Procurement Reforms Become a Reality

Even as Congress continues to debate which defense programs should be funded and which should be cut, one issue it has agreed on is the importance of defense systems procurement reforms. This spring, both the Senate and the House of Representatives demonstrated significant support for eliminating cost overruns and schedule slippage when they unanimously passed the Weapons Systems Acquisition Reform Act.

President Barack Obama signed the legislation on May 22. During the signing ceremony, he cited a report released by the Government Accountability Office that estimated cost overruns of $295 billion for 95 major defense projects in 2008.

While many people believe aerospace and defense companies are afraid of the impact of procurement reforms, the Aerospace Industries Association (AIA), which represents members of the aerospace and defense industry, says it has long been in favor of reforming the defense acquisition system.

“We believe in acquisition reform,” says Cord Sterling, vice president of AIA. “We issued our own report at the beginning of the year with various proposals on how to reform the current system to reduce costs and delivery times.”

Among the number of provisions in the legislation is the creation of a new office tasked with accurately estimating the cost of new programs.

AIA supports the idea of accurate up-front cost estimates, but warns of the effects of requirements creep.

“It’s hard to predict today what the requirements of tomorrow will be. When you design or initiate a weapon system to meet a certain set of requirements, the threat may change, so you change those requirements to meet the new threat. That’s going to increase costs. And it can increase costs dramatically. You don’t want the requirements changed arbitrarily or easily. At the same time, you don’t want to deliver a weapon system and they don’t want to receive a weapon system that doesn’t meet the challenges of the day,” Sterling says.

Because requirements can change—and they often do—that means that project costs can easily seen to be spiraling out of control. Oddly enough, costs also can seem to be escalating in situations in which budget cuts have occurred.

Consider a situation in which a program is created to build 10 airplanes a year, but then is cut so that only five planes a year will be delivered. “If you then start delivering only five a year because the government cuts the budget, those five units, unit for unit, are going to be more expensive because you have all that overhead that was developed based on a 10-unit-a-year delivery goal. That’s obviously going to drive up your costs,” explains Sterling.

Because of these types of situations, Sterling believes the legislation can only do so much.

“This really becomes a management issue, not necessarily a legislative issue,” he says. “It all comes down to how well the department manages itself.”

Congress seemed to agree with this sentiment. After years of having its procurement staff slashed, under the new legislation the Department of Defense will be growing its procurement workforce significantly, with the goal of filling 20,000 new positions by 2015.

However, as Sterling points out, simply adding more workers won’t make much of a difference unless those workers are qualified and trained.

“Numbers aren’t everything. I can hire 100,000 people tomorrow, and that doesn’t mean it’s going to be any better. In fact, it could be worse. You need to get the right people and really need to make sure they’re trained and qualified and can be the best representatives for the government and for the tax payer that they can possibly be.”

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