Pentagon Procurement Could See Dramatic Changes

 Senate Armed Services Committee Chairman John McCain has two ideas for radically changing the way the Pentagon does its shopping.

No. 1: Each new weapon or service contract should have one person, preferably a service chief, sign off on it and take responsibility for it from start to finish. No. 2: That person's military branch should pay a fine if the cost of the program goes beyond the original budget.

These two changes would represent an unhinging of the Pentagon as it now operates. They are some of the boldest provisions in the Senate's defense authorization bill, propelled by McCain's sense of urgency in curbing wasteful defense spending and also, tangentially, marking his place in the history books as a major Pentagon reformer.

"What the Pentagon has turned into is the absolute quintessence of 'Everybody's responsible, so therefore nobody is responsible,'" the Arizona Republican said in an interview.

DOD's centralized system of acquisition has perversely created a situation in which the commanders who ultimately will use a weapons system can weigh in only on how it will work. They don't have any authority over how it is researched, developed, or contracted. This inevitably leads to cost overruns because the proposed products get weighed down with unnecessary requirements dictated by people who, by design, see only one part of a bigger picture. If a Naval commander knew, for example, that his request for a gold-plated widget would add $1 million to the engine of a new submarine, he might determine that a copper-plated one will do. If he never knows the cost consequences of his requests, it's hard to control the costs.

McCain likes to cite the $2.4 billion cost overrun on the new Gerald R. Ford aircraft carrier, which has the dubious distinction of being the single most expensive piece of military equipment ever. He was incensed last year when the chief of naval operations couldn't tell him who was responsible for that particular snafu. "Here's the chief of the service that can't tell you who's responsible for a $2.4 billion cost overrun. Do you know what Arizona can do with $2.4 billion? That would take care of every problem they ever had for the next 10 years," he said.

This sentiment is at the heart of the acquisition changes in the National Defense Authorization Act: If you're going to spend taxpayer money, you'd better be willing to say that you know you're doing it. "The secretary of the Navy, now, when there is a new cost overrun, has to sign on the dotted line: 'I am aware that there is an additional cost to the catapults on the aircraft carrier,'" McCain said.

The proposal is reverberating throughout the uniformed leadership of the Pentagon, according to a former committee staffer who declined to go on the record because of the sensitivity of the topic. Frank Kendall, DOD's undersecretary for acquisition, technology, and logistics, has expressed concern that McCain's proposal would give his office less legal power than the individual branches of the military. Of course, that's exactly what McCain is after, happily stating that power will be redistributed to the people who can make better decisions.

These changes wouldn't take all power away from the central acquisition office. In fact, some analysts predict that only a fraction of its authority would go away. The cost-overrun penalties wouldn't apply to procurements begun before 2009, for example, and the Defense secretary has the authority to designate point people for joint projects or "other specific cases," according to the committee report.

Still, the proposed new acquisition system deserves the dramatic labels that McCain proudly gives them. Current and former staffers of the committee say direct accountability for cost overruns is almost unprecedented. That simple alteration could serve up scapegoats for long-simmering frustrations about the massive amount of waste generated by poorly executed projects. Would those procurements work more smoothly if service chiefs were able to decide, for example, when it's time to move from a technological-development phase to a manufacturing and production phase?

There are lots of opinions about how procurement programs go wrong, but to date there has been little direction regarding whom to blame. Long-running weapons programs like the F-35 Joint Strike Fighter have been punching bags for members of Congress and defense analysts alike. But they have very little recourse for their complaints.

Here's an example: "The military would have gotten into a lot less problems if they had actually had working prototypes before they committed to a multibillion F-35 production," said Peter Singer, a senior fellow and military-technology specialist at the New America Foundation.

McCain feels similarly. "I fought it tooth and nail for years," he said.

But, when push came to shove, McCain allowed more orders for the F-35 to remain in the defense bill this year, regardless of the problems with the Joint Strike Fighter. "Once a weapons system gets to a certain level of production, it's impossible to kill," he said.

It's this type of runaway development that McCain is trying to rein in, but it's impossible to know whether his idea for changing it will make things better or worse. For example, will the threat of a cost-overrun penalty make service chiefs cautious about trying out new commercial manufacturers or researchers, despite Congress's encouragement that they branch out beyond traditional contractors? Will different branches of the military all be working on similar projects?

One thing is clear. These changes, if they go through, will cause a dramatic shift within the Pentagon. That may make some programs work more smoothly, but it will also probably make others worse. Then, committee observers say, Congress will no doubt need to come back and tinker in 10 or 15 years.

One former committee staffer put it this way: "Frankly, at this point, any change is worth doing."