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Pentagon Readies New Acquisition Fixes: Will They Work?

Posted by Sydney J. Freedberg Jr. on


cutting-dollar-red

[UPDATED with Congressional staffer comment] WASHINGTON: The Pentagon’s coy about the next iteration of its Better Buying Power initiative, but it’s clear that “BBP 3.0” is coming. We even have some hints of what will be in it:

But what will BBP 3.0 really mean for acquisition reform and for the defense industry? And have the first two iterations done as much good as the Defense Department says they have?

At the very least, BBP 1.0 and 2.0 haven’t made things worse, said Loren Thompson, a well-connected defense consultant and analyst. Yes, a lot of defense contractors are complaining – but that’s probably a good sign, he said.

“A lot of the unhappiness with Better Buying Power in industry simply reflects it is on the other side of the bargaining table from a demanding customer,” Thompson told me yesterday. “If industry was really happy with the Pentagon buying process, that wouldn’t be good news for taxpayers.”

That said, there are distinct limits to what the Pentagon can accomplish on its own. “People like Frank Kendall genuinely want to wring waste out of this system and make it more professional, but they are hamstrung by all of the political constraints within which they function,” Thompson said. “All these rules for improving acquisition processes don’t mean much if the political system is wracked with so much uncertainty that they can’t be implemented. [For example], we already knew multi-year contracts save money —  but if the contracts are broken halfway through, we’re not going to have any beneficial result.”

Figuring out that kind of impact from hasty budget cuts, in fact, looks like it will be one part of BBP 3.0, according to hints dropped by the assistant secretary of Defense for acquisition, Katrina McFarland, in a talk to the National Defense Industrial Association last week. While she declined to give any details, McFarland did say BBP 3.0 would probably try to improve the DMAG, the Deputy Secretary’s Management Action Group responsible for budget drills, in response to “the last six months of going through DMAGs and not being fully prepared to understand the impacts of what those decisions are.”

McFarland also told the defense industry-dominated audience that the Pentagon wanted to work with them more closely in the future. That may well include giving industry a window into earlier stages of the military’s often arcane requirements process, so companies can get a better sense of what the armed forces are likely to ask for in the future and can direct their own planning and R&D accordingly. Requirements are crucial because, except in urgent cases, the Pentagon can’t buy anything without one. But, McFarland warned, the converse is not true: Even though someone was gotten a requirement formally approved and on the books, “the government may never ever actually buy this.”

As long as industry goes in armed with this understanding, though, giving them more insight into emerging requirements can help both them and the military – maybe.

“I am not sure that bringing in industry earlier to one of the few processes that is even more dysfunctional than the acquisition process is going to be much help,” said American Enterprise Institute acquisition expert Bill Greenwalt. (Greenwalt wrote on acquisition reform writ large for us just this morning). That said, he went on, because requirements are written by military officers and civil servants (many retired military themselves) who have great knowledge of what the armed forces would like, but not of what real-world science and engineering can actually do, more industry input could provide a much-needed dose of reality.

“The requirements problem has [focus on] what is specifically unique to defense and that cannot be met by the outside commercial marketplace,” Greenwalt told me. The reform efforts of the 1990s did a lot to cut back impractical, unaffordable requirements and force the military to look for commercially available solutions first, he said. Since then, though, the weeds have grown back and “unique military specifications have spiraled out of control” again, sabotaging such programs as the canceled presidential helicopter.

Thompson agreed: “Perhaps the quintessential example of this is the presidential helicopter, which had so many requirements attached to it that, in the end, there was no helicopter in the world that could do the mission.” (No one mentions it publicly at the Pentagon, but many of those requirements came from the Secret Service, via the Navy.)

But while over-ambitious requirements can tie down a program with too much cost, complexity and time, the irony of acquisition reform is that the reform efforts themselves can do the same thing. “Organizations and activities set up to improve acquisition can gradually become a drag,” said Thompson, creating yet another costly layer of bureaucracy.

The last thing the Pentagon wants is for Better Buying Power to go down that same self-defeating road. So far, said Greenwalt, “BBP has not been a coherent package.” Instead, he said, its different sub-initiatives have sometimes pulled in contradictory directions. That’s the result of  what he called “philosophical tensions” in the Defense Department over how much to rely on commercial industry, how to incentivize contractors and how much to give industry leeway to innovate as opposed to enforcing compliance with regulations.

“BBP 3 could clear up some of these issues, but if the past is any indication it will likely just bolt on a few new focus areas,” Greenwalt told me. “I assume whenever they come up with a new idea they will just layer it on to the old versions.”

[UPDATED: A Congressional staffer told me he was more optimistic that Better Buying Power wouldn’t go down this well-worn path, because unlike past reforms, its focus is not on rules, regulations, and organization charts. “This is not ‘acquisition reform’ in the traditional sense,” the staffer said. “This is more of a ‘continuous improvement’ effort” — a common practice in the private sector — “focused on improving the culture and decision-making in the acquisition workforce.”

The hard part is getting a jaded workforce to buy in to the change instead of just trying to wait it out. By issuing semi-regular updates to Better Buying Power, “they’re trying to say, ‘we’re here to stay, and you’re going to have to buy into it,’ the staffer said.

The problem: Kendall and company at the Office of the Secretary of Defense level “don’t control the all of the incentives that drive decisionmaking in the acquisition workforce,” the staffer went on. The four armed services control promotions of most acquisition personnel, for example, while Congress sets such fundamental rules as when appropriated funds expire — which tends to drive inefficient rushes to spend whatever’s left of the budget before the end of the fiscal year.

Ultimately, said the staffer, “the key is what Congress does — and there’s a lot of momentum in Congress.” There’s a full hearing of the full Senate Armed Services Committee coming up soon, for example, and SASC seems to be buying into the House Armed Services Committee acquisition reform effort led by Rep. Mac Thornberry. So there’s a real chance Congress may address the problems that executive-branch-only initiatives like Better Buying Power simply can’t.]

What do you think?