Procurement is broken.

Whenever the budget is tight, certain people like to complain about wasteful spending by the Department of Defense. And to be sure, the DoD is not the most efficient entity in the world (tho it is about the most efficient in the federal government). Always popular targets are procurement programs that run over budget. And as a rule of thumb, they ALL run over budget.

Here’s a perfect example of just how bad DoD procurement is. The Navy spent 10 years and a billion dollars trying to buy a minisub to deliver Navy SEALs from submarines. They failed miserably. But a private company, in one year, at a cost of about $10 million dollars, built a minisub that, while not perfect, is good enough for 90% of the job.

Why is procurement so broken? I can think of two reasons. The first is the services fault, the second is Congresses fault.

First, when a program is started, not just the end-user community has input as to what will be bought. And everyone that has input into the program insists on adding its own bells and whistles to whatever it is being bought. What starts out as something relatively simple often becomes a bloated monstrosity. A couple years ago, when the Navy started to process to replace the VH-3s used as Marine One, the list of requirements exploded. The President just needs a helicopter to get from the White House to Andrews AFB or maybe Camp David. But by the time the requirements were nailed down (and this was after the contract was awarded!) the chopper needed to have secure voice, data and video teleconference capability. And it had to have a galley. A galley! Dude, I know we’re talking about the President, but even he can go half an hour without a meal. Give him sammich and a thermos! What should have been about a $20 million dollar helicopter was rapidly approaching a $1 billion dollar helicopter. Without a single manager responsible for setting requirements, and ruthlessly working to eliminate gold-plating, costs will balloon incredibly fast.

Secondly, the rules of procurement aren’t set by the DoD. They are set by Congress. In an effort to keep the process fair, competitive and free of fraud, the DoD is burdened with possibly the most complex set of contracting regulations in the history of the world. Many companies simply refuse to bid on DoD business because it is such a pain.  Add in that for any expensive program, the pressure to hold a competitive bidding process. And since Congressmen represent districts that have interests in the bidding process, very often, the competition parameters are set not to reflect what the services need, but to lean the competition to a favored constituency.

A third problem is that for very complex programs, like ships, the Army’s Future Combat System, and especially any aircraft program, developing the programs is far more lucrative for the contractors than building it. You have a perverse incentive for the contractor to never be ready to produce anything.

I think the simplest way to cut this Gordian knot would be to eliminate any and all oversight, fire all the auditors, and take the best guess of what a program should cost, add 100% for graft and fraud and just cut a check that includes development and procurement. In the long run, it would probably be cheaper.

Hat tip to the headlines at Ace of Spades

14 thoughts on “Procurement is broken.”

  1. My idea is to split the two parts of the procurement process: research and acquisition.

    Stand up a Defense Research Administration that contracts with the private sector to design the next generation of technology, including prototypes. The technology would be the property of the government.

    The other side would be the services taking the techs researched and putting them together into a system, then soliciting bids. The critical bit is that the contract would be fixed: X million dollars for Y widgets with Z specs. The buy can’t be canceled (unless the contractor fails to meet quality standards) and any change to any part would require a whole new bid.

  2. @DirtyBlueshirt

    Bravo! We don’t even have to stand up a new government organization. Just reflag DARPA with a new mandate. The actual buys on systems just makes so much Goddamn sense… which is why it won’t happen, sadly.

    Hey Brad, how was procurement handled during WWII? Seems to me we had a fairly efficient system back then. Different context, I know, but still…

  3. Procurement in WWII was a mess in a different way.

    Some things ran pretty well, such as production of B-24s and F6Fs. But there was a very conscious decision to stick with “good enough” and not “world’s best”. That’s why we didn’t have an operational jet and why tankers had to put up with the M4 instead of the M26.

    On the other hand, how many hundred Brewster Buccaneer dive bombers were built? 771. But you never heard of it. They just built it to give Brewster something to do.

  4. And to keep Brewster out of the way. The Brewster F-3A Corsair was so badly made, that none of them left the CONUS, and were prohibited from aerobatics.

  5. It wasupposed to be a nice little plane, before a lot of weight was added through pilot armor, self sealing tanks, etc, without any power increase.

    The Wildcat! First of the Cats of Grumman! Navy fighter maker supreme. Eric Brown gave his heart to the SeaFire, but belived that the F6F was the best carrier fighter of the war, and when you took into consideration what it accomplished, not just whether other fighters were faster, of more maneuverable, or better armed, but just what it accomplished, a case could be made for the F6F being the best fighter of WWII, land or sea.

    Captain Brown was not, however, a fan of the Corsair, whether Vought, Sikorsky, or Brewster.

  6. Dad’s first operational assignment was flying TBM-3S’s. He also ended up flying F6Fs, F4U-4, -5, -5N’s, SNB’s, AD’s (pretty much all the attack models, none of the Guppies or -5s), T-28’s, R4D-8’s, TF-9J, T-33, A-6A, and TC-4C. He scrounged hours in a bunch of other stuff as well.

  7. Procurement is broken:
    Lockheed and the USAF have just tendered a bid to replace a one hundred year old airborne material delivery system.

    Sleigh Mark II

    Funniest when posted in December.

  8. Wow! Your Dad got around! I know it was just a lowly utility plane, but I have always liked a the SNB. How can you not like a plane whose name is so much fun to say? SNEEB! SNEEB! SNEEB!

    Since your Dad flew a lot of VA/VFA types, you kind of followed in his footprints, didn’t you. Bradleys sort fill the light attack role in land warfare, don’t they?

  9. At some point the problems with procurement multiply themselves. For instance, because it’s so painful to work through a sizable procurement, you know it’s going to be the only chance for many years to develop that type of weapons system. So you hang everything you ever wanted on it, resulting in unreasonable design requirements, schedule slips, and high costs.

  10. It works from the other side as well. We’ve consolidated so many defense industries, each contractor feels it has no choice but to win each contract, even if that means tying up the whole program in lawsuits in perpetuity. See the KC-X or CSAR-X programs.

    In both programs, either selection would have been good enough, but neither contractor felt they could afford to not win.

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