Congressional panel seeks broad Defense acquisition overhaul

A congressional panel that has spent the past year studying deficiencies in the Defense Department's procurement system has recommended the department do a better job of defining acquisition requirements and monitoring contract performance.

"While the nature of Defense acquisition has substantially changed, the Defense acquisition system has not kept pace," the Defense Acquisition Reform panel's 49-page March 4 interim report stated. "The system remains structured primarily for the acquisition of weapon systems at a time when services represent a much larger share of the department's acquisitions."

The panel, which the House Armed Services Committee established in March 2009 to carry out a comprehensive review of the defense acquisition system, found that the shift to service-based contracting has led to challenges in outlining requirements, setting measurable and performance-based goals and overseeing contractor performance. Agencies spent $200 billion on service contracts in fiscal 2009.

To reform the system, the report recommended that Defense re-examine its guidance on service contracting and establish clear lines of authority for setting acquisition requirements. The group also said Defense must differentiate between information technology acquisition processes and other parts of the procurement system.

The panel deemed the department's performance on weapon systems acquisition "unacceptable." In 2009, the Government Accountability Office reported that 96 major Defense weapons programs experienced $296 billion in total cost growth and an average of 22 months in schedule delays.

"Even in the acquisition of weapon systems, the department's historical strength, the system continues to generate development time frames for major systems measured in decades, an approach which has resulted in unacceptable cost growth, negative effects on industry, and in too many cases, a failure to meet warfighter needs," Rep. Rob Andrews, D-N.J., the panel's chairman, said in a statement prepared for the group's final hearing on Thursday.

Another major problem, the panel found, is the absence of a performance management structure that can objectively determine the value being delivered to the warfighter and taxpayers.

The report recommended that Defense's new Office of Performance Assessment and Root Cause Analysis track whether organizations throughout the defense acquisition system meet prenegotiated performance goals. Bonuses and potential promotions could provide incentives for doing a better job, according to the report.

"The intent of the performance metrics and performance management recommendations in this report is not to create new layers of bureaucracy," the group noted. "If the performance management measures envisioned in the panel's recommendations are implemented properly, program managers could be freed from certain reporting responsibilities specific to their individual program."

But in his prepared statements for Thursday's hearing, the department's top acquisition official questioned whether the plan was feasible.

Ashton B. Carter, undersecretary of Defense for acquisition, technology and logistics, said the PARCA office did not yet have the staffing or capability to conduct the type of performance assessments the panel suggested.

"I am concerned that adding a vast new domain of application to the PARCA portfolio -- as this panel suggests -- will complicate and delay that effort," Carter testified.

The panel also recommended that Defense:

• Require workforce certification and mandatory continuing education for the acquisition workforce;
• Improve its financial management and audit readiness, or risk losing congressional funds;
• Proactively notify small businesses of contract solicitations rather than relying on firms to find those notifications on FedBizOpps;
• Repeal a rule that allows agencies to withhold 3 percent of contract payments in anticipation of taxes owed to the Treasury Department;
• Identify contractors and grantees with serious tax delinquencies and include that information in databases relating to past performance and contractor integrity;
• Review and implement recommendations, once they are completed, of an ongoing GAO study of the costs of contracting with firms with questionable employment practices;
• Shift the responsibility for certification of contractor business systems to independent teams within or outside of the Defense Contract Audit Agency.

PSC argued, however, that since GAO's contractor employment report has not been released or publicly vetted, it would be inappropriate to implement those yet-unknown recommendations.

The panel's final report, which will incorporate input from various stakeholders, including Defense officials, will be released in two weeks, Andrews said. Many of its final recommendations will be addressed in the House Armed Services Committee's version of the fiscal 2011 National Defense Authorization Act.