Better Buying Power 2.0 Might Actually Improve DoD’s Acquisition System
(Source: Lexington Institute; issued November 15, 2012)
(© Lexington Institute; reproduced by permission)
Trying to guide, direct or reform the Pentagon’s acquisition system would make steering the Titanic appear easy. There have been many attempts in the past and hundreds of studies, blue ribbon panels and commissions that have recommended ways of improving the system. There has been more oversight and less oversight. In some periods, the government has acted as a systems integrator and in others it has turned this responsibility over to private companies.

Despite all these efforts, the data shows little change or improvement. R&D programs tend to overrun their cost estimates by around 10 percent and production programs overrun by about 20 percent whatever acquisition system is in place.

So what makes the current effort, called Better Buying Power 2.0 (BBP 2.0), different from its predecessor and an improvement on past efforts and why does it have a chance of being more successful? First, it is incremental. Like updates to software programs, this is not a radical revision of BBP 1.0. In fact, it has taken advantage of user feedback to fix a number of glitches in the first iteration. Parts of the program that are working well have been reinforced and those that caused problems have been modified or even eliminated.

For example, BBP 1.0 made a point of calling for greater use of firm fixed price (FFP) contracts and less use of cost plus contracts that have often lead to the proliferation of requirements and exploding costs. Unfortunately, some program managers thought this suggestion was the equivalent of a religious fatwa and started only issuing FFP contracts regardless of the type of work involved.

BBP 2.0 makes it clear that FFP is only one of a range of contracting mechanisms that can be employed. In fact, the new version recommends not using FFP contracts for early development work precisely in order to allow for learning and changes. For production and sustainment activities, where the products or services are well understood and there is a lot of technical knowledge and experience, FFP makes sense.

Second, while continuing to emphasize affordability and seeking to lower costs BBP 2.0 seeks to rein in some of the more egregious examples of cost cutting at any price. There have been a chorus of complaints from industry about the overuse and strict interpretation of the lowest price technically acceptable bid evaluation standard. Even senior DoD officials have admitted that when there are no points added for technical value beyond the minimum threshold or to past performance the result has been a race to the bottom. The new policy will develop a better definition of technically acceptable and articulate a concept of best value that recognizes there are instances where a slightly higher price can result in a product of twice the performance of that offered by the lowest price bidder.

A third example, is the serious effort to rein in requirements. This objective will be pursued in a number of ways. One is to make affordability itself a requirement and to backstop this with enforced affordability caps. Another is to force explicit requirements-cost tradeoffs. An additional step will be to have the requirements generators and the acquisition decision makers work more closely together.

Perhaps most significant, BBP 2.0 acknowledges that the Pentagon had gone way too far in its “war on the private sector.” For example, there is now an explicit recognition that Peformance-Based Logistics works based on actual data and that the greater use of this approach should be encouraged. In addition, senior acquisition officials admit that over the past decade a “climate of fear” has developed in the acquisition community reflected in the arms-length stance taken by many program managers and contracting officers with respect to discussions with industry. The revised policy will seek to encourage dialogue and communications between government and industry.

The acquisition system is far from perfect. But by taking an incremental approach to change, basing decisions and policies on hard data and improving the relationship between government and industry, BBP 2.0 could have a significant positive effect on outcomes.


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