The House Armed Services Committee will tackle a defense acquisition reform effort, led by committee vice chairman Mac Thornberry (R-Texas) and ranking member Adam Smith (D-Wash.), which may include some combination of amending past rules so they work as intended and scrapping old rules in favor of starting from scratch.
HASC chairman Buck McKeon (R-Calif.) said yesterday that “we cannot afford a costly and ineffective acquisition system, particularly when faced with devastating impacts of repeated budget cuts and sequestration. The Congress, together with the Department of Defense and industry, must be willing to do the hard work to find root causes, look past band-aid fixes and parochial interests, and have the courage to implement meaningful, lasting reform.”
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| House Armed Services Committee vice chairman Mac Thornberry (R-Texas) will lead an acquisition reform effort. |
The panel of experts testifying at the hearing had no shortage of ideas for how to improve the current acquisition system. In response to a question from Rep. Rick Larsen (D-Wash.), Moshe Schwartz, a defense acquisition policy specialist at the Congressional Research Service, stacked on the table a copy of the federal acquisition regulations and its accompanying guidance, as well as the DoD-specific addendum and its even longer implementation guidance. Larsen noted the stack was well over a foot thick and asked how much of it was Congress’ fault.
Schwartz said the regulations weren’t inherently bad, but some are outdated, and some have been applied more broadly than they should have been and therefore harmed some programs even as they helped others as intended. Congress and the Pentagon should take a serious look at the regulations to weed out ones not needed anymore, or amend some so they are more narrowly focused.
Pierre Chao, a senior associate at the Center for International and Strategic Studies’ international security program, said during his opening statement that acquisition reform was somewhat complicated by the range of contracts DoD pursues–some are for goods and some for services, some are decades-long force modernization programs and others are rapid-acquisition programs for wartime needs, some are for development of systems from scratch and others are to acquire mature technologies.
“Reforms being done at one end of the system may actually be very counterproductive if applied to the wrong end of the system,” Chao said. “So avoiding the tendency to do one-size-fits-all rules and regulations will be important.”
All the witnesses seemed to agree that the individual program managers and contracting officers were not bad actors, but rather the system includes incentives to keep the status quo and spend the money allotted to a program rather than be innovative and look for the best ways to run a program.
Smith noted that issue during his opening statement.
“One of the greatest challenges in that is getting the incentives right so that the men and women who work in this have the incentive to be innovative, to find a way to do the thing that’s most cost-effective,” he said. “I think far too often the incentives in place within our personnel system and within DOD are to merely check the box – as long as you do the process right, regardless of the results, nobody can blame you. I think we need to better empower people at the Pentagon to make smart decisions.”
That check-the-box mentality can apply to individuals’ personnel records and promotions, the witnesses discussed, but Chao and Zakheim both noted it went deeper than that. If a program manager finds a one-time cost saving, for example, that program is then at risk of having its budget slashed by that amount the following year instead of being rewarded for saving the government money. Though Smith stood by the idea of Congress only allotting what a program actually needs instead of some higher amount, Zakheim argued that future budgets shouldn’t be slashed when a program manager finds savings, and instead the DoD comptroller should perhaps be given greater reprogramming authority so that–with congressional oversight–he can balance programs that are temporarily under budget and those temporarily over budget.
The “Lowest Price Technically Acceptable” model of contracting also drew a great deal of attention. Zakheim said there is a whole industry formed around bid protests, and defense lawyers have told program managers that the easiest way to ward off bid protests–which include a stop-work order until the Government Accountability Office can sort out the matter, throwing off program schedules–is to pick the lowest price.
Zakheim said Congress could intervene by making it harder for companies to protest, though that would not be a popular option. Requests for proposals could also be rewritten to put cost as a lower-weighted criteria, making other priorities–energy efficiency, lifecycle costs and other longer-term cost and quality issues–the focus of the competition. Contractors then couldn’t protest just because they had a lower bid than the winner.
Zakheim also suggested that DoD had a lot of latitude in defining what is “technically acceptable,” and so a rewrite of that definition could ensure that picking the lowest-priced bid still provided lifecycle savings the department needs.