[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
______
CLEARING THE PATH:
REFORMING PROCUREMENT
TO ACCELERATE DEFENSE INNOVATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON MILITARY
AND FOREIGN AFFAIRS
OF THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
U.S.HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
JUNE 11, 2025
__________
Serial No. 119-33
__________
Printed for the use of the Committee on Oversight and Government Reform
GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT
Available on: govinfo.gov,
oversight.house.gov or
docs.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
60-683 PDF WASHINGTON : 2025
COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JAMES COMER, Kentucky, Chairman
Jim Jordan, Ohio Vacant, Ranking Minority Member
Mike Turner, Ohio Eleanor Holmes Norton, District of
Paul Gosar, Arizona Columbia
Virginia Foxx, North Carolina Stephen F. Lynch, Massachusetts
Glenn Grothman, Wisconsin Raja Krishnamoorthi, Illinois
Michael Cloud, Texas Ro Khanna, California
Gary Palmer, Alabama Kweisi Mfume, Maryland
Clay Higgins, Louisiana Shontel Brown, Ohio
Pete Sessions, Texas Melanie Stansbury, New Mexico
Andy Biggs, Arizona Robert Garcia, California
Nancy Mace, South Carolina Maxwell Frost, Florida
Pat Fallon, Texas Summer Lee, Pennsylvania
Byron Donalds, Florida Greg Casar, Texas
Scott Perry, Pennsylvania Jasmine Crockett, Texas
William Timmons, South Carolina Emily Randall, Washington
Tim Burchett, Tennessee Suhas Subramanyam, Virginia
Marjorie Taylor Greene, Georgia Yassamin Ansari, Arizona
Lauren Boebert, Colorado Wesley Bell, Missouri
Anna Paulina Luna, Florida Lateefah Simon, California
Nick Langworthy, New York Dave Min, California
Eric Burlison, Missouri Ayanna Pressley, Massachusetts
Eli Crane, Arizona Rashida Tlaib, Michigan
Brian Jack, Georgia
John McGuire, Virginia
Brandon Gill, Texas
------
Mark Marin, Staff Director
James Rust, Deputy Staff Director
Mitch Benzine, General Counsel
Kaity Wolfe, Deputy Director for Oversight
Grayson Westmoreland, Senior Professional Staff Member
Ashlii Dyer, Senior Counsel
Mallory Cogar, Deputy Director of Operations and Chief Clerk
Contact Number: 202-225-5074
Jamie Smith, Minority Staff Director
Contact Number: 202-225-5051
------
Subcommittee on Military and Foreign Affairs
William Timmons, South Carolina, Chairman
Michael Turner, Ohio Suhas Subramanyam, Virginia
Michael Cloud, Texas Ranking Member
Andy Biggs, Arizona Stephen Lynch, Massachusetts
Byron Donalds, Florida Kweisi Mfume, Maryland
Anna Paulina Luna, Florida Robert Garcia, California
Eli Crane, Arizona Greg Casar, Texas
John McGuire, Virginia Vacancy
C O N T E N T S
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Page
Hearing held on June 11, 2025.................................... 1
Witnesses
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Ms. Margaret Boatner, Vice President, National Security Policy,
Aerospace Industries Association
Oral Statement................................................... 4
Mr. Eric Snelgrove, Senior Fellow, National Defense Industrial
Association
Oral Statement................................................... 6
Ms. Shelby Oakley, Director, Contracting and National Security
Acquisitions, Government Accountability Office
Oral Statement................................................... 8
Mr. Moshe Schwartz (Minority Witness), Defense Fellow, Coalition
for Government Procurement
Oral Statement................................................... 10
Written opening statements and bios are available on the U.S.
House of Representatives Document Repository at:
docs.house.gov.
Index of Documents
----------
* Report, GAO, ``DoD Financial Management, Accelerated
Timelines Needed to Address Long-standing Issues, Fraud Risk;
submitted by Rep. Crane.
* Report, Responsible Statecraft, ``Pentagon will likely fail
audits through 2025''; submitted by Rep. Crane.
* Article, Quincy Institute for Responsible Statecraft, ``March
of the Four-Stars, The Role of Retired Generals and Admirals'';
submitted by Rep. Crane.
The document listed above is available at: docs.house.gov.
Additional Documents
----------
* Questions for the Record: to Ms. Boatner; submitted by Rep.
Turner.
* Questions for the Record: to Ms. Oakley; submitted by Rep.
Turner.
* Questions for the Record: to Ms. Oakley; submitted by Rep.
Crane.
* Questions for the Record: to Mr. Snelgrove; submitted by Rep.
Turner.
These documents were submitted after the hearing, and may be
available upon request.
CLEARING THE PATH:
REFORMING PROCUREMENT
TO ACCELERATE DEFENSE INNOVATION
----------
Wednesday, June 11, 2025
U.S. House of Representatives
Committee on Oversight and Government Reform
Subcommittee on Military and Foreign Affairs
Washington, D.C.
The Subcommittee met, pursuant to notice, at 10:05 a.m., in
room HVC-210, U.S. Capitol Visitor Center, Hon. William Timmons
[Chairman of the Subcommittee] presiding.
Present: Representatives Timmons, Comer, Turner, Biggs,
Crane, McGuire, Subramanyam, Lynch, Mfume, and Garcia.
Mr. Timmons. This hearing of the Subcommittee on Military
and Foreign Affairs will come to order. I want to welcome
everyone.
Without objection, the Chair may declare a recess at any
time.
I recognize myself for the purpose of making an opening
statement.
Good morning, and welcome to the Subcommittee on Military
and Foreign Affairs. I want to thank you to all our Members for
being here today to examine the future of our defense
procurement system. It is not lost on me the irony of starting
a hearing 5 minutes late when I am trying to get the DoD to do
things more efficiently.
Today's hearing will focus on a critical challenge, the
outdated, cumbersome process by which the Department of Defense
acquires new technology, and how that process slows down the
pace of innovation.
The stakes could not be higher.
If we want to outpace strategic competitors, we must
modernize the way we identify, test, acquire, and scale
cutting-edge defense technologies.
South Carolina plays a vital role in our national defense
industrial base. In my own district, Lockheed Martin builds the
F-16 Fighting Falcon in Greenville, a cornerstone of American
airpower. Across the state, defense companies manufacture
everything from aircraft to submarine components.
But we must do more to ensure the next generation of
innovators are inspired. We should be just as excited to see
startups take root and thrive in our defense ecosystem.
Unfortunately, for too many of those innovators, the path
to partnership with the Federal Government is blocked by a
procurement process that is opaque, rigid, and often punishing.
The risk of entering the defense market, both in time and cost,
deters even the most promising companies. And for those who
try, many never make it past what many in the industry have
called the ``valley of death,'' where transformative
technologies die on the vine between prototype and production,
often because of bureaucratic red tape.
To be fair, there have been efforts to fix this, from
alternate contracting authorities to pilot programs. But most
reforms have been short-term, ad hoc, or have traded speed for
oversight.
What we need are lasting, transparent, and commercially
available viable solutions that enable agility without
sacrificing accountability.
Our witnesses today bring a wealth of experience, from
frontline military service to deep knowledge of defense
contracting. They understand both the promise of innovation and
the bureaucratic inertia that holds it back.
As we will hear, innovation thrives in environments that
reward speed, flexibility, and calculated risk-taking, the very
qualities the current defense procurement system too often
discourages.
A culture of risk aversion has led to seven consecutive
failed audits and spiraling cost overruns in even our most
critical programs.
But this is not a hopeless story. Reform is possible.
Through modernization of our procurement system, we can remove
barriers to innovation and foster collaboration between
government and industry.
I look forward to today's discussion and to exploring
actionable steps to move our procurement system into the
future, not only to keep pace, but to be leaders on the world
stage.
Thank you again to each of our witnesses for participating
today, and I look forward to your testimony.
I now recognize Ranking Member Subramanyam for the purpose
of making an opening statement.
Mr. Subramanyam. Thank you, Mr. Chairman, and thank you for
holding this hearing. I am proud to represent Virginia,
especially northern Virginia. It is home to some of the most
innovative companies that do really important work with the
Department of Defense to support our national security, protect
our country, keep our men and women safe who are in uniform.
You know, our district, in particular, builds the chips
that power many of the military vehicles and the circuit boards
they sit on, the military components crucial to allowing the
soldiers to communicate and fight and defend our Nation, and we
build state-of-the-art technology products that prepare us for
the future threats and the future of warfare. We are getting
prepared for it because of the work being done by our
contractors in Virginia.
I am especially proud of all the small businesses, as well,
that work with the DoD to try to bring innovation, because a
lot of times innovation comes from small businesses who are
trying to do things differently than the bigger businesses and
the major players. But we need both. We need everything.
And these technologies are so important to our national
security, and they actually have a lot of applications in the
civilian world, as well. And a lot of industries have developed
because of investments that DoD made. The internet is a good
example of that, for instance.
I have spoken with many of these companies and actually
visited them. One of the things that I keep hearing is about
wanting to see if we can sort of fix the procurement process
and make it better. It is nowhere close to perfect right now.
You know, there are a lot of things that a lot of these
companies have to face when it comes to DoD procurement,
whether it is workforce challenges, budget uncertainty, and the
long and inflexible acquisition processes. These are especially
true for the smaller businesses that do not have the budget to
be able to anticipate what is going to happen in the future.
They are going month to month, and do not have the revenue
already in place, in many cases. So, we want them to continue
to work with the DoD and all of our agencies and be able to
innovate.
We have Ms. Oakley here today, and the GAO report that was
released today talks about some of this, and about how it can
take over a decade to deliver essential capabilities to the
field.
Any time I speak with folks in industry, they are also
concerned about the uncertainty that Congress creates, as well.
These continuing resolutions, for instance, are hurting
innovation. And the private sector and our contractors have to
make investment decisions based on what is going to yield the
best results, and this uncertainty makes it difficult. Many
hang onto cash reserves to cover for a shutdown or a CR so they
do not have to lay anyone off, but in many other cases they
have to lay off a lot of really good people, and then it is
hard to get them back.
One of the things I want to talk about today is how we can
make things more certain for our contractors, so that they can
be responsive to the DoD and be able to deliver products on
time, efficiently, and under budget.
Finally, I want to talk about the workforce at the DoD. One
of the things that will help with procurement is having
experienced, knowledgeable procurement officers. I am concerned
about some of the cuts that have been made at DoD, and cuts
made especially to technologists and technology experts, those
who are actually leaving or being forced out. So, if we really
want to have cutting-edge technologies at the DoD, we need to
have good technologists and good procurement officers who know
which technologies we should be acquiring.
I will give you one example. The Office of the Director of
Operational Tests and Evaluation, or DOT&E, this office was
created by Congress in 1983 to be an independent advisor to the
DoD on weapons testing, and many contractors in my district
work with them on this. It provides critical checks on the
acquisition process and makes our weapon systems effective,
reliable, and safe.
But last month, the Administration significantly cut the
staff there, including halting all of its work with
contractors, and this has led to a ripple effect of cuts to
other organizations that support this work. And we now risk
moving inadequately tested technology to the field which will
only add further delays and cost increases.
I want to thank the Chairman and all of our witnesses for
being here today, and I was glad to see that our colleagues on
the Armed Services Committee, as well, want to make this a
bipartisan priority in the NDAA this year. So, I hope we can
learn from this hearing today and take some of these findings
to the Armed Services Committee and to others in Congress and
find some real solutions.
Thank you again, and I yield back.
Mr. Timmons. Thank you for that. I am pleased to welcome
our witnesses here today.
We have Ms. Boatner, who is the Vice President of National
Security Policy at the Aerospace Industrial Association. She
has nearly 15 years of experience in shaping DoD acquisition
and procurement policy in the Pentagon.
We have Mr. Snelgrove, a Senior Fellow with the National
Defense Industries Association. He has held senior positions in
the U.S. Air Force, the Department of Defense, and on Capitol
Hill, bringing a wide range of experience to today's
discussion.
Ms. Oakley is Director in the Government Accountability
Office's Contracting and National Security Acquisitions team.
She oversees GAO's portfolio of work regarding DoD acquisition
policy and oversight.
And finally, Mr. Schwartz is a Defense Fellow at the
Coalition for Government Procurement, and is no stranger to
testifying before the House Oversight and Government Reform
Committee. We welcome you back, Mr. Schwartz.
Pursuant to Committee Rule 9(g), the witnesses will please
stand and raise their right hand.
Do you solemnly swear or affirm that the testimony you are
about to give is the truth, the whole truth, and nothing but
the truth, so help you God?
[Chorus of ayes.]
Mr. Timmons. Thank you. Let the record reflect that the
witnesses have all answered in the affirmative.
We appreciate you being here today and look forward to your
testimony. Let me remind the witnesses that we have read your
written statement and it will appear in full in the hearing
record. Please limit your oral statement to 5 minutes.
As a reminder, please press the button on the microphone in
front of you so that it is on and the Members can hear you.
When you begin to speak, the light in front of you will turn
green. After 4 minutes, the light will turn yellow. When the
red light comes on, your 5 minutes have expired and we would
ask that you please wrap up.
I now recognize Ms. Boatner for her opening statement.
STATEMENT OF MARGARET BOATNER
VICE PRESIDENT, NATIONAL SECURITY POLICY
AEROSPACE INDUSTRIES ASSOCIATION
Ms. Boatner. Chairman Timmons, Ranking Member Subramanyam,
Members of the Subcommittee, on behalf of the Aerospace
Industries Association thank you for the opportunity to testify
today on how we can reform acquisition and procurement
processes to accelerate defense innovation.
AIA represents hundreds of companies across the aerospace
and defense sector. These companies and others operating across
the broader defense industrial base are important partners to
the Department of Defense in its mission to develop and deliver
innovative technologies to the warfighter.
The operate effectively, the defense industry relies upon
several conditions, including clear and stable demand signals
from both Congress and the executive branch, sufficient Federal
investment, and an acquisition system that promotes speed,
flexibility, and innovation.
Unfortunately, these conditions do not exist today. Flat
defense budgets, the annual reliance on short-term continuing
resolutions, and abrupt programmatic changes have created
instability and an uncertain business environment that makes it
difficult for the defense industrial base to develop innovative
new technologies, maintain production lines, or support a
skilled workforce. Couple that uncertainty with a defense
acquisition system born in the cold war and fundamentally
designed to eliminate risk, and the result is a rigid and
lengthy system which does not enable the flexibility or speed
required by today's evolving threat landscape.
As evidence of this, the average amount of time for a major
acquisition program to deliver capability is now 11 years.
Given the rapid pace at which technologies and threats evolve
today, that is too long.
These protracted timelines can be directly attributed to
the maze of burdensome statutes, regulations, and policies,
both the DoD and defense industrial base must comply with. For
example, the Federal Acquisition Regulation, which governs the
Federal procurement process, spans more than 2,000 pages. When
combined with the DoD's supplementary regulation, known as the
DFARS, it totals more than 5,000 pages. And this does not
include thousands of additional pages of requirements contained
within various defense policies, guides, and manuals.
Taken together, these challenges have had a corrosive
effect on the health of the industrial base and our national
security. In some cases, these obstacles have driven companies
to stop participating in the defense ecosystem altogether. From
2011 to 2020, approximately 40 percent of small businesses
decided to leave the DoD market.
For those companies who stayed, the defense marketplace has
only become more difficult to operate in. Demand signals
discourage long-term investments and novel technologies.
Extended and unpredictable contract award timelines make it
challenging to attract and retain skilled workforces. And the
multitude of laws and regulations significantly increase the
cost and complexity of doing business with the government.
While the process and the regulations in place today were
undoubtedly well intended and put in place to mitigate specific
risks, the cumulative effect is an acquisition system that
stifles innovation, drives up cost, and struggles to deliver
critical capabilities to our warfighter.
We recognize that as we sit here today, conditions are ripe
to tackle reforms that will fundamentally alter the statutory
and regulatory framework that the defense industrial base must
operate in. This is a unique opportunity, and we applaud
efforts ongoing across the legislative and executive branches
to tackle these longstanding challenges. We stand ready to
partner with you in these efforts, and we ask that you keep
several things in mind as you contemplate such reforms.
First, we recommend an all-of-the-above approach to
reforming the acquisition system. This approach recognizes the
contributions of the whole industrial base, which is a complex
network of established primes, new entrants, mid-and sub-tier
suppliers, small businesses, and commercial providers of all
sizes are required to meet the warfighter's needs. These
efforts should include finding ways to empower new entrants in
the market, streamlining access for small and midsized
businesses, and addressing the obstacles faced by established
vendors in executing programs.
Second, Congress and the DoD should focus on rightsizing
the regulatory regime. This will require a focused and
comprehensive review to harmonize and streamline the layers of
compliance requirements that have been added over many years,
while still ensuring proper oversight mechanisms remain in
place. Government and industry collaboration will be crucial in
identifying those most onerous compliance requirements. AIA
conducted a deliberate review of these regulations, and I would
be happy to discuss these areas in more detail, should you
like.
Last, any efforts to reform the acquisition process and
reduce burdensome regulatory requirements will be done in vain
if Federal investment in national defense does not keep pace
with the threats we face. We encourage a return to on-time,
predictable, and sufficient defense funding. A consistent and
stable demand signal is an essential pillar in strengthening
the defense industrial base.
Taken together, these changes will broaden the defense
industrial base, enable DoD to better access industry
innovation, and accelerate processes to more rapidly deliver to
the warfighter.
We look forward to working with Congress and the DoD as
reforms are identified and implemented. On behalf of AIA, thank
you for the opportunity to testify, and I look forward to your
questions.
Mr. Timmons. Thank you for that. I now recognize Mr.
Snelgrove for his opening statement.
STATEMENT OF ERIC SNELGROVE
SENIOR FELLOW
NATIONAL DEFENSE INDUSTRIAL ASSOCIATION
Mr. Snelgrove. Chairman Timmons, Ranking Member
Subramanyam, and Members of the Committee, good morning and
thank you for the opportunity to testify today on military
procurement and defense innovation, and specifically the
critical role that small businesses and defense technology
startups play in securing our Nation's future.
As a military officer and veteran of the wars in Iraq and
Afghanistan, a former congressional staffer on the House Armed
Services Committee, and now a small business owner working in
national security, I have seen firsthand how innovation thrives
in America, but too often fails to reach the warfighter. The
challenge is not a lack of ideas or ambition. It is a system
that is encumbered by red tape and resists change.
Bottom line, we are operating at two speeds--one fast,
adaptive, and entrepreneurial, and the other constrained by
outdated processes and paralyzing uncertainty.
Despite growth in venture capital and new entrants into the
defense marketplace, small businesses still account for a
disproportionately small share of defense contracts. Promising
technologies remain locked in pilot programs or mired in
procurement cycles that outlast the companies themselves. For
early stage defense technology companies, the financial
realities are stark. The average time between venture funding
rounds is just 12 months, placing immense pressure on founders
to quickly demonstrate product-market fit, validate their
technology, and secure meaningful government contracts. Yet,
the DoD procurement cycle operates on a much longer timeline.
As a result, many promising startups either pivot away from
national security or fail outright, not because of
technological shortcomings but because the system is simply too
slow to keep pace with private sector tempo.
Fortunately, America's national security base is resilient
and determined. We are at a pinnacle moment, one where years of
frustration have matured into a focused, bipartisan
conversation about reform. Legislative interventions like the
FORGED Act and the recently introduced SPEED Act reflect this
shift, offering pragmatic solutions to unlock acquisition speed
and empower portfolio-based decision-making.
Building upon this progress, I offer four recommendations.
No. 1, we must reform acquisition pathways and adopt a
commercial first system to capitalize off private sector R&D.
Defense innovation does not emerge from rigidly executing
outdated requirements. It thrives when companies take risks,
anticipating emerging threats, and build capabilities the
Pentagon did not yet know it needed. If we want to outpace our
adversaries, we must empower those who are building the future,
not just fulfilling the past. The recent executive order from
the White House on Modernizing Defense Acquisition and Spurring
Innovation is an important step toward adopting a commercial-
first acquisition framework.
No. 2, we must invest in manufacturing and industrial
resilience, including workforce development, additive
manufacturing, and targeted use of Defense Production Act
authorities, which are set to lapse at the end of September.
Programs like the DoD Office of Strategic Capital loan program
are critical for bridging the funding gap that often prevents
innovative technologies from scaling beyond prototype into
full-rate production. The expansion of OSC's lending
authorities and the House-passed reconciliation bill is an
important step to making this program more accessible to
defense technology startups.
No. 3, we must confront the national security talent crisis
with the seriousness it demands, recognizing that every
breakthrough defense technology begins with an American mind,
often shaped by a U.S. university and supported by federally
funded research and development. Now is not the time to cut
basic research funding. Doing so would undermine the very
foundation upon which the future technologies and future
companies are built. We cannot afford to sacrifice our long-
term national security for short-term budget optics.
No. 4, we must cut through the red tape that is holding
back America's innovation base. This means harnessing the power
of AI to streamline bloated contracting processes and back
office functions. We must also modernize outdated export
controls that prevent U.S. companies from equipping our allies
with trusted technology, remove legacy barriers that delay
access to classified facilities through innovative policy
reforms, and ensure that government laboratories are focused on
supporting private sector innovation, not competing with it.
This Committee plays a vital role in ensuring
accountability and progress. It is your oversight that ensures
innovation mandates are implemented and that we do not allow
bureaucracy to choke off opportunity.
America's edge in innovation is not guaranteed. It must be
earned and renewed with deliberate policy, sustained funding,
and a defense ecosystem that values speed, risk-taking, and new
voices. If we want to field the most advanced capabilities
before our adversaries do, we must create a system that rewards
these behaviors.
Thank you, and I look forward to your questions.
Mr. Timmons. Thank you for that. I now recognize Ms. Oakley
for her opening statement.
STATEMENT OF SHELBY OAKLEY, DIRECTOR
CONTRACTING AND NATIONAL SECURITY ACQUISITIONS
GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Oakley. Chairman Timmons, Ranking Member Subramanyam,
and Members of the Subcommittee, I appreciate the opportunity
to be here today to speak about DoD's path forward for
reforming acquisition and accelerating innovation.
The Department of Defense is at a critical crossroads when
it comes to procurement and innovation. The pace of
technological change, from biotech and microelectronics to AI
and machine learning, is accelerating. Unfortunately, our
adversaries are moving faster than we are to turn these
advances into military advantage.
To its credit, DoD recognizes that the current acquisition
system is not keeping up, as does the Congress. There have been
reforms, things like new pathways, new offices like the Defense
Innovation Unit, more flexible contracting options like OTAs,
and even recent executive orders calling for the overhaul of
acquisition and procurement at DoD. But despite these efforts,
the system remains too slow, too rigid, and too costly.
This morning we released our 23d Annual Assessment of
Weapons Programs. DoD plans to spend at least $2.4 trillion on
its weapons portfolio, yet it now takes nearly 12 years, on
average, to delivery capability to the warfighter. That is a
year and a half longer than just last year.
Why is this happening? A big part of the problem is that
DoD is still operating with an outdated, linear acquisition
model. This model locks in cost, schedule, and performance
requirements before the program even begins real design and
testing. As a result, programs take a long time and are often
delivering on outdated needs with outdated technology.
In contrast, the world's most successful companies use
iterative development to build and improve complex products.
They refine high-level requirements based on real-time
feedback. They leverage modern digital tools to design, test,
and manufacture faster, and they deliver value early, and then
they keep evolving their products over time to keep adding
value.
DoD's adaptive acquisition framework was meant to bring
more flexibility and speed to the process. But while it has
helped some programs get off the ground more quickly, we are
not seeing them finish any faster.
Take the middle tier pathway. It is designed for programs
that can deliver capabilities within 2 to 5 years. Yet, many
programs are taking that long to just prototype, and then at
least 5 more years to provide any real capability. Bottom line,
programs are not using the framework to achieve the
efficiencies the Department intended for it to. As a result,
the warfighter is still left waiting more than a decade for
capability.
We have found that many programs are not using iterative
development, and that is a missed opportunity. Getting the
benefits of iterative development requires planning for it from
the start, setting up programs to test, learn, and adjust early
and often, based on feedback. It also means adopting modern
digital tools and building an innovation pipeline that
continually feeds new technologies into development.
But innovation cannot happen without strategy. DoD's
science and technology planning still lacks clarity. It does
not define the right mix of incremental versus disruptive
innovation or assess whether they are achieving the mix.
Leading companies do this as a matter of course. It is how they
ensure they are prepared for both the near term and the long
haul.
Over the years, GAO has made clear, actionable
recommendations based upon our body of work examining the
practices of leading innovative companies. In line with these
practices, we have urged DoD to update its policies to support
iterative development, define and track innovation investments,
and create a more agile S&T management framework. But progress
has been limited.
And we are not the only ones calling for big change. The
current Administration and previous administrations, several
commissions, Congresses, and countless think tanks all have put
forward ideas for overhauling the acquisition and budgeting
systems. There is near universal agreement that the status quo
is not working.
But DoD cannot keep applying workaround to a broken system.
The threat environment is evolving too quickly for that. What
is needed is full-scale shift toward an acquisition model built
for speed, flexibility, and innovation. GAO's work, alongside
our many open recommendations, offers a roadmap for getting
there. We believe that adopting proven commercial practices can
provide the strategic foundation for DoD that it needs to meet
the moment.
Chairman Timmons, Ranking Member Subramanyam, and Members
of the Subcommittee, this concludes my opening statement. I am
happy to take any questions you have.
Mr. Timmons. Thank you for that. I now recognize Mr.
Schwartz for his opening statement.
STATEMENT OF MOSHE SCHWARTZ
DEFENSE FELLOW
COALITION FOR GOVERNMENT PROCUREMENT
Mr. Schwartz. Thank you very much, Chairman, Ranking
Member, Members of the Subcommittee. Thank you for inviting me
to talk about the defense acquisition system and innovation
adoption.
Our defense industrial base is shrinking, but it is not
just small businesses. It is all businesses. The battlefield is
evolving faster than our acquisition system can keep up with.
We are seeing this in real time, today, in the Pacific, and in
Ukraine.
The U.S. does not have an innovation problem. The
Department of Defense has an acquisition and adoption problem.
Ms. Boatner is right--overregulation is choking our system. It
is the No. 1 cause, consistently in polls, on why companies
either leave the defense industrial base or choose not to work
with it in the first place.
We need to streamline a lot of these regulations. Cost
accounting systems--those have not been updated in a decades,
commercial buying practices, the thresholds we use for
acquisition. These all need to be reviewed, and many of those,
if not all of the ones that I just mentioned, are within the
jurisdiction of this Committee.
Mr. Snelgrove is right, we need small businesses. The Small
Business Act was championed by President Eisenhower, who knew,
better than most Americans, the importance to the Department of
Defense of getting the capabilities of small businesses into
DoD. And the theory--and he said this, and you can look at the
congressional Record, this is what they talked about for the
Small Business Act--we need the capabilities and technology and
adaptability of small businesses, and we need a fair, level
playing field for everybody. Because what we need at the end of
the day is for DoD to have the best capabilities, not what
company we buy it from but what they are delivering to the
warfighter.
And it is not just small businesses. It is not just medium-
sized businesses. We need the entire industrial base. Because
at the same time that the defense industrial base is shrinking,
the entire economy and the number of companies in the United
States is increasing, and we need to tap into that.
Ms. Oakley is right, we cannot have 500-plus-day
requirement processes, budget processes that take years, and
acquisition systems that take just as long. We need iterative
systems, and we need to constantly evolve. It is not once
something is deployed, it is deployed. We need to constantly
evolve.
But we are just playing around the margins. All these
things are very important. But we are just playing around the
margins. We are not going to move the needle unless we do two
things: deal with the defense acquisition workforce and
modernize DoD's IT systems.
Acquisition, at its heart, is not about regulations. You
cannot legislate good acquisition. It is a human endeavor. And
the outcomes that we see in acquisition depends on the
judgment, the decisions, and the thoughts of the people that
run that system. And we need the right people in the right
place.
And let me emphasize, not just the right people in the
right place. I recall when I was in Afghanistan as an advisor
to CJ5 at the time for logistics, I was talking to his advisor
on acquisition. And we were talking about how much money is
being spent in Afghanistan on contracts. And I said, ``Well,
that is not what the Federal procurement data says.'' The
Federal procurement data system tracks all data in the Federal
Government. And he said, ``Well, I never heard of it.'' And I
was stunned he never heard of it. I said, ``You are the
acquisition advisor.'' He said, ``Yes, for about a week and a
half. When I landed in Afghanistan, I was a helo pilot, and now
they made me an acquisition advisor.'' That might be the right
person, but in the wrong place. It is like playing a football
game and having the best coaches and the best game plan, but
your quarterback lining up to be wide receiver. That is problem
No. 1.
Problem No. 2 is very often our acquisition workforce does
not control the technical baseline. They do not know about the
systems. I remember talking to a program manager who was doing
a logistics IT system for the Army. And I said to him, ``Oh, is
this your first time being a program manager?'' He said, ``Yes,
it is my first time being a program manager.'' I said, ``Are
you a logistics guy?'' He said, ``No. I am an explosives guy.''
``So, but you know IT.'' He said, ``I will shortly,'' and
picked up the book, SAP for Dummies and showed it to me. I
mean, here was a great explosives guy, but that is the problem.
They did not control the technical baseline. And then what do
we do? We have him be a program manager for 3 to 4 years, and
then we rotate him somewhere else. So, everything that he
learned, he moves to another job that he cannot apply anymore.
And then IT. All of this depends on IT. Auditability
depends on IT. Logistics depends on IT. Readiness depends on
IT. And I will give one vignette.
There was an article this year about how the Army, when
they need spare parts, 90 percent of the spare parts they need
are parts that DLA has. So, they would send in their IT system
the request to DLA. And the Army IT system did not talk to the
DLA IT system, so the parts never got there. That is not a
regulation problem. That is not an access problem. That is a
fundamental IT problem. We have planes, ships, weapon systems,
just sitting there, not operable, because of our IT systems.
Until we address these issues, yes, overregulation, yes,
iterative, yes, small business. Those are all critical. But
until we address these other issues, we are not going to
substantially move the needle.
Thank you.
Mr. Timmons. Thank you. I now recognize myself for 5
minutes of questions.
Let us start with the big picture. We hear the defense
industry call the procedures of going through the Department of
Defense acquisition process the ``valley of death.'' Mr.
Snelgrove, can you briefly define for the Subcommittee what the
``valley of death'' looks like in DoD acquisition, and, if you
can, quantify its scale in terms of dollars lost?
Mr. Snelgrove. Thank you for the question, sir. Yes, the
``valley of death,'' specifically for small businesses and
defense technology startups, is once we provide these small
businesses with, in many cases, it is a Small Business
Innovation Research contract, so typically less than $1
million, to assess the feasibility of their technology for DoD
use cases. The DoD has the largest SBIR program in government,
and they have created essentially a front door for small
businesses to engage with the DoD.
Unfortunately, we have not created the mechanisms for small
businesses to graduate from that program routinely and then
scale their technology across the Department of Defense. And as
a result of that, they are losing access to over $100 billion
in potential procurement in each and every annual
appropriations bill.
Mr. Timmons. Thank you for that. Ms. Boatner, can you give
us an example of how long a non-major defense acquisition
program takes? More specifically, how much time does a
commercial-grade prototype spend on contract negotiations
versus research, development, and testing?
Ms. Boatner. Absolutely. Right. So, we talked about major
development programs taking about 11 years. When we are talking
about a non-major system and you are focused on commercial,
that should be able to be done in a matter of months. I think
what you see, in reality, though, is that that can take upwards
of years. Congress and the Department has given streamlined
authorities to procure commercially, and what I would tell you
is that within the Department of Defense, I think in response
to a risk aversion, a creeping back of those requirements that
Congress intentionally tried to remove.
So, while it should only take a shorter amount of time,
particularly when you are talking about a smaller system that
could be done in months, it is taking years.
Mr. Timmons. Relatedly, have you seen instances where the
scope of the DoD's needs change over time, and that ends up
exceeding the procurement process? And if so, do you have an
example?
Ms. Boatner. Absolutely. I mean, I think across warfighting
portfolios you see that. It is referred to as ``requirements
creep,'' and the requirements process, particularly for larger
weapon systems, can take anywhere from 1 to 3 years. So, in
that 1-to 3-year time period, of course requirements are going
to evolve. New technologies are emerging. New threats are
emerging. And so, requirements are changing.
The problem, though, is that the requirements process is so
prescriptive that, to Ms. Oakley's point, the Department
struggles to respond to those changes with any agility.
Mr. Timmons. I happen to be meeting with the South Carolina
Home Builders Association later today, and they always complain
that permitting is costing them up to 35 percent of the cost of
the new build. I mean, if you think about it, that is pretty
wild, I mean, between delays and just the regulation. It seems
that we are kind of getting to something similar cost-wise in
the procurement process. And it has gotten so bad that I guess
certain people are saying we are just going to turn it upside
down and go out and create something and hope it works out.
I recently saw the 60 Minutes expose on Anduril, and the
founder there is just saying, ``I am going to build this and
then bring it to DoD and tell them why they want it.''
Mr. Schwartz, has this happened before, or is this just
kind of a novel approach?
Mr. Schwartz. It has happened before, and there are a lot
of companies that have these great capabilities. And it goes
back to, I think, a great point, is the technology is out
there. The innovation is out there. The problem is acquisition
and adoption of the Department of Defense.
When you talk about programs that take 11, 12 years, or a
requirement process that takes more than a year, one of the big
challenges is by the time you finish, it is already obsolete.
So, the more that companies can invest and develop the
technologies, the better. But I think what it really drives to,
to really get to the heart of your question, is yes, we should
be looking at the commercial markets and buy a lot more
commercial, and not just buy commercial. Let us use commercial
buying processes to buy it. Let us try to limit all those other
regulations that we put on--and we do this to ourselves in the
Department--that we put on DoD internally, that take so long,
and add all of these contract clauses that companies never deal
with.
Mr. Timmons. Thank you for that. I feel like necessity is
the mother of invention, and I do not think the Ukrainians are
taking 11 years to develop their next drone that they are using
in real time. So, we need to get better at this.
With that I yield back, and now I recognize the Ranking
Member, Mr. Subramanyam, for 5 minutes.
Mr. Subramanyam. Thank you, Mr. Chairman. It is a very good
conversation. I guess, Ms. Oakley, your report came out today,
and I am very interested in some of the findings here,
especially this iterative development approach and trying to
reform how we procure things at DoD.
I guess I am going to try to summarize kind of what has
been said, which is right now the DoD has a lot of money, but
it spends that money in a way that is not very agile. It
sometimes buys technologies or products, but the acquisition
process takes so long that by the time they receive that
product it may be obsolete because of how fast things are
changing.
In other cases, as Mr. Snelgrove mentioned, small
businesses really do not want to work with the DoD, or have
trouble working with the DoD, because the process is so
cumbersome, and Ms. Boatner mentioned some of that, as well.
So, you are not getting the best and brightest in our country
working with the DoD, trying to help them innovate.
There are some exceptions to this that I want to point out,
like the Defense Innovation Unit. But it is a workaround, as
Ms. Oakley mentioned. It is not necessarily the norm at the
DoD.
And then Mr. Schwartz mentioned that a lot of these
procurement officers are not experienced in what they do, and
that a lot of times they are just sort of, sometimes literally
helicoptered in, thinking they are going to be doing something
else, and then they end up being the acquisition person. And
then they leave and do something else and then a new
acquisition person comes in too. And in the meantime, a lot of
the IT and tech people, we seem to be losing them.
So, I think that is sort of the summary in my head of what
is going on here. I am new here. This is my first term. But
this certainly cannot be the first time we have had this
conversation. So, Ms. Oakley, I would just ask, why has not
anything changed? This cannot be the first time we have had
this conversation, right. Why has change been so slow at the
DoD?
Ms. Oakley. I think that change has been slow for a number
of reasons. I think oftentimes the changes are focused on
things around the margins, trying to change a specific process
or a specific policy to get at a particular issue. But what our
work would advocate for is a wholesale, new approach to
acquisition that would address a number of the issues that we
are talking about here. Having an iterative development
approach opens you up to businesses that you would never be
able to work with before because they do not want to work in
DoD's long, linear acquisition processes, with all the
bureaucratic hurdles that they have to go over. But an
iterative development process opens them up to a new world.
I think the other thing that is important to note is, is
that the prior long, linear acquisitions that we have had in
the past have maybe been OK for the threats that we have faced
over the past several decades. That is different now. We are in
a new world where technology is evolving very quickly, and the
threat is changing, and we are facing peer competitors. That is
all a new world, and that requires----
Mr. Subramanyam. Are those new problems, though?
Ms. Oakley. New problems, yes.
Mr. Subramanyam. In the past 10 years, you would say?
Ms. Oakley. Yes, I would say it is new problems and new
opportunities, right? The pace of technological change is
stunning right now, and being able to seize on those
opportunities is something that DoD needs to be able to take
very seriously.
Mr. Subramanyam. How much money--this is for anyone--how
much money do you think we could save by fixing DoD
procurement? Like ballpark, you would say.
Ms. Oakley. I think you could save hundreds of billions of
dollars. I mean, just our work on weapon systems alone, where
we point out cost and schedule overruns for these programs
every year in our annual weapons assessment would really point
to the fact that if we got more efficient and effective at
providing capabilities to our warfighter, we would save a
significant amount of money and avoid a lot of the waste in the
system that we have right now.
Mr. Schwartz. And I would say three points about that
question. The first one is I would say we can at least save 10
percent, even when you are talking about actual dollars.
But I want to make two other points. We would get things
faster. We get them into the field faster. That sometimes is
more important than some of the cost savings. And two is, we
would get better capabilities at the same time. There are
companies, I know companies that will not offer their front,
top technologies to the Department of Defense. They will sell
them the second-or third-generation technologies but not the
first.
So, we are talking about three things. We are talking about
cost savings, and it could be significant, we are talking about
how fast we get these capabilities into the hands of the people
that need it, and it is just not warfighters. It is the
logistics systems, like we talk about, so the right things get
to the right places, so we can fix things.
Mr. Subramanyam. So, to summarize, because I am running out
of time----
Mr. Schwartz. Sorry.
Mr. Subramanyam [continuing]. By doing DoD procurement
reform we would save hundreds of billions of dollars, at least.
I think it is actually more. We would get things faster, and we
would get better technology. I think this should be one of
Congress' top priorities when it comes to budgeting.
I yield back.
Mr. Timmons. Thank you for that. And I think the plan is to
have a second round of questions for anyone that is interested.
I now recognize the gentleman from Arizona, Mr. Biggs, for
5 minutes.
Mr. Biggs. Thank you, Mr. Chairman. I thank the witnesses
for coming.
So, everybody but Mr. Schwartz--but I knew you were
thinking this too--all of you mentioned Congress' failure to do
a budget but to resort to CRs repeatedly, that that is a major
problem. It is a major problem, and shame on Congress. In my
entire time here, I have only voted for one CR, and I kind of
have buyer's remorse even over that one.
The other thing is, DoD has consistently had crappy audits.
They have never passed an audit, to be frank. And it is because
you have a sclerotic, bureaucratic system, and they told us,
``We are too big to be audited. We do not know where it is all
going.'' That is a huge, huge problem.
So, we have been focusing on procurement today, but I will
just tell you that the previous administration also implemented
something called Project Labor Agreements on Federal contracts.
And those agreements kill competition, they inflate prices,
they block non-union contractors from fair opportunities.
So, the Trump Administration said we are not going to do
that anymore. Federal claims court says, ``That is right. You
do not have to do that.'' Then the district court judge in D.C.
came in and said, ``Well, wait a second. We are going to
reinstate that.'' The result is you sideline some of the best
contractors, which we were already talking about in the
procurement system, you sideline many contractors. Many
entrepreneurs may be interested, but they do not want to get
into it because it is so bad.
In my state, because of the PLAs, businesses are forced to
abandon bids. They are forced to get into unionization. And
this is a state where 97 percent of the workers are non-
unionized. I mean, this is just absurd. So, we end up rigging
the system.
Mr. Snelgrove, are you aware of PLAs?
Mr. Snelgrove. I am aware but I am not an expert.
Mr. Biggs. OK. Ms. Oakley, are you aware of PLAs?
Ms. Oakley. Same answer.
Mr. Biggs. Ms. Boatner?
Ms. Boatner. Same answer.
Mr. Biggs. OK. Mr. Schwartz, it is down to you, baby.
Mr. Schwartz. I feel obligated not to disagree with anyone
on this panel.
[Laughter.]
Mr. Biggs. Very good. Well, here is the problem. Everything
you guys have talked about is stuff that we have talked about
before, but we do not ever make the change, because you have
bureaucratic stasis. There is no real attempt to move it,
because there is no incentive to move it. Until this body says
we are going to make a change, then there will be no incentive
for the agency, the Department, to make the change.
So, we can talk until we are blue in the face about all the
great ideas you all have, but it is us. We have met the enemy;
it is Congress. It is us. And until we make the change, it is
not going to happen.
So, whether it is on the PLA side or just, you know, the
project side, or whether it is the procurement process, these
bureaucratic overlays--and by the way, it is not that they will
not just not get better. It is that they will get worse,
because there is no incentive to change. And what bureaucrats
find incentive in doing is protecting a fiefdom, the system
that is in place. They are comfortable with the status quo
because that is what they know.
Now, what is the status quo in the military? It is to have
an acquisitions officer that is there for 6 months to 2 years,
and they move them on back to the bomb squad, or whatever it
may be. And that is a perpetual problem that we have.
But what changes it, ultimately, is going to have to be
tied directly to funding. You know what Congress' response to
this is every time? It is, ``Yes, they have never passed an
audit. Yes, we know there is massive amounts of waste, because
studies have routinely said there is massive amounts of
waste.'' But you know what we do? We say, ``We are going to
give you more money. That is what we are going to do.'' We are
not going to give you any kind of direction on how to fix this,
because that would cause Congress to actually think, in a
bipartisan way, restructure what is happening in DoD. But we
are never going to do it. I am sorry to say this body is
probably irredeemable.
And with that I yield back.
Mr. Timmons. Thank you for that. I know recognize the
gentleman from Massachusetts, Mr. Lynch, for 5 minutes.
Mr. Lynch. Thank you. First of all, thank you to all the
witnesses for your willingness to come forward and help the
Committee with its work.
Mr. Schwartz, since January of this year, when the Trump
Administration took over, we have had about 121,000 layoffs at
DoD. Do we know how many of those employees came out of the
Defense Acquisition Department?
Mr. Schwartz. I do not know. Estimates I have heard of
ultimate goals was something like 10,000, but that is only what
I have heard.
Mr. Lynch. Yes. The Deferred Resignation Program that was
offered to DoD took out 21,000 of our employees who, to be
eligible you had to be 50 years old and you had to have 20
years of service. If you had 25 years of service there was no
age limit, obviously.
But that cohort, you know, first of all, 83 percent of
these people have a bachelor's degree or greater. I am just
trying to figure what the impact of the layoffs and the so-
called Deferred Resignation Program had on the efficiency and
the capabilities of the defense acquisition program, in
general.
Mr. Schwartz. Sure. So, two comments. One is you mentioned
20 years and over 50, and I just realized how old I am because
I fit into that.
Mr. Lynch. Yes, but that would be some of our most valuable
and knowledgeable and capable employees, right?
Mr. Schwartz. There are a lot of people that are very
capable, absolutely. And I cannot control what the size
ultimately will be. But I do believe we absolutely can take
steps now to ensure that we have the right workforce, and,
importantly, not just numbers but the right skills and the
right incentives for the people, in 2 years, 3 years, 4 years,
because this is a long-term game.
Mr. Lynch. Yes. Going back to the gentleman's earlier
question, do you have any idea how many PLAs are actually in
place?
Mr. Schwartz. I am sorry.
Mr. Lynch. Anybody there? My experience, and I am a former
union president for the ironworkers, and one of the complaints
I have, just generally, with DoD, is contracts are just a black
box. Nobody knows how these contracts are being awarded. It
seems like there is a propensity to award contracts to firms
that have connections with former admirals or generals, and so
they have inside knowledge of the needs of DoD. They have got
those relationships. And that is much more prevalent. That is
involved in every single DoD contract, and there are very, very
few product development programs or any contracts at DoD in
acquisitions that have a PLA. They might do it to build a
warehouse or something like that, but there are very few of
those. I do not know of any that are in place right now, in the
entire United States.
But those programs, a PLA would require that those
individuals working on that program go through an
apprenticeship program so that they are highly skilled. I think
electricians it is a 5-year apprenticeship program, for
plumbers, pipefitters, steamfitters, 5-year program. So, they
make sure that these folks that are going on to DoD projects
are actually highly skilled and able to perform the work at a
level that meets the standards of the Defense Department.
What do you think would be the most impactful change that
we could make in this whole acquisition process in order to
generate some of the savings that are there potentially, that
exist right now? I know we are talking huge numbers, but are
there one or two things--I am not asking for a silver bullet,
but the most important changes that we can make to actually
glean those savings that we desperately need?
Mr. Schwartz. Yes. Invest in IT systems, and I will just
give two examples. I think we talked about this last time. DoD
does not have a world-class defense travel system. There is the
Defense Travel System. You could actually go onto YouTube and
you will hear rants by uniformed personnel about their travel
system. You could actually see it. It is interesting.
So, DoD tried to put in a new system, because DTS had about
a $1 billion of improper payments, where we do not know what
happened. So, they had a system. They did a successful other
transaction and successful prototype, and they could not
implement it, a commercial system that is used ubiquitously
around the world by Fortune 500 companies. They could not
implement it. It was not a problem with the system. It was a
problem with DoD.
That costs money. We can save money on travel. We can save
money on logistics. We can save money on maintenance. We are
buying more planes because we have readiness rates which are so
low, we do not have enough to fight with. We could save a lot
of money--it is like investing in college--if we did the IT
systems right.
Mr. Lynch. Thank you, Mr. Chairman. I appreciate your
indulgence. Thank you.
Mr. Timmons. Yes, sir. I could talk about DTS all day long.
It is really terrible.
I now recognize the gentleman from Kentucky, Mr. Comer, for
5 minutes.
Chairman Comer. Thank you, Mr. Chairman. Ms. Boatner, the
Defense Intelligence Agency recently released a report
addressing the status of the missile threat in response to
President Trump's goals of building a Golden Dome defense
system. How vital will procurement modernization be to the
success of that particular initiative?
Ms. Boatner. It will be critical. You know, what they are
contemplating with the Golden Dome will certainly be a major
defense acquisition program, meaning that it will be subject to
the most stringent requirements that currently exist across the
acquisition system. So, subject to schedule delays and cost
overruns, as most of our major defense acquisition programs
are.
Chairman Comer. So, you agree strengthening public-private
partnerships will better advance this project and strengthen
and make the President's goals more doable and efficient?
Ms. Boatner. Yes, absolutely.
Chairman Comer. How do you see the government and industry
working together to obtain this goal? It seems like this would
be a challenging project for public-private partnership, but I
do not see any other way for this to happen.
Ms. Boatner. Yes. The technical aspects of this program
will be incredibly challenging, and I think as much
communication between all of the players in the defense
industrial base and the technologies that exist to enable such
a system will be critical as the Department kind of really
identifies the requirement and gets into the weeds of what they
are going to ask for from industry, and it should be informed
by what is resident across established primes, new entrants,
small businesses who can all play in this ecosystem on this
program.
Chairman Comer. Thank you. Mr. Snelgrove, your experience
spans active military duty, government service, and private
industry. How have you seen public-private partnerships benefit
the Department of Defense?
Mr. Snelgrove. Congressman, I have witnessed, firsthand,
from my time in both Iraq and Afghanistan, where public-private
partnerships using university-affiliated research centers,
federally funded research and development centers have all
contributed technological advancements to the warfighter. I
think currently you have a lot of great technology coming out
of the private sector that is being largely funded by private
sector research and development. So, to your earlier question
about how is Golden Dome going to be successful, I think it is
leveraging a lot of the private investment that is going into
space, commercial space specifically, that is going into small,
unmanned aerial systems that will contribute to that whole
picture.
Chairman Comer. Yes. The reason I ask these questions,
obviously I support public-private partnerships, and there is
no doubt in my mind that we have to partner in a big way with
the private sector to keep up with the threats that we face
from China and other countries that are investing heavily in
their military budgets.
But many of my colleagues on the other side of the aisle
often criticize private relationships with government
contracts, maybe because they do not like who the owner of the
company is or whatever. They may not use pronouns in their
website, or for whatever reason.
So, I think it is important that we face the reality that
we have to have public-private partnerships. And it would be
nice if we could do that in a bipartisan manner. I think
President Trump has expressed a desire to focus, with this
Golden Dome project, to try to have and make it a bipartisan
project. I hope it is, Mr. Chairman. That is my goal, so we
will see if that happens.
But thank you all for being here. Mr. Chairman, thank you
for holding this Subcommittee hearing. I yield back.
Mr. Timmons. Thank you. I now recognize the gentleman from
Maryland, Mr. Mfume, for 5 minutes.
Mr. Mfume. Thank you very much, Mr. Chairman. I want to
thank you and the Ranking Member for calling us together on
this. Obviously, I want to thank those witnesses who are here
in the room for your testimoneys and for some of your insights
into what is going on.
If you hear some disdain coming out of Members of this
Committee, it is because this fight and this discussion has
gone on for a long, long time, and we are all getting weary as
a result of it.
We all agree that there are massive amounts of waste. We
all agree that regulations and processes are too burdensome to
sort of get around and get over. We all believe that we have
got to have a situation, at particularly DoD but elsewhere,
also that creates innovation and give it a chance to succeed.
And I think we all believe that this DoD acquisition process
leaves a lot to be desired.
What is left unsaid, I think, not just where we are but how
did we get here and why aren't we moving forward? And I would
submit that the firing of the Inspector General is not the way
we want to go in situations like this, and the absence on these
matters by the Secretary of Defense is not the way we want to
go. It is not to knock either of them. It just to say that, as
someone said earlier, if you are sitting around waiting for the
U.S. Congress to pretend to be the cavalry, you would be
waiting all day long because there are too many intricacies
that prevent this huge body from moving forward, unfortunately.
And if you think you have got red tape at DoD and some of the
other agencies, we invented it. We have it right here. And so,
that is why it appears to the onlooker that we cannot seem to
get anything done.
So, I would just submit for consideration another thought
in all of this. The gentleman from Texas, Mr. Sessions, and I
head up a committee where we have been dealing with this matter
for several years now, and what we are finding are two things.
Not only is there massive waste, but there is also massive
fraud. And that is why, I think, in many instances, you do not
see the movement that we would think would be coming
internally.
$10.8 billion in documented fraud over the last several
years--$10.8 billion. This is the Department of Defense. And
before us, in the continuing resolution, an increase in 13
percent of the appropriations so that more fraud, in my
opinion, can take place.
I have said repeatedly that there has got to be some
direction from the top down on this. I mean, you are doing your
job. We are trying to do our job. But time is ticking away and,
you know, this fraud is absolutely massive. People are making
all sorts of money, retiring on it, waving a flag like they are
true-blue Americans, and at the same time their hands are in
the cookie jar--$10.8 billion documented fraud.
So, when you do not have an Inspector General who can point
that stuff out, you are in a situation where nobody knows that
it is going on unless there is an investigative report that
takes place. And I want to particularly thank the Government
Accounting Office [sic]. I mean, I do not know what we would do
if we did not have you providing the information and the
suggestions that we need.
But we are in a bad, bad situation, when that kind of money
can be ripped off, away from the American taxpayer, and we are
not prosecuting anybody whatsoever. That is money that could be
going toward food and nutrition programs. It could be money to
offset these drastic cuts in Medicaid. It is money that could
be shoring up a number of areas right now where we are short as
a Nation. But when you do not see it, because it walks out the
door, and it is $10.8 billion, God only knows what it is going
to be in the next report. This is a massive, massive failing on
the part of all of us.
So, I have appealed, and will do so again publicly, to
Secretary Hegseth, at this moment, to please come before this
or the entire Oversight Committee, and let us know what you are
planning to do about this. We have issued that formal
announcement. I am issuing it again today.
The Marine Corps is the only branch of the service that has
gotten past these failed audits, and it is because the
Commandant of the Marine Corps said, ``Look, this is how we are
going to do it. Anybody that does not want to agree, you are
getting off the ship now,'' and everybody else got in lockstep.
It is not happening anywhere else. And I think it has got to
come from the Secretary of Defense directly, to everybody under
his line of command, so that the things you are proposing,
which are good, commonsense things, actually get put into
practice.
Mr. Chairman, I yield back.
Mr. Timmons. Thank you. I now recognize the gentleman from
Arizona, Mr. Crane, for 5 minutes.
Mr. Crane. Thank you, Mr. Chairman, for holding this
hearing today. Thank you for our panelists for coming to
testify. I know this is a very important topic, reforming
procurement to accelerate defense innovation. It is obviously
important because we have a lot of threats around the world who
are developing their weaponry very quickly, and the battlefield
is ever-changing.
We also have a Defense Department that has a massive
budget. We all know that. You know, we also have a Defense
Department here that continues to fail audits.
But I want to start with you, Ms. Boatner. You previously
served as the Deputy Assistant Secretary of the Army for
Strategy and Acquisition Reform. Is that correct?
Ms. Boatner. Yes.
Mr. Crane. Acquisition reforms are important, but I am also
concerned about the revolving door of senior military and
procurement officers leaving the DoD and taking jobs at large
defense contractors. With their influence they are able to
leverage military relationships to negatively influence
procurement.
One example of bad procurement practices is retired Rear
Admiral James A. Murdoch and retired Captain Tony Parisi used
their influence to fund the procurement of the Navy's infamous
Littoral Combat Ship and the Defense Civilian Human Resource
Management System software development program that was 6 years
behind schedule and more than $280 million--that is 780
percent--over budget until Secretary Pete Hegseth announced its
termination.
The work of these former military officers on the LCS ship
resulted in the procurement and continued deployment of flawed
ships that cost the taxpayer billions of dollars and put
crewmembers at risk. Undoubtedly, someone continued to champion
the Defense Civilian Human Resource Management System, too.
Otherwise, it would have ended a long time ago.
My question, how do we ensure that the hiring and work
reforms for some of the acquisition officers, so U.S. taxpayers
are not holding the bill for failed projects like the Littoral
Combat Ship or the Defense Civilian Human Resource Management
System software, ma'am?
Ms. Boatner. Absolutely. I think it is an important point.
There are restrictions in place for folks leaving the
Department and going elsewhere so that they cannot use, kind
of, their information or relationships to push contracts in any
given way. I think, to the best of my knowledge, myself and
others comply with those restrictions. And specifically to
contracts, if you have ever touched a specific contract or even
that portfolio area, you are prevented from being involved in
any of those discussions with that agency, for different
periods of time moving forward.
Mr. Crane. What are those time periods, Ms. Boatner?
Ms. Boatner. Depending on the level of position that you
held, they range from 2 years and can go higher. Different
Presidents have set different specific year-long restrictions,
cooling-off periods, based on their administrations.
Mr. Crane. Do you think those time periods should be
increased?
Ms. Boatner. I think that is probably not a call that I
should make but should leave it to Congress to determine, and
the executive branch.
Mr. Crane. If that is the case, how did this example that I
just read with the Littoral Combat Ship happen, in your
estimation, ma'am?
Ms. Boatner. Again, I do not know the specific details of
that. Potentially, perhaps, the right restrictions were not in
place. But I am really not familiar with that particular
situation.
Mr. Crane. Ms. Oakley, would you like to take a stab at
that?
Ms. Oakley. I am also not familiar how that particular
example happened. But the approaches that we are talking about
today, to advocate for change within the Department, could play
a role in limiting the ability for something like that to
happen. So, in these new approaches you are not locking in
these long-term contracts on these big, mammoth acquisition
programs that then you are stuck with one vendor in perpetuity.
These new approaches would enable shorter-term contracts that
focus on an initial capability, and then be able to open up the
aperture for competition through things like modular open
systems, et cetera, that would enable other companies to get
involved.
So, I am kind of tangentially answering your question, but
what we are talking about today would help to prevent the
situations like you are talking about.
Mr. Crane. Thank you. I would also like to submit for the
record an article from the Quincy Institute for Responsible
Statecraft. It is called, ``March of the Four-Stars: The Role
of Retired Generals and Admirals in the Arms Industry.''
Mr. Timmons. Without objection, so ordered.
Mr. Crane. And I would like to read a quick section.
``In another prominent case, General James Mattis went to
bat for the blood testing firm, Theranos, while he was serving
as Commander of the U.S. Central Command, then joined the
company's board upon leaving government service. Mattis pressed
the Army to buy and utilize Theranos equipment, as he
acknowledge in an email to Theranos CEO Elizabeth Holmes
uncovered by The Washington Post.''
It basically goes on to say that Theranos was later
charged, two of their executives were charged. The Securities
and Exchange Commission, described Theranos as an ``elaborate,
years-long fraud'' in which Holmes ``exaggerated or made false
statements about the company's technology, business, and
financial performance.''
And on that, I yield back.
Mr. Timmons. Thank you. And I recognize the gentleman from
California, Mr. Garcia, for 5 minutes.
Mr. Garcia. Thank you, Mr. Chairman. Thank you to all of
our witnesses for being here, as well. And I also definitely
want to agree with a lot that was said by both sides of the
Committee today. I thank you again for your time.
I just want to start, of course, by saying that I think
everyone here agrees that our military needs the absolute best
equipment, the best materials. Those that serve our country
also deserve, of course, the absolute best weapons, the best
ships, the best planes, whatever we can provide, we all can
agree. And we all have, of course, the responsibility to
safeguard our national security.
At the same time, as has been said already, we know the
Department of Defense still cannot pass an audit. I believe it
is the only department in the government that consistently,
every time there is an audit process, consistently essentially
comes back and says, ``We are not able to do so,'' which I do
not think anybody thinks is acceptable or a way to actually
operate any type of organization.
Now, the F-35 fighter jet, for example, will cost us $2
trillion over its lifecycle, and we know that just that one jet
alone is often delivered late, often cannot fly, and has had
numerous, numerous issues over the years. And that is just one
example of all the different types of aircraft, other types of
equipment that we have seen, that have had massive delays,
massive cost overruns, and where the technology often times is
not working right.
We do know, of course, that taxpayer money is being wasted.
I do not think can disagree with that statement, and I agree
with the Ranking Member that if we really want to save money
and actually be efficient in government we should be looking at
trying to save this waste, particularly at the Department of
Defense.
And I want to also note, I think it is interesting that we
have had a lot of conversation in the broader Committee on
Oversight, and I sit on the DOGE Subcommittee, about efficiency
and about waste. Yet, we have yet to discuss the Department of
Defense. And there is so much opportunity that I think both
sides of the aisle have been interested in, in actually trying
to cut some of this waste. And I think it has been a real
missed opportunity on the behalf of this Administration and
certainly on behalf of the DOGE Subcommittee.
So, I would encourage our colleagues that are working on
DOGE, not just from the Committee but across the government, to
focus on the enormous amount of opportunity and work there is
to do in the Department of Defense.
Now I am concerned, like many, that one of the President's
first moves was to fire the Inspector General over at DoD, who,
of course, has official responsibilities for holding the
Department accountable. And I continue to have very serious
concern about Secretary Hegseth's ability to do the job. That
is my personal opinion. But I think we do have opportunities to
work on a bipartisan basis to improve our system.
We have seen the number of major defense contractors has
shrunk, actually, from about 51 down to about 10. That is not a
positive change. I think any time you actually lose competition
it is harder for new people to enter the marketplace. It is
harder for new ideas to enter and provide new models of
functioning. It also, I believe, stifles innovation.
So, the idea that less and less and less contractors are
now being used, particularly on major projects at the
Department, I think should concern everyone on this Committee
in a bipartisan way. This also, of course, just creates more
opportunities for higher costs and failures.
We know there actually has been some progress when we look
at space procurement. In 2019, the Department set up a Space
Development Agency, which has been an important partner for the
private sector. I will note that back in my hometown of Long
Beach, we have one of the largest concentrations of space and
aerospace development in the country. As mayor, we helped
develop the Space Beach Program. It is a major part of our
economy in Southern California.
My team, though, as heard directly from space companies
that we may be losing some of our recent wins. There have been
reports suggesting that some of the Space Development Agency's
programs, called the Tranche 2 and Tranche 3 Transport Layers
Program could be terminated or consolidated. These programs,
within the space community, are incredibly important.
Cancelling them, in their opinion, could threaten national
security.
Mr. Schwartz, just briefly, could you just talk about the
importance of the Space Development Agency to the growing space
industrial base and how that maintains competitiveness and
national security?
Mr. Schwartz. Absolutely, and I believe this
Administration, and the last administration, have both focused
on space. Space is a new frontier as it were, not just for the
Department of Defense but, frankly, all of national security,
independent of the agency.
After we went to the moon, and after a while we did cut
back on some space investments, and that came back to haunt us,
and cutting key development efforts in space will take a long
time to recover.
As Ms. Boatner was saying--and this is particularly
important not just for the Department of Defense but for
industry--consistency and understanding what the rules of the
game are, are important. And it is important to make those
investments and keep those investments, because it is a lot
cheaper to do things consistently than cut programs and have to
recreate everything and get that entire team back and start
from scratch.
Mr. Garcia. Thank you very much. I yield back.
Mr. Timmons. Thank you. I now recognize the gentleman from
Virginia, Mr. McGuire, 5 minutes.
Mr. McGuire. Thank you, Mr. Chairman, and thank you for our
witnesses for being here today.
The strength of our defense industrial base is critical to
maintaining our national security and military readiness. But
we face real challenges with our supply chain and a burdensome
acquisition process. These challenges threaten our ability to
equip the warfighter. We do need more competition, and we need
something, a phrase from the movie Top Gun, we have a ``need
for speed.'' We have atrophied in just about every way
possible, and God forbid we need to go to war, we want to make
sure our men and women have a chance that they can win the
fight and come home alive.
One of the key challenges is with additive manufacturing.
The DoD has a slow and complex qualification process, which
makes it difficult to rapidly adapt innovative technologies.
Ms. Boatner, why is it so hard for the Department of
Defense to qualify parts produced through additive
manufacturing, and can you give an assessment of DoD's current
attitude toward additive manufacturing?
Ms. Boatner. I think the Department's current attitude is
actually one in which they want to embrace it and want to adapt
it. You are right, though. They are getting mired in the
process to certify and qualify parts, I think taking upwards of
months to years to certify and qualify any one additively
manufactured part. And the concern there is risk aversion,
frankly. I think when we are not talking about flight safety or
safety-critical parts, perhaps some additional risk can be
taken on the certification and qualification process for select
parts.
Again, it is all balancing, to your point, the need for
speed, with the appropriate need to balance, and it is always
trying to find what that balance is between speed and risk
management. But there is absolutely opportunity to do that
here.
Mr. McGuire. So, Ukraine has a goal of 4.5 million drones
in 1 year, this year, and we have a goal of about 10,000. You
can see where if our enemies have that ability to capacity and
speed, it is going to be a problem.
Ms. Boatner, also, how often do your member companies lose
promising suppliers due to time and complexity of a traditional
DoD procurement?
Ms. Boatner. All the time. That is one of the No. 1
problems that they raise when they talk to us is, is suppliers,
up and down the supply chain, will walk away, particularly
commercial suppliers. So, when you are talking about drones,
when we try to force government-unique requirements down the
supply chain and we do not allow them to use some of the
streamlined commercial processes that have been made available
by Congress, they will walk away because they have other
marketplaces.
Mr. McGuire. There was a Navy amphibious ship due to deploy
in San Diego, I believe January 7, but they had a hinge that
broke, that moved a big door. And so, the manufacturer said,
``We might be able to give you that door in 18 months.'' So, in
my district, we have an ATDM. They scanned it, and over
Christmas and New Year's they produced a part. These guys can
do 3D printing with titanium and steel, et cetera. And they
installed the part on January 6, and the ship departed on time,
January 7.
Ms. Boatner, how can we better integrate small and mid-
sized innovators into the defense industrial base without
burying them under regulatory compliance demands?
Ms. Boatner. That is the answer. I think you have to look
at the regulatory regime that is in place today. Every
regulation was put in place to protect against a bigger risk,
but it now creates an even larger risk, which is that we are
losing suppliers, we are losing small businesses, those that
have a lot of innovation. And I think taking a whack at the
regulatory regime will go a long way, because it is exactly our
mid-sized companies and our small businesses that do not have
the resources to comply with what the government requires in
those regulations.
Mr. McGuire. Mr. Snelgrove, what are you hearing from
industry leaders regarding what they see as their biggest
roadblock in the procurement process?
Mr. Snelgrove. Congressman, I would highlight one major
issue which we see from small businesses, universities, and
even major defense contractors, and that is access to
classified facilities and networks. Across the country there is
a major lack of these facilities, specifically in the areas
where we need them most.
For decades, constructing your own SCIF as a company has
been a cost-prohibitive endeavor, costing multimillion dollars
and multi-years, many of which, you know, small businesses and
startups cannot afford to take on, which prevents them from
actually competing for classified contracts.
Fortunately, Members of Congress have recognized this is an
issue, and just over the last few years have passed legislation
to start to scale this kind of shared classified facility
model, almost like a WeWork for SCIFs, to allow access and
expand access across the Nation for startups, large companies,
and universities.
Mr. McGuire. Just real quick for Ms. Oakley, how do we
strike the right balance between oversight and speed,
especially when rapid innovation is the goal?
Ms. Oakley. Absolutely. I think that is a key challenge,
and I actually think it is one that Congress plays a critical
role in helping with. When you think about the need for
oversight, it is significant based upon managing the risks to
the government. So, when you are taking on an F-35, for
example, or an LCS, as was mentioned before, that is a giant
program and a huge commitment, and so the risk to the
government is huge. So, rightly, as Ms. Boatner mentioned, a
lot of these restrictions and requirements were put in place
because of the magnitude of the risk.
But when you are taking a different approach and focusing
on getting out capability quickly, in shorter timeframes, the
magnitude of that risk is much less, and so it requires a new
look at oversight, and the types of things that will be
required in that environment are going to be different than in
an environment that we have traditionally seen.
Mr. McGuire. Thank you. I yield back.
Mr. Timmons. Thank you, and again, if anyone wishes to ask
a second round of questions we are going to start that now, and
I recognize myself for 5 minutes.
I am still a captain in the Air Force. I am the Area
Defense Counsel for the South Carolina National Guard. And
continuing resolutions have really caused me an enormous amount
of problems in my service in the military. I cannot fathom what
it is like, the entire enterprise-wise.
How bad are continuing resolutions for the procurement
process? Ms. Boatner?
Ms. Boatner. Sure. Continuing resolutions, they cap funding
at the prior level, the prior year's level of spending. So,
what that does is it forces programs to make tough decisions,
reducing procurement quantities, for example, meaning your per-
unit cost increases, so you are driving up costs. You also
cannot award any new contracts or task orders for as long as
the CR is in place. There are program managers that will
actually plan to not award any contracts in the first or second
quarter of a year and wait until the third and fourth quarter,
knowing that there will be a continuing resolution, and that
pushes program timelines to the right. And that really has a
very negative impact on the supply chain, given the uncertainty
of that environment, and particularly for small businesses who
do not have the cash-flow to kind of hang on over that long
time horizon that a CR----
Mr. Timmons. All these challenges that we are talking
about, if you could fix one problem would it be no more CRs?
Ms. Boatner. Oh, absolutely. Budget stability, consistent
demand signals, that would make a huge difference for the
defense industrial base and really for the procurement system.
Mr. Timmons. I think that is something that we can work on.
It should not be a hard task to fund the government.
I want to talk about technology. You know, if you look at
health care and the challenges that we face with rural health,
telehealth is something that has really solved a lot of
problems. I mean, we have increased connectivity. Everybody has
got a phone that has a camera on it. That is still kind of
emerging, but it is mostly developed. And that has been a huge
help in delivering health care to tens of millions of
Americans.
You know, how do we use technology to address this
challenge? What can we do to harness all these emerging
technologies to streamline these processes? Mr. Schwartz, any
thoughts?
Mr. Schwartz. How much time do you have? Sorry.
There is a lot, and I am just going to start a little bit.
Digitized acquisition. We do not have IT systems to do
acquisition. We do not have IT warehouses of all the IT that
DoD owns to know what they own already, how much are they
paying somewhere else, what rights do they need. We do not have
a good centralized system that we can share on what commercial
items, what determinations we have made in the past. These can
be solved with IT.
Mr. Timmons. I hate to say it. I do not know the answer to
this question. Mr. Schwartz, does every branch of the military
have their own procurement system, or does it go through one
clearinghouse?
Mr. Schwartz. So----
Mr. Timmons. Do the Marines have one? Does the Navy one?
Does the Air Force?
Mr. Schwartz. There is a Defense Federal Acquisition
Regulation System, and it ultimately rolls up to the Secretary
of Defense. However, each department has their own Air Force
Regulation System, Army Regulation System, Navy, for tweaks.
Mr. Timmons. It is why we have multiple variants of the F-
35.
Mr. Schwartz. It is one reason. Well, that is more a
requirement decision. But yes, no one was making the call, and
they also have different individuals in charge, so each
department, and sometimes service, has a service acquisition
executive who is different. So, there is a service acquisition
executive for the Army, the Navy, the Air Force, Space Force.
There is a head of procurement for SOCOM, for example. So,
there is a lot of disparity.
Mr. Timmons. Mr. Snelgrove, I feel like authoritarian
governments have a big advantage when it comes to this issue,
because they do not have any of the restraints that Western
democracies have. Are any Western democracies doing this
better? Are any countries that share our system of government
doing this better than we are?
Mr. Snelgrove. Chairman, no, they are not. The U.S. is
still the leader in innovation across the globe, despite all of
the headwinds that we have described.
Mr. Timmons. I think Israel would probably be pretty good
at stuff like this. Are they ahead of us, or are they still
following our lead?
Mr. Snelgrove. I think there are a lot of lessons that we
have learned from Israel, specifically over the last, you know,
12 to 18 months. However, a lot of the technology that Israel
is deploying is still invented here in the United States and
shared through various DoD programs, counter-tunneling
programs, Iron Dome programs. There is a whole host of
examples.
Mr. Timmons. And I assume we all agree that China's command
economy and ability to dictate everything in a real-time manner
is a disadvantage for us, relatively speaking. Is that fair?
OK. We need to get better at this.
Thank you. I yield back. I now recognize the Ranking
Member, Mr. Subramanyam, for 5 minutes.
Mr. Subramanyam. Thank you, Mr. Chair. I wanted to ask Ms.
Oakley about the iterative development approach a little bit
more. Let me give you an example, to see if I am right. Some
new cars now--I have an old car and a new car. My old car has
an audio system in there that was built when the car was built.
There is no way of updating it in any sort of way. It is what
it is, and obviously, 12 years later, it is very outdated. If I
want a new audio system I might as well buy a new car, at that
point.
But the new car I have, or newish car I have, you can
update the audio system and update the offerings the audio
system has. Is that what you would say is an iterative
development approach?
Ms. Oakley. That is one aspect of it. Obviously, allowing
over-the-air updates for software is one capability that can be
added to an existing capability, to get something out quickly.
So, you field something with the knowledge that you are still
working on the software to update a critical capability. So,
that is one step of it.
But then a next step is being able to change out the
engine, being able to change other key parts of that system in
an easy way because you have structured the program to be able
to be modified in the long run. So, you are going at an
acquisition with the intention of we are going to put out this
car, and these are the capabilities it is going to provide. In
the interim, while we are working on the next iteration of it
we are going to give it software updates while design, test,
and evaluate the next iteration, and collect feedback from the
first iteration to then change the design and put out a new
vehicle, a new model going forward. And that is exactly the
type of iterative approach that we think DoD should follow, to
ensure that we are meeting warfighter needs.
Mr. Subramanyam. I will give you a more tangible example.
We have a lot of assets in space now, and we have a Space
Force, and we are very involved in defense in space. Some of
those assets are very valuable satellites in low-Earth orbit. I
have a company in my district that has the ability to basically
maintain those satellites, and they have come up with new,
innovative ways to do that. So, instead of having to buy and
launch a new satellite, we can just keep the satellites we have
up there running because they are perfectly fine otherwise.
Sometimes they just simply run out of fuel, so we just need to
refuel them.
The problem they have encountered is institutional barriers
at DoD, to adopt these kinds of services. So, what could we do
to help put in place these iterative development approaches
that you have suggested?
Ms. Oakley. Yes, DoD needs to change its acquisition
process, and this starts with budgeting and requirements. The
way the current requirements are developed is that the unity is
very specific, exquisite requirements are developed right from
the very beginning, before you realize the art of the possible,
in some cases. And also, doing that ignores the fact that you
might be able to continue upgrading and modifying systems as
you go forward.
So, what our work would look at is could DoD put in place a
requirement system that starts with high-level needs, focuses
on what those critical needs are, and then does the design,
testing, and evaluation, using digital tools, to be able to
understand where they are going to be able to get in a
reasonable timeframe, and then structures the program to be
able to leverage just what you are saying, the ability to
upgrade and modernize systems as you are going forward. And
that needs to be baked in from the very beginning.
Mr. Subramanyam. The other thing that I have seen from, I
think, almost everyone's testimony here today, and even the
comments of the other Members, is that we have to have good
talent at the DoD. And I guess I would ask, really anyone, some
of the people who have resigned, I think there have been
thousands now at the DoD who were either probationary or fired,
they were either probationary or they were people who were
technologists and they left for greener pastures.
So, how do we attract better talent to the DoD when right
now there is this issue with the Federal Government and cuts to
the Federal Government? Anyone?
Mr. Schwartz. I will jump in. So, how to attract talent. I
think there are a number of ways. There was a while where I was
going to a lot of people and asking them, ``Why did you leave
government, and would you go back into government, and how
important is pay?'' And invariably, pay was not the issue. The
issue that a lot of these people who are former government
employees would say, it was two. One, ``I didn't feel like I
could get anything done,'' and two was, ``I was being too
micromanaged. I was not asked to do anything. I was told this
is what you do, this is the policy you follow, and this is how
you do it.'' It was those two things.
I said, ``Would you go back into government?'' I am like,
give me an offer. But, ``Can I get anything done?'' And that
was really what motivated a lot of people to leave, and I
think, having been a former government worker myself, motivates
a lot of people to want to work for government. And if we can
fix those things, I think we will get the best and the
brightest.
Mr. Subramanyam. I yield back. Thank you.
Mr. Timmons. Thank you. I now recognize the gentleman from
Arizona, Mr. Crane, for 5 minutes.
Mr. Crane. Thank you, Mr. Chairman. I want to start this
line of questioning off with just a little of my background. I
was in the military myself, a former servicemember, and I still
have a lot of friends in the military that are running around
some of the worst parts of the world. I want them to have the
best gear possible. I want our military to be strong. But I do
struggle with the Defense Department and their complete lack of
ability to pass an audit or be financially responsible in any
way.
Ms. Oakley, you come from GAO. Is that correct?
Ms. Oakley. Yes, sir.
Mr. Crane. What does that stand for, ma'am?
Ms. Oakley. Government Accountability Office.
Mr. Crane. And you are tasked often with looking over data,
verifying information, and then bringing your findings to
Congress so that we can try and present some legislative
solutions. Is that correct?
Ms. Oakley. Correct.
Mr. Crane. OK. Did your organization submit a report to
Congress that said that the Pentagon will not be able to pass
an audit until 2028?
Ms. Oakley. Yes.
Mr. Crane. Why is that? Why is it going to take--I mean,
why is it going to take another 4 years for the DoD to pass an
audit?
Ms. Oakley. I am not familiar with the intimate findings of
that report, but I know that we have reported a number of times
that DoD does not have the controls and processes in place to
be able to pass the audit. And I am assuming that those
findings are focused on what DoD's action plan is for passing
that financial audit, given that DoD financial management is on
our High Risk List. So, I would assume that those findings are
based upon what we have seen in that action plan.
Mr. Crane. Do you know when the last time that DoD passed
an audit was?
Why are you laughing, Mr. Schwartz?
Mr. Schwartz. They have not. As a department, they have
not.
Mr. Crane. Since they were required to in 1990, they have
never passed one. Is that correct?
Mr. Schwartz. Correct.
Mr. Crane. So, it is just interesting that we sit here and
talk about this, because this is a bipartisan problem. This is
not Republicans or Democrats. This is Republicans and
Democrats.
Let me pose it this way. Why would the DoD pass an audit,
or even try and pass an audit, if we continue to fund them at
the same levels or increased levels, over and over again?
Ms. Oakley. I think that is a very good question. What is
the incentive if there is no consequence of not passing an
audit.
Mr. Crane. Absolutely. That is the only language that
people and organizations up here in D.C. understand, which is
why I opened with what I told you about my background and my
concern, but yet several times I voted against the NDAA and
other authorization and appropriations for the Department of
Defense, because of my concern not only for our national debt
and the deficits that we are running, but because of the
Department of Defense's unwillingness to be fiscally
responsible or accountable to the American people whatsoever.
As a matter of fact, a couple of months ago I went over to
the Pentagon, and I was talking to Secretary Hegseth with other
conservatives, and this was one of the things I brought up. I
said, ``Hey, sir, I understand you guys have been tasked with a
lot of important things. I am a supporter of yours. I am a
supporter of a strong military. I have seen a lot of reporting
from DOGE and some of the other agencies that they have taken a
look at. When are we going to see some fraud, waste, and abuse
reporting at the Department of Defense?''
He did tell me that those guys are right down the hallway,
and if you would like to go talk to them you are more than
welcome to, and you will be seeing something come out of there.
I just want it to be said that it is a concern, even for
many Republicans, that, hey, the Department of Defense needs to
get its fiscal house in order. And I am glad that one of my
colleagues pointed out that the Marine Corps is actually doing
this. I think it is great, and I am not surprised that it is
the Marine Corps that is leading by example, but I hope to see
the other branches and leadership at the Pentagon and the
Department of Defense start to get its fiscal house in order.
And I am a bit concerned about your report, ma'am, that
says it is going to take another 4 years for us to get a clean
audit at the Department of Defense. And I was not exactly sure
that your answer covered the reason for your organization
stating that.
Ms. Oakley. I can take that for the record and get back to
you.
Mr. Crane. Does anybody else have anything to add on that,
why it is going to take another 4 years?
Mr. Schwartz. I will add one of the challenges is the IT
systems, and then they were bought and put in place they were
not done in a way that thought about audit to begin with.
Mr. Crane. OK. Thank you. I yield back, Mr. Chairman.
Mr. Timmons. Thank you. In closing, I want to thank our
witnesses once again for their testimony today. I now yield to
Ranking Member Subramanyam for his closing remarks.
Mr. Subramanyam. Thank you, Mr. Chairman, and thank you to
the witnesses today. We had a great hearing. This is my first
DoD procurement hearing, and I hope it is not the last. But it
sounds like we have had some before. But I hope that this time
we actually make some of the changes that are being recommended
today. I read through all of your testimony, heard some of it,
heard some of your answers. A lot of great ideas. A lot of
smart people in the room today. So, let us actually do some of
it.
One of my concerns is that we are hearing the right things
from both sides of the aisle, but we are not getting action.
So, I go back to the personnel example. We had a lot of great
technologists that have either been pushed out or just left or
even got fired, who could really help us with IT procurement.
And we have a lot of procurement people who are leaving because
they simply are fed up with being there or because they do not
want to work in this environment.
So, we are going the wrong direction in personnel. I am not
sure we are going the right direction in several other places.
Someone mentioned in their testimony something about Federal
labs. We are firing a lot of scientists in our government.
Someone mentioned in their testimony about budget uncertainty.
We just did another CR. I am already nervous for the next CR.
And someone even mentioned in their testimony something about
manufacturing and industrial resilience. Well, I actually
talked to a company that manufactures products for the DoD, and
they are concerned about tariffs and the fact that the 20
percent increase in making everything will be passed on to the
DoD and passed on to the taxpayers.
So, we are going the wrong direction so far, early in this
Administration. While the talk has been good, what is happening
and what has actually been the action has not worked out, and
been in line with that talk.
And I really appreciate some of the comments from both
sides of the aisle. But the one ugly bill, Beautiful Bill,
whatever you want to call it, that we just passed, increases
defense spending and makes no mention of trying to audit the
DoD or reform procurement or do anything of the sort to try to
get things under control when it comes to how dollars are spent
over there.
I am not seeing a lot of actual change. I am just seeing a
lot of talk so far.
So, I do hope that this can be bipartisan and that we can
actually work together on real changes. The best way to change
something is to actually start doing it, so I hope we can do
that.
I will end with a couple of stories from my district. One
company that said that the DoD will often ask them to make a
product. Sometimes that product has not even been invented.
They actually have to create a product that does not exist on
the market or anywhere else. And they have to put their own R&D
dollars into this. So, going from CR to CR, getting mixed
messages about what they should be producing and how they
should produce it, is tiring and it is costly. So, they have
decided to start opening a commercial business, and they goal
is to get out of the defense business altogether.
And we have seen that over and over again. And as others
have mentioned, less companies are working with the DoD because
why would you? They are a terrible customer right now.
I have another story about a small business who is doing
the same thing, only they do not have the cash reserves like
the bigger companies. So, they do not have a choice but to get
way from trying to sell to the DoD, even though they have great
products, and others have mentioned that, as well.
Finally, I talked to someone who left the DoD. They did not
take the deferred resignation but they were going to leave
anyway. But they were fed up, as Mr. Schwartz mentioned, about
the environment at the DoD, about all the rules they have to
follow, about all the contracting officers they have to work
with, about the mixed messages they get, and how they will have
a mission-critical product they are working on with a
contractor and then that project will go out the window 6
months later.
So, it is very difficult right now, and we have to see
actual changes. I look forward to making those changes. But we
need to actually act instead of just talk.
Thank you again, and I yield back.
Mr. Timmons. Thank you for that. I now recognize myself for
closing remarks.
My friend from Arizona said that Congress was irredeemable.
I do not believe that to be the case, and I do not believe that
this hearing would reflect that. I think that we had good,
productive conversations. I think that we are all interested in
streamlining the procurement process and saving taxpayer
dollars, and then delivering the best possible weapons to our
warfighters. Peace through strength is not just a saying. It is
what we have to do in order to continue to be prosperous and
continue to have the impact that we have had on the world for
250 years.
As we seek out waste, fraud, and abuse to try to streamline
our costs governmentwide, the Pentagon can be no exception.
And, if anything, it is probably the spot that we can find the
most cost savings and deliver the best results.
I think one of the things that I have taken away from
this--I mean, I kind of knew this, that CRs are just really bad
for the government, in general, and they are really bad for the
military. But they are also really bad for procurement. So, we
have to do our job, and we have to fund the government, and we
have to create predictability for the defense industrial base
to continue to provide the best possible products to our
military. And our national security depends on it.
And I am afraid that we are to the point where the
procurement process, the development of new technologies is
becoming an emerging national security threat. And as we see
what countries that are faced with live-or-die scenarios are
able to accomplish in a short period of time, it makes me even
more concerned. But I do think that maybe we can learn from
countries that we have given tens of billions of dollars to,
and maybe take some of the lessons that they have learned from
the wars that they are engaging in.
I really appreciate all of you being here today, and I
appreciate my colleagues across the aisle for a productive
hearing. And we will definitely be following up with additional
questions and try to see what we can do legislatively to solve
some of these challenges we face.
With that, and without objection, all Members have 5
legislative days within which to submit materials and
additional written questions for the witnesses, which will be
forwarded to the witnesses. If there is no further business,
without objection, the Subcommittee stands adjourned. Thank you
all.
[Whereupon, at 11:45 a.m., the Subcommittee was adjourned.]