Acquisition reform on a ballistic trajectory

It doesn`t get much attention relative to other, more titillating bits of news. Actually, it never did - even during slow news periods - but that`s really the point. Acquisition reform, specifically the move toward broad use of commercial off-the-shelf (COTS) components, has become embedded in the defense culture to the stage where it is becoming invisible.

Mar 1st, 1998

by John Rhea

WASHINGTON - Acquisition reform is alive and well in the nation`s capital.

It doesn`t get much attention relative to other, more titillating bits of news. Actually, it never did - even during slow news periods - but that`s really the point. Acquisition reform, specifically the move toward broad use of commercial off-the-shelf (COTS) components, has become embedded in the defense culture to the stage where it is becoming invisible.

Well, almost.

The reformers aren`t through reforming, and they have a short list of enhancements they would like to see members of the Clinton Administration push Congress to enact. At the top of their list is a move to train Defense Department acquisition personnel to adjust to the new COTS culture.

This proposal comes from members of the Acquisition Reform Working Group (ARWG), who unveiled this plan in Washington last month. ARWG leaders, who represent eight industry associations, want the training budget increased, and they want to split it out from the catch-all category of travel and training, where it is today.

This is just one of many incremental changes that defense industry leaders want. The basic change occurred with the passage of the Federal Acquisition Streamlining Act (FASA) of 1994, which was the liftoff that put acquisition reform on its current ballistic trajectory. To take that metaphor a step further, you can`t accelerate a spacecraft in a ballistic trajectory without relighting its rocket engines, and short of a collision it can`t decelerate without firing a retro rocket.

Suffice it to say that U.S. defense acquisition reform is moving along steadily, and should not speed up or slow down anytime soon - unless, of course, it collides with something. Yet a spacecraft in a ballistic trajectory can make fine course corrections by firing small vernier engines, and that`s what the reformers want.

Redefining COTS

Acquisition reform advocates in industry want to start by fine-tuning the federal government`s definition of COTS, says Ella Schiralli, a government contracts adviser with the Washington law firm of Manatt, Phelps Phillips, and a former director of marketing for government relations at the Electronic Industries Association.

Under the present Federal Acquisition Regulation, a COTS item for the military must be identical to an item previously sold in the commercial marketplace. This means that a white T-shirt would qualify, but a green T-shirt would not - and the military buys a lot of green T-shirts, Schiralli points out.

At a minimum, ARWG members want the governing statue to change the COTS definition from "in the same form" to "to the form, fit, and function." This would broaden the definition of COTS sufficiently to include far more items than it does today. This is widely accepted commercial practice pioneered by, among others, ARINC of Annapolis, Md., keeper of many civil aviation standards.

The same logic applies to the support services that the Defense Department and other government agencies buy. Doing the job in-house might have made some sense when these were basically low-tech services such as janitorial and maintenance work. Today, when the military services are struggling to operate increasingly complex global information systems, they desperately need to tap the expertise of industry.

This is one more example of the way best commercial practices can infiltrate the military culture, with resulting improved efficiencies and reduced costs.

I remember a suggestion like this that came up during the Vietnam War from one of the Beltway bandidos (who like to roil the waters so they can charge megabucks to calm them again). The suggestion was for the Defense Department to buy a total radar package deal in which the contractor would be responsible for providing radar operations on a worldwide basis, instead of simply buying radar hardware.

Neither the technology nor the political climate was conducive to that kind of radical departure then, but the times have changed. Pentagon leaders are even loosening their restrictions on allowing contractor personnel into war zones (read Bosnia and, perhaps before long, Iraq).

Defense Secretary William Cohen has made it clear that broadening the military`s use of private services and privately developed hardware and software is an integral part of his Defense Reform Initiative. "We are going to improve competition," he told a Pentagon news briefing recently on the Fiscal Year 1999 defense budget.

"We`re going to put up 150,000 to 200,000 positions for competition. What we`ve found in the past historically, that when there is competition, it usually breaks down about 50 percent of the time the public facilities will win, and 50 percent will go to the private sector," Cohen added. "But in any event, it usually results in about a 20 percent savings."

Bert Concklin, president of the Professional Services Council, and a member of the ARWG, puts the savings at more like 40 percent for contractors and 20 percent for in-house operations, but either way the logic of competing services is compelling.

Members of the ARWG, which also includes the Aerospace Industries Association, American Electronics Association, National Defense Industrial Association (NDIA), and various shipbuilding and other groups, are not optimistic that any major legislation approaching the magnitude of the 1994 FASA will be forthcoming this year. This is another election year, and that means a short legislative session, notes Pete Scrivner, senior vice president for government policy at NDIA and chairman of the ARWG. The best the reformers can hope to do is line up their ducks this year in the prospect of a more productive Congress in 1999 after the mid-term elections.

If there`s one lurking issue that troubles the reformers more than any other, it is a recurrence of the spare parts "horror stories" of the 1980s, Schiralli says. Here again the remedy comes in best commercial practices.

The traditional military compulsion for maintaining large (and expensive) inventories of spare parts would be anathema to a company that has to reduce costly overhead in order to meet stiff competition. A beneficial fallout of the Total Quality Management mania that swept industry a decade ago was the idea of "just in time" inventory, using advanced computer techniques to ship parts where and when customers need them. Advanced technologies, such as the increasingly accepted distance learning, might also make inroads into the problem of training acquisition personnel.

No obstacles appear to be in the path of acquisition reform that would bring the whole process to a screeching halt. Government bureaucracies are no more (or less) resistant to cultural changes than corporate bureaucracies. Ask the people at IBM who missed the boat on personal computers. Or the Big Three automakers who underestimated foreign competition. The pace of acquisition reform may not be entirely satisfactory to the reformers, but for the foreseeable future all systems are "go."

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