[Congressional Record Volume 155, Number 31 (Monday, February 23, 2009)]
[Senate]
[Pages S2366-S2368]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEVIN (for himself and Mr. McCain):
  S. 454. A bill to improve the organization and procedures of the 
Department of Defense for the acquisition of major weapon systems, and 
for other purposes; to the Committee on Armed Services.
  Mr. LEVIN. Mr. President, I am pleased to introduce the Weapon 
Systems Acquisition Reform Act of 2009, with Senator McCain as an 
original cosponsor. The Department of Defense faces huge problems in 
its acquisition system today. Every year, the Government Accountability 
Office publishes a report assessing DOD's purchases of major weapon 
systems, and every year, the picture seems to get worse.
  Since the beginning of 2006, nearly half of DOD's largest acquisition 
programs have exceeded the so-called ``Nunn-McCurdy'' cost growth 
standards established by Congress to identify seriously troubled 
programs. As Secretary Gates pointed out in his testimony before the 
Armed Services Committee last month, ``The list of big-ticket weapons 
systems that have experienced contract or program performance problems 
spans the services: the Air Force tanker, CSAR-X, VH-71, Osprey, Future 
Combat Systems, Armed Reconnaissance Helicopter, Littoral Combat Ship, 
Joint Strike Fighter, and so on.''
  Overall, DOD's 95 major defense acquisition programs (known as 
``MDAPs'') have exceeded their research and development budgets by an 
average of 40 percent, seen their acquisition costs grow by an average 
of 26 percent, and experienced an average schedule delay of almost two 
years. Last summer, GAO reported that cost overruns on DOD's MDAPs now 
total $295 billion over the original program estimates, even though we 
have cut unit quantities and reduced performance expectations on many 
programs in an effort to hold costs down.
  These cost overruns happen because of fundamental flaws that are 
endemic to our acquisition system. We even know what these flaws are: 
DOD acquisition programs fail because the Department continues to rely 
on unreasonable cost and schedule estimates, establish unrealistic 
performance expectations, insist on the use of immature technologies, 
and adopt costly changes to program requirements, production quantities 
and funding levels in the middle of ongoing programs.
  Particularly at this time, when the federal budget is under immense 
strain as a result of the economic crisis we simply cannot afford this 
kind of continued waste and inefficiency. That is why I am introducing 
this bill with Senator McCain today and why I have scheduled an 
acquisition reform hearing in the Armed Services Committee next week. 
The problems in our acquisition system may not be easy to solve, but 
they are far too big for us not to take whatever steps may be necessary 
to correct them.
  The key to successful acquisition programs is getting things right 
from the start with sound systems engineering, cost-estimating, and 
developmental testing early in the program cycle. Programs that are 
built on a weak initial foundation, including immature technologies, 
inadequate development and testing, and unrealistic requirements, are 
likely to have big problems in the long run.
  Unfortunately, a number of previous so-called acquisition ``reforms'' 
have taken the system in the wrong direction by cutting out people, 
organizations, and processes needed to establish a sound initial 
foundation for major programs. For example in the mid-1990's, DOD 
experimented with assigning ``total system performance responsibility'' 
to contractors, abdicating its role in overseeing and ensuring program 
performance; beginning in the late 1990's, DOD eliminated organizations 
and capabilities responsible for providing system engineering and 
overseeing developmental testing on major weapon systems; beginning in 
2003, DOD revised its key guidance for major acquisition programs to 
make the key early phases of an acquisition program optional, 
authorizing MDAPs to skip over the concept refinement phase, the 
technology development phase, and even the system development and 
demonstration phase of the acquisition process, effectively leaping 
into production before design considerations were adequately addressed. 
The result has been excessive cost growth in weapon systems and 
excessive delays in fielding major defense acquisition programs.

  Congress has already taken some steps to address problems that come 
late in the acquisition process--for example, by establishing 
certification requirements to ensure that programs meet minimal 
requirements before they enter system development and by tightening the 
Nunn-McCurdy requirements that are used to identify underperforming 
programs.

[[Page S2367]]

  The bill that we are introducing today is designed to identify and 
address major problems much earlier in program development--before a 
Nunn-McCurdy threshold is breached, before a program is formally 
initiated, and before the program's trajectory has been established. 
For example, our bill would require the Department of Defense to 
address problems with unreasonable performance requirements by 
requiring DOD to reestablish systems engineering organizations and 
developmental testing capabilities; make trade-offs between cost, 
schedule and performance early in the program cycle; and conduct 
preliminary design reviews before giving approval to new acquisition 
programs; address problems with unreasonable cost and schedule 
estimates by establishing a new, independent director of cost 
assessment to ensure that unbiased data is available for senior DOD 
managers; address problems with the use of immature technologies by 
requiring the Director of Defense Research and Engineering (DDR&E) to 
periodically review and assess the maturity of critical technologies 
and by directing the Department to make greater use of prototypes, 
including competitive prototypes, to prove that new technologies work 
before trying to produce them; and address problems with costly changes 
in the middle of a program by tightening the so-called ``Nunn-McCurdy'' 
requirements for underperforming programs to provide for the 
termination of any such program that cannot be justified after 
undergoing a complete reexamination and revalidation.
  Taken together, these provisions will require the Department of 
Defense to take the steps needed to put major defense acquisition 
programs on a sound footing from the outset. If they are successfully 
implemented, they should help these programs avoid future cost 
overruns, schedule delays, and performance problems.
  I look forward to working with Senator McCain and our colleagues to 
enact these important reforms into law.
  Mr. President, I ask unanimous consent that a bill summary be printed 
in the Record.
  There being no objection, the material was ordered to be placed in 
the Record, as follows:

      Summary of the Weapon Systems Acquisition Reform Act of 2009

       Report after report has indicated that the key to 
     successful acquisition programs is getting things right from 
     the start with sound systems engineering, cost-estimating, 
     and developmental testing early in the program cycle. Over 
     the last twenty years, however, DOD has eliminated 
     acquisition organizations and cut the workforce responsible 
     for taking these actions, and has tried to ``reform'' the 
     acquisition process by taking shortcuts around early program 
     phases in which these actions should be taken. The result has 
     been excessive cost growth in weapon systems and excessive 
     delays in fielding those systems.


                   title 1: acquisition organization

       Section 101. Systems Engineering Capabilities. The Defense 
     Science Board Task Force on Developmental Test and Evaluation 
     reported in May 2008 that ``the single most important step 
     necessary'' to address high rates of failure on defense 
     acquisition programs is ``a viable systems engineering 
     strategy from the beginning.'' The Government Accountability 
     Office has reached similar conclusions. Unfortunately, the 
     Committee on Pre-Milestone A and Early-Phase Systems 
     Engineering of Air Force Studies Board of the National 
     Research Council reported in February 2008 that the Air Force 
     has systematically dismantled its systems engineering 
     organizations and capabilities over the last twenty years. 
     The other services have done the same. Section 101 would 
     address this problem by requiring DOD to: (1) assess the 
     extent to which the Department has in place the systems 
     engineering capabilities needed to ensure that key 
     acquisition decisions are supported by a rigorous systems 
     analysis and systems engineering process; and (2) establish 
     organizations and develop skilled employees needed to fill 
     any gaps in such capabilities.
       Section 102. Developmental Testing. Many weapon systems 
     fail operational testing because of problems that should have 
     been identified and corrected during developmental testing 
     much earlier in the acquisition process. The Defense Science 
     Board Task Force on Developmental Test and Evaluation 
     reported in May 2008 that this problem is due, in significant 
     part, to drastic reductions in organizations responsible for 
     developmental testing. According to the Task Force, the Army 
     has essentially eliminated its developmental testing 
     component, while the Navy and the Air Force cut their testing 
     workforce by up to 60 percent in some organizations. Section 
     102 would address this problem by: (1) requiring DOD to 
     reestablish the position of Director of Developmental Test 
     and Evaluation; and (2) requiring the military departments to 
     assess their developmental testing organizations and 
     personnel, and address any shortcomings in such organizations 
     and personnel.
       Section 103. Technological Maturity Assessments. For years 
     now, the Government Accountability Office (GAO) has reported 
     that successful commercial firms use a ``knowledge-based'' 
     product development process to introduce new products. 
     Although DOD acquisition policy embraces this concept, 
     requiring that technologies be demonstrated in a relevant 
     environment prior to program initiation, the Department 
     continues to fall short of this goal. Last Spring, GAO 
     reviewed 72 of DOD's 95 major defense acquisition programs 
     (MDAPs) and reported that 64 of the 72 fell short of the 
     required level of product knowledge. According to GAO, 164 of 
     the 356 critical technologies on these programs failed to 
     meet even the minimum requirements for technological 
     maturity. Section 103 would address this problem by making it 
     the responsibility of the Director of Defense Research and 
     Engineering (DDR&E) to periodically review and assess the 
     technological maturity of critical technologies used in 
     MDAPs. The DDR&E's determinations would serve as a basis for 
     determining whether a program is ready to enter the 
     acquisition process.
       Section 104. Independent Cost Assessment. In a July 2008 
     report, the Government Accountability Office (GAO) reported 
     that ``DOD's inability to allocate funding effectively to 
     programs is largely driven by the acceptance of unrealistic 
     cost estimates and a failure to balance needs based on 
     available resources.'' According to GAO, ``Development costs 
     for major acquisition programs are often underestimated at 
     program initiation--30 to 40 percent in some cases--in large 
     part because the estimates are based on limited knowledge and 
     optimistic assumptions about system requirements and critical 
     technologies.'' Section 104 would address this problem by 
     establishing a Director of Independent Cost Assessment to 
     ensure that cost estimates for major defense acquisition 
     programs are fair, reliable, and unbiased.
       Section 105. Role of Combatant Commanders. In a February 
     2009 report, the Government Accountability Office (GAO) 
     recommended that the acquisition process be modified to allow 
     combatant commanders (COCOMs) more influence and ensure that 
     their long-term needs are met. The GAO report states: ``a 
     COCOM-focused requirements process could improve joint war-
     fighting capabilities by ensuring that the combatant 
     commander--the customer--is provided the appropriate level of 
     input regarding the capabilities needed to execute their 
     missions rather than relying on the military services--the 
     suppliers--to drive requirements.'' Section 105 would address 
     this problem by requiring the Joint Requirements Oversight 
     Council (JROC) to seek and consider input from the 
     commanders of the combatant commands in identifying joint 
     military requirements.


                      title 2: acquisition policy

       Section 201. Trade-offs of Cost, Schedule and Performance. 
     The January 2006 report of the Defense Acquisition 
     Performance Assessment Project (DAPA) concluded that ``the 
     budget, acquisition and requirements processes [of the 
     Department of Defense] are not connected organizationally at 
     any level below the Deputy Secretary of Defense.'' As a 
     result, DOD officials often fail to consider the impact of 
     requirements decisions on the acquisition and budget 
     processes, or to make needed trade-offs between cost, 
     schedule and requirements on major defense acquisition 
     programs. Section 201 would address this problem by requiring 
     consultation between the budget, requirements and acquisition 
     stovepipes--including consultation in the joint requirements 
     process--to ensure the consideration of trade-offs between 
     cost, schedule, and performance early in the process of 
     developing major weapon systems.
       Section 202. Preliminary Design Review (PDR). The 
     Government Accountability Office (GAO) has reported on 
     numerous occasions that a knowledge-based approach is 
     critical to the successful development of major weapon 
     systems. In January 2006, the Defense Acquisition Performance 
     Assessment Project (DAPA) endorsed this view, and recommended 
     that Milestone B decisions be delayed to occur after PDR, to 
     ensure a sufficient knowledge base to ensure the 
     technological maturity and avoid ``a long cycle of 
     instability, budget and requirements changes, costly delays 
     and repeated re-baselining.'' Section 202 would address this 
     problem by requiring the completion of a PDR and a formal 
     post-PDR assessment before a major defense acquisition 
     program receives Milestone B approval.
       Section 203. Life-Cycle Competition. The Defense Science 
     Board Task Force on Defense Industrial Structure for 
     Transformation reported in July 2008 that consolidation in 
     the defense industry has substantially reduced innovation in 
     the defense industry and created incentives for major 
     contractors to maximize profitability on established programs 
     rather than seeking to improve performance. The Task Force 
     recommended the adoption of measures--such as competitive 
     prototyping, dual-sourcing, funding of a second source for 
     next generation technology, utilization of open architectures 
     to ensure competition for upgrades,

[[Page S2368]]

     periodic competitions for subsystem upgrades, licensing of 
     additional suppliers, government oversight of make-or-buy 
     decisions--to maximize competition throughout the life of a 
     program, periodic program reviews, and requirement of added 
     competition at the subcontract level. Section 203 would 
     require the Department of Defense to implement this 
     recommendation.
       Section 204. Nunn-McCurdy Breaches. Since the beginning of 
     2006, nearly half of DOD's 95 Major Defense Acquisition 
     Programs (MDAPs) have experienced critical cost growth, as 
     defined in the Nunn-McCurdy provision, as amended. Overall, 
     these 95 MDAPs have exceeded their research and development 
     budgets by an average of 40 percent, seen their acquisition 
     costs grow by an average of 26 percent, and experienced an 
     average schedule delay of almost two years. Such cost growth 
     has become so pervasive that it may come to be viewed as an 
     expected and acceptable occurrence in the life of a weapons 
     program. Section 204 would address this problem and enhance 
     the use of Nunn-McCurdy as a management tool by requiring 
     MDAPs that experience critical cost growth: (1) be terminated 
     unless the Secretary certifies (with reasons and supporting 
     documentation) that continuing the program is essential to 
     the national security and the program can be modified to 
     proceed in a cost-effective manner; and (2) receive a new 
     Milestone Approval (and associated certification) prior to 
     the award of any new contract or contract modification 
     extending the scope of the program. In accordance with 
     section 104, a certification as to the reasonableness of 
     costs would have to be supported by an independent cost 
     estimate and a stated confidence level for that estimate.
       Section 205. Organizational Conflicts of Interest. Defense 
     Science Board Task Force on Defense Industrial Structure for 
     Transformation reported in July 2008 that ``many of the 
     systems engineering firms which previously provided 
     independent assessment [of major defense acquisition 
     programs] have been acquired by the large prime 
     contractors.'' As a result, the Task Force reported, 
     ``different business units of the same firm can end up with 
     both the service and product side in the same program or 
     market area.'' This structural conflict of interest may 
     result in ``bias [and] impaired objectivity,'' which cannot 
     be resolved through firewalls or other traditional mitigation 
     mechanisms. Section 205 would address this problem, as 
     recommended by the Task Force, by: (1) prohibiting systems 
     engineering contractors from participating in the development 
     or construction of the major weapon systems on which they are 
     advising the Department of Defense; and (2) requiring 
     tightened oversight of organizational conflicts of interests 
     by contractors in the acquisition of major weapon systems.
       Section 206. Acquisition Excellence. The Department of 
     Defense will need an infusion of highly skilled and capable 
     acquisition specialists to carry out the requirements of this 
     bill and address the problems in the defense acquisition 
     system. The Committee has already established an acquisition 
     workforce development fund to provide the resources needed to 
     hire and retain new workers. However, positive motivation is 
     needed as much as money. Section 206 would address this issue 
     by establishing an annual awards program--modeled on the 
     Department's successful environmental awards program--to 
     recognize individuals and teams who make significant 
     contributions to the improved cost, schedule, and performance 
     of defense acquisition programs.

  Mr. McCAIN. Mr. President, over the last few years, Senate Armed 
Services Committee Chairman Levin and I have developed a number of 
initiatives that reform various aspects of the defense procurement 
process. Our hope is that, in the aggregate, those initiatives, 
including those that help control the proliferation of non-essential 
requirements; have the Department of Defense move towards more fixed 
price-type contracts while incentivizing performance; and subject major 
systems to a more evolutionary, knowledge-based procurement process, 
will have a beneficial effect on the process--as a system. I am under 
no delusion that a single ``silver bullet'' will remedy a fundamentally 
broken defense acquisition system.
  The Weapon System Acquisition Reform Act of 2009, which I am pleased 
to introduce with Chairman Levin today, is an important next step in 
efforts to reform the system.
  Consensus has emerged that a key to defense acquisition programs' 
performing successfully is getting things right from the start--with 
sound systems engineering, cost-estimating, and developmental testing 
early in the program cycle. Doing so helps the DoD understand and mete 
out costly technology-and integration-risk out of programs early--
before the DoD makes important go/no-go decisions on the program that 
effectively out it ``on rails''.
  We have learned this lesson the hard way--at great cost to the 
taxpayer. Typically, major weapons have been procured with insufficient 
systems engineering knowledge about critical technologies. But, with 
those weapons programs having, by a certain point, acquired often 
overwhelming political momentum, Nunn-McCurdy, basically only a 
reporting requirement, has done very little to bring costs associated 
with those originally underappreciated risks under control.
  We now know that when a program is predictable, that is, when 
decision milestones are being met; estimated costs are actual costs; 
and performance to contract specifications and key performance 
parameters are achieved, the acquisition process can be relied on as 
providing the joint warfighter with optimal capability at the most 
reasonable cost to the taxpayer.
  The bill that I am introducing with Chairman Levin today appreciates 
that fact--by focusing on starting programs right. It does so by 
emphasizing systems engineering; more effective upfront planning and 
management of technology risk; and growing the acquisition workforce to 
meet program objectives.
  A particularly important feature of the bill includes a provision 
that puts Nunn-McCurdy ``on dynamite.'' That provision requires, among 
other things, that programs currently underway, post-Milestone B, 
experiencing ``critical'' cost growth either be terminated or enter the 
new defense acquisition system, which the DoD recently and 
fundamentally restructured to help it manage technology and integration 
risk. In so doing, Chairman Levin and I hope to transform Nunn-McCurdy 
from a mere reporting requirement into a tool that can help the DoD 
manage out-of-control cost growth.
  While I am pleased to be introducing this legislation with Chairman 
Levin, we certainly must, and will, do more. That having been said, the 
primary responsibility to reform the process falls on the DoD itself. 
No amount of legislation can substitute for a true commitment to 
acquisition reform within the Pentagon. I look forward to seeing the 
White House convey that commitment--through deeds--going forward.
                                 ______