U.S. Defense Companies Show Path to A New Acquisition Model
(Source: Lexington Institute; issued January 6, 2014)
The defense acquisition system is busted; virtually everyone in the private sector and even many in government acknowledge this reality. It now takes way too long to develop the next fighter, armored vehicle, ship or weapon. New capabilities also tend to cost way more than they should. The system is weighed down by constantly changing requirements, burdensome regulations, unnecessary audits, ongoing contract disputes, multiple protests, excessive export restrictions and ever more stringent testing requirements. Even more serious, senior defense officials are worried that the U.S. military could lose its technological edge vis-à-vis competitors free of many of the strictures that make life so difficult for the U.S. defense industry.

So what to do about this situation? Historically, reformers have used one of two basic strategies. The first strategy is to eat the elephant in one sitting; reform the entire system from requirements generation to R&D activities, test, production and sustainment. The last time this was tried was the Packard Commission in the 1980s. The other way is to devour the beast a bit at a time. This approach to reform focuses on low-hanging fruit or on specific parts of the system, the most burdensome or costly causes of dysfunction. The Obama Administration tried this second approach with its Better Buying Power Initiative. The problem with the first approach is that it takes an enormous effort and the expenditure of huge amounts of political capital. The second approach, while it can be successful, tends not to save much money or speed up the process appreciably.

Perhaps the answer is not to try and fix the system itself, at least not from within. There are too many vested interests, too many bureaucrats unwilling to take risks. There is always a “good” reason for more regulations, additional data calls, another set of tests and more complex contracting procedures.

An alternative approach would be to have the private sector define a new acquisition model. The history of U.S. defense acquisition is replete with examples of the private sector producing state-of-the-art platforms and systems in record time when allowed to operate free of the strangling fetters of the established acquisition system. It took the Lockheed Skunkworks less than two years to produce the first U-2 in the 1950s and about as long to build and fly the first SR-71 in the 1960s. Admittedly these were special aircraft built in small numbers. But the F-16 took only five years from concept studies to a competitive fly-off and just ten years to Initial Operational Capability. The first F-16s were pretty simple and without a lot of the enhancements carried by later models. Pentagon officials love to tout the success of the MRAP program in which a half a dozen companies, including Oshkosh, a new player in the armored vehicle market, built some 25,000 vehicles in just a few years. The secret to their success, as senior acquisition officials have acknowledged, was being set free from the traditional peacetime acquisition system.

Recently, several private defense companies have shown what can be done in the way of developing and building new platforms free from the limitations of a government program. Using its own money and talent, in two years Sikorsky produced a revolutionary light attack/reconnaissance helicopter, the S-97 Raider, intended initially to serve as the replacement for the Army’s obsolescent Kiowa Warriors. Textron’s Cessna unit together with AirLand Enterprises took even less time to come up with the Scorpion, a twin-engine light attack/ISR aircraft that is cheap to build, maintain, convert and upgrade. The Scorpion could take the place of some older U.S. systems, particularly in the Air National Guard and allow the U.S. to break into the global light attack market, an area heretofore largely inaccessible to U.S. aircraft producers.

The approach taken by Sikorsky and Textron/AirLand mirrors that of commercial producers who try to anticipate, even create, the market. Detroit tends to think in five year increments at most when planning the introduction of a new model; producers of electronic devices have an 18 month time horizon. The Pentagon talks all the time about how it wants to take advantage of the strength of U.S. commercial companies and their innovativeness. If that’s what it want then the government has to allow defense companies to operate more the way those in the commercial world do.

What if the aerospace and defense industry were to come together and propose a commercially-based approach to the development and production of major defense items? They would tell the Pentagon what they could provide in five years based on their own internal resources to meet recognized military requirements. Companies would compete to win a contract at the five year mark. The Department of Defense could say yea or nay at the outset, but if it likes what it sees, then the government has to commit to buy a minimum number from whoever wins the competition. Alternatively, if DoD doesn’t want to buy the item or platform then it must allow the company to sell it internationally.

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