On May 22nd President Obama signed the Weapons Systems Acquisitions Act into law. Before we look at the law I want to note that here is another instance where the Congress, House and Senate, behaved like adults addressing an important issue of our times.
Upon signing this legislation into law President Obama said:
"Last year, the Government Accountability Office, or the GAO, looked into 95 major defense projects and found cost overruns that totaled $295 billion. Wasteful spending comes from exotic requirements, lack of oversight, and indefensible no-bid contracts that don't make our troops or our country any safer. To put this in perspective, these cost overruns would have paid our troops' salaries and provided benefits for their families for more than a year.
At a time when we're fighting two wars and facing a serious deficit, this is unexcusable and unconscionable. As Secretary Gates has said, one dollar of waste in our defense budget is a dollar we can't spend to support our troops, or prepare for future threats, or protect the American people. Well, it's finally time to end this waste and inefficiency.
The bill I'm signing today, known as the Weapons System Acquisition Reforms Act, represents an important next step in this procurement reform process. It reforms a system where taxpayers are charged too much for weapons systems that too often arrive late -- a system that suffers from spending on unproven technologies, outdated weapons, and a general lack of oversight.
The purpose of this law will be to limit cost overruns before they spiral out of control. It will strengthen oversight and accountability by appointing officials who will be charged with closely monitoring the weapons systems we're purchasing to ensure that costs are controlled. If the cost of certain defense projects continue to grow year after year, those projects will be closely reviewed, and if they don't provide the value we need, they will be terminated. This law will also enhance competition and end conflicts of interest in the weapons acquisitions process so that American taxpayers and the American military can get the best weapons at the lowest cost."
Here is the breakdown on the legislation section by section.
Title I deals with Acquisition Organization.
§101 establishes a Director of Cost Assessment and Program Evaluation who reports to the Secretary of Defense and other Department of Defense (DOD) senior officials. This Director is charged with providing independent analysis and advice on DOD acquisitions. Specifically the Director is to ensure that DOD cost estimation and cost analysis processes provide accurate information and realistic cost estimates for DOD acquisition programs; and also requires the Secretary of Defense to ensure that the Director reviews acquisition program cost estimates, cost analyses, and related records for major defense acquisition programs (MDAPs) and major automated information system programs (MAISPs) of the military departments and defense agencies.
§101 also requires that the : (1) Director, the Secretary of the military department concerned, and the head of the defense agency concerned to disclose the confidence level used in establishing a baseline estimate for an MDAP or MAISP; and (2) Director to report annually to the Secretary, the Under Secretary of Defense for Acquisition, Technology, and Logistics (Under Secretary), the Under Secretary of Defense (Comptroller), and the congressional defense and appropriations committees on DOD cost estimation and analysis activities.
Finally, §101 transfers to the Office of the Director the functions and personnel of the Cost Analysis Improvement Group and the Office of Program Analysis and Evaluation. The law also requires the Director to review, and report to the Secretary on, existing DOD systems and methods for tracking and assessing MDAP operating and support costs; and that such report be transmitted to the defense and appropriations committees.
§102 should do for the Pentagon what Consumer Reports has done for the purchasing public. This section establishes a Director of Developmental Test and Evaluation and a Director of Systems Engineering to advise the Secretary of Defense and the Under Secretary on DOD systems engineering and development planning.
The Director of Developmental Test and Evaluation is required report to the defense and appropriations committees on activities undertaken; and to issue appropriate guidance with respect to DOD developmental test and evaluation and systems engineering, respectively. This section directs the service acquisition executives of each military department and defense agency with responsibility for a MDAP to: (1) develop and implement plans to ensure that the department or agency has provided appropriate resources for developmental testing and developmental planning and systems engineering; and (2) report to the directors established under this section with respect to such plans and each such director's responsibilities.
§103 directs the Secretary to designate a senior DOD official to conduct and oversee assessments and root cause analyses for MDAPs; and to make annual reports to the defense and appropriations committees.
§104 Requires periodic reviews and annual reports assessing the technological maturity and integration of risk critical technologies of MDAPs. It also requires the Director to develop knowledge-based standards to measure the maturity and risk of critical technologies at key stages in the acquisition process.
§105 Directs the Joint Requirements Oversight Council (JROC) to seek and consider input from commanders of combatant commands prior to identifying joint military requirements. Requires the Comptroller General (CG) to report to the defense committees on the implementation of such requirement.
Title II deals with Acquisition Policy.
§201 Requires the Secretary to ensure the consideration of tradeoffs among cost, schedule, and performance objectives for DOD programs. This section mandates the Joint Requirements Oversight Council (JROC) make those same considerations for joint military requirements. The Director of Cost Assessment and Program Evaluation is to lead the development of study guidance for an analysis of alternatives for each joint military requirement for which the JROC Chairman is the validation authority.
§202 Directs the Secretary to make certain that the strategy for acquiring each MDAP includes competitive measures at both the prime contract and subcontract level of the MDAP throughout its life-cycle as a means to improve contractor performance. This section mandates documentation of the rationale for selecting subcontractors and outlines measures to ensure competition. This section requires the Secretary to take specific actions ensuring fair and objective "make-buy" decisions by prime contractors on MDAPs; and that contracts for maintenance and sustainment of a major weapons systems are awarded on a competitive basis with full consideration of all sources.
Make-buy determinations weigh the costs and benefits of manufacturing an item compared to purchasing the item. Under this Section the Secretary will need to know that the make-buy analysis took place and the factors which were considered. This just makes good business sense to ask if the prime contractor has the facilities, equipment, personnel, and ready supply of raw goods to deliver the product to specifications, on time, and on or under budget.
§203 Directs the Secretary to ensure that the acquisition strategy for each MDAP provides for competitive prototypes before Milestone B approval, unless the milestone decision authority waives that requirement.
The Milestone B approval is a Department of Defense term of art used by Pentagon accountants. This approval triggers a review of nearly thirty aspects of the MDAP, or other acquisition. An example of what is meant by Milestone B can be found online at: http://www.dfas.mil/technology/pal/ssps/sds/d-fa-011.htm. If there is a waiver then notice must be given to the Comptroller General of the waiver and the rationale for it. The Comptroller General is required to review the rationale and report the results of the review to the defense and appropriations committees. So if waivers are made the Congress gets to exercise legislative oversight.
§204 Requires a Milestone Decision Authority (MDA) to report to defense and appropriations committees, within 30 days of being notified that an MDAP is experiencing cost or schedule delays of 25% or more. That report must identify the root cause of the cost or schedule growth and list appropriate acquisition performance measures for the remainder of the MDAPs development. The report must include either a certification that the MDAP is needed, a plan for its termination, or the withdrawal of Milestone approval.
§205 Directs a MDA waiving certain program certification requirements routinely required for a Milestone or Key Decision approval to, at least annually, review that MDAP to determine the extent to which it currently meets the waived requirement. This section requires that current certification of MDAPs with waivers in annual DOD budget justifications. At minimum these MDAPs must satisfy specified certification components and be subject to annual review with focus on their success in achieving adequate program performance.
§206 Directs the Secretary, if the acquisition or procurement unit cost of an MDAP or designated major subprogram increases by a percentage equal to or greater than the critical cost growth threshold for the program or subprogram, to first determine the root causes for the cost growth and then to terminate the program or subprogram, unless the Secretary notifies the Congress of a decision not to terminate. Any such program not terminated may only continue on a limited basis, with certification that the program is essential to national security and no alternative exist which will provide acceptable military capability at less cost. These programs may be restructured, under this section, in a manner which addresses issues of the root cause of the critical cost growth overrun. Obviously, more reports to Congress are required.
§207 Directs the Secretary to revise the Defense Supplement to the Federal Acquisition Regulation to provide guidance and tighten existing requirements pertaining to organizational conflicts of interests by MDAP contractors. The Panel on Contracting Integrity, created by the John Warner National Defense Authorization Act for Fiscal Year 02007, and present recommendations to the Secretary on measures to eliminate or mitigate those conflicts of interest. The Panel on Contracting Integrity is directed to serve until at least the end of 2011.
Title III provides for Additional Acquisitions.
§301 Requires the Secretary to carry out a program to recognize excellent individual and team performance by members of the Armed Forces and civilian DOD personnel in the acquisition of products and services. Winners get cash bonuses!
§302 Amends the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 by requiring additional discussions and recommendations within a required report from the Secretary to the defense committees on DOD implementation of earned value management.
According to Wikipedia, http://en.wikipedia.org/wiki/Earned_value_management - Earned value management (EVM) is a project management measuring project progress in an objective manner. EVM has the ability to combine measurements of scope, schedule, and cost in a single integrated system. When properly applied, EVM provides an early warning of performance problems. Additionally, EVM promises to improve the definition of project scope. prevent scope creep, communicate objective progress to stakeholders, and keep the project team focused on achieving progress.
§303 Requires periodic defense capability assessments to consider the effects of the termination of MDAPs. This section makes the ability of national technology and industrial base maintaining critical design skills a national security objective. The point being that American Armed Forces will be provided with systems capable of ensuring technological superiority over potential adversaries.
§304 Requires the Comptroller General to report to the defense and appropriations committees on growth in operating and support costs for major weapons systems and on the results of a review of weaknesses in operations affecting the reliability of financial information on systems and assets to be acquired under MDAPs.
This law makes sense. Government should be run like a business, with We the People treated like the stockholders. Here we see effective business tools and reliable data going to decision makers. When these reports start hitting the desks of the Secretary and the defense and appropriations committees they need to be read and properly acted upon. We can ill afford to let the reports be pigeon holed to the peril of the nation's security and the lives of our Armed Forces.