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 October 2005 

Lt. Gen. Lawrence P. Farrell, Jr., USAF (Ret)

Defense Acquisition Reform: A Case of Déjà Vu

October 2005

by Lt. Gen. Lawrence P. Farrell, Jr., USAF (Ret)

Acting Deputy Defense Secretary Gordon England by the middle of next month is expected to endorse an “action plan” that is intended to address the Pentagon’s acquisition problems.

A proposed acquisition-reform blueprint will result from the work of an expert team that was hand-picked to be part of the Defense Acquisition Performance Assessment (DAPA) project. England chartered the group to consider every aspect of acquisition—including requirements, organization, legal foundations (such as Goldwater-Nichols), decision methodology, oversight, checks and balances.

Once England approves the recommendations, they will be sent to Congress in late November.

DAPA faces a tough challenge. Currently, more than 80 new major weapon systems are under development, with a combined cost growth of $300 billion and total acquisition cost of nearly $1.5 trillion.

A recent Government Accountability Office study of 26 major acquisition programs suggests the top five programs have nearly doubled in cost during the last four years—in fact, skyrocketing from $281 billion to $521 billion.

The trend is not abating—estimates of cost growth and development time of these same five programs grew 14.3 percent and 5.5 percent, respectively, in the past year alone, according to GAO.

After more than 20 years of numerous attempts to improve the acquisition system, the perception is that no reforms have addressed systemic weaknesses in structure, process and governance of major weapon systems development.

DAPA cites a number of issues that prompted the Defense Department leadership to take action. One is the perception that the military is not keeping up with a changing world—buying the next generation of what we already have today. Another is a “conspiracy of hope” created by an industry must-win mentality and service advocacy for scarce resources.

DAPA also is concerned about “program demagogy” that results from valuing sunk costs more than future options. Further complicating the Pentagon’s ability to manage resources is the practice of stretching out funding to support more and more programs, each at its marginally inefficient rate. The problem of “ever-escalating requirements” also has plagued many defense programs.

NDIA and industry representatives had an opportunity to testify recently at a DAPA public hearing. DAPA’s leader is retired Air Force Lt. Gen. Ronald T. Kadish, who ran the Missile Defense Agency before retiring from active duty.

Panel members include Gerald W. Abbott, professor of industry studies at the Industrial College of the Armed Forces; Frank J. Cappuccio, vice president and general manager of advanced development programs at Lockheed Martin Aeronautics; retired Air Force Gen. Richard E. Hawley, an independent defense industry consultant; retired Army Gen. Paul J. Kern, former commander of the Army Materiel Command, and Donald R. Kozlowski, aerospace industry consultant.

The consensus among top industry leaders is that DAPA faces a huge challenge because it has to fix problems that have existed for many years and have been pinpointed by a plethora of blue-ribbon commissions and reports.

The issues DAPA is addressing fall into the category of “lessons we had already learned.” Industry officials who testified at DAPA noted the problem of diffused acquisition authority, which often leaves program managers without the proper tools and authority to do their job. This also makes it difficult to hold anyone accountable when problems arise.

As we have reorganized and fixed problems in the past, we appear to have arrived at an acquisition system with inconsistent and inadequate levels of review and oversight, with “distributed” accountability and a system that lacks critical skills in systems engineering and integration.

The recommendations offered to DAPA in recent hearings include many of the same suggestions that have been offered in years past: Stabilize program funding, improve cost estimating and requirements management, bolster the acquisition corps by creating an independent systems engineering organization within the Defense Department, encourage early industry participation, effectively use performance-based contracts, better recognize risks, and provide proper incentives to contractors. Also, the GAO study referenced above listed three items we need to get right: technical maturity, design stability and stable production processes. These conclusions, again, are not new.

One suggestion well received by DAPA officials is the notion that acquisition accountability should be aligned with the authority that approves requirements and allocates resources. In other words, each service must have oversight authority, execution responsibility and control over resources to get the job done. This is consistent with Title 10 legislation that requires each service to organize, train and equip its forces. It is also in line with a recommendation of a recent report by the Center for Strategic and International Studies, titled “Beyond Goldwater-Nichols - Phase 2.”

It is worth noting that during the past two decades, the Defense Department has developed acquisition processes that have worked well. Consider: analysis of alternatives for major acquisitions, evolutionary acquisition and spiral development, as well as a code of ethics and standards. Many of the current problems stem from having walked away from what worked well in the past.

What comes through loud and clear from the work DAPA is doing is the need for a disciplined approach to acquisition. Also, the alignment of authority with responsibility will help to ensure accountability—an essential characteristic of effective military organizations.

The inescapable conclusion is that we know how to do it well, and indeed there are programs that are still well managed. The question is whether the procurement system can muster the necessary resolve to get its groove back.

Please e-mail me your comments to Lfarrell@ndia.org.

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