Event Review: HASC Hosts Hearing on Acquisition Reform
On July 10th, the House Armed Services Committee held their latest in a series of hearings focused on acquisition reform.
Frank Kendall, the DOD Undersecretary for Acquisition, Technology, and Logistics, testified at the hearing, along with Stephanie Barna, Deputy General Council for the Operations and Personnel Practice Group.
The hearing began with opening remarks from Chairman Buck McKeon, who acknowledged that Congress bears part of the blame for a slowing pace of improvement for acquisition reform. More importantly, McKeon noted that this hearing heralded the first opportunity to discuss these issues with DOD officials, in order to better understand the DOD’s productivity efforts in the area of acquisitions. “A key theme that has emerged from previous hearings is that you cannot effect the acquisition system if you don’t effect the people,” he said. “We hear it referred to as a need for cultural change. Professionalism of the workforce or personal accountability.”
In his opening remarks, Undersecretary Kendall supported McKeon’s observations about the slowed rate of improvement for acquisitions. Many of the things tried have had little impact and resulted in little statistical change. From this Kendall drew three conclusions. First, fixing acquisition is not a simple process. Second, it may be time to consider the possibility that perhaps “we have not been patient enough or sufficiently tenacious with acquisition policies.” Finally, he offered the possibility that the DOD has been focusing too much on the wrong things. “We have been too focused on organizational structures,” said Kendall. Barna echoed this sentiment in her opening statement, emphasizing that “defense acquisition is a human endeavor.”
The Question of Accountability
Accountability was a primary sticking point for many of the questioning committee members. Rep. Smith addressed this problem in his opening remarks, laying most of the blame for lack of accountability on the “layers of personnel” within the DOD. Smith rightly observed that, invariably, every additional program manager or coordinator added to a project will have an individual set of requirements, obligations, and instructions. With every step, the question of accountability gets murkier. “There are so many people that have a say in it, that at the end of the day, nobody’s responsible. How can we empower the workforce, and then hold them accountable?” he asked.
Rep. Speier addressed the accountability issue as well, in terms of resolving excessive spare-parts cost within the DOD. “I’m deeply troubled by the fact that 25 years ago, we were complaining about 600-dollar toilet seats, and the truth of the matter is, we’re still dealing with those same issues today.” Citing the recent Inspector General report on Bell Helicopter’s exorbitant pricing, Rep. Speier declared in her questioning that the DOD paid 8500 dollars per spare part unit from Bell Helicopter when it should have only cost 409. She then asked Undersecretary Kendall what the DOD plans to do about these excess costs in the acquisition process moving forward.
“This is an ongoing and difficult problem to address,” responded Kendall, going on to categorize the problem as one of capacity. The DOD buys hundreds of thousands of various spare parts per year, making oversight extremely difficult. There aren’t systems in place, or a sufficient work force, to properly investigate price claims. He acknowledged the need to hold these suppliers accountable, and told Rep. Speier that audits are necessary to determine how widespread and systemic the problem is.
Efficiency, Time Management, and the Better Buying Power Initiatives
In the world of defense acquisitions, the question of efficiency is of course of paramount importance. How can we ensure that the process by which we acquire new technologies and equipment is as streamlined as possible? This question was addressed by several members of the committee, including Rep. Smith, who asked Undersecretary Kendall, “How can we make quicker decisions?” In his response, Kendall conceded the complexity of the DOD acquisitions system, but reaffirmed the importance of regulations, stating that he believed the DOD has “the right overall approach.”
The issue of time management in the acquisitions process was raised by Rep. Kilmer, during his questioning of Undersecretary Kendall. Currently, a major issue for the DOD is that certain defense equipment, such as intercontinental ballistic missiles (ICBMs) or military aircraft, need to be replaced within the same time frame. This means that extreme acquisition spending happens in cycles, when this could potentially be avoided by staggering major purchases and replacements.
“We’ve been focusing for the last few years on business practices, on efficiency and productivity,” Kendall responded. He went on to reference the Better Buying Power initiatives in his response, saying that the BBP has been looking longterm at the life cycle of such equipment in order to avoid starting programs the DOD cannot afford in future.
Role of Small Business in the Acquisitions Process
Another key question raised in the hearing was the role private, small business plays in the acquisition process for the DOD. Rep. Forbes used his time to address this particular concern, observing that when there is a need for a new piece of defense equipment, it’s the small businesses that can go from idea to result the quickest. However, small businesses get so frustrated with the bureaucracy of the acquisition process that they end up consistently walking away from potential contracts with the DOD. He concluded by asking Undersecretary Kendall what the DOD hopes to do about this issue.
In his response, Kendall admitted that he is not sure what procedural things could be changed, since that same bureaucracy which turns off small businesses is what regulates the acquisition process. However, he also reaffirmed that he is “hugely invested” in small businesses, and that they are very important to the Department, providing many of its most important contracts. “The single best thing Congress can do for us in terms of small businesses is to stabilize the budget,” he said. “The cuts we’re going to take under sequestration I think are going to fall disproportionately on small businesses. It’s going to hit our service contractors.”
As the final committee member to question the Undersecretary and Ms. Barna, Vice Chairman Thornberry, an expert on acquisition reform, reviewed the material covered in the day’s hearing, ultimately articulating the key takeaway of the event. “We’ve had so many conversations about satellites, and other sorts of technologies, that just emphasize basically where we started today — we have to have top people: trained and experienced, to even understand the commercial business and the fast pace of change, in order to make these decisions.” Having a qualified, equipped, and prepared workforce is essential to acquisition reform — something which nearly everyone explicitly acknowledged during the day’s questioning. Nevertheless, acknowledging a problem and addressing it are miles apart. It is of course necessary to articulate the issues the acquisition process faces, including time management, accountability, efficiency, and overly-complicated work environments. (To highlight the frustrations of the acquisition workforce, Thornberry quipped, “A program manager is a lot like a bus driver, except every passenger on the bus has a brake and a steering wheel.”) Correcting these problems, though, will take a great deal more time than the length of an Armed Services Committee hearing.
In closing, Vice Chairman Thornberry remarked, “The whole focus that we’ve talked about today is getting and keeping top quality people in these key acquisition jobs … [today’s hearing] has been very helpful, and we look forward to continuing to work together.”
The hearing is available in its entirety on the House Armed Services Committee website.