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We are pleased to be here today to discuss issues facing the Department of Defense (DOD) in its acquisition of weapon systems, related spare parts, and other goods and services. In response to the many changes that have been witnessed in the defense acquisition environment over the last few years, DOD has begun broad-based changes to its acquisition and contracting processes. However, weapon programs continue to have questionable requirements; unrealistic cost, schedule, and performance estimates; and strategies that begin production before adequate testing has been completed. This discussion of acquisition issues is well-timed, as DOD implements plans to increase its procurement budget to $60 billion in fiscal year 2001-a 40-percent increase over last fiscal year's budget. My testimony focuses on a different approach to improving weapon acquisition outcomes based on best commercial practices and an understanding of the acquisition culture. My testimony also includes some observations on (1) DOD'S management of its acquisition workforce and organization, (2) DOD'S experience with commercial pricing of spare parts, (3) the effectiveness of DOD'S mentor-protege pilot program, and (4) federal agencies' use of multiple award task- and delivery-order contracts.
T-NSIAD-98-123 Defense Acquisition: Improved Program Outcomes Are Possible
Since 1990, the DoD mgmt. of major weapon system acquisitions has been designated a high-risk area. DoD has taken some action to improve acquisition outcomes, but its weapons programs continue to take longer, cost more, and deliver fewer capabilities than originally planned. Over the next 5 years, DoD plans to invest about $900 billion to develop and procure weapons systems -- the highest level of investment in two decades. This testimony describes DoD¿s current weapons system investment portfolio, the problems that contribute to cost and schedule increases, and the potential impacts of recent legislative initiatives and DoD actions aimed at improving outcomes. Charts and tables.
The DoD expects the cost to develop and procure the major weapon systems in its portfolio to total $1.6 trill. With increased competition for funding within DoD and across the fed. gov¿t., effectively managing these acquisitions is critical. Yet DoD programs often experience poor outcomes -- like increased costs and delayed fielding of needed capabilities. In 2006, a report was issued on DoD¿s processes for identifying needs and allocating resources for its weapon system programs. In 2007, it was reported that DoD consistently commits to more programs than it can support. This report assesses DoD¿s funding approach, identifies factors that influence the effectiveness of this approach, and identifies practices that could help improve DoD¿s approach.
Thank you for the opportunity to submit this statement for the record, which discusses the best practices that can improve the way the Department of Defense (DOD) buys major weapon systems. With DOD's annual research, development, and production spending for major systems at about $85 billion, the Subcommittee's oversight of acquisition policy can have a major impact on the value the taxpayer gets for that expenditure.
The US defense acquisition system is a massive enterprise charged with developing and acquiring state-of-the-art military technology and systems. For the past 65 years, many broad-reaching studies and commissions have endeavored to refine and overhaul the acquisition process to improve its value delivery in the form of increased capability, in less time, and for lower costs. But processes don't make things, people do; which reframes this research to focus on people over process. Acquisition people are knowledge workers, who must creatively execute defense programs within the system and processes they are given. The Government Program Manager (PM) is the primary focus of the thesis. The research explores how the PM is able to achieve improved program outcomes through a combination of leadership competencies and management of key stakeholder relationships. The examination of relevant acquisition literature provides opportunities for the application of systems, stakeholder, and negotiation theory to enable PMs to achieve value delivery on defense programs. Additional theories on organizational routines and activity systems provide insight on how effective PMs can build acquisition dynamic capabilities in the small and in the large to benefit US national security. The research gathers interview data from PM experts and leadership of several large acquisition case study programs. Unique to this research is the multi-dimensional perspective obtained from the Government PM, the lead User representative, and the prime contractor PM on the case programs. This approach enables an examination of the influence of dyadic and triadic relationships and program priorities alignment, with particular focus on the Government PM's role in establishing and managing those stakeholder relationships. The research concludes that strong dialectic leadership, with sufficient managerial and technical competence is paramount for an exceptional PM to succeed in delivering improved program outcomes. Recommendations are provided for the PM, those responsible for PM development, and the DoD to increase efficiency and effectiveness of the defense acquisition enterprise.