Congress Meekly Moves toward DOD Acquisition Reform

Both the House and the Senate unanimously passed legislation in early May to overhaul the Department of Defense's (DOD) acquisition process for major weapons systems. While the goal of this legislation is to reform and strengthen the procurement process used at DOD to limit cost and schedule overruns, many of the provisions included in the Senate bill fall short.

The Weapon Systems Acquisition Reform Act of 2009 (S. 454 [1]) was introduced by the two top members of the Senate Armed Services Committee, Sens. Carl Levin (D-MI) and John McCain (R-AZ), on February 23 and has moved rapidly through the Senate. The Levin-McCain bill seeks to strengthen the 1981 Nunn-McCurdy Provision, an amendment inserted into the FY 1982 Defense Appropriations bill. Nunn-McCurdy currently requires the Secretary of Defense to notify Congress if a project exceeds 30 percent of its original cost and certify that a program exceeding 50 percent of its original estimate is essential for national security, is the only option available, and is adequately structured to prevent future cost growth.

Rather than simple notification, the Levin-McCain bill calls for any weapons program experiencing "critical" cost growth, defined as over 50 percent, to be terminated unless the Secretary of Defense certifies that the project is "essential to the national security of the United States." [2] Additionally, even if the program receives certification from the secretary, the Defense Department would cancel the most recent certification granted to the project and require it to obtain a new one that guarantees timeframes and costs for the remaining work before the project continues.

While these standards are tougher than the 1981 law, the Senate bill still contains significant limitations, some of which were added to the bill as it moved through committee mark-up and the amendment process on the floor. First, allowing a project to be classified as "essential to national security" creates a loophole for the Defense Department to continue with business as usual. Second, the establishment of the Director of Independent Cost Assessment (DICA) – an important position – did not create a sufficiently wide jurisdiction for review, as the DICA can only review those programs that receive their certification to move forward from the Under Secretary for Acquisition, Technology and Logistics. Finally, the legislation does not do enough to encourage competition in the different stages of development for a weapons program because Congress can simply grant a waiver, again based on "national security," or if it is believed that competition would not provide an ample amount of cost savings.

The Levin-McCain bill also continues to allow defense contractors to develop multiple parts of a weapons project. Reform advocates, such as Travis Sharp at the Center for Arms Control and Non-Proliferation, claim [3] that this allows contractors to "grade their own tests," as the company responsible for the engineering or technical assistance of a project also works on the development or construction of the weapons system. In order to bring more scrutiny to weapons acquisition, an independent assessment of the progress made during development of weapons systems is needed.

It is not surprising that this legislation is insufficient to truly reform DOD's acquisition process. Introduced in late February, the measure coasted through the legislative process because some legislators are averse to truly reforming a broken system that still provides their districts with high-paying defense contracting jobs. Evidence of this aversion is an amendment to the Levin-McCain bill introduced by Sen. Patty Murray (D-WA). The amendment would require the Pentagon to notify Congress of the impact of the cancellation of a major weapons program on the industrial base. Murray originally wanted the amendment to automatically prohibit the cancellation of a weapons program if it would have a significant impact on the industrial base, but that requirement would essentially protect all major weapons programs and negate the intent of the review process.

With the legislation currently in conference, House and Senate members are attempting to hash out the few differences between the two versions of the bill. Despite the shortcomings of the legislation, it is still possible a properly structured conference agreement will emerge in time for President Obama to sign the legislation before the Memorial Day recess. If the final product includes an independent cost analyst, stringent criteria for cancelling a program with endemic cost overruns, and more thorough measures to prevent organizational conflicts of interest at different stages of weapons development, the bill will take a meaningful, if small, step toward reforming the procurement process at the Department of Defense.