Bill aims to rein in bloated Defense contracts

The top two members on the Senate Armed Services Committee introduced a bill on Tuesday aimed at reining in the cost and scheduling overruns of hefty Defense Department contracts.

Sponsored by Chairman Carl Levin, D-Mich., and ranking member John McCain, R-Ariz., the 2009 Weapon Systems Acquisition Reform Act would require re-examination of defense contracts if their costs increase by more than 25 percent from the initial estimate.

Defense's 95 largest acquisition programs are an average of two years behind schedule and have exceeded their original budgets by a combined total of almost $300 billion, according to Levin.

"The key to successful acquisition programs is getting things right from the start with sound systems engineering, cost-estimating and developmental testing early in the program cycle," he said. The bill would tighten the requirements of the rarely enforced 1982 Nunn-McCurdy law, which mandates that Defense must cancel any weapons program that experiences cost overruns of more than 25 percent unless it can show that it is essential to national security, no cheaper alternative is available and the revised costs are reasonable.

The Levin-McCain bill also would require Defense to:

  • Re-establish systems engineering organizations and developmental testing capabilities.
  • Introduce trade-offs between cost, schedule and performance early in the program cycle.
  • Use prototypes more often, including competitive prototypes, to prove that new technologies work before attempting to produce them.
  • Start an annual awards program to recognize the performance of the Defense acquisition workforce.
  • Establish the position of director of independent cost assessment to ensure that cost estimates for major defense acquisition programs are fair, reliable and unbiased.
Defense procurement was one of several issues discussed in depth on Monday during President Obama's fiscal responsibility summit. Following a series of breakout sessions, including one on procurement, Obama held a briefing with reporters and participants. He directed the first question to McCain, who had participated in the procurement session. The Arizona lawmaker cited upgrades to Marine One -- the president's helicopter -- as an example of procurement excess. At $11.2 billion, the project is now more than 50 percent over budget.

Obama said he had already spoken with Defense Secretary Robert Gates about conducting a "thorough review of the helicopter situation," adding the contract was "an example of the procurement process gone amok."

At the earlier breakout session on procurement, lawmakers hashed out ways to improve the acquisition system governmentwide. According to a White House pool report from Washington Times reporter Jon Ward, many participants said the government must refocus on competition and make better use of fixed-price contracts. Others called for having federal employees do certain jobs that contractors perform.

Sen. Susan Collins, R-Maine, repeated oft-heard pleas to beef up the acquisition workforce, which has declined by 22 percent since 2001. The senator predicted the situation could become even more precarious in the coming years as half the procurement workforce is eligible to retire by 2012.

Meanwhile, Sen. Claire McCaskill, D-Mo., who will lead a new Homeland Security procurement subcommittee, said many information technology contracts have been a "huge black hole" and amounted to a "massive amount of waste," according to the pool report.

Collins added the government would benefit from expanding the Nunn-McCurdy law to include IT projects.

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