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Congress strikes deal on acquisition reform

U.S. House and Senate negotiators have hammered out a final version of defense acquisition legislation that would shake up the Office of the Secretary of Defense, and give the combatant commanders a greater say in deciding which weapons the Pentagon will buy.

Among other proposals, the compromise legislation would scuttle OSD’s Program Evaluation and Analysis directorate and replace it with a new outfit that would be dubbed the “Cost Assessment and Program Evaluation” office. A summary of the conference committee’s report suggests the Pentagon’s Cost Assessment Improvement Group (CAIG) also would be scrapped, with its personnel moving to the new directorate.

PA&E was created in the mid-1990s under the Clinton administration. Some analysts have said it lost some power and influence during the George W. Bush administration.

The new director would get two deputy directors: one for cost assessment and another for program evaluation, the summary states.

John Douglass, a former Navy acquisition chief who also served as president of the Aerospace Industries Association, applauded the legislation.

“This would seem to give PA&E more power and make it a bigger player within the Pentagon,” Douglass said.

The final version of the legislation, which now must be passed by both chambers before it can be sent to the president, also directs the Joint Requirements Oversight Council (JROC) to “seek input” from the military’s combatant commanders when making decisions on weapon requirements, according to the summary.

The Senate’s version of the bill was championed by Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., respectively the chairman and ranking member of the Senate Armed Services Committee. The House version was pushed by several House Armed Services Committee members, including the chairman and ranking member, Reps. Ike Skelton, D-Mo., and John McHugh, R-N.Y.

“Working with our Senate colleagues, we’ve reached a solid final product that builds on the strengths of both bills while ensuring the Secretary of Defense maintains adequate flexibility within his organization,” McHugh said in a statement. “Hopefully, both chambers can approve the conference report and move it to the president for his signature within the coming days.”

The compromise bill would modify the Nunn-McCurdy statute, which requires the Pentagon notify Congress when major defense programs experience cost growth. Under the conferees’ proposal, the department would be required to “perform a root cause analysis” on each breaching program. It also would assume breaching programs would be terminated — but with a safety valve.

“However, if the program is not terminated,” the conference report summary says, “but is restructured, it would rescind the most recent milestone approval and require the program to receive a new milestone approval prior to proceeding.”

All contractual actions for such programs would be “limited … until a new milestone approval is received … but would allow the [Pentagon acquisition chief] to grant an exception to this restriction in order to allow the program to be restructured without unnecessarily wasting resources.”

New directors

The House-Senate bill also proposes creation of two new director-level positions within OSD, one to oversee developmental test and evaluation and another to manage the Pentagon’s systems engineering efforts. Appointed by the defense secretary, the new directors would be charged with “issuing joint guidance relating to the integration of developmental test and systems engineering” and “leading the developmental test and systems engineering workforces within DOD.”

Both positions would report to the Pentagon’s acquisition chief.

Under the conference committee’s plans, each service and DoD agency would be required to “develop and implement plans to ensure they have the appropriate resources for developmental testing and systems engineering, and the two [new] directors [would be] required to assess these plans.”

The compromise bill also would require the two directors to annually deliver to Congress a joint report of these matters.

The legislation also seeks to require the Pentagon use prototypes more often. One section of the compromise bill would require the defense secretary to “modify acquisition guidance to require competitive prototyping prior to a Milestone B decision.”

The House-Senate conference committee agreed on language that would allow “prototyping to occur at the system or subsystem level,” according to the summary. The legislation “includes waivers in the event prototyping is not affordable or in the interest of national security.”

Additionally, the legislation aims to insert the military’s regional and functional command chiefs into the weapons requirement-generation and —approval processes. It various sections, it calls for new reviews to ensure the JROC consulted the commanders when decided whether to approve program requirements proposals and changes.

Further, the House-Senate bill, if approved and signed by the president, would require the secretary to designate one defense official in charge of conducting program-specific performance studies and “root cause analyses.”

The summary says this official would be “responsible for issuing guidance related to performance assessment for acquisition programs and for analyzing the root causes of poor performance, including reviews conducted after Nunn-McCurdy breaches.”

Last week, one Senate aide involved in the effort said of the House and Senate versions on which the conference agreement is based said both merely “move around the deck chairs, but don’t get at the substantive problems.”

Douglass disagreed, saying the compromise bill would implement “things that DoD should already be doing.”

To the former Navy acquisition chief, “there is certainly nothing in this bill that would hurt the department.”

In several sections, according to the summary document, the conferees propose inserting new reviews — led by new and existing Pentagon directorates — at various points in the weapons-development cycle to ensure technologies are progressing properly.

Too often under the current set up, lawmakers and defense experts say, high-tech subcomponents of advanced weapons systems are allowed to move through the development cycle before they are ready. The result often is costly delays and cost increases later, when program managers have to alter the overall program plan to bring that subsystem up to spec.

Under this section, the conferees want the secretary to implement tools that “consider trade-offs among cost, schedule, and performance objectives in establishing requirements for acquisition programs.

“At a minimum,” the conferees state, those tools must include “officials outside the JROC who are responsible for acquisition, budget, and cost estimation are given a chance to develop estimates of cost and schedule before the JROC approves a requirement, and that requirements are structured in a way that will allow for incremental, evolutionary, or spiral development.”

The same section also would require the JROC establish “a schedule objective for each requirement.”

The compromise bill also reflects both chambers’ concerns about major defense program cost estimates, which typically are too low and inevitably result in actual costs that are much higher.

While he applauded the various moves the legislation proposes, the bottom line, Douglass said, is “it’s all about management — you can have all the safety rules you want, but if you don’t follow them, bad things will happen.”