Recently, the chairman of the US House Armed Services Committee released a proposed set of acquisition reform steps. This proposal follows dozens of others in the past decades.
Chairman Mac Thornberry said the basic principle was to do no harm, but improve incrementally. The proposal achieves that goal, but is unlikely to change system results because it focuses on operational parts, not the conceptual base or accountability of results.
Results of the acquisition system are unsatisfactory due to unaffordability, cost overruns, late operational availability, unachieved performance and program cancellations unrelated to threat changes.
Other than general condemnations, little attention is given to objective analysis highlighting root causes of poor system performance in individual programs. Based on recent studies, half of the major system projects are within 7 percent of expected costs, but the average cost growth is over 25 percent. A few projects dominate this result, the F-35 being the outstanding example. Careful analysis of the "whys" for specific failures could help improve overall acquisition performance.
Government Accountability Office (GAO) summarizes selected acquisition reports results over the past several years. Overruns have continued to grow — now $457 billion over estimates approved at program start. System introduction delays increase with each annual report and are now 29 months longer than planned. But a few programs do well. In the last report, GAO indicated a $5.3 billion cost growth, adjusted to maintain constant quantities, over the 2013 period. This is the net of $20.5 billion growth offset by $15.2 billion cost reductions. Critics of the system too frequently ignore the successes, which have to be the basis of improvement.
Acquisition reform starts with getting affordability right so that adequate numbers can be purchased within projected budgets. Solving this problem requires Congress to set long-term, stable defense allocations, and DoD to plan within these.
Recent DoD estimates suggest that annual DoD budget growth should be in the 7 percent range to accommodate real and inflation growth. This is not happening. The impact is shown in the annual 30-year plans for ships and aircraft. The current shipbuilding plan clearly illustrates that the 308-ship Navy cannot occur under historic shipbuilding budget levels. Similarly, the aircraft plan indicates maintenance of the current 14,000 aircraft inventory is impossible.
Assuming a 20-year life for aircraft, 700 should be purchased annually to maintain the fleet, but about 400 are being purchased. Force reductions are inevitable and accelerated by decisions making helicopters more expensive and the F-35 replacing the low cost A-10 as an infantry-support airplane.
The first step in fixing the affordability problem is by understanding the long-term projections, including the basis for cost estimates. This is particularly important now since major strategic force programs are being implemented that will have large budget demands.
The reform proposal includes several simplifications of the process that were implemented by law. There are too many "how to" instructions in the law. Some judgment should be allowed. An example Thornberry uses is a requirement to do corrosion abatement studies on software.
A recent GAO analysis of the acquisition process identified numerous reports required of the program manager. The value of many is questionable, but the length of time required to review them was measured in months, sometimes exceeding the preparation time. This is an unnecessary, time consuming problem for the program manager and a clear indication too many are involved in the reviews.
The best response is reduction of bureaucratic layers as the Navy did in eliminating the Navy Materiel Command. Other services should take similar actions to flatten organizations and reduce organizational layers. A place to start is the Joint Requirements Oversight process. Its role should be limited to interoperability issues. Service chiefs are best informed to make requirements decisions for their service.
Annual GAO analyses make clear that over the last decade cost overruns have continued to mount and delays grow longer. Operational test performance has been mixed with no clear signal of improvement. Therefore, it is time to try increased and sharply focused accountability. American business solves this problem with quarterly reports. Defense should try this approach using selected acquisition reports as the data source.
This change would require each service secretary and military chief to provide joint progress reports quarterly detailing the status of each major acquisition program, and actions taken and planned in achieving program goals. The performance of each service could then be compared.
Second, more focus is needed on system production cost and logistical support. Roughly 10 percent of system lifecycle cost is R&D, 20 percent production and 70 percent operation. The current management process concentrates on R&D. Assistant secretaries dealing with facilities must be refocused on production and logistical support.
The bureaucratic, process-oriented acquisition system has not produced desired improvements. It is time to try an accountability-based system where participants have a strong motivation to produce success as described in quarterly reports.
Pyatt is the leader of the Project for Defense Management and Acquisition Leadership at the McCain Institute, Arizona State University.
