WASHINGTON — After months of concerns from the Pentagon about acquisition reform language in the National Defense Authorization Act (NDAA), the Pentagon's top weapons buyer said today that the "most egregious" parts of the language were removed in conference between the Senate and House.
Frank Kendall, undersecretary for acquisitions, technology and logistics (AT&L), did not spell out exactly what the "most egregious" parts were. But the Pentagon has been warning for months that the language drafted by Senate Armed Services Committee Chairman Sen. John McCain, R-Ariz., would strip Kendall's office of oversight authorities that are crucial for preventing cost overruns and failed programs.
"We're going to assess the impact" of the final language, Kendall told an audience at an event hosted by DefenseOne. "But it gives the department and the Ssecretary of Defense a fair amount of latitude."
Staff from the House and Senate committees sorted through more than 120 acquisition policy provisions before putting out the final conference report. Analysts agree the final report borrowed more heavily from McCain's language over than that of his House counterpart, Rep. Mac Thornberry, R-Texas.
Kendall also said that the reform language was unlikely to impact affect staff size or the Defense Acquisition Board structure, but did noted that the rules don't go into effect until fiscal 2017 — which gives the lawyers plenty of time to sort through the language and fully understand its impact.
One provision Kendall called out as said was "interesting" calls for a fiscal penalty against any service which undergoes a Nunn-McCurdy breach, where cost overruns on a program go higher than 15 percent.
Under the language in the NDAA, the services would pay a penalty of 3 percent on the overrun, which would then be funneled into a fund controlled by AT&L for prototyping of new technologies.
Kendall again warned that the department is still understanding how that would work, noting that "it's not obvious to us as to how you remove that money," as it would be transferring funds from one part of the budget to another. That may require a congressionally approved reprograming effort to do, he added.
"We've looked at the current situation with this with all the programs we have now, and it turned out two of the services wouldn't have any problem at all based on past performance, and one service would have about a $20 million penalty," Kendall said. "That's sort of the practical implications of it. I understand the intent behind it. I'm just not as sure as a practical matter that it's going to be all that effective."
Asked about Kendall's comments, McCain did not seem concerned with the logistics.
"I'm glad to look at what recommendations he has. But for the first time, there's a penalty," McCain said.
Joe Gould in Washington contributed to this story