Pentagon's reform plans puzzle experts: Contractors, program managers await release of new acquisition guidelines. (Analysis).

Senior Pentagon officials said they intend to launch yet another set of regulatory reforms to the weapons-acquisition policies. In their opinion, previous attempts at making defense procurement regulations less cumbersome have not gone far enough, because they have not addressed adequately the need for more innovation and efficiency.

Defense officials are expected to unveil details of the plan during the next several months. In the meantime, defense contractors and procurement experts seem baffled as to what the changes really mean and how they will affect weapon programs.

The latest round of acquisition reforms is designed to make the procurement regulations less "restrictive" and to expedite the development of weapon systems.

Critics of the reforms, meanwhile, caution that liberalizing the acquisition rules could result in the production of unsafe weapon systems that could jeopardize the lives of U.S. troops.

The changes proposed by the Bush administration involve the possible cancellation or sweeping overhaul of the so-called 5000 series of policy directives, which provide detailed guidance on how weapon systems should be developed, procured and managed.

An unsigned memorandum from the office of the defense secretary--which was distributed among defense contractors and reporters via electronic mail in early September--said that the current regulations "are overly prescriptive and do not constitute an acquisition policy environment that fosters efficiency, creativity and innovation." As a result, said the memo, the 5000 series, which includes versions 5000.1 and 5000.2, would be "cancelled ... effective immediately."

To replace the canceled policies, the Pentagon would issue "interim guidance," the memo said.

Undersecretary of Defense for Acquisition, Technology and Logistics Edward C. "Pete" Aldridge Jr. directed his staff to prepare revised documents within 120 days from the day the memo was issued--or approximately by early January 2003.

The possibility that the 5000 series would be discarded and replaced by a new policy sent shock-waves through the community of defense program managers, which regards the documents as the acquisition bible.

Seeking to avoid mass panic in the procurement world, Pentagon officials subsequently clarified that the plan was not necessarily to cancel the 5000 series, but to revise the policies.

Richard K. Sylvester, the Pentagon's deputy director for acquisition initiatives and systems acquisition, wrote in a September 10 memo to program managers and defense industry representatives that "no such cancellation has taken place."

In the meantime, he said, "we are working on a streamlined DoD 5000 series that will remove prescriptive requirements and focus on outcomes."

The overhauling of the acquisition system is not an unusual event at the Pentagon, observers pointed out. The 5000 series has gone through several rewrites during the past two decades. Less than four years ago, the department kicked off a massive revision effort, which was completed in late 2000 and early 2001.

The latest stab at reform appears to have been triggered by frustrations among senior officials that many weapon programs are years behind schedule, as a result of a cumbersome procurement process, and that acquisition managers don't work as efficiently as commercial businesses do, because they are restricted by the rules.

Since the beginning of his tenure as defense secretary, Donald Rumsfeld repeatedly has called for the "transformation" of the Defense Department business practices, for greater innovation and flexibility in weapons acquisition.

Sylvester's memo reflects Rumsfeld's marching orders. "We want to encourage innovation, creativity, flexibility and efficiency in the acquisition process," he wrote. "To that end, we have proposed canceling the current documents and replacing them with interim documents that are 80 percent complete, while we work on finalizing a new directive and instruction and coordinating it within DoD and with industry."

Sylvester sent a version of the documents to top acquisition officials and industry representatives, asking for comments by the end of September.

His office is coordinating the proposed cancellation of the 5000 series and the implementation of interim policy documents with the Pentagon's director of test and evaluation, and with the assistant secretary of defense for command, control, communications and intelligence. The Defense Department's general counsel would be asked to review the changes. Revisions or outright cancellation of the 5000 series do not require congressional approval.

Also fueling the uncertainty has been the recent reorganization of the defense procurement and acquisition policy office, led by Deidre Lee. In late September, Sylvester moved to a different job, dealing with acquisition workforce issues. He was replaced by Dan Nielsen.

Without knowing the exact scope of the reforms, it is too early to speculate on what may happen with the 5000 series, said one defense procurement expert who did not want to be quoted by name. Defense contractors, in general, said the source, support the elimination of the "overly prescriptive language" in the 5000 series. Some of it, however, "is useful guidance."

Other experts are concerned that this round of reforms could lead the Pentagon back to the embarrassing procurement scandals of the 1980s--scandals that prompted the creation of the 5000 series to begin with. Any time that oversight is relaxed, critics said, it's hard to say what unintended consequences may ensue.

Procurement Scandals

James F. O'Bryon is the Defense Department's former deputy director of operational test and evaluation. He came to the Pentagon in the mid-1980s, when the building was reeling in procurement scandals and accusations of contractor fraud and abuse.

Reform advocates, he said, sometimes fail to learn the lessons of the past. In the case of weapon acquisitions, he noted, policy changes unintentionally could lead to problems such as unreliable or unsafe systems.

"I really think Rumsfeld is trying to do the right thing," O'Bryon told National Defense. He speculated that Rumsfeld's thinking is influenced by Pentagon political appointees who maybe taking a short-term view of the situation and do not have the benefit of corporate memory.

"Program managers are only there for three years," said O'Bryon. "So they are not necessarily optimizing the performance of the system. They are optimizing the resources they have at their disposal for that period of time. As a result, we end up making short-term decisions and making sub-optimal systems.

The administration's desire to remove "overly restrictive" language from the regulations might be a good idea, in the end, but it's hard to predict what will happen, he added. "I'm ambivalent. There are some good points, but also bad points."

One lesson he learned in his 15 years at the Pentagon, said O'Bryon, is that "I get somewhat fearful when some of the accountability is removed."

The history of acquisition goes in cycles, he explained. The level of oversight in acquisition programs tends to ebb and flow. Oversight lessens when the process is perceived as too slow and cumbersome. But as soon as cases of fraud and abuse surface, the regulations get tightened again.

"What happens is we end up having a disaster. A weapon system goes down in flames. Someone gets seriously injured. Then we have another cycle [of increased oversight]," said O'Bryon. "We have seven- to eight-year cycles that swing back and forth."

The current reform effort, he added, "Is one of those that swings back away from oversight."

Sometimes, "less regulation is better," said O'Bryon. But decision makers must ponder whether they are raking unnecessary risks. "We are talking about lives, winning and losing wars.

Rumsfeld's goal to expedite the development and deployment of equipment to the field is laudable, he said, but relaxing oversight may not be the way to accomplish it.

Pentagon-funded studies carried out in the mid1 990s concluded that the number-one reason systems go over budget and schedule is technical problems, O'Bryon said. Rushing to field systems that are not mature could cause more trouble than it might solve. "You can argue that if you put it out there [and field a system] incrementally, you'd be better off. But if you lower the bar too much, [the end result could be] a serious hazard or ineffective equipment in the field."

O'Bryon is not surprised that the Pentagon wants to reform the acquisition process again. "We are always reforming. ... But I don't think we should throw everything out and start all over again." The current regulations "are there for a good reason. If you want to change them, that's fine. But I don't believe you should throw the baby out with the bath water."

A useful analogy to what is happening today was the Pentagon's decision in the mid-1990s to do away with derailed military specifications--which contractors had to follow in the design and development of weapon systems. The move was aimed at lowering the cost of military equipment that was made more expensive by the so-called milspecs and could be bought at lower prices from commercial vendors. A famous example was an Army milspec on how to bake chocolate-chip cookies.

Even though it made economic sense to get rid of the milspecs, some 30,000 to 40,000 of those rules had been created in response to equipment failures in the field, "where people were hurt and things weren't reliable," said O'Bryon. Nevertheless, "We threw them [the milspecs] all our."

However, "I'm not saying some of them weren't ready to be thrown out. But I think we forgot many of the lessons that took them there. ... We are going to end up learning them the hard way.

Inadvertent mistakes sometimes happen, because there is a lack of corporate memory, he said. "A lot of the senior folks don't have corporate memory. Many things have been tried before and have not worked. ... We need corporate memory to make sure that we don't repeat the errors of the past."

Until the details of the revisions to the 5000 series are unveiled, defense contractors remain unsure of what to expect, said Cathy Garman, defense procurement policy analyst at the Contract Services Association.

"There is a really mixed feeling as to what the impact [of the regulation changes] is going to be and what it really means for the procurement process," she said. "What I'm hearing from industry is that they will wait and see."

RELATED ARTICLE: Battle Management Technology Moving to the Web

Defense contractors are rushing to develop Web-based software applications that promise to help war planners make decisions faster. Web technology also is gaining popularity among intelligence planners and operators, experts said, because it provides them with smoother access to a vast universe of military databases.

Industry officials said that they see growing interest by the military services in battle-management software for tactical applications--such as targeting or mission planning--that are Internet compatible, which makes them easier to network with other systems.

"Superior decision making is the goal," said Neil Kacena, deputy for advanced development programs at Lockheed Martin Corp.

Military customers want tools for "rapid re-planning and real-time mission planning," he said during a briefing to reporters in Washington, D.C.

When it comes to battle-management software, however, the lack of common, open standards presents a "challenge in the industry," said Kacena. Companies need to figure out "how to pull this capability together in a format that allows the war fighter to have situational awareness so he can operate at a higher level in the decision process."

One problem has been the lack of standards in battle-management software, he said. "It's fair to say that there are no standards at this point."

The so-called "enterprise technology" will help war planners organize information faster and in a more coherent fashion, said Don Bently, program manager at BAE Systems.

"The concepts and applications of enterprise technology, if adopted judiciously, can be particularly appropriate for defense systems," said Bently.

He noted, however, that there is a "problem with establishing standards." In the industry today, "the competitive environment is alive and well and is going to continue," he said. For that reason, the military services should not rush to buy any one company's technology 'The services need to be sure that they continue to have well-prepared program managers and technical advisors for those program managers, because they are going to have to filter through all these operators that industry will bring."

In the near term, said Bently, "the adoption of enterprise technology will be a generalized trend. The particulars will be based on the mission needs of each Service."

The Web-based enterprise technology is an ideal environment for many air war planners, he said. These operators typically spend hours each day surfing the Web. 'They understand what Web-centric and Web-enabled really means," he said. "They want to be able to access target information, enemy defense information and other data."

The technology used today for joint command and control, called the Theater Battle Management Core Systems (TBMCS), is being upgraded to incorporate more Web-based applications, said Frank DeLalla, the TBMCS program director at Lockheed Martin Mission Systems.

The TBMCS is being improved for "rapid decision making," he said. The company is adding more "Web-enabling capabilities, to make it more user friendly and improve the access to more data."