Provisions to slow the growth of operating and support costs in acquisitions programs may be part of the reforms coming in the 2017 Defense authorization bill.
During a Feb. 3 House Armed Services Committee hearing, former Defense Department Comptroller Robert Hale said controlling O&S spending is so important it should be “the next frontier for acquisition reform.”
At the end of the hearing Committee Chairman Rep. Mac Thornberry (R-Texas) told Hale he received his message loud and clear on O&S costs and how to arrest them.
O&S consists of sustainment costs from the deployment of a system through the end of its use. Those costs can include anything from fuel to maintenance, modernization to manpower and depot maintenance to supplies.
According to Hale, those costs are rising in all the services and military departments.
“Operating and support costs … if you adjust them for inflation, take out wartime or [overseas contingency operations], they’ve grown by 20 percent since the year 2000,” Hale said. “At the same time the size of the military force as measured by the number of active duty personnel has declined by 4 percent.”
Hale said part of the reason for the increase in costs is program managers need to better consider tradeoffs between requirements and costs, particularly O&S.
“If you’re a program manager early in the life cycle of a weapon you want to get this system going,” Hale said. “The key to that is to keep the acquisition costs reasonable, so that it gets through the early stages. The operating and support costs are five to 10 years out there; that’s somebody else’s problem … they [the costs] tend to focus more on the acquisition. I think we need pressure from within the department to pay more attention.”
Hale said when he was in DoD he did not see the same interest in O&S as he did in acquisition. He also admitted that O&S costs are hard to estimate.
Hale said Congress can help drive down the costs by holding more hearings about affordability caps with a focus on O&S costs. He also suggested using reporting requirements to “shine a spotlight” on O&S costs.
Hale’s recommendations weren’t the only ones to have resonance during the hearing.
Former Director of Cost Assessment and Program Evaluation Christine Fox said DoD is not taking enough risk in its development.
Fox recommended creating a new category of acquisition programs that push the boundaries, knowing full well the cost and schedule risks.
“This is an acceptable approach only if there is an agreed upon need and we are candid in our assessments of the risk,” Fox said.
The risky acquisitions would be used to counter adversaries who are able to field technologies faster or more efficiently than the United States.
Former Vice Chairman of the Joint Chiefs of Staff Adm. James “Sandy” Winnefeld Jr. added to Fox’s recommendation by suggesting discretionary funding for DoD to accelerate the development of programs once the requirements have been set.
“A requirement hits the street, now we’ve got a budget for it and because of our cycle process it’s one-and-a-half or two years before the thing really gets money,” Winnefeld said. “If there were a pool of money where we could accelerate development in that space you might actually bring some of these programs forward significantly in time with relatively low cost.”
Thornberry has been holding hearings on defense acquisition reform to figure out what ideas would be best to put in the 2017 Defense authorization bill.
Last year, the authorization act lessened some of the paperwork burden on program managers and gave more milestone decision authority to the military service chiefs and secretaries.
This year, Thornberry said he wanted to encourage more experimentation and prototyping. During a Jan. 13 speech he said he wants to foster experimentation to make sure only mature technology goes into production.
“To do that a culture shift is needed, Thornberry said. “We have to accept or even expect regular, small failures in order to have greater success.”
Thornberry likely will release an acquisition reform bill in late March so stakeholders can make comments on the suggestions. Lawmakers then will fold that bill into the Defense authorization legislation.