You have to admire the commitment to public service of individuals such as the incoming Secretary of Defense, Dr. Ashton Carter. To accept the task of managing the Department of Defense in the final two years of the Obama Administration is an example of selflessness over self-preservation. Secretary Carter accepted the post knowing that he faced a remarkable array of challenges and difficulties. He knows that the White House will be making all important defense decisions – and many of the small ones, as well. Carter is well aware that the FY2016 budget he will be defending on Capitol Hill is tens of billions of dollars above the spending ceiling imposed by the Budget Control Act. The current defense program will crater if sequestration comes back into effect, forcing incredibly painful decisions on the Pentagon generally and the Secretary of Defense, in particular. He faces also a Republican-dominated Congress, the leaders of which have made it clear that they take their responsibilities for oversight and investigations very seriously. There is little chance that Congress will defer to DoD when it comes to issues of force structure, weapons systems or cost cutting strategies.
All these difficulties might be tolerable in an era of global peace. But Secretary Carter knows better than most that he will occupy the big office on the Pentagon’s E ring at a time of rising threats to the global order and U.S. security. Moreover, he must appreciate the growing unhappiness at home, abroad and even in Carter’s own department with the President’s strategies and policies to deal with these threats.
With little control over matters of strategy, budgets, forces or threats, what is left on which the incoming Secretary of Defense can have an impact in the next two years? Only one thing: the defense acquisition system. Ironically, it is precisely the intersection of the challenges and difficulties described above that could make the last quarter of the Obama Administration the time to make some major improvements to the way the Pentagon acquires goods and services.
Secretary Carter is no novice when it comes to acquisition reform. As Under Secretary of Defense for AT&L, he aggressively sought ways of improving the performance of the acquisition system and saving costs. Carter was the architect of the original Better Buying Power (BPP) strategy, now on its third iteration under Carter’s successor as Under Secretary, Frank Kendall.
Unfortunately, Secretary Carter’s last foray into the realm of acquisition reform produced relatively little in the way of demonstrable improvements in the system’s performance. In fact, the percentage of defense contracts awarded on a competitive basis, a major objective of BPP, has actually declined over the past several years.
Secretary Carter should make it the central objective of his tenure to improve the relationship between the Pentagon and industry which has deteriorated significantly over the past six years. This means addressing industry’s concerns over topics such as control of intellectual property, profits, incentives, cost reductions and the use of commercially-accepted standards in areas like accounting and safety. These are particularly important subjects in view of DoD’s desire to promote greater innovation in defense goods and services and its interest in gaining greater access to commercial technologies and ideas.
Secretary Carter is the poster child for the revolving door between the private sector/academia and DoD. Contrary to the comments by some critics, this revolving door is a good thing. Too few acquisition officials have a clue as to how industry operates or the factors that motivate decisions by private business. Secretary Carter should seek to revise the rules on conflict of interest in order to draw more experienced industry officials into the acquisition system.
The new Secretary should rein in the Pentagon’s mania for competition. In fact, there is good evidence to suggest that increasing the frequency of competitions actually raises the costs to both industry and the government. Moreover, the Pentagon could save a lot more money and time if it consulted more with industry on such issues as the cost of individual performance requirements or alternative life cycle management strategies before releasing an RFP, than it has by focusing obsessively on competition between contractors and maintaining an arms-length policy towards industry.
He may wish also to revisit and revise his erstwhile opposition to defense mergers. Back in 2011, as the magnitude of the decline in defense spending became evident, then Under Secretary Carter made clear his department’s opposition to the kind of mergers of major defense companies that occurred in the 1990s. Today, many defense companies, including some of the largest in the industry, are essentially one or two contracts or programs away from exiting critical sectors of the defense and aerospace market. Given the dearth of new starts and the increased tendency by DoD to seek modifications that extend the life or expand the missions of existing systems and platforms, once a company exits a sector it has virtually no chance for re-entry. Sectors such as armored fighting vehicles, artillery and ships already are down to two competitors. Aircraft, helicopters and missiles are likely to follow. Secretary Carter ought to be thinking now about how to manage the next round of defense consolidation.
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