DoD stuck with too many reforms and not enough staff

Congress is giving the Defense Department too many acquisition reforms and not enough employees to do the job, says one top Pentagon official.

The leaders of the House and Senate Armed Services committees committed to reforming the bloated defense acquisition system a couple of years ago. So far they have devolved acquisition power to the military service chiefs and reduced paperwork burdens for program managers.

The 2017 defense authorization bill takes things a step further by splitting DoD’s chief acquisition officer position in two and putting an emphasis on fixed-price contracts. The bill does that all while mandating reductions in the Senior Executive Service and in headquarters staff.

Peter Levine, the acting defense undersecretary for personnel and readiness and former deputy chief management officer, says that puts DoD in a Catch-22.

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“When you look at is [DoD] too top heavy, perhaps one of the reasons we are too top heavy is we are trying to do too many things at the same time. You can say the same thing about acquisition legislation. If you have 50, 70, 90, 100 different acquisition provisions in a single National Defense Authorization Act, every single one of those provisions has to be administered by somebody and it’s hard then to see how you complain that you have too much headquarters [staff], when it’s the headquarters units that’s going to have to write the legislation that implements those,” Levine said, during a Dec. 12 speech at a National Contract Management Association event in Washington.

The 2017 bill as passed by the House and Senate has about 100 provisions on acquisition policy. At the same time, it limits the number of civilians assigned to the Office of the Secretary of Defense to 3,767. It shrinks the number of personnel on the Joint Staff to 1,930 and mandates that no more than 1,500 may be active duty military. That’s all while DoD is implementing a self-imposed 20 percent cut on headquarters staff by 2020.

“You’ve got so many of these [reforms] at the same time there’s only so much attention that the senior leadership has. … Too much legislation can add overhead in the same way that too much regulation can,” Levine said.

Levine criticized some of the reforms placed in the bill, most notably the split of the defense undersecretary for acquisition, technology and logistics (AT&L) position.

“I don’t know what problem splitting AT&L was trying to solve, so you’ve got that from the beginning, where’s the problem? I don’t know why this is a solution to a problem. I don’t know what it’s expected to improve,” he said. “On the other hand, I don’t know that it will hurt anything particularly as long as we keep our acquisition systems under single leadership, so we don’t try to split the acquisition funding from the development funding, which would be completely impractical. You’d have two masters for a single program. As long as we don’t do that I think we can still run the systems with two undersecretaries.”

One of the new positions will be an undersecretary of research and engineering. Levine said that position will have trouble establishing itself because the space is already owned by the Defense Advanced Research Projects Agency and the service laboratories are very protective of their authority and won’t want to give it up to a new undersecretary.

Lawmakers say the bill frees the research and engineering undersecretary to focus on innovation, while the business management secretary will deal with day-to-day acquisition.

The research and engineering “position builds upon and updates the old USD R&E, a once-powerful position that helped to lead the development of stealth, precision guided munitions, and other advanced capabilities as part of the so-called ‘Second Offset’ strategy during the Cold War,” a Senate press release on the NDAA stated.

Levine also took a swing at the NDAA’s penchant for fixed-price contracts. The bill establishes a preference for fixed price in contracts more than $5 million.

“The reason members of Congress look to fixed price contracting is what they are looking at is programs, not contracts, and they are looking at programs with dramatic cost growth,” Levine said. “Cost growth to them is essentially ‘You broke your promise.’”

Levine said fixed price contracts should only be used when enough risk is squeezed out of the contract that it can be used. One of the risks in a contract is that the government doesn’t know exactly what its building. It might be a new type of plane or a new innovation to solve a known problem. If DoD doesn’t know what it’s building it doesn’t have a fixed performance to measure the contract against, and therefore can’t come up with a contract price.

Proponents of fixed price contracts look to the negative side of cost-plus contracts.

“The whole culture of cost contracts cuts across everything.  … Cost contracts are almost a drug,” said a a Senate Armed Services Committee staffer. “Really, what has happened over the course of decades is that the Department of Defense’s dependence on [cost contracts] has created some really, really negative incentives for the contractors and for the government.”