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DOD Acquisition Reforms: Spending Money is Hard!

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November 13, 2012

“It turns out acquisition reform is hard,” said Undersecretary of Defense Frank Kendall at yesterday’s rollout of the Defense Department’s upgraded contracting reforms. You can say that again. The second coming of the “Better Buying Power” reforms, creatively tagged “Better Buying Power 2.0,” builds upon a suite of directives issued by former Defense Secretary Robert Gates in September 2010. Those initiatives took on many valuable targets such as lack of competition, requirements creep and weak enforcement of cost constraints. The 2010 directives were clearly a preemptive strike against defense budget cuts (their stated goal is “doing more without more,” not “doing more with less”), and the timing of the 2.0 version seems to follow the same logic.

The new directives elaborated on the original five BBP goals and added a couple more. For example, “achieving affordable programs” would prevent programs from racking up so many costs in the development process that they never make it into production, and re-emphasizing the chain of command should help “eliminate unproductive processes and bureaucracy.” The goals are all admirable, and Kendall promised that they have saved taxpayers money over the past two years. Yet the goal of incentivizing industry still seems like a oxymoron. The Pentagon is the federal government’s largest buyer, purchasing more than $400 billion in goods and services each year, and most of its largest contractors—such as Lockheed Martin—are reliant on the government for the vast majority of its business. So when Kendall said that BBP 2.0 turned away from the emphasis on fixed-price contracts that the previous reforms adopted in reaction to contract cost overruns, it was hard not to stop eyes from rolling. Yes, contracts are not one-size-fits-all, but is anyone really worried that billions of taxpayer dollars aren’t sufficient incentive for a company to control costs? Another bone thrown to industry was a pilot program that would include “exportability” into a project from the beginning in order to increase foreign sales. 

DOD will release a more detailed memo on BBP 2.0 in January after industry and government submit comments.

Filed under: Stop Waste, Ensure Fair Returns

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