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Germany Shifts Procurement Tasks to Single Organization

September 1999
By Robert K. Ackerman
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Newly consolidated acquisition group also given mandate for development, implementation of information technologies.

Germany has accelerated a longtime move toward acquisition reform by consolidating diverse activities in its main procurement agency. These changes have been driven largely by Germany’s new security mission and by the need to incorporate substantial amounts of high technology into hardware and doctrine.

The procurement office is assuming overall responsibility for all management tasks formerly held by the Ministry of Defense. The ministry retains planning, overall control and functional and project supervision. The agency is now responsible for many research and development functions that were the purview of the ministry.

In addition to assuming tasks from the Ministry of Defense, this acquisition organization was handed the portfolio for information technology procurement, including data processing centers.

The focal point of these changes is Germany’s Federal Office of Defense Technology and Procurement, known by its German acronym BWB. Based in Koblenz, this organization is dealing with the cultural shock of abandoning its long-standing hierarchical structure in favor of more decentralized autonomy with linked subordinate offices.

The need for new procurement procedures in a time of shrinking budgets, new defense missions and burgeoning information technology capabilities is not just a German problem but a European one, BWB President Detlev Petry notes in a SIGNAL interview. Different countries have been affected in varying ways, but most are facing new requirements, a changing force structure and reduced defense funding. As a result, international cooperation is the only way certain projects can be financed in some countries.

Ultimately, Europe must pool its resources to maintain a strong and effective defense, Petry states. The continent’s defense industry must cooperate, and even consolidate, where possible. This includes trans-Atlantic cooperation between European firms and their counterparts in North America. The driver for this is limited resources, as many companies cannot afford to duplicate efforts and maintain a strong technology base. This will not be a pain-free process, Petry warns.

For Germany, BWB was given increased responsibility to further needed changes. Unlike many other countries, Germany’s governing party and its opposition have been in relatively close agreement on defense policies, Petry observes. So, the recent change from the Helmut Kohl administration to the Gerhard Schröder government did not bring a drastic change in defense policies.

Petry says that the challenge was to adapt the defense structure to the changing military situation. The armed forces structure has been changed, and new tasks have been added. Military technology procurement also has been changed to be more effective. Forces increasingly are adopting advanced technologies, and private industry is now the pacesetter for these advances.

Overall defense procurement responsibility has shifted from the Ministry of Defense to BWB. Dr. Wolf-Dietrich Mahler notes that this has cut one step out of the process, resulting in fewer people being involved in procurements. Mahler is director of the first of three information technology directorates (IT I) under BWB’s center of information technology. IT I handles cooperative support service and security in the armament information technology directorate. He explains that the ministry is still responsible for pre-phase activities. It engages in research and development with the army and industry. The armed forces are responsible for requirements definition and technology realization. After these are achieved, BWB takes over the procurement process. Each procurement program features a working group comprising army and BWB staff members.

With its new responsibilities, BWB is addressing the administrative process of procurement. One goal is to concentrate more funding in the early stages of a project to compress program time. There is no doubt that life cycles are getting shorter, which mandates a quicker development phase, says Mahler. He continues that this quicker development must lead to procurement that provides soldiers with necessary materiel within a reasonable time and at a reasonable cost.

Two other major thrusts characterize BWB efforts. One is standardization. Mahler notes that this can involve greater use of commercial, military or government off-the-shelf goods. He emphasizes that forces must either reduce their requirements or look to commercial off-the-shelf purchases. This may force them to accept an 80 percent solution to a requirement rather than a 100 percent solution, but it will be necessary to achieve modernization on a tight budget.

The other thrust is for rapid prototyping and simulation. Greater use of these capabilities will reduce administrative tasks and paperwork, which translates into cost and time savings. Several specific products are targeted for this effort.

Information technology presents its own set of unique challenges, but they are not unknown among other nations. Germany, as with the rest of the North Atlantic Treaty Organization (NATO), sees this technology being driven by the commercial marketplace. Where past information technology was driven by military requirements, quick technology developments are now redirecting defense to the private sector.

Dr. Elmar Berwanger, director of IT III, notes that length of procurement time is even more of a problem than funding. Berwanger, whose directorate covers command and control systems and weapon control systems, explains that BWB is looking for harmonization and standardization in its use of commercial information technology products. Interoperability among different systems is a problem that is compounded by the prospect of future operations with other nations.

This interoperability must range from mainframes to battlefield PCs, and it must be both vertical and horizontal. Currently, in the army, different levels have different command systems. Many weapon systems have different battlefield management systems.

Mahler echoes the need for good communications and quick networks from the first to the third command levels. One means of achieving standardization is to purchase commercial off-the-shelf computer software. German forces increasingly are stymied by computer maintenance because, for years, their software was custom developed, rather than acquired, for the military. Now, the multitude of uncommon systems is taxing personnel and funds.

BWB is turning to information technology test centers to help speed commercial technologies into the military inventory effectively. These test centers could involve virtually every installation—military laboratories, research and development centers—that can evaluate appropriate commercial technologies and test their functions. The only way to be successful in the future, Berwanger declares, is to keep the dynamic of the commercial market in the military.

“In the past, it was more theory; in the future, it will be practice,” Mahler says of this approach.

The army is conducting field trials similar to the U.S. Force XXI effort. German forces will participate with different command, control, communications and intelligence systems from the division level down to the individual platform. This also will represent an attempt to bring together research and development from the military, civilian government and industry. Trials will test functional combinations such as interconnections, varying information volumes at different levels and content requirements, and a simulation also may be performed. Berwanger offers that these trials could provide enough data for three to five years of requirements.

One of the most important efforts in any defense acquisition reform involves cultural change. Mahler states that top managers must convince their charges of the need to fully embrace new ways of operation. This can be helped through workshops and other forms of education. And, above all, regulations can be implemented through direct orders. The hardest task may be to convince the forces that harmonizing requirements can be achieved, he offers. On an organizational scale, requirements must be met, or funds are not allocated.

Industry can help German defense acquisition efforts by keeping the military in mind as it develops new technologies, Mahler says. The commercial sector can tailor its innovations to suit vital defense needs.

Berwanger emphasizes that corporations as large as DaimlerChrysler to small, specialized companies, especially software firms, can help harmonization and standardization. Currently, the army tends to deal with three large companies and about six smaller subcontractors. Berwanger describes these firms as all interdependent, which is a problem because their cross-connections tend to blur responsibilities.

He foresees more foreign involvement in German defense procurement. The government watches foreign companies in the defense market for applicable technologies or systems. Bidding requirements are published on a European level, except for sensitive points of national security. Berwanger notes, however, that Germany is keeping an eye on U.S. technologies.

BWB President Petry describes the process as a never-ending story. The effort already has produced some examples of success, while other areas still need work.

Budget cuts can serve to help the process as well as hinder it. Funding constraints can impel officials to plan carefully and spend wisely. On the other hand, too much budget pressure can hinder creativity. And, if funding continues to decline, it could drop below the threshold necessary to sustain the force, Petry warns.