Frank Kendall, the Pentagon’s acquisition chief, said Tuesday that he’s comfortable with a package of procurement reforms the House Armed Services Committee passed two weeks ago, largely because the final bill took a step back from strict language that would have required DoD to use modular open architectures on all of its major weapons systems.
Rep. Mac Thornberry (R-Texas), the committee’s chairman, still wants DoD to separate its large platforms from the technological components that ride atop them via open systems architectures and publicly defined interfaces. But the annual Defense bill his committee passed two weeks ago would require the department to use open systems only “to the maximum extent practicable.” An earlier version left no such wiggle-room.
Kendall, the undersecretary of Defense for acquisition, technology and logistics, said he was “delighted” by that change in particular, and that he did not object to any of the other four dozen acquisition reform provisions in the broader bill.
“Open systems have been part of our lexicon for decades now even though we haven’t always enforced it,” he said at the Center for Strategic and International Studies in Washington. “But it doesn’t work in every circumstance. If you look under the hood of a modern car, it’s completely packed with stuff and every component is tightly interwoven with other components. Some [weapons] designs are so integrated and dense and so constrained by things like space, weight and power considerations that you can’t realistically swap modules in and out, so we really need flexibility.”
Thornberry made the change after having released a public discussion draft of his acquisition reform proposals a full month before the committee began its deliberations, and Kendall said he and his staff worked closely with Thornberry and his staff via several meetings leading up to the markup of the 2017 Defense bill.
The Pentagon’s relationship with the Senate Armed Services Committee has been much less collaborative.
That panel, chaired by Sen. John McCain (R-Ariz.), is marking up its version of the Defense bill this week. Unlike the House, the Senate committee conducts almost all of its markup work in secret and does not release any of its legislative language until its members have approved a final bill. But the Senate version of the Defense bill is also expected to include dozens of provisions dealing with acquisition reform.
“I don’t know what the Senate’s going to do,” Kendall said. “We’ve had a few conversations at the staff level. We’re just waiting to see what comes out of the SASC this time.”
But Kendall, a 30-year veteran of Defense acquisition, says attitudes on Capitol Hill toward procurement reform tend to operate in cycles. Most of them, he says, have been well-intentioned, but ultimately not very helpful.
He said the current zeitgeist points toward less government oversight over Defense contractors and cautioned that Washington has gone down that road before.
“Despite a lot of data that shows the Defense acquisition system is doing a lot better, I’m sensing that we’re in a cycle right now that favors a laissez–faire approach: just remove the overhead and the bureaucracy, give industry the money and let them do the job,” he said. “I call that acquisition magic. We have tried that multiple times and it does not work. But we have a wave of that thinking right now, and it makes me nervous.”
He said his nervousness is informed by a series of historical analyses his office has performed in an effort to ferret out which policies have an effect on the cost of big weapons systems, for better or worse.
DoD’s analyses show a clear trend in which the difference between a weapons system’s expected price and what the government actually paid steadily crept upward, starting in the mid-1990s, during the last major push to reduce government oversight.
“There were various versions of this: Reinventing Government, which was largely about getting rid of government standards, there was Transformation, which was about being much more aggressive about how we did things, and there was Total System Performance, which said we should give industry complete responsibility for a program from birth to death. The thing that ran through all of those was a smaller role in the government’s management of its contractors, and things got worse, not better,” Kendall said.
Specifically, according to DoD’s figures, average cost growth during a program’s development and early production phases was about 5 percent in 1995, and steadily rose until it reached 9 percent in 2010. Kendall argued the department’s Better Buying Power initiatives reversed that trend by reintroducing “cost consciousness” as a priority for Defense acquisition managers.
“I have looked at this data in a lot of different ways and had my team go through it very carefully, because I didn’t want to brief something like this unless it actually showed reality,” Kendall said.
But he said he’s confident in DoD analyses which purport to show that programs’ average cost growth has dropped from 9 percent to 3 percent during the Better Buying Power era. During roughly the same timeframe, the department also seems to have done a much better job of beating the original cost estimates in some programs: In 2009, only 29 percent of the Pentagon’s programs were cheaper than expected by the time they entered the engineering and manufacturing development phase. By 2014, that figure had risen to 57 percent.
If the objective of Capitol Hill reforms is to reign in cost and schedule growth, Kendall said decades of data strongly suggest that previous legislative efforts haven’t made a perceptible difference. He pointed to other success factors that are more difficult to legislate, such as ensuring that the acquisition workforce is adequately sized and trained, leaving a consistent set of policies in place long enough to determine which ones work and which do not, and giving the workforce sufficient flexibility to tailor an acquisition strategy to the product or service they’re buying.
But thus far, Congressional efforts to fix acquisition have created a large set of conflicting priorities for the department, he said.
“We’re pulled pretty hard in a couple different directions,” he said. “On one hand we have people telling us to go faster, take more risks, fail fast. And then we’re told, ‘Why are you having that cost overrun? What’s wrong with you?’ That’s the nature of the beast. A serious attempt at acquisition reform would take a look at the whole structure of the Federal Acquisition Regulation on a clean sheet of paper. It would ask whether we really need all of this. Almost everything in there is well-intended, but it makes doing business with the government very different from doing commercial business. The reason the FAR is as thick as it is is that we keep getting mandates imposed by law.”
As to the most recent Congressional reforms, Kendall said last year’s largest change – giving the military’s service chiefs a greater role in the acquisition process – has proven to work well, at least in the early stages of its implementation.
“The chiefs have always been fairly influential, and to some degree, it’s been a choice as to how involved they want to be,” he said. “But we’re very happy with their increased involvement. They are our customers, they’re the people we’re doing all of this for. We want to satisfy our customers, and in particular, Gen. Mark Milley has gotten very involved in Army requirements.”
Indeed, Milley, the Army chief of staff personally chairs new weekly meetings of the of the Army panel which determines that service’s requirements and tells the acquisition community how urgent they are. That task has historically been delegated to lower-level officers.
In a report to Congress earlier this year, Milley asked for additional autonomy for the Army, including the ability to substitute its own weapons testing procedures and approval authorities for the ones that currently have to be approved by Kendall’s office.
“Those authorities go further than what I would be comfortable with,” Kendall said. “But none of the other service chiefs have taken that path.”