Defense Acquisition Reform, 1960–2009

[Pages:287]Defense Acquisition Reform, 1960?2009 An Elusive Goal

By J. Ronald Fox with contributions by David G. Allen Thomas C. Lassman Walton S. Moody Philip L. Shiman

CENTER OF MILITARY HISTORY UNITED STATES ARMY WASHINGTON, D.C., 2011

Library of Congress Cataloging-in-Publication Data Defense acquisition reform 1960?2009 : an elusive goal / J. Ronald Fox ; contributions by David G. Allen ... [et al.].

p. cm. Includes bibliographical references and index. 1. United States--Armed Forces--Procurement--History--20th century. 2. United States--Armed Forces--Procurement-- History--21st century. 3. United States--Armed Forces--Weapons systems--Purchasing. 4. United States. Dept. of Defense-- Procurement. I. Fox, J. Ronald (John Ronald), 1929? II. Allen, David Grayson. UC263.D368 2011 355.6'2120973--dc23

2011042992

First Printing CMH Pub 51?3?1

Contents

Page

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Principal Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

Chapter

1. The Defense Acquisition Process . . . . . . . . . . . . . . . . . . . 1 The U.S. Defense Establishment . . . . . . . . . . . . . . . . . . . . . 1 Major Weapon Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Defense Acquisition Historical Perspective . . . . . . . . . . . . 7 Defense Acquisition Versus Commercial Operation . . . . . 12 Government Acquisition Regulations . . . . . . . . . . . . . . . . 13 Participants in Defense Acquisition . . . . . . . . . . . . . . . . . 14 Defining New Defense Systems . . . . . . . . . . . . . . . . . . . . . 15 Congressional Authorization and Appropriation . . . . . . . 19 Stages in the Acquisition Process . . . . . . . . . . . . . . . . . . . 20 The Transition Between Phases . . . . . . . . . . . . . . . . . . . . 28 Selecting a Contractor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Controlling Schedules and Costs . . . . . . . . . . . . . . . . . . . . 30 The Basis for Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Limited Rates of Production . . . . . . . . . . . . . . . . . . . . . . . 32 Limitations of Government Program Managers . . . . . . . . 33

2. Defense Acquisition Reforms in the 1960s and 1970s . . . 35 Acquisition Reform During the 1960s--The McNamara Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 The Transition from Robert McNamara to Melvin Laird . . . 40 Deputy Secretary of Defense David Packard . . . . . . . . . . . . . 43 Secretary Laird Creates the Blue Ribbon Defense Panel (1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Defense Systems Acquisition Review Council . . . . . . . . . . . . 47 Industry Advisory Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Packard Confronting Resistance . . . . . . . . . . . . . . . . . . . . . . . 53 Pushing Against Inertia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 The Blue Ribbon Defense Panel Issues Its Report (1970) . . . 62 Consolidating Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Codifying the New Acquisition Process--DoD Directive 5000.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

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Chapter Page

Leadership in the Post-Packard Era . . . . . . . . . . . . . . . . . . 79 The Congressional Commission on Government

Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Office of Federal Procurement Policy . . . . . . . . . . . . . . . . . 84 Procurement of Research and Development . . . . . . . . . . . 88 Reforming Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Legislating Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Office of Management and Budget Circular A?109 . . . . . 95

3. The 1980s: The Carlucci Initiatives and the Packard Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Setting the Stage: PPBS and the Cycles of Weapons Acquisition Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 From PPBS to the Acquisition Improvement Program . . . . . 106 AIP in Action: Implementation and Execution . . . . . . . . . 115 Responding to Charges of Fraud, Waste, and Mismanagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 The Packard Commission, 1985?1989 . . . . . . . . . . . . . . . . 125 Under Secretary of Defense for Acquisition . . . . . . . . . . . 132 The Battle for Control of Weapons Systems Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 The Legacy of 1980s Weapons Acquisition Reform . . . . . . 146 1980s Retrospective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

4. Acquisition Reform from 1990 to 2000 . . . . . . . . . . . . . . . 151 A Mandate for Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 Organizing the Reform Process . . . . . . . . . . . . . . . . . . . . . 154 Tools for Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 The Broad Reach of Reform . . . . . . . . . . . . . . . . . . . . . . . . 165 Changing the Acquisition Process . . . . . . . . . . . . . . . . . . . 175 Results of 1990s Acquisition Reforms . . . . . . . . . . . . . . . . 180 Views of Army Headquarters Personnel . . . . . . . . . . . . . . . . 183 Views of the Army Program Management Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 What Has Been Good About Acquisition Reform? . . . . . . . . . 185 What Has Been Bad About Acquisition Reform? . . . . . . . . . 185 Summary of Rand Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

5. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 The Defense Marketplace . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Relationships Between Government and Industry . . . . . . 194 Reexamining the Program Manager Concept . . . . . . . . . . 198 Differing Perceptions of Defense Acquisition . . . . . . . . . . 200

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Government and Contractor Incentives . . . . . . . . . . . . . . . . 203 The Need for Extended Follow-up Actions . . . . . . . . . . . . . . . 205

Appendixes A. Four Acquisition Reform Studies Conducted from

2001 to 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 B. Changes to the Acquisition Process, DoD

Directive 5000.1, 1971 to 2008 . . . . . . . . . . . . . . . . . . . . . . . . . 221 C. Carlucci Thirty-Two Acquisition Reform

Initiatives, 1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229 D. Rand Corporation Study of Sixty-Three

Acquisition Reform Initiatives, 2002 . . . . . . . . . . . . . . . . . . . 231 Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 Selected Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255

Tables

No.

1. Defense Outlays, FY 1950?FY 2008 . . . . . . . . . . . . . . . . . . . . 2 2. DoD's Budget Authority by Component . . . . . . . . . . . . . . . . . 3

Figures 1. Total Federal Outlays: Non-Defense and Defense . . . . . . . . . 4 2. The Defense Acquisition Management System . . . . . . . . . . . . 24 3. The Systems Acquisition Process . . . . . . . . . . . . . . . . . . . . . . . 57

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