The Thursday Senate Armed Services Committee hearing on the Ford-class carrier, which has been dogged by ballooning costs and schedule delays, turned into a referendum on acquisition reform.
The USS Gerald R. Ford (CVN-78) is more than $2 billion over its initial budget, and a Government Accountability Office report released yesterday stated that further cost overruns are likely. The director of the Pentagon’s independent weapons testing office, Michael Gilmore, testified that several of the developmental systems on the ship—such as the Dual Band Radar, Advanced Arresting Gear, and Electromagnetic Aircraft Launch System—are not meeting reliability targets.
But instead of delving into the technical and budgetary challenges facing the Ford class, senators pressed Defense Department officials on accountability.
For SASC Chairman John McCain (R-Ariz.), the answer came back to one of his favorite punching bags: the office of undersecretary of defense for acquisition, technology and logistics (AT&L). The problems on the Ford are emblematic of AT&L’s control over acquisition, he said, and while the Navy was guilty of excessive optimism, it was AT&L who gave the go-ahead.
“AT&L is responsible for determining whether a program has a sound business case, and for approving the start of development and production. The Navy can be faulted for excessive optimism and deficient realism, but AT&L was either complacent or complicit,” he said. “Indeed, AT&L authorized the Navy to start construction of CVN-78 when only 27 percent of the ship was designed and just five of its 13 new systems were mature.”
AT&L could see its power shrink in the near future. The conference report of the 2016 National Defense Authorization Act released contains language that would transfer the milestone decision authority on new major defense acquisition programs from AT&L to the service acquisition executives. The goal of the proposed regulations, which were put forward by McCain, is to increase accountability by making the service responsible for ensuring a program meets requirements and cost targets. If a program goes over budget, the service will pay a 3 percent cost penalty on overruns.
The acquisition reform proposals in the NDAA are a step in the right direction, Paul Francis, the GAO’s managing director of acquisition and sourcing management, said during the hearing. However, he urged SASC to more closely scrutinize new programs before providing them with funding.
“Your most important oversight tool is the initial funding you provide to a program, but you give that tool up pretty early,” he said. “A couple of good no’s would be healthy.”
Francis also recommended spending more money during the science and technology phase to prove out technologies before they are adopted in a program of record.
McCain called the Ford program “one of the most spectacular acquisition debacles in recent memory” in his opening statement, but Francis said that the overruns on CVN-78 were in line with other programs, and certainly not as dire as the F-35 Joint Strike Fighter or the Army’s canceled Future Combat Systems program.
The Ford-class carrier program has had unacceptable levels of cost growth, said Sean Stackley, assistant secretary of the Navy for research, development and acquisition. “What I would suggest is that we are making some systemic changes on our side and, likewise, with the Congress to try to address these issues.”
Several senators, including McCain and Kelly Ayotte (R-N.H.), asked why the Pentagon does not use firm, fixed-price contracts more often, as it did in the Air Force’s KC-46A program. After technical issues drove up the price of developing the tanker, prime contractor Boeing [BA] had to absorb those costs, McCain noted.
The department is using those contracts when it can, said Katrina McFarland, the assistant secretary of defense for acquisition. However, if a program incorporated relatively developmental technologies, a fixed price contract might not be the best option because companies will seek a larger contract value to compensate for increased risk.
Several members of SASC grilled the Pentagon officials on how program officials are penalized and incentivized for their work.
McFarland said, “In terms of holding folks accountable, when we see a clearer connection between what they did and their outcome, we do retire them or move them.”
To date, only one person has ever been taken off of the Ford program as a result of poor performance, Stackley said. That person, a Navy captain, was a “program manager associated with the aircraft launch and recovery equipment” and was “relieved of his responsibilities,” he said.
But in terms of rewarding good performance, McFarland said the Pentagon does not do enough.
During a heated exchange, Sen. Dan Sullivan (R-Alaska) asked who is responsible for cost overruns on the program.
“Today, I am responsible,” Stackley said.
“The Navy is responsible,” McFarland said.
“That’s a ridiculous answer,” Sullivan shot back. “We’re talking about individuals. That’s how you fix it. You can’t blame it on the Navy.”