The Buzz

Why the Pentagon Must be a Smarter & Better Customer

After 35 years in aerospace, I find myself passionate about defense acquisition reform because the stakes are high, the challenges are deep, and the opportunities are great.  Today we face both resurgent threats and a budget crisis: Russia, China, North Korea, Iran, the Islamic State, Al Qaida, and the U.S. is $19 trillion in national debt.  Former Deputy Secretary of Defense John Hamre and others have estimated that a full third of procurement dollars goes to overhead.[1]   We have a widely recognized loss of technological superiority, and an acquisition system that too often delivers needs late, and costs more than necessary.

We have tackled such shortcomings over time with new policies aimed at being a better steward of citizens’ money, and advocate for the warfighter and buyer of the things he needs. To this day, the government has neglected the importance of how it can become a better customer for the defense industry.

This forum is a small part of the surging conversation on acquisition reform in recent years.  Congress, Department of Defense (DoD), think tanks, industry and the media have dedicated remarkable resources to this topic.  Senator John McCain and Congressman Mac Thornberry have been great advocates about how the government can become a better customer.  Thornberry was particularly optimistic in a speech at the Center for Strategic and International Studies last yearstating that, “never before have all of the stars been so favorably aligned with the necessity of reform, the people in key positions, and the commitment to make it happen.

On the other hand, acquisition reform has been more or less a continuous conversation over decades, and MIT Professor Harvey Sapolsky famously summarized the lack of progress in his well-known 2009 article “Let’s Skip Acquisition Reform This Time:”

The limited number of available reforms have all been recycles.  You can centralize or decentralize.  You can create a specialist acquisition corps or you can outsource their tasks.  You can fly before you buy or buy before you fly.  Another blue-ribbon study, more legislation, and a new slogan will not make it happen.[2]

I corresponded with Professor Sapolsky in recent weeks and discovered that he is even more pessimistic.  His remarks in that article seem particularly relevant today given current and proposed legislation which is now, once again, decentralizing DoD acquisition and walking back many Packard Commission and Goldwater-Nichols reforms.  The claim is that today is different.  In the 1980s, we were just recovering from the Cold War, but today we face a different environment.  That may be true for arguments about strategy and tactics, and perhaps the kind of equipment we are buying, but those considerations have little to do with how we buy.

Secretary Ashton B. Carter in an April House Armed Services Committee (HASC) testimonyreported that DoD’s Better Buying Power (BBP) program has slowed annual growth metrics for contracted costs on major programs, dropping from nine percent to three and a half percent. A much higher percentage of major programs are also projecting cost reductions relative to initial baselines.  Better Buying Power has also improved the professionalism of the acquisition workforce, but restoring our diminishing technical dominance, increasing competition, and timeliness of acquisition have proven elusive.

It is challenging for the private sector to justify investing in an unfriendly defense acquisition environment when compared to the more attractive commercial markets available.  While BBP focuses on technical dominance and acquisition tradecraft, DoD struggles with access to technology and low rates of competition. One hundred thousand companies have stopped doing business with the Department of Defense.  The 2012 HASC report Challenges to Doing Business with the Department of Defense describes many issues driving companies to make that choice.