The Army is moving forward smartly to implement most of the acquisition reform recommendations by the most recent committee to grapple with the process–the Decker Wagner acquisition report.
Principal Military Deputy to the Assistant Secretary of the Army for Acquisition, Logistics and Technology Lt. Gen. William Phillips said the service is implementing 63 of 76 recommendations by the panel.
For example, the service is working with the Office of the Secretary of Defense (OSD) to offer language to members of Congress to change the Nunn-McCurdy law.
The 1983 provision has been amended several times and is designed to reduce cost in weapons programs. It is triggered by a 15 percent program cost growth, which requires congressional notification. Program termination looms if costs grow beyond 25 percent, though the Defense Department can certify the program is vital to national security and must continue.
Phillips said the problem is that the Army has implemented Nunn-McCurdy on programs “where we probably shouldn’t have.” One such program was the Boeing [BA] AH-64 Apache helicopter, where the service bought an additional 56 aircraft. That increased buy swelled costs and triggered Nunn-McCurdy, so the service had to go through the process.
The Army went back and looked “at every hour” that went into the effort to get the Apache program through Nunn-McCurdy. “It cost us, I think it was about $11 million” Phillips said, including his time, the acquisition executive’s time and the processing.
“The one action that we took from that was to work with OSD and propose language to go over to the Hill to change what we perceive to be the Nunn-McCurdy law so we stop doing those kinds of actions on programs where it was never intended to be implemented.”
Other efforts include creating an organization to better manage service contracts worldwide, in pursuit of efficiencies, he said. The Army spends about $132 billion on contracting each year and 59 cents of each $1.00 is spent on service contracts.
Another area of intensive work stemming from the Decker Wagner report is streamlining paperwork, he said.
“You’ll see less paperwork going forward,” he said. The paperwork it takes to take an ACAT 1D program through is enormous, he said, and the service is working with OSD working to reduce the load. This is an area Defense Department acquisition lead Ashton Carter and Principal Deputy Frank Kendall are pushing hard.
“We have streamlined the amount of paperwork it takes to bring an ACAT 1D program through and certainly working to streamline the paperwork inside the Army as well,” Phillips said.
“Sometimes we use FAR and DFAR I think as a crutch, and we say it’s almost too hard or too complicated to get something through the staff at OSD or the Army we have all this paperwork to show that we’ve done due diligence, so we’re sometimes our own worst enemies,” Phillips said. We need to work within the system to deliver it quicker and I think we can.”
Phillips said the service recently briefed Carter on past year savings from the 13 program executive officers that report to him and the Army Acquisition Executive.
“We’ve saved to date about $7.4 billion and another $10.2 billion in cost avoidances,” he said. About $5 billion comes from Capability Portfolio Reviews and Configuration Steering Board actions.
“At the end of the day affordability and executability of that program remain absolutely essential,” Phillips said. That’s what OSD wants to know when the Army proposes programs: can you, as a service, afford it and do you have a strategy to deliver the program on the schedule you want.
Thus, industry plays a part. When the Army partners with industry, it wants to know how to help gain efficiencies and reduce costs.
For example, if procurement will be conducted over time, why not implement a multi-year strategy, he said. The service will seek authority from OSD to go to Congress to allow it to buy that equipment on a multiyear contract.
Some of that $7.4 billion in savings is directly related to multiyear contract savings he said.
For example, a Boeing [BA] spokesman told Defense Daily that the current multiyear contract, a five-year effort that would procure 191 Chinook helicopters and valued at more than $4 billion, “will yield a cost savings to the Army in excess of $400 million.”
Multiyear contracts produce benefits for industry as well, officials said at the time, providing security into the production schedule for five years, stabilizing the work force and suppliers (Defense Daily, Aug. 27, 2008).
The Army continues to push acquisition to be faster and more agile in the face of declining budgets and an uncertain future, Phillips said.