Tuesday, December 1, 2015


To receive testimony on acquisition reform: next steps

(As Prepared for Delivery)

Thank you very much, Mr. Chairman.  I’d like to join you in thanking our witnesses for their willingness to appear today to testify on the next steps in reforming the acquisition system used by the Department of Defense.   Today’s witnesses have a wealth of experience in defense acquisition, from both inside and outside of government.  Their insight and experience on what works, and does not work, in our current acquisition system will help to inform the Committee’s review of possible reforms that would allow the Department to more effectively and efficiently procure goods and services.    

The Pentagon’s fundamental mission is the defense of our Nation, which requires that our military procure technologically advanced weapons platforms and invest in cutting edge research and development programs.  According to the Congressional Research Service, the Department of Defense obligated $285 billion in contracts in FY 2014, which was more than all other government agencies combined.   This amount included funding for high-end critical weapons systems such as the Joint Strike Fighter and the Ohio-class Replacement Program, as well as service support contracts which have much less visibility.  In fact, the Government Accountability Office has stated that within the federal government, the Pentagon has the largest share of all service contracts totaling $156 billion in FY 2014.    

In an era of fiscal constraint, it has become even more important to ensure that the Department spends every dollar wisely.  While the Department has made progress in addressing cost over-runs for major acquisition programs, more work remains.  For every dollar that is spent on weapons systems that are under-performing, that is a dollar that won’t be spent on other important requirements of the military services, including other acquisition programs and important readiness activities, including flying hours for aircraft, steaming days for ships and submarines, and all training that supports the National Military Strategy.

The good news is that the acquisition and procurement reforms undertaken by this committee under the leadership of Chairman McCain and former Chairman Carl Levin, such as the Weapons Systems Acquisition Reform Act and the efforts in our most recent NDAA, combined with the Better Buying Power reforms being lead within the Pentagon by Secretary Carter and Under Secretary Kendall, have begun to make an impact on our ability to control costs and schedules of acquisition programs.  Programs are being run with more realistic cost estimates, more rigorous systems engineering, and with lower technological risks.  Programs that are been initiated under the rules of these latest reforms have experienced less cost growth and fewer schedule slips than we have seen previously.  Fewer programs are breaking the large cost growth thresholds – known as “Nunn-McCurdy” breaches.  We also seem to be making progress in halting the cost increases for some major troubled acquisitions initiated under old rules, including the Joint Strike Fighter and aircraft carrier programs.

Unfortunately, progress has been more elusive in other areas.  The Department still struggles to develop and field large information technology (IT) systems to manage business processes, like personnel pay and accounting.   DOD still does not have a good handle on how to control its spending on the lower visibility services contracts.  DOD also finds it very difficult to compete with the private sector for world class technical, engineering, and program management talent.  We are rapidly losing important pieces of our defense industrial base to mergers and consolidation.  And perhaps most importantly, the Pentagon is in the unfamiliar role of chasing global and commercial innovation, rather than acting as the technological leader that it has been in the past.

I hope that our witnesses can shed some light on these challenges and offer us some specific recommendations to consider as we continue our bipartisan and bicameral efforts at acquisition reform.  I thank you all for your time and your expertise, and look forward to your testimony.

Thank you, Mr. Chairman.