Aligning Acquisition Strategies With the Times
The need to do more with less dictates crucial changes in national security procurement.
Top U.S. military officials are warning that the current fiscal crisis is the single biggest threat to the country’s national security. And, the most critical concern facing the United States is ensuring that it has the resources necessary to maintain its security globally—and that it is prepared for the challenges ahead.
In fiscal years to come, the U.S. Defense Department must make major changes to the way it deals with the competing forces of decreased financial resources and continually morphing security challenges.
The changing nature of security threats to the United States requires significant rethinking of how agencies procure everything from major weapons systems, to tactical communications systems, and even to the batteries needed to power gear developed from next-generation technologies, according to Dr. Jacques S. Gansler. He is the director of the University of Maryland’s School of Public Affairs, where he holds the Roger C. Lipitz chair in the university’s Center for Public Policy and Private Enterprise. He is also a former undersecretary of defense for Acquisition, Technology and Logistics.
“The need to improve the acquisition process extends beyond just the defense arena,” Gansler emphasizes, suggesting that it increasingly includes global commercial firms. And the struggles that the Defense Department experiences are not much different than those at the Department of Homeland Security (DHS) he contends. This is because the DHS taps into many of the same national security industrial base firms that sell goods and services to the Defense Department.
“Technology has changed dramatically; geopolitics has changed dramatically; international economics has changed dramatically; and most importantly, national security has changed dramatically,” Gansler explains. “We’re not talking about tank-on-tank from the Cold War. We’re talking about war among the people; we’re talking about everything from pirates to terrorists and unstable governments and even nuclear war.”
Both the Defense Department and the DHS have to cover a full spectrum of national security challenges at a time when government purse strings are by necessity being drawn tighter. “Since 9/11, we’ve lived in a rich man’s world,” he says, characterizing increases in defense and homeland security spending over the past decade.
“The budget has exploded, and now we’re going to be facing the reality that we have a deficit problem. In fact, [Adm.] Mike Mullen [USN], the former chairman of the Joint Chiefs of Staff, says our number one national security problem is the debt,” Gansler says. In 2014, interest payments on the debt alone will equal the amount of the defense budget, he warns.
The rising political tide of concern over federal spending, Gansler notes, means that, “We have to worry about things we haven’t had to worry about over the last 10 years.” In the past, he says, “If costs go up, we just put a supplemental in— get an extra $150 billion. But now, if the dollars are going to go down significantly, we know historically some things will go away.”
Based on past experience, he adds, the first things to go when budgets are tight generally are travel, training and research. “It’s the research that can kill us, because for the last 50 years, at least, our national security strategy has been technological superiority. How do we maintain that in the absence of research money?”
At a time when it is not unusual for major weapons systems to go tens and even hundreds of millions of dollars over budget, Gansler says that another acquisition hurdle to overcome in austere times is the increasing unit cost of equipment.
“The next fighter, instead of costing $35 million, is now going to cost over $130 million. Each [Navy] carrier is going to cost $11 billion without airplanes, and the numbers are just enormous!”
Gansler points to several examples of weapons systems developed in times of fiscal restraint that got the job done. One is the Joint Direct Attack Munition (JDAM) add-on modules developed in the 1990s by the Air Force and the Army to give so-called dumb bombs the ability to fly to specific targets.
He recalls saving a hand-written note from the chief of staff of the Air Force, outlining the three requirements for the JDAM: “It should work; it should hit the target; and it should cost under $40,000 each.” Gansler states that current versions of the JDAM “work; they hit the target; and they now cost $17,000 each.”
Gansler explains that adjusting the acquisition process to meet new fiscal and security challenges is more than just writing a better contract. Instead, he asserts, a more comprehensive approach to acquisition reform demands four planks of change—represented in the form of questions—to how business is done.
Gansler says that, “The first question is what do we buy? The second question is how do we buy? The third question is, who does the buying, and do we have smart buyers? And the fourth question,” he continues, “is from whom do we buy—what’s the industrial base we’re drawing upon?”
Addressing the first issue of what to buy, Gansler says that affordable equipment is at the top of the list. “What I can afford at the quantities that I need should become a military requirement,” he explains. “The equipment we buy should also have flexibility to cover the spectrum of security challenges, including new threats like cyberwarfare.
“Cyberwarfare is not just an attack on the military; it is an attack on the civilian economy. We can have an attack easily on the power grid, or the banks or the hospitals. What we buy has to be thought of for the 21st century, not the 20th century.”
With regard to examining how things are bought—the acquisition process—Gansler says that along with changing the cost of what is purchased, the Defense Department also has to make significant changes to the amount of time it takes to acquire major weapons systems.
“Take the next-generation airplane—the F-22 has taken over 20 years to develop and deploy,” he says. “Technology changes on an 18-month cycle, and this is supposed to be the technology airplane.”
Gansler insists that doing it faster, and doing it with more cost sensitivity, is vital—and the best way to accomplish that is through effective competition.
In a study he conducted for the Defense Science Board, Gansler notes that 57 percent of what the Defense Department buys today is services. He explains that one of the proposed defense acquisition reforms calls for the re-competition of all service contracts every three years. He considers the three-year requirement by itself to be a disincentive to firms that want the government’s business, and he instead would base the three-year re-evaluation on a firm achieving higher performance at lower cost.
When it comes to who does the buying, Gansler says smart buyers are needed. He minces no words in stating that the training and retaining of skilled acquisition experts has been grossly neglected and undervalued in terms of the importance of having smart, experienced buyers.
Gansler states that he was shocked to learn that, during a study of contracting in Iraq and Afghanistan—conducted for former Defense Secretary Robert Gates—“The organization that supervises the contracting, the Defense Contract Management Agency, used to have four general officers in 1990. When I did the commission in 2009, they had zero. They went from 25,000 people to 10,000 people.”
This undervaluing of acquisition experts, both in the rank and file, serves as a disincentive to junior officers to become experts in contracting and acquisition if no visible career path exists for promotion. Gansler relays that much of the reduction in contracting staff took place during the last round of defense spending reduction, but, when the budget exploded in the mid-1990s, the number of contracting people and general officers kept decreasing.
“We’ve gotten to the point where they’re more concerned about conflict of interest, they’re more concerned about compliance, than they are about results. We’re more concerned about process than results, and that’s dangerous,” Gansler warns.
Commenting on whom the United States buys from—which is the final reform plank—Gansler expresses concern about the deterioration of the industrial supply base. “It’s very clear that in many areas, the Department of Defense is no longer the leader in many of these fields. [In] a lot of electronics, a lot of information systems, software packages, the commercial world is way ahead, so we should be drawing on that commercial world, as well as traditional defense suppliers and, where appropriate, there’s technology from around the world we should be drawing on.”
In some cases, Gansler says, U.S. regulations and laws have made the Defense Department dependent on foreign technology. One example is in the realm of night-vision technology, which is used to provide nighttime operational and tactical ability to dismounted warfighters. Gansler says he learned in a briefing by the Army’s Night Vision Laboratory that, “The French are now ahead of us in night-vision technology, and the reason is that we prohibited our people from selling around the world, and therefore, the French took over the world market in night vision.”
He says another challenge for the defense industrial base is the labor force, particularly in high-technology sectors.
“If I go over to the University of Maryland engineering department, or any school in America today, the largest share of the engineering and science people are non-U.S. citizens, but we have this foolish requirement that they have to sign, that they have to go home when they complete their student visa. That’s silly! Why can’t we take advantage of this work force?”
Gansler also points to President Ronald Reagan’s signing of National Security Decision Directive (NSDD)-189, the National Policy on the Transfer of Scientific, Technical and Engineering Information, which says fundamental research can be done by anybody, anywhere, and published freely. He says that this directive recently was re-affirmed by former National Security Advisor and Secretary of State Condoleezza Rice, and more recently by Gates. And yet, Gansler says, the Defense Department, the DHS and the Department of Energy have placed restrictions on fundamental research awards, limiting them to U.S. citizens.
True acquisition reform will result from an overall cultural change in the Defense Department and the DHS, Gansler emphasizes. Officials in charge of contracting and acquisition must recognize the need for change, based on the four planks of reform. And they must be willing to do what is needed, including setting appropriate milestones and metrics to determine if the changes are creating the desired improvement in the way acquisitions take place.
Boeing JDAM program: www.boeing.com/defense-space/missiles/jdam/index.htm
National Security Decision Directive (NSDD) 189: www.fas.org/irp/offdocs/nsdd/nsdd-189.htm
Dr. Jacques Gansler bio: www.publicpolicy.umd.edu/directory/gansler