Who Will Mind the Store?
If Pentagon Can't Get Results, Congress Will Try
Talk of Draconian program cuts abounds within the Pentagon. Why? Because making cuts is easier than making weapon programs conform to cost, schedule and performance objectives.
Some would argue that it's not a matter of being easier but of keeping large defense programs on cost, on schedule and performing, period.
Well, I'm not so quick to throw in the towel and agree that all you have to do is identify the "limping gazelle" programs and cancel them. Nevertheless, the message is clear: If the U.S. Department of Defense does not mind the store, Congress will try.
The "Weapons System Acquisition Reform Act of 2009" intro-duced Feb. 24 by Sens. Carl Levin and John McCain is an example of the legitimate response from Capitol Hill prompted by the failure of the Department of Defense to manage the cost of weapon programs. It is not a surprise.
However, wholesale program cuts or cancellations, particularly large programs known as major defense acquisition programs (MDAPs), come with significant costs. This is not a reason not to cut or cancel, but the costs should be understood.
There is a cost, called termination liability, associated with killing major weapon programs that are on contract, and the amount is generally substantial. In other words, there is a bill to be paid initially, not an immediate savings.
There is an additional cost in the reduction of jobs. These are not, as a rule, low-paying, high school-dropout-skill-level jobs. Quite to the contrary, these are most often highly paid, highly skilled jobs. When one of those jobs goes away, the experience and skill of the worker who held that job goes away.
It seems counterintuitive for Congress to have passed a national stimulus package touting job creation while cutting defense spending, which creates and sustains jobs.
Furthermore, the procurement accounts are not the only place where stewardship of the taxpayer dollars is important. The operations and support funding that pays for civilian personnel, nongovernment contractors, as well as maintaining and repairing of equipment is an equally valid area for savings. The FY2009 budget operations and support is nearly $160 billion and has grown 2 percent to 3 percent annually, while procurement amounts to $101 billion.
The focus, though, should be on unnecessary functions and not a salami-slice percentage reduction.
Finally, it is possible to fix the acquisition system. Uncertainty caused by not achieving stable programs drives up costs, pushes the schedule to the right and jeopardizes desired system performance. Three areas most sensitive to instability are the requirements for the systems, the budget for the systems and the acquisition process.
Another contributing factor is the frequent changes to the guidance that directs acquisition program management - 14 times in the last 38 years, according to Charles Cochrane, a former member of the staff at the Defense Acquisition University.
The basic acquisition regulation document has ranged from eight pages in 1971 to 840 pages in 1991. Currently, the regulation is 80 pages. For programs that have taken 20 years or more to field, such as the F-22 fighter or the V-22 Osprey, the acquisition regulation might have changed seven times.
I recommend establishing three rules that, when followed, would drive structure and discipline into the acquisition system:
■ All MDAPs should be evaluated for time-definite program duration as a matter of process. Programs should have an agreed, defined number of years from when a contractor is selected and program go-ahead is approved until the initial operating capability is achieved. All improvement requirements would be incorporated into upgrades after full operational capability is established.
■ A budget should be established with funding guaranteed for the time-definite program duration. Program managers would be required to report to congressional staffs twice annually on program progress. If the program fails to meet cost, schedule and performance objectives three reviews in a row, then it is canceled. No debate, no constituent intervention; the program is canceled.
To ensure that capital funding is available, the military services would be prohibited from reducing funding to pay other bills. The result would be more stability in managing the program to plan.
■ When a contract is awarded, the winner will build what was bid. There will be no added requirements while the ink is drying on the contract. All the competitors will know this rule going into the competition, and proposals will reflect what is possible within the time-definite program duration.
These rules are not perfect, but they are a good start. They were actually recommendations made in 2006 as part of the Defense Acquisition Performance Assessment study. However, any set of rules should be based on thoughtful consideration, to preclude introducing unintended consequences that make matters worse.
Today, there are 91 MDAPs with a combined cost of $1.6 trillion, and unless programs become more predictable and stable, costs will rise, schedules will not be met, and programs will not perform as expected. And Congress, out of frustration, justifiably will step in and attempt to run the store. ■
Patterson is former executive director of the Pentagon-sponsored Defense Acquisition Performance Assessment. He is executive director of the National Defense Business Institute at the University of Tennessee.
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