The Pentagon’s People Person

key official involved in determining the future of the Pentagon's procurement operations doesn't even have the word "acquisition" in his title. He's David S. Chu, the new undersecretary of Defense for personnel and readiness. Chu is no stranger to the Pentagon. He served for 12 years in the Reagan administration and the first Bush administration as head of Defense's Program Analysis and Evaluation Office. Now, he's responsible for training, human resource planning, military and civilian personnel policies and health care at the department.

That means Chu is responsible for handling some of the biggest challenges facing the Pentagon today. He is, for example, at the center of a new debate about the wisdom of such long-standing policies as the the "up or out" promotion practice, which forces officers in their prime out of the ranks if they fail to keep advancing.

While personnel and readiness is Chu's central responsibility, he is also well versed in acquisition matters. He has, for example, served as director of the Procurement Round Table, a group of former senior government acquisition officials chaired by former Comptroller General Elmer Staats. This background will hold him in good stead as he works in partnership with the Pentagon's acquisition office on crosscutting issues.

Chu serves on the Defense Acquisition Board, which is chaired by the undersecretary for acquisition, technology and logistics, with the vice chairman of the Joint Chiefs of Staff serving as vice chair. The military service secretaries as well as the Defense comptroller also participate in this body, which advises the Defense Secretary on all major systems acquisitions.

A major issue confronting the board is the need to view new systems acquisitions in light of not just procurement costs, but total life cycle costs. When viewed on a life cycle basis, the costs of operating and maintaining major Defense systems is a significant portion of total program costs.

The types of systems bought and how they are upgraded can have significant implications for how Defense employees are trained. As systems undergo continuing changes to maintain effectiveness, staff will likewise have to be kept up to date. "Training strategies for this kind of transformation will have to move away from calendar time. We can't send all these people away to school," says Chu. Web-based instruction programs may provide a solution to the problem, he says.

Chu notes that traditionally, Defense has focused on detailed goals for shaping and training its officer corps, with less pressure to do the same with its civilian workforce. Now, however, with civilian attrition rates projected to skyrocket in coming years, training issues are becoming increasingly important. On the acquisition front, for example, each of the services is examining its career professionals to see what must be done to respond to future needs. These include both staffing and skill requirements. Defense officials are reviewing strategic plans that lay out new approaches for recruiting, retaining and training acquisition employees.

When that process is complete, the department may propose new legislation to change the structure and the management of its civilian workforce. Such proposals will need to be carefully considered within the context of reassessment of the "up or out" policy for uniformed service members. Changes to the lengths of military tours of duty and career options, if implemented, will have major implications for all aspects of how the department conducts its business.

Another area where Chu's role ties directly to the acquisition world is his responsibility for managing the health care programs of the department. Central to this role is ensuring that the military's Tricare system for service families is both affordable and well-managed. Tricare is a nationwide multitiered health benefit plan. It's been much maligned, but Chu believes that it may be more effective than its critics contend. He points out that on independent surveys of patient satisfaction, Tricare "scores quite well," particularly in the context of other health plans.

One of the factors contributing to Tricare's problems is a contracting issue. When the program was established, Defense, in keeping with acquisition reform pressures, insisted that Tricare contractors shoulder a major portion of the risk of escalating costs. What many have now come to realize is that contractors under the program are akin to benefits plan administrators under private health plans, and have relatively little control over rising health care costs. So Defense officials have proposed a contracting approach that builds on best practices in the corporate world. It would reduce the contractors' portion of the cost risk, yet still evaluate and reward them on the basis of measures of how well they administer the Tricare program. Legislation to effect this change is awaiting congressional action. Tackling problems like the Tricare contracting issue and restructuring the Defense civilian acquisition workforce will take someone who knows both the personnel and the procurement worlds. It's comforting to know that Chu has experience and expertise in both realms.