Empowering Working-Level Officials – Acquisition Reform for Pentagon Services

The Pentagon is spending more on services than it does for direct combat systems, $155 billion vs. $145 billion during last year alone. Services use a significant chunk of its resources, and the Pentagon wants to overhaul that process, introducing controls that hopefully will not bog down the process with too much bureaucracy.

That’s according to a recent article from Breaking Defense, which reports that Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics, will move ahead after more than a year’s review and institute a Department of Defense Instruction (DODI) titled 5000AC. 5000AC is a direct descendant of Kendall’s Better Buying Plan 3.0 and other efforts to improve DoD acquisition.

With budgets being scrutinized and Congress keenly focused on acquisition reform DoD wants to refocus how it buys services, with processes that will create levels of oversight similar to those for weapons systems. This will bring some order to services purchasing. The 5000AC for services will be complementary to, but not the same as a Major Defense Acquisition Program, according to Kenneth Brennan, deputy director of services acquisition for Mr. Kendall.

Modeled in some ways on a process the Air Force has used since 2003, the article explains how the system uses the value of the contract to determine acquisition authority:

  • “$1 billion or more would require approval from Kendall, as DoD’s chief acquisition executive, or from his equivalents in the Army, Air Force, and Navy departments.

  • $250 million to just under $1 billion would require approval from an unspecified “senior official,” said Brennan, “We specifically stay away from making any specific definition to allow the military departments and the buying commands to make those individual decisions.”

  • Under $250 million would require approval from a “senior services manager,” a position created by Congress in 2010, although lower value contracts could and probably would be delegated down further.”

As opposed to traditional contract oversight that takes a “guilty until proven innocent” approach, 5000AC reverses that approach and attempts to give the lowest level position feasible wide authority to contract for services. Periodic “health assessments” of procurement practices by acquisition experts will be conducted to balance this latitude with some control and accountability.

To help purchasing officials better leverage their increased discretion and responsibility the new policy will create “centers of expertise” to advise them on implementing purchasing-related “best practices”. Some of the changes will build on existing Defense Department resources while others, are being created from the ground up.

This kind of new approach to purchasing services will be critical to the DoD in retaining its technological advantage in space. Onerous regulations and a risk-averse culture benefit incumbent Pentagon contractors and often disincentivize or even prevent other technology companies from going after Pentagon contracts. Last month we wrote about the danger to space innovation if current analysis of alternatives (AOA) studies don’t include input from the commercial space industry and aren’t vetted in time for the FY 2017 budget planning cycle. Heavy oversight and unnecessary bureaucracy will not support effective and rapidly implemented technology to counter a dangerous space environment.

These changes will challenge the thousands of DoD personnel affected and will take time and training to foster such a culture shift. But the combination of a challenging budgetary climate and newly assertive rivals in space mean Kendall and the DoD do not have much choice, and have to be successful in this acquisition reform effort.