
That bothers some reform advocates who would like to further reduce the
organizational layering by putting the acquisition commands, such as AFSC, out
of business. Their favorite example is that of the controversial John Lehman,
former Secretary of the Navy, who abolished the Navy Materiel Command several
years ago. The Navy feels that it is getting along just as well without it.
The Air Force, on the other hand, has felt that its Systems
Command provides much worthwhile support and management to the program offices.
AFSC's acquisition strategy panels, for instance, are available teams of
experts in contracting, testing, product assurance, software, competition,
technology, financial management, manpower, and other areas. Beware, insiders
warn, of streamlining this specialized talent and assistance away from the program
manager. In any case, Air Force Systems Command has its own list of
achievements to point to in the age of reform.
AFSC has cut its headquarters manning by seventeen percent.
It is experimenting with a "reduced oversight" initiative, in which
contractors assume functions previously handled by Air Force personnel assigned
to the plants. If this works with the three contractors chosen for the test,
Systems Command looks forward to reducing oversight by fifteen percent or
In another action, AFSC is trying to speed up the source
selection process. In the past, ten months or more might elapse between the
release of a Request for Proposal and the eventual signing of the contract.
This interval now averages 140 days, and the goal is to get it down to 120. In
the best chest-thumping case so far, AFSC moved the Medium Launch Vehicle II
through source selection in 114 days. In aid of this, the command now limits
the size of the documents it sends out and says it will accept no proposal that
exceeds 100 pages.
Moreover, the Air Force has led all of the services on
baseline discipline. Once the basic concept and configuration of a program is
decided, everybody signs up to it. It is not impossible to change the baseline
after that, but neither can it be done so casually as it once was.
Acquisition discipline is also tighter at the top Pentagon
levels. Here, acquisition reform gets a boost from the Defense Department
reorganization directed by the Goldwater-Nichols bill of 1986. That
legislation created the position of Vice Chairman of the Joint Chiefs, the job
General Herres now holds. In that capacity, he is well situated to narrow the
gap between requirements and resources.
Most work on acquisition at the Joint Chiefs-Defense
Department level is conducted by three major bodies: the Joint Requirements
Oversight Council (JROC), the Defense Acquisition Board (DAB), and the Defense
Resources Board (ORB). The JROC was created several years ago to validate and
clean up requirements before a proposed system moved into the acquisition
cycle. General Herres chairs the JROC, whose members are the vice chiefs of the
If a requirement passes muster, the JROC sends the Mission
Need Statement on to the DAB, where system acquisitions are approved or disapproved.
The Under Secretary for Acquisition chairs the DAB, and General Herres is the
vice chairman. The services have representatives, as do relevant staff
agencies in DoD. If an acquisition czar is going to exercise clout, the DAB is
the place—barring more change in charters and organization—where he's going to
Whenever requirements and programs exceed the money
available to fund them—which is always—the action moves to the ORB, to decide
on funding priorities. This board has grown from an original membership of five
to a present total of about twenty, with still others participating by invitation
from time to time. It is chaired by the Deputy Secretary of Defense.
In his October remarks, Senator Bingaman cited
"artificial distinctions between program approval and funding" in
the Defense Department. General Herres and others believe that the Pentagon,
coordinating the work of the JROC, the DAB, and the DRB, has made real progress
in scrubbing requirements and programs and in aligning them with resources.
If Congress wants to reshape those connections, the change would fall somewhere
in the makeup and relationship of these three bodies.
William Schneider, defense advisor to the Bush campaign,
made quite a ripple, therefore, with his statement in October that a Bush
Administration response to smaller budgets would emphasize system stretchouts
rather than cancellations. He said that economical production rates are possible
in a stretchout if funding is stable. "The problem that has killed the industry
has been the annual appropriations cycle and the unpredictability of the
annual buy," he said.
The key to an economical stretch-out, he declared, is multiyear
procurement. Even if the annual buy were lower than program officials might
prefer, the size of it would be known and would not change. In support of Mr.
Schneider's point, multiyear procurement has done great things when the
Defense Department has been allowed to use it. The problem is getting Congress
"I think Congress is more comfortable with multiyear
procurements now than it has been in the past, especially if there's a better
consensus over resource aggregates," Mr. Schneider said. "When
multiyear procurements were initiated in the early 1980s, there was concern
about whether the administration was using [them] as a way of getting a weak
program started and having the Congress irrevocably committed to it."
Almost everyone who has a hand in micromanagement has some
legitimate—or legitimate-sounding, anyway—reason for their involvement.
Deputy Secretary of Defense William H. Taft IV explains: "There are reviews
and reviewers concerned with competition, with exotic technologies, with
operational testing, with the industrial base, with specific features of
military strategy and doctrine, and with a score of other genuinely important
matters—not to mention the purely political interests of the 535 members of
The acquisition process, he says, "visits and revisits
... decisions month after month and year after year, making a program's forward
progress depend repeatedly on favorable alignment of every independent-minded
star in the governmental galaxy."
Rep. Jim Courter (R-N. J.) was on the mark in 1986 when he
said that single-issue advocates persist in bogging programs down with
"extraneous provisions concerning how best to resettle homeless burros."
So long as the policymakers insist that all federal actions reflect due
concern for homeless burros or other special issues, micromanagement is likely
"The trade-off for unnecessarily tight career
restrictions on acquisition officials may well be quality and expertise
available to our nation's overall defense effort. Yes, we should study the
adequacy and enforcement of rules governing the career movement of people
between DoD and the defense industry. At the same time, we should realize that
what some call the 'revolving door' in fact benefits both DoD and the defense
industry and advances America's national security.
"DoD gains tremendously when we are able to recruit
defense industry professionals. They bring to us valuable business experience
and in-depth knowledge to help us be a demanding buyer of defense industry
products. Industry and our nation gain when military and civilian professionals
leaving government continue to apply their expertise in building a stronger
A few months after Mr. Carlucci said this, the new
administration was reportedly unable to persuade some industrialists it had
wanted to accept Pentagon posts, since service there might block their return
to industry later. It has been noted also that under the "revolving
door" rules touted by some, "Mr. Reform" himself, David Packard,
might not have served in the Defense Department.
As one former official with top credentials in these
matters says, "The crooks and the acquisition process are separate
The reformers will be better pleased with their results if
they can keep that in mind.
The next Daily Report will be Tuesday, Feb. 19, due to the Presidents Day holiday.
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