The Iron Triangle

Tracking Power, Money and Influence in U.S. National Security

Secretary Robert Gates’ draft congressional testimony

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Defense Secretary Robert Gates will be testifying before the Senate Armed Services Committee on Tuesday. His draft statement includes the following discussion of acquisition. It was provided by a well-placed source with connections to the Defense Department.

Defense Acquisition

As I focused on the wars these past two years, I ended up punting a number of procurement decisions that I believed would be more appropriately handled by my successor and a new administration. Well, as luck would have it, I am now on the receiving end of those kicks.

Chief among institutional challenges facing the Department is acquisitions – broadly speaking, how we acquire goods and services and manage the taxpayers’ money. The Congress, and this committee in particular, have rightly been focused on this issue for some time. The economic crisis makes the problem even more acute. Allow me to share a few general thoughts.

There are a host of issues that have led us to where we are, starting with long-standing systemic problems:

· Entrenched attitudes throughout the government are particularly pronounced in the area of acquisition: a risk-averse culture, a litigious process, parochial interests, excessive and changing requirements, budget churn and instability, and sometimes adversarial relationships within the Department of Defense and between DoD and other parts of the government.

· At the same time, acquisition priorities have changed from defense secretary to defense secretary, administration to administration, and congress to congress – making any sort of long-term procurement strategy on which we can accurately base costs next to impossible.

· Add to all of this the difficulty in bringing in qualified senior acquisition officials. Over the past eight years, for example, the Department of Defense has operated with an average percentage of vacancies in the key acquisition positions ranging from 13 percent in the Army to 43 percent in the Air Force.

Thus the situation we face today, where a small set of expensive weapons programs has had repeated – and unacceptable – problems with requirements, schedule, cost, and performance.

While the number of overturned procurements as a result of protests remains low in absolute numbers – 13 out of more than three and a half million contract actions in FY 2008 – highly publicized issues persist in a few of the largest programs. The same is true of cost over-runs, where five programs account for more than half of total cost growth. The list of big-ticket weapons systems that have experienced contract or program performance problems spans the services: the Air Force tanker, CSAR-X, VH-71, Osprey, Future Combat Systems, Armed Reconnaissance Helicopter, Littoral Combat Ship, Virginia Class Sub, Joint Strike Fighter, and so on.

Since the end of World War II, there have been nearly 130 studies on these problems – to little avail. I mention all this because I do not believe there is a silver bullet, and I do not think the system can be reformed in a short period of time – especially since the kinds of problems we face date all the way back to our first Secretary of War, whose navy took three times longer to build than was originally planned at more than double the cost.
That said, I do believe we can make headway, and I have already begun addressing these issues:

· First, I believe that the FY 2010 budget must make hard choices. Any necessary changes should avoid across-the-board adjustments, which inefficiently extend all programs.

· We have begun to purchase systems at more efficient rates for the production lines. I believe we can combine budget stability and order rates that take advantage of economies of scale to lower costs on the systems needed for our troops.

· I will pursue greater quantities of systems that represent the “75 percent” solution instead of smaller quantities of “99 percent,” exquisite systems.

· While the military’s operations have become very joint – and impressively so – budget and procurement decisions remain overwhelmingly service-centric. To address a given risk, we may have to invest more in the future-oriented program of one service and less in that of another service – particularly when both programs were conceived with the same threat in mind.

· We must freeze requirements on programs at contract award and write contracts that incentivize proper behavior.

· I feel that many programs that cost more than anticipated are built on an inadequate initial foundation. I believe the Department should seek increased competition, use of prototypes, and ensure technology maturity so that our programs are ready for the next phases of development.

· Finally, we must restore the Department’s acquisition team. I look forward to working with the Congress to establish a necessary consensus on the need to have adequate personnel capacity in all elements of the acquisition process to support the needs of the military. On that note, I thank you for continuing to give us the funding, authorities, and support to sustain our growth plan for the defense acquisition workforce.

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Written by schwellenbach

January 26, 2009 at 5:09 pm

Posted in Uncategorized

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