Army asserts progress on acquisition reforms

An Army-commissioned study finds that since 1996, the service has spent more than a billion dollars per year on defense systems that wound up being cancelled. A...

By Jared Serbu
Federal News Radio

The Army on Thursday released a study of its acquisition processes along with the service’s plan for acting on most of its recommendations.

The report, commissioned by the Army secretary, was finished in January but was not released to the public until Thursday. It made 76 detailed recommendations, falling into four broad categories: A more collaborative requirements process, more resources to boost the competency of the acquisition workforce, smarter alignment of the Army’s various acquisition organizations, and better-informed risk management.

The recommendations are designed to address a problem the report describes in detail: large Army acquisitions have tended to dramatically exceed their predicted cost and schedule over the past decade, according to authors Gil Decker, a former Army acquisition chief, and Lou Wagner, a former head of the Army Materiel Command.

They found the Army wound up terminating 22 major defense acquisition programs over the past 20 years; 15 of those since 2001. And each year since 1996, the Army has spent at least a billion dollars per year on systems that were never completed.

But Army leaders say such dour conclusions are “old news,” and that they have been working to analyze and implement the report’s recommendations for months. Army Secretary John McHugh has concurred with 63 of the 76 recommendations.

“And there are 30 recommendations that are already under implementation,” said Heidi Shyu, the Army’s acting assistant secretary for acquisition, logistics and technology. “Secretary McHugh specifically asked, what are the problems and what are the issues we need to fix to go forward, instead of looking at spilled milk. I understand the milk’s spilled. I’m trying to lap it up, but it’s spilled. Figure out the best path forward, that’s what we’re focusing on.”

Shyu said some of the first recommendations they acted on surround the way the Army sets requirements for the systems it wants to build and buy. Currently, that process takes around two years all by itself.

“What happens is, the requirements folks dream up all the capability we’d love to have,” she said. “It’s like a kid thinking about everything they want in a big bag on Christmas day. That’s what’s happening, and to achieve that goal means you have immature technology that takes time to design and develop. Because you’re pushing the envelope to achieve the capability you want but you have immature technology, you have an optimistic schedule that you can’t achieve. Schedule slips, and it costs more money. That’s the spiral that we got into.”

One of the recommendations the Decker-Wagner study made to help end that spiral is for the Army to take a more collaborative approach to requirements.

“Don’t just write the requirement and throw it over the fence, but have a process where you have the requirements folks working with the resourcing folks working with the acquisition folks to design something that’s affordable and achievable,” Shyu said. “That whole process makes a lot of sense, and it’s how you should be designing a program from the beginning.”

She said the Army has already begun using that process on large military hardware programs like the Ground Combat Vehicle and the Joint Light Tactical Vehicle.

It’s a way of thinking the Army hopes will help it structure its major programs so that they can be built on time and on budget. The idea is to place requirements into different tiers early on in the process and rank them based on importance, letting decision makers trade off less important capabilities in exchange for time and cost savings as they go.

“What we’re doing now that’s different is looking at the trade space before we decide we want this capability,” she said. “A capability may not be achievable within the time frame we’re looking for. So what are the knobs we can turn to dial down our appetite? Understanding that is absolutely paramount to designing and developing a program that’s achievable and affordable and realizable.”

Other areas of the plan the Army plans to act on are better use of outside technologies. Shyu said avoiding duplication of work that’s already being done by industry is one way the Army can move away from a one-size-fits-all approach to acquisition.

“For very large programs, we follow a process that’s by law or by regulation,” she said. “Our hands are tied. But what we’re doing that’s different is looking at what industry has in terms of (independent research and development). Maybe somebody out there is already developing a system we don’t need to spend our investment money to develop. So we’re leveraging that opportunity to rapidly shorten the acquisition cycle.”

She said the Army also plans to make greater use of commercial off-the-shelf technology.

“For example, with processors, the commercial industry is already investing billions in that area. You can’t compete with them,” Shyu said “So you leverage what’s out there in industry. But there are areas in which the Army has to invest, because nobody else is going to, like ammunition and the things that we worry about, like protecting our soldiers and allowing them to accomplish their mission.”

The report also recommended that the Army expand its use of fixed price contracts where they’re appropriate. Shyu said that’s already happening across the Defense Department, but there are many cases in which fixed price contract types are unfeasible.

“In well-known, mature technologies, especially where you’re going into production, it’s fixed price. You already know the design and we’re trying to drive down the cost,” she said. “If you’re in a development phase and there’s unknown technologies there, it’s not realistic. Nobody’s going to bid that.”

There are 13 recommendations the Army decided not to implement. The service also released a memo Thursday detailing its rationale for rejecting those recommendations, along with its plan for acting on the ones it decided to adopt.

Tom Hawley, deputy undersecretary of the Army has been charged with leading the reforms. He said overall, the report gives leaders good framework for tackling the Army’s longstanding acquisition problems, but that the process will be a marathon, not a sprint.

And even in an environment where the entire government, DoD included, is looking for cost savings, he said the Army secretary is not concerned, first and foremost, with saving money in the acquisition reform process.

“It’s not that he doesn’t care about saving money, he does. But his focus is on making the system work better,” Hawley said. “This is a hugely complex enterprise. We’re spending a lot of the taxpayers’ money and we need to be fair to industry as well, because they’re putting a lot of money into things and the funding starts and stops. So it takes continuous examination and leadership by all hands to make sure the system works. It’s not something that you can put out in a directive and forget about. It takes continuous leadership and emphasis.”

For the action items that the Army hasn’t already begun to work on, secretary McHugh has given the service’s leadership specific deadlines to articulate a way forward. They’ve been told to report back within three months, Hawley said.

RELATED STORIES: Army heeding call for acquisition reforms

Army teeing up acquisition reforms

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