DoD leader raises an eyebrow over proposed acquisition reforms

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Both the House and Senate versions of this year’s Defense authorization bill include numerous acquisition reform provisions. But the Pentagon has serious reservations about a few of those measures, including one that would give the military’s uniformed leaders more control over procurement decisions.

The language granting more power to the service chiefs is part of the Senate’s version of the 2016 National Defense Authorization Act (NDAA), which the Senate Armed Services Committee approved by a vote of 22-4 in a closed session last Thursday. The text of the bill still has not been released, but the committee says it would “enhance” the role of the members of the Joint Chiefs of Staff, shifting some authority into the military services and away from top Pentagon officials.

One of those officials, undersecretary of Defense for acquisition, logistics and technology Frank Kendall told the Northern Virginia Technology Council Tuesday that he has serious concerns about the path the Senate appears to be forging.

He said the service chiefs already have plenty of ways to influence the acquisition process should they care to exercise them, and that weakening civilian oversight could have severe consequences for keeping programs on time and on budget.

“There’s a perception, which I think is inaccurate, that they have somehow been excluded from acquisition,” he said. “They have an enormously important role. They set requirements and tell us what the product’s supposed to do. They manage the personnel system. They control the budgets of their services. All of those things have a huge impact on acquisition. I do think they should be more engaged, but I don’t think they should be making decisions about what kind of contract to use or what kinds of risk mitigations we should be putting in place. I think those things should be left to acquisition people.”

Kendall told reporters Tuesday that he has begun to reach out to the service chiefs to address any complaints they have about inadequate inclusion in weapons system decisions, but said he believes that no new legislation is needed and that the Pentagon can address their concerns internally by, for example, encouraging top military brass to attend and participate in meetings of the Defense Acquisition Board.

Certify in writing any cost overruns

In comments to reporters last week, Sen. John McCain (R-Ariz.) suggested that his main objective in restoring some of the acquisition authority the chiefs lost as part of the 1986 Goldwater-Nichols Act was to curb cost overruns, such as the ones now being reported in the Navy’s Ford-class carrier program.

The second ship in that class, the future USS John F. Kennedy is likely to exceed existing cost caps by $370 million, Bloomberg News reported Tuesday. McCain said the legislation would deter similar overruns by making the military’s top officers both responsible and accountable for their services’ programs, starting with the newest carrier: the Chief of Naval Operations would need to personally approve any design changes that cost more than $5 million.

“The service chiefs will be directly responsible for the acquisition process,” McCain said. “If there’s a cost overrun, they will have to certify in writing that they are aware of it and that they are acting to resolve it in one way or another.”

In a fact sheet the committee distributed to reporters, staffers said the legislation would decentralize acquisition decision making to the military services “to the maximum extent practicable” and require the chiefs to sign binding “performance agreements” dealing with the budgets and requirements of their programs.

The more service-centric approach suggests a decreased oversight role for the Office of the Secretary of Defense (OSD), a retrenchment from the tact Congress took in the landmark Goldwater-Nichols Act in which lawmakers concluded that major procurement decisions should be made by civilian acquisition professionals rather than military leaders.

Kendall said diminishing the civilian oversight function now played by OSD would be a mistake.

“There are enormous pressures within a military service to be optimistic about a program, and everyone who’s ever had my job has had to push back against those pressures,” Kendall said. “We’ve had a lot of disasters in acquisition because the services believed what they wanted to believe. People think the program can be faster and cheaper and low-risk, they build those assumptions in to their plans, and they turn out to be train wrecks. That can still happen even with the safety of independent OSD oversight, but the odds of it happening go up pretty dramatically when you put things in the hands of the service chiefs.”

High-profile train wrecks

Kendall acknowledged that train wrecks have continued to occur from time to time even in the post Goldwater-Nichols era, when OSD was supposed to have been insisting on realistic cost and schedule projections from the military services before allowing programs to go forward. But he said several high-profile programs that have gone off the rails in recent years have been the result of OSD not being assertive enough — not because of a flaw in the oversight system itself.

“The Army wasted an enormous amount of money for the Future Combat System because it was incredibly overambitious in every respect, but also because it had a schedule dictated by the service chief that was totally unrealistic and forced the acquisition people to take so much risk that it was doomed from the start,” Kendall said. “That one was approved by OSD, but it wasn’t reviewed carefully enough. Another example is the F-35, which I’ve termed acquisition malpractice: the decision to start production before any real testing had been done. That also happened with OSD review, but I think the odds of something like that not being allowed to happen are much stronger when there’s a strong OSD voice and a strong acquisition executive.”

The House version of the Defense bill, which gained final passage in that chamber last week, does not make changes to the service chiefs’ role, but it would require them to draw up a report detailing the additional acquisition authorities they’d like to have and giving them a more explicit role in developing the acquisition workforce.

On the whole, Kendall said the House Armed Services Committee has worked collaboratively with the Pentagon in an open process; the final product is mostly centered on removing what parties on both sides of the Potomac generally agree are unnecessary bureaucratic hurdles and documentation requirements.

But the final House bill also includes language Kendall finds troublesome. For example, it would require DoD to create a “dual track” career path for uniformed members of the acquisition workforce, splitting their time between acquisition and operational tours. The objective is to make acquisition professionals more attuned to the on-the-ground realities of military operations.

Veto threatened

But Kendall said Defense acquisition is a poor fit for a “secondary” career path.

“It’s important for acquisition people to have a couple of tours in the field as operators alongside soldiers, sailors, airmen and marines so that you understand the realities of their existence. But if you try and split their time 50/50, I think you end up with someone who’s not really proficient at either one,” Kendall said. “If you had a choice between someone who’s always been a doctor and a doctor who’s spent half his life as a lawyer, I think you’d generally go with the one who’s been a doctor the whole time. These are professions. Operations is a profession with a lot of career fields, and so is acquisition. People need to get into a track and get as good as they possibly can at what they’re doing.”

The NDAA process is far from final. While the House has passed its bill, the Senate has yet to do so and both committees will need to reconcile their differences before sending a final product to the president.

And so far, both committees have taken overall funding approaches which have provoked the White House to threaten to veto the entire package, since both measures rely on the Pentagon’s overseas contingency operations account to sidestep federal budget caps in current law, but only for the Defense Department. There is no such workaround for the rest of the government.

“They’re giving us pretty close to what the president asked for, but they’re doing it by putting tens of billions of dollars into the OCO account, including a lot of things that ought to be in the base budget,” Kendall said. “That avoids sequestration for the defense accounts, but it doesn’t do anything for the rest of the things impacted by sequestration, and the president has made very clear that’s not something he can accept. There are a lot of things in the non-defense budget that are important to national security: the Justice Department, for example, the State Department and our intelligence activities. I don’t know where we’ll end up. We’ve been working under an enormous amount of uncertainty for several years, which has made planning very, very difficult.”

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