Bill would bar contractors from running Defense programs

Concerned the Defense Department is ceding too much program management to contractors, the House Armed Services Committee has included language in the fiscal 2008 defense authorization bill that would curb the military's growing reliance on major defense firms to execute large, complex acquisition programs.

This unpublicized provision in the bill, scheduled for House floor action Wednesday, would prohibit the Defense Department from issuing any new contracts to private-sector "lead system integrators" to manage and supervise major weapons programs after Oct. 1, 2011.

That effective date would give the department four years to hire and train new acquisition managers to run its massive weapons programs, reversing a decade-long trend that has seen cuts to in-house acquisition staff and the outsourcing of many development and procurement responsibilities, House aides familiar with the language said.

Current programs that have relied on industry lead system integrators -- such as missile defense and the Army's Future Combat Systems -- would be largely unaffected by the language, aides said. One aide said the provision would likely only apply to current programs if the Pentagon decides to put an existing contract up for competitive bid again.

Also apparently not covered by the provision would be the Coast Guard's troubled Deepwater modernization program, managed by a joint venture of Northrop Grumman Corp. and Lockheed Martin Corp. for the Homeland Security Department.

The defense industry has yet to react publicly, as officials at some major firms and defense trade groups were still reviewing the bill Tuesday while others said they were unaware of the provision.

But two defense industry officials defended the use of private sector lead system integrators, saying they can bring technological expertise to the development of weapons systems. Many cost overruns, schedule delays and other problems that plague some major defense programs are often the result of changing requirements and funding cuts, and cannot be attributed solely to industry teams, they added.

The provision, sponsored by Armed Services ranking member Duncan Hunter, R-Calif., and Seapower and Expeditionary Forces Subcommittee Chairman Gene Taylor, D-Miss., was added to the bill as part of a package of noncontroversial amendments approved during the full committee markup last week.

In addition to curtailing the use of lead system integrators, the language also would require the Defense Department to study its acquisition workforce and identify and fill gaps in skills needed to effectively manage programs. The Defense Department cut its acquisition workforce by more than 50 percent between 1994 and 2005.

"I think this is really a savvy move by [the House Armed Services Committee] to address the acquisition workforce issue," said Jeff Green, a former Republican committee aide who now runs a lobbying firm that represents several small defense contractors.

Supporters of the LSI concept have long argued that placing a system integrator in charge of a program could result in better technology innovations because industry often has better knowledge and expertise of rapidly developing commercial technologies that could be applied to weapons systems.

But the LSI concept, in which the government hands over to a contractor or team of contractors the broad responsibilities to do everything from technology development to final testing of a new weapons system, has been a concern of lawmakers worried that the arrangement could limit government oversight and ultimately drive up costs on programs that already are very expensive.

Indeed, Paul Francis, director of acquisition and sourcing management at GAO, told the House Armed Services Air and Land Forces Subcommittee March 27 that the Army's relationship with Boeing Co., which has teamed up with Science Applications International Corp. as the lead system integrator for the Future Combat Systems program, posed "long-term risks" to the government.

"The government can become increasingly vested in the results of shared decisions and runs the risk of being less able to provide oversight compared with an arms-length relationship, especially when the government is disadvantaged in terms of workforce and skills," Francis said.

Besides Future Combat Systems and missile defense, many large ship programs -- including the Littoral Combat Ship and the DDG-1000 destroyer -- rely on private sector lead system integrators.

Irked by cost increases on the Littoral Combat Ships being built by Lockheed Martin, Navy Secretary Donald Winter announced last month he wanted to abandon the lead system integrator approach to shipbuilding and have the Navy reassert its control over the program.

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