DOD aims for acquisition overhaul

Taken collectively, the nearly two-dozen measures in Defense Secretary Robert Gates’ plan to reform the military’s acquisition processes are on a scale that makes them akin to — pardon the metaphor — trying to turn around a battleship.

Yet in the end, there are just two simple goals behind a plan that aims to save $100 billion in five years and will affect hundreds of programs, thousands of acquisition workers and $400 billion in contracts, which is more than half of this year’s $700 billion Defense budget. The approach would transfer money now spent on administrative overhead into military capabilities and get the same kind of productivity gains for the military that the rest of the economy has enjoyed for years.

“Consumers are accustomed to getting more for their money — a more powerful computer, wider functionality in mobile phones — every year,” Gates said at the Sept. 14 unveiling of the reform plan. “When it comes to the defense sector, however, the taxpayers had to spend significantly more in order to get more. We need to reverse this trend.”

The plan targets problems that some observers say are not new and have resisted reform in the past. It also addresses some new issues, such as the explosive growth in services spending and an acquisition workforce spread too thin. Among the 23 specific measures, the plan includes the following broad objectives.

• Increase competition for contracts. $55 billion dollars' worth of defense contracts attracted only one bidder, a situation that Gates said dampens industry productivity and innovation, writes Amber Corrin for FCW.com. But the various measures DOD officials will introduce to increase competition will not work instantly. “Some experts argue that solicitations that get few bids, even only one bid, may reflect contractors who understand the requirements and don't bid if they know they can't meet the needs,” Corrin writes.
• Pay what the cost should be. Program managers will now be asked to set cost estimates that reflect what a program should cost if managed effectively, not what it would cost if delays and other overruns are built in at the start, as has been the practice, said J. Nicholas Hoover in InformationWeek. "In too many instances, cost estimates that are based on past programs, I might say past mismanagement, have deprived us of incentives to bring down costs," Gates said.
• Reinforce the acquisition workforce. Acquisition experts are the boots on the ground for the secretary’s plan, yet when DOD downsized in the 1990s, it wiped out a large portion of mid- and senior-level contracting specialists, writes Matthew Weigelt for FCW.com. Acquisition workers now handle five times more transactions than they did eight years ago, so the services have been bolstering their contract specialist ranks to keep up with the demands, a trend that will continue. For example, the Army is increasing its military contracting workforce by 600 percent and its civilian contracting workforce by 25 percent, reports Kate Brannen for Army Times.
• Get smarter about services. As elsewhere in the government, DOD's spending on services has increased greatly in recent years, to approximately $200 billion this year. The acquisition reform plan has several steps to better manage that spending, including putting a senior manager in charge of services acquisitions in each military branch, more frequently recompeting knowledge-based services contracts and adopting a uniform taxonomy for different types of services to help analyze spending patterns.