If the Defense Department could reinvest the money it pays contractors in inefficiencies and unnecessary cost growth in major weapons systems and IT, it could double the size of the military.
That’s because the cost growth of the military’s major weapons systems totals about $448 billion—or about $112 billion more than DOD’s 2015 budget request for day-to-day operations, pay and benefits for all 1.3 million active duty service members, as well as health care for millions of retirees.
“Forty-two percent of programs have had unit cost growth of 25 percent or more,” said Michael J. Sullivan, director of acquisition and sourcing management at the Government Accountability Office, in testimony Wednesday before the Senate Armed Services Committee. DOD’s 80 major acquisition programs account for $1.5 trillion in spending, according to GAO.
Sullivan outlined a vast array of problems in the military acquisition system, from poor decisions to proceed with technologies that have not reached maturity, failure to test and produce prototypes of major systems before purchasing them, and serious acquisition workforce problems that result in poor accountability for large acquisition programs.
Sen. Carl Levin, D-Mich., chairman of the Senate Armed Services Committee, called the department’s track record in the acquisition of new IT systems “abysmal” and said the Pentagon’s history in this area is littered with “repeated examples of systems that take years longer than expected to field, run hundreds of millions of dollars over budget and end up being canceled without any benefit at all to the government.”
“We’ve got a real crisis,” said Sen. Claire McCaskill, D-Mo. “I would use an unladylike term about how bad DOD is at acquiring IT, but I don’t want to do that as a United States senator. But you’re terrible at it. Just terrible.”
According to McCaskill, the military’s bad habit of changing requirements in the middle of major acquisitions has found its way into IT acquisitions as well.
But fixing defense acquisition isn’t as easy as many seem to think it is, said Frank Kendall III, undersecretary of defense for acquisition, technology and logistics. “Many of the things we have tried have had little discernible impact,” he added.
But there are structural problems, particularly in IT, that cause delays and cost overruns, he said.
For example, the complexity of the approval process for major IT systems imposes heavy burdens on acquisition managers that lead to micro-managing, Kendall said. In addition, the department tends to force new business systems to do things the way they have always been done, rather than re-engineering and modernizing internal processes to leverage new IT capabilities.
Fixing the acquisition workforce is also a major priority for the department, he said.
“I think we have a real problem with our workforce,” Kendall said. The department will soon lose many senior, experienced acquisition managers to retirement, and the workforce suffers from the uncertainty about employment stability and pay created by sequestration and budget pressures, he said.
Sullivan urged the committee to consider new career requirements for program managers, such as requiring experience in engineering and business, as well as developing new career tracks for acquisition professionals. He pointed to the $400 billion Joint Strike Fighter program—the most expensive weapon system in the nation’s history—as an example. The program has had six program managers in 11 years.
“There’s not much accountability when you have that many,” Sullivan said.
Sullivan also criticized the Pentagon’s cozy relationship with its major contractors, arguing it has fostered less competition and has placed “considerable power in the hands of the contractors.”
Kendall said he is trying to implement cultural change throughout the acquisition workforce in an attempt to replace the current culture, which values spending, with one that values controlling cost.
“In government, the built-in incentive system is to spend one’s budget so that funds are not rescinded or reduced in subsequent budgets,” Kendall said. “The other cultural change is to move the government workforce away from a check-the-box or school solution approach to acquisition to one based on professionalism, sound business and technical analysis and, most of all, critical thinking.”
Kendall said his staff is preparing a legislative proposal to simplify the body of law that covers the defense acquisition system. “The idea is to make it easier for people to understand,” he said.
Although the proposal will take a comprehensive look at the entire system, Kendall plans to develop a set of near-term recommendations to get into this year’s budget cycle.
