Gates told the Senate Armed Services Committee that acquisition was "chief among the institutional challenges" at the Pentagon. A risk-averse culture, an unwieldy and litigious acquisition process, excessive and morphing requirements, and budget instability are the primary issues that must be addressed, he said.
Additionally, a grossly understaffed acquisition workforce is trying to nail down purchasing priorities that are constantly in flux.
"Acquisition priorities have changed from Defense secretary to Defense secretary, administration to administration [and] Congress to Congress, making any sort of long-term procurement strategy on which we can accurately base costs next to impossible," Gates told lawmakers.
During the past eight years, the Defense Department has operated with key acquisition positions unfilled. Current vacancy rates range from 13 percent in the Army to 43 percent in the Air Force. Gates said this is due in part to a dramatic reduction in procurement staffing after the Cold War.
The Defense secretary tiptoed around a potential disagreement with his boss over restrictions on movement between industry and government jobs. Gates said strict revolving door policies might have contributed to acquisition vacancies, especially at the highest levels.
"We've created a situation where it's harder and harder for people who have served in industry -- who understand the acquisition business, who understand systems management -- to come into public service, particularly when they're not coming in as career people but perhaps at more senior levels to serve for a few years then go out," Gates said. "The last thing I would do is criticize the ethics executive order that the new president has just signed; this is a cumulative problem that has taken place over many, many years."
Transparency will be crucial for balancing the ethics order and the need to recruit the most qualified staff, Gates told the committee.
"The president recognized … that to be able to get some of these people he'd need to exercise a waiver and he provided for that, I think wisely, in the executive order," Gates said. "But I think all of us -- the Congress, the executive branch -- together need to look at this and see if we're cutting off our nose to spite our face."
Gates noted that component agencies and services have committed to boosting acquisition staffing, with the Defense Contract Management Agency planning to hire 2,300 additional people in the next 18 months and the Army on tap to add 1,000 civilians and 400 military acquisition officials.
The Defense chief committed to building a strong foundation for major acquisition programs. By increasing competition, freezing requirements on programs upon award and writing contracts that provide incentives for "proper behavior," the department can make progress toward procurements that offer the best value for the military and the taxpayer, Gates said.
Sens. Joseph Lieberman, I-Conn., and Saxby Chambliss, R-Ga., said Defense spending could, and should, be a key part of any economic stimulus package. While Gates said the "spigot of defense funding opened by Sept. 11 is closing," Chambliss argued that Defense acquisition programs were among the most productive spending projects.
"If you take any one of these programs, and I'll just cite the F-22 program as an example, if you shut down that line you're talking about the loss of 95,000 jobs on top of the other woes we're looking at in this economy now," Chambliss said. "If we truly want to stimulate the economy there's no better way to do it than defense spending."
In response to a request from the White House, Gates submitted a list of programs that had the potential to create jobs and could get off the ground within months. Suggestions included infrastructure improvements to military hospitals, clinics, barracks and child care centers, where work could begin immediately or where projects already are under way and can be accelerated.
Committee members also asked Gates how the department will handle contractors as the military presence shifts from Iraq to Afghanistan. He conceded that the use of contractors "grew willy-nilly" in Iraq after 2003 and was not accompanied by the necessary oversight capacity. He assured lawmakers that leaders are applying contracting lessons from Iraq to the developing approach to Afghanistan. The department nonetheless must do some soul-searching on the role of contractors in combat environments, Gates said.