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Levin, McCain Take Aim at Acquisition

By Colin Clark Tuesday, February 24th, 2009 5:55 pm
Posted in Policy

Two of the Senate’s defense heavyweights came out swinging today against the Pentagon’s dismal acquisition record of the last decade, with Sen. John McCain (R-Ariz.) declaring the nation faces a defense spending “train wreck” and joining Sen. Carl Levin (D-Mich.) in offering a sweeping new bill to rein in the acquisition system.

“We are going to do everything we can legislatively to put an end to these horrific cost overruns that we have seen,” Levin, chairman of the Senate Armed Services Committee, said Tuesday at a joint press conference with McCain, the committee’s top Republican. McCain made clear he knew this legislation was just the beginning of the process.

The proposed bill would substantially beef up the Nunn-McCurdy legislation that requires congressional notification by the Pentagon of any program whose cost grows by more than 15 percent. Nunn-McCurdy used to be two words to strike fear in the hearts of a program manager or the head of Pentagon acquisition and give heartburn to taxpayers and to Congress.

But program after program — the presidential helo, Future Combat System, SBIRS (twice), the C-5 modernization program, EFV, JASSM and almost every major space program — has busted the Nunn-McCurdy cost and schedule restraints. McCain noted during today’s press conference that congressional notification of breaches has become “routine,” causing the consequences of a Nunn-McCurdy breach to carry must less weight.

The existing legislation requires the Pentagon to notify Congress when cost growth on a major acquisition program reaches 15 percent. If the cost growth hits 25 percent, the Pentagon must justify continuing the program based on three main criteria: its importance to U.S. national security; the lack of a viable alternative; and evidence that the problems that led to the cost growth are under control. The new bill would assume cancellation of any program to exceed the Nunn-McCurdy restrictions “unless the secretary determines that the continuation of such program is essential to the national security.” This is the big change; existing legislating does not assume cancellation.

The 31-page bill also requires reports within 180 days by each service acquisition head about the state of their service’s requirement, acquisition and budget processes. It also requires them to examine the strategy and extent of systems engineering. The proposed bill also requires the undersecretary of defense for acquisition for acquisition, technology and logistics to produce a report within 270 days on the system engineering capabilities of the department.

Levin was willing to concede he and his colleagues were to blame in part for the parlous state of acquisition. “We have not done an adequate job of oversight,” he told reporters. To help redress that, he and McCain said the Senate Armed Services Committee will hold hearing next week next week on acquisition issue to get the ball rolling.

One way, of course, to force lower spending on the Pentagon — aside from improving acquisition – is to cut programs or force the Pentagon to choose between overlapping capabilities. But neither senator advocated major shifts to the programs actually being bought now, noting that President Obama has just nominated Ash Carter as head of acquisition and is still assembling his defense team. McCain noted that the country faces two wars and the majority of Pentagon costs arise from personnel cost, health care and direct materiel support to troops in the field.

Asked if the 25 percent cut to defense spending first suggested by Rep. Barney Frank (D-Mass.) would be supportable, McCain said he would “adamantly oppose” any such cuts in the face of two wars.

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	mike j February 24th, 2009 at 8:24 pm Seems to be trying to fix the problem on the wrong end. These systems get sold based on inflated capabilities and low-balled costs, how in the world WOULDN’T they bust budget caps? “Oversight” actually ends up contributing to the problem. A little honesty up front would do more.
	Rhys F February 25th, 2009 at 11:54 pm What they need is a bill that states that any increases above the contracted price that are not attributable to increased material costs, increased wages, or other OUTSIDE influences on the manufacturing process, must be met by the contracted manufacturer. Contract prices will jump high, as manufacturers work out what it WILL cost them, and add on a bit for margin and a bit more for increases… but it will stop them contracting at far below cost to win the contract, and announcing “budget overruns” then claiming more money from the treasury to finish the job… If you as a homeowner had a firm quote from a builder to re-roof your home as being $3000, signed a contract, and later with half the roof removed he came knocking on your door talking about budget over-runs and he needed another $1000 to finish the job… you’d have him in court in a flash for breach of contract and attempted extortion… why doesn’t the pentigon do the same?
	CMSgt BillyD February 26th, 2009 at 7:54 am It is refreshing to see the Congress, which hasn’t balanced a budget in years, just flushed $1 Trillion Dollars down the sewer, is sending a $400 Billion Dollar bill with hundreds of Demican AND Republicrat “porky little ammendments” through for approval and signature, has the spine to talk about reforming the DOD acquisition process. Sorry, Senators McEvin and Lain, but we just do not believe that contract costs will go down. There will be at least an equal transfer payment of the present overruns to 7 levels of Government bozos who will spend our tax money(without ANY oversight), but plenty of wing flapping, chest pounding, and congressional self-agrandizement(sp).
	jimtom February 26th, 2009 at 8:16 am One thing that needs to be realized is that the majority of the increased costs do not come from contracting at far below cost to win the contract, and announcing “budget overruns”, but from the government adding requirements to the various contracts, as long as the additions can be judged “in scope”.
	TCB February 26th, 2009 at 9:53 am Acquisiton cost increase are caused by DOD contractors under bidding cost and because we the goernment give out cost plus, incentive award, incentive fee contracts. Therefore the contractors can perform rework on articles until they make their profits and as long as they stay within their inflated delivery schedules they get their incentive fees/awards. All the government needs to do is give out fixed price contracts and cut their fat integrated delievery schedules, then all those cost overruns cost will be liable to the contractors.
	gotarmadillo February 27th, 2009 at 6:29 am Imagine! McCain and Obama agree-the DoD acquisitions is a mess!! That says something, doesn’t it? Acquisitions has it’s own little world and group of players, based on institutionalized thing-fear and salesmanship-and no fiscal responsibility.
	wtpworrier February 27th, 2009 at 9:26 am “We are going to do everything we can legislatively to put an end to these horrific cost overruns that we have seen,” Levin, chairman of the Senate Armed Services Committee, said Tuesday at a joint press conference with McCain, the committee’s top Republican. McCain made clear he knew this legislation was just the beginning of the process.” Thats called Congress doing it’s job, something the Repub control Congress failed to do during the last administration, thats why they lost and why they will loose again in two years. This is not a game, for some reason some of you fail to see that, it don’t matter. We’ve had enough of the bull, the jokes over, it’s time to put this Country back on track.
	GOTTOBELEVE March 31st, 2009 at 9:57 am The problem is the program has to be in such bad shape that even wakes Congress. The entire idea that the Department would let Congress knows that they have mismanaged hundred of millions of dollars and now need to scale back to through the baby out with the bath water should be a sign to the the world that: we need changed. we need leadership we need integrity we need to fire people Take a ten minute look at the Defense Department Integrated Military Human Resource Systems and you want to scream fraud, waste and abuse. Gordon England, David Chu and Tina Jonas should be brought back before Congress and made to answer why this is such a mess. Dave Fisher and Beth McGriff as well as Paul Brinkley should be fire!! Secretary Gates should stand up and do the RIGHT THING!!