Pentagon reports progress on anniversary of procurement reform law

In the year since President Obama signed the Weapons System Acquisition Reform Act into law, the Defense Department has made significant strides in gaining control over the cost and development of its procurement programs, Pentagon officials testified on Wednesday.

Many of the changes have focused on the front end of the acquisition process, according to Nancy Spruill, director of acquisition resources and analysis in the Office of the Undersecretary of Defense for Acquisition, Technology and Logistics.

"The department is committed to making trade-offs among cost, schedule and performance to significantly reduce cost growth in major defense acquisition programs," Spruill told the House Oversight and Government Reform Subcommittee on National Security and Foreign Affairs.

The law, which legislators have described as the most significant change to the Pentagon's purchasing system in two decades, addressed the ballooning cost of Defense weapons system acquisitions. For example, it includes a provision that presumes any weapon program that exceeds its original costs by more than 25 percent will be terminated. If the program is not canceled, then it must be restructured and reviewed again.

To reduce the risk of cost overruns, additional reviews will be conducted early in the process, scrutinizing the schedule, cost limitations and technological maturity of major weapon programs, Spruill said. The department also has increased the size and capabilities of its cost estimating staff and is using contract fee structures that are better tied to delivered accomplishments, she said.

"We believe these steps will result in more thoughtfully structured programs that reinforce our stated preference for an evolutionary acquisition approach," Spruill said.

A key federal watchdog, however, said Defense's acquisition improvements were a mixed bag.

In March, the Government Accountability Office examined 42 major weapon programs and found progress in the technology, design and manufacturing knowledge at key points in the acquisition process. But, the report also found some weaknesses. A majority of the programs experienced substantial requirements changes, software development challenges or workforce issues, investigators said.

"Most programs are still proceeding with less knowledge than best practices suggest, putting them at higher risk for cost growth and schedule delays," Mike Sullivan, director of acquisition and sourcing management at GAO, told the subcommittee.

GAO's findings disappointed lawmakers. "DoD has still not fully implemented a 'knowledge-based approach' to its weapons acquisitions program," said Rep. John Tierney, D-Mass., chairman of the subcommittee. "It boils down to the need for the department to take some common-sense steps in its processes."

While Defense has made steep cuts to some of its weapon systems, its portfolio of major acquisition programs still is growing, from 96 in December 2007 to 102 in July 2009, according to GAO.

Defense Secretary Robert Gates recently proposed ending all or part of at least six major defense acquisition programs that are over cost, behind schedule or no longer meet the department's needs.

Pentagon officials also reported progress in increasing the department's acquisition workforce and insourcing functions currently being performed by contractors. During the next five years, Defense plans to hire 9,000 more civilian employees and convert 11,000 contract positions to government jobs.

By the end of March, Defense had brought on 3,200 new acquisition employees, said John Roth, the Pentagon's deputy comptroller for program and budget. Hiring projections for the rest of fiscal 2010, which ends on Sept. 30, remain on target to meet the department's needs, he said.

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