The Department of Defense (DoD) recently released the first in a series of annual performance reviews of the DoD acquisition system.
Frank Kendall, Under Secretary of Defense for Acquisition, Technology, and Logistics, described this report as an evaluation of Major Defense Acquisition Programs (MDAPs) across the department. The report does not include specifics of individual programs, but “focuses on more in-depth indicators of system outcomes, particularly with respect to cost and schedule.”
Because meaningful analysis of acquisition performance and the effects of new policies takes many years, DoD plans to identify data gaps and continue to collect new data that will be analyzed in future reports. “By using objective data and analysis to measure performance, these reports will identify underlining drivers and inform future decisions on programs, policies, and processes,” according to Kendall.
Kendall said this initial report helps DoD “figure out ways to do a better job” in its acquisition program. He wants each DoD component “to look at how well they are performing compared to others and ask themselves how they learn from one another to improve performance.”
The report underscores the importance of data-driven analysis over anecdotal evidence, Kendall stressed. “I am a firm believer that improvements to policies and processes must be driven by data and objective analysis rather than conjuncture and opinion.
The importance of objectively analyzing the performance under different types of contracting was an important part of the report. Data on fixed-price and cost-plus contracts showed that the results of using the two types of contracts were often similar. This seemed to support Kendall’s contention that fixed-price contracts are not necessarily the “panacea” for solving acquisition problems. “I don’t think that’s the case, and the data support that,” Kendall said. The report showed that “undefinitized” contracts showed the most cost growth, especially during development.
Not only did the report clarify and provide insight into the differences types of contracts, the data showed some important trends in performance in the phases of acquisition. Development programs experience cost overruns by 30 percent, while production programs over run costs by 10 percent. Kendall said that the variability, uncertainty, and greater risk during development drives this overrun difference. Because requirements and projected costs are not clearly defined in development, “a lot of people doing a lot of work that they’re not ready to do…leads to huge inefficiencies,” Kendall said.
Kendall said two key conclusions from the report are that the U.S. still maintains a strategic edge in its military capability, but that without improvement in the acquisition process this edge is coming at a cost that is not sustainable. “We knew that the recent wars have placed a premium on technical performance and schedule at the expense of cost growth,” Kendall acknowledged. This report confirms that it is essential that DoD pursue initiatives that utilize resources better, such as “Better Buying Power” he said.