Defense Contract Reform: Recommendations

 As noted in yesterday’s blog on Defense contracting reform, The House Armed Services panel on Defense acquisition reform offered a series of recommendations in five areas in its March 2010 report:

• Managing the acquisition system
• Improving the requirements process
• Developing and incentivizing a high quality acquisition workforce
• Reforming financial management
• Getting the best from the industrial base

Improve overall management of the acquisition system.  The panel offered a series of recommendations to improve the overall management of the Defense buying system:

• Create a comprehensive performance assessment and audit function.  The panel recommended expanding the role of the Office of Performance Assessment and Root Cause Analysis to include the entire defense acquisition system, and that it should report directly to both the head of Defense procurement as well as the department’s chief management officer.  It also recommended that all program executive offices develop measures of progress and success, and be linked to incentives that “reward high performing activities.”

• Align acquisition policy to the acquisition system.  Requirements related to weapon systems are being inappropriately applied to non-weapon system acquisitions, particularly the buying of services and information technology.  Separate policy tracks are needed.

• Address the inappropriate use of financial incentives.  Program managers and business managers need better training to ensure they do not inappropriately use obligation and expenditure benchmarks in lieu of best value benchmarks to judge the progress and success of contracts.

Fix the requirements development process.  The panel found the existing requirements development process to be largely broken: “. . the requirements process is simply not currently designed to support the kind of iterative dialogue with the acquisition process that is needed to ensure that the acquisition process remains focused o real operational needs.” It recommended setting clear authority over who and how requirements are set.  Key players should be involved in discussions on what the requirements should be, in order to ensure trade-offs are accounted for.  In addition, senior Defense leaders should rethink the entire requirements determination process.  However, the panel offered no specific fixes in its report (or if it did, they were too subtle!).

Establish attractive career paths for acquisition professionals.  It’s not just contract officials, but also system engineers, development planners, software engineers, cost estimators, developmental testers, product support mangers, and others.  The laws are now in place; implementation is needed.

Improve financial systems to the point they can pass an audit.  The panel believes poor financial management fosters poor accountability and that the chief management officer for the Defense Department needs to develop a plan to be compliant with the audit laws before 2017 (a deadline set by Congress last year).

Proactively engage business in contract opportunities.  Don’t rely only on businesses searching federal announcements of contract opportunities as a way of developing the country’s industrial base.  Reach out especially to small businesses.  In addition, Defense should compile better pricing information of commercial items so it pays the best price.  In addition, Defense should do a better job at identifying “bad actors” and banning them from doing work with the government, instead of the current approach of withholding upfront a share of contract payments in the belief that all companies are tax cheats.

Do you think these actions get at the heart of Defense acquisition problems?  Do you think they can be implemented?