The House Armed Services Committee released the mark of its version of the defense authorization bill yesterday, with a number of its provisions taken from the acquisition reform bill sponsored by Chairman Mac Thornberry (R-Texas) and Ranking Member Adam Smith (D-Wash.). However, some organizations argue that portions of the language will only serve to further muck up an already slow and bureaucratic procurement system and increase long-term costs.
“What we’re really concerned about is that this is going to make changes that might look like you’re getting efficiencies in the short term, but you’re really going to continue to see long term costs, and you really aren’t going to be mitigating the major challenges that we’re seeing,” said Mandy Smithberger, director of the Project on Government Oversight’s (POGO) Straus military reform project. “What you’re really going to see is that it will be good for shareholders in the near term, but I don’t think it’s good for the [Defense] Department or for the defense industrial base.”
POGO on April 23 sent a letter to Thornberry and Smith outlining the provisions the organization supports and opposes. However, the National Defense Authorization Act language has actually worsened some of the problems in the original bill, Smithberger told Defense Daily on April 28.
For instance, one section would require the Pentagon to establish an office charged with determining what products are considered commercial items, which are subject to fewer restrictions. While POGO supports creating a centralized authority, Thornberry has added language stating that once a product is designated a commercial item and its pricing data is certified, the determination is permanent.
That could have negative consequences in the long term, Smithberger said. In the past, there have been cases where an item is deemed “commercial” even when the government is the only customer. Additionally, prices for items in the commercial market can change, and the legislation needs to reflect that, she said.
The Professional Services Council (PSC)—which represents the interest of federal contractors—generally supported the acquisition reform legislation but has concerns about several portions of the bill, including the commercial items language.
Even though Defense Department officials want to increase the use of commercial products, in recent years the Pentagon has backed legislation seeking to narrow the definition of what is considered commercial, an action that PSC believes would limit business’ ability to enter the defense market, Stan Soloway, the organization’s president and CEO, said in an April 17 letter to Thornberry and Smith.
Having one entity responsible for making commercial item designations will likely amplify problems, Soloway said in the letter. “There are thousands of commercial items determinations made each year and requiring they all be conducted by one office, disconnected from the customer base and the acquisition offices, will almost certainly result in procurement delays,” he said.
Further, the Pentagon has already made strides in training its contracting officers to designate commercial items. Rather than taking away that authority, Congress should assess where the Defense Department could improve that training, Soloway said.
One way to improve the scope of the legislation would be to limit the office’s responsibilities, allowing it to determine whether a product qualifies as “commercial” only when there is a disagreement among contracting officers, the letter said.
POGO continues to have issues with other portions of the NDAA, Smithberger said. The mark directs the Pentagon’s independent testing authority, the director of operational test and evaluation (DOT&E), to take “appropriate action” to ensure its activities don’t unnecessarily impact the cost and schedule of a program. However, testing is necessary to make certain that new weapon systems are safe and operating as expected, and undermining the DOT&E role could cause additional cost overruns and schedule delays, she said.
Another concern is language that could reduce the use of competitive prototyping, in which multiple contractors build and test prototypes before the Pentagon makes a production decision.
Competitive prototyping is great way to encourage competition, increase performance and decrease cost, and the government should be employing it more Smithberger said. “The reason that it hasn’t produced the results that we’d like to see is because the department hasn’t really embraced it.”
Not all competitive prototyping has been successful, said Todd Harrison, senior fellow for defense budget studies. The practice increases development costs and sometimes can lead to splitting the contract award among multiple vendors. One example of this was paying both Boeing (BA) and Lockheed Martin (LMT) to develop launch vehicles for the Air Force’s Evolved Expendable Launch Vehicle program and dividing the award between the companies.
“What ended up happening is neither company could get as far down the learning curve because they weren’t getting as many orders,” he said in an April 28 interview. The companies ended up merging their launch businesses, forming United Launch Alliance, which ended up negating the Pentagon’s efforts to increase competition.
The NDAA language is a step in the right direction and will keep acquisition officials from using competitive prototyping where it doesn’t make sense, he added.
HASC will mark up the defense authorization bill tomorrow in a marathon session expected to go until late at night, but Smithberger predicts few changes will be made to the acquisition reform piece until it moves to the Senate. There, Senate Armed Services Committee Chairman John McCain (R-Ariz.) could be key in revising the bill.
Some of Thornberry’s mark is similar to language that was eventually stripped from the Weapon Systems Acquisition Reform Act of 2009, which was co-authored by McCain while he was SASC’s ranking member, she said. “We’re hoping that he’ll recognize why he made those changes and why they are still important.”