[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                         [H.A.S.C. No. 111-127] 

                    EXPERT PERSPECTIVES ON MANAGING 

                     THE DEFENSE ACQUISITION SYSTEM 

                      AND THE DEFENSE ACQUISITION 

                               WORKFORCE 

                               __________

                                HEARING

                               BEFORE THE

                  PANEL ON DEFENSE ACQUISITION REFORM

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                           FEBRUARY 25, 2010

                                     
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                  PANEL ON DEFENSE ACQUISITION REFORM

                  ROBERT ANDREWS, New Jersey, Chairman
JIM COOPER, Tennessee                K. MICHAEL CONAWAY, Texas
BRAD ELLSWORTH, Indiana              DUNCAN HUNTER, California
JOE SESTAK, Pennsylvania             MIKE COFFMAN, Colorado
                Andrew Hunter, Professional Staff Member
                 John Wason, Professional Staff Member
                     Megan Howard, Staff Assistant






















                            C O N T E N T S

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                     CHRONOLOGICAL LIST OF HEARINGS
                                  2010

                                                                   Page

Hearing:

Thursday, February 25, 2010, Expert Perspectives on Managing the 
  Defense Acquisition System and the Defense Acquisition 
  Workforce......................................................     1

Appendix:

Thursday, February 25, 2010......................................    19
                              ----------                              

                      THURSDAY, FEBRUARY 25, 2010
EXPERT PERSPECTIVES ON MANAGING THE DEFENSE ACQUISITION SYSTEM AND THE 
                     DEFENSE ACQUISITION WORKFORCE
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Andrews, Hon. Robert, a Representative from New Jersey, Chairman, 
  Panel on Defense Acquisition Reform............................     1
Conaway, Hon. K. Michael, a Representative from Texas, Ranking 
  Member, Panel on Defense Acquisition Reform....................     2

                               WITNESSES

Augustine, Norman R., Chairman, Task Force on Defense Acquisition 
  Law and Oversight, Business Executives for National Security...     2
Flynn, Joseph, National Vice President, American Federation of 
  Government Employees, AFL-CIO..................................     6
Schooner, Steven L., Co-Director of the Government Procurement 
  Law Program, George Washington University Law School...........     4

                                APPENDIX

Prepared Statements:

    Andrews, Hon. Robert.........................................    23
    Augustine, Norman R..........................................    27
    Conaway, Hon. K. Michael.....................................    26
    Flynn, Joseph................................................    56
    Schooner, Steven L...........................................    49

Documents Submitted for the Record:

    Improvement in Weapon Systems Acquisition by David Packard, 
      July 31, 1969..............................................    71
    Remarks on Acquisition Workforce Professionalism, Training, 
      Motivation, and Incentives by Norman R. Augustine..........    73

Witness Responses to Questions Asked During the Hearing:

    [There were no Questions submitted during the hearing.]

Questions Submitted by Members Post Hearing:

    [There were no Questions submitted post hearing.]
EXPERT PERSPECTIVES ON MANAGING THE DEFENSE ACQUISITION SYSTEM AND THE 
                     DEFENSE ACQUISITION WORKFORCE

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                          Defense Acquisition Reform Panel,
                       Washington, DC, Thursday, February 25, 2010.
    The panel met, pursuant to call, at 7:59 a.m., in room 
2261, Rayburn House Office Building, Hon. Robert Andrews 
(chairman of the panel) presiding.

OPENING STATEMENT OF HON. ROBERT ANDREWS, A REPRESENTATIVE FROM 
   NEW JERSEY, CHAIRMAN, PANEL ON DEFENSE ACQUISITION REFORM

    Mr. Andrews. Good morning, ladies and gentlemen. Thank you 
for your attendance. I would like to thank my colleagues on the 
panel for their attendance as well.
    In order to hear as much from our witnesses as we can this 
morning, Mr. Conaway and I are going to have very brief opening 
statements.
    He has a very busy day, and I am participating in the 
health care summit today at the Blair House, so I want to not 
walk into the middle of it late. I think that would be a little 
bit of a problem, so--succinctly, we have reached the 
decisionmaking point of our venture here, where we are 
beginning to put together our report to the American people and 
to the Congress and the full committee.
    And the purpose of today's hearing is to hear experts and 
leaders from three perspectives on procurement reform and 
workforce development, a perspective from those who have led 
businesses that have achieved in that area.
    Norm Augustine is someone who not only has led great 
companies but is now the leader of an organization of leaders 
of great companies who have tried to contribute and have 
contributed to our national debate very positively and 
constructively.
    Professor Steven Schooner is a returnee to our panel. He 
gave us very valuable insight early in our process, and he is 
back to help us today.
    And Mr. Joe Flynn is national vice president of the 
American Federation of Government Employees. We know we will 
only succeed if the men and women who are committed to the 
institutions and agencies succeed.
    And so we want to be sure that our report is inclusive and 
takes into account those who know best the procurement process, 
the men and women who work with it.
    So we welcome the witnesses.
    At this point I am going to yield to my friend, the senior 
Republican on the panel, Mr. Conaway.
    [The prepared statement of Mr. Andrews can be found in the 
Appendix on page 23.]

  STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE FROM 
   TEXAS, RANKING MEMBER, PANEL ON DEFENSE ACQUISITION REFORM

    Mr. Conaway. Thanks, Mr. Chairman.
    Gentlemen, welcome. Glad to have you here this morning. And 
as the chairman stated, we are not past the point of good 
ideas. We are still looking for good ideas even though we do 
have a draft of the document. It looks pretty good.
    Nothing is perfect, and so any input that you give us this 
morning is going to be much appreciated.
    And with that, Mr. Chairman, I yield back.
    [The prepared statement of Mr. Conaway can be found in the 
Appendix on page 26.]
    Mr. Andrews. Thank you.
    And again, so we can hear more substance from the 
witnesses, I am going to forego the usual reading of the 
biographies. We know and respect all three of you and 
appreciate the contributions you have made.
    I think you know from the rules here that your written 
statements, without objection, are being made part of the 
record of the hearing. We would ask you to give us a five-
minute-or-so synopsis of your written statement. And then we 
are going to proceed to interaction with the members of the 
panel.
    So, Mr. Augustine, welcome. It is good to have you with us.

   STATEMENT OF NORMAN R. AUGUSTINE, CHAIRMAN, TASK FORCE ON 
DEFENSE ACQUISITION LAW AND OVERSIGHT, BUSINESS EXECUTIVES FOR 
                       NATIONAL SECURITY

    Mr. Augustine. Mr. Cooper, members of the panel, we 
appreciate the opportunity to share with you some of BENS', the 
Business Executives for National Security, some of our thoughts 
on defense acquisition.
    As you probably know, BENS is an organization made up of 
mostly former business executives, mostly from the commercial 
sector, some from the defense sector, who came together 28 
years ago to offer advice to the government on areas where we 
may have any particular expertise.
    Last year it was my privilege to chair the BENS task force 
on acquisition, and in July we issued a report which you, I 
believe, have a copy, that we offered 25 specific 
recommendations that we believe would improve the acquisition 
process.
    Today I would, in my five minutes, like to make just a few 
comments that I personally believe summarize the challenges 
that the process of acquisition still faces, and I appreciate 
your submitting --or including my written testimony in the 
record.
    I would call to your attention as part of it an attachment 
that describes a canonical acquisition program gone wrong, and 
it is derived from my--goodness, 50 years, I guess, in this 
business. And it is a pretty good summary of why things go 
wrong.
    Secondly, I would like to provide for the record, just so 
that your committee will have it available if you don't, Dave 
Packard's 1969 statement which is closely reflective of what we 
have included in our BENS report, and I will provide that for 
the record.
    Mr. Andrews. Without objection, it will be considered in 
the record.
    [The information referred to can be found in the Appendix 
on page 71.]
    Mr. Augustine. Thank you very much. It was my privilege to 
work for Dave in those days, and I think he understood this 
process better than most anybody I have met since that time.
    Individuals participating in the defense acquisition 
process, of course, have a particularly great fiduciary 
responsibility.
    Not only do they take care of many billions of dollars of 
public money but, perhaps more importantly, the lives of our 
soldiers, sailors, airmen, marines, and coast guardsmen depend 
on how well they do their job. And in fact, the very survival 
of our country could depend upon that.
    It has been my experience, having worked 10 years in 
government and the rest in the private sector, that the 
individuals in the defense acquisition process are in large 
part, overwhelming part, extremely dedicated, able people. 
Nonetheless, as you know, dissatisfaction with the defense 
acquisition process is rampant in all quarters.
    The process is complex, as you know. It revolves around 15-
year programs and 5-year plans and 3-year managements, 2-year 
Congresses, 18-month technologies, 1-year budgets and thousands 
of pages of regulations and laws. It is complex.
    But you know, despite the serious shortcomings, it is still 
noteworthy that the equipment and services provided by our 
acquisition process remain the envy of most of the world's 
military forces.
    But we can do better. We can do much better. Perhaps the 
best summary I have seen over the years of the failing of the 
acquisition process comes from Gil Fitzhugh's 1970 Blue Ribbon 
Task Force in which they said that everyone is responsible for 
everything, and no one is responsible for anything. I think 
that vividly summarizes the challenge that we face.
    Today we have a large number of individuals, about 125,000 
people--I calculate that to be the equivalent of 7 Army 
divisions--running the acquisition process. In a few areas, we 
need additional people, particularly in contracting and systems 
engineering and program management.
    On the other hand, I would point out that adding, say, 
10,000 people each with 1 year's experience is different from 
adding 500 people with 20 years experience.
    And when I compare my experience in industry with 
government at any given level, the biggest difference is not 
the talent level or the commitment level. It is the experience 
that is relevant to the job that is being conducted.
    Unfortunately, the government's hiring and employment 
practices make it very difficult to attract and keep the sort 
of talent that the government needs to conduct these difficult 
programs.
    I would also note that the United States no longer 
possesses the dominant position it once held with respect to 
technological leadership. That certainly has an impact on how 
we manage the defense acquisition process.
    U.S. firms have also moved much of their manufacturing 
capability abroad. And while I believe you could probably build 
an economy based on a service sector, I don't think you could 
win wars with purely a service sector.
    I would also note that the talent base within the U.S. is 
withering, particularly in engineering and science and 
mathematics. Two-thirds of the Ph.D.s that are granted in 
engineering today from U.S. engineering schools go to foreign 
individuals, many of whom are now returning home.
    During this period of burgeoning technology that we have 
been living in, astoundingly, the number of U.S. citizens 
studying engineering has dropped 20 percent. The number getting 
Ph.D.s has actually dropped 35 percent.
    The report that BENS has prepared offers a series of 
recommendations which I won't repeat at this point in order to 
keep my comments short.
    I would note that the great irony is that Secretary Gates 
and his colleagues, I am sure, would prepare a quite comparable 
report. There is no great secret, I think, in terms of the 
nature of the problem we face.
    I would just close with a quote from Dave Packard that I 
heard him make many times while I had the privilege of 
testifying alongside him over the years. He made the comment 
that we all know what needs to be done. The question is why 
aren't we doing it.
    And so let me, on behalf of my colleagues at BENS, 
particularly the members of the committee I chaired, thank you 
for this opportunity to share our views.
    [The prepared statement of Mr. Augustine can be found in 
the Appendix on page 27.]
    Mr. Andrews. Thank you. And I think what binds us together 
on this panel is that we do want to do what needs to be done 
and not just talk about it. And your contribution is very 
welcome and appreciated.
    Professor Schooner, welcome back to the panel. We value 
your participation as well.

STATEMENT OF STEVEN L. SCHOONER, CO-DIRECTOR OF THE GOVERNMENT 
   PROCUREMENT LAW PROGRAM, GEORGE WASHINGTON UNIVERSITY LAW 
                             SCHOOL

    Mr. Schooner. Well, good morning. And I appreciate the 
opportunity to again discuss Department of Defense's (DOD) 
pressing need to invest in the acquisition workforce. As this 
group knows, the empirical case that DOD's workforce has been 
starved for a couple decades is now compelling. So that is the 
easy thing.
    This is obviously clear with regard to contracting officers 
and contract specialists but, as Norm pointed out, particularly 
acute with regard to program managers, systems integration, 
systems engineering, and those needs will need to be addressed.
    I think that the one thing that is very important for us to 
focus on today is the Defense Department is now on record 
saying they are going to add 20,000 new people in a couple 
different ways over the next 4 years.
    And I think what we need to keep in mind is it is great 
that they have at least begun the discussion, but we are 
talking about numbers that are too low and we are talking about 
an evolution that is simply too slow.
    Just a number of reasons why 20,000 people by 2015 won't 
get the job done is the 1998 benchmark is fundamentally flawed. 
1998 is at the end of a decade after which the congressionally 
mandated workforce cuts had been in place.
    There has been explosive procurement spending in the last 
decade. Procurement increased in the Defense Department five 
times the rate of inflation in the last decade.
    The dominance of service contracts today has totally 
changed the post-award contract management burden that DOD has 
to share.
    We have a looming retirement crisis. We tend to describe 
the acquisition workforce today as a bathtub effect. We have 
lots of senior people, lots of junior people, basically nothing 
in the middle, and we need to do something about that as well.
    In addition, what has basically happened over the last 15 
years is because of the workforce problem, we have failed to 
effectively implement almost every significant acquisition 
reform that has been promulgated either by Congress or by the 
Administration.
    The other thing to keep in mind is as DOD grows, this is 
not just DOD's problem. It is a government-wide problem. So as 
DOD finds people, trains them, and integrates them, they are 
going to start losing those people to the other agencies that 
have exactly the same problems and have historically taken 
highly-skilled DOD acquisition workers rather than train them 
themselves.
    Now, Norm mentioned that right now the workforce that is 
available, the marketplace, is saturated with people who would 
love to come work for the government.
    But the civil service and the Office of Personnel 
Management (OPM) hiring process is flawed. It is burdensome. 
And the overall level of awareness of these opportunities on 
the nation's college and university campuses is inadequate.
    But at the end of the day, I think one of the most 
important things for us to keep in mind today is simply hiring 
people will not end this conversation.
    There is every reason to be pessimistic that even if DOD 
can hire all these people, they lack the vision, the 
institutions and the determinations to properly train, 
allocate, mentor, incentivize, develop and, over time, retain 
all of these new professionals.
    I mean, there is a number of encouraging signs. If you look 
at the model at the Veterans Administration Acquisition 
Academy--granted, a very small model--it is a wonderful 
holistic approach to addressing some of these concerns.
    And there is a wonderful bill that has been introduced by 
Senators Collins, McCaskill and Bennett. I think it is S. 2901, 
Acquisition Workforce Improvement Act--again, a nice holistic 
approach.
    But it is going to take major change for DOD to actually be 
able to manage all of these people. Leadership is a problem. I 
think we have every reason to be skeptical at this point of 
DOD's newfound commitment to investing in the acquisition 
workforce.
    They have delegated this problem too long to the Defense 
Acquisition University. It is underfunded. It is overly 
conservative. It has been slow, risk-averse, and it is not 
sufficiently potent to solve the problems.
    I think that the message that we are getting from the White 
House very recently from the new Office of Federal Procurement 
Policy (OFPP) Administrator, Dan Gordon, is very encouraging. 
Time will tell whether he has actually been empowered to do 
anything about these things.
    But I guess I want to close with one really significant 
point here. And that is we have got to do something about the 
pervasive anti-contractor rhetoric that we hear, because it 
colors the public's perception of contractors and the 
acquisition profession.
    There is more truth than there should be behind the black 
humor in Jack Gansler's popular new moniker for the current 
environment, which he calls the ``global war on contractors.''
    Look. Let's be clear. A successful procurement regime does 
depend on high standards of integrity and compliance. But the 
currently pervasive corruption-control focus stifles creativity 
and encourages mechanical rule-adherence, timidity, and risk-
averse behavior by our acquisition professionals.
    If, in fact, the government aspires to recruit, inspire and 
retain tens of thousands of new professionals, the government 
surely has an interest in communicating the importance to every 
government mission of effectively managing the government's 
business partners, its vendor and supplier base, or simply its 
contracts.
    So ultimately, any prospective investment in the DOD 
workforce, whether it is the numbers, the skills or the morale 
of our purchasing officials that will reach huge--will reap 
huge dividends over time. It is going to be good for the 
taxpayer. It is going to be good for the warfighter. It has got 
to be done.
    Thank you again for the opportunity to share these 
thoughts, and I would be glad to answer questions later.
    [The prepared statement of Mr. Schooner can be found in the 
Appendix on page 49.]
    Mr. Andrews. Professor, we look forward to that. Thank you 
very, very much.
    Mr. Joe Flynn is the American Federation of Government 
Employees (AFGE) District 4 National Vice President. He is new 
to our panel but certainly not new to these issues. He has over 
40 years experience as an AFGE activist and officer, holding 
numerous positions.
    And it is very much our pleasure to have you with us this 
morning, Mr. Flynn. Welcome.

 STATEMENT OF JOSEPH FLYNN, NATIONAL VICE PRESIDENT, AMERICAN 
          FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO

    Mr. Flynn. Thank you, Mr. Chairman. Thank you very much. 
Once again, thank you very much, and I really appreciate the 
opportunity to appear before you today, especially since the 
National Security Personnel System (NSPS) has been repealed. 
Thank you all for that very nice gift to DOD employees.
    AFGE vigorously opposed NSPS from its conception until its 
repeal. The original NSPS included provisions to eliminate 
collective bargaining rights for DOD employees, eliminate 
employee rights to independent adjudication of severe 
disciplinary actions including termination. These anti-union, 
anti-worker provisions were repealed in the 2008 National 
Defense Authorization Act (NDAA).
    And last year, following evaluations, the so-called pay for 
performance scheme for NSPS employees was repealed.
    NSPS was tainted. It was a flawed system. And it clearly 
created a poisonous atmosphere, destroying collective 
bargaining, federal union and employee rights and protections.
    Things that we do in the future--I would urge the members 
of the panel to make sure that these colossal mistakes are not 
repeated.
    Despite much rhetoric to the contrary, there are 
alternatives, and I would like to go back to the General 
Schedule (GS). The General Schedule pay system is simple. It is 
transparent. It is flexible.
    And it is particularly adept at rewarding high performance 
among employees when proper funding is available. And that is 
the key, Mr. Chairman. Proper funding.
    Within grade step increases, quality step increases, 
individual performance bonuses--are all designed to promote 
individual excellence.
    Two additional constructs of the GS system are the best at 
motivating employees. First, we have what is known as career 
ladders, which allow an employee to progress from one grade to 
the next as part of the position for which they were hired and 
for which they competed.
    For example, an employee may begin working for an agency in 
a position which has a career ladder of GS-5, moves to a GS-7, 
to a GS-9, culminating in the journeyman grade of a GS-11.
    The career ladder is similar to pay banding, except that 
under the career ladder the criteria for advancement are known 
and understood by the employee and his supervisor.
    If the GS-5 employee applies himself and achieves the 
performance standards required, then he progresses to the GS-7. 
If he then achieves the performance standards for the GS-7, he 
progresses to the GS-9, up to the journeyman level of the GS-
11.
    The career ladder gives tremendous incentive to the 
employee to work hard and dedicate himself to the agency's 
mission. It assures that he will not find himself at a dead 
end.
    Along with career ladders, merit promotion, which occurs 
when an employee is eligible for and promoted to a different 
job at a higher grade rate--these are posted for all to see, 
and people are hired for these positions following a 
competition based on merit. This is not only transparent and 
honest, but a promotion is very public recognition of an 
individual's performance.
    The market elements of the GS system are based on pay 
studies and job matches done by the Labor Department's Bureau 
of Labor Statistics. The data are discussed in joint committee 
meetings with Office of Management and Budget (OMB), OPM, 
Department of Labor (DOL), AFGE, and other unions. All 
employees receive the same national raise and a locality raise 
based on the regional labor market.
    AFGE has successfully negotiated numerous contracts with 
performance bonuses, gainsharing. During the mid 1990s, AFGE 
and DOD engaged in a successful 5-year demonstration project 
called PACER SHARE, which made changes in organizational 
structure, created a new classification system and implemented 
gain sharing and a different performance appraisal system.
    I would like to emphasize, Mr. Chairman, that all these 
changes were conducted through collective bargaining 
agreements.
    AFGE is working with the Office of Personnel Management as 
it explores options to enhance and improve the GS system.
    We are discussing changes to simplify the appraisal process 
so that there are generally three categories of employees--
those who are in good standing, those who are superstars, and 
those who are not performing at an acceptable level. AFGE has 
negotiated contracts with just these sorts of systems and the 
results have been extremely favorable.
    There is agreement between the employees and managers that 
the system is fair. It involves less tedious and often less 
pointless paperwork which, in turn, allows employees and their 
supervisors to focus on the work of the agency.
    Mr. Chairman, I realize how pervasive the perception is 
that the federal workforce is full of incompetents who are 
showing up late, if they show up at all, doing virtually 
nothing at all--all day long and yet collecting a paycheck.
    Mr. Chairman, I can tell you that my experience--it is just 
not that way. Nobody believes more strongly than AFGE that 
where we have these types of employees that they need to be 
dealt with in a serious manner.
    It is important that hard-working rank-and-file employees 
are not forced to take up the slack for those who are 
intentionally unproductive. And AFGE certainly--certainly--does 
not want to have those types of employees in the workforce.
    AFGE routinely negotiates contracts which simplify and 
expedite appeals for adverse personnel actions. The grievance 
arbitration process included in our contracts is transparent, 
impartial, and swift.
    In conclusion, Mr. Chairman, in addition to our ongoing 
dialogue with OPM, AFGE is eager to work with DOD management to 
improve the performance management system as well as the hiring 
systems. And in that regard, we are working with OPM to try to 
streamline the hiring process.
    Mr. Chairman, that concludes my presentation, and I look 
forward to any questions you may have.
    [The prepared statement of Mr. Flynn can be found in the 
Appendix on page 56.]
    Mr. Andrews. Mr. Flynn, thank you very much.
    We will proceed with the questioning.
    Mr. Augustine, I was very much in agreement with your 
statement that you can't fight a war or defend a country with 
just service industries. I think that is very important, which 
implies the issue of how we create stability in our industrial 
base.
    One of the ways that the panel has looked at is the 
encouragement of more multiyear contracting and procurement so 
that our manufacturers have a better degree of predictability.
    As you well know, the risk of that approach is that you can 
wind up tamping down competition by giving, you know, one 
vendor too many years where it doesn't have to compete.
    What suggestions do you have for us as to how we can strike 
the right balance between multiyear contracting that promotes a 
stable or growing industrial base but promotion of effective 
competition to protect quality and the taxpayer?
    Mr. Augustine. Well, you point to a true dilemma, and there 
is substantial savings to be had through multiyear 
contracting--at least the programs I have been involved with, 
that has been the case.
    At the same time, I think you have to distinguish between 
programs with large volume, if you will--very large programs 
where you might--and we also have to distinguish whether we are 
talking about service programs or production programs, too.
    Mr. Andrews. Yes.
    Mr. Augustine. But where there is a sufficient volume of 
effort, that you perhaps can keep two organizations involved. 
Unfortunately, that is very often not the case, and so when you 
do go to these long-term contracts, you pay a price.
    But as I say, my experience has been that you are well 
ahead to go to multiyear procurements in terms of cost, in 
terms of learning on the part of the supplier. And if it is 
something, you know, where you can afford to have another firm 
in the background, that is a useful thing to do. Unfortunately, 
I don't think you can always do that.
    Mr. Andrews. Professor Schooner, I want to ask you a 
different question. I think you are justifiably alarmed about 
unfair criticism of contractors, painting with a broad brush, 
where the small minority who are doing something wrong taint 
the image of the vast majority who are doing something right.
    Can you give us an example of a rule or practice that you 
think leads to the kind of timidity and lack of creativity that 
you cite in your testimony?
    Mr. Schooner. I think maybe more than anything else, if we 
were just to take an example and look at the messages that we 
are seeing from the Defense Contract Audit Agency (DCAA) right 
now--historically, DCAA, when they found problems, their goal 
or their aspiration was to work with contractors to resolve the 
problems.
    The message that they are getting today, the risk-averse 
approach, is rather than solve the problems, it is to refer 
them to criminal investigative units. That is not going to get 
the government more value for money. It doesn't solve problems. 
It just leads to openly hostile relationships. And it is 
fundamentally problematic.
    Mr. Andrews. Do you think that there have been too many 
instances where there have been criminal referrals?
    Mr. Schooner. I think that it is--it is always hard to say 
that we shouldn't be prosecuting criminals. I don't think there 
is any question about that. I think----
    Mr. Andrews. Very hard to say that.
    Mr. Schooner. Right. But let's take the more proactive 
approach. There always seems to be enough money for Inspectors 
General and auditors, but there never seems to be enough money 
to proactively avoid the problems in the first place.
    This is what we learned in kindergarten--an ounce of 
prevention is worth a pound of cure. If we had invested the 
kind of resources up front in Iraq and Afghanistan in contracts 
professionals that we invested after the fact in auditors and 
Inspectors General--look at the size of the Special Inspector 
General for Iraq Reconstruction (SIGIR) and the Special 
Inspector General for Afghanistan Reconstruction (SIGAR). These 
are huge organizations.
    Mr. Andrews. Right.
    Mr. Schooner. Had we had contracting offices of that size 
at the beginning, we wouldn't have the criminals and the 
problems that we are dealing with now. So this is all about 
dealing with these problems proactively.
    Mr. Andrews. You are right, and the panel's mission, in 
large part, is that--I will say when the next deployment occurs 
not if, because there always is another one--that we have in 
place a system that could learn the lessons of Iraq and 
Afghanistan and prevent the problems that we have had.
    We, frankly, don't want any more deployments, but we live 
in the world of reality and expect that we will have them.
    Mr. Schooner. Could I also just add one very brief thing?
    Mr. Andrews. Just briefly, if you would, because I want to 
be sure the other members get time.
    Mr. Schooner. I think that the point that Norm made is a 
very good one about dealing with long-term contracts. But 
again, one of the other things--if we can build up the 
acquisition workforce, we can put better incentives in the 
long-term contracts.
    We can use incentive and award fees so that the contractor 
has significant incentive to perform well and disincentives to 
perform badly. Once again----
    Mr. Andrews. I do think that is a creative way to solve the 
dilemma that I posed in my question, I agree with you, which is 
not so much a matter, I think, of the number of professionals 
we have, but the quality of their training and the sufficiency 
of their motivation and incentive, which gets me to Mr. Flynn's 
point.
    I was very pleased--first of all, I appreciate your active 
involvement in our effort, and I was very pleased to read on 
page seven your position on finding fair evaluative mechanisms 
that could put employees into categories of good standing, 
superstars, and those not performing at acceptable level.
    How many of these contracts, if you know, have you been 
involved in negotiating across the country thus far?
    Mr. Flynn. I would say that that type of system--you would 
find in the previous Veterans Affairs (VA) contracts, the 
Social Security contract, the Medicare contract. I am not--I 
don't believe very many DOD units have----
    Mr. Andrews. How old are the contracts in Social Security, 
Medicare, VA, do you know? How long have they been in effect?
    Mr. Flynn. A good number of years, Mr. Chairman.
    Mr. Andrews. We would be interested--I would just ask the 
staff to--and invite the panel as well--to collect some data on 
how they have worked out in those agencies, to see what the 
assets and liabilities of going about that is, because I do 
think that it is refreshing to hear your testimony that you are 
actively involved in looking for a solution to this problem of 
proper motivation and fair treatment of people that are part of 
our team.
    [The information referred to can be found in the Appendix 
on page 73.]
    Mr. Andrews. Well, thank you.
    And I would turn now to Mr. Conaway for his questions.
    Mr. Conaway. I think I am--between Mr. Flynn and Professor 
Schooner--well, first off, what happens to the folks who are 
underperforming?
    Mr. Flynn. Well, the agency has three recourses. One is to 
reassign them, demote them, or terminate them, and in my 
experience, they have moved for the termination. The other two 
options usually are not considered----
    Mr. Conaway. So they don't hand them off to somebody else? 
Okay. If you could include that in the information.
    There is a story today that a high school in Rhode Island 
fired every teacher today because the school had just the most 
dramatically dreadful results of kids coming out--and then they 
go back and re-hire the few goods ones--whatever.
    But, Mr. Flynn, if--why hasn't that professional workforce 
that you guys represent fixed these problems?
    Mr. Flynn. You mean the underachiever, Mr.----
    Mr. Conaway. No, no.
    Mr. Flynn [continuing]. Conaway?
    Mr. Conaway. I mean the whole--all the--we hear about the 
acquisition deal if everything is great under the GS scheme and 
all those things work perfectly, then why has that cadre of 
professionals not fixed the problems that we are talking about 
from 1969 through today?
    Mr. Flynn. From my perspective, Mr. Chairman, there are a 
couple of things. Number one is question of staffing. Clearly, 
they have not had enough people to do the job, and the workload 
has continued to go up.
    The second piece is that, again, in my opinion, whether you 
are ordering guns or butter, the process is pretty much the 
same. But yet if you go to the different agencies, there is 
quite a bit of disparity in terms of grade levels.
    And I don't know if that is because--it is not necessarily 
because of the classification system. It is just that decisions 
that individual agencies are making in terms of what they want 
to pay salary-wise for those services.
    Mr. Conaway. Yes.
    Professor, your thoughts? I mean, you are--part of it--you 
both, Mr. Augustine and Mr. Schooner, talked about the 
impediments to hiring seasoned veterans into the system and how 
difficult that is--any thoughts on how we blend the two, 
because we obviously want to protect people from unfair 
treatment.
    But by the same token, we want to fire the folks who aren't 
doing the job they are supposed to be doing.
    Mr. Schooner. I think as a premise, I just want to clarify 
one thing. It is actually remarkable what the existing 
acquisition workforce has been able to do over the course of 
the last two decades.
    If you take any publicly available metric for how you would 
staff a procurement organization, the government is so woefully 
understaffed it is breathtaking. But we continue to have the 
best acquisition regime on the planet.
    We have wonderful weapons. We have terrific support for our 
troops. I mean, again, even with all the criticism, if I just 
use the example of the Logistics Civil Augmentation Program 
(LOGCAP) contract, never before in the history of the planet 
has a military been able to project such potency, lethality, 
and sustainability anywhere on the globe with contractor 
support.
    It is incomprehensible how many troops we can move and how 
well supported they are when they fight, and that is because we 
have an effective contract in place.
    It has problems at the margin, there is no question, but 
the amazing thing is that the government is able to do all of 
the things it needs to do because it relies on contract 
support. And a very thinly capitalized acquisition workforce 
every day does amazing things for the government.
    Now, I think the much larger issue is that we literally 
spent a couple of decades dealing with the classic tooth to 
tail mix. And there were strong messages from Congress and from 
the Administration that we needed a smaller military and 
therefore we should focus on trigger pullers, not shoppers. 
That was the Duncan Hunter message for many, many years.
    Well, now we are paying the price for that. We don't have 
enough people to manage all the contractors that the government 
must have every day. But again, I think the important thing to 
take away from this--the people that we have--they may not be 
perfect.
    They may never have been trained appropriately. And we may 
not have been able to implement all of the policies. But they 
are doing a remarkable job given the resources they have been 
given.
    Mr. Conaway. Your observations on one other thing. We have 
got the program managers and folks who actually are evaluated 
based on how well the things that they do supervise do.
    Is there a scheme that says, ``All right, let's put in 
place an evaluation system that evaluates them separate and 
apart from the results of what they are trying to get done,'' 
so that you are looking at evaluation of the system itself--you 
have got a system that is supposed to work, and it has got to 
evaluate the--whether or not the contractor or the delivery 
system is working.
    But do we properly evaluate the folks for how the--even 
though their program may fail, that may not be a reflection on 
them. It may be a reflection on something else. So are they 
evaluated properly?
    Mr. Schooner. We should have Norm weigh in on this, too. 
But on program managers, I think one of the most important 
things--I think we all agree that we can have better incentive 
schemes for program managers.
    But if you were going to isolate one problem you have to 
solve at the Defense Department with regard to the program 
manager workforce, it is that you got to leave them in place 
and let them manage the programs.
    The last time that I was here with a senior DOD official, 
they were bragging about the fact that program manager 
retention was up to 23 months on a program. That is 
incomprehensible.
    In the private sector people spend professional lifetimes 
guiding programs to success. Until we can do that, we will not 
be able to achieve what we need done in terms of program 
management.
    And I am sure Norm has stuff to add on that, too.
    Mr. Augustine. If I might, I would just add that in the 
private sector, we generally--if I might use an analogy to bull 
riding and the rodeo, you get your scores based on two things. 
One is how well you do, and one is how hard the bull bucked.
    And if you have an easy job and do a great piece of work, 
you don't get that much credit. And so I think you can 
distinguish.
    I would also, if I might, just add a footnote that with the 
exception of a few areas, I don't think the answer is to add 
more people. The answer is to have more experienced people in 
the job they are in. And the experience needs to be relevant to 
the job they are doing.
    If I might quote Dave Packard again, who I think so highly 
of, it used to trouble him greatly that we would bring the 
commander of a destroyer flotilla who had done a terrific job 
at sea, and put them in charge of the F-111 program. And they 
would ruin their career and usually ruin the program.
    It wasn't fair to them. It wasn't fair to the program. It 
wasn't fair to the taxpayer. And it sure wasn't fair to the 
future pilots. And I think that is part of our problem today, 
that we put people in jobs that they are just not equipped to 
handle.
    Mr. Conaway. Thank you, Mr. Chairman.
    Mr. Andrews. Thank you very much.
    Mr. Cooper is recognized.
    Mr. Cooper. Thank you, Mr. Chairman.
    How do we keep program managers in place for longer than 23 
months? What steps are required to do that?
    Mr. Schooner. This is all about leadership and incentives. 
Now, I mean, to some extent, you could argue--and again, I 
think Norm just suggested it before.
    There is a perception particularly in the military 
organizations that in order to have a program moving forward 
you need someone with lots of color on their chest to come in 
so that they can project leadership and they can make the good 
sale up here on the Hill so that the funding keeps going on.
    But at the end of the day, what the private sector does 
much better than the government on this is they develop the 
right talent within their fields and respect people within 
those fields. So the message isn't that I need to take a 
warfighter and turn them into a program manager so that it 
looks like my program has leadership.
    We need to value the people who come up through the 
organization, and then we need to incentivize them to stay by 
basically developing them so that they can rise up and be 
important contributors to the system. It is a totally different 
cultural approach.
    And I can assure you, in the private sector, the program 
managers who are the civilian or the private sector equivalent 
with whom the Defense Department program managers deal every 
day are incentivized completely differently and are far more 
incentivized to have those programs succeed than their 
government counterparts.
    We can solve these problems.
    Mr. Cooper. So is the problem, in order to appeal to 
Congress, turning a warfighter into a program manager? Or is 
the real problem that that temporary program manager really 
wants to go back to being a warfighter very quickly, so he or 
she doesn't stay in that position very long?
    Mr. Schooner. I think it is actually a combination of both. 
But I can just tell you a quick anecdote. As a former 
Department of Justice litigator, I never represented a program 
manager in a deposition who didn't tell me in advance that he 
or she was never given the opportunity to attend the Defense 
Systems Management College program management course before 
they took over the program, because they just didn't have time.
    So if the marquee course for preparing program managers is 
something that does not merit the time of the successful kind 
of people we want to put in charge of the programs, we have got 
a pretty big disconnect going on there.
    Mr. Cooper. What would be an appropriate minimum period of 
time for a program manager to----
    Mr. Augustine. May I try to address that one?
    Mr. Cooper. Sure.
    Mr. Augustine. The practice in the industrial world, which 
I think is reasonably good in this area, is not to keep a 
program manager in place based on time but, rather, on the 
phase of the program.
    And a person who may be a very good program manager in a 
development program probably isn't a very good program manager 
in the production program, or in the original tooling program, 
or in the prototype phase.
    We used to in our company refer to--we had bear catchers, 
bear skinners, and people who liked to sit around the campfire 
and talk about bears, and----
    [Laughter.]
    And we--so I think the important thing is to leave people 
in place from one phase of a program to the next phase so that 
you have somebody who is equipped.
    Mr. Cooper. In service records, is their service as a 
program manager linked to the overall success, or lack thereof, 
of the program, or is that just a temporary assignment? You 
check your ticket, punch your ticket and then move on?
    Mr. Augustine. I think that is another major difference. In 
the private sector, to succeed as a program manager, which is a 
really tough job, is probably one of the best ways to move up 
in an organization.
    In the government, the first thing you want to do is get 
out of program management and get out into a foxhole.
    Mr. Cooper. Because that is the best way to be promoted.
    Mr. Augustine. Absolutely. And of course, that brings up 
the whole question, should you have civilian program managers 
instead of military program managers, which is a major debate 
in its own right.
    Mr. Cooper. Which side do you come down on on that debate?
    Mr. Augustine. By and large, on the military program 
manager.
    Mr. Cooper. Because they are able to follow through?
    I have been worried that while after Goldwater-Nichols we 
had joint warfighting, we still don't have joint procurement, 
and sometimes parochial interest can prevail.
    Mr. Augustine. That is true.
    Mr. Cooper. What should we do about that?
    Mr. Augustine. Well, you are talking about a cultural 
issue, and usually the way to deal with cultural issues like 
that--and this is probably very hard to do in the military; 
maybe not in the civilian part of procurement--but is to move 
people around so they have to live in the different elements.
    They don't view themselves as--but I guess the joint 
assignments are that way, to a degree, that you don't view 
yourself as coming from one element of an organization but, 
rather, have experience broadly.
    Mr. Cooper. I see my time has expired, Mr. Chairman. Thank 
you.
    Mr. Andrews. Well, we are glad you got to the ``bare'' 
essentials there with----
    [Laughter.]
    Mr. Augustine. I apologize for that, Mr. Chairman.
    Mr. Andrews. No, I apologize for that. [Laughter.]
    Mr. Coffman is recognized.
    Mr. Coffman. Thank you, Mr. Chairman.
    Mr. Augustine, one point that Mr. Cooper raised I want to 
go into, and that is we have often discussed the challenges of 
military program managers and the fact that it is an assignment 
for them.
    And if they are a naval officer, they want to go back into 
the fleet. If they are a ground commander in the Army or the 
Marine Corps, you know, they want to return back to a command, 
because at the end of the day that is going to get them 
promoted.
    And I know we have done some work inside the Armed Services 
Committee, I know in the Seapower and Expeditionary Forces 
Subcommittee, to--I think the--there was a shipbuilding program 
where we insisted that there be one military program manager 
for the duration of the program. I don't know how that is going 
to affect that individual's career.
    But could you go into more detail as to why you think it is 
important to have military versus civilian program managers? 
Because certainly, the military could always--is always going 
to be there to have input into the program as it progresses.
    Mr. Augustine. Well, you touch on a very difficult issue, 
and as I said, I come out rather narrowly on the side of the 
military program manager.
    And I do that in part because we are building equipment for 
the military. The military understands the system. Also, they 
will have much more, I think, respect and much more impact in 
dealing with a military organization.
    Also, frankly, it is very easy to get rid of a military 
program manager who is not performing. It is very difficult to 
get rid of a civilian program manager in the government if they 
are not performing. And I have been--had the misfortune of 
having to try to do both. There is a big difference.
    I think the key is not so much whether you wear a uniform 
or not, but whether you have been given the opportunity to 
really be experienced.
    And we do have people--we have a Chaplain's Corps, we have 
the Judge Advocate Generals (JAG), where those people 
understand they will probably never be Chief of Staff or Chief 
of Naval Operations (CNO). But they know if they do their job 
well, they can move to the top of their organization, which is 
viewed as a very important thing.
    Somehow we haven't conveyed that in the acquisition area, 
partly, as has been pointed out, acquisition is viewed as when 
anything goes wrong, it must be for criminal intent.
    Mr. Coffman. You mentioned a concern about, and I share 
your concern about, the declining industrial base in the United 
States. And certainly, we can go into a lot of reasons for 
that--tax, regulatory policies and things like that.
    But let's focus on one specific issue, in that some of the 
contractors have mentioned to me the limitations in terms of 
their ability to export their technologies that they develop, 
that other countries don't have those restrictions.
    And have we gone simply too far on those restrictions, and 
we need to loosen them up so that our industrial base has a 
broader market than just the United States Defense Department?
    Mr. Augustine. I think that is absolutely the case. Most of 
our export regulations were written many, many years ago in a 
world where we controlled the technology----
    Mr. Coffman. Okay.
    Mr. Augustine [continuing]. Where you really could build a 
border around the country, neither of which are true today.
    Mr. Coffman. Okay.
    Mr. Augustine. I would commend you--I chaired a Commerce 
Department study on this about a year ago, and I would commend 
that to you.
    Mr. Coffman. Okay.
    Mr. Augustine. Also one by General Scowcroft.
    Mr. Coffman. Thank you, Mr. Chairman. I yield back.
    And, Mr. Chairman, I just want to say that that is 
something that--you know, I know it is sort of off--it may be a 
little off the reservation of what the committee--but I think 
it is something that we ought to look at.
    Mr. Andrews. If the gentleman would yield, I don't think it 
is off the reservation.
    Mr. Coffman. Okay.
    Mr. Andrews. I think it is an excellent point, that there 
are both national security and economic aspects to the export 
control debate. And of course, the economic concerns are 
implicitly a national security concern as well.
    The obvious national security concern is we don't want to 
share sensitive intelligence with someone who may not be 
friendly to us. But the other national security concern is that 
if intelligent export policy helps to sustain our industrial 
base, it improves our national security.
    And I think that is something we really should address in 
our report.
    I would like to thank the witnesses and actually impose 
upon them another duty, if I could. Mr. Conaway and I 
appreciate the efforts of the staff, which has done an 
extraordinarily good job in creating a draft report that 
summarizes our work and makes recommendations.
    That draft report was distributed to the members of the 
panel yesterday. The members of the panel will be meeting next 
week to review it and hone it. And Mr. Coffman and I had a 
discussion earlier today. I would note to the staff members of 
the other panel present, more suggestions are absolutely 
welcome. That is why it is called a draft.
    But we would like to give you that draft report, the three 
of you, so that you would then have a homework assignment of 
taking a look at it and giving us some input. The panel is 
going to meet in a business session next week to review the 
draft.
    We are then going to have public circulation of the draft 
and another hearing of the panel where we are going to have 
Defense Department and other witnesses comment on it. But we 
would welcome your specific comments as well as we go forward.
    I think the perspectives that you have given us here today 
are very valuable. What we have learned in our year working on 
this is that the superficial questions are rather easily 
answered. But when you get below the superficial level, these 
are very complex issues. But I do think they are solvable 
issues.
    One recurring theme has been leadership and the quality of 
the workforce. I think we have heard today from all three 
witnesses that if you make the proper investment in experience 
and skill, if you motivate and reward experienced and skilled 
people, if you empower them to do the things that need to be 
done, we can make improvements that would then turn the whole 
system around.
    The other lesson that I think we have learned is that when 
you are purchasing $300 billion a year worth of goods and 
services apart from major weapons systems, almost $300 billion 
a year, everything ranging from cases of water to elaborate 
pieces of software, that one size most assuredly does not fit 
all.
    And we certainly will not be rendering a report that 
suggests that one procurement system or one set of rules is the 
way to do this.
    I will tip our hand a little bit and tell you that my own 
bias is that more rules and more proscriptive mandates from the 
Congress is--we are just going to exacerbate the problem, not 
solve it.
    And so what we are looking for--to do here, a way to do--is 
to give intelligent principles and concepts, then put in place 
intelligent, experienced people to execute those concepts, and 
then reward them when they do.
    And I think if I could summarize what we are going to 
propose, that is about it. So if we can do that with your good 
graces, we would like that. So I would invite you to take a 
look at the draft report. It will be publicly available soon. 
And we would welcome your input.
    Mr. Conaway, did you have any closing comments?
    Ladies and gentlemen, thank you.
    With that, the hearing is adjourned.
    [Whereupon, at 8:48 a.m., the panel was adjourned.]
     
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