Posted on 05/30/2015 6:35:02 PM PDT by QuisCustodiet1776
Procurement Riddle: 10 Things to Reverse the Trend
This slide was prepared as a support slide for “Hondo” Geurts’s presentation on SOF acquisition (.pdf) at last week’s SOFIC. We don’t believe he actually used it, but it essentially illustrates the multifaceted procurement riddle:
The essential riddle is this: even as the rest of the world iterates faster, military procurement takes longer and longer to field technology, and costs more and more — with the usual Congressional or Pentagon response to soaring unit costs being to cut procurement quantities or stretch out procurement costs, which really blows out unit costs. (See: C-5, F-111, M1 Bradley IFV, F-22 and F-35 for some examples, but we have plenty in the SOF world. Remember all the radios that we are just about to field in the 80s, 90s, and 00s? None of them went anywhere).
Here are 10 things that would reverse the trend — things that they’re not doing now — since it’s a manmade trend in the first place.
1.No more Cost-Plus Contracts. This is an unethical form of procurement that corrupts both the government and the contractor. Firm fixed price, take it or leave it.
2.Cut the Red Tape. FFS, we have a Defense Acquisition University in which the people we need to innovate our future weapons have to spend hundreds of unproductive hours learning how to stroke the dragon just right.
3.Multiyear procurement authority. About the only thing worse than micromanagement is uncertainty. Right now, any contract can have a whole new set of terms imposed every time some new Congressman comes along.
4.Consider all procurement without reference to the company offering the bid or the location of the facilities. Double-blind the proposals both in the DOD and in Congress. Otherwise you wind up with lots of contracts going to low-quality providers in Johnstown, PA, because an important and corrupt committee chair was from there.
5.No Social Clauses in Contracts Do we want them to be counting diversity beans, or stuffing money in union goons’ pockets? Or do we want them developing weapons? You have to pick one. So far, we’ve picked the wrong one, producing Hondo’s slide above.
6.Enable Innovation with Prizes Offering a prize for a tough design assignment — a frequency-agile, highly-directional antenna, for example — gets multiple teams of bright guys to knock themselves out finding solutions to your problem. And you only have to reward the best ones.
7.Decentralize. Look, we’ve been chasing uniformity in procurement, and production economies of scale, for most of a century now, and where has it gotten us? Decentralize. Don’t make the Army, Navy, Marines, and SOCOM all buy the same rifle bullet. What better test than to actually use the things for a while?
8.Give every unit Discretionary Procurement Funds. It’s worked for combat preparation, it will work better for peacetime. It doesn’t need to be a lot, just enough to encourage experimentation.
9.Hold an annual innovation conference on how those funds were spent, and how those innovations helped (or what was learned from them, if they didn’t help). Most experiments are going to fail, but something will be learned from them if you share the lessons learned. If not, they have to be learned over and over again — a characteristic of the procurement system that is not working now.
10.Give Budgetary Awards to the best performers at the Innovation Conference, on the SEAL belief that “it pays to be the winner.”
All of those could be enabled with one bill in Congress or Senate. All that needs is for someone on the DOD SOF side to ask. Who’s going to do it?
There’s a lot of truth in this. I see it every day. The reality is that we need a more streamlined process; the political reality is that Members need to send $$$ to their home districts and guess which one wins.
Yeah - ain’t it great? Americans are getting the government they deserve.
That’s a pretty good list.
How about a vendor scoring system based on solid performance metrics? If you decentralize procurement you might keep others from getting burnt.
Let me just comment on your #1 item here.
If you want 10,000 lbs of nails or some similar, known commodity, firm fixed price is the only way to go. But, if you want something that has never been done before, you are going to get very few takers on a firm fixed price contract. At least very few credible takers.
Now, if you are willing to accept a "best effort" attempt to meet specifications, then firm, fixed price may be OK.
Let me give you a hypothetical. A contractor is tasked with developing a new aircraft. The range is specified as 3000 km. After years of development, a problem arises with engine development, and to get the specified thrust and performance levels, fuel consumption must increase slightly. range suddenly drops to 2840 km.
Now, we all know that the original 3000 km. was just a guess, with no particular mission in mind, and that somewhere between 99.9 and 100% of all real-world missions will be possible with the lower range, but the contracting officer is insistent that the 3000 km. be met. Suddenly, you are looking at a redesign that will delay the program by years and increase costs by hundreds of millions.
This kind of thing happens in the contracting world every day...
The problem with that is, how does a new company show past performance? It would result in a closed system.
I didn’t write the article but...
I think you CAN get credible offers, at a fixed price, for improved tools. Companies will just have to pad their bids to cover unexpected problems. A lot. This happens all the time in computer programming.
And it’s not like these systems are radically new in most cases - they are incremental improvements.
Even with that padding you are not going to get the ‘who gives a damn about the cost cause we make 10% regardless’ corruption that exists now. Final system prices would be vastly lower than they are now.
Perhaps. But if all the current vendors are terrible they would welcome new ones.
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