Eight Actions to Improve Defense Acquisition

In this report, the authors look back at history, noting that the Department of Defense (DoD) has made numerous attempts to reform its acquisition system over the last 50 years, but that these and similar reforms have pro­duced only modest improvements.  Additionally, during the last decade, DoD’s acquisitions also experienced a major shift:  of approximately $400 billion spent on contracts for goods and services in FY 2011, over half was spent on services --yet rules, policies, and practices are based primarily on buying goods, which have different needs for acquisitions from services.  In addition, recent events involving acquisition of information technology by HHS and other agencies involved in the implementation of the Affordable Care Act have reinforced the need to look for practical ways to improve how agencies buy services.

Gansler and Lucyshyn write that given current and prospective fiscal conditions, there is likely to be increased interest in innovative strategies that maximize the effectiveness and efficiency of DoD’s investments in order to meet operational requirements and modernization needs.  Moreover, growing costs will require difficult choices for DoD just to maintain the status quo. Consequently, DoD must spend every dollar with the objective of getting the best value.

Given the current focus on acquisition across DoD and civilian agencies, addressing acquisition reform in a strategic and coordinated manner is imperative.  In that light, this new report also addresses a concern that complying with multiple acquisition initiatives at once can lead agencies to lose sight of the real intent—to improve per­formance with the dollars available—and instead focus on achieving zero deviation from the detailed acquisition guidance. This can results in less likelihood that any individual initiative will produce the desired effects.

The authors outline eight recommended actions intended to improve the results of acquisition programs, and, at the same time, strengthen the industrial base.

1. Use Appropriate Forms of Competition During All Phases of Acquisition
2. Improve the Effectiveness of Indefinite Delivery/Indefinite-Quantity Contracts.
3. Use a Best Value Tradeoff Selection Strategy for Complex and Most High-Knowledge-Content Work.
4. Use Cost-Reimbursable Contracts for System Development.
5. Remove Barriers to Buying Commercial Products and to Dual-Use Industrial Operations.
6. Where Possible, Reduce the Government Monopoly through Public/ Private Competitions (On Non-Inherently Governmental Work).
7. Work to Realize the Benefits of Globalization, Both Economic and Security.
8. Recruit and Retain a World-Class Acquisition Workforce

While the report centers on acquisition in the Department of Defense (DoD) because of its dominant size in the federal budget, the eight proposed actions apply to civilian agencies as well. The authors emphasize the urgency of acquisition reform in DoD given budgetary constraints and security challenges, finding that “DoD will need to gain every possible efficiency, while resisting the temptation to buy defense on the cheap.”

This report builds on two other recent IBM Center reports -- Controlling Federal Spending by Managing the Long Tail of Procurement and A Guide for Agency Leaders on Federal Acquisition: Major Challenges Facing Government – to set forth a clear and timely set of perspectives to help the government improve acquisition, while saving costs. We hope that these reports will assist government executives in effectively addressing acquisi­tion challenges.