Radical Reform: Should the Pentagon Outsource its Management Functions?

Radical Reform: Should the Pentagon Outsource its Management Functions?

How about outsourcing the management and support half of AT&L?

Without question this is already a busy year for Defense Secretary Carter and his department. In terms of external challenges, there is the ever-expanding fight against ISIS, now about to include the deployment of U.S. forces to Libya. Then there is the intensifying confrontation with China over that country’s attempt to turn the South China Sea into Xi Jinping’s private lake. Add to this the decision to return U.S. ground forces to Europe to deter a more threatening Kremlin and the upcoming NATO summit in Warsaw that will refocus the Alliance on its collective defense obligations. North Korea and Iran continue to behave provocatively.  Almost daily there are signs that the international security environment is becoming less conducive to American interests and more threatening to the homeland, friends and allies.

Within the Pentagon issues such as the food fight between the Army and the National Guard or the possibility of drafting women have dominated what attention the media provides to military matters. Senior officials are busy defending budgets and force postures clearly inadequate to the nation’s needs or even its professed defense strategy.

All of these subjects have provided fodder for what little official defense media exists and among the defense blogs. Yet, what is potentially the biggest story of the year has received relatively little attention and virtually no serious scrutiny. I am referring to the proposal by the chairman of the Senate Armed Services Committee, Senator John McCain, to do away with the Under Secretary of Defense for Acquisition, Logistics and Technology (AT&L), splitting this massive Pentagon bureaucracy into two positions: An Under Secretary for Management and Support and an Under Secretary for Research and Engineering. In the chairman’s view, the requirements levied on the AT&L office to, at one and the same time, be highly inventive and agile on acquisition while managing the ongoing procurement annually of almost $200 billion in goods and services is too much for any one organization.

“Innovation cannot be an auxiliary office at the Department of Defense. It must be the central mission of its acquisition system. Unfortunately, that is not the case with the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics, or AT&L. It has grown too big, tries to do too much, and is too focused on compliance at the expense of innovation.” 

It is interesting that the McCain proposal comes at a time when the current Under Secretary for AT&L, Frank Kendall, has been taking a victory lap for his efforts to reform the acquisition system. According to the Under Secretary, a series of efforts to rein in costs, improve contracting oversight and train the acquisition workforce has produced a reduction in the growth of contracts for major programs. This does not mean that major end items such as aircraft, combat vehicles or ships are becoming less expensive, but only that they are becoming more expensive at a slower rate. This is what passes for success in the public sector. But it is better than nothing.

This proposal and other changes suggested by Senator McCain in the 2017 National Defense Authorization Act constitute potentially the biggest changes to the organization of the department since Goldwater-Nichols legislation of a generation ago. They deserve intense analysis, discussion and debate. So far they have received relatively little.

There are strong arguments in favor of McCain’s Solomonic proposal to divide AT&L in two. At the time AT&L was created, the idea was to bring the entire life cycle of military systems from design and development through sustainment and eventual retirement under a single management structure. But the idea of improving performance while lowering acquisition and sustainment costs has proven elusive. In part this is because even by Pentagon standards, this organization is a behemoth. It is simply too large and complex for any set of leaders to direct. In addition, driving innovation and cost containment in the development and acquisition of major weapons systems is really different from what is required to transform the defense department’s multiple logistics and sustainment operations. The appropriate contracting mechanisms are often different. Simply put, a single leader for the entire enterprise can focus either on being innovative in the creation of new engines of war or on improving the efficiency of the logistics and sustainment activities that support all military operations, but not both.

Of course, it is possible to take Senator McCain’s basic idea and make it even better. How about outsourcing the management and support half of AT&L. This is pretty much what the British Ministry of Defense has done and rather successfully. The private sector knows how to wring cost out of the traditional logistics and sustainment functions. They have learned how to design long-term performance-based sustainment contracts to continually improve performance while reducing costs. When the Pentagon went to war in Iraq and Afghanistan it took along an army of private contractors that was bigger than the total force in uniform deployed to either country. Even if the Department of Defense needs someone in charge of R&D to invent new weapons it surely doesn’t need its own chief of supply and repair parts when the private sector has demonstrated for decades that it can do the same job for the military, better and at a lower cost.

Dr. Dan Goure is a Vice President of the Lexington Institute. He is involved in a wide range of issues as part of the institute’s national security program. This piece originally appeared in the LexNext blog.

Image: U.S. Navy