There?s Your Problem Right Here!

[here_2_help]

Shay Assad understands the problems with the DOD acquisition process and knows how to fix them.

The following are exact quotes from Government Executive article entitled ?Defense Outlines Change in Acquisition Strategy?: (http://www.govexec.com/story_page.cfm?articleid=41973&sid=60)

For too long, Assad said, Defense has assumed too much risk in its procurement procedures, both on programs that might not have been technically ready and on precarious contracting vehicles that failed to hold down costs. To better predict costs and share risks, the department plans to make a ?significant shift? away from cost-plus award-fee contracts. ? Moving forward, Defense will utilize more incentive-based costs-plus and fixed-price contracts and rely on multiple companies for long-term agreements. ?We?ve got to write better contracts that better incentivize industry and get the best deal,? said Assad ? ?The world of cost-plus award-fee contracts is over.? ?

Echoing a point frequently made by the new administration, Assad said Defense acquisition employees ?need to keep at arm?s length from industry. This will benefit the warfighter and will benefit the taxpayer.? Defense also will look to increase savings through more contract competition. In 2008, the Pentagon competed 64 percent of it?s [sic] nearly $400 billion in contracts, a record for the agency. But, Assad said, ?It?s still not enough,? because many of those contract awards involved only one bid.

? ?We are going to push contractors real hard for significant savings,? said Assad ?.

Leadership in action? Or time for the classic internet "facepalm"?

More seriously, does anybody really think that "writing better contracts" and "keeping DCMA folks at 'arm's length' from industry" is going to solve the myriad problems in DOD's acquisition process? Can we also add, "write better solicitations" and "better evaluate proposals" to the list of Big Changes to be implemented? I guess I'm ready for SES status now!

[Guest Vern Edwards]

If Mr. Assad thinks that he'll solve problems by switching from CPAF to CPIF and FPI contracts, he'd better think again. The predetermined formula-type incentives have been studied by many organizations, including Rand, Harvard, Logistics Management Institute, and the GAO, and no one has proven that they work as advertised. Moreover, they require a lot of know-how to design and properly administer--know-how that his workforce by and large does not have. They are monstrosities in programs in which contracts will undergo a large number of changes.

The most serious problems in defense acquistion are deeply rooted in organization and culture. DoD cannot solve them by writing formula-type incentive contracts. More competition won't help, either. Anyone who thinks that it will does not understand either acquisition or competition as practiced today under CICA.

One of DoD's most serious problems is that its senior acquisition "leaders" keep falling back on the same old "remedies" and "reforms" that have been practiced off and on for more than 50 years: contracts that put more risk on contractors and talking tough. If they knew what they were doing and had the power to overcome the organizational and cultural obstacles to change they would chart an entirely different course.

[joel hoffman]

How about BETTER management of risk by REDUCING risk. Do their homework up front; make commitments and stick to them; treat the taxpayers' money like it is their own.

[Guest Vern Edwards]

What Secretary Gates and Shay Assad are talking about is major systems acquisition. The problems in that field are primarily organizational and cultural, not managerial. The services compete for budget dollars. The identity and very existence of the service is at stake. For example, the Air Force feels that the F-22 and a new strategic bomber are crucial to its identity as a strategic force. It does not want its primary mission to be air support for ground troops, which is tactical, rather than strategic. The Navy feels the same way about aircraft carriers, despite their obvious vulnerability, and submarines. (Although I must admit that a carrier stacked with aircraft is a pretty impressive and somewhat scary sight. Boomers cruising on the surface leaving Puget Sound are very, very scary.)

Interservice rivalry induces all sorts of "bad" behavior. Such behavior includes understating the prospective cost of a new system and overstating the system's capabilities in order to get congressional support and then forming alliances with members of Congress whose constituents are employed in the production of the system in order to keep the program alive despite escalating costs and performance shortfalls. Premature approval to proceed on to the next developmental phase helps to maintain support. Despite all of its bitching, Congress is a co-conspirator. Consider the current effort by certain members of Congress to keep the F-22 alive as a jobs program.

Many, many books have been written about this, going back to The Weapons Acquisition Process (2 vols.), by Peck and Scherer, published circa 1960. See also The Politics of Strategic Aircraft Modernization, by Sorenson (1996), and Flying Blind: The Politics of the U.S. Strategic Bomber Program, by Brown. There are many, many others.

We are not going to change any of this by talking tough to contractors, writing better contracts, switching from award fee to formula-type incentives, and getting more competition. That's ridiculous. And we're not going to change it by getting better program management training and using earned value management. Major systems acquisition works the way it does because of organizational, cultural, and political imperatives and objectives rather than mismanagement. (Although there is mismanagement, as there is in all human endeavors).

Hopefully, Mr. Assad understands all this and is simply engaging in the standard public relations effort designed to mollify ignorant public officials, the press, and the general public. If he doesn't understand, if he truly believes what he is supposed to have said, then, well...