Procurement’s Problem

It's not ethics, but rather the ambitions of the weapons buyers.

Fifteen years have passed since Government Executive published its first listing of the Top 200 Federal Contractors, based on data compiled by Eagle Eye Publishers. At the time, procurement was a hot topic because President Reagan's big defense buildup had recently come to a close. Ships, aircraft, tanks, satellite systems all had been fielded in a bid to persuade the "evil empire" that it could not win a war, cold or hot.

Procurement declined after the big Reagan spending spree, and only now, with expensive military adventures in Iraq and Afghanistan, and many other military commitments around the world, is the government spending as much on goods and services as it did in the mid-1980s. Records from the Reagan era show that procurement outlays totaled $184 billion in fiscal 1986. Accounting for inflation, that would come close to the $328 billion we record for fiscal 2004 in this issue of the magazine.

Much has changed during the intervening years. In general, government has become more reliant on the private sector. Procurement has been shifting toward services, with hardware no longer dominating the numbers. Civilian agencies have joined the Pentagon in looking for commercial help to meet their mission requirements. Scholars and journalists have recognized how dependent government has become on its contractors, and have written about the accountability issues the trend implies.

The importance of sound acquisition policies and practices has gained recognition in government. Congress passed reform laws, and leaders including Steven Kelman, President Clinton's procurement chief, have encouraged agency workers to loosen the red tape and be more creative in working with suppliers. The reform effort has continued, and now we have a whole new layer of officialdom in the person of chief acquisition officers, political appointees whose primary duty is supposed to be acquisition management.

The jury is out on this latest round of bureaucratic augmentation, as our cover story suggests. And no amount of bureaucratic reform will solve what this issue of Government Executive identifies as the principal problem facing government procurement: the runaway cost escalation of weapons systems the military needs to replace its aging arsenal.

The Navy has been able to ask Congress for only four new ships in fiscal 2006, though it needs eight or nine to keep the fleet at its current size. One-third of the Air Force's fleet of planes operates under flight restrictions on any given day, principally because of age, and the service doesn't have enough money to fund the replacements it wants. The Army's Future Combat Systems is one of the most expensive and technologically challenging programs in modern American history. The Pentagon's top five weapons systems, thought to cost $281 billion four years ago, now are pegged at $521 billion, and the services are underfunding their modernization programs by a jaw-dropping $50 billion a year.

In the White House and in Congress, officials might worry about ethics, accountability and other issues surrounding federal procurement, but the real problems reside across the Potomac, in a Pentagon where ambitions outstrip the resources available to meet them.