Senate Bill Tackles Acquisition Problems on the Front End

— A bipartisan bill introduced in the U.S. Senate could help the Pentagon avoid some of the huge cost overruns that have long plagued its biggest acquisition programs, but the proposed remedies also could come at the expense of innovation, a panel of defense acquisition experts told the Senate Armed Services Committee during a March 3 hearing.

“Overall this bill is a step in the right direction,” former Pentagon acquisition chief Jacques Gansler testified. “But we need to recognize that a law doesn’t change the system, and we need to be careful not to go too far in the other direction.”

Too many Pentagon acquisition programs have become mired in cost overruns and schedule delays that are the result of unreasonable cost and performance expectations, fluid program requirements and the use of unproven technologies, said Sen. Carl Levin (D-Mich.), chairman of the Armed Services Committee. To begin fixing these problems, Levin and the committee’s ranking member, Sen. John McCain (R-Ariz.), introduced Feb. 23 the Weapon Systems Acquisition Reform Act of 2009, which the committee met to discuss.

The bill would attempt to establish more realistic cost estimates and program requirements for weapons systems by creating two new independent oversight positions. It also would require more prototyping to ensure technologies are ready before production is approved, and it would maintain competitive pressure through the program cycle.

The Pentagon’s 95 biggest acquisition programs on average have exceeded their research and development budgets by 40 percent, seen their acquisition costs grow by 26 percent and have fallen nearly two years behind schedule, Levin said, citing a 2008 U.S. Government Accountability Office (GAO) report. Those programs are a collective $295 billion over their original budgets, he said.

Major space programs are not exempt from these troubles. Levin cited an overly optimistic schedule for the Air Force’s Advanced Extremely High Frequency satellites, and McCain said the software glitches that Lockheed Martin is working to fix on the Space Based Infrared System satellites have added more than $1 billion to the program.

“A train wreck is coming,” McCain said. “We are looking at a decrease in defense spending over the next 10 years, and our ability to provide for national security will be compromised.”

The Levin-McCain bill would seek to put more of these programs on sound footing by making organizational and procedural changes at the Pentagon.

The bill would create a director of independent cost assessment at the Pentagon to provide senior Defense Department officials with unbiased cost and schedule information; reduce the use of immature technologies by requiring Pentagon acquisition programs to make greater use of prototypes; and re-establish the position of director of developmental testing as a hedge against programs adopting unrealistic performance requirements. The bill would also seek to reduce the number of costly changes made in the middle of programs by imposing new guidelines for ensuring requirements are well understood before approval is given to begin major development and production work.

Michael Sullivan, the GAO’s director of acquisition and sourcing management, in his testimony before the committee outlined a list of acquisition problems that plague the Pentagon. He said at the strategic level, the processes the Pentagon uses to develop and procure weapons systems are fragmented, placing too much emphasis on giving each service what it wants, instead of developing the systems that would most benefit the Defense Department as a whole. At the program level, too many programs are approved without sufficient knowledge about the time, funding, people and technologies needed to execute them. Rather than limit the number of programs or adjust requirements, the department often chooses to push the real costs of these programs into the future, Sullivan wrote.

Sullivan called the Levin-McCain bill a “very healthy step,” saying some of the proposed initiatives could instill more discipline into the critical front end of the acquisition process.

Gansler and Paul Kaminski, also a former undersecretary of defense for acquisition, technology and logistics, were asked to testify on the causes of and solutions to the Pentagon’s acquisition troubles, and both supported the Levin-McCain bill. Gansler said one major contributor was the loss of experienced acquisition professionals that accompanied post-Cold War budget reductions.

There is no silver bullet to fixing the acquisition problems, Gansler said; rather, it will take a broad set of initiatives to change what systems the Pentagon buys, how it buys them, and how it manages them.

Kaminski provided recommendations for fixing the acquisition problems in his written testimony, which included doing more early systems engineering work, giving program managers more accountability and authority, and reducing long development timelines for weapon systems. While the Levin-McCain bill’s focus on processes and oversight is important, more emphasis should be placed on the people that make the system work, Kaminski said.

“We need to focus on getting our people the training, education and domain experience,” Kaminski said. “And it would be worth looking at how to attack these long development times that are just killing us.”

Another major change the Levin-McCain bill would put into place is making cost a consideration in the Pentagon’s requirements process, which it currently is not. All of the panelists agreed this is a necessary change.

Michael Wynne, a former secretary of the Air Force, said while reining in costs is important, putting more pressure on programs to use technologies that are fully proven could harm innovation.

“The question is how do you balance the natural tension between innovation and satisfying warfighter requirements?” Wynne said. “One of the strengths of this bill is in the commodity procurement area, where you have the highest technology readiness levels. The concern is when you’re trying to stretch the state of the art to meet a high technology goal. It’s going to introduce a lot of uncertainty into the outcome, and program managers are going to be weary of pushing innovation.

“I only worry that there are so few sources of innovation in the , of which the Defense Department is the largest. I worry about any activities that tend to cap or slow down American innovation.”