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Acquisition system overhaul plan would impose penalty for busting budget

By CHRISTIAN DAVENPORT | The Washington Post | Published: September 30, 2015

The consequences of the cost overruns that plague so many Pentagon procurement programs have traditionally been limited to tongue lashings from Congress, bad press and not a whole lot else.

But under a proposal from the chairmen of the House and Senate Armed Services committees, the services would have to cough up real cash — 3 percent of the amount of the overrun — when the costs of their programs go over budget.

The measure is part of what Senate committee chairman, Sen. John McCain (R-Ariz.), called "the most sweeping acquisition reforms in a generation," another in a series of attempts to fix the way the Pentagon spends billions of dollars on weapons and other programs annually.

The issue has gotten increased attention from Capitol Hill because major programs continue to go way over budget and slip years behind schedule. The Pentagon spent $46 billion on at least a dozen programs, including a new fleet of presidential helicopters, between 2001 and 2011 that never became operational, according to an analysis by the Center for Strategic and Budgetary Assessments.

But officials are also concerned that the Pentagon's acquisition system is so flawed that it threatens national security. Potential enemies have been able to catch up with the United States, which can no longer always count on having a huge advantage in the sophistication of its weaponry, defense officials say.

And they are particularly concerned with the pace at which the nation's cyberdefenses are moving.

"If it takes us years to field technology, then the threats will outpace us and we could lose lives as a result," Rep. Mac Thornberry (R-Tex.), the chairman of the House Armed Services Committee, said in an interview. "Being more agile means we will be more effective in dealing with the huge array of challenges we face."

One of the main features of the effort is to give the heads of the services, such as the Air Force, Army and Marine Corps, more responsibility for their programs, instead of the power residing with the Office of the Secretary of Defense.

Now there are too many people involved in the process, with program managers spending "more time running between cubicles [in the Pentagon] than managing their own programs," said a senior congressional staffer not authorized to speak publicly about the proposed legislation. "There are all these people in the back of the bus who all have their own steering wheels and brakes. And they drive you into the ditch."

In addition to the 3 percent penalty, the proposal would automatically transfer oversight of programs to the Pentagon if they suffer a 15 percent cost overrun, or what's called a "Nunn-McCurdy breach."

The idea behind those consequences is to force the services to make more realistic cost estimates of their programs. Too often, officials say, the estimates come in too low in an effort to win congressional approval. And then, once the program has already started, the Pentagon asks for more money.

The proposal would also temporarily double the pay for some program managers, from roughly $150,000 to $300,000, in an effort to attract top talent and make government work competitive with the private sector.

The Pentagon has also been wooing companies, particularly those in Silicon Valley, which traditionally have not wanted anything to do with the Pentagon's dense bureaucracy. Earlier this year, Defense Secretary Ashton B. Carter visited the Valley in an attempt to work with companies such as Google and Apple the way it does with Lockheed Martin and Boeing.

To bolster those efforts, the proposal would allow commercial companies to keep their intellectual property and streamline the red tape that typically goes with government contracts.

"Our military must be able to access emerging innovations in cyber, robotics, and more that are increasingly likely not to come from the defense establishment," McCain said in a statement.

The effort also seeks to streamline the paperwork involved. For example, the Pentagon requires officials to fill out paperwork ensuring that their ships could sail without succumbing to corrosion. But the anti-corrosion effort spread, and eventually the Pentagon required the corrosion paperwork for everything it bought, even computer software.

"We specifically eliminated that," Thornberry said.

The Pentagon.
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