A cornerstone of the Senate’s acquisition reform legislation—taking away acquisition responsibility from the Office of Secretary of Defense and placing it with the service chiefs—could end up compounding problems with cost growth, a former top Pentagon official said today.
Both the House and Senate defense authorization bills contain many good changes to acquisition policy, said Christine Fox, who formerly held positions in the Defense Department including the acting deputy defense secretary and director of Cost Assessment and Program Evaluation (CAPE). However, she noted reservations about the upper chamber’s National Defense Authorization Act, which contains reforms championed by Senate Armed Services Committee chairman John McCain (R-Ariz.).
McCain’s bill is widely noted as being the more ambitious of the two and contains sweeping changes to the process that would reduce the responsibility and oversight of the undersecretary of acquisition, technology and logistics.
In a speech at Capitol Hill forum held by the Lexington Institute, Fox said that plan could backfire.
“Services just have particular motivations…The budget pressures push them to be optimistic,” she said. “People in the services want capability. Of course they do, they face incredible operational challenges. But when they want that capability, they are able to convince themselves that they can indeed have it for less than anybody would have ever predicted and sooner than anybody would every predict.”
Take the Lockheed Martin [LMT] F-35 Joint Strike Fighter, a program that Fox said is “not over cost, it’s overdreamed.” The problem with the F-35 is that the services pushed so many requirements into the program that it became unrealistic, she said.
Fox also said she was concerned the legislation does not provide adequate mechanisms for the services to work together on joint technologies or to discuss best practices.
Whether McCain’s changes to the acquisition process become law is still up for grabs. He and House Armed Services Committee Chairman Mac Thornberry (R-Texas) will soon begin reconciling their versions of the NDAA. The final version of the bill, which is expected to be released next month, might not include all of McCain’s reform language. Furthermore, President Barack Obama has threatened to veto any measure that would increase defense spending but not the budgets of other departments impacted by mandatory budget caps, a category both the House and Senate bill fall into.
One provision in the Senate’s NDAA would force the services to pay a penalty for cost overruns, creating an incentive for officials to keep programs on budget. The problem is that the penalty comes out of the services’ procurement budget as a whole, not from the program responsible for cost growth, Todd Harrison, senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments, said at the event. “So this is effectively group punishment.”
Harrison recommends holding officials responsible—rather than the services—by knocking down them down a pay grade if they cannot deliver a weapon for the price they promised, “even if they’re no longer with the program, even if they’re in retirement,” he said.
Fox said fining the services for cost overruns could end up hurting programs that would give the military much-needed capabilities and may not necessarily result in greater accountability.
“What we really need are those independent cost estimates with teeth,” like the ones conducted by CAPE, she said.
Senate Majority Whip John Cornyn (R-Texas) said he supported McCain’s reform efforts, which would increase the use of non-traditional defense contractors, push rapid acquisition and empower the service chiefs to control acquisition.
The Defense Department wasted $46 billion between 2001 and 2011 on at least a dozen acquisition programs that never delivered a single piece of operational equipment, he noted.
“These measures in the NDAA reduce the red tape and the bureaucracy of procuring weapon systems and services,” he said.
Fox also noted that both versions of the bill contained language that is “grounds for hope.” Both include provisions calling for a “long overdue” streamlining of unnecessary statutes and regulations, she said. The legislation also encourages the development of officials with acquisition expertise.
“We need people with experience, the confidence to stand up to industry when necessary, the confidence to stand up internally to the people who want more than they can reasonably achieve,” she said.