Panel recommends Defense acquisition overhaul

A Defense acquisition panel on Wednesday recommended that the Pentagon move away from cost-based competitions for contracts, establish a new fund for Defense programs and give industry more details about its needs.

The Defense Acquisition Performance Assessment Project -- a panel made up primarily of industry members and authorized by acting Deputy Defense Secretary Gordon England -- reviewed 1,500 documents and heard from 107 acquisition experts over the last six months. Its findings were similar to those in more than 100 past reviews of Defense acquisition.

The group found that there is no standard way to track costs, that budget schedules often interfere with acquisition planning and that complicated oversight processes delay purchases.

Retired Air Force Lt. Gen. Ron Kadish, panel chairman and a partner at the McLean, Va.-based consultancy Booz Allen Hamilton, acknowledged that some of the recommendations, particularly regarding cost-based competitions, would be controversial, but he said he and other panel members were prepared to defend them.

Asking contractors to compete based on costs creates "strange behavior" because they are not accountable for the success of the project, Kadish said. Anyone can give a number that is lower than other bids, he said, and that doesn't guarantee that the lowest-bid contractor offers the best solution.

The panel suggested that contractors and the government should determine the price together, and then the government should base its selection on technical competency and the risk associated with proposals.

The constantly changing budget is another source of problems for Defense acquisition, Kadish said. "When budgets change as many times as we've observed, it is not a healthy situation," he said. Instability wastes time and makes acquisition planning difficult, he added.

To combat this instability, the panel recommended an Acquisition Stabilization Account that could fund programs that are affected by budget shortfalls. Kadish said the panel would leave details on how such an account would work to the Defense Department and Congress.

Earlier this year, a different panel focused on governmentwide acquisition heard program managers voice similar complaints regarding budget instability.

The Defense panel also recommended sharing a roadmap of what the Pentagon wants and needs with contractors. If contractors had a better sense of requirements, then the companies could target their investments more productively, Kadish said.

Workforce improvements also would help acquisition, the panel said. Acquisition executives should be promoted and held to five-year terms to encourage stability, and commanders in the field should be on the lookout for their command's short- and long-term needs, and transmit that information to acquisition officials, the group recommended.

Within the next 10 days, the DAPA office will release its full-length report, Kadish said. The panel expects its recommendations to be implemented over the next calendar year.