Defense reform bill would clamp down on spiraling costs, schedules

After signing a sweeping Defense acquisition reform bill on Friday, President Obama said at a Rose Garden ceremony that the bill would strengthen oversight and limit out-of-control spending on unproven technologies and outdated weapons.

Described by lawmakers as the most significant change to the Pentagon's purchasing system in two decades, the Weapons System Acquisition Reforms Act sailed through the House and Senate during the past several weeks with unanimous votes -- a rarity for a bill of this stature.

"I reject the notion that we have to waste billions of taxpayer dollars to keep this nation secure," Obama said. "When it comes to purchasing weapons systems and developing defense projects, the choice we face is between investments that are designed to keep the American people safe and those that are simply designed to make a defense company or a contractor rich."

The president was joined by five of the bill's six key sponsors: Senate Armed Services Committee chairman Carl Levin, D-Mich.; House Armed Services Committee chairman Ike Skelton, D-Mo., and ranking member John McHugh, R-N.Y.; and Defense Acquisition Reform Panel chair Rep. Rob Andrews, D-N.J., and ranking member Rep. Mike Conaway, R-Texas.

Sen. John McCain, ranking member of the Senate Armed Services Committee, attended his son's graduation from the Naval Academy on Friday and was not present for ceremony.

In a statement, Skelton said the bill is only the first step in reforming Defense purchasing.

"Defense acquisition is very complex, and we all understand that this bill is just a start," he said. "The new law focuses almost exclusively on major weapon systems acquisition, which is only 20 percent of the total that DoD spends on acquisition on an annual basis. The other 80 percent of the acquisition system also has serious problems."

The bill would create a handful of new positions at Defense, including a director for developmental test and evaluation and a director for systems engineering. Defense Secretary Robert Gates will designate a senior official to conduct performance assessments to analyze the root causes of problems with weapons programs.

In one of the more significant changes, the legislation includes a provision that presumes any weapons program that exceeds its original costs by more than 25 percent will be terminated. If the program is not canceled, it must be restructured and go through its major review again.

The measure increases the focus on tracking weapons development more closely during the early stages. Systems would be required to undergo new tests prior to production to determine whether they are technologically viable. Competitive prototypes would play a greater role.

The bill was prompted by a 2008 Government Accountability Office report that said Defense's 96 largest weapons programs had exceeded their original cost estimates by a combined total of nearly $300 billion and were, on average, two years behind schedule. Nearly four out of 10 acquisitions were over budget.

"Wasteful spending comes from exotic requirements, lack of oversight and indefensible no-bid contracts that don't make our troops or our country any safer," Obama said. "To put this in perspective, these cost overruns would have paid our troops' salaries and provided benefits for their families for more than a year. At a time when we're fighting two wars and facing a serious deficit, this is unexcusable and unconscionable."

The president has made reforming the procurement process, particularly at the Defense Department, a priority. In recent months, Gates has canceled several costly and overbudgeted weapons systems and begun the process of hiring an additional 20,000 acquisition employees.

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