Senators Carl Levin (D-MI) and John McCain (R-AZ) have demonstrated that Department of Defense spending reform is important enough to merit bipartisan action by co-sponsoring S. 454, the Weapon Systems Acquisition Reform Act of 2009. This legislation could be a step toward creating a more cost-efficient Department of Defense.
The Government Accountability Office identified the weapons acquisition process within the DoD as being at high risk for waste, fraud, abuse and mismanagement in 1990. Nearly 20 years later, the weapons acquisition process has deteriorated even further as contracts have become less competitive and exorbitant cost growth has become the norm. From 2000 to 2007, major military acquisitions ran over budget by $401 billion. The Weapons Systems Acquisition Reform Act would help ensure that interventions occur before the cost-overruns happen in the first place.
The act specifically targets acquisition programs at the concept refinement and technology development phase, before they are approved to move into the system development phase. Eighty-five to 90 percent of cost decisions are made in the first two phases of the procurement process.
The Reform Act contains many worthwhile goals that, if successfully implemented, could dramatically improve the DoD’s ability to efficiently and effectively provide our troops with necessary weapons and equipment. The bill would require the DoD to assess each department’s ability to conduct early stage systems engineering analyses and then to improve upon any shortcomings in their abilities. Currently, many systems engineering analyses have been assigned to outside contractors.
The bill also identifies the high risk associated with using immature technologies. One of the biggest contributors to cost growth is reliance upon immature technology in weapons systems development, partly because it is so difficult to project costs accurately. The technology should exist before the DoD spends money on developing entire systems in the hope that the weapons contractor will eventually be able to finalize the technology and fix its flaws.
The bill aims to sharpen the teeth of the existing Nunn-McCurdy Amendment, which is designed to facilitate congressional oversight of weapons procurement. In its current form, the amendment requires the DoD to report to Congress programs that run 15 percent or more over budget projections. It calls for the termination of projects that go 25 percent over budget, unless the DoD demonstrates that the project is necessary to national security and that no other alternatives exist.
The Levin-McCain bill proposes that the programs only be allowed to continue if they are shown to be essential to national securityand can be continued in a more cost-effective manner. Before receiving additional funding, programs would have to provide updated milestone plans. The goal is to force departments to be upfront and realistic about the cost estimates for programs.
Other sections of the bill call for additional reform measures, such as the creation or reintroduction of oversight positions, including the Director of Independent Cost Assessment and the Director of Developmental Test and Evaluation. One of the more vague sections of the bill is the requirement for the “Secretary of Defense to ensure that trade-offs between cost, schedule, and performance are considered as part of the process for developing requirements for major weapon systems.” This is a gigantic task that is not detailed sufficiently in the bill.
The lack of competitive government contracting is a long-standing criticism of government agencies, but the DoD, with its enormous budget, is the biggest target. The Levin-McCain Reform Act will enforce “life-cycle competition” by requiring the DoD to perform periodic competitions for subsystem upgrades, and explore the licensing of additional suppliers, among other steps to make contracting more competitive. In the past 20 years, the government has consolidated its contracts to six major companies, down from 20.
While the Weapons Systems Acquisition Reform Act could help to rationalize defense spending, it is also critical that Congress fulfill its role of fiduciary responsibility over taxpayer money and make the difficult decisions about how money is spent. They must also ensure that defense dollars are spent according to a sound strategy, and that the money is used to maximize competition and minimize waste, fraud and abuse.
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