Commentary: Defense Acquisition Reform -- Where Do We Stand?

Recent events are pointing to a shift in the way the Department of Defense (DOD) will implement future government contracts. The passage of a new law [1], the planned addition [2] of much-needed acquisition personnel at DOD – by far the government's largest contracting agency – and an intended top-to-bottom overhaul [3] of the Air Force's procurement process are all geared toward reforming a system ripe with waste, fraud, and abuse. Despite significant progress, these reforms face critical challenges ahead.

On the morning of May 22, President Obama signed into law a major weapons procurement reform – the Weapon Systems Acquisition Reform Act (WSARA) of 2009 – which represents a small step toward fixing the chaotic and troublesome weapons acquisition process at DOD.

One of the main goals of this law is to try to foster more competition within different parts of the DOD weapons contracting process, thereby harnessing the theoretical power of the free market. This is a much-needed reform, as six industry giants have, at the urging of the Clinton administration long ago, gobbled up [4] most of the competition within the world of defense contracting. The six companies – Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, Raytheon, and United Technologies Corp. – represented 29 percent of the total DOD contracting dollars spent in FY 2008, according to USASpending.gov.

Despite the requirement in WSARA that obligates the Secretary of Defense to "preserve the option of competition" throughout the life of a weapons program through the use of ten competition-promoting measures, there may not be enough companies to make sure that true competition exists to meet the requirements. Because of this, what is more likely is that the Pentagon will use a national security waiver in the law to skirt the intent of the reform. This loophole will allow wasteful weapons programs to slip by the prospective knife of Congress. However, to be fair, that knife is not always competently, if at all, wielded by congressional members.

The creation of a Director of Cost Assessment and Program Evaluation (DCAPE), a presidentially appointed and Senate-confirmed oversight position created under WSARA, is the second important aspect of the reform law. DCAPE will provide independent cost assessments to the Secretary of Defense of some, although not all, of DOD's major weapons programs. One of the vital tasks of this new position will be to make recommendations, through the Secretary of Defense, for Congress to eliminate a program after it exceeds the newly strengthened cost overrun rules. The success in completing that task assumes that Congress can see beyond parochial interests, sit on its hands, and not interfere to rescue a weapons program that the Defense Department may say it does not want or need. Unfortunately, if the recent efforts by congressional members to save the few programs Obama and Secretary of Defense Robert Gates have recommended cutting – including the F-22 fighter jet [5], the C-17 cargo plane [6], and the VH-71 presidential helicopter [7] – is any indication, then prospects look bleak.

Another goal of the new law is to eliminate conflicts of interest in the weapons procurement process. Because the Pentagon relies on so few manufacturers for the nation's aircraft, missiles, ships, and other weapons systems, there often are conflicts of interest during the multiple phases of the production process. Firms that construct a weapon, and, consequently, are responsible for the evaluation of the contracting process up to that point, may have been responsible for the design of the same program. It is questionable that employees of a company would find fault with anything previously done by their own colleagues.

WSARA takes steps to eliminate these organizational conflicts of interest by preventing a contractor from working on multiple stages of a program; precluding the awarding of a contract to a subcontractor whose parent company is the prime contractor for the same weapons program; and requiring advice on systems engineering from sources independent of the prime contractor.

In addition to the important reforms contained within this new law, the Pentagon announced in early April that it plans to beef up its acquisition personnel by hiring 20,000 new procurement officers. Eleven thousand of these new posts will be former contracting positions converted to civilian jobs. This expansion, with an intended completion date of 2015, will represent a 15 percent increase in acquisition personnel, a sorely neglected part of the Pentagon for years.

What is even more important is the conversion of acquisition jobs from contracting to civilian posts. The sheer amount of DOD contract work for procurement tasks creates an unnecessary potential for conflicts of interest. A contracting company advising the Pentagon on procurement issues, and therefore with insider knowledge of the process, could theoretically take on another contractor as a client to advise on winning contracts from the Defense Department.

Finally, the Air Force has recently released a plan to restructure its entire procurement process, which could end up as a model for the rest of the DOD and perhaps the entire federal government. Spurred by previous contracting failures, this restructuring calls for revitalizing the Air Force acquisition workforce, demanding more specific systems requirements, instilling budget and financial discipline, and establishing clearer lines of authority and accountability within the acquisition process. The key, Air Force officials stress, is to get the best people possible and provide them with sound training to complement their experience. The Air Force realizes that this problem requires a long-term approach and has stated that these reforms will take three to five years to bear results.

While these changes and reforms are a good start, the true test of whether the defense contracting process will become streamlined and efficient is whether these stakeholders follow through with their recent actions. Do the White House, Congress, and the Pentagon consider their tasks for reforming the defense acquisition process complete, or do they rightly regard these efforts as the start of a much longer process? Without proper follow-through – meaning a continuous monitoring of the reform effort – the limited increase in oversight and regulations, the addition of personnel, and the plans for internal reform will do little to transform the defense procurement process.