Fixing the Defense Department Procurement System
The House and Senate Armed Services Committees are currently looking into suggestions on how to "fix" the Defense Department Procurement system. Industry groups, such as the National Defense Industry Association (NDIA), have been asked to submit suggestions to the committees by this month to be considered for the 2016 Defense Authorization Bill. There has been a lot of talk on how to make the system better over the years but most people think that the system has become more cumbersome and somewhat less effective over the years. Many argue that the taxpayer is not getting the best value for their money. That is hard to argue when you see so many defense programs over budget and late in delivery (The FA-22 & F-35 aircraft are two good examples that come to mind). So what will make this attempt to "fix" the system any different from past attempts? According to Rep. Mac Thornberry (R-Texas) the committee is interested in why current laws and regulations didn't work as intended, not in adding new regulations. Rep. Thornberry is currently overseeing the House Armed Services Committee looking into defense procurement reform.
Certainly one of the major problems with defense acquisition is that the government is not very good at estimating the cost of new systems. Since many of the procurement items that are high dollar are also high technology (and cutting edge technology) the government pays for the development of the technology. This is commonly referred to as a cost reimbursable contract. This type of procurement is always going to be risky as there are many "unknowns" to be encountered in any R&D effort. So the main question to the government is how to develop new technologies without paying for so much of the risk of R&D. In a recent letter to the editor of the National Defense magazine, Jeff Windham makes some good observations in his letter: How to Fix Defense Acquisition. His solution is simple - just start over rather than reform the existing system. I think there could be some merit there. To summarize Jeff's thoughts;
- Keep it simple: Overarching framework, not dictation of every step
- Reporting burden kept small
- Simplified process
- 5 phases
- 7 technical reviews
- 3 decision points
- 1 independent operational test
- No deviations from the process
- Simplified acquisition organization with clear lines of responsibility
- Small, simple set of requirements to solve end user problem, not "requirements pull" process
- Every project either 15% over budget or 15% past due to be canceled, no exceptions
Certainly these requirements would define a procurement system that would be more streamlined and cost effective than what we have today. That's not to say that some of Jeff's points may be hard to implement or create. What is important here is Jeff is thinking outside the box. If we want real reform in the department of defense procurement system, all solutions will have to come as a result of thinking outside the box. I particularly like Jeff's idea about the "requirements pull" process. Too many times we see a laundry list from the government of requirements, some of which conflict with others to cause trade-offs, that tend to increase the price. If the government could do more to describe the real needs to be satisfied and let industry worry about the requirements, I'm sure a lot of money can be saved.
I also think that many political requirements are added to government procurements that add layers of bureaucracy to the supplier's organization that cost more money. Many of these programs are designed to protect people, environment, animals or other politically defined groups. The problem is that these programs are too much micromanagement and not enough incentive (stick rather than carrot).
If you have ideas for reform, please send them to the HASC or NDIA quickly. If you don't feel comfortable with that, send them to me, I'll forward them.