Dodging the Formal Acquisition Process
Pentagon leaders find creative ways to avoid oversight
By: Dan Grazier | January 5, 2018
When Army leaders decided they needed an upgraded version of the Abrams tank, they wanted to get it without enduring what they consider to be a cumbersome formal acquisition process. Any program of this scale would ordinarily be classified as a Major Defense Acquisition Program (MDAP) and be subject to the oversight reviews and regulations that status entails. To avoid this, Army leaders claimed a major modernization effort to a weapon central to their very identity was a mere design tweak, and managed the project through the far less rigorous Engineering Change Proposal process. This is a problem. The MDAP process may be cumbersome, but its intended purpose is to ensure the Pentagon properly evaluates its needs and then enters into programs that will properly meet them. It is also meant to exert the kind of pressure necessary to keep costs under control. While the system is indisputably flawed (the F-35 is an MDAP), the services should not be permitted to simply ignore the laws. Doing so will almost certainly result in weapons of dubious combat value and more cost overruns.
In performing such a maneuver to avoid the toughest of the acquisitions process, the Army is hardly alone. All of the services are increasingly resorting to similar schemes for other high-profile programs. The danger to the taxpayers, to say nothing of the men and women who will have to take these systems into combat one day, is that these complex and expensive weapons systems aren’t subjected the kind of outside scrutiny necessary to ensure the services are purchasing suitable and effective equipment.
Hardly a year goes by without some effort to modernize the Pentagon’s weapons buying process. Senator John McCain (R-AZ) succeeded in pushing into law a provision to split the Pentagon’s office of Acquisition, Technology & Logistics into at least two offices. The long-time chairman of the Senate Armed Services Committee believes this will allow the separate undersecretaries to focus more on their particular offices. The new office of Research and Engineering will focus on innovation while the Acquisition and Sustainment office deals with basic business functions associated with buying and maintaining new weapons. House Armed Services Committee chairman, Representative Mac Thornberry (R-TX), has introduced legislation meant to streamline the process for the past three years. The latest version would allow the services to purchase more items through commercial marketplaces. Previous similar efforts, such as when the Pentagon attempted to change the definition of commercial items to avoid the competitive bidding process, proved problematic. Earlier efforts were geared towards improving program business models and reducing the process's reports and paperwork. Congress also effectively outsourced acquisition reform to the defense industry when it created the “Section 809 Panel” as part of the FY 2016 National Defense Authorization Act to make recommendations to streamline the way the Pentagon buys weapons. This panel is comprised of several members with deep ties to the defense industry and is the subject of a concerted lobbying effort by the contracting community.
The effectiveness of such efforts is not yet clear, but that might not matter. The usual result of most such efforts is an even more sluggish process—it is a rare problem that can’t be made worse with the addition of more bureaucracy.
Why the Military-Industrial-Congressional Complex Wants to Avoid the MDAP Process
From the perspective of the Pentagon, the defense contractors, and their allies on Capitol Hill, there are advantages in procuring weapon systems through means other than the formal acquisition process. The acquisition process is so complicated and involved that the Department of Defense created the Defense Acquisition University in 1991 to educate personnel on navigating various aspects of the process. A full explanation of the process would fill volumes, but even the basics provide a glimpse into the complexity of the process.
A Major Defense Acquisition Program goes through three separate phases. At the end of each phase, a program goes through a review process to determine whether it has met the criteria to move onto the next phase. These transitions are called “milestones.”
That means we will be spending $22 million to upgrade a $6 million vehicle.
A project begins when the services identify a new military need, or what is known as a capability. This is done through the Joint Capabilities Integration and Development System. This process figures out whether a new weapon system is actually needed to fill the perceived capability gap or if a change in tactics or some other non-material solution can get the job done. This work is reviewed by the Joint Requirements Oversight Council. If they determine a new weapon system is needed, then it goes through the Material Solution Analysis Phase.
A program has to achieve 40 milestone requirements just to pass Milestone A into the second major phase of a program, the Technology Maturation & Risk Reduction Phase. These 40 requirements includes conducting an Analysis of Alternatives, which is a comparison of other weapons that could potentially fill the same need; an Independent Cost Estimate, which helps decision-makers decide if the weapon is something they can afford to pursue (or what tradeoffs should be made if it’s not); and developing a Test and Evaluation Master Plan, which is essential to establish clear testing benchmarks to evaluate how the new weapon system performs in combat. While plenty of redundancy exists within the process, it is meant to protect the interests of both the warfighters and taxpayers. The Government Accountability Office has noted the importance of following through with these steps as part of a knowledge-based process. If the services don’t do so, they create situations where programs “carry technology, design, and production risks into subsequent phases of the acquisition process that could result in cost growth or schedule delays.”
Ideally, multiple contractors will build prototypes that will then be tested as part of a competition to see which design performs the intended mission better. The most successful programs begin this way, with the Lightweight Fighter Program (F-16) and the A-X Program (A-10) being the most notable examples.
The awarding of a contract for the winning design marks Milestone B, and the program passes into the Engineering & Manufacturing Development Phase. The prime and sub-contractors then finalize the development of the system and begin manufacturing enough production-representative goods to complete the Initial Operational Test & Evaluation process.
The successful completion of the realistic combat and live-fire testing phase marks Milestone C, and the program proceeds to full-scale production and deployment to the troops.
Throughout this process, there are numerous review and decision points. This includes a review by the Defense Acquisition Board, which is made up of the Vice Chairman of the Joint Chiefs of Staff, Secretaries of the Military Departments, four undersecretaries of defense, the Director of Operational Test & Evaluation, and others.
Case Study: The Army’s New Tank
The Army commissioned General Dynamics to design an upgraded version of the M1A2 Abrams tank in 2015. The first of what is expected to be 1,500 upgraded versions of the Army’s Abrams tanks rolled off the assembly line at the Lima, Ohio, factory on October 4, 2017. The choice of contractors for the project was hardly a surprise as the Abrams tank is a General Dynamics product. That is not to suggest that another contractor could not perform the work. Other contractors like BAE Systems also build armored vehicles and their component systems. By designating the project as an Engineering Change Proposal, however, the Army had little need to open it to a competitive bidding process as “most ECPs occur in a sole source environment.”
To the casual observer, the Army’s newest tank looks very much like the existing tanks. The M1A2 SEPv3 is still essentially an Abrams tank on the outside. However, the vehicle is quite different on the inside. It sports a new suite of communications gear called the Joint Tactical Radio System, which is supposed to fully integrate the vehicle into the Army’s command and control network. To provide the necessary electricity to power all of the new electronics and conserve fuel in situations where the crew does not need to run the gas-turbine engine, an improved generator has been added inside the hull.
The tank uses the same M256 smooth-bore cannon as the existing M1A1 tanks, but the breach in this variant has been modified to use the Ammunition DataLink to be compatible with the advanced multi-purpose round. This allows the tank’s gunner to send a signal to the round right before it is fired, setting its detonation mode to one of three different settings. It can detonate on impact, detonate on a delay for obstacle reduction, or airburst. This single round replaces four existing rounds, reducing the logistical burden of the armored forces, which is always a great concern.
In response to the threat posed by IEDs, the new tank includes a Counter Remote Controlled Improvised Explosive Device electronic warfare package. Should all of that fail, or when enemy fighters use simpler low-tech command-wired IEDs (which they will), the tank also boasts additional armor protection.
These are not insignificant changes. They add significantly to an already extremely heavy tank. As someone who spent ten years operating in tanks, I can tell you this is a significant problem. The Abrams tank is already too heavy for most of the world’s bridges. This restricts the number of avenues a unit can take to reach an objective, making it much easier for the enemy to predict the unit’s movements. It also increases the logistics burden because a heavier tank requires more fuel.
Sources within the Army say the new variant is too heavy for the Army’s fleet of Heavy Equipment Transport vehicles. The Army relies on these vehicles to transport the tanks across long distances to conserve fuel and to reduce wear and tear on the tanks.
They also do not come cheaply. The 2018 National Defense Authorization Act provides $650 million to upgrade 29 M1A2s to the new configuration. That means we will be spending $22 million to upgrade a $6 million vehicle.
What makes this particularly curious is that at the same time the Army is dodging the MDAP process with the tank upgrade program, the Hercules tank recovery vehicle upgrade program is going through the MDAP process. That means the wrecker will receive greater scrutiny than the weapon it is meant to recover.
Case Study: F-35 Follow On Modernization
The F-35 program is being managed through the regular MDAP process, but officials are now working furiously behind the scenes to prevent the next phase of it from following the same path. No one is quite sure what the latest incarnation of the F-35 will be able to do when the program completes the development and testing process, but that isn’t stopping officials from seeking funds for upgrades to the aircraft. They are continuing to develop a list of needed capabilities for the newer version, called Block 4.
The Pentagon estimates the cost just for the initial phase of the modernization program—the research, development, test and evaluation (RDT&E) phase—to be more than $3.9 billion through 2022. The Government Accountability Office correctly points out that this “would exceed the statutory and regulatory thresholds for what constitutes a major defense acquisitions program (MDAP), and would make it more expensive than many of the other MDAPs already in DOD’s portfolio.”
The F-35 Joint Program Office has strenuously resisted efforts to create a separate MDAP for the Block 4 modernization citing time and money concerns. The Joint Program Office wants to run the modernization program as part of the original contract from 2001. By dodging the MDAP process for this effort, the program would avoid many of the processes meant to ensure proper Congressional oversight. The program would not, for example, have to go through a Milestone B review, which would establish an acquisition program cost baseline and require regular reports to Congress about the program’s cost and performance progress.
Such a move also means the program would not be subject to the provisions of the Nunn-McCurdy amendment which establishes unit cost growth thresholds. This would require the Pentagon to notify Congress if the program’s unit cost grows by 25 percent and calls for the program’s cancellation if the cost grows by more than 50 percent. This, unfortunately, does not happen very often because the law includes a waiver provision that allows the Secretary of Defense to certify that the program is critical to national security and should be continued. Only one program, the Armed Reconnaissance Helicopter, has been cancelled as a direct result of a Nunn-McCurdy breach.
Case Study: The B-21 Raider
The biggest ticket item currently attempting to dodge public scrutiny is the Air Force’s newest bomber, the B-21 Raider. This program is being managed by the Air Force’s Rapid Capabilities Office, a secretive group that is conveniently not subject to many of the regulations Congress imposes upon most acquisition programs.
According the Air Force’s Rapid Capabilities Office website, this outfit has a key advantage the regular acquisition office does not:
“waivers to and deviations from any encumbering practices, procedures, policies, directives or regulations may be granted in order to ensure the timely accomplishment of the mission within applicable statutory guidance.”
The Air Force has been extremely cagey about releasing cost information about the new bomber. During the bid process, service leaders announced a $550 million per aircraft target cost. So far, Air Force leaders have refused to publicly release the value of the B-21’s development contract with Northrop Grumman. The stated reason for the secrecy about cost is that a potential adversary could derive information about the size, weight, and range. Apparently no one will be able to determine any of that information from the artist’s rendering of the new bomber, or from the list of subcontractors Air Force officials publicly announced.
The MDAP process is complex and does often fail to produce weapons that do what they are expected to do or come anywhere close to meeting the original cost expectations. The process is long over-due for a comprehensive streamlining effort. But even though the process is deeply flawed, the protections it includes were put there to protect the interests of the troops and the taxpayers. Just because the services find the process inconvenient, doesn’t justify their efforts to dodge the oversight mechanisms provided by federal law.
Unless Congress arrests this disturbing trend, the services are likely to continue to use these schemes to bypass the rules and regulations put in place to protect both the troops and the taxpayers. The people’s interests are served only when everyone involved in the process of buying new weapons have the correct information at the beginning. As Tom Christie, former Director, Operational Test and Evaluation wrote:
“Upfront realistic cost estimates and technical risk assessments, developed by independent organizations outside the chain of command for major programs, should inform Defense Acquisition Executives. The requirement for those assessments to be independent, not performed by organizations already controlled by the existing self-interests sections of the bureaucracy is essential.”
It is understandable that the services want to speed up the process of fielding new weapon systems. While there are many flaws in the current acquisition system, it is not the root of the problem. Service leaders and their partners (and far too often future colleagues) in the defense industry keep pursuing unrealistic programs and Congress keeps voting for them. Dodging the current acquisition regulations will not fix that problem, but it will make it easier for all involved to hide the bad results from the people paying for them, but presumably not from those who would suffer the consequences if a weapon were to fail in combat.