WASHINGTON — As the US House and Senate prepare to reconcile differences in their defense authorization bills, the acquisition community is closely watching how the two branches settle on acquisition reform language.
Both the House and Senate Armed Services committees included acquisition reform language in their National Defense Authorization Act bills. It's a focus the issue has not had for some time, and presents perhaps the best chance in years for a shift in the how weapon procurement process — a process that senior Pentagon leadership openly talks about as too slow.
So what's driving that focus on acquisition reform in 2015? Experts point to a perfect storm of global threats, shrinking budgets and changing technologies.
Concerns over the budget situation are well trod at this point. The Pentagon and its supporters claim the Budget Control Act has unreasonably capped spending levels for defense, but without much hope of those caps being overturned, the building is looking for other ways to save money. Finding ways to avoid costly overruns is low-hanging fruit everyone can agree on when compared with to needing to cutting people or systems.
The rise of China as a near-peer competitor on the technological level is another driver. US technological superiority has been all but guaranteed since the end of the Cold War. Now, it is not assured that the US will stay ahead of its competition. That means technology needs to be developed and inducted into the service more quickly.
The technological growth in the commercial sector also plays a part.
Byron Callan, an analyst with Capital Alpha Partners, highlights how much technology the Pentagon needs for future high-end capabilities is being developed outside of the beltway, but noted the current acquisition system is simply too antiquated to attract those firms into doing business with the department.
Combined with new threats like cyber espionage and a changing US industrial base, Callan said, those factors have created a real opportunity for acquisition reform.
"This is different," he said. "This is a different era."
Callan was speaking at a June 24 event organized by the Lexington Institute focused on acquisition reform. The speakers, a mix of analysts and former officials, largely stayed away from commenting directly on the HASC and SASC proposals, instead talking about acquisition reform theory in general, but there were some comments on the pros and cons of what Congress is proposing.
Jon Etherton, a former Hill staffer who now heads Etherton and Associates, praised HASC Chairman Rep. Mac x Thornberry of Texas and SASC Chairman Sen. John McCain of Arizona for their "robust" efforts to develop their bills.
"There is a remarkable alignment, I think, based on the inputs the committees got over the last year or two," Etherton said of the two competing bills.
Indeed, the acquisition reform language in both bills is very similar, and much of it is common sense, including a desire to beef up the responsibilities of program managers.
"One of the things that the legislation changes is the duration of a program manager in their position," Fox said. "I think incentives exist today for program managers to get the program to their next milestone because that is what they are judged by.
"I think we need incentives that program managers would stand up and say 'it's not ready to go to the next milestone,' or maybe 'it's never going to be ready,' or maybe 'we don't need it anymore' — and to be rewarded for standing up and saying those things," said Fox, now assistant director, policy and analysis at the Johns Hopkins Applied Physics Laboratory.
Todd Harrison, an analyst with the Center for Strategic and Budgetary Assessments, believes program managers benefit from more power, but also require more accountability.
He suggests penalizing a solution that program managers by knocking them be knocked down a pay grade — a change that would also impact their retirement — if their program fails to meet promised requirements.
"If you have acquisition professionals who are in charge of these programs, who are selling these programs and promising to deliver a certain set of capabilities at a certain price, if you had them sign up on the line that they are committed to that and they will take a cut in their pay and future retirement pay if this did not come true, I think we might see better incentives at work," Harrison said.
Perhaps unsurprisingly, his proposal was not met with enthusiasm by the audience of former Pentagon officials and industry representatives.
The two bills are now lined up to go to conference, although final outcomes are not expected before mid-July at the earliest.
"From where I sit, the next few weeks are going to be fun," Etherton said of the upcoming conference. "Many of the issues raised in these bills, we've been kicking this stuff around for years. It's now on the table for discussion, and it's my hope that the fact these provisions are in both bills is really going to force everyone to have a productive conversation, and maybe some tentative resolution on some of these issues."
The largest sticking point remains the push by McCain to bring the services more tightly into the acquisition process. The SASC bill would make the service acquisition executives the milestone decision authority for non-joint weapon programs transferred to or started under service control.
Supporters of that language say it will decentralize the acquisition process and free up the undersecretary of defense for acquisition, technology and logistics (AT&L) to focus on big picture issues. Critics warn that the move would weaken have the consequence of weakening the oversight powers for AT&L on major defense programs.
While the event lacked any back and forth among speakers, the closest to a point-counterpoint came when Fox's speech was interrupted by the arrival of Sen. John Cornyn, R-Texas, who used his short speech to praise the McCain language.
"The Senate bill establishes a robust system of accountability that streamlines decision making and centralizes the acquisition process," Cornyn said. "One simple way it does this is by empowering the service chiefs who are responsible for planning and budgets to also have responsibility for weapons acquisition."
After retaking the stage, Fox noted, "I do have a few worries with the legislation," in particular the role of the services vs the secretary of defense when it comes to oversight.
Speaking to Defense News after the event, Fox said she believes the SASC bill is well intentioned, but that the unintended result of taking some power from AT&L will result in less oversight from above.
"The goal of streamlining is good," Fox said. "I think taking the secretary and his undersecretary out of that process is the problem … taking oversight of acquisition away from OSD and giving it solely to the service acquisition executives is the only part I'm deeply concerned with."
One addition in the SASC bill that is not in the HASC comes from the office of Sen. Orrin Hatch, R-Utah.
Hatch placed an amendment into the NDAA, approved by the Senate, which carves out a greater role for the sustainment community early on in the acquisition process.
"Adding sustainment as a major component to this year's acquisition reform initiatives will save taxpayers billions of dollars, addresses a strategic deficiency faced by our depots, and will have a real, lasting impact," Hatch said in a statement.
A Hatch staffer said the language had input from inside the Pentagon as well as outside experts. The staffer also added that HASC staffers have no issue with the language and it is expected to pass through conference.