October 19, 2005 | Backgrounder on National Security and Defense
In a memo dated June 7, 2005, Acting Deputy Secretary of Defense Gordon England clearly stated his view that the Department of Defense acquisition system is not working properly. He is not alone in holding this view. Knowledgeable individuals inside and outside the Department of Defense recognize that the defense acquisition system has problems. Many programs continue to increase in cost while their development and deployment schedules slip.
Thus, Secretary England was speaking for many when he stated, "There is a growing and deep concern within Congress and within the Department of Defense (DOD) Leadership team about the DOD acquisition process."1 But while Secretary England recognizes that some of the DOD's own actions contribute to these shortcomings, it is far from certain that Congress recognizes that its actions contribute to the system's weaknesses.
To address these weaknesses, Secretary England established the Defense Acquisition Performance Assessment (DAPA) Project to provide the Secretary of Defense and the Quadrennial Defense Review (QDR) with "an integrated acquisition assessment to consider every aspect of acquisition, including requirements, organization, legal foundations (like Goldwater-Nichols), decision methodology, oversight, checks and balances-every aspect."2The DAPA Panel is chaired by retired Air Force Lieutenant General Ronald T. Kadish, whose last government position was as director of the Missile Defense Agency. The panel is scheduled to provide its findings to the Department of Defense later this fall.
DAPA's Sweeping Mandate
Secretary England was wise to give the DAPA Panel a sweeping mandate because the defense acquisition system's problems have many sources. While many of these problems reside within the DOD, some of the most important reside outside the department. How Congress exercises its legislative and oversight responsibilities regarding DOD, including its acquisition system, is among the most important factors contributing to these shortcomings.
Cumulatively, congressional legislative and oversight activities have sought to centralize acquisition functions because Congress sees centralization as increasing its power to control the acquisition process and specific acquisition decisions. This perception is an illusion because the acquisition bureaucracy responds with a risk-averse mindset that undermines accountability. In this mindset, the bureaucracy moves reflexively to protect itself by adding more bureaucracy to diffuse responsibility. Ultimately, Congress gets more bureaucracy and less accountability out of the acquisition system. Further, the excess bureaucracy is itself wasteful and slows the acquisition process.
The DAPA Panel will perform a valuable service if it does not shy away from criticizing Congress in how it identifies the defense acquisition system's problems and if it also proposes possible solutions. As an independent panel, it is capable of assessing congressional actions in a way that the senior political and career leadership within the DOD cannot. Further, many panel members have considerable experience in the DOD acquisition system. They are in a good position to describe how those operating within the system respond to Congress in ways that Congress likely fails to recognize or appreciate.
Congress, for its part, needs to be willing to listen to constructive criticism and respond with reforms that encourage self-restraint. This begins with recognizing that excessive centralization in the defense acquisition system begins at the top and that such centralization neither meets Congress's legislative and oversight responsibilities nor serves the overall effectiveness of the acquisition system.
Evidence of Serious Shortcomings in the Defense Acquisition System
General Kadish and his colleagues on the DAPA Panel face a daunting task. There have been numerous attempts to reform the defense acquisition system, yet the system is still perceived by many as functioning ineffectively. By Secretary of Defense Donald Rumsfeld's count, there have been 128 different studies and reports on reforming the system between 1975 and 2001; but while some of these studies and reports certainly helped to improve the defense acquisition system at the margins, serious problems persist.
Others familiar with the defense acquisition system provide specific evidence to support Secretary England's conclusions regarding the system's shortcomings. The U.S. Government Accountability Office (GAO) released a report in March that assessed the performance of 54 major weapons acquisition programs and found that 26 of them experienced a cost growth average of 14.5 percent over the original estimates and increased acquisition cycle times averaging 19.6 percent longer than the original estimates. More disturbing, the same GAO report assessed average increases in research, development, testing, and evaluation costs for the same 26 programs at almost 42 percent above the original estimates.
The evidence further suggests that increases in program costs and delays in fielding new systems are particularly prevalent in critical space-related military programs. Dr. Pedro L. Rustan, director of advanced systems and technology at the National Reconnaissance Office, told the House Armed Services Committee in July that, "during the last 15 years, a negative trend has developed [in the specific area of space system acquisition] with respect to the procedures the Government uses to acquire U.S. space systems." In the context of identifying 10 specific shortcomings in the acquisition process for defense space systems, Rustan went on to say, "I think we need to transform today's organizational culture and processes used to acquire space systems." Among the specific shortcomings that he identified were:
On the other hand, the DAPA Panel needs to recognize that the defense acquisition system is not completely broken. For example, John W. Douglass, president and chief executive officer of the Aerospace Industries Association of America, told the DAPA Panel that, "whatever the ills of the DOD's [acquisition] system, it's still the best one in the government today, and the other agencies in the federal government would be well served if they could reach the level of proficiency that exists in [DOD] today."
Paradoxically, the defense acquisition system's strengths make the DAPA Panel's task more complex. While it would be easier to recommend discarding the entire existing system and starting anew, it would be wrong for the DAPA Panel to recommend this course of action. Such a drastic and indiscriminate approach is both unnecessary and disruptive. The DAPA Panel needs to take a more delicate approach by determining the specific causes of cost overruns and delays in major weapons acquisitions and then proposing specific solutions to eliminate the causes.
This suggests that the DAPA Panel should adopt Rustan's approach of identifying specific shortcomings and matching the shortcomings with specific and narrowly drawn solutions. Among the specific solutions that Rustan proposed regarding acquisition of defense space systems are:
Need to Focus on
While Rustan's approach is sound for acquisition of space systems and, by extension, other major weapons systems, these recommendations do not identify specific congressional actions that weaken the system or propose specific solutions to those problems. Of the 10 specific recommended reforms, only one (greater budget flexibility) is even related to how Congress oversees and manages the defense acquisition system. This is not surprising, because it is at best awkward for an executive branch official to tell Congress how to do its work.
Further, the GAO is not in a position to perform this duty because it works for and answers to Congress. Asking the GAO to examine and make recommendations to Congress on reforming congressional legislative and oversight systems regarding defense acquisition is a bit like the Mafia asking its hired killers to identify problems with its "contract" system.
This is why the DAPA Panel provides an important opportunity to improve the defense acquisition system. As an independent panel with a sweeping mandate (including issues related to legal foundations, oversight, and checks and balances), the DAPA Panel has an opportunity to identify the specific problems in the system that can be traced to how Congress performs its legislative and oversight duties.
The DAPA Panel should not miss this opportunity. If it focuses only on reforming defense acquisition processes within the confines of DOD and the contractor community, the panel will unnecessarily narrow its mandate and waste a critical opportunity for more effective reform.
Regrettably, a review of the testimony to date before the DAPA Panel reveals a bias in favor of identifying problems and proposing solutions within DOD and the contractor community. Testimony that focuses on specific recommendations for changing how Congress performs its duties is quite limited.
What the DAPA Panel Should Recommend to Congress
Congress, by many of its actions, has contributed to the defense acquisition system's problems. It has a tendency to micromanage defense acquisition, address acquisition problems episodically, criticize problems with the development of certain technologies with the benefit of 20-20 hindsight, and centralize control of the defense acquisition process. These tendencies contribute to program instability and a cumbersome acquisition system and, most important, drive DOD personnel to adopt a risk-averse mentality in managing acquisitions.
This is not to say that the related shortcomings in the defense acquisition system are exclusively the fault of the current Congress-quite the opposite. These problems have accumulated over time. The following are several examples of how Congress oversees and legislates defense acquisitions in ways that contribute to problems within the system.
Problem #1: Congress attempts to centralize acquisition management.
Congress has a propensity to impose restrictions on major acquisition programs in ways that centralize acquisition authority in order to enhance its own power to control or manage those acquisitions.
An example of this is an amendment offered by Senators Jeff Bingaman (D-NM) and Richard Shelby (R-AL, then a Democrat) regarding the Strategic Defense Initiative (SDI) program. SDI was the name of the program to develop a defense against ballistic missiles. A version of the Bingaman- Shelby Amendment was ultimately incorporated into the 1990 Defense Authorization Act. The original amendment balkanized the SDI budget by breaking it into 11 different accounts, each one of which had its own funding ceiling. The final version of the amendment broke the SDI budget into five such accounts. Clearly, the amendment was motivated by the desire of Congress to enhance its ability to manage the SDI program. Senator John Warner (R-VA) quite appropriately called the provision "the largest incursion we've seen to date by the legislative branch into the authority of the executive branch to manage a program."
Aside from the fact that balkanizing a program's budget is inherently inefficient, Congress has neither the time nor the institutional structure to assume direct management of a defense acquisition, as much as it might like to think that it has. The inherent problems of centralization are not unique to the federal government. Successful corporations are moving away from structures that would have chief executive officers, much less boards of directors, attempt to manage all aspects of corporate operations.
Problem #2: Congress attempts to micromanage the Department of Defense.
While no single measurement can completely describe the level of micromanagement that Congress imposes on the DOD through the legislative process, the length of the annual defense authorization bill is a good general indicator. In 1973, the Department of Defense Appropriation Authorization Act for Fiscal Year 1974 ran 19 pages. In 2004, the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 ran 388 pages.
The increase in length cannot be justified by dramatically higher defense budgets or more complicated national security circumstances. According to the Congressional Budget Office (CBO), the defense budget in 1973 was 5.9 percent of GDP, while the 2004 defense budget was 3.9 percent of GDP. Further, while today's defense problems are very complex, in 1973 the nation was engaged in a bitter debate over the Vietnam War, and Congress was grappling with the issue of how to extricate U.S. military forces from Vietnam.
Problem #3: Congress's propensity to embarrass DOD leaders over perceived program failures or shortcomings fosters a risk-averse attitude in the acquisition bureaucracy.
From time to time, Congress indulges in "show trial" hearings to embarrass DOD leaders and put them on the defensive over particular defense acquisition shortcomings. One example is a hearing before the Senate Subcommittee on Administrative Practice and Procedure on September 19, 1984. The hearing included testimony that a 10-cup coffeemaker for the C-5 transport plane cost $7,622.
Aside from the fact that the DOD leadership itself was working at the time to uncover these kinds of cost overruns, Congress does not fully appreciate that show-trial hearings foster a self-protection response from the DOD that is itself costly. The response includes adding extra layers of bureaucracy to review each program, which has the unintended consequence of diffusing responsibility because the process, not any individual, is the controlling authority. In the long run, Congress actually reduces accountability in the defense acquisition system by indulging in these kinds of critical hearings.
Problem #4: Congress uses the benefit of hindsight regarding a failed program to reach an inaccurate conclusion that the failure reflects widespread problems in the acquisition system.
For example, Congress adopted a number of procurement "reforms" in 1985 in response to the failure of the DIVAD anti-aircraft gun system. (Secretary of Defense Caspar Weinberger cancelled the DIVAD program that same year.) Among these reforms was a provision that required multiple sources in both the development and production of major weapons systems. The provision could be waived only on the grounds of national security.
The questions of whether applying this requirement to all major acquisitions made economic sense, and whether the DIVAD failure was just a matter of the technology not working out in this instance, were brushed aside in the rush to appear to be solving the assumed procedural problems that allegedly caused the failure. The contradiction was made all the more apparent because the same legislation provided $210 million to the DIVAD program, albeit with several restrictions, despite the criticism of both the program itself and the DOD leadership by many in Congress. If Congress had just waited, the DOD would have resolved the problem in a more appropriate way with Secretary Weinberger simply canceling the program.
What Congress Should Do
Given their considerable experience in supervising and managing major defense acquisitions, DAPA Panel members are undoubtedly aware of past congressional actions, in both legislation and oversight, that have complicated and make less efficient the overall defense acquisition system. The panel's report should not hesitate to catalogue these actions and explain to the DOD leadership, the public, and especially Congress why these actions, individually and in combination, weaken the effectiveness and efficiency of the defense acquisition system.
Among the acquisition reform measures that the DAPA Panel could recommend to Congress are:
Reform #1: Congress should not seek to impose a highly centralized system of acquisition management on the Department of Defense.
Successful private businesses in the U.S. are finding success in adopting flatter, less hierarchical organizational structures that provide mid-level and lower-level managers both clear goals and considerable discretion in managing their portions of the business. Top-heavy, overly centralized management is proving to be both ineffective and inefficient. Gary Christle of the CNA Corporation made this point to the DAPA Panel during a hearing on August 23, 2005.
Excessive centralization begins at the top. While Christle's testimony addressed issues related to legislation enacted by Congress governing the acquisition process, particularly the Goldwater-Nichols Act, it did not focus on the issue of how Congress behaves as a supervisor of defense acquisitions on an annual basis. Congress, as the government's rough equivalent of a corporate board of directors, is at the top. As much as Congress would like to control defense acquisitions down to the line item, particularly in the pursuit of parochial interests, attempts to do so undermine the overall defense acquisition system.
Part of the answer to avoiding excessive centralization is for Congress to organize the research and development (R&D) and procurement sections of defense legislation, including authorization and appropriation bills, around broader accounts and not on an item-by-item basis. Further, Congress should exercise the same restraint in drafting the accompanying reports on the legislation.
Reform #2: Congress should recognize that its irresponsible exercise of oversight results in a risk-averse approach to defense acquisition.
These actions, particularly when they recur over time, unintentionally undermine accountability in the acquisition system. No member of the executive branch wants to be subjected to the sort of show-trial persecution by congressional committees that befell Secretary Weinberger in the 1980s. When faced with such threats, the DOD predictably moves to protect itself. This self-protection mechanism takes the form of an aversion to risk and results structurally in layers of bureaucracy that are designed to diffuse responsibility.
While the excessive bureaucracy is an effective self-protection mechanism, it also imposes immense direct costs and incalculable opportunity costs. Ambassador Henry F. Cooper, director of the SDI program during the early 1990s, catalogued the direct costs for the Theater High Altitude Area Defense (THAAD) system during a six-month period. He determined that addressing and readdressing over 900 issues related to this one program for Defense Acquisition Board reviews during this period required:
Clearly, this degree of bureaucracy makes no sense, except as an institutional self-protection mechanism. It reflects the risk-averse attitude that causes DOD program managers and supervisors to say to themselves, "No expense is too great to protect me against being hauled before a congressional committee over some perceived failure in a program that will jeopardize both my career and the program."
Congress needs to stop feeding this kind of thinking within the DOD acquisition bureaucracy. This means resisting the temptation to conduct show-trial hearings. Unless it is anticipated that hearings regarding a particular acquisition will reveal a systemic shortcoming in the DOD acquisition process that lends itself to a systemic legislative remedy, they should not be held. Congress should remember that the primary purpose of oversight hearings is to inform the legislative process.
Reform # 3: Congress needs to address legislative requirements for acquisition reform systemically, not episodically.
Congress can find itself caught in a cycle of finding an acquisition problem and seeking a legislative solution designed to ensure that the problem does not recur, which is what happened in the DIVAD "scandal." Taken in isolation, this kind of responsive legislation seems reasonable and certainly not damaging to the defense acquisition system. However, the accumulation of such tailored legislation weakens the acquisition system.
When Congress confronts a genuine shortcoming in the acquisition system or a program failure, it needs to step back and take a broader view of the problem. First, it needs to assess whether the program was managed responsibly or whether the technology simply did not pan out. Congress should not judge adverse technology outcomes as necessarily deserving punishment or legislative remedy. Indeed, it should accept that a certain number of technology failures is evidence of a healthy attitude in both the DOD and industry to press for larger-scale advancements.
Second, it should assess whether the problem or failure reveals a systemic shortcoming in the acquisition system and not just a circumstance in which someone broke the rules or otherwise acted irresponsibly. Catching a burglar does not indicate a problem with the criminal code, and no one would recommend changing the burglary law simply on this basis. The same should be true of defense acquisition law.
Reform #4: Congress should allow flexibility in the acquisition system so that different kinds of programs can be managed differently.
Frequently, the admonition is stated in Congress and elsewhere that effective defense acquisitions follow from a "fly before you buy" approach. This term is shorthand for fully testing the weapon or system in question before proceeding to the procurement phase. In many cases, this admonition is clearly appropriate.
On the other hand, the fly-before-you-buy approach cannot work in a number of critically important defense acquisitions. These are elaborate "system of systems" acquisitions such as satellite networks, global missile defense, and command and control networks, which are becoming more frequent in the age of "network-centric warfare." In these cases, the network in question cannot be tested until major components have been purchased and put in place. The Bush Administration has therefore adopted a "spiral development" approach for acquiring these kinds of elaborate networks that entails putting critical components of the overall network in place and testing the components and improving the network on an incremental basis.
In this day and age, Congress cannot reasonably assume that a single, uniform approach to defense acquisition, particularly in major acquisitions, will serve the men and women who fight the nation's wars. Further, it should not assume that the research, development, testing, and evaluation portion of an overall acquisition can eliminate all technical risks before a decision to go into production, at least not in all instances. This means that Congress must give DOD managers and supervisors some discretion to take calculated risks.
The payoff for the military is an increased prospect for achieving significant technological breakthroughs and moving them to the field relatively quickly. Jim Albaugh, a senior executive with the Boeing Company, made this point in his August 17, 2005, testimony before the DAPA panel: "The current [acquisition] process is designed to make all development and procurements fit a common mold…[and] isn't set up to be flexible." When the nation is at war, Congress should focus on getting better technology to the nation's soldiers, sailors, airmen, and Marines sooner.
Reform #5: Provide adequate funds to defense R&D and procurement accounts.
Part of the problem with the acquisition system is that some in the DOD and Congress expect to get more out of the acquisition system than the resources committed to modernization can possibly deliver. This issue is pertinent to Congress because Congress is responsible for funding the entire DOD program. Yet the two major DOD accounts that fund acquisitions, R&D and procurement, have been falling relative to the overall DOD budget.
Put another way, the nation's overall defense effort is growing faster than the program to arm and equip the force. As a result, the modernization effort is failing to keep pace with the broader defense program. For example, in fiscal year 1985, almost 45 percent of the DOD budget went to the R&D and procurement accounts. In fiscal year 2004, these accounts absorbed only 31 percent of the DOD budget.
An accompanying result of these declining resource commitments to the modernization accounts is an economic squeeze on the defense industry that Congress may not fully appreciate. According to Christopher E. Kubasik and Ralph D. Heath of Lockheed Martin Corporation, the potential economic rewards in the defense sector are not keeping pace with the economic risks, particularly when compared with other business sectors. Publicly owned electric utilities, pharmaceutical companies, and software and software services companies all have higher average operating margins than the defense companies, although in some cases the other sectors have to tolerate a higher level of volatility in revenues.
In other words, defense companies that deliver new weapons to the DOD are not fleecing taxpayers, as some might imagine. The major consolidation in defense industries during the past decade and a half did not happen by coincidence. In relative terms, the defense sector is at risk of falling behind other sectors of the economy.
To fulfill its mandate, the Defense Acquisition Performance Assessment Panel needs to address how Congress authorizes, funds, and oversees major defense acquisitions. As an independent panel, the DAPA Panel has a unique opportunity to achieve truly effective reform. Congress, for its part, needs to be willing to listen to constructive criticisms of its behavior because its actions can and do contribute to problems in the defense acquisition system.
It is important to note that the House Armed Services Committee in particular is showing a keen interest in the Quadrennial Defense Review and is undertaking its own complementary review, which it calls the Committee Defense Review. This bipartisan panel is hearing from expert witnesses.
Since defense acquisition reform is a key issue in the Quadrennial Defense Review, and since the DAPA project is the vehicle for providing recommendations for reform, the Committee Defense Review panel should seek the testimony of DAPA Panel Chairman General Kadish. The Senate Armed Services Committee received preliminary testimony from General Kadish on September 27. General Kadish has already offered to testify again after the DAPA Panel completes its work later this fall. In the interim, he should make sure that the DAPA report includes an assessment of how Congress's daily actions affect the overall defense acquisition process and how they could be improved.
Finally, everybody concerned should focus on the single most important goal of defense acquisition reform: providing U.S. soldiers, sailors, airmen, and Marines with the most effective weapons and equipment as soon as possible. During this time of war, they are putting their lives on the line for the security of the nation every day. Government leaders in both the executive and legislative branches have a duty to them to give them the best possible chance of surviving the battlefield while fulfilling their assigned missions.
Baker Spring is F. M. Kirby Research Fellow in National Security Policy in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.
Gordon England, "Acquisition Action Plan," memorandum, June 7, 2005, at www.nasites.com/cmprojects/projects/1188/docs/ England%20Acq%20Action%20Plan%20Memo.pdf (October 5, 2005).
Donald H. Rumsfeld, "Prepared Testimony on the 2002 Defense Department Amended Budget to the House and Senate," June 28, 2001, at www.defenselink.mil/speeches/2001/s20010628-secdef.html (August 30, 2005).
U.S. Government Accountability Office, Defense Acquisitions: Assessments of Select Major Weapon Programs, GAO-05-301, March 2005, p. 5.
Pedro L. Rustan, Ph.D., testimony before the Committee on Armed Services, U.S. House of Representatives, July 12, 2005, p. 2, at www.house.gov/hasc/schedules/Rustan7-12-05.pdf (October 5, 2005).
W. Douglass, in "Acquisition Perspectives from Industry,"
transcript of Defense Acquisition Performance Assessment Panel
meeting, August 23, 2005, p. 6, lines 15-19, at
(August 30, 2005).
Rustan testimony, p. 3.
For a brief description of the authorizing legislation relative to the SDI program adopted by Congress in 1990, see Congressional Quarterly, Congressional Quarterly Almanac (Washington, D.C.: Congressional Quarterly Books, 1991), Vol. 46, pp. 691-693.
Public Law 93-155, 87 Stat. 605-623.
Public Law 108-375, 118 Stat. 1811-2199.
Congressional Budget Office, "Historical Budget Data," January 25, 2005, Table 8, at www.cbo.gov/showdoc.cfm?index=1821&sequence=0#table8 (September 21, 2005).
For a general description of the congressional hearing process from the perspective of the Secretary of Defense at the time, see Caspar W. Weinberger, Fighting for Peace: Seven Critical Years in the Pentagon (New York: Warner Books, 1990), pp. 59- 63.
Charles Mohr, "Military Price on Coffee Cited as $7622," The New York Times, September 20, 1984, p. A27.
Congressional Quarterly, Congressional Quarterly Almanac (Washington, D.C.: Congressional Quarterly Books, 1986), Vol. 41, p. 142.
Gary Christle, "How Do We Avoid Being the 129th Study?" briefing slides from testimony before the Defense Acquisition Performance Assessment Panel, August 23, 2005, p. 18.
Ambassador Henry F. Cooper, "End of Tour Report," January 20, 1993.
Jim Albaugh, "Opening Remarks," testimony submitted to the Defense Acquisition Performance Assessment Panel, August 17, 2005, p. 4.
These calculations are derived from data in U.S. Department of Defense, Office of the Under Secretary of Defense (Comptroller), National Defense Budget Estimates for FY 2006, April 2005, at www.defenselink.mil/comptroller/defbudget/fy2006/ fy2006_greenbook.pdf (September 23, 2005).
Christopher E. Kubasik and Ralph D. Heath, "Lockheed Martin Perspective on Improving the Defense Acquisition System," briefing slides accompanying testimony before the Defense Acquisition Performance Assessment Panel, August 17, 2005, p. 5.
For a description of the Committee Defense Review and its ongoing activities, see Committee on Armed Services, U.S. House of Representatives, "CDR-Committee Defense Review" Web site, at armedservices.house.gov/CDR (October 5, 2005).
Lieutenant General Ronald T. Kadish, "The Defense Acquisition Performance Review Project," testimony before the Senate Committee on Armed Services, September 27, 2005, at www.dapaproject.org/documentframeset.asp?docname=http:// www.nasites.com/cmprojects/projects/1188/docs/0927%2OSASC%20Defense%20Acquisition%20Kadish.pdf (October 17, 2005).