The leadership in the Department of Defense (DoD) has succumbed to a new religion. This one is called affordability. The high priests of this new religion in the Office of the Secretary of Defense and particularly in Acquisition, Technology and Logistics have been writing a new catechism that directs their acolytes in the acquisition system to make affordability a key goal in managing all defense programs. Not only must affordability be applied in the procurement of new weapons systems but in their sustainment and that of older systems as well. Program managers and budget analysts are taught holy words such as “will cost” and “should cost” that have no basis in fact or science but are intended to inspire those who chant them to pursue the Eden of affordability.
I would be less cynical about DoD’s newfound religion if that organization did not swap them out every couple of years. Pentagon leaders are like college freshmen away from home, on their own for the first time and trying on new belief systems more regularly than they change their underwear. A little while ago the religion de jour was insourcing and before that outsourcing.
I also would be less cynical if there was hard evidence that DoD leaders were serious about incentivizing behaviors that had the effect of lowering costs and making programs more affordable. But the opposite seems to be the case.
It is well known that procurement contracts for new platforms must be of sufficient duration and scale to allow the companies bidding on them to recoup their costs and make a profit. Yet, in program after program from the F-35 to the Global Hawk and the JLTV the Pentagon is cutting the numbers of systems being procured. The companies are asked to invest more of their own money with less chance of getting it back in sales. Moreover, uneconomical rates of production violate the tenets of affordability.
When it comes to sustainment, DoD has a proven approach for reducing costs: Performance-Based Logistics (PBL). Properly structured PBL-based sustainment contracts can save tens and even hundreds of millions of dollars. There are estimates that if DoD required the majority of sustainment programs to be managed according to the tenets of PBL it could save as much as $20 billion a year. Is DoD requiring program managers to pursue PBL sustainment strategies? No.
In addition, in case after case the Pentagon is demanding shorter contract periods with more frequent recompetes in the name of affordability. Everyone knows that competitions cost both the government and the private companies money. Also, if the contract award period is very short companies cannot make the necessary investments to reduce costs and increase a program’s affordability.
DoD is worshipping a false god, affordability. Or maybe more accurately it is not serious about its new religion and is just waiting for a new prophet to come along.
Find Archived Articles: