Senate committee approves the FY2017 Defense Authorization bill with major organizational and acquisition reforms

Yesterday, the Senate Armed Services Committee (SASC) approved (23-3) its version of the FY2017 Defense Authorization bill.

The bill authorizes force levels, programs, and policies (including military pay raises) for DoD budgets and the programs and policies for the Department of Energy (DoE) nuclear weapons program.  Appropriations bills provide actual funding.

SASC Chair Sen, John McCain (R-AZ) praised the “collaborative, bipartisan process” that led to the committee’s approval.  He called the bill one of reform and innovation saying the bill “contains the most sweeping reforms of the organization of the Department of Defense in a generation” and” refocuses Pentagon leadership on preserving America’s military technological advantage and advances reforms to the defense acquisition system to harness American innovation.”

The SASC bill authorizes total of $602 billion, including $543 billion for the FY2017 DoD base budget and the DOE nuclear weapons program and $59 billion for Overseas Contingency Operations (OCO) costs in FY2017, the same amount requested by the president for OCO.  The House Armed Services Committee’s (HASC) bill provides only $36 billion for OCO through April 2017. The White House and DoD Secretary Ash Carter have been highly critical of the HASC approach to funding OCO for only part of FY2017.

The SASC approves the president’s request for a 1.6 percent military pay raise, rather than the 2.1 percent military raise included in the House Armed Services Committee (HASC) bill.  The SASC also did not follow the HASC in increasing the authorized active duty and reserve strength levels.  In another difference with the HASC, the SASC would authorize three new TRICARE health plans—TRICARE Prime, TRICARE Choice, and TRICARE Supplemental.  The HASC bill provides two TRICARE options—TRICARE Prime and TRICARE Preferred.

Citing the significant changes in the “strategic landscape” since the Goldwater Nichols Act was passed 30 years ago, the SASC bill seeks to recalibrate “the roles and missions of the senior officials in DoD, as well as their relationships with each other.”  The bill limits the National Security Council (NSC) staff of “permanently assigned professional staff and detailees from DoD and other U.S. departments and agencies” to 150.  The SASC also clarified the role of the Chairman of the Joint Chiefs of Staff (CJCS) emphasizing joint readiness and leadership.

The bill would clarify the primary duties of the Combatant Commanders (COCOMs) “to execute the national defense strategy in consultation with the Chairman of the Joint Chiefs of Staff, to prepare and plan for conflict, to take necessary actions to deter conflict, and command U.S. armed forces in combat.”  The SASC would establish a Combatant Commanders Council (COCOMs, Chairman and Vice Chairman of the JCS, and the Secretary of Defense) to assist in the execution of strategy and the global integration of military activities.  The Secretary of Defense would convene the council and set the agenda.

The bill would reduce by 25 percent the number of general and flag officers and cut the number of authorized four-star billets from the current 41 to 27.  The committee believes that the general and flag officer corps “has become increasingly out of balance with the size of the force it leads.”  The bill also would reduce the number of Senior Executive Service (SES) civilian employees by 25 percent.  In keeping with these reductions the bill would reduce spending on contractors by 25 percent by January 2019 from a FY2016 baseline.

The SASC bill continues the committee’s acquisition reform efforts by focusing on improving acquisition outcomes.  The bill establishes accountability, assesses new sources of innovation, removes unnecessary processes and requirements., adopts best business practices, and improves the acquisition workforce.

The bill would replace the Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L) with an Under Secretary of Defense for Research and Engineering (R&E) and an Under Secretary of Defense of Management and Support.  The bill would also create a new Assistant Secretary of Defense for Acquisition Policy and Oversight to set defense-wide acquisition and industrial base policy eliminate four Assistant Secretaries and three Deputy Assistant Secretaries.

To improve access to commercial and global innovation, the bill includes provisions “to improve rapid acquisition authority and rapid prototyping and rapid field processes.”  Regulation of commercial items and off the-shelf commercial items is streamlined under the bill.  The SASC would also establish a preference for commercial services.

The bill would establish a preference for fixed-price contracts.  To curb the use of cost-type contracts, the bill would assess military department and agency heads a penalty for using of some cost-type contracts awarded over the next five years.

To improve the acquisition workforce, the bill would authorize more flexible hiring and compensation practices, improve the Defense Acquisition Workforce Development Fund, and establish competitively-selected senior military acquisition advisors in the Defense Acquisition Corps.

Senate leaders have not announced a schedule for full Senate consideration of the SASC bill.