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Acquisition reform act: the backlash has begun.

* It's only been seven months since President Obama signed the Weapon Systems Acquisition Reform Act of 2009. Both Congress and the administration heralded the legislation as a much-needed fix to the Pentagon's troubled procurement process.

Predictably, a chorus of disapproval already is being heard.

This is a bill that by most accounts was conceived with noble intentions--to rein in out-of-control costs of weapons systems and ensure the Pentagon does not waste billions on boondoggles. It also introduced important "organizational conflicts of interest" measures that restrict defense hardware suppliers from owning companies that also advise the government on weapons acquisitions.

"It is a thoughtful, bipartisan piece of legislation," says federal procurement attorney Robert A. Burton.

But military acquisition officials and contractors are privately moaning about the "unintended consequences" of WSARA. These critics say the law may inadvertenly exacerbate some of the problems it was intended to fix. The complaints most often heard are that WSARA duplicates existing regulations, adds fresh layers of bureaucracy and piles of new reporting mandates that could have paralyzing effects on a system that already is sluggish and unresponsive.

One particular source of unhappiness is the creation under WSARA of a director of cost assessment and program evaluation. The DCAPE is expected to provide independent cost assessments of major weapons systems to the secretary of defense. But several insiders who discussed the matter on condition of anonymity question the usefulness of this new bureaucracy and predict it will create unnecessary complexity. They argue that independent cost estimates already were being bandied by the program evaluation and analysis directorate (PA&E) and the CAIG, or cost assessment improvement group. The new office creates a chain of command that operates in parallel to the undersecretary of defense for acquisition, so there is much confusion at the Pentagon as to how programs are supposed to be certified and approved under the new regime, said one acquisition official.

"They are making it harder to deliver systems," he said. "At the Pentagon, they're having trouble figuring out how to implement the new law." A combination of confusion and fear of making mistakes is fueling paranoia and creating an environment where programs will see costs rise and schedules delayed, the manager said.

The programs that will be most affected in the near term are those that are in the midst of development, or between "milestones." Until the new rules of the game are sorted out, these programs will be running up additional costs to keep contractor teams working longer than planned. Even a relatively short delay of several weeks could translate into millions of dollars in contractor billable hours and overhead expenses.

"They've got this law and they are not sure how to implement it," the program manager said. "Eventually they'll figure it out. But it's going to take time."


Another point of criticism is the way WSARA deals with cost overruns. The law modifies the previous Nunn-McCurdy legislation, which required the secretary of defense to seek special approval from Congress to continue funding a program that was 15 percent to 25 percent over budget. The new process was designed to make it easier to terminate wasteful programs, but insiders say the legislation could unintentionally drive up the price of weapons by creating incentives for "bureaucratic dithering," and for keeping alive programs by cutting quantities, which increases unit cost. Some experts note that the DOD 5000 acquisition regulations already have mechanisms in place to address cost overruns. The new law duplicates existing regulations, said one Army expert.

The way WSARA deals with Nunn-McCurdy breaches is a "huge debate" because some of the language is fuzzy, said Stan Soloway, president of the Professional Services Council and a former Pentagon official in charge of acquisition reform. "You can argue all day long whether the new legislation is value added," he said. After hundreds of billions of dollars in cost overruns in weapons programs, Congress can't be blamed for trying to do more to control the purse strings and demand more reports and analysis, said Soloway. "The frustration Congress feels translates into more reports, more oversight." It remains to be seen whether WSARA will deliver real benefits. "It added a few layers of oversight and reporting but didn't dramatically change the process," said Soloway.

Congress often is reminded that the Pentagon and various blue-ribbon panels have produced 126 studies on how to reform the acquisition process, and none has resulted in meaningful change. It could be years before anyone can say with certainty whether WSARA bucked the trend. If critics are right and the law ends up only making the process more tortuous rather than more efficient, let's hope that there are no urgent requirements for a new weapon system any time soon.

The flaws in defense procurement today are glaring, and the government has always struggled trying to reform the system. WSARA must at least be given credit for taking a big step forward.

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Title Annotation:DEFENSEWATCH
Comment:Acquisition reform act: the backlash has begun.(DEFENSEWATCH)
Author:Erwin, Sander L.
Publication:National Defense
Date:Jan 1, 2010
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