From the Carlucci initiatives of the 1980s to BBP 3.0 today, reform is a central theme of acquisition
by Michael Bold
Thirty-five years ago, defense acquisition reform dominated the cover of the July-August 1981 issue of Army Research, Development & Acquisition magazine, a predecessor of Army AL&T.
“Decisions Made on 31 Recommendations to Reduce Costs … DOD to Improve Management Principles, Acquisition Process.”
The cover featured the first page of an April 30, 1981, memo from Deputy Defense Secretary Frank C. Carlucci, and the article stated that Secretary of Defense Caspar W. Weinberger had made decisions on “31 recommendations and issues to reduce costs and improve the acquisition process throughout the Department of Defense. He also announced a charter of acquisition management principles.”
The 31 items—soon to be joined by a 32nd—came to be known as the Carlucci initiatives, the spearhead of his Acquisition Improvement Program. Weinberger and Carlucci entered the top DOD posts in January and February 1981, respectively, as members of the Reagan administration. The newly elected president saw his mandate as reviving economic growth at home and expanding American influence abroad. His first term in office saw the largest, most expensive peacetime expansion of the U.S. military. The DOD budget exploded from $142 billion in 1980 to $286 billion in 1985 (30 percent of that increase coming from inflation).
Harold Brown, the previous defense secretary, had centralized acquisition authority in the Office of the Secretary of Defense (OSD). Weinberger believed that centralization had exacerbated cost overruns and led to purchases of hardware that failed to perform as planned. In a process he called “controlled decentralization,” Weinberger sought to give the program managers in the military services decision-making authority in the weapon acquisition process.
The time had come, Carlucci wrote, “to make major changes both in the acquisition philosophy and the acquisition process itself. We are convinced that we have now a historic and unique opportunity to significantly improve the Defense acquisition system.”
Carlucci, the Army RD&E article noted, “emphasized that the primary objectives in streamlining the DOD acquisition process are reducing costs and shortening the acquisition time.”
“Mr. Carlucci pointed out,” the article continued, that “ ‘while DOD should be tough in contract negotiations as part of the buyer-seller relationship, this does not mean that relationships between management and industry should necessarily be adversarial. Industry and government have a shared responsibility and must assume a new spirit of cooperation. A healthy, innovative, and competitive industrial capability is a primary national objective. I direct all top DOD management, in the Office of the Secretary of Defense, Joint Chiefs of Staff, and in the Services, to ensure this is understood at all levels.’ ”
The ensuing massive defense buildup under Reagan resulted in ramped-up production of the Army’s Abrams M-1 main battle tank, the revival of the B-1 bomber, which had been canceled during the Carter administration, and production of the MX missile. A 600-ship Navy was planned that included 100 new nuclear attack submarines and pulling four Iowa-class battleships out of mothballs.
But with that massive escalation of federal defense spending came problems, in the form of fraud, corruption, mismanagement and waste by DOD and large defense firms—the $435 hammer, the $640 toilet seat and $7,600 coffee makers—resulting in congressional hearings and federal investigations. Some of those investigations led to criminal charges and convictions of defense contractors.
In response, Congress passed the 1983 DOD Authorization Act, which included what has come to be known as the Nunn-McCurdy Act. The provision, written by two Democrats—Sen. Sam Nunn of Georgia and Rep. Dave McCurdy of Oklahoma—requires DOD to report to Congress whenever a major defense acquisition program experiences cost overruns that exceed certain thresholds.
Adding to the Pentagon’s woes were fluctuations in annual congressional funding that left some programs sputtering. The services, meanwhile, balked at many of the initiatives, especially multiyear procurements. Such procurements required heavy up-front funding, which the services feared hampered managers’ flexibility and left fewer resources available for other worthy programs.
“The Carlucci initiatives were to be the be-all and end-all of positive change in the Pentagon,” The New York Times in 1983 quoted Sen. Charles Grassley as saying. The Iowa Republican, who revealed many of the details of the profligate Pentagon spending, continued, “But they had no teeth. There was no timetable, no accountability and no clear indication that the initiatives were a serious undertaking.”
Dr. J. Ronald Fox has made a career of studying defense acquisition. He’s a professor emeritus at the Harvard Business School, served as assistant secretary of the Army for procurement, contracting and logistics, and before that served as deputy assistant secretary of the Air Force. In 2006, he was named to the Defense Acquisition University Hall of Fame.
In 2009, the U.S. Army Center of Military History asked him to literally write the book on defense acquisition reform. His monograph, “Defense Acquisition Reform, 1960–2009: An Elusive Goal,” looks at the reform initiatives of that period (including some 27 major studies of defense acquisition commissioned by presidents, Congress, defense secretaries, government agencies, think tanks and universities). Most of the efforts, he noted, arrived at the same conclusions and made similar recommendations.
In an interview with Army AL&T in July, Fox agreed with critics who said the Reagan defense buildup lacked a strategic game plan, and he said that eventually the services would require guidance from OSD.
“The perspective of the services is often not identical to what it is at OSD,” he said. “… If you’re in a program and there are a number of senior officers who have committed themselves to that program, then, ‘Yeah, there may be schedule slippages and cost growth, but you know what? I think we can get more money. So we can go back and get some money.’ … I think OSD has a much broader perspective across the services, and I think often has a greater commitment to cost control. … I don’t think you can just turn that all over to the services, because the incentives of the services are maximizing the effectiveness of that service.”
In 1985, Nunn and Republican Sen. Barry Goldwater of Arizona wrote a report on DOD spending that concluded the department was poorly run and that combat readiness was perilous. The report found no correlation between spending more and acquiring better defense. It also blamed congressional meddling for driving up costs. Later that year, House Armed Services Committee Chairman Les Aspin, a Wisconsin Democrat, launched a series of hearings on defense spending, finding “skimpy improvements in the U.S. defense posture despite the huge increases in defense spending over the years.”
In 1986, the General Accounting Office, now the Government Accountability Office, issued a report stating that only eight of the original 32 Carlucci initiatives had been fully implemented. Carlucci and DOD disagreed vigorously with that analysis.
A little over four years after the Carlucci initiatives were issued, Reagan established the President’s Blue Ribbon Commission on Defense Management—known as the Packard Commission after its chairman, David Packard, co-founder of Hewlett-Packard Co. and a former deputy defense secretary—and the next round of defense acquisition reform had begun.
The latest attempt at changing the way DOD does business was Better Buying Power (BBP), introduced in 2010 by Ash Carter, then the undersecretary of defense for acquisition, technology and logistics (USD(AT&L)) and now the secretary of defense. That was followed by BBP 2.0 in 2012 and BBP 3.0 in 2014, crafted by USD(AT&L) Frank Kendall.
What does Fox think of BBP? “I think it’s a good start,” he said. “It’s in the implementation and follow-up where things fall apart.”
This article will be printed in the October – December issue of Army AL&T magazine.
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