Go Gently On Acquisition Reform, Say Wise Men

[updated 3:00 pm with Kendall comments] WASHINGTON: If history is any guide, the cuts to the defense budget will prompt a new wave of acquisition reform — and if history is any guide, we’ll get it wrong, again.

Frank Kendall, the undersecretary for acquisitions, logistics, and technology, rolled out a “Better Buying Power” initiative in September 2010, and yesterday at the National Press Club he promised he would soon roll out a new and improved version of BBP that built on the lessons of the last two years. But it’s an uphill battle.

“There are so many ‘lessons learned’ we haven’t learned,” said Jacques Gansler, the undersecretary for acquisition during much of the Clinton Administration.

That’s the discouraging consensus of the elder statesmen gathered Wednesday at the Press Club for the 2012 ComDef conference. They also agreed that, as emotionally satisfying as it might be to burn the entire current system to the ground — as suggested by Defense Business Board study chairman Arnold Punaro — an effective reform must be a careful one.

“I certainly would not start out by scrapping everything; you’d have nine months of nothing, and that’s dangerous,” said Gansler. Just getting rid of burdensome regulations could paralyze habit-bound bureaucrats as easily as it could empower them.

What’s needed is not just new rules, but a revolution in mindset, Gansler said: “Two things are required to make a culture change: recognition of the need for the change — which I think the budget will be driving — [and] leadership with a vision, a strategy, a set of actions, an ability to align and motivate. [Admiral Hyman] Rickover is actually a perfect example.”

“You can’t just scrap it [the current system],” Gansler added afterwards to Breaking Defense. “You can’t change a culture just by putting out a directive,” he said, least of all one that boils down to “you’re wrong — change!”

“We don’t want to break the system as we go about these needed reforms,” agreed Bill Lynn, Obama’s first deputy secretary of defense. In the final analysis, he said, “what you’re trying to do is ensure that we have the best-equipped, most capable force with the most cutting-edge technology. I would argue that the system has accomplished that [today]. That doesn’t mean we can’t do it better, but… we have done, to this point, better than anyone else out there.”

So what does reform done right look like?

“Acquisition reform runs in cycles,” said Kenneth Krieg, formerly undersecretary for acquisitions under Bush, with reform drives launched amidst budget cuts and petering out when budgets grew again. But the changes that do get made are often counter-productive, he said, because “there are two absolutely conflicting priorities in reform”: maximizing efficiency — which requires giving acquisition officials more freedom — and minimizing mistakes — which requires imposing tighter control. In practice, “almost always the second trumps the first,” he lamented. “It’s the only enterprise in the world that would spend millions to prevent the fraud of pennies.”

So the thousands of pages of legislation and regulation layered on over the years to prevent “waste, fraud, and abuse” should certainly be pruned back, the assembled experts said — a key point of agreement with the Defense Business Board study that Punaro helmed. They also agreed with Punaro that the acquisition system can’t be fixed by fixing the acquisition system alone. The Pentagon also needs to rein in overly ambitious requirements, which set the often unaffordable goals that programs have to meet. And it must make hard choices in budgeting, killing lower-priority programs to save others rather than cutting them all back a little and letting them limp inefficiently along.

“The first and most important lesson you learn from prior drawdowns is to make hard decisions early,” said Lynn. “It’s not going to get better.”

Most fundamental for the long-term, though — to both the experts at the Press Club and to the Punaro study — is to hire highly qualified people and give them the freedom to use their best judgment. That won’t be easy, either, given restrictive rules on private sector professionals coming into government and the mass retirement of many experienced civil servants.

“We need smart buyers,” said Gansler, but in the current acquisition workforce, “32 percent of them have less than five years’ experience today.”

All told, it’s a daunting challenge. But if the cost of military equipment keeps rising on current trendlines, said legendary former Lockheed chairman Norm Augustine, “we’re going to price ourselves out of the ability to fight.” Augustine once famously calculated that, by 2054, the entire Defense Department budget would only buy one airplane; he recently updated his figures with data from current programs and “they’re right on the curve,” as he predicted.

“We’ve got to do things differently,” Augustine told Breaking Defense after the conference. Might the current budget pressures force the long-overdue change? “It is true,” he said dryly, “that looking up at the guillotine sharpens the imagination.”