Gov't uses industry methods to change weapons buy
By Daniel W. Gottlieb -- Purchasing, 4/22/1999 2:00:00 AM
Ever since the 1980s exposés on waste and weapons failures, the heat has been on DoD's army of procurement personnel. From DoD's own Inspector General, whistleblowers, and lobbying groups, the message has been the same: No more $635 hammers!
But there's more to it. The top echelon at the Pentagon--which used to either stonewall acquisitions reform or give it little more than lip service--now preaches it as a mantra. There's even a Deputy Undersecretary for Acquisition Reform whose shop has its own Web page with the greeting: Welcome to the Defense Acquisition Revolution.
How much of a revolution is taking place depends on where in time you benchmark Pentagon purchases. There's been a sea change if you compare today to the 1980s when Presidential reform commission chairman Dave Packard likened the DoD marketplace to an Iranian bazaar. Many barriers to using commercial buying practices have been removed by Congress and the Administration. One result: A great deal of off-the-shelf procurement instead of mil specs for towels and cookies. Rather than extremes of sole sourcing or cost-plus pricing, DoD is also considering best value in many contract awards.
Major hurdles lie ahead, however, when it comes to procuring big-ticket items like a new weapons systems. Indeed, DoD is just now considering Price-Based Acquisition (PBA), a fancy name, as one industry observer notes, for doing what every shopper does: get the best deal for the lowest price.
As one acquisition reform official explains it, DoD is trying to apply commercial practices in development of new products. The first step: setting a range for how much a better missile, plane, or component should cost. Then, after looking over competitive bids and judging whether prices are reasonable and within available budget, deciding to either develop and build or look for some other hardware or software to do the job.
The intent is to apply PBA in limited cases such as taking a known technology or high-tech component to a new level without creating a gold-plated widget that doesn't work on a multibillion-dollar fighter. DoD thinks this is feasible since industry is outpacing DoD development work, particularly in high-tech fields such as electronics and information technology.
Some in the defense industry, however, aren't convinced that this particular "go commercial" strategy will work. "It's good in theory, but there are a lot of loopholes in this way of doing business for development work," says Bill Lewandowski, vice president for supplier management of the Aerospace Industries Association. It's one thing to put five years into development for the commercial marketplace where the market share can yield return on investment, he explains. "With DoD it's one customer buying."
"Nobody in industry will play that game if there's too much risk," adds Paul Teibl, a DoD policy analyst with the Business Executives for National Security (bens). While cost-containment is now the watchword in Congress and in the DoD on major weapons procurement, the contribution of new buying practices is still to be proven.
"So far there is no major system that's been purchased and delivered under the new (procurement reform) plans," says Teibl. Everyone will be watching to see how the new joint strike fighter plane comes out because Congress, with DoD's agreement, has put a cap on the program's costs at the start.
Also open to question is whether the top-down approach to acquisitions reform will reach the transaction level. A recent directive from the Undersecretary for Acquisition and Technology, Jacques Gansler, calls for 80 hours of continuous training every two years for 100,000 civilian and military buyers. Presumably they will be told how to implement the new contracting methods. The question is what they do back at their desks where they work under a different command structure.
Everyone agrees it will take time to change entrenched ways and to forge new partnerships with DoD's industry suppliers.
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