US Navy photo by Mass Communication Specialist Seaman Apprentice Michael J. Lieberknecht/Flickr
Once more unto the breach for acquisition reform, dear friends, once more; and close the wall up with our past rules and regulations! In the days of rising budgets there’s nothing so becoming an official as attacks on waste and fraud; but when the blast of budget cuts blows in our ears, then imitate the action of a reformer.
My apologies to the Bard, but the time is right for real acquisition reform. No, really! You can feel the initial stirrings in the air as the Pentagon finally begins to face the budgetary reality that it can’t afford its current force structure. Justifiable fears are rising about a declining innovation gap with China and other countries. So something has to be done. As in the past, the House and Senate Armed Services Committees will be the focal point for any serious reform effort and the annual National Defense Authorization Act scheduled to begin markup in the House on April 30th will be the first opportunity to change the system.
This is a once in a generation chance, one forced on us. Why? First, budgets are being slashed to such a level that a realization sets in that there are no other alternative courses of action. Then a chance arises at implementing management reforms that include not only fixing how the Pentagon buys goods and services, but also changing the way it does business. We are on the cusp of one of those inflection points. The last one occurred just after the fall of the Berlin Wall and started with a plethora of hope, good ideas, and some significant change. But these opportunities for reform are not always acted upon or sustained. There are no guarantees of success this time around, and if history is any guide, there is a good chance that the government will get it wrong.
Historically, Pentagon acquisition changes have not been a positive experience. Instead of adopting best practices, the laws and policies flowing from the Hill and the Pentagon follow a well-worn path that ebbs and flows with the rise and fall of the defense budget. Dollars flow into the Pentagon during wartime or in a crisis, immediate needs are met, corners are sometimes cut, and inevitably some mistakes are made. The presence of fraud is a constant threat with the expenditure of taxpayer dollars. The more money that flows quickly to a war zone the greater are the chances for theft and fraud. Those who disagree with spending more on defense or who oppose the given conflict decry the inevitable examples of waste and fraud and Congress rushes to pass new laws to rein it in.
As the conflict or crisis subsides, austerity sets in. Budgets are cut and a procurement holiday begins. Costs rise to meet the new acquisition oversight requirements imposed during the budget run-up, but because of an implementation lag they don’t start to be felt until the budget declines. Innovative firms with other commercial options exit the business while defense-unique firms hunker down and get ready to comply with whatever regulations are passed. Competition declines and costs rise again from the need to prop up more sole-source suppliers.
Then further handwringing ensues about the cost of acquisition. Studies are conducted, organizational changes are called for and more oversight and compliance legislation and regulations are enacted. The defense acquisition and legal bureaucracy overreacts legislative requirements in such a way as to ensure maximum damage to existing programs by ignoring flexibilities embedded into the law. These trends continue until the military force is a hollow shell of itself and everyone waits for the next crisis to increase the defense budget. Repeat.
Since World War II we’ve seen two times when this cycle was temporarily reversed and real acquisition reform and innovation resulted. The first was during the implementation of Eisenhower’s New Look policy and it really only succeeded because the rot in the acquisition process had not yet set in. The U.S. owes its military dominance, the development of the nuclear triad, the beginnings of the information age, and advances in satellite reconnaissance and communications to this period of rapid competitive operational prototypes that pushed the boundaries of technology development.
The second period of positive acquisition reform and the only one that attempted to hack away at the thicket of laws, rules, and regulations that had enveloped the system since World War II was the commercial item acquisition reforms of the 1990s. Far-sighted defense leaders like David Packard and William Perry understood that by the mid-1980s the defense acquisition system had resulted in the creation of an isolated grouping of defense unique contractors who specialized in adhering to Pentagon rules but were now technologically behind the commercial marketplace. The resulting reforms enshrined in law in 1994 and 1996 allowed the Pentagon to bring in current technology and practices – primarily from the information technology sector. Unfortunately, this effort ultimately ended with mixed results as advocates for the status quo rolled these back in the last decade.
So, if the time is right because of where we are in the budget cycle, what can be done now to kick-start the right kind of acquisition reform? How can these reform efforts draw on the streamlining lessons learned from the 1950s and 1990s, rather than leading to more stifling bureaucracy and regulation? The problems we face have been decades in the making and will require more than one National Defense Authorization Act to fix. Still, much can be done this year to build on the types of reforms that worked in the past and, secondly, to lay the intellectual groundwork for a new acquisition system. The question remains whether the Pentagon and the Congress will reach the right consensus on what needs to be done as happened 20 years ago or will allow this opportunity to slip by.
Bill Greenwalt is a visiting fellow in the Marilyn Ware Center for Security Studies.