The state of defense acquisition reform (an October update)

On October 23, a day after President Obama vetoed the National Defense Authorization Bill for 2016, and three days after a Brookings forum featuring Senator McCain and Congressman Thornberry to discuss that legislation, the Brookings national defense industrial base working group convened to discuss the state of acquisition reform. That subject featured prominently in the defense authorization bill, with its attention on giving greater authority and responsibility to the individual military services, on encouraging greater use of commercial contracts in military acquisition, and on encouraging new entrants into the defense procurement process.

Matt Chandler of Palantir initiated the discussion and I moderated. Since the conversation proceeded along Chatham House rules, and because no effort was made to achieve consensus among the participants, the observations offered here are simply intended to give a sense of the discussion and of some of the ideas that were voiced in its course. They should not be attributed to any specific individual.

Several questions were put on the table at the outset of the conversation. They included whether the reforms in the National Defense Authorization bill were particularly important, whether the Department of Defense would really behave differently in light of the proposed reforms, and whether there were specific types of military programs that should be particularly identified as top candidates for new acquisition procedures.

Among the key opinions and observations raised in response to these and other questions were the following:

• At the risk of belaboring the obvious, the uncertain budgetary environment, combined with the ongoing use of continuing resolutions to fund the Department of Defense, creates a context in which high-level fiscal forces could do considerable harm to the defense industrial base. These problems could trump many of the benefits of even well-conceived acquisition reforms.
• That said, it would be desirable to find a way to resuscitate the acquisition reforms in the defense bill even after the veto—there was little dissent in the room on this basic point, even among those who did not expect the reforms to accomplish great things. Most saw them as a net positive in aggregate.
• Areas of military technology where reforms like those in the 2016 defense bill might yield the greatest benefit include software and robotics/autonomous systems.
• For certain other types of programs—like traditional large platforms—acquisition reform might yield less. Indeed, for such areas of technology, there might be just as much benefit from improvement maintenance practices, such as greater use of performance-based logistics contracts, as from acquisition reform per se.
• The private sector, and the commercial world, are of course not always successful in their technology development. Thus, changes in acquisition practices that involve more commercial approaches will sometimes produce failure themselves. Indeed, as many as 90 percent of all software startup efforts fail. But Silicon Valley is a place where the culture is to “fail fast, fail small” and this is a better way to operate in the software world than to commit irrevocably to big mega-systems that are likely to encounter major problems and thus huge remedial costs as well as long delays.
• The defense bill’s greater emphasis on giving the service chiefs primary responsibility (or at least greater responsibility) for the success of weapons programs met with more hopefulness than criticism from the group. But there was some skepticism that this would amount to a major change in how business is done, or how well it is done, given that the services have had greater acquisition authorities at times in the past and not always performed well.
• For Silicon Valley firms, and many other companies, working with the Department of Defense may not be an appealing prospect in many ways, but the combination of technological challenges associated with major military programs, together with patriotic sentiment and an awareness of the importance of defense programs for national security, make a number of such companies willing to consider entering into the defense sector even when the strict merits of the idea in business terms may be dubious. Silicon Valley is not categorically opposed to working with the American armed forces!

The overall tenor of the conversation was hopeful—at least, as hopeful as it could be a day after a presidential veto of a defense authorization bill and seven short weeks before the current continuing budget resolution is due to expire. It is therefore still far too early to reach a verdict on the year’s overall efforts in defense acquisition reform.