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Regulatory burden: a systems analysis of weapons acquisition in the U.S. Department of Defense

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Regulatory burden: a systems analysis of weapons acquisition in the U.S. Department of Defense

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Content REGULATORY BURDEN: A SYSTEMS ANALYSIS OF WEAPONS
ACQUISTION IN THE U.S. DEPARTMENT OF DEFENSE
by
Dikla Gavrieli
A Dissertation Presented to the
FACULTY OF THE GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(POLITICAL ECONOMY AND PUBLIC POLICY)
May 2008
Copyright 2008 Dikla Gavrieli
ii
DEDICATION
I would like to thank the numerous people who supported and encouraged me
during the writing of this dissertation.
First and foremost I would like to thank my committee chair, Dr. Catie Burke
for her dedication and commitment to seeing me through this process. Her willingness
to take on a student not in her own department and the hours she spent guiding me
through this research are very appreciated. I would also like to thank the advisor for
the Political Economy and Public Policy Program and my co-chair, Dr. Carol Wise for
her years of support and advice during my years at USC. I also must thank my final
committee member Dr. Taha Al-Sabea for his support.
Finally, and most important, and to whom this book is dedicated, is my family:
my fiancé Dean Unatin, my mother Mira, and my brothers and sisters, Yamit, Kfir,
Ganit and Elram for their unconditional love and encouragement throughout this
process.
iii
TABLE OF CONTENTS
DEDICATION ...............................................................................................................ii
LIST OF TABLES ........................................................................................................vi
LIST OF FIGURES......................................................................................................vii
ACRONYM GLOSSARY...........................................................................................viii
ABSTRACT .................................................................................................................xii
CHAPTER ONE: Introduction......................................................................................1
TWO KINDS OF REFORM ......................................................................................2
BACKGROUND........................................................................................................3
PURPOSE/OBJECTIVE ............................................................................................4
SIGNIFICANCE ......................................................................................................10
SUMMARY .............................................................................................................11
CHAPTER ONE ENDNOTES ................................................................................12
CHAPTER TWO: Literature Review..........................................................................13
A REVIEW OF ACQUISITION REFORM HISTORY AND LITERATURE ......13
RECENT STUDIES .................................................................................................15
RESPONSES TO THE EARLIER STUDIES .........................................................19
A “LANDMARK” STUDY .....................................................................................21
Methodology.........................................................................................................22
Results ..................................................................................................................24
Critique .................................................................................................................25
IMPLEMENTING STUDY RECOMMENDATIONS AND OTHER
ACQUISITION REFORMS.....................................................................................26
DoD-Initiated Efforts............................................................................................26
Congressional Efforts ...........................................................................................29
Analyses of Savings .............................................................................................31
Pilot Program Experience.....................................................................................33
2006 RAND STUDY ...............................................................................................34
Methodology.........................................................................................................35
Results ..................................................................................................................35
Critique .................................................................................................................36
Summary Observations ............................................................................................38
INTRODUCTION TO SYSTEMS THEORY .........................................................40
A SYSTEM’S PURPOSE ........................................................................................41
COMMON CAUSE VARIATION VS. SPECIAL CAUSE VARIATION ............43
THE ENVIRONMENT OF A SYSTEM .................................................................45
SYSTEMS DRIVE BEHAVIOR .............................................................................47
How authorized and productive is a system? .......................................................48
iv
SUMMARY .............................................................................................................50
CHAPTER TWO ENDNOTES................................................................................52
CHAPTER THREE: Theory & Methods ....................................................................56
THE DISCREPANCY BETWEEN THE RAND RESULTS & THE
PERCEPTIONS OF PROGRAM OFFICE PERSONNEL......................................56
USING SYSTEMS THEORY TO CALM THE SWINGS OF THE
ACQUISITION PENDULUM .................................................................................57
Applying Systems Theory to Government Program Offices ...............................59
LIMITATIONS AND DELIMITATIONS ..............................................................61
ELITE AND SPECIALIZED INTERVIEWING.....................................................62
Interviews .............................................................................................................64
Specific Interview Methodology ..........................................................................67
SURVEYS................................................................................................................68
TRANSFORMATION ACT ....................................................................................72
SUMMARY .............................................................................................................75
CHAPTER THREE ENDNOTES............................................................................77
CHAPTER FOUR: Findings .......................................................................................78
INTERVIEW RESULTS .........................................................................................78
Identifying the Burdensome Elements of the Job.................................................79
The Specific Burdens of Compliance/Oversight..................................................83
Who Benefits from this Oversight?......................................................................87
The Oversight Community—Helping or hindering getting the job done?...........90
Reducing the Burden of Oversight .......................................................................92
Compliance Outsourced to the Contractor ...........................................................96
ORGANIZATIONAL QUESTIONS .......................................................................97
Well Designed Organizations vs. An Accumulation of Rules .............................97
Rules and Regulations—Facilitating or Hindering Achieving the Program
Office’s Purpose ...................................................................................................98
Complying with Obsolete Rules.........................................................................101
Laws, Policies, Statutes and Regulations Which Conflict With One Another...102
Working Around the Rules and Regulations to Get the Job Done.....................103
Elimination of Statutes and Regulations that Prevent Effective Work ..............103
Reforms—Productive or Counterproductive? ....................................................104
The Impact of Changes in Statutes and Regulations on Program Office Work.106
Narrow vs. Broadly Written Statutes and Regulations.......................................106
Lack of Feedback on Reports .............................................................................107
THE DEFENSE TRANSFORMATION ACT FOR THE 21
st
CENTURY...........108
Redundant and Unnecessary Reports .................................................................111
Authority and Accountability in the Workplace ................................................111
SUMMARY ...........................................................................................................114
CHAPTER FOUR ENDNOTES ............................................................................115
v
CHAPTER FIVE: Conclusions .................................................................................116
THE ACQUISITION SYSTEM IS LACKING A CLEAR PURPOSE.....................118
Defining a Purpose .....................................................................................................121
PROGRAM OFFICES—AN ACCUMULATION OF RULES, NOT A WELL-
DESIGNED SYSTEM ...............................................................................................123
“Working” a Poorly Designed System ...............................................................123
Lack of Feedback on Reporting Requirements ..................................................126
You Can’t Get Different Results by Doing Things the Same Way....................127
Lack of Training .................................................................................................128
New Rules for the Wrong Reasons—Discretion and Authorities ......................129
One “Bad Apple”, Punish the Bunch .................................................................131
Good Leadership ................................................................................................133
WHO’S IN CONTROL? ........................................................................................133
NO EFFECTIVE AUDIT.......................................................................................137
REEVALUATING THE SYSTEM .......................................................................138
SUGGESTIONS FOR FUTURE RESARCH........................................................140
SUMMARY OF FINDINGS..................................................................................142
CHAPTER FIVE ENDNOTES..............................................................................146
BIBLIOGRAPHY ......................................................................................................147
APPENDIX A: Acquisition Systems Questionnaire.................................................153
APPENDIX B: Additional Resources Specific to the Fields od Political Science
and International Relations.........................................................................................158
vi
LIST OF TABLES
Table 2.1—Estimates of the DoD Regulatory and Oversight Cost Premium ..............18
Table 2.2—Key Cost Drivers—10 Site Average .........................................................24
Table 2.3—Analyses of Acquisition Reform Savings from Implementation ..............32
Table 4.1—DoD Reasoning for Repealing Reports ...................................................109
vii
LIST OF FIGURES
Figure 1.1—Definition of System……………………………………………………...5
Figure 1.2—Definition of Control…………………………………………..…………5
Figure 1.3—Definition of Audit……………………………………………………….5
Figure 2.1—Different Constraints on Program Offices ..............................................46
Figure 2.2--Definition of Control……………………………………………………..47
Figure 2.3--Definition of Audit……………………………………………………….47
Figure 2.4—Matrix for the Analysis of Systems..........................................................48
Figure 2.5--Definition of Work……………………………………………………….49
Figure 2.6—Potential Processes Driven by Different Categories of Systems .............50
Figure 3.1--Definition of Systems Theory……………………………………………57
Figure 3.2--Definition of Authority…………………………………………………..58
Figure 3.3--Definition of Control……………………………………………………..58
Figure 3.4--Definition of Audit……………………………………………………….58
Figure 3.5—Matrix for the Analysis of Systems..........................................................60
Figure 3.6--Definition of System……………………………………………………..66
Figure 3.7--Definition of Weapon System……………………………………………66
Figure 4.1—Matrix for the Analysis of Systems..........................................................81
Figure 5.1—Matrix for the Analysis of Systems........................................................118
viii
ACRONYM GLOSSARY
ABC Activity-Based Cost
ACAT Acquisition Category
ADPA American Defense Preparedness Association
AMC Army Material Command
AMCOM Aviation and Missile Command, U.S. Army
AO Action Officer
AR Office of Acquisition Reform
C&L Coopers and Lybrand
CAE Computer Aided Engineering
CAIG Cost Analysis Improvement Group
CAIV Cost as an Independent Variable
CAS Cost Accounting Standards
CCA Clinger-Cohen Act
CFE Contractor Furnished Equipment
COTS commercial of-the-shelf
CRS Congressional Research Service
CSIS Center for Strategic and International Studies
C/SCS Cost/Schedule Control System
DAB Defense Acquisition Board
DAES Defense Acquisition Executive Summary
ix
DAU Defense Acquisition University
DAWFE Defense Acquisition Work Force Environment
DAWIA Defense Acquisition Work Improvement Act
DCAA Defense Contract Audit Agency
DCMAO Defense Contract Management Area Operations
DCMC Defense Contract Management Command
DISA Defense Information Systems Agency (U.S.
DoD)
DoD Department of Defense
DSCA Defense Security Cooperation Agency
EDI Electronic Data Interchange
FACNET Federal Acquisition Computer Network
FARA Federal Acquisition Reform Act of 1996
FASA Federal Acquisition Streamlining Act
FY fiscal year
G&A general and administrative
GAO Government Accountability Office
GS grade scale
IA Information Assurance
IDA Institute for Defense Analysis
IPR Integrated Program Review
IPT integrated product team
IT information technology
x
ITMRA Information Technology Management Reform
Act of 1996
JASSM Joint Air-to-Surface Standoff Missile
JCIDS Joint Capabilities Integration and Development
System
JDAM Joint Direct Attack Munitions
MAIS Major Automated Information Systems
MDA Milestone Decision Authority
MDAP Major Defense Acquisition Program
MILSPEC military specification
MMAS Material Management and Accounting System
O&M Operations and Management
OSD Office of the Secretary of Defense
OTA Office of Technology Assessment
OUSD(AT&L) Office of the Under Secretary of Defense for
Acquisition, Technology, and Logistics
PADS Procurement and Assistance Data System
PEO program executive office/officers
PM program manager
PPB program planning and budgeting
PSR program status reporting
R&D research and development
RDT&E research, development, testing, and evaluation
SAE Service Acquisition Executive
xi
SAR Selected Acquisition Report
SPI Single-Process Initiative
T&E Test and Evaluation
TINA Truth in Negotiations Act
TLCM Total Life-Cycle System Management
USC United States Code
USD(AT&L) Under Secretary of Defense for Acquisition,
Technology, and Logistics
WAR Weekly Activity Report
WCMD Wind Correct Munitions Dispenser
WIPT Working Integrated Process Team
xii
ABSTRACT
The weapons acquisition process in the United States is a complex system
guided by numerous rules and regulations. Government program offices are
responsible for abiding by statutes and regulations as they oversee the building of
weapons from start to finish. This research set out to understand why there is a
difference in perception between a recent RAND study finding that the burden
associated with compliance of these rules and regulations is minimal and the belief of
program office personnel that it is not.
This study concludes that the burden on program office personnel is not a
result of the time spent complying with rules and regulations (what the RAND study
set out to measure), but rather a burden created by the complex and incoherent system
that these rules and regulations create. The system was analyzed within the broader
context of the following questions: One, what is the purpose of the weapons
acquisition system?; Two, Is it well designed to achieve this purpose?; Three, are the
controls built into the system adequate and necessary?; Four, is there an audit function
that provides information as to whether or not the business process is achieving the
intended purpose and ensuring that controls are in place and being used correctly?
The results indicate that the current “system” is an accumulation of rules, not a
well-designed system. For example, this research reveals that program offices are
guided by too many rules, many of which conflict with one another. This research
reveals that the weapons acquisition process is lacking a clearly defined purpose,
adequate controls and a necessary audit function.
1
CHAPTER ONE:
INTRODUCTION
“Something’s wrong with the system”
—Secretary of Defense Donald Rumsfled
to the Senate Appropriations Committee, April 27, 2005.
Defense acquisition reform is neither a new idea nor a product of the last
several decades. Over the 200 plus year history of this country, demands for reform of
the acquisition process have led to countless studies and commission reports. All have
repeatedly identified the same recurrent problems and advocated similar solutions. In
a June 2005 memo to senior Pentagon officials, then acting Deputy Secretary of
Defense Gordon England stated, “There is a growing and deep concern within
Congress and the Department of Defense (DoD) Leadership Team about the DoD
acquisition process. Many programs continue to increase in cost and schedule even
after multiple studies and recommendations that span the past 15 years.”
i
Thus, it has become a cliché to declare that the various reforms initiated over
the years have not had the intended effect. Despite scores of attempts to reform the
i This statement was made by Gordon England, then Acting Deputy Secretary of Defense, in a
memo to Senior Pentagon Officials, June 5, 2005.
2
process, the problems of today mirror those reported decades ago. The persistence and
pervasiveness of acquisition problems suggests that one or more underlying problems
are not being addressed.
TWO KINDS OF REFORM
One of two types of reform appears to drive each study on acquisition reform:
(1) More regulations are needed to preclude recurrences of past mismanagement; (2)
Less regulation is needed to allow more innovation and flexibility. These categories
are referred to as Type 1 and Type 2 reforms. The categories are not mutually
exclusive, as some reform movements have blended elements of each category. This
research shows that each major reform movement was dominated by one type.
Efforts to reform the acquisition process have tended to split along these
lines—Those designed to stop transgressions and those designed to grant flexibility.
Consequently, the reforms often run at cross-purposes, creating a pendulum that
constantly swings between regulation and deregulation.
The historical frustration with Defense acquisition reform could be fueled by
regular reversals of the regulatory pendulum—adding and removing controls,
increasing and decreasing management layers, centralizing and decentralizing. Some
Type 1 reforms have sought procedural corrections for past problems without
exploring the root causes of the past problems.
For example, some years ago regulations were issued that required acquisition
officials to consider a contractor’s past performance on Government contracts when
3
making a selection for a new contract. Since considering past performance seems only
sensible, a key question might be “why were acquisition officials not already doing
it?” What was it about the existing culture that caused it to largely abstain from a
common-sense consideration. If such key questions were asked, solutions other than
more controls and regulations might become apparent.
BACKGROUND
There is a common belief within the acquisition community that abiding by
statutes and regulations is burdensome for government program offices. Many
attempts have been made to understand the cost of compliance with these rules.
Between May 2003 and December 2005 the author was involved in a RAND project
commissioned by the Undersecretary of Defense (AT&L) which tracked specific costs
of statutory and regulatory constraints on weapons acquisition by focusing on costs at
the program office level. The author was a part of a six member team which designed
and saw the project from start to finish. The project focused on capturing actual costs
by tracking the actual labor hours spent while complying with a certain statute or
regulation by staff at the government program office.
The RAND study found that the burden in terms of time spent adhering to
rules and regulations is minimal. However, program office personnel continue to
assert that there is a significant burden associated with compliance. There are several
reasons why this discrepancy may exist: First, it is impossible to separate everyday
operations within a program office from time spent complying with statutes and
regulations since the primary responsibility of program office personnel is to assure
4
compliance with rules and regulations. If this is true, the RAND study is inherently
flawed because measuring time spent complying with several specific statutes and
regulations will not accurately reflect total time. Second, the burden associated with
compliance may not be one of time spent, but rather frustration with the need to follow
rules and regulations that do not necessarily have added value.
PURPOSE/OBJECTIVE
The purpose of this research is to understand why there is a difference in
perception between the RAND study finding that the burden associated with
compliance is minimal and the belief of program office personnel that it is not. This
question of why the difference in perception will be answered by testing the theory
that the weapons acquisition “system” is not properly designed.
The purpose of this study is to examine the difficulties of past reform
movements within the broader context of the following questions:
1. What is the purpose of the weapons acquisition system?
ii
2. Is it well designed to achieve this purpose?
3. Are the controls built into the system adequate and necessary?
4. Is there an audit function that provides information as to whether or not the
business process is achieving the intended purpose and ensuring that
controls are in place and being used correctly?
ii
Please note that system does not refer to a specific weapons system, but rather the
organization whose goal is acquiring weapons.
5
Systems will be studied within the framework of national security, the
acquisition process generally, and weapons program offices specifically. For the
purpose of this research, a system is defined as a specific methodology for organizing
activities in order to achieve a purpose.
1
Crucial to the design of a well-functioning
system are building proper controls into the system. In this case a control in a system
acts to provide information as to whether or not the system is working as intended.
2
In the weapons acquisition community the program offices act as the controls.
They are responsible for abiding by the rules of the system, which in this case are the
statutes and regulations. In order to monitor whether or not the controls are working
properly, an audit process is crucial to a well-designed system. Audits also confirm
whether or not the system is achieving its purpose and whether the system is designed
in the best possible way for achieving its purpose. In the case of weapons acquisition
the audit process should respond to questions such as: Are the controls in place? Are
Figure 1.2--Definition of Control:
A control in a system acts to provide information as to whether or not the
system is being operated correctly and working as intended (MBS).
Figure 1.3--Definition of Audit:
Audit is different from control in that it first checks from time to time that the
controls are in place and then reviews whether the system is achieving its purpose
in the best way possible (MBS).
Figure 1.1—Definition of System:
A specific methodology for organizing activities in order to achieve a
purpose. This involves directing flows of work, information, money, people, and
materials. The system provides the framework within which these flows take place
(MBS).
6
they being used correctly? Are the controls effective? Are there too few, or too many
controls?
In the RAND study, the cost of compliance with statutes and regulations was
empirically evaluated at the program office level by developing a web-based data
collection tool. A simple, user-friendly, web-based data collection protocol was
fielded over 12-14 months. This database captured the individual information (rank,
pay, experience) and tailored webpages were designed to track the hours spent abiding
by these and other statutes and regulations. Six of the eight program offices
commissioned for the study participated the entire 14 months, with hundreds of
program office personnel logging in their hours weekly. The data was validated via
follow up interviews. These compliance activities were then linked to program
deliverables that are in the critical path thereby affecting its cost and schedule. This
project was conducted with the idea that capturing all these costs would provide a
richer understanding of the actual cost of compliance.
The study found that total effort reported in the statutory and regulatory areas
averaged less than 5% per reporting period (2 weeks) across 26 reporting periods
across all program offices. This debunked the myth that most people spend close to
full time on any one compliance-related activity. Emphasis appears to be on the
implementation of rules rather than a specific statute or regulation. There were very
few serious complaints about policy within the five regulatory areas that were
examined, although there were some complaints about the process. However, the
RAND report concluded that the reported hours were not correlated with the
7
complaints and there was very little evidence of actual burdensome consequences to
the programs.
Since very few cost increases and schedule delays were incurred by the
programs in response to compliance related activity, it was concluded that abiding by
these statutes and regulations is in fact not burdensome as measured. The belief
within the acquisition community, however, has not changed. It is still widely
believed that these statutes and regulations add an unnecessary burden.
This research will attempt to answer the question of why these regulations are
viewed as a burden when they apparently do not add to the cost and time required to
build weapons. Although the RAND study found little evidence of actual burdensome
consequences, many in the acquisition community do report they feel some rules and
regulations add a significant and unnecessary burden to their work. Therefore further
research is necessary to learn why there is a discrepancy between employees’
perceptions and the RAND study.
Although the RAND study’s quantitative approach was unable to capture the
burden associated with compliance, it did confirm that the burden is more than just the
time spent abiding by statutes and regulations. This research addresses different
perceptions of “burden” and provides the acquisition community with a new and
different way of looking at the problem.
This research indicates that much of the problem lies in the design of the rules
and regulations which form the basis for the system itself. For example, a poorly
designed system often includes too many or too few rules. A system as complex as
weapons acquisition inevitably results in rule accumulation and conflicts where rule
8
changes are made without fully understanding their effects when designed. The result
is a poorly designed system in which it becomes difficult to eliminate controls, and
individuals are forced to comply with rules that were designed for a long forgotten
purpose.
Examples include program offices being required to produce reports that are
never used, receive no feedback, or are repetitive and unnecessary Another problem
is the continued use of flawed regulations merely because their elimination would be
more costly, difficult, and time-consuming than continued compliance. Furthermore,
eliminating flawed regulations may be politically infeasible even though they burden
the system, hinder efficiency and frustrate employees. What is really needed is to
rethink the system itself.
The intent of this study is to take advantage of the knowledge of those that best
understand how the system operates to bring to light its inherent design flaws, if any.
In this respect, the RAND study did not go beyond quantitative data to get at the issues
as perceived by the people who operate the system. Through this research the author
was able to identify alternative approaches to mitigate burden not detected by the
RAND study. Just like a game of chess would not exist without rules for the players
to follow, rules (in this case statutes and regulations) must exist when acquiring
weapons. Few officials at any level disagree with the intent of specific policies, but
rather it is the way one tries to achieve those objectives that produces a perception of
burden.
In an attempt to answer the questions posed above, this research also analyzes
The Defense Transformation Act for the 21
st
Century. This bill was introduced to
9
Congress by DoD in 2003 in hopes of streamlining defense. It identifies thousands of
rules and regulations DoD believes simply add burden to the acquisition process.
Although this bill never became law, in an attempt to study the acquisition system, an
analysis of the reporting requirement portion of the bill is conducted to determine
whether or not some of the reports (in this case controls) are in fact repetitive, or
unnecessary. Although this bill is not an all inclusive list of problems, it is presented
to illustrate how widespread the problems have become.
Other system problems can be seen in the observations from the literature and
the interviews conducted for the purpose of this study. These reveal that the time
spent complying with statutes and regulations is dominated by attempts to “work the
process” to ensure that the program is executed as well as possible. Also, the Services
differ in both culture and in how policies are interpreted, leading to different
implementation approaches, and hence, different “costs.” Most program office
personnel are generally aware of the statutory or regulatory basis for their activities,
but it is not foremost in their minds as they execute the program. They are simply
doing their jobs. This indicates how institutionalized acquisition processes have
become. Nonetheless, the observations from the literature, interviews, and
Transformation Act indicate that there is a problem with the design of the system.
When designing a system for weapons acquisition the unique non-market
characteristic of the weapons acquisition process must be considered. A market by
definition is an information system where prices are determined by buyers and sellers
at the point of sale. Most markets are competitive, that is, prices are not set to meet
certain profits, but rather are determined by competition within the marketplace. The
10
system via which we acquire weapons is not as clear cut. The weapons acquisition
process begins when the government determines that a new weapon is needed and
initiates the development of a new product. The consumer, in this case the
government, finances the development of the product whose cost is determined by cost
plus fixed fees to contractors. Thus, the weapons acquisition market is unique in that
incentives are not guiding the sellers to provide the best possible product at the lowest
possible price.
More importantly, since systems drive behavior
3
, this research examines the
Acquisition culture—collective behavior of the various participants in the acquisition
process—Congress, Department of Defense, Office of Secretary of Defense (OSD),
the services, program offices, prime and subcontractors, among others—and the forces
that motivate their behavior. Since it is widely believed that the ability of executives
to bring about change is limited, the incentives and pressures that drive behavior of
participants within the process will also be examined.
SIGNIFICANCE
As a result of problems that have become evident in recent years, such as
newly discovered waste, fraud and abuse of the system, there is an effort to prevent
further abuse by devising rules with tighter constraints once again swinging the
pendulum from deregulation to regulation. This research serves as a guide towards
more stable and balanced acquisition policies and processes designed to dampen the
swings of the acquisition pendulum. This research reveals that the current approach of
regulating and deregulating in response to special causes is not working. Rather, the
11
issue is the lack of a well-designed system, one with appropriate boundaries and
constraints.
The implications for political economy and public administration are
momentous. This research may indicate the need for better systems design as a
potential solution not only for the weapons acquisition process, but for other
governmental processes as well. This research should be of interest to those
concerned with the design of systems through rules and regulations. This includes
public administrators in the Office of the Under Secretary of Defense for Acquisition,
Technology, and Logistics (OUSD[AT&L], Program Offices, Program Executive
Offices within the services, and Congress.
SUMMARY
This chapter has introduced the discrepancy between a major research study
and the perceptions of the people working within the systems studied. In the
following chapter the history and literature of weapons acquisitions is discussed along
with an introduction to systems theory.
12
CHAPTER ONE ENDNOTES
1 Ian MacDonald, Catherine Burke, and Karl Stewart, Systems Leadership,
Creating Positive Organisations, Gower Publishing Company, 2006, p. 204.
2 Ibid, p. 430.
3 Ibid, p. 105.
13
CHAPTER TWO:
LITERATURE REVIEW
A REVIEW OF ACQUISITION REFORM HISTORY AND LITERATURE
The discrepancy between perception and measurement may originate in the
many “reforms” of the acquisition process over the past few decades. There have been
many initiatives since the mid-1980s, but few have brought about measurable change
in cost, schedule or performance. Each time, however new rules and regulations are
created requiring those implementing the changes to learn new ways of working.
Often the changes do not rescind earlier changes, but simply add to the existing
process procedures.
One of the main challenges researchers have faced has been the inability to
assess how changes in policy and the regulatory environment affect programs. During
periods of increased oversight the government may benefit from increased
accountability and a reduction of waste, fraud, and abuse. However, increased
oversight has a significant downside—it may increase cost, and an increased burden of
paperwork and inspections sometimes leads to a reluctance of firms to do business
with DoD. Periods of increased flexibility (less oversight) may help spur innovation
and improve efficiency, but with the possibility of increased waste, fraud, and abuse.
14
These two opposing trends create a pendulum that constantly swings between
increased and decreased regulation.
Since this research attempts to uncover whether the problems with acquisition
reform lie in the design of the rules and regulations which form the basis for the
system itself, the literature review includes significant background on systems
analysis. Unfortunately, to date, there is no adequate systems analysis of the total
defense acquisition process in terms of its real components; there is no literature
combining systems analysis and acquisition reform.
This chapter presents the results of a literature review that focused on the
statutory and regulatory environment surrounding the management of defense
acquisition programs. Of particular interest to this research were studies and analyses
that:
 identify problems or constraints that the legal or regulatory environment
creates for programs; and
 describe the mechanism through which such impacts occur.
This literature review examines the objectives, approaches, results and
challenges that result from studying constraints that are deeply embedded in existing
procedures. Some studies led to reform initiatives and changes in statutes and
regulations; for these the extent to which implementation has resulted in cost savings
is examined. Lastly, the lack of follow-up on implementation is addressed along with
the trends that have created the “pendulum-effect” that has the acquisition community
swinging from increased to decreased regulation. The discussion that follows
provides the foundation upon which the research design is based.
15
RECENT STUDIES
In the late 1980s and 1990s, think tanks, industry groups, Congress and DoD,
among others, produced hundreds of studies on acquisition reform. These included
commission reports; position papers; historical analyses; and numerous micro-level
studies focusing on some specific aspect of the defense acquisition process, selected
weapon programs, or service-centered concerns. Many of these studies have had a
significant impact on reform and contain valuable insights into the problems inherent
in the acquisition process. The majority of these studies are consistent in their
underlying themes, problems cited, and proposed solutions.
Congressional studies found that the burden of regulatory controls imposed
through the DoD acquisition system are an important factor in the decline of the
defense industrial base.
1
A 1992 congressional study found that, “Defense
Department provisions requiring compliance with Government Cost Accounting
Standards (CAS) and the Truth in Negotiations Act (TINA) are serious impediments
to commercial companies wishing to sell to the department.”
2
These studies found
that many of the regulations that impose the most burdensome controls are specifically
mandated by statute. The response was increased Type 2 legislative reform rather
than regulatory reform.
Another group of studies recommended the increased use of less-costly
commercial products, whose quality is often comparable to products built according to
DoD specifications.
3
In the past, high-tech commercial products have been state of the
art and changing so fast that the DoD military specification (MILSPEC) system was
unable to keep pace. Although these studies never answered the questions of how
16
much could be saved in the long run and exactly how to measure such savings, in the
mid to late 1990s, Congress passed Type 2 reforms to alleviate constraints and enable
the use of “commercial” products and practices.
Some studies focused on delays in program deliverables, rather than on costs.
One such study found that oversight does not cause delays, but rather that the delays
are merely a symptom of other problems.
4
A 1983 analysis of the milestone review
process found that the process is effective, but not efficient, and further concluded that
the process did not directly affect the overall length of a program.
5
Many studies have attempted to show that contractor compliance with statutes
and regulations imposes a significant cost premium on government-procured items.
Table 2.1 presents various studies’ estimates of the DoD regulatory cost premium, that
is, what the DoD pays contractors to cover the added cost of complying with DoD-
specific statutes and regulations.
iii
The cost premium can also be viewed as the potential savings available from
acquisition reform. Although all of the studies listed attempt to calculate a DoD-wide
cost premium, each study differs in its approach, the manner in which it defines cost,
and the political environment at the time of the study. Additionally, the unique
program or program sets often influence the results and make the conclusions very
difficult to generalize across all programs within DoD. Attempts to do so have
resulted in estimates that government regulation increases costs anywhere from 5 to
200 percent.
6
iii Specifically, the DOD regulatory cost premium refers to all additional costs that DOD pays
contractors in order to cover the cost of complying with DOD unique statutes and regulations above and
beyond what the cost is in a purely commercial environment.
17
The very wide range reflects the high level of uncertainty in such estimates.
Although studies have found the cost savings potential to vary significantly, the
underlying premise is always the same: DoD statutes and regulations impose a
significant cost premium on DoD procurement. A RAND study which examined
many such studies from 1986 to 1992 found that most of the studies in the late 1980s
and early 1990s that were able to estimate cost savings potential used very limited data
and differing methodologies, and although they were able to derive a percent potential
cost savings, the overall analyses are qualitative.
7
18
Table 2.1—Estimates of the DoD Regulatory and Oversight Cost Premium
Study Date Unit of Analysis Estimated DoD
Cost Premium/
Potential Cost
Savings (%)
Honeywell, Defense Acquisition Study 1986 Internal study of 20
programs
13
Smith et al., A Preliminary Perspective
of Regulatory Activities and Effects in
Weapons Acquisition, RAND
1988 Total program costs 5-10
U.S. Congress, Office of Technology
Assessment, Holding the Edge:
Maintaining the Defense Industrial Base
1989 Total DoD acquisition
budget
10-50
IBM (prepared for CSIS) 1990 Internal case study 26
CSIS, Integrating Commercial and
Military Technologies for National
Security
1991 Cost premium on
identical items
30
Carnegie Commission, A Radical
Reform of the Defense Acquisition
System
1992 Total DoD acquisition
budget
40
ADPA, Doing Business with DoD—The
Cost Premium
1992 Product cost
questionnaires; internal
studies
30-50
OUSD, Acquisition and Technology,
Report of the Defense Science Board
Task Force on Acquisition Reform
1993 Gov./Industry panel
approach
20
NORCOM, Activity-Based Cost Analysis
of Cost of DoD Requirements and Cost
of Capacity
1994 3
rd
party data collection;
testing C&L results; no
new raw data
27
Coopers & Lybrand (C&L) with TASC,
Inc., The DoD Regulatory Cost Premium
1994 10 contractor sites 18
OUSD, Acquisition and Technology,
Acquisition Reform Senior Steering
Group, DoD Regulatory Cost Premium
Working Group
1996 Program analysis of
C&L’s top 24 cost
drivers
6.3
GAO, Acquisition Reform: Efforts to
Reduce the Cost to Manage and Oversee
DoD Contracts, DoD Reducing
Oversight Cost Reinvention Laboratory
1996 Program analysis of
C&L’s top 10 cost
drivers
6.1
Office of the Assistant Secretary of the
Air Force, Acquisition, Acquisition
Reform Success Story: Wind Corrected
Munitions Dispenser
1997 Contractor data
requirements lists only
(cost savings in R&D)
3.5
19
The specific focus and methodologies of the studies listed in Table 2.1 vary
significantly, and thus the results are not directly comparable. Most “empirical”
estimates confront significant methodological challenges and thus are actually based
on expert opinion, anecdotal information, or projections derived from commercial
analogies that may or may not be appropriate.
8
Thus, these numbers should be used
cautiously. Furthermore, the unit of analysis in each of these studies is different:
some studies analyze firms, while others analyze programs or program budgets. In the
discussion below, the most “empirically credible” studies are examined in more detail.
Interestingly, few studies were found with empirical estimates of compliance
costs after the late 1990s. Those that were found focused on estimating the saving
from reform; these are addressed in Table 2.3 below.
RESPONSES TO THE EARLIER STUDIES
The findings of the studies conducted in the late 1980s helped DoD prepare a
workable set of recommended changes to acquisition laws. The National Defense
Authorization Act for FY1991 therefore established the Section 800 Panel, whose
purpose was to review and propose ways to streamline existing DoD acquisition laws
and processes that some of the studies identified as problematic. The group's
subsequent report
9
was instrumental in laying the groundwork for several pieces of
major procurement (Type 2) reform legislation passed in the early 1990s.
The Section 800 Panel identified more than 800 provisions of law that had
some relationship to DoD acquisition, although detailed reviews later reduced this
number to just over 600. Of the laws reviewed by the Panel, almost 300 were
20
recommended for repeal, deletion, or amendment. The changes recommended for
these statutes would result in a streamlined system of acquisition laws that would be
more easily understood and implemented. They also recommended significant
legislative changes to improve DoD’s access to commercial technologies and
emphasized the need to simplify contract management for both DoD and its suppliers.
In 1994, efforts to create a “Government That Works Better and Costs Less,”
iv
brought about a revision of more than 225 statutory rules and a swing of the pendulum
from regulation to deregulation (Type 2 reform). Based on recommendations of the
Section 800 Panel, the Federal Acquisition Streamlining Act (FASA) significantly
changed how the government does business. This act encouraged federal agencies to
buy commercial off-the-shelf products (COTS), and simplified government procedures
for procuring those products. Some of the key provisions of FASA include raising the
threshold for waiving many statutes governing defense procurement and streamlining
the bid-protest process to prevent costly delays that could result when contractors
protest procurement process awards. Other provisions raised the cap to allow bidding
defense contractors to bypass special accounting systems requirements and avoid
providing lengthy cost and pricing data to the government.
Acquisition studies continued to proliferate, however, and the cost premiums
cited continued to grow. In the early 1990s, the Principal Deputy for Acquisition, U.S.
Army Material Command (AMC), directed NORCOM, a private consulting firm to
undertake a study with the goal of determining the cost of Army contractors’
iv Vice President Gore presented FASA to President Clinton in 1993 as part of his effort to
create a “Government that works better and costs less.”
21
compliance with DoD regulations. NORCOM’s study applied activity based costing
(ABC) to data collected from six U.S. Army contractors, most of whom specialized in
military unique items. In its final report, dated May 1994, NORCOM estimated that
the weighted-average DoD regulatory cost premium amounted to 27 percent.
10
A “LANDMARK” STUDY
More than any other study, however, the December 1994 study conducted by
Coopers and Lybrand (C&L), The DoD Regulatory Cost Premium: A Quantitative
Assessment, is regarded as a landmark in acquisition reform research. The C&L study
provided what many consider a uniquely empirical analysis of the burden imposed by
the statutory and regulatory environment surrounding DoD acquisition. Previous case
studies relating to the impact of the DoD acquisition environment on contractors’ costs
focused solely on estimating the total DoD cost premium. The C&L study attempted
to tie compliance costs to specific DoD regulatory requirements.
11
The report proved to be highly influential and remains the most cited document
in acquisition reform because it is widely considered to be the first truly objective
assessment of the DoD regulatory cost premium. C&L analyzed 10 contractor sites
representing $7.2 billion in military sales and spent 25 man-months in the field. The
researchers interviewed 1000 contractor personnel (executives, cost center managers,
and other key workers), completed 500 worksheets, documented 5000 business
activities, and assessed 120 cost drivers. At the request of then Secretary of Defense
William Perry, Coopers and Lybrand also used findings from the Section 800 Panel
report in their study. In all of the literature on acquisition reform following the C&L
22
study, the most important estimates of the DoD regulatory and oversight compliance
cost premium are based on data derived from C&L. For this reason, this particular
study is discussed in more detail.
Methodology
The C&L project team used value-added costs as the cost basis for their
assessment.
v
They defined the DoD cost premium as equal to the contractors’
compliance costs divided by the contractors’ value-added costs:
[
($) Costs Added Value
($) Costs Compliance Contractor
(%) Premium" Cost " DOD  ]
vi
After arriving at a company site, the project team reviewed the firm’s
organizational structure with company personnel and identified cost centers (the
lowest level of an organization for which costs are budgeted or collected: primary
business functions such as finance, quality assurance, and operations). After grouping
cost centers into business functions, the project team interviewed cost center
managers. The team excluded from their site assessment those cost centers supporting
v Such costs are equal to total costs less the costs of material purchases, including subcontracts.
Coopers and Lybrand used value added as the basis for measuring regulatory cost impacts because
prime contractors use the practice of “flowing down” most contract terms and conditions to their major
subcontractors. The project team adjusted value added cost base slightly by excluding profits, and
when applicable corporate general and administrative (G&A) allocations. Profits were excluded
because of the firms’ reluctance to provide this info and because in the defense industry profits are
driven largely by costs. Corporate G&A allocations were excluded because there are no means to
assess regulatory impacts at the corporate level when conducting site assessments at the division/facility
level.
vi Using total costs rather than value added costs in the denominator would result in double
counting of material costs (material purchases of prime contractor are largely value added costs of
subcontractors and suppliers) and thus would lead to an understatement of the regulatory cost impact.
23
only commercial operations but did include indirect cost centers supporting both DoD
and commercial operations. C&L used cost allocation formulas approved by the
Defense Contract Audit Agency (DCAA) to remove from defense costs those
expenses related to the support of the commercial side of the contractor’s business.
To allocate the 1994 budgeted expenses properly, and to identify those activities
that are impacted by DoD oversight and regulation, the project team developed a
hierarchical “process model” documenting all the cost center’s processes, sub-
processes, and activities. Estimates generated from interviews determined the cost
impact on those activities should the regulation and oversight “disappear.” Cost center
managers were asked to estimate the cost impact on specific activities if best
commercial practices were substituted for all DoD regulation and oversight (assuming
characteristics and performance requirements of DoD-purchased items do not change).
They were also asked to compare their current practices to best commercial
practices, prevailing practices in the contractor’s commercial operations, and practices
utilized in direct military sales to foreign governments. Cost center personnel were
asked to provide appropriate qualitative information and to make suggestions as to
how DoD might reduce compliance costs while preserving appropriate government
accountability. After examining all cost centers in a given function, the project team
consolidated the interview results into a summary worksheet for the functional area,
and provided results to appropriate function managers for review and concurrence.
24
Results
The C&L project team found an average DoD regulatory cost premium of 18
percent of value-added costs. This figure represents a straight average of the site
assessment results from the ten facilities. The study concluded that the DoD
regulatory environment imposes a substantial cost premium throughout the defense
sector that is ultimately absorbed by DoD in the form of increased unit costs for
military equipment and services.
The top three drivers account for almost 25 percent of the total DoD regulatory
cost premium, and half of the total regulatory cost impact is concentrated in ten key
areas. The results suggest that DoD could achieve significant benefits from
concentrating its reform efforts on a relatively small number of high leverage
regulatory areas that impose significant compliance costs throughout the defense
sector, regardless of industry sector, tier position, or other factors.
The top ten cost drivers and their cost impacts are listed in the Table 2.2.
Table 2.2—Key Cost Drivers—10 Site Average
MIL-Q-9858A 1.7 10.0
Truth in Negotiations Act (TINA) 1.3 7.5
Cost/Schedule Control System (C/SCS) 0.9 5.1
Configuration Management Requirements 0.8 4.9
Contract Specific Requirements 0.7 4.3
DCAA/ Defense Contract Management Area
Operations (DCMAO) Interface
0.7 3.9
Cost Accounting Standards (CAS) 0.7 3.8
Material Management Accounting System
(MMAS)
0.6 3.4
Engineering Drawings 0.6 3.3
Government Property Administration 0.5 2.7
Subtotal 8.5% 48.9%
25
The C&L project team found that DoD was the primary change agent for eight
of the ten top regulatory cost drivers. DoD can play an important role in costs
associated with those measures in which Congress has significant involvement (TINA
and CAS) by developing and carrying out streamlined, less intrusive oversight
practices.
The study found that the DoD regulatory cost premium is significant and that
study results are consistent with previous analyses and policy statements. It noted that
compliance costs are concentrated in a small number of regulatory/oversight areas
and, with passage of FASA in 1994, many corrective actions could be achieved
without further statutory changes. The study concluded that reductions in compliance
costs could be achieved over several years.
Critique
The numbers in the C&L study are often referred to as “actual data,” whereas
in fact they are semi-quantitative estimates based on limited data and a unique
methodology. This methodology, although consistently applied, is ultimately
subjective in its assessment of the cost consequences of specific statutes and
regulations. Although the study concludes with a number (18 percent), it is derived
from expert opinion and theoretical analyses, rather than actual impacts on a program.
The C&L project team evaluated only the direct costs of compliance with DoD
regulations. The study concluded that significant savings were potentially achievable
through reductions in DoD regulations and oversight without examining the benefits
26
that are associated with the oversight process and without examining the actual cost of
implementing reform.
IMPLEMENTING STUDY RECOMMENDATIONS AND OTHER
ACQUISITION REFORMS
One of the primary reasons the C&L study is so influential is that its broad
conclusion appeared to be confirmed by other studies. The earlier NORCOM study,
which estimated that the weighted-average DoD regulatory cost premium amounted to
27 percent, was close to C&L number of 22
vii
percent regulatory compliance cost for
companies that produce military unique items for the DoD.
12
When it came to
implementing the changes C&L recommended, however, it turned out that the
estimated savings were much higher than could be realized.
DoD-Initiated Efforts
In response to the C&L and NORCOM studies, for example, DoD established
the Regulatory Cost Premium Working Group to investigate and eliminate the top cost
drivers. This team focused on the C&L study’s top 24 cost drivers, which led to a
13.4 percent DoD cost premium, but it concluded that DoD could achieve less than
half of those savings. DoD then established the Reducing Oversight Costs
Reinvention Laboratory to further investigate the C&L study’s recommendations.
Participants included ten contractor sites, the Office of Secretary of Defense (OSD),
vii
The 22 percent refers to the cost premium incurred by the defense only firms participating in
the C&L study. The more commonly cited 18 percent cost premium figure includes both defense and
commercial study participants.
27
the Defense Contract Management Command (DCMC), and the Defense Contract
Audit Agency (DCAA).
The Reinvention Lab conducted extensive cost/benefit analyses on reducing
oversight and regulatory requirements and reported results in the same categories used
in the C&L study. Five of the ten participants in the Reinvention Lab had prepared
their own estimates of the cost impact of the top ten cost drivers at their sites. The
results were only a 1.2 to 6.1 percent savings, compared to the C&L estimate of 8.5
percent, and participants had little success in addressing nine of the top ten cost
drivers. Almost all projected savings came from adopting commercial standards
instead of using MILSPECs.
13
Nevertheless, cost reduction remained a key acquisition reform objective, so in
1994 and 1995 DoD introduced several new acquisition reforms. In June 1994,
Secretary Perry introduced a major directive reversing traditional DoD preference for
MILSPECs and focusing instead on performance specifications and commercial
standards. Programs now needed special waivers to use MILSPECs, and DoD granted
these only in special cases.
In 1995 DoD developed the Single-Process Initiative (SPI), which was intended
to reduce the DoD cost premium and to eliminate many of the regulatory barriers
identified by C&L by promoting block changes to the manufacturing and management
requirements of all existing contracts on a facility-wide basis. More than 1,000
changes were made and more than 300 sites were participating by 1998. Upon further
examination, however, it is evident that it is difficult to estimate actual savings.
Defense Contract Management Command (DCMC) data showed SPI resulted in $30.3
28
million in direct savings to the DoD and $472.5 million in extended cost avoidance
(over the lifetime of contracts). As a percentage of research, development, testing, and
evaluation (RDT&E) budgets, however, the total direct cost savings from SPI
amounted to only 0.03 to 0.04 percent.
In May 1995 DoD decided to begin using an integrated product team (IPT)
approach when developing and building weapon systems in order to facilitate
collaboration between representatives of the contractor, military service, and OSD.
The author could find no studies on the relative cost or benefit of this reform.
DoD also attempted to increase the importance of “cost” as a factor in deciding
on the acceptable level of a weapon system, through the Cost As an Independent
Variable (CAIV) policy. CAIV forces decision-makers to consider trading away some
system performance to achieve greater cost savings. Under CAIV, program managers
must examine a weapon system’s entire life-cycle, including research and
development, production, operation, and support, and its cost patterns and objectives.
They must think about cost-related factors such as budgetary resources, unit costs of
comparable or fielded systems, mission effectiveness, technology trends, innovative
manufacturing techniques, and commercial business practices. The challenge to
implementing CAIV is the ability to persuade DoD and industry managers to become
more innovative, accepting larger risks to achieve breakthroughs in cost performance,
while also accepting less-than-desired performance to preserve or reduce cost. In
practice, few programs have made those cost-performance trades.
14
29
Congressional Efforts
In 1996, the growing importance of information technology for effective
government and the need to further simplify procedures to procure commercial
products and services led to even more changes in the acquisition process in areas of
competition, commercial items, certification requirements, and the Federal Acquisition
Computer Network (FACNET). The Federal Acquisition Reform Act of 1996
(FARA) and the Information Technology Management Reform Act of 1996 (ITMRA),
further advanced the changes made by FASA. By eliminating the requirement for
certified cost and pricing data for commercial products, FARA aimed to preserve the
concept of full and open competition while further reducing barriers to acquiring
commercial products.
That year, FASA also directed DoD to reduce its acquisition workforce by
15,000 personnel and to report to Congress on how to implement an overall 25 percent
reduction in workforce during the next five years. It also sought to streamline the bid
protest process by having all bid protests adjudicated by the General Accountability
Office (GAO).
In 1997 Congress focused on integrating the assessments and recommendations
of various defense panels charged with assisting the Secretary of Defense in changing
the business culture within the department. DoD implemented the Pentagon
management and organizational reforms recommended by the Task Force on Defense
Reform, including ways to improve business practices within DoD. Secretary Cohen
used recommendations to develop Defense Reform Initiatives including the following:
30
 reducing the size of Office of Secretary of Defense and the Joint Staff
and defense agencies from 141,000 to 111,000 staff members;
 realigning functions within DoD and consolidating and eliminating
duplicate functions;
 increasing public-private competitions to outsource non-core
maintenance and support work; and
 establishing a senior-level Defense Management Council to monitor
compliance.
One of the most significant Type 2 reforms was changing the DoD 5000
Series, which has been the guideline for acquisition policy since 1969. In 1995,
following the passage of the FASA and the push for more efficient acquisition, the
then Under Secretary for Acquisition and Technology, Paul Kaminski, called for the
revision of the Series to allow more flexibility and, in turn, reform of the system. The
original 5000 Series mandated a complicated acquisition process requiring
government to follow specific rules and regulations to ensure that the government
purchase only the highest quality equipment. The rewrite of the Series in 1997 sought
to revise the rules to favor a streamlined acquisition process.
The rewrite incorporated new policies and laws, separated mandatory policies
from discretionary practices, and integrated for the first time acquisition policies and
procedures for both weapon systems and automated information systems. The rewrite
not only reduced the volume of internal regulatory guidance, it also reduced the
original document in size from more than 1,000 to a mere 160 pages. The DoD 5000
31
series has since been revised several more times, each time in an attempt to simplify
the process and better reflect the changing character of technology and industry.
15
Analyses of Savings
In 1997, at the request of the Service Acquisition Executive (SAE) and with
the endorsement of Secretary Cohen, Coopers and Lybrand published another study to
assess the previous four years’ implementation of acquisition reform in DoD contracts.
The 1997 C&L survey approach involved developing a catalog of 53
acquisition reform change elements propagated since January 1993. The research
team conducted 430 surveys at ten contractor sites, interviewing program managers,
team members, and process managers. The survey found that considerable progress
has been achieved in implementing acquisition reform in DoD contracts, but that there
was a great deal to accomplish to reach full implementation. Industry acknowledged
progress and was committed to working with DoD to effect further change, but
implementation was uneven and inconsistent across and within Military Services and
buying commands. No further follow-up has been conducted on these issues since the
1997 study.
Also in 1997, a GAO study of 33 major defense acquisition programs (MDAPs)
predicted that savings from Clinton administration reform efforts (FY1996 to 2002)
would be negative. This study found that although the programs would experience
cost savings because of acquisition reforms, the savings would be offset by cost
increases elsewhere or by reinvestment. This study was based on comparisons of
overall program budget data and on projections from different fiscal years. This study
32
does not differentiate among specific acquisition reform measures and does not
explain how such measures contributed to changes in estimates. At the time the data
was collected, radical acquisition reforms were not fully implemented.
16
Table 2.3 lists some of the studies that examined the effects of acquisition
reform implementation.
Table 2.3—Analyses of Acquisition Reform Savings from Implementation
Study Date Unit of Analysis DoD AR
Savings (%)
Schank et al, Analysis of
Service-Reported Acquisition
Reform Reduction, RAND
1996 Summary of initial assessment of overall
DoD savings for FYs 1995-2001
4.4
Coopers and Lybrand,
Acquisition Reform
Implementation
1997 Assess implementation of AR in DoD
contracts; industry feedback; 10
contractor sites; PM interviews
Significant
outcomes (on
C&L scale)
Anderson, A., A Study of the
Federal Government’s
Experiences with Commercial
Procurement Practices in
Major Defense Acquisitions
1997 Average of 23 MDAPs; Savings for FY96 4.3
GAO, Acquisition Reform:
DoD Faces Challenges in
Reducing Oversight Costs
1997 Average 33 MDAPs; Savings FY96-02 -2
GAO, Acquisition Reform:
Effect on Weapons System
Funding
1997 Average 10 MDAPs; Savings FY95-02 4
Lorell and Graser, An
Overview of Acquisition
Reform Cost Savings
Estimates, RAND
2001 Savings from commercial-like programs
in terms of R&D (using CAIV); few
numbers based on hard data; estimates
made pre-product development and
production; used 1999 DoD estimates for
overall cost savings; lessons from pilot
programs
15-35
Hanks, Christopher H., et al,
Reexamining Military
Acquisition Reform: Are We
There Yet?, RAND
2005 63 acquisition reform (AR) initiatives
were classified to analyze the good and
bad that has resulted from acquisition
reform
N/A
33
Pilot Program Experience
Throughout the last decade or so, pilot programs have been established to test
whether specific reforms are feasible and produce the expected results. One
underlying theme was whether defense acquisition could be run more like a
commercial business. Pilot programs have been launched to determine whether to
structure weapon system acquisition programs so that the incentives provided to
contractors are more like those found in commercial R&D and production programs.
The pilot programs aimed to incentivize contractors to focus on cost as a primary
objective and to use commercial standards, technology, parts, and components.
Very few studies on these programs are based on hard data and the data that is
available suggest that savings of 15-35 percent in research and development costs may
be possible in programs that are fully restructured in a commercial-like manner in
accordance with concepts of CAIV. The three best-documented cases suggest that
savings up to 65 percent are possible, at least in programs with less complex systems
and with high production runs. These cases include Joint Direct Attack Munitions
(JDAM), Wind Correct Munitions Dispenser (WCMD) and Joint Air-to-Surface
Standoff Missile (JASSM). The reforms demonstrated in these programs have not
been widely used, however.
Each of these programs is characterized by low technological risk, commercial
derivative items, and large production runs. The potential applicability of these
reforms to a large, complex weapon system that employs high-risk, cutting-edge
technology remains uncertain. The literature does note that some of the most
important issues in achieving acquisition reform savings include CAIV, requirements
34
reform, maximizing the use of commercial parts, and true dual-use utilization of
production facilities.
17
2006 RAND STUDY
The 2006 RAND study took a difficult approach by examining costs internal to
DoD. It empirically evaluated the cost of compliance with statutes and regulations at
the program office level. The RAND research team conducted interviews at several
program offices to identify statutes and regulations that are perceived as burdensome.
Based on these interviews a web-based data collection tool was designed via which
program office personnel were able to record time spent complying with statutes and
regulations. The areas for which data was collected are: The Clinger Cohen Act
(CCA), the Core and 50-50 Law, Program Status Reporting (PSR), Program Planning
and Budgeting (PPB), and testing. Program Status Reporting includes the Defense
Acquisition Executive Summary (DAES), and Selected Acquisition Report (SAR)
among others.
The 1996 Clinger Cohen Act, also known as the Information Technology
Management Reform Act, established a process for the acquisition of Information
Technology (IT) systems. The Core Law (Title 10 USC §2464) and 50-50 Law (Title
10 USC §2466) require that public depots perform 50 percent of the DoD-wide
maintenance load. Program Planning and Budgeting includes all activities related to
movement of money from one appropriation to another in response to a change in
budget. Testing includes only the reporting requirements surrounding the test.
35
Methodology
The RAND research team developed a web-based data collection tool.
Individuals within eight program offices whose responsibilities included compliance
activities in any of the five areas were asked to provide the number of hours they spent
each day complying with these statutes and regulations. The data was collected over
26 two-week periods. In addition, participants were able to include comments that
corresponded to the hours they logged in, or comments relating to other burdensome
areas. Follow-up interviews were conducted to validate the data.
Results
The RAND study found that the total level of effort reported in the five statutory
and regulatory areas is less than 5% of total available program office hours. In
addition, there were few commonalities among the programs, and workload between
senior and non-senior personnel varied by program. The myth that most people spend
full time on any one compliance-related activity was debunked. The study also found
that most activities were performed for the Service as opposed to OSD and Congress.
There were very few serious complaints about the policy or process within the five
statutory and regulatory areas that were measured. In fact, reported hours were not
correlated with complaints and there was very little evidence of actual consequences
to the program. Lastly, the study found that many of these activities need to be
accomplished regardless of whether or not they are mandated. Thus, the issue was
determined to be implementation, not the intent of the statute or regulation. The study
36
concluded that there is a mismatch between perception of burden and actual
consequences at the program office level.
Critique
The RAND study was the first of its kind in the sense that it attempted to
quantify the burden program office personnel feel is associated with abiding by
statutes and regulations. However, when interviewing people who had participated in
the RAND study for this research, it was determined that the RAND study was not in
accord with what program office personnel experience at work. There are several
reasons for this.
First, and most important, the methodology used in the RAND study did not
take into account that the rules and regulations are not external to the work done in
program offices. Therefore, the statutes and regulations which the RAND study
attempted to isolate and measure are only a small fraction of the guidelines which
guide the behavior of program office personnel. In fact, these rules and regulations
are the system, not merely a part of it. These rules define the work of program office
personnel. They tell them what to do, what not to do, and how to do it. It is thus
impossible to isolate several categories of rules and measure the time associated with
compliance because essentially all of the time spent in program offices is somehow
associated with following statutes and regulations.
Second, it is important to remember that people are notoriously bad at keeping
track of how they spend their time. One program manager, who also participated in
the RAND study explained that the RAND study did not accurately reflect the amount
37
of time spent because program office personnel did not always record their time
accurately. Another person who participated in the RAND study explained that the
study used only compliance measures and a lot of time it is not the actual filing of a
report that is burdensome, but rather the psychological stress that is associated with it.
This individual explained that filing a report should be compared to filing taxes
because it is something that is constantly on one’s mind and a lot of work goes into the
report that is not reflected in the time it takes to fill out paperwork. This individual
explained that the RAND study only captured, “the last minutes of effort.”
Others explained that the RAND study did not capture the fact that an
individual statute or regulation may not be a burden, but when combined with others
that are similar, or run at cross-purposes they become burdensome. The constant
change in statutes and regulations creates a burden associated with constantly learning
a new way of doing business and the RAND study did not capture this. One
individual explained that the most burdensome element of program office work is,
“the constant churn”. This learning curve was not captured in the time measured in
the RAND study.
By measuring only the time associated with compliance with a particular set of
rules and regulations the RAND study failed to capture the time spent on program
execution. Although this was stated as a limitation of the study, when attempting to
show total time spent associated with compliance, program execution must be
considered.
Based on the findings of the RAND study and the interviews conducted for this
research, it is safe to assume that it is not the amount of time spent abiding by statutes
38
and regulations that creates the perception of burden. As a result, an anecdotal study
is more likely to accurately reflect the burdens associated with working in government
program offices.
SUMMARY OBSERVATIONS
For the purposes of this research, several observations can be made from a review
of prior studies:
 Acquisition reform has been a continuous activity whose specific content varies as
a function of many factors, including political environment, budgetary
environment, and preferences regarding degree of regulation and management
control.
 Broadly speaking, the same basic set of problems or challenges has been identified
for several decades. These include the need to balance responsibility, authority,
and accountability; the mismatch between incentives (both explicit and implicit)
and desired behavior; and the interaction of the acquisition process with the
requirements and budgeting processes.
 Similarly, the same set of solutions has been proposed to address these challenges,
including adopting commercial products and processes and streamlining decision-
making within the Services and OSD.
 Many recommendations made by previous studies have in fact been implemented,
but they do not appear to have had the desired effect.
39
This literature review identified several of the major Type 1 and Type 2
acquisition reform themes that relate to perceived constraints on the acquisition
process, including:
 Commercialization of acquisition products and practices;
 Increased centralized policy authority and oversight;
 Decentralized and flexible execution management responsibilities; and
 Elimination of government unique specifications and standards.
The truth remains that acquisition reform is not new to DoD, and despite all the
reform initiatives, the magnitude of cost savings is uncertain. Additionally, there has
been little follow-up on those initiatives that have been implemented to determine
whether they worked as expected. This is primarily a result of the fact that
compliance costs are difficult to estimate and even more difficult to generalize. The
large range of estimates in the literature suggests that a great deal of uncertainty exists
because the various data problems are difficult to remedy. Each of the studies
discussed is unique in its methodology, unit of analysis, and the political environment
of its time. Although each study is unique, the reforms that are later implemented as a
result of these studies are surprisingly similar. Thus, the acquisition community
continues to find itself riding the pendulum of acquisition reform.
By studying the design of the rules and regulations which form the basis for
the system itself, this research is designed to identify scenarios which burden the
system, hinder efficiency and frustrate employees. By bringing to light the inherent
flaws in the design of the system and understanding how the system operates, there is
40
hope of bringing about lasting change which will dampen the swings of the acquisition
reform pendulum.
INTRODUCTION TO SYSTEMS THEORY
In order to understand the importance of applying a well-designed system to
the weapons acquisition process it is important to understand some basic definitions
and examine how a “systems” approach has revolutionized other industries. A system
can be defined as, “a specific methodology for organizing activities in order to achieve
a purpose.”
18
When examining a system to determine its efficiency, it is important to
question even the most basic assumptions. Systems are made up of sets of
components that work together to accomplish the goals of the whole. Most program
offices are a system of systems. Systems have a tendency to become embedded and
drive behavior. Over time, even good systems can become outdated and
counterproductive.
A systems approach is a way of thinking about these total systems and their
components. When analyzing a system it is crucial to first think about the overall
purpose of the system and then to begin to describe the system in terms of this overall
purpose.
Five basic considerations that are crucial when thinking about the meaning of a
system are:
19
1. The total system objectives (purpose) and the performance measures of the
whole system.
41
2. The fixed constraints (i.e. the system’s environment)
3. The resources of the system
4. The components of the system, their activities goals and measures of
performance
5. The management and leadership of the system
A SYSTEM’S PURPOSE
The system’s purpose must focus on a specific measure of performance for the
overall system, it cannot simply be a statement of objectives. A good way to assess
whether the purpose of the system is accurate is to understand whether the system will
forgo other goals in order to fulfill the purpose.
20
Systems need to be designed so that all activities help in achieving the
organization’s purpose. Many systems actively and symbolically run against the
organization’s purpose. For example, in the weapons acquisition system, is the
purpose of the system to acquire the weapons at the lowest possible cost, or to acquire
the best possible weapons?
One of the difficulties of designing government systems is that the basis for
many systems is Congressional legislation. Such legislation is often based on what
members of Congress and the President can agree to. As a result the system may
contain multiple purposes, contradictory purposes, unclear purposes, or no definable
purpose. Therefore, departmental leadership should have the task of defining a
42
particular system’s purpose and perhaps create several systems, each of which has its
own purpose.
Clarity of purpose is crucial.
21
In Systems Leadership, Creating Positive
Organisations, the authors explain that the purpose of a system should be explained in
a single sentence without the conjunction ‘and’. The reason for this is that it is
difficult to prevent the two purposes from running into conflict. Additionally, the
purpose must be known to all who work within the system since it is the underlying
theme guiding their behavior.
Most interviewees in this study were unable to express the purpose of the
system. The one statement of purpose that was found, “obtain the best possible
weapon at the lowest possible price,” is inherently contradictory. It is safe to conclude
that this purpose has two parts which more often than not run at cross-purposes—the
best possible weapons are simply not available at the lowest prices.
22
Working within
a system whose purpose is contradictory inherently creates a burden for those working
within the system.
Another important issue that must be addressed when designing governmental
systems is whether the systems are designed to promote productive behavior, or to
catch those that abuse the system. It is best to have a positive purpose. In a well
designed system the purpose should encourage and reinforce productive behavior.
23
For example, ‘to use good judgment for government spending’, rather than ‘to stop
stealing’. The latter implies a lack of trust and may result in a system that is designed
to treat everyone as a potential thief.
24
Most of the people interviewed felt that they
43
were working in a system whose purpose is designed to punish bad (unproductive, or
inefficient) behavior, rather than encourage good (productive, or efficient) behavior.
Most interviewees felt that the current systems are designed as though
everyone working within the system is stupid or corrupt. A system should always be
designed with the assumption that the individuals working within the system are
competent and want to do a good job. Even with the assumption that people will do a
good job, the system must leave room for exercising good judgment. Such a system
must also be designed to identify people who cheat or shirk. The following section
will describe the reason why so many government systems are unable to achieve this.
COMMON CAUSE VARIATION VS. SPECIAL CAUSE VARIATION
There are two sources which account for variation within a system—common
cause systemic variation and special cause variation. Common cause variation is the
normal variation within a system caused by random and independent changes that can
be traced back to key elements of the system such as personnel and equipment. If a
system experiences only common cause variation the output of the system forms a
stable distribution over time.
Special cause variation is the result of unpredictable, intermittent events which
lead to a change in the output of the system. When special cause variation exists the
system is unstable and the output of the system is unpredictable. The problems caused
by special cause variation are not a result of the system. Since the problems are not
caused by the system design, the response to these problems should not be changing
the way the system works.
44
When making changes to a system it is crucial to discriminate between
common and special cause variation. One of the reasons the government has difficulty
designing systems that encourage good behavior is that there is no distinction between
special causes and common systemic causes. The rules of a system should be made
based on common causes, not special ones. However, as this literature review reveals,
many rules in government are based upon special causes. For example, in response to
one incident of bad behavior by an individual, the government may implement a rule
that prevents not only the bad behavior, but the ability to exercise good judgment.
Several interviewees explained that in response to one bad apple, they now had
to follow rules that are unnecessary and extremely burdensome. Such rules result
from changing the system in response to a special cause. For example, during the
1980s The Project on Military Procurement, later renamed the Project on Government
Oversight, exposed the procurement of $7,600 coffee makers, $640 toilet seats, and
$436 hammers. Although it was later revealed that these high costs were the result of
the manner in which the costs for a program were divided, a special cause, the
government reacted with new rules. As the result of these procurements, new laws
were introduced including Competition in Contracting Act
viii
, the recreation of the
Cost Accounting Standards Board
ix
and emphasis was placed on the Truth in
Negotiations Act.
x
Such regulatory controls were later determined to be overly
viii
The Competition in Contracting Act of 1984 required that all contracts be “fully and openly
competed.”
ix
The Cost Accounting Standards Board was designed to achieve uniformity and consistency in
cost accounting practices.
45
burdensome in that they left little room for an individual to exercise good judgment.
Additionally, they were viewed as a barrier to entry in government procurement.
In an attempt to reduce the burden of oversight, Vice President Al Gore’s
“Reinventing Government” initiative, moved the weapons acquisition system
pendulum from regulation to deregulation. Later, in response to new abuses
associated with deregulation, new laws were passed once again swinging the
pendulum toward regulation.
THE ENVIRONMENT OF A SYSTEM
The environment of a system is essentially made up of all things and resources
that are taken as given, or fixed from the system’s point of view. If a system operates
under a fixed budget that is given to it by some higher agency and the budget cannot
be changed by any activities of the system, then we can conclude that the budgetary
constraints are in the environment of the system. If by some organizational change the
system could influence the budget, then some budgetary process would belong inside
the system.
25
Although the environment is outside the system’s control, it plays a
prominent part in how the system performs.
The resources of the system are inside the system and are best defined as the
“means that the system uses to do its jobs.”
26
Examples include money, staff hours,
information, equipment, and authorities. Resources differ from the environment of a
system primarily in that the system can change resources and use them to its own
x
The Truth in Negotiations Act requires government contractors to submit cost and pricing data
for negotiated procurements above a certain threshold.
46
advantage. Since we never have unlimited resources or time, all work is carried out in
the context of constraints.
Figure 2.1--Different Constraints on Program Offices
It is the responsibility of the systems leaders to determine the constraints
around how the purpose is to be achieved. These constraints are articulated in the
form of policies which have a tremendous impact on those who associate with the
system. For example, when there are too many constraints in the form of statutes and
regulations, the cost of doing business with DoD is high, and contractors may choose
not to work with DoD. Thus, leadership is about behavior and changing behavior.
27
When working in a bureaucratic organization the system may often frustrate
the leader’s purpose. Program offices are no exception to systems which frustrate a
well intentioned leader’s goals. In such bureaucratic systems the proper exercise of
authority may be hindered by too many levels of organization that lead to inefficiency
and slow decision making. Over time systems may become so complex that leaders
spend an excessive amount of time doing unproductive busy work.
Statutory Regulatory Other
External
Other
Internal
Well-
Designed
System
System that over
time has become
an obsolete
accumulation of
rules
Constraints
47
The management of a system is responsible for creating the plans for the
system and making sure they are executed in accordance with the original ideas. In
cases when they are not, it is the management’s responsibility to determine why they
are not. This activity is also known as the “control.”
The control is responsible for plan evaluations and change of plans when
necessary. One of the most critical aspects of the management of systems is planning
for changing plans.
28
This research will evaluate whether or not a “control”
mechanism exists for program offices, and if so, how the control deals with constant
change. A well-designed system must include authority, control and audits.
SYSTEMS DRIVE BEHAVIOR
Systems should be designed according to their purpose. Systems should be
designed to be productive; to achieve a purpose and in doing so encourage positive
behavior. Systems should be designed with the understanding the behavior within the
system is responsible for turning the purpose of the system into reality. Another issue
Figure 2.2--Definition of Control:
A control in a system acts to provide information as to whether or not the
system is being operated correctly and working as intended (MBS).
Figure 2.3—Definition of Audit:
Audit is different from control in that it first checks from time to time that
the controls are in place and then reviews whether the system is achieving its
purpose in the best way possible (MBS).
48
to consider is whether some people may be against changing a system because they
are benefiting from current inefficiency.
How authorized and productive is a system?
In all organizations there are systems that are authorized and productive (see
Box A in Figure 2.2). There are also systems that are authorized, but non-productive,
or even counterproductive (see Box B). When many systems hinder production,
employees find ways to work around them in order to get the job done (see Box C).
These systems are unauthorized, but productive. In some cases they may also be
unsafe or violate law. Where they are productive safe and legal, the organization
should move them to Box A. Where they are unsafe or illegal, they need to be stopped
even though they get the job done. Box D represents systems that are unauthorized
and non-productive. These must be stamped out.
29
Figure 2.4--Matrix for the Analysis of Systems
30
Productive (contributes to the
purpose of the organization)
Counterproductive
Authorized A.
Well designed and implemented
B.
Restrictive practices that have
been adopted by the
organization
(Ex. Bureaucracy, red tape)
Unauthorized C.
People cutting corners and
breaking rules in order to get
their work done
(Ex. sometimes this is the only
way to get the job done and
results in ideas for positive
change and innovation)
D.
Alternative leadership based on
power. (ex. Intimidation, racism,
sexism, stealing, work quotas,
etc.)
(Ex. personal gain at the expense
of the organization)
49
Systems are essentially a set of rules. If rules are well designed, they set the
authority and boundaries around the authority. The problem with government rules is
that they often have lots of boundaries which dictate exactly how something should be
done. Such systems do not merely set the boundaries, but attempt to state how the
work should be carried out.
In actuality, people never do the same thing the same way twice because they
usually find a way to improve the process. Where a system does not allow room for
discretion or provide individuals with the ability to follow their natural human
tendency to improve, movement will be away from authorized and productive. Even
if the system is well-designed, as the environment changes and new requirements are
added the system may drift into Box B. This may lead to Box C behaviors to get the
job done, while punishment for not following the rules may lead to Box D behaviors.
31
Figure 2.5—Definition of Work:
Work is the act of turning intention into reality. The intention of a system is
the system’s purpose .
50
Figure 2.6--Potential Processes Driven by Different Categories of Systems
32
This literature review outlines many systems problems within the acquisition
system that lead towards movement away from Box A behavior. Since the trend in the
last couple of decades has been towards Type 2 reforms without adequate controls or
audit, it is likely that the pendulum has swung too far in the direction of deregulation
and the government will overcompensate with Type 1 reforms. This research is
designed to show that rather than adding rules and regulations to the existing system,
the system could be redesigned with a clear purpose and well-functioning control and
audit functions.
SUMMARY
This chapter has introduced the relevant literature to date and an introduction
to systems theory was presented. The literature presented portrays the weapons
acquisition system during periods of increased and decreased regulation. The RAND
A B
C D
Over time
these drift into
Working around
bureaucratic red taps
leads to
Optimal Point
Being
punished
for
someone
else’s bad
behavior
51
study was examined closely to show why the methodology was inadequate to explain
the perception of burden. In the following chapter, the methods used will be
described in detail along with a description of how systems theory will be applied to
this research.
52
CHAPTER TWO ENDNOTES
1 Office of Technology Assessment (OTA), U.S. Congress, Redesigning
Defense: Planning the Transition to the Future Defense Industrial Base, July 1991;
Department of Defense, Defense Systems Management College, Streamlining Defense
Acquisition Laws, Executive Summary: Report of the DOD Acquisition Law
Advisory Panel, March 1993.
2 H.R. Committee on Armed Services, 102nd Congress, 2nd Edition, Future of
the Defense Industrial Base, Report of the Structure of the U.S. Defense Industrial
Base Panel, 1992.
3 Mark Lorell, Julia Lowell, Michael Kennedy, and Hugh Levaux, Cheaper,
Faster, Better? Commercial Approaches to Weapons Acquisition, MR-1147-AF,
Santa Monica: RAND, 2000; Michael Anderson, A Study of the Federal
Government’s Experiences with Commercial Procurement Practices in Major Defense
Acquisitions, Massachusetts Institute of Technology, June 1997.
4 Institute for Defense Analysis (IDA), Role of OSD in the Acquisition Process,
1991.
5 David Acker, Evaluation of the Effectiveness of DSARC, Information
Spectrum Inc., 1983.
6 Holding the Edge: Maintaining the Defense Technology Base, Vol. II
Appendix, Washington D.C.: USGPO, Office of Technology Assessment, April 1989.
7 An Overview of Acquisition Reform Cost Savings Estimates, Mark Lorell,
John C. Graser, Santa Monica, RAND MR-1329, 2001.
8 Ibid.
53
9 Department of Defense, Defense Systems Management College, Streamlining
Defense Acquisition Laws, Executive Summary: Report of the DOD Acquisition Law
Advisory Panel, March 1993.
10 NORCOM, Activity-Based Analysis of Cost of DOD Requirements and
DOD Capacity: Executive Summary, May 1994.
11 Coopers and Lybrand/TASC, The DOD Regulatory Cost Premium: A
Quantitative Assessment, December 1994.
12 NORCOM, Activity-Based Analysis of Cost of DOD Requirements and
DOD Capacity: Executive Summary, May 1994.
13 General Accounting Office, Acquisition Reform: Efforts to Reduce the
Costs to Manage and Oversee DOD Contracts, GAO/NSIAD-96-106, April 1996;
General Accounting Office, Acquisition Reform: DOD Faces Challenges in Reducing
Oversight Costs, GAO/NSIAD-97-48, January 1997; Lorell, Mark, Graser, John C.,
An Overview of Acquisition Reform Cost Savings Estimates, Santa Monica, RAND
MR-1329.
14 Drezner, Jeffrey A., et al, Measuring the Statutory and Regulatory
Constraints on DoD Acquisition—Research Design for an Empirical Study, Santa
Monica, RAND TR-347-OSD, 2006;Drezner, Jeffrey A., et al, Measuring the
Statutory and Regulatory Constraints on DoD Acquisition—An Empirical Analysis,
Santa Monica, RAND MG-569-OSD, 2007.
15 Joe Ferrara, “DOD’s 5000 Documents: Evolution and Change in Defense
Acquisition Policy,” Acquisition Review Quarterly, Fall 1996. See also Sylvester and
Ferrara, “Conflict and Ambiguity: Implementing Evolutionary Acquisition,”
Acquisition Review Quarterly, Winter 2003.
16 General Accounting Office, Acquisition Reform: DOD Faces Challenges in
Reducing Oversight Costs, GAO/NSIAD-97-48, January 1997.
54
17 Benjamin C. Rush, “Cost as an Independent Variable: Concepts and Risks,”
Acquisition Review Quarterly, Spring 1997; Mark Lorell, Julia Lowell, Michael
Kennedy, and Hugh Levaux, Cheaper, Faster, Better? Commercial Approaches to
Weapons Acquisition, MR-1147-AF, Santa Monica: RAND, 2000; Lorell, Mark,
Graser, John C., An Overview of Acquisition Reform Cost Savings Estimates, Santa
Monica, RAND MR-1329, 2001.
18 Ian MacDonald, Catherine Burke, and Karl Stewart, Systems Leadership,
Creating Positive Organisations, Gower Publishing Company, 2006, p. 108.
19 C. West Churchman, The Systems Approach, Delacorte Press, New York,
1968, page 29.
20 Ibid, page 31.
21 Ian MacDonald, Catherine Burke, and Karl Stewart, Systems Leadership,
Creating Positive Organisations, Gower Publishing Company, 2006, p. 216.
22 Ibid.
23 Ibid.
24 Ibid.
25 Ibid, p. 36.
26 Ibid, p. 37.
27 Ibid, p. 102.
28 Ibid, p. 45.
29 Ibid, p. 112.
55
30 Ibid, p. 113.
31 Ibid.
32 Ibid.
56
CHAPTER THREE:
THEORY & METHODS
THE DISCREPANCY BETWEEN THE RAND RESULTS & THE
PERCEPTIONS OF PROGRAM OFFICE PERSONNEL
As described in Chapter 2 many studies have produced marginal results.
Chapter two examined these studies in detail. In hopes of addressing the issues the
RAND study could not, this chapter introduces a systems approach to identifying
some of the burdens felt throughout the weapons acquisition community.
Despite, or perhaps because of the many “reforms,” there is a common
perception in the weapons acquisition community that there is a significant burden on
program office personnel resulting from the need to comply with numerous statutes
and regulations which govern program office work. The RAND study, which was
introduced in the last chapter, set out to quantify the amount of time spent complying
with the most burdensome statutes and regulations. The study results revealed that
individuals working in these offices spend less than five percent of their time working
on compliance related issues.
Although the RAND study found that program office personnel do not spend a
significant amount of time doing work directly related to a statute or regulation,
program office personnel continue to feel burdened by the numerous rules and
regulations which guide their everyday work. This research attempts to account for
57
the discrepancy between the results of the RAND study and the perceptions of the
people working within the system.
Rather than concluding that there is no burden associated with compliance as a
result of the small amount of time directly related to compliance activities, this
research attempts to isolate the root of the perceived burden. In order to do so, there is
an implicit assumption that the burden is not caused by the amount of time spent on
compliance related activities, as measured by the RAND study.
USING SYSTEMS THEORY TO CALM THE SWINGS OF THE
ACQUISITION PENDULUM
One of the reasons a burden is associated with statutory and regulatory
compliance in program offices is the constant change in acquisition policy. In an
attempt to address burdens associated with regulations, the government often
deregulates to allow for flexibility. During periods when regulations are removed new
problems surface, including waste, fraud and abuse. As a result, efforts to reform the
acquisition process tend to create a pendulum which swings between regulation—
implemented to limit waste, fraud, and abuse; and deregulation—implemented to
compensate for the lack of flexibility resulting from earlier regulations.
The systems theory articulated by MacDonald, Burke and Stewart suggests that
swinging the acquisition pendulum by constantly loosening and tightening regulations,
Figure 3.1--Definition of Systems Theory:
Systems theory suggests that the business methods and process in use are
the major driver of the organization’s behavior and culture (MBS).
58
is not a solution to the acquisition community’s problems. Rather, it suggests that the
systems governing government program offices are poorly designed. The evidence
presented in the next chapter reveals that swings between regulation and deregulation
are not a solution to the problems in the acquisition community. It also indicates the
need for better systems design as a potential solution.
Systems Design
The goal of a well-designed system is to achieve positive corporate culture. A
well-designed system demonstrates respect for human dignity and trust while at the
same time recognizes that not all people are trustworthy. Such a system is a able to
stop those who abuse it.
Figure 3.2--Definition of Authority:
Authority within a system is a statement of what an individual may do,
within what limits, and carries with it the accountability for exercising proper
judgment in doing it (MBS).
Figure 3.3--Definition of Control:
A control is the verification that the system is being operated correctly and
working as intended. It is the control which reviews the quality of judgment used
by authorized personnel within the system (MBS).
Figure 3.4--Definition of Audit:
Audit is a check that the system is being used, that the controls are in place
and being used, that the system is doing what it was intended to do, and that it is
functioning effectively (MBS).
59
Systems design must include a clear statement of authority, control and audit.
For example, in an attempt to eliminate the labor intensive process of purchasing
supplies and services under $2,500, the government removed regulations for purchases
below $2,500 and introduced credit cards to speed up such purchases. When an
individual is authorized to spend government money using a government purchase
card, that is the authority. When the individual’s manager checks the expense record
to verify the system is being used and the quality of the decisions of the authorized
individual, that is the control. Audit is a check by the manager-once-removed or an
auditor who confirms the system is being used, that the controls are in place and being
used, and that the system is doing what it was intended to do in the most effective and
efficient way feasible.
Applying Systems Theory to Government Program Offices
From a systems perspective, a program begins when a service identifies its
needs and defines a new weapon system to meet those needs. The program manager
(PM) is the agent for the service and is responsible for formulation and execution of
the program. The PM manages the prime contractor whose responsibility is to execute
the requirements of the contract with respect to cost, schedule, and performance.
Thus, the program office acts as the control for the contractor. One of the interview
revelations presented in the next chapter indicates that there is a common practice in
government program offices to outsource oversight to the contractor. When this
occurs the program office is essentially outsourcing control to the organization they
are designed to control.
60
This research addresses the question of whether or not a poorly designed
system is the source of the burden in program offices. In order to approach this
question it was essential to acquire a thorough understanding of how a program office
is run and how this program office fits into the weapons acquisition process. Once a
system was properly defined, the problems within the system were easy to identify.
Since many program office “burdens” translate into system problems, the first
step to identifying flaws within the system is to identify the burdens felt at the
government program office level. First, the term burden has to be defined as it is
associated with compliance. For the purpose of this research it is defined as any effort
program managers and their staff put in towards compliance that is perceived to have
little or no added value to the program. This is depicted as any behavior other than
that which occurs in Box A in figure 3.1.
Figure 3.5—Matrix for the Analysis of System
1
Productive (contributes to the
purpose of the organization)
Counterproductive
Authorized A.
Well designed and implemented
B.
Restrictive practices that have
been adopted by the
organization
(Ex. Bureaucracy, red tape)
Unauthorized C.
People cutting corners and
breaking rules in order to get
their work done
(Ex. sometimes this is the only
way to get the job done and
results in ideas for positive
change and innovation)
D.
Alternative leadership based on
power. (ex. Intimidation, racism,
sexism, stealing, work quotas,
etc.)
(Ex. personal gain at the expense
of the organization)
61
In an attempt to identify systems problems, interviews and surveys were
conducted with experienced program office personnel and others involved in the
acquisition process. Furthermore, the Transformation Act for the 21
st
Century was
analyzed to identify reporting requirements that have created a burden on the system.
The use of interviews, surveys and an evaluation of the Transformation Act are three
methods used to identify the burden perceived by government program office
personnel.
As a result of accusations of corruption and cost overruns which appear to be
preferential practices, there may be an effort to devise rules with tighter constraints to
prevent abuse. By applying systems theory to government program offices this
research may indicate the need for improved systems design as a potential solution,
rather than a pendulum between regulation and deregulation. The idea is that applying
systems theory to government program offices will help dampen the swings of the
acquisition pendulum and lead to well-designed systems throughout government.
LIMITATIONS AND DELIMITATIONS
The delimitations of this study were chosen in order to best capture the
perceptions of program office personnel who participated in the RAND study. This
study focused exclusively on weapons acquisitions, not all types of government
acquisitions. Only government program office personnel were interviewed to capture
the program office perspective. Only program offices working on acquisition category
I (ACAT ID) programs, or Major Defense Acquisition Programs (MDAP) were
62
considered.
xi
No interviews were conducted in contractor program offices. This
study was therefore limited to government program offices of the Army, Navy and Air
Force, not the entirety of the Department of Defense or the entire federal government.
This research also left out issues of personality and psychology to focus on work and
systems. The Analysis of The Defense Transformation Act for the 21
st
Century was
limited to Title 10 of the U.S. Code.
xii
The limitations of this study are a result of the period in which the study was
conducted. One of the most difficult challenges that had to be overcome during the
research phase is that it was conducted during a period in which the ideological and
political climate did not allow for government officials to voice complaints. Thus, it
was difficult for those working in government to speak freely to outsiders.
ELITE AND SPECIALIZED INTERVIEWING
In order to obtain information from the most experienced and knowledgeable
personnel in the field of weapons acquisition, most of the interviewees were program
managers, or program executive officers. Since these interviews were conducted
during a time when speaking with people outside of government was often punished
by the current administration, special techniques had to be used even to get an
interview and to improve the likelihood of valid responses. The methodology for
xi
An ACAT ID Major Defense Acquisition Program (MDAP), is a program who cost is more
than $355 million for research, development, testing and evaluation (RDT&E) or $2.1 billion in
procurement costs. The D refers to the Defense Acquisition Board (DAB), which advises the USD
(AT&L) at major milestones.
xii
Title 10 of the U.S. Code is the law guiding the Armed Forces including the Uniform Code
of Military Justice.
63
interviewing these program office managers and executive officers was also used for
interviews conducted with military generals and others within DoD. For these
interviews the interviewees led the discussion in terms of what they regarded as
relevant. This approach was adopted because these individuals are influential,
prominent, and well-informed in the acquisition community. Following the guidance
in Dexter’s Elite and Specialized Interviewing, this research concentrates on extensive
interviews with a few key, elite personnel rather than a greater number of less
intensive interviews.
2
There are many differences between standardized interviewing and elite and
specialized interviewing. One of the most crucial differences is the manner in which
the interview is conducted. For example, in standardized interviewing the interviewer
defines the question and the problem. When the interview is conducted the
interviewer is looking for answers within the bounds set by the presuppositions used
to design the questions. In elite interviewing this is not the case. The interviewer
allows the interviewee to teach him or her what the problem is and what questions
should be asked to address the issue. It is no surprise that only individuals of rank,
influence and experience can direct such an interview.
In elite interviews the interviewer may run into a situation where only a few of
the interviewees provide insightful answers. This is often because they are the few
who know and can articulate how things are actually done. Elite interviewing is
relevant to this research because there are very few program managers in the
acquisition community and most of them have worked their way up the acquisition
64
ladder, especially the civilians. In such instances what they say is often more useful
for identifying problems than what a majority of non-elite personnel would say.
Since the government program office community is small, concentration on a
few key interviewees helps the interviewer acquire a better picture of the problem than
by conducting a greater number of less intensive interviews. To conduct such
interviews it is important to first know the background of the interviewees and to
understand their frame of reference. Experienced individuals in the acquisition
community know that the manner in which things happen is complex and cannot be
stated simply. These individuals are crucial for research in which the interviewer does
not have practical experience in the field.
Interviews
To identify burdens, interviews and surveys were conducted with current and
former members within the Office of the Under Secretary of Defense for Acquisition,
Technology, and Logistics (OUSD[AT&L]); Congressional Research Service (CRS);
program managers (PMs), and program executive managers (PEOs); and personnel
within several Major Defense Acquisition Programs (MDAPs) within the Department
of Defense (DoD). The specific organizations and the people interviewed were
selected because they are critical players in the acquisition process.
A cross section of both military and civilian personnel working in program
management were interviewed. One-on-one interviews, group interviews, and phone
interviews were conducted. Surveys were provided to those who were unable to meet
with the author. Over the course of the interviews, more than 30 people in the
65
program management community were interviewed and additional written comments
from others who were unable to provide interviews were obtained. Since program
managers and their staff are a critical link in the acquisition chain, interviewees
consisted primarily of program managers, and other program office personnel from
various program management offices.
The interviewees and respondents were a knowledgeable group, with everyone
having at least 10 to more than 20 years of full-time experience with program
management. Before visiting interviewees, a copy of the questionnaire was sent to
them outlining the types of questions that would be discussed at the interview. They
were each also provided with a study summary and a copy of the RAND study
findings was given to those who had participated in that research. Most interviewees
had substantial insight and opinions on problems within the “system” as it affects his
or her work. Most interviewees were also willing to make suggestions on how to
mitigate the burden of compliance with statutory and regulatory constraints.
The objective of this research is to identify whether the burdens associated
with compliance are a result of poor systems design. If such system design problems
can be identified, system redesign may eliminate much of the burden. The approach is
to take a broad view of government procurement systems, but with a special focus at
the government program office level.
The research approach has two parts. First, because “systems” can mean
different things to different people, the term must be defined—i.e., the difference
between a weapon system and the system in which it is developed.
66
For this research, a system is defined as a specific methodology for organizing
activities in order to achieve a purpose. A system is therefore the manner in which we
acquire weapons. An essential element of a successful system is the proper controls to
provide information as to whether or not the system is working properly and good
judgment is being exercised by those with the authority to do so. In the weapons
acquisition community the government program offices are the controls of the
weapons acquisition system. However, these program offices are systems within a
larger system in the sense that each program office has its own built in controls.
Second, to better understand whether the weapons acquisition system is well
designed, this research examines the current system within the broader context of four
questions. First, what is the purpose of the weapons acquisition system? Is it to
acquire the best, most technically advanced and effective weapon system at any cost?
Or, acquiring the weapon system in the most efficient manner? Second, the question
of whether or not the system is well designed to achieve its purpose must be asked.
Third, are the controls built into the system adequate and necessary? And, Fourth, is
Figure 3.6—Definition of System:
A specific methodology for organizing activities in order to achieve a
purpose. This involves directing flows of work, information, money, people, and
materials. The system provides the framework within which these flows take place
(MBS).
Figure 3.7—Definition of Weapon System:
An item or set of items that can be used directly by warfighters to carry out
combat support missions to include tactical communications systems (DoDI
5000.2). The word system as used in this context implies, “a combination of two or
more interrelated pieces of equipment (or sets) arranged in a functional package to
perform an operational function to satisfy a requirement (Defense Acquisition
Glossary of Terms, Jan 2004).
67
there an audit function that provides feedback to the system as to whether the controls
are in place and being used correctly and whether or not the system is achieving its
purpose.
To best answer these questions interviews were conducted with current and
former program managers, personnel within the Department of Defense, members of
the Congressional Research Service (CRS), and various people working for Major
Defense Acquisition Programs (MDAPs), and instructors at the Defense Acquisition
University.
Specific Interview Methodology
These interviews were used to identify whether or not the perceived burdens of
the acquisition process are a result of a larger systemic problem. So as not to lead the
officials interviewed, the interviews began with open-ended questions. Specifically,
officials were asked to identify the burdens in their line of work and requested ideas
on what they believed the root of the problem is.
At each interview, the interviewee was asked specific questions about the
system, but also given the opportunity to raise individual concerns and propose
suggestions to alleviate the burden. Most interviews lasted anywhere between 45
minutes to 2 hours. Some were group interviews, but most were one-on-one. Most
interviews were conducted in person, but interviewees who are not in Washington
D.C. or southern California were interviewed by phone. In order to encourage honest
and forthright answers, confidentiality was promised to all participants.
68
The interview began with a very vague question asking the interviewee to
identify burdens in his or her everyday work and progressed towards questions
designed to identify burdens resulting from the design of the system. For example,
“Do you feel your organization is well-designed, or do you find yourself working in an
organization that is an accumulation of rules?” Interviewees were then asked to
identify specific problems with some of the rules and these questions were followed
by, “What can be done to reduce the burden of oversight?” Overall, thirty questions
were asked during the interview, and most interviews became discussions on how to
improve the system.
SURVEYS
Surveys were also designed to reach those in areas other than Washington D.C.
and California who preferred a survey to a phone interview. Many of the survey
questions were similar to the questions asked in the interviews. The goal of the survey
was again to encourage forthright answers to the questions and to create a survey that
was easy to respond to, relatively short, and informative at the same time. The steps
involved in designing, conducting, and analyzing the survey included:
1. Establishing the goals of the project—What needs to be learned?
2. Determining the sample—Whom should be interviewed?
3. Choosing the interview methodology—How should they be interviewed
(online survey)?
4. Creating my questionnaire—What questions should be asked?
69
5. Pre-testing the questionnaire
6. Conducting interviews and entering the data—asking the questions
7. Analyzing the data
8. Follow-up to confirm that data was interpreted correctly.
The goal of the surveys was once again an attempt to identify whether or not
there is a systems problem. In order to provide the people being surveyed with an
environment in which they could discuss aspects of their jobs most freely, they were
promised confidentiality. The people surveyed were from six different program
offices and their positions within the program offices included program managers,
program executive officers, program control chiefs and commanders. All civilian
personnel were at least at a GS-14 level, and military personnel included Colonels and
Major Generals.
The creation and implementation of the surveys occurred in several steps. The
first was a planning phase. During this phase, prior to composing the survey
questions, specific objectives for the surveys were identified. Most importantly, the
goal of the surveys was to identify system problems within an organization. By
identifying this objective, it was easy to focus on questions that provide only
necessary data. This focus was crucial to limiting the length of the survey. Each of
the questions would then be written with the goal of testing or confirming a specific
hypothesis. In this case the survey questions were guided by the following four
questions:
70
1. What is the purpose of the weapons acquisition system?
xiii
2. Is it well designed to achieve this purpose?
3. Are the controls built into the system adequate and necessary?
4. Is there an audit function that provides beneficial feedback to the system?
For questions in which there is one likely answer to the hypothesis, careful attention to
detail was crucial to prevent composing a biased question. Participants who were not
program managers and program executive officers were encouraged to complete the
survey by eliciting the support of the program manager.
The second step addressed survey structure. For example, a brief overview of
the objectives of the survey was written and included at the beginning of the survey.
Although there were several versions of the survey, the final survey consisted of 25
questions, excluding the background information (see Appendix A). Since this is a
fairly long survey, questions were assigned a priority based on whether they were
“crucial” for the research, “potentially useful” in the sense that they may or may not
lead to a response related to the system, or “would be nice to know,” but may not lead
to a relevant response.
The second phase also involved putting careful thought into how each question
should be worded. The most important element to writing each question was not to
reveal the pre-survey hypothesis. This was achieved by writing neutral, unbiased
questions that covered a single topic. So as not to lead the people being surveyed,
they were initially asked very broad, open-ended questions such as, “please identify
xiii
Please note that system does not refer to one weapons system, but rather the organization
whose goal is acquiring weapons.
71
what about your job is burdensome.” They were not given any background on
systems, or told exactly what types of burdens the survey was trying to identify. As
the survey progressed the questions became more specific. For example, after being
asked vaguely what about their job was burdensome, respondents were asked
specifically what about compliance and oversight is burdensome.
The third and final phase of survey development involved addressing the
confidentiality aspect of the survey. One of the most difficult challenges that had to
be overcome during the data gathering phase of research is that it was conducted
during a period in which the ideological and political climate did not allow for
government officials to voice complaints. Thus, it was crucial that participants felt
that their anonymity was maintained to prevent self-censored data and low
participation. Although, it is equally important to be able to track participants who
complete the survey to prevent duplication. A statement guaranteeing confidentiality
was clearly disclosed at the top of the survey and in the letter outlining the study.
After weighing the advantages and disadvantages of paper versus electronic
surveys, an online format was selected to allow flexibility of completion times. To
assure that the sample used is representative of the entire group the survey responses
were compared to responses in the individual and group interviews.
The intent with this survey was to take advantage of the knowledge of those
who best understand how the system operates to bring to light its inherent design
flaws, if any. In this respect the RAND study did not go beyond the quantitative data
to get at the issues as perceived by the people who operate the system.
72
TRANSFORMATION ACT
On April 10, 2003 the Department of Defense (DoD) issued the “Defense
Transformation for the 21
st
Century.” This 207-page act proposed many major
changes to the statutory basis for the acquisition system. The requested changes were
primarily to Title 5 (Government Organization and Employees), and Title 10 (Armed
Forces) of the United States Code. Since this research focuses on the weapons
acquisition process at the program office level, only the recommendations to the Title
10 portion of the U.S. Code will be examined. This section of the U.S. Code focuses
on the reporting requirements of the acquisition process.
The Transformation Act identifies many reports that the Department of
Defense believes are unnecessary, repetitive, obsolete, and overly burdensome, among
other problems. Examining this act will help detect problems within the acquisition
“system” as a whole. For example, are there some required reports which are never
used, receive no feedback, or are repetitive and unnecessary? Are reports that were
designed for a long forgotten purpose still required? If so, are such reports required
merely because reevaluating the system to identify such reports is more costly than
simply producing them? If this is the case, perhaps the non-monetary cost incurred by
those who produce these reports, which they know are useless, is not taken into
consideration. Since systems drive behavior, such a scenario would lead to inefficient
and frustrated employees working in a poorly designed system that is deteriorating
rapidly.
The first portion of the research involves converting and sorting the
information contained in the 207 pages of the Transformation Act into data for
73
statistical analysis. After a thorough evaluation of the contents of this act, it was
determined that a categorical model for sorting the data would be most useful. The
categorical breakdown of the data was done in two parts. First, the information was
put into a table sorted by the following categories: Section of the U.S. Code, Report
Title, Report Description, Reason the Report Should be Repealed, and
Recommendations.
In the first category, “Section of the U.S. Code”, only Title 10 was considered.
Title 10 identifies the guidelines of the armed forces and identifies all of the legal
principles for the organization of each of the services and the Department of Defense.
For the purposes of this research only the sections involving the reporting
requirements under Title 10 were evaluated. The “Report Description” category
contains information on the agency required to file the report and the agency for
whom the report is generated. It contains a detailed description of the requirements of
the report and the reasoning behind why the report was originally designed.
Additional data in this category includes how often the report is required, and what the
report entails in terms of detail and time spent preparing it.
The fourth category, “Reason the Report Should be Repealed”, provides the
reasons the Department of Defense believes these reports should no longer be
required. In the second step of analyzing the categorical data, a two-way table was
prepared containing the different data in the “Reason the Report Should be Repealed”
category. The categories in this table indicate the reason the report should be
repealed. It is important to note that the reasons are not mutually exclusive, so one
report can have several reasons for repeal. The categories in this two-way table are as
74
follows: Provides information of limited utility; Extraordinarily costly; Report is
redundant; Report is obsolete; Report is unnecessary; Potentially harmful to national
security; Report is overly burdensome; Information requested by Congress serves no
discernable purpose; and, Wait Provision is overly burdensome. The information
found in each of these categories is then sorted and quantified to identify the most
common problems associated with the reporting requirements. A further explanation
of this two-way table will follow in Chapter 4.
The final category includes recommendations by the Department of Defense
for eliminating some of the burden associated with the respective report. For example,
if the information is already conveyed to Congress in some other form, it is described
in this section. Or, if the report is burdensome because it is required too often, a
suggestion is made to reduce the requirement. If there is little or no follow-up on the
report after it is submitted, this is also stated in this section. All suggestions for
providing Congress with more useful information can also be found in this category.
Once this data has been sorted and analyzed further conclusions can be made
as to whether or not the repeal is validated. Furthermore, if there is a problem with the
reporting requirements, an analysis will be conducted to determine whether or not the
problem translates into a larger ‘system” problem. If a problem is detected within the
system, the author will attempt to identify the source of the problem and propose
suggestions for improvement. During this portion of the analysis the control and audit
aspects of the system will be examined. The same four questions will be reexamined:
1. What is the purpose of the system?
2. Is it well designed to achieve this purpose?
75
3. Are the controls built into the system adequate and necessary?
4. Is there an audit function that provides beneficial feedback to the system?
Special attention will be placed on the latter two questions since the reporting
requirements often serve as controls for the system. A control in this case should
provide information as to whether or not the system is working properly to achieve its
purpose. Since the purpose of the reporting requirements is to have the Department of
Defense report to Congress on the progress within the larger acquisition process, these
reports are some of the controls of the system. More importantly, question four
addresses the importance of system reevaluation to identify whether or not the controls
are working as intended and the system is still achieving its purpose. It also addresses
the important issue of whether there are too many or too few controls.
Finally, this research will investigate where the proposals found in the
Transformation Act stand today. For example, was the entire act, or portions of the
act implemented? If yes, has there been adequate follow-up on implementation. If
changes have been made have they had a positive or negative effect on the system as a
whole? If no changes were made based on these recommendations, were similar
changes proposed in other acts since 2003? If so, why are these proposals rarely
implemented?
SUMMARY
This chapter explained how interviews, surveys and the Transformation Act
are used to determine whether or not a systems problem exists in government program
offices. Furthermore, the limitations and delimitations of the study were presented so
76
that future research can be conducted accordingly. The next chapter will present the
results of the interviews and surveys alongside an analysis of the Transformation Act.
77
CHAPTER THREE ENDNOTES
1
Ian MacDonald, Catherine Burke, and Karl Stewart, Systems Leadership,
Creating Positive Organisations, Gower Publishing Company, 2006, p. 113.
2
Lewis Anthony Dexter, Elite and Specialized Interviewing, Northwestern
University Press, 1970, p. 8.
78
CHAPTER FOUR:
FINDINGS
INTERVIEW RESULTS
In Chapter Three the methodology for this research was introduced. The
unique approach of elite and specialized interviewing was discussed. The
methodology described in the last chapter is designed to address and uncover the
reason program office personnel feel burdened by the acquisition process. Chapter
Three also explained how the burden may be tied to a problem of system design.
In this chapter the results of interviews, and surveys are presented about the
weapons acquisition “system” as perceived by program office personnel, program
managers, program executive officers, members of the Congressional Research
Service, and Pentagon officials. The goal was to capture how senior leaders of the
acquisition process view the “system” as a whole. What, in their view, is working,
what isn’t, and what can be done about it. This is presented alongside an analysis of
the Defense Transformation Act for the 21
st
Century.
This chapter is organized around the four key interview issues: The
organization of the system; the rules and regulations of the system; the environment
79
of the system; and how best to improve the system. This section includes actual
interviewee statements, or paraphrases of their statements (edited for clarity). Since
these interviews and surveys were confidential, the statements are enclosed in
quotation marks without attribution to any particular individual.
Identifying the Burdensome Elements of the Job
Several interviewees noted that, in general the most burdensome aspect of their
job is the “plethora of reporting requirements.” Most felt that the majority of the
oversight is done outside of normal business operations. The most burdensome aspect
of the reporting requirements is that some reports or reviews require special reporting,
“unique slides, or data in a different format, or even reporting to satisfy a different
personality.” One individual explained, “There are numerous, numerous recurring
reporting requirements for very similar data in a wide variety of formats. For
example, a weekly ‘Hot Topics’ brief to the director, a ‘quarterly’ Integrated Program
Review (IPR) for the director which really turns out to be monthly, a weekly
Computer Aided Engineering (CAE) lifecycle status summary, a quarterly financial
health assessment for Contractor Furnished Equipment (CFE), and so on and so on.”
The main complaint with such requirements is that, “many of the prescribed formats
use the same charts as a basis (which is good), but then require alterations to some of
the charts (which is tedious, time consuming and unnecessary).”
The absence of a clearly defined purpose also presents a burden on program
offices. When asked to identify the purpose of the system in which they work most
interviewees were unable to do so. One interviewee expressed concern when he
80
explained that, “We have lost the big picture in lieu of all the details.” He explained
that, “you lose the forest when you focus only on the trees.”
A different program manager explained that a significant burden results from
the “lack of a trained staff to put together the numerous briefings and significant
number of required reports.” A program executive officer for a different program
explained that the most burdensome aspect of the job is “trying to manage ‘Big A’
acquisition versus procurement.” The reason was explained as, “people understand
how to purchase ‘stuff’ but are not as good on the overall program management side.”
This program manager explained that, “although there are many helping hands and
mentors willing to provide ‘lessons learned’ there is still a fairly large learning curve
associated with the role of Computer Aided Engineering (CAE) and the Program
Executive Officers (PEOs).”
One Program Executive Officer explained that there are so many layers of
oversight. These layers are the controls of the system. He explained that some of the
oversight layers (controls) are unnecessary and are the result of an unclear relationship
between each of the PEOs and the various organizations to which they must answer.
In this case, the system is so poorly designed that the proper exercise of authority is
hindered by too many levels of organization that slow decision-making and cause
inefficiency. Over time, this system has become so complex that it often obstructs the
leader’s purpose. Such an unproductive system is very costly, not just in money and
time spent working around the bureaucracy, but even more so in terms of affecting
program office personnel’s willingness to use their ability to the fullest.
81
This brings us to the question of how authorized and productive the system is.
Systems should be designed according to their purpose. Systems should be designed
to be productive; to achieve a purpose and in doing so encourage positive behavior.
When there is no clearly defined purpose people often find themselves working
around the system.
In all organizations there are systems that are authorized and productive (see
Box A). There are also systems that are authorized, but non-productive, or even
counterproductive (see Box B). When many systems hinder production, employees
find ways to work around them in order to get the job done (see Box C). These
systems are unauthorized, but productive. In some cases they may also be unsafe or
violate law. Where they are productive safe and legal, the organization should move
them to Box A. Where they are unsafe or illegal, they need to be stopped even though
they get the job done. Box D represents systems that are unauthorized and non-
productive.
Figure 4.1—Matrix for the Analysis of Systems
Productive (contributes to the
purpose of the organization)
Counterproductive
Authorized A.
Well designed and implemented
B.
Restrictive practices that have
been adopted by the
organization
(Ex. Bureaucracy, red tape)
Unauthorized C.
People cutting corners and
breaking rules in order to get
their work done
(Ex. sometimes this is the only
way to get the job done and
results in ideas for positive
change and innovation)
D.
Alternative leadership based on
power. (ex. Intimidation, racism,
sexism, stealing, work quotas,
etc.)
(Ex. personal gain at the expense
of the organization)
82
Systems are essentially a set of rules. If rules are well designed, they set the
authority and boundaries around the authority. The problem with government rules is
that they often have lots of boundaries which dictate exactly how something should be
done. In actuality, people never do the same thing the same way twice because they
usually find a way to improve the process. This research indicates that the majority of
the work within program offices moves from Box B to Box C over time. Most often,
Box C is the only way to get the job done. One program manager explained Box C
behavior as “asking for forgiveness rather than permission.”
One of the areas in which Box C behavior is most common is in the acquisition
of joint programs. During this phase of the interview process several people
mentioned that the acquisition of joint programs is significantly more difficult than the
acquisition of single-service programs. Several people attributed the increased
difficulties to the various requirements and complexity of the management
organization of such programs. The Defense Acquisition Guidebook defines a joint
program as: “Any defense acquisition system, subsystem, component, or technology
program that involves formal management of funding by more than one DoD
Component during any phase of a system’s life cycle.”
xiv
Since DoD investments are
increasingly concentrated in large, system of systems
xv
, joint acquisitions programs
are becoming ever more common. One program manager explained that, “Since joint
xiv
All participating programs in this study were Major Defense Acquisition Programs
(MDAPs).
xv
The Defense Acquisition University defines a system of systems as a system designed by
integrating the capabilities of a mix of systems so that the system of systems has capability greater than
the sum of the capabilities of the constituent parts (DAU).
83
programs are becoming ever more common, it is crucial to focus special attention on
facilitating the acquisition of such programs.”
The Specific Burdens of Compliance/Oversight
Since most people explained that oversight is the most burdensome aspect of
their jobs, many took this opportunity to provide specific examples. While
interviewees agreed that there is a need for oversight, they were also forthcoming in
depicting the problems that have plagued the acquisition process. Most interviewees
recognized that rules and regulations are crucial to a well designed system.
Many complaints focused on the inadequate authority provided by the DoD
5000. The DoD 5000.1 establishes the guidelines for any and all defense acquisitions.
This includes everything from a simple helmet to an advanced fighter jet. The DoD
5000.2 outlines mandatory policies and procedures for Major Defense Acquisition
Programs (MDAPs)
xvi
and Major Automated Information Systems (MAIS) acquisition
programs. The Defense Acquisition Deskbook is a tool for program managers (PMs)
which outlines the guidelines and mandatory procedures for the defense acquisition
process.
The most recurring comment was that the “DOD 5000 is designed for large
weapon systems and does not support IT programs well at all. The compliance and
regulations that IT ACAT I (Acquisition Category I) programs have to abide by often
xvi
All participating programs in this study were Major Defense Acquisition Programs
(MDAPs).
84
does not make sense for software systems.” A different program manager explained
that, “When Major Automated Information Systems (MAIS) are held to the same
guidelines as non-IT programs, the oversight becomes a major roadblock.” Other
program managers explained frustration because although they have commented on
the need for streamlining, nothing has been done to remove the hurdles associated
with IT acquisitions. Since the system is not properly designed to deal with IT
acquisitions, “IT is still poorly utilized by DoD, and there is no uniformity across the
Army, Navy and Air Force.” For example, AMCOM (Aviation and Missile
Command, U.S. Army) uses PADS (Procurement and Assistance Data System) for
Electronic Data Interchange (EDI) and there is a variety of EDI within and between
the commands, resulting in a process that is not uniform or interoperable.
The problems resulting from IT acquisitions are a result of a system that was
not properly designed or reevaluated to accommodate IT acquisitions. This is an
example of inadequate authority within a system. One program manager explained
that it is as though “there was an acquisition process in place, so the government
simply decided to have IT acquisitions follow the same guidelines regardless of
whether or not it made any sense to do so.” A well designed system for IT
acquisitions must be extremely flexible to allow for the acquisition to occur before the
technology becomes obsolete. In the case of IT acquisitions the existing system seems
to have replaced discretion, that is, it has produced negative bureaucratic red tape
which has stifled creativity and logic. One program manager suggested dividing the
DoD 5000 into weapon acquisitions and IT acquisitions to alleviate the burden.
85
Since IT systems are drastically different from non-IT systems, the acquisition
process must be reexamined to account for these differences. The most frequently
made suggestion on how to improve DoD 5000 was revising it such that it is more
relevant for IT systems, specifically the interpretation issues and conflicts between
being MAIS and MDAP.”
Another common suggestion was reducing the page count and working on
better implementation of DoD 5000. One program manger explained, “The main root
of the problem is the internal implementation of procedures within the Defense
Information Systems Agency (DISA).” The RAND study also suspected that the
burden of the acquisition process stems from poor implementation rather than the time
spent complying with statutes and regulations.
1
. This was confirmed with interviews
conducted in this research.
The second most popular comment related to “color of money” issues. “Color
of money” is a term that refers to moving money from one appropriation to another.
xvii
The transfer can occur in one of two ways. If the amount of money being transferred
is below the current congressional threshold of $9.9 million for RDT&E, this money
can be transferred to a different appropriation such as procurement or Operations and
Management (O&M). If the amount of money is above the $9.9 million threshold, or
if the threshold has already been used, a programming request must be submitted to
the Service comptroller, the OSD comptroller and others, ultimately ending up in
xvii
An appropriation refers to the legal basis for withdrawing funds from the Treasury. There
are often specific provisions for specific expenditures. Congress authorizes purposes of appropriations
and generally DoD cannot expend or obligate appropriations without authorization (Friedrich, Holly,
DAU).
86
Congress. Such issues arise in program management offices because PMs and their
staff lack the financial flexibility to move funds from one appropriation category to
another.
Several interviewees expressed concern because they felt that the system was
working against them. One program manager even exclaimed that “those outside the
program office do not really want the program to succeed.” Most of the oversight
community working outside the program office, is a part of the program office’s
environment. Although the environment is outside the system’s control, it is crucial in
determining how the system performs. This environment also includes the budget that
is given to it by Congress, and Congress’ ability to control movement of money from
one appropriation to another. Since this budget cannot be changed by activities within
the system, the budgetary constraints are a part of the environment of the system.
However, since the same program manager that cannot control the budget, is
held accountable for the system’s performance, the system is likely to be frustrating
the leader’s purpose. Several program managers explained that since they are running
the program office they should have the ability to move funds to areas where the funds
are most needed. In fact, if reevaluated it would likely be concluded that this
regulation may be counterproductive to achieving the purpose of the system.
Another area of concern involved, “continuous confusion about briefing format
requirements.” One program manager explained that “even for standing and recurring
briefs, the guidance on content changes frequently, sometimes right up to two days
before the actual brief.” This manager explained that this was similar to aiming a dart
at a constantly moving target. All participants explained frustration in the extra work
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that goes into satisfying the reviews. They also explained that much of their required
work is well beyond the normal day-to-day operations. The RAND study measured
burden using compliance measures. In other words, the study did not account for all
costs associated with program execution. For example, it did not account for the
constant change in statutes and regulations which requires constantly learning new
processes.
Several program managers explained that regulations often work at cross-
purposes. For instance, a regulation designed to decrease procurement costs, may
actually increase lifecycle costs. Such rules often lead to movement from Box B to
Box C.
Who Benefits from this Oversight?
It is important to remember that for the purpose of this research oversight is
equated to the control of the system. Although there are many clear benefits to
oversight—accountability to taxpayers; guidelines for inexperienced personnel; a
standardized acquisition process; and less waste, fraud, and abuse—most program
office personal are quick to explain that when it comes to oversight, the costs greatly
outweigh the benefits. One of the primary reasons for this is that the costs and
benefits are incurred by different groups of people. While most of the costs are
incurred by the program office responsible for filing the reports, the benefits (if any)
are incurred at higher organizational levels.
For example the Defense Acquisition Executive Summary (DAES) quarterly
report is prepared by program offices for the Under Secretary of Defense for
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Acquisition, Technology, and Logistics (USD[AT&L]). The program offices do not
see the direct benefits of such reports, in fact, most program managers stated that they
never receive any feedback on this report, making them question whether or not the
report is ever even reviewed.
One program manager explained that “programs benefit from oversight since
having others review or weigh in on your work is always valuable. However, where
the process imposes unnecessary time or work, oversight becomes a burden.” Most
program managers feel that much of the process does involve spending time that could
otherwise be spent doing something more productive.
Most program managers expressed that the same oversight could be achieved
with less frequent reports and briefings. Several program managers explained that
these reports and briefings rarely address the real issues and as a result rarely identify
problems in advance. One program manager explained that, “There is not a lot of
flexibility to identify the real problem areas.” One of the problems identified most
frequently in this research is that the strict guidelines of the oversight briefings make it
so that program managers cannot raise the real issues.
Many program managers also explained that the personnel they deal with on
the oversight end rarely know much about the program they are responsible for
overseeing. When asked “who benefits from this oversight?” one program manager
stated, “From what I have seen, 9 times out of 10, the organization conducting the
oversight is the one who benefits. The review is done for their education.”
When questioned about the benefits of oversight, one individual in OSD
explained that, “people on the receiving end are burdened, but they are there for a
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reason—this is the cost of democracy.” Many program office executives explained
that they often felt that by being asked to file certain reports they were being
persecuted for someone else’s past crimes. In response to this two researchers at CRS
explained that, “one apple ruins the bunch,” and that the purpose of the regulations is
to “regulate the bad apples.” Since it is impossible to measure the road less traveled it
is often difficult to identify the waste, fraud and abuse that has been prevented by
oversight making it extremely difficult to compare the “costs” incurred to the
“benefits” accrued.
When analyzing costs and benefits of the weapons acquisition system from a
“systems” perspective, it is important to keep in mind that the system has to balance
competing interests of the Executive, Congress, and DoD, among others. One
interviewee from CRS explained that, “the interests even amongst these organizations
are overlapping and not identical, so this is the best system to achieve the desired
purpose.”
Most program managers expressed concern with many of the differences
between the military acquisition system and the commercial market. Most of the
differences where financial, for example “color of money” issues. One program
manager explained, “In the business world there are no “color of money” issues, when
you have to petition every time you want to move money from one appropriation to
another, it results in schedule delays for the program.” He added, “If I do not spend
the money in a given amount of time, it is taken away, but the need for the money is
not.” He expressed that such regulations move us further from what should be the
goal—“supplying the guys on the ground with what they need when they need it.”
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One interviewee from the Defense Acquisition University explained that, “It is
not necessarily the amount of time one spends that creates a burden, but rather, a
burden is created when one feels that they are doing something that does not serve a
higher purpose, even if it takes only five minutes.” When designing a system, the
burdensome issue must be compared to the necessity issue. In other words, only work
guided by the system’s purpose should be conducted. Based on the feedback received
during interviews, if the burdensome versus necessary issue were raised about each of
the reports a program office is required to produce, the reporting requirements would
be cut in half.
The Oversight Community—Helping or hindering getting the job done?
The oversight community has been described as political appointees, members
of Congress and OSD. When asked if the oversight community helps or hinders
getting the job done, most program managers expressed that the oversight community
hinders the acquisition process more than it helps achieve the system’s purpose.
Issues such as fighting for funding, the lack of expertise of Action Officers (AO)
xviii
,
and dealing with the personal agendas of these oversight officials were among the
most common concerns.
Most program managers explained that working with Congress and OSD is
extremely stressful. One program manager explained, “We have several political
appointees that create unnecessary oversight and churn in our program. Members of
xviii
An action officer is an individual who evaluates programs, but is not directly involved with
the program office. Most often these officers work for oversight agencies within Congress and DoD.
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OSD are often the same. We deal with action officers that seem to think their job is to
make sure we don’t succeed. Many action officers weigh in at the last minute so you
cannot be successful. We spend a lot of time pre-briefing and convincing people
before every milestone.”
Another program manager suggested doing away with what he called “five-
minute action officers.” He explained that action officers do not come to meetings or
help chart the program and are therefore not dedicated to the success of the program.
In fact, he explained that most of these action officers are not even up to speed with
the program when they are evaluating it. He explained that these action officers,
“come in at the last minute and throw road blocks on the program.”
In addition, this research revealed that the oversight community, especially
DoD and Congress, often work at cross-purposes. For example, Congress has the
ability to cut DoD funding for ‘excessive’ program growth. Another concern that was
raised by several of the interviewees is that many of the oversight personnel do not
understand all parts of the acquisition process. For example, one program manager
expressed concern that one of the action officers from the office for Acquisition
Technology and Logistics (AT & L), who is responsible for overseeing the acquisition
strategy only attends the acquisition Working Integrated Process Teams (WIPTs), and
as a result doesn’t fully grasp all aspects that should be considered. This program
manager explained that it would be helpful if such action officers attended other
WIPTs, such as the Test and Evaluation (T&E) WIPT and the Information Assurance
(IA) WIPT. Attending these additional WIPTs would help the action officer
participate in the acquisition process more effectively.
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One program manager explained that, “In most cases the people who throw the
roadblocks at a program are not accountable for delivering the capability.” In fact, he
explained that, “they have no incentive to support the success of the program.” This is
evidence of a poorly functioning control. Given the current system design, the
oversight community is not a part of the system, but rather a part of the system’s
environment. Even though the environment is not under the system’s direct control, it
is crucial in determining how the system performs. Under a well-designed system this
oversight community would be part of the larger system, rather than the system’s
environment. Thus, anyone who is associated with the program is driven by the
system’s purpose to guide the program to its ultimate goal.
Reducing the Burden of Oversight
Participants were also asked what should be done to reduce the burden
associated with oversight. Responses touched upon many areas and addressed many
of the “system’s” problems. No interviewees complained about the amount of time
spent complying with statutes and regulations, indicating that time (what the RAND
study captured) is not the burden.
According to the people interviewed in the program management community,
the PMs were most concerned by the lack of support they receive from other
stakeholders. Many interviewees stressed the need for more involvement from
personnel who have particular expertise. One program manager explained that there is
a constant struggle of “stakeholder versus observer.” He further explained that there
are many “value added and critical stakeholders who can provide input across the
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process.” Several program managers expressed concern with the current system
because many of the individuals in the oversight community have little or no
association with the end product. The problem with the oversight community, or the
control, is that individuals who never see the capability demonstrated are often the
ones who evaluate it.
Other comments were targeted at the reporting process directly. For example,
one interview suggested, “reviewing the numerous reporting requirements and
consolidating. In cases where the same slide content is required for more than one
briefing, the format should remain unchanged. Other suggestions included, “reducing
briefings and reports so the program management office can concentrate on the cost,
schedule and performance of the contract.”
Most of the suggestions revolved around streamlining the acquisition
process.
xix
In most cases, this means relaxing some of the rules and regulations aimed
at reducing waste, fraud, and abuse. In other words, reducing the amount of
regulation. A CRS researcher identified some of the key problems associated with
streamlining. Primarily, that simply being told that a regulation is burdensome does
not necessarily indicate how it should be reformed. For example, is a regulation better
when it is written broadly or narrowly? He explained that, “a broad regulation may
add stress of interpretation, but a narrow regulation is similar to ‘teaching to the test’
in that there is little room to exercise one’s own discretion. One of the issues that
xix
Streamlining acquisition practices is one of the key strategies for reforming the acquisition
process. It focuses on reducing the cost and length of acquisition by eliminating unnecessary
duplication and burdensome administrative elements. Streamlining acquisition processes free the
program office and the contractor to problem-solve and use best practices (Data and Analysis Center for
Software).
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must be raised when addressing the amount of regulation imposed is whether the
regulation exists to reduce waste, fraud and abuse, or to check and re-check to prevent
public embarrassment.
Most program managers stressed that the rules are too narrow. This indicates a
clear problem with the design of the system. However, it does not tell us whether a
certain rule should be eliminated entirely or changed to allow for more flexibility of
interpretation. A system’s purpose if well defined can address such issues when they
arise. However, one of the reasons it is unclear whether the rules in the acquisition
community are too broad or too narrow is because the purpose is not well defined.
When examining the rules, it is unclear exactly what they are designed to achieve. It
is crucial that all rules be clear on the work and authorities of each role.
Other suggestions for reducing the burden of oversight include, “Grading the
Action Officers (AOs) on their participation in the program’s WIPT and compare this
to the number of criticals they submit against products.” In fact, several program
executives recommended “making the action officers accountable for getting it right
before it gets to the top.”
Another suggestion was automating how documents are reviewed and signed.
Although some efforts have been made to streamline this process, it has faced many
problems within the acquisition community primarily because there is no uniformity
of the document filing process within the system. One program manager suggested
that if everyone could “agree to a set of metrics that can be placed online for all to
review, that can be used across all programs, oversight would be much more
transparent.”
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Others explained that they are constantly struggling to determine what needs to
be done when a program is simultaneously a Major Automated Information System
(MAIS) and a Major Defense Acquisition System (MDAP). Several program
managers expressed concern that the guidelines in this area are unclear and expert
assistance is necessary to simplify the process. Most interviewees raised this issue and
explained that since the two are quite different (MAIS and MDAP) following the same
guidelines does not make sense. In this case, the rules of the existing system were
simply enforced on IT related acquisitions, even though the system probably should
have been re-evaluated and adapted to deal with this new type of acquisition. These
concerns indicate the need for one or more systems.
Program managers have expressed concern that the process often leads to
disagreements between “OSD elements AT&L and Networks and Information
Integration) NII, and the PM is often stuck in the middle.” Suggestions for improving
the process include holding OSD accountable in terms of how long it takes them to get
the program from milestone to milestone. Another program manager explained that,
“If OSD representatives are held accountable for program schedule delays, PMs may
be more successful in getting through the wickets.”
The Milestone review structure was established by deputy Secretary of
Defense David Packard in 1969.
xx
The Milestone system is designed to ensure that all
weapons are acquired to meet strategic requirements; that detailed performance
requirements are not determined early in programs; that cost-schedule-performance
trade-offs are made in programs; that weapons are adequately tested before entering
xx
The Milestone Decision Authority (MDA) for ACAT ID programs is USD(AT&L).
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production; and that fiscal constraints are constantly taken into account.
xxi
The
acquisition cycle occurs in four phases: concept design, demonstration, full-scale
development, and production. Each phase is separated by a Milestone at which the
program is assessed prior to receiving authorization to proceed to the next phase.
Program offices are responsible for receiving these authorizations, as they monitor the
program through each milestone. The review process at each milestone involves a
great deal of paperwork to get the proper authorizations. Program office personnel
express concern that the amount of time to request and receive the necessary approvals
is elongated by burdensome processes that are in need of reevaluation.
Compliance Outsourced to the Contractor
Interviewees were asked to identify what proportion of compliance work is
outsourced to the contractor. Although most interviewees were unable to assign a
numerical value to this question they admitted that it occurs frequently. Since the
program office’s responsibility is to monitor the contractor, most interviewees
admitted that having the contractor monitor itself presents a problem. “Having the
contractor work on compliance issues is essentially having the contractor self-
regulate.”
xxi
Per U.S. Department of Defense Instruction (DoDI) 5000.1 and 5000.2, The Defense
Acquisition System, May 2003, and Operation of the Defense Acquisition System, May 2003,
respectively.
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ORGANIZATIONAL QUESTIONS
Well Designed Organizations vs. An Accumulation of Rules
Interviewees were asked if they feel that they are working in a well-designed
organization, or an organization that is an accumulation of rules. Their responses
conveyed that there is both too much and too little control. One interviewee explained
that a big part of the problem is that “the organization is fairly chaotic due to the
constant rotation or departure of personnel.” Others stated that when working in a
poorly designed organization that is an accumulation of rules, the constant churn of
personnel is difficult since those who have mastered the rules are constantly leaving
and new members spend a significant amount of time learning how the system works.
Many in the program management community pointed to another systems
problem—civilian personnel are not used as effectively as possible. One program
manager explained that the root of the problem is that civilian personnel reach the
height of their careers too quickly, making it more difficult to retain experienced
personnel. Other civilian interviewees complained that they themselves were not
being used as effectively as possible given their backgrounds and experience with
acquisitions.
One of the main concerns program managers and executive officers raised is
that the incentive structure within the personnel system is not well designed for
civilian personnel, making it extremely difficult to retain them. “The current system is
not designed in a way which allows program offices to transfer lessons learned from
departing to new personnel.” Many interviewees expressed concern that this may
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contribute to repeating the same costly mistakes that impact cost, schedule or
performance more than once.
A separate interview question read, “Do you believe there are resources within
your organization that are not being used as effectively and efficiently as possible?
Please give examples.” Every comment in this section, both written and verbal,
indicated that individuals were not being used effectively. Some explained that people
with experience and skill are often forced to do remedial work, and people with little
to no experience are required to produce complex reports. One program manager
explained that, “People. Contracts and personnel actions take forever.” Another
program manager explained that the problem with contracts is that, “Contract support
is matrixed into the PM Office. This is a major roadblock at times.”
Several interviewees expressed concern with some of the rules as being
designed to punish them for someone else’s bad behavior. One program manager
explained that, “Sometimes these rules and regulations create a burden due to an over-
reaction to a previous program’s mistakes.”
Rules and Regulations—Facilitating or Hindering Achieving the Program
Office’s Purpose
When asked if the rules and regulations facilitate or hinder the achievement of
the program office’s purpose, some members of the program acquisition community
expressed concern that they are spending time on processes that are old, irrelevant and
add little value to the actual program. Several interviewees cited that the rules and
regulations which hinder the achievement of the program office’s purpose are those
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which were once designed to achieve a purpose that has since become obsolete. One
program manager explained that rules hinder the achievement of a program office’s
purpose anytime they “use resources that could better be used elsewhere.” Most
program office personnel explained that this is often the case and as a result only a
small percentage of their time is spent being proactive. One program manager
explained that 60% of his time is spent reacting to internal and external controls,
leaving only 40% of available time to guide the program towards achieving its goal.
One of the most addressed concerns revolved around software driven systems.
Many program office personnel explained that working under one set of acquisition
rules (DoD 5000) guiding both IT and mechanical systems creates problems in
achieving the program’s purpose. Many interviewees expressed concern with what
seemed to be forcing a unique system of IT acquisition to work under an existing
acquisition process that was designed well before IT applied to programs. One
program manager explained that, “The idea of building IT solutions with the
guidelines of a weapons platform makes no sense.” This manager suggested revising
the DoD Directive 5000 into different directives for weapon systems and IT
acquisitions. One manager explained that, “Although DoD 5000 encourages
streamlining and doing what makes sense, this is rarely practiced. In fact, you need to
plead your case for why you should be allowed to do something differently.” This
manager explained that the problem with streamlining is that only the program office
has the incentive to do so, and thus it often appears as though members of the
acquisition community outside the program office are working against achieving the
program’s purpose. Others explained that even though they can often come up with a
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way to do things faster and better, they are not allowed to do so because of the way in
which the rules are written. One manager stated that although the goal of a program
office is to develop solutions for the war fighters, bringing in additional capabilities
that weren’t initially in the books can get the manager in trouble for spending money
earlier than planned.”
Another act that was described as hindering the acquisition process is the
Clinger Cohen Act. In 1996 the Federal government implemented the Clinger Cohen
Act (CCA) which established strict guidelines for the acquisition of IT systems. This
act, also known as the Information Technology Management Reform Act (ITMRA),
was designed to alleviate many of the problems relating to the acquisition of IT
systems. Many program office personnel explained that the problem with the act is
that it does not clearly define IT. Since almost all weapon systems have some degree
of IT, are all weapon systems required to comply with Clinger Cohen? Many program
office personnel explained that much of the burden they experience when acquiring IT
systems is determining which acquisitions fall under Clinger Cohen, and which do not.
Most concerns involved proper training for the requirements of this act. One program
manager expressed concern with the fact that OSD is often unable to guide program
managers by answering questions relating to IT and the CCA. He explained that when
this occurs, “it feels as though the system is not there to support the program.”
Although most concerns centered around having to abide by too many
unnecessary rules, some people explained that there are areas in which guidelines are
necessary, but non-existent. Concerns included, “Transitions within a program office
to a new program.” This process was also explained as very confusing with very few
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guidelines. One participant explained that, “In some areas of the Defense Information
Systems Agency (DISA), there do not seem to be current policies and procedures in
place. This leads to different guidance for the same process and no guidance for non-
repeatable processes.” One PEO explained that “the Defense Information Systems
Agency (DISA) is not aligned properly to work with PEOs.”
Complying with Obsolete Rules
Program office personnel were asked if they ever find themselves being forced
to comply with rules that were once designed to achieve a purpose which may no
longer be the case. In general, most program office personnel were supportive of the
goals of weapons acquisition, but most felt that there may be a better way to achieve
the goal. In the words of one PM, “The organization is not agile enough to meet the
needs of the changing world. Ability to purchase material is slow and archaic. DISA
has not quite moved from the old DCAA to the new DISA and still needs to transform
and shed the old ways. This is true in many areas.”
One frequently heard remark is that program offices are forced to comply with
rules which no longer achieve a necessary purpose because many people within the
weapons acquisition community, primarily OSD, are averse to change. One program
manager explained that this is most prevalent in the testing community where more
emphasis is placed on producing reports than actually fielding a functioning product.
Although the RAND study accounted for time spent producing test reports, it did not
take into account the consequences of such reports to address which are necessary and
which are not.
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The PM community emphasized again that, “DOD 5000 does not support IT
systems.” Other frequently heard comments included that, “the DAES and SAR
processes are very complex (OSD reporting) and need simplification.” Suggested
included simplifying these reporting requirements to allow more time to deal with
actual program problems.
Program office personnel acknowledge that the pendulum will probably swing
again. On program manager explained, “Rules and regulations we are asked to
comply with are based on the current agenda. When this agenda changes (like in the
case for using commercial practices), the program offices are criticized for using
practices which were once mandated.”
Laws, Policies, Statutes and Regulations Which Conflict With One Another
Interviewees were asked if there are any laws, policies, statutes or regulations
which conflict with one another. Several interviewees expressed concern that rules
that conflict with one another presents a serious problem for program office personnel.
For example, under DoD 5000 program managers are responsible for Total Life-Cycle
System Management (TLCSM). The PM community explained that for TLCSM to
work the PM must receive funds to cover the cost of the acquisition and decide how
best to use those funds without facing “color of money” issues. One PM explained
that, “Color of money issues prevent me from spending money where it is most
needed.” One of the reasons such problems arise is because the rules are developed by
people outside the program office who do not understand the acquisition process at the
program office level. In other words, the rules are written by people who are not
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working on the program at the program office level. Many interviewees expressed
concern that the people who write the rules are too far removed from the everyday
work associated with acquiring the weapon or weapon system. This raises the
question of who should be responsible for designing or redesigning the system and
furthermore, who should own the system.
Working Around the Rules and Regulations to Get the Job Done
Interviewees were asked if they sometimes have to work around the rules and
regulations to get the job done. Most interviewees explained that the majority of their
work occurs in Box C because by working around the rules they save time and are
more efficient. In the words of one program manager, “Most of the rules have some
flexibility. That does not mean that what you are doing is of value…sometimes you
do it just to check the box.” Another manager explained that working the system
involves learning the bureaucracy and working with key players on a continuing basis.
He explained that, “Many issues can be handled on a personal basis.”
Elimination of Statutes and Regulations that Prevent Effective Work
Program managers were asked why statutes and regulations that are not
productive are not eliminated. Program managers expressed concern with the system,
because although they understand it best they cannot make changes to it. One
program manager explained that bad rules are not eliminated because, “The
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government is slow to change things.” Another explained that the “process is too long
and complex to eliminate rules.”
In the words of one program manager, “I think we have so many government
workers involved in the process that the process became grid-locked. This is not so
true in the Navy with the small Program Management offices and small oversight
staffs.” This same manager raised an interesting point when he explained that, “Many
people’s jobs depend on retaining some of the non-productive statutes and
regulations.” Overtime, the system has become so complex because entire positions
have been created within program offices where people produce unnecessary reports
and abide by obsolete and repetitive regulations.
One program manager explained that the community outside the program
office is resistant to change because they do not deal with the everyday hassles of the
system. This interviewee explained that, “The office, or more often the person, which
established the statute or regulation is still in existence and is averse to change.”
Reforms—Productive or Counterproductive?
Interviewees were asked, “Over the years many reforms have been instituted to
increase productivity. Which if any have achieved this purpose? Which have been
counterproductive?” Most interviewees expressed concern because they felt that the
negative aspects of the counterproductive reforms outweigh the benefits of the
successful one. One problem that program offices face is that rules that may work for
one office may not necessarily work for another, but they are all required to follow
essentially the same rules. One interviewee explained that the productivity of reform
105
is “organization dependent. I have seen very efficient processes in one agency be very
inefficient in another.”
One program manager provided an example of a situation in which rules were
designed to discipline a problem and have since made the process more complex. He
explained that, “The Joint Capabilities Integration and Development System (JCIDS)
process has really complicated the development of requirements, but it was instituted
because the same process had become undisciplined. We are our own worst enemy
and now we have ourselves to thank for the onerous JCIDS process.”
Several interviewees commented that, “The Defense Acquisition Workforce
Improvement Act DAWIA act has been productive.” The purpose of the 1990
DAWIA (Title 10 USC §1701-1764) is to improve the effectiveness of the acquisition
workforce (military and civilian) primarily through education, training and career
development. Under this act acquisition positions are divided into position categories,
each of which requires a formal certification. Examples of position categories include:
contracting, information technology, program management, purchasing, test and
evaluation, among others. Each position is then further subdivided by level,
depending on an individual’s grade scale (GS) or military level. Training is provided
by the Defense Acquisition University and is usually broken down into basic or entry
level, intermediate, or advanced/senior level, depending on GS level or military rank.
Basic level training emphasizes fundamentals of the acquisition process; intermediate
training involves a specialization of some sort along with broadened general expertise
in acquisition; and senior level training focusing on a particular functional area as well
as mastering the overall acquisition process.
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The Impact of Changes in Statutes and Regulations on Program Office Work
Interviewees explained that the constant changes in statutes and regulations
create a burden. One program manager explained, “They generally create confusion,
since whoever owns them is not prepared to react to them. This rolls down to the PM
usually as a late suspense.” He further explained that this applies not only to the
interpretation of rules, but also to revising them when necessary. Others explained
that much of the burden comes from the manner in which such changes are
communicated to the program office. In the words of one program manager, “There is
no good mechanism within DISA to communicate these types of changes. I get any
information informally from old DAU (Defense Acquisition University) professors.”
One interviewee explained that the burden is usually generated when the changes in
statutes and regulations deal with, “the development of contracts (types, methods, etc.)
and in the various certifications now required.”
Narrow vs. Broadly Written Statutes and Regulations
Interviewees were asked, “Are the statutes and regulations that impact your job
written too narrowly (leaving little room to exercise good judgment)? Or, are they
written too broadly (providing little direction on what to do)?” Responses were split
evenly between the two. Half the program managers explained that the rules are broad
and they tend to use that to their advantage in the sense that they interpret them in a
manner which best suits them. Others explained that the rules are too narrow, but that
good personal relationships (Box C) can overcome some of the burden associated with
abiding by strict guidelines that may not be necessary at given times.
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In an interview with members of the Congressional Research Service (CRS),
one interviewee explained that, “the burden imposed is only as good as it is written.”
Another issue that was raised by program office personnel is that it may not be the
statute or regulation itself that is burdensome, but rather the way the boss applies it.
Many personnel explained that when they are working for an experienced program
manager, the manager has the people skills to work the system and make the process
less burdensome.
Lack of Feedback on Reports
Interviewees were asked, “Are you required to produce some reports for which
you receive no feedback? If yes, do you believe they are used?” Several of the senior
people who were interviewed expressed concerns about reports which the program
office spends time producing for which they receive little or no feedback. One
program manager explained that, “No one pays attention to the DAES (Defense
Acquisition Executive Summary).” This program manager explained that in the three
years he has spent running a program, filing quarterly DAES reports, he never once
received any feedback. He explained that initially a DAES report is difficult and time
consuming to complete, but once you get the hang of it the report is mostly composed
by cutting and pasting together previous reports.
He explained that when the RAND study was conducted it captured the
amount of time associated with this cutting and pasting process, and since it was
minimal concluded that there was little to no burden associated with the DAES report.
However, he explained that even if the DAES was simplified into two questions and it
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took one tenth of the time to produce it would still be burdensome because, “It doesn’t
enable capability to the user faster, it does not make the program manager more
effective, and it slows down the process rather than making it more efficient. Another
senior manager explained that, “The DAES is basically a task to scratch the itch with
no benefit.” Many of those same senior people expressed concerns that there is not a
more effective audit mechanism. They explained that they find themselves producing
non-value-added reports simply for the sake of producing them.
In an interview with an OSD official addressing this concern, the official
assured the author that the reports are looked at and that they are useful tools to flag
problems. When program managers do not get feedback it simply means that
everything is moving along smoothly (even if it is over a three year period). The only
time such reports have side effects such as schedule delays, is when there is a problem
that needs to be addressed. In the words of one official, “We have very selective
oversight. There are many programs and very few people monitoring them. We are
forced to focus on brick ticket items and wounded ducks.” A system where no news is
good news indicates bad management.
THE DEFENSE TRANSFORMATION ACT FOR THE 21
ST
CENTURY
The 2003 Defense Transformation Act for the 21
st
Century contains a list of
183 congressionally mandated reporting requirements which DoD believes are
unnecessary, repetitive, obsolete, and overly burdensome, among other problems.
Many of these reports are filed by program office personnel. The justifications
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associated with repealing each report are depicted in the table below. Some reports
have more than one reason for repeal. For the purposes of this research only reports
relating to the weapons acquisition process are examined.
Table 4.1—DoD Reasoning for Repealing Reports
Justification Percentage of Reports
Unnecessary 36%
Overly burdensome 35%
Redundant 28%
Limited utility 23%
Obsolete 14%
High cost 7%
Harmful to national security Less than 1%
Adds delay Less than 1%
One example of a redundant report is the Annual Operations and Maintenance
Budget mandated by Title 10 USC § 116. This provision requires the Secretary of
Defense to provide Congress with a report on the operations and maintenance of the
armed forces. This includes documenting the number of training days for combat
arms units in the Army and Marines, major vehicle overhauls and repair work on Navy
ships and the number of flying hours of military aircraft. DoD explains that since it
already provides this same information in the Operation and Maintenance OP-5
Budget exhibit, the Annual Operations and Maintenance Budget report should be
repealed.
Some reports were explained as providing “information of limited utility at an
extraordinary cost to DoD in terms of human resources.” An example of such a report
is the Humanitarian and Civic Assistance Provided in Conjunction with Military
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Operations report as mandated by Title 10 USC §401. DoD estimates that the Defense
Security Cooperation Agency (DSCA) requires 48 workdays and $38,400 to produce
the report. The recommendation for repeal includes comments such as, “The report
generates very little interest from Congress” and that DSCA has received only one
question from Congressional staff about this report in the last five years. DoD has
requested repealing this report in favor of providing Congress with information in
response to specific concerns.
Suggestions for making the reporting process less burdensome included
replacing some obsolete reports with a constantly updated information delivered to
interested members of Congress through a classified DoD internet site. One report
that fell into this category include the Personnel and Unit Readiness Quarterly Report
which requires the Secretary of Defense to provide Congress with a report on military
readiness.
Another example of a report that was described as overly burdensome and
redundant is the Report on Transfers from High-Priority Readiness and Appropriations
as mandated by Title 10 USC §483. This report requires the Secretary of Defense to
provide Congress with a report on transfers during the preceding fiscal year from
funds available for each covered budget activity. DoD claims that it already provides
such information to Congress through other reports such as, the rebaseline report,
which provides the execution track requested by the Congress; the DD 1415
reprogramming request, which provides detailed movement of funds prior to
execution; and the DD 1102 execution status report which provides detailed execution
on a monthly basis. DoD has argued that since these reports have been tailored to
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provide useful and meaningful data to Congress, the Report on Transfers from High-
Priority Readiness and Appropriations should be repealed.
Redundant and Unnecessary Reports
Interviewees were asked, “Are there some reports that are redundant? Or
unnecessary? If yes, please give examples.” In addition to the DAES, senior
personnel complained that, “Internally we create so many different reports or views of
reports. We tend to cut and paste a lot between them.” One of the most burdensome
elements of the reports was explained as, “Exhibits are nit-picky and redundant.”
Others explained that, “Some of the internal agency reports are redundant.” In the
words of one program manager, “Internal to DISA, there are numerous redundant or
unnecessary reports. The Director's Hot Topics and IPR briefings seem duplicative of
the OSD/NII quarterly review. The DISA Annual Program Plan review and quarterly
health assessments overlap in some areas with the Director's IPR reviews. The CAE
lifecycle summary chart is duplicative of these reports also. The Weekly Activity
Reports (WAR) and quarterly newsletters are time consuming and unnecessary.” One
individual explained that “DAES and SAR are very complex and require well trained
staff to produce them.”
Authority and Accountability in the Workplace
Interviewees were asked, “Is authority and accountability clear in your
workplace? For example, do you have the authority to make the necessary changes to
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make yourself more efficient and productive? Do you have access to information and
resources you need to get the job done?”
The message from responses to this question is that authority and
accountability are unclear for personnel in lower positions. These personnel also felt
that they did not have the authority to make the necessary changes to make themselves
more productive. Most program managers explained, however, that they are held
accountable for everything whether or not they have the authority to exercise their
own good judgment. In the words of one PM, “The PM is overly accountable, yet not
given freedom to do what he thinks is best.” Another program manager explained,
“The PM is accountable and responsible for everything that happens in his/her
program.” These same program managers explained that they do not have the
resources and information to get the job done.
One common example is the inability to move money to where it is most
needed (color of money) without working up the bureaucratic chain. One PM
explained, “This (color of money) is a clear example of PMs not having the authority
to do what needs to be done.” In a well-designed system, for managers to accept
accountability for their work and the work of those below them, they must have the
ability to exercise authority. Another PM explained that in his line of work he must be
creative and innovative to achieve the system’s purpose, but often times he does not
have the necessary resources or flexibility to deal with challenges that arise on a daily
basis.
Another concern with having the adequate information to get the job done
centered around the distinction between roles and responsibilities at different levels.
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The challenge of implementation is often the initial interpretation of a statute or
regulation at the program office. (Although the RAND study found this in the initial
interview rounds, the time allocation did not account for this). When a statute or
regulation is ambiguous in its intent program office personnel find it difficult to know
what needs to be done in order to comply with its requirements. In the words of one
program executive officer, “Authority and accountability are not clear. There is no
distinction made between roles/responsibilities of the Program Office level Program
Control division versus the PEO level Program Control responsibilities.” Several
senior people expressed that often times the organization responsible for the confusing
rules cannot or will not clarify the confusion.
In a subsequent survey/interview question people were asked, “If you find a
better way of doing your work, are you allowed to change the way you work? If not,
is there someone else who can authorize the change?” Although this question received
mixed answers, people in management positions seemed to express that they are
unable to make necessary changes without working through a complex bureaucratic
process. One PM explained, “More often than not we don’t even bother trying to
make changes.”
Personnel in lower level positions within the program office explained that
they do make suggestions to their boss. One interview explained that, “authority is
delegated to the boss.” Although most lower-level personnel believed that the
program manager could authorize the necessary changes, most PMs said that this is
not the case. One PM explained, “There doesn’t seem to really be a way of putting
forward these types of changes for consideration.” These program office personnel
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were then asked, “Does anyone ever ask you how the process can be made better? If
yes, are your suggestions implemented?” All but one interviewee responded “no” to
both questions.
SUMMARY
This chapter presented the results of interviews, surveys and an analysis of the
Defense Transformation Act for the 21
st
Century. The next chapter applies these
results to examine the state of the system and proposes suggestions for improvement.
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CHAPTER FOUR ENDNOTES
1
Drezner, Jeffrey A., et al, Measuring the Statutory and Regulatory Constraints
on DoD Acquisition—Research Design for an Empirical Study, RAND Corporation,
2006.
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CHAPTER FIVE:
CONCLUSIONS
The purpose of this research was to examine the difference in perception
between the findings of the RAND study, that the burden associated with compliance
is minimal (in terms of time spent abiding by statutes and regulations), and the belief
of program office personnel that it is a significant burden. In Chapter 1, four questions
were presented to help determine whether the root of the problem is the lack of a well-
designed system. A system in this study is defined as “a specific methodology for
organizing activities in order to achieve a purpose. This involves directing flows of
work, information, money, people, materials and equipment. The system provides the
framework within which these flows take place.” First, what is the purpose of the
weapons acquisition system? Second, is it well designed to achieve this purpose?
Third, are the controls built into the system adequate and necessary? Fourth, is there
an audit function that provides information as to whether of not the business process is
achieving the intended purpose and ensuring that controls are in place and being used
correctly?
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Chapter 3 presented the methodology for analyzing the current system and
determining whether it is achieving the goals of the acquisition process in the most
efficient manner possible. The responses to the interview questions by elite personnel
in the acquisition community were presented in Chapter 4. Based on the findings
presented in Chapter 4 it is clear why the perception of people working in government
program offices is different from the RAND study findings. In this final chapter the
responses will be analyzed in the context of the questions presented in Chapter 1. The
clear message that emerges from interviewee comments is that the current weapons
acquisition “system” is not properly designed and in need of reevaluation.
In order to answer these questions it was crucial to keep in mind that the rules
and regulations are not a small part or “extras” of the acquisition system. In fact, they
make up the system in use. The RAND study attempted to measure time spent abiding
by certain rules. To do this, some rules were isolated and the time spent complying
with them was measured. In doing so the RAND study failed to recognize that the
rules of the acquisition community make up the system and cannot be isolated.
Systems are essentially a set of rules. When the rules are well designed they set up the
authority and boundaries around the authority. The interviews conducted for this
research revealed that the problem with the rules in program offices is that they have
specified rules which dictate exactly how the work should be carried out rather than
provide guidelines within which qualified employees may exercise their judgment.
The interviews revealed that the weapons acquisition system does not make
room for individual discretion at the program office level. When human beings work,
they almost invariably can think of ways to do the job better next time. When a
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system is designed to prevent this, employees learn to work around the system and the
direction of the work shifts away from authorized and productive. This study found
that the majority of the work done in program offices falls in Box B (authorized but
unproductive) and Box C (unauthorized but productive) rather than Box A (see figure
5.1 below). The conclusions presented in this chapter will explain why this is the
result of the absence of a well designed system with a clearly defined purpose, proper
controls and an audit function.
Figure 5.1—Matrix for the Analysis of Systems
1
Productive (contributes to the
purpose of the organization)
Counterproductive
Authorized A.
Well designed and implemented
B.
Restrictive practices that have
been adopted by the
organization
(Ex. Bureaucracy, red tape)
Unauthorized C.
People cutting corners and
breaking rules in order to get
their work done
(Ex. sometimes this is the only
way to get the job done and
results in ideas for positive
change and innovation)
D.
Alternative leadership based on
power. (ex. Intimidation, racism,
sexism, stealing, work quotas,
etc.)
(Ex. personal gain at the expense
of the organization)
THE ACQUISITION SYSTEM IS LACKING A CLEAR PURPOSE
The purpose of a system is not a statement of objectives, but rather a specific
statement of why the system exists which then clarifies what work needs to be done to
achieve that purpose. One of the ways in which a purpose can be evaluated to
determine if it is authentic is to identify whether or not the system will forgo other
goals in order to achieve the purpose. A system is designed based on the purpose
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which it hopes to achieve. Each activity done within the system must be toward
achieving the purpose of the system which is the embodiment of the organization’s
purpose.
Interviews with program managers and program office personnel suggest that
the root of the “burden” of acquisition at the program office level is the absence of a
clearly defined purpose. The “official” purpose is to obtain the best weapons at the
lowest possible price. This is, in fact, two purposes which are inherently
contradictory. Thus the employees must constantly consider which purpose should
take precedence as they make their day-to-day decisions – a considerable burden.
This is in stark contrast to the RAND study hypothesis that it is the amount of
time spent complying with statutes and regulations (which is what the RAND study
set out to measure) which creates the burden. Interviewees justified this by explaining
that it is the overall feeling that a majority of the “work” done within the program
offices is not directly related to achieving the purpose of the organization, as they
understand it. As the interviews reveal this is because the purpose of the system is not
well defined, and is, in fact, contradictory.
The majority of the people interviewed were unable to clearly identify any
specific purpose and those that stated that the purpose was “to obtain the best possible
weapon at the lowest possible price” explained that many of the activities within the
current system run against this purpose, or purposes. One program manager explained
that “oversight not only increases the cost of the weapon, but the delay in getting
paperwork processed and working through the red tape of the current bureaucratic
system often leads to the acquisition of obsolete technology.”
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When creating a purpose, clarity is crucial.
2
In Systems Leadership, Creating
Positive Organisations, the authors explain that the purpose of a system should be
explained in a single sentence without the conjunction ‘and’ because it is difficult to
prevent the two purposes from running into conflict in terms of priority. The
employee, rather than the leadership of the organization must decide, “Should I look
for the best weapon or should I try to get the lowest price?” The purpose of a system
must be known by all people who work within it since it is the underlying theme
guiding their work.
One of the difficulties of designing governmental systems is that the basis for
many of the systems is Congressional legislation. Such systems are known to have
multiple, unclear, or contradictory purposes because the purpose is based on what
members of Congress and the President can agree to. The bureaucracy is left to
resolve the contradictions contained within the legislation.
Often personnel find themselves doing work that is not directed at any purpose
they can understand. Given that systems drive behavior, many program office people
find themselves frustrated with producing variations of the same report for different
organizations, following unclear guidelines for the acquisition of complex systems,
working with personnel who are not adequately trained for their positions, or doing
remedial work given their education and position.
Systems should be designed so that all activities support accomplishing the
organization’s clear and singular purpose. The major problem with systems is that
even good systems over time can become outdated and counterproductive. Many
personnel believe that many of the current reports were designed long ago to achieve a
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purpose that has since become obsolete. The interviews suggest that many of the
reporting requirements are not designed to help achieve the program office’s purpose
– either getting the best weapons or getting them at the lowest cost.
Seeing as, the organization’s purpose is inherently contradictory, the personnel
within program offices find themselves doing work that is not designed to achieve the
organization’s understood purpose. The interviews also reveal that some of the
required reports even work against the system’s perceived goal. In the words of one
program manager, “Programs are encouraged to grow and develop rapidly, but based
on reports we file, Congress cuts funding for ‘excessive’ growth.”
Defining a Purpose
When creating a purpose, clarity is crucial.
3
The purpose of the weapons
acquisition process is to obtain the best possible weapon at the lowest possible price.
The program office is essentially the control on this system. Personnel working in
program offices are responsible for making sure that the system is achieving its overall
purpose by monitoring that the contractor is on schedule. To do this program office
personnel must follow numerous statutes and regulations.
When designing a system for weapons acquisition, it makes sense for trade-
offs to be made between the cost of a weapon, its schedule and its performance
requirements. The purpose guiding the current acquisition system is to acquire “the
best possible weapon at the lowest possible price,” a statement that is inherently
contradictory since the best possible weapons are simply not available at the lowest
possible prices. This purpose also fails to acknowledge that priorities for one weapon
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acquisition might be different from another weapon system. For example, one system
might be needed immediately in combat so speed is a priority over perfection. In
another, the long range view requires a truly superior weapon with specified
characteristics such that quality of product is more important than cost or schedule.
Although it would be preferable for the U.S. government to acquire the ideal
weapon quickly and cheaply, a cost-schedule-performance trade-off makes more
sense. When greater performance requirements are necessary, the time will usually
increase in relation to the required increase in performance. Weapons take a long time
to develop and produce, and the more advanced the weapon the longer it takes, but this
process must be kept as short as possible to accommodate the troops and to assure that
our military is not equipped with obsolete weapons. Costs must be minimized to
assure that the government can purchase enough to equip the services. Thus, a
purpose that takes into account the importance of schedule will lead to a much more
well-designed system.
Another factor to consider when specifying a purpose which identifies cost,
schedule and performance goals is that in the case of a weapons acquisition system it
is important to keep in mind that the costs and benefits of the program accrue at
different levels. In the case of program management, most of the costs accrue at the
program office level and the benefits are accrued elsewhere. Thus, it is crucial to
design a system in which program office personnel realize that what they are doing is
accruing a benefit at a higher level, and that it is being done at a minimal cost to them
and without unnecessary burden.
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PROGRAM OFFICES—AN ACCUMULATION OF RULES, NOT A WELL-
DESIGNED SYSTEM
When a system is poorly designed, it often becomes an accumulation of
repetitive, obsolete, and unnecessary rules. The majority of interviewees felt as
though they work in an organization that is an accumulation of such rules. A system
that has become an accumulation of rules rarely achieves its purpose efficiently. It is
no surprise that personnel in such organizations spend a significant amount of time
trying to work around the inefficiencies of the system. Therefore a majority of the
work they do involves working around the rules of the system. This behavior explains
why the majority of the work is in Boxes B and C rather than Box A. When the
RAND study attempted to quantify the burden of complying with many of the
system’s rules, it failed to capture the time spent and “burden” associated with
working around the rules.
“Working” a Poorly Designed System
When a system prevents more efficient behavior it is most likely discouraging
productive behavior designed to achieve the goal of the system. What happens more
often than not, is personnel learn to work around these binding rules which lead to
unproductive behavior. Once again the system finds itself in a situation where
counter-productive work that is authorized by the system slowly becomes
unauthorized (rule-breaking) work that is more productive—movement from Box B to
Box C. When working in an organization with high turnover rates, moving from Box
A (authorized, productive) to Box B (authorized, counterproductive) to Box C
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(unauthorized, productive) is not only time consuming, but burdensome and
counterproductive. It also means that new personnel coming into the workforce first
have to learn what is authorized (whether productive or unproductive) and then have
to learn how to “work the system” in ways that are unauthorized in order to get the job
done.
In an attempt to make productive, unauthorized work (Box C), productive and
authorized (Box A), organizations are created within the system to enforce the rules
strictly, thus adding more system elements to Box B. For example, one interviewee
commented that, “Problems develop when new oversight requirements cause
additional organizational structure to be created. As an example, a new branch is
created whose sole purpose is to generate an oversight report.” The problem remains
that the system is not evaluated to confirm whether or not the report (or other such
rule) is necessary. While controls and audits are not built into the system, even when
the rules or reports become obsolete, workers continue being required to follow them
and the work within the system once again moves from Box A to Box B to Box C.
This research found that over 80% of work in program offices is not authorized and
productive (Box A). What is authorized is often unproductive, and what is productive
is not authorized.
The findings suggest that the primary concerns of program management
revolve around the vast number of rules and regulations that are overlapping,
unnecessary, or working at cross-purposes. The RAND study attempted to identify
and isolate the most burdensome rules and regulations. The problem with this is that
in the case of program offices, the rules make up the system. They cannot be isolated
125
from everyday procedures. Given that the goal is to design systems which fit into Box
A, when a system has rules which work at cross-purposes it should be reevaluated. By
minimizing mandatory guidelines, program managers can have the freedom to
exercise their own judgment as they structure and execute defense acquisition
programs.
In the case of program offices the system is an accumulation of rules, some of
which conflict with each other, or have become obsolete through the years. Working
in such a poorly designed (or really non-designed) system hinders the proper exercise
of authority. In addition the many levels of organization slow decision-making, make
it difficult to change existing systems, exacerbate inefficiency and frustrate
employees. In the case of program offices the system has become so complex that it
often obstructs the program manager’s purpose. Working in such an inefficient and
burdensome system is very costly, not just in a monetary sense, but also in the time
spent working around the bureaucratic system. Most importantly, this poorly designed
system affects program office personnel’s willingness to use their ability to the fullest.
Why try to improve when no one is able or willing to make changes?
For the system to be successful, the rules and regulations need to be
understood uniformly at the program management, and contractor levels. For this to
happen, the rules have to be clearly communicated and understood in consistent ways
across the entire acquisition “chain” both within and outside the Department of
Defense. Without a clear understanding of the rules and regulations, and the purposes
behind them, even the most simple rules will continue to be burdensome at the
126
program office level. Most importantly it is crucial to reevaluate the system
constantly and eliminate rules that are no longer useful or overly burdensome.
Simply identifying a regulation as burdensome, does not necessarily address
the direction in which the regulation should be revised. Furthermore, which type of
regulation—broad or narrow—is better remains unclear, and should be determined
based on the purpose of the system. After a regulation has been identified as
burdensome, the question of whether it should be changed or eliminated entirely must
be addressed. The Transformation Act brought to light many reporting requirements
which are burdensome, but gave little suggestion on how the problem should be fixed
other than eliminating the report completely, or making it less frequent.
Lack of Feedback on Reporting Requirements
In a well-functioning system, there should not be any reports which receive no
feedback, because such reports create the perception of burden. People should only be
working towards achieving the purpose of the system and all of the work they do
should be value-added. One of the main problems with redesigning the existing
system is that it is perceived as a long process. Rather than taking the time to do it,
Congress continues requiring program offices to file unnecessary reports. Because
very little change was brought about from the suggestions of the Transformation Act,
it is likely that the system needs to be reevaluated to eliminate some of these reporting
requirements.
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You Can’t Get Different Results by Doing Things the Same Way
Another impediment when working in an organization that is an accumulation
of rules rather than a well-designed system is that many of the rules are designed to
tell people how to do something, rather than what needs to be done. Many such rules
arise because of the high personnel turnover rates within the organization.
Inexperienced personnel need guidelines to lead them through the new system.
Problems arise when the rules are more than just guidelines. It is important to
recognize that all work is necessarily carried out with guidelines, but guidelines that
prevent personnel from using their own good judgment are often unproductive.
Human beings rarely do the same thing in the same way twice—we find ways to be
more effective. If humans are not allowed to exercise individual discretion, they are
no more valuable than a machine.
Another issue which leads to repeating the same mistake twice is the lack of an
incentive structure to retain personnel. The high turnover rate in program offices leads
inexperienced personnel to make mistakes that a more experienced individual would
not make. Such mistakes occur because inexperienced personnel have not yet
mastered working around the inefficiencies of the system. When new personnel begin
working in a program office their guidelines lead most of their work to fall in Box B
(authorized but counter-productive). Over time they learn to cut corners and break
rules to do work that is productive but unauthorized (Box C). The shift from Box B to
Box C requires getting to know the right people and the right places to go to get things
done. Most of the work in program offices is productive but because it is
unauthorized it is often undocumented. When individuals enter a system in which
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Box C work is the most common, they tend to make mistakes as they learn how to
work the system by building connections with people who help them work around
bureaucratic hurdles. In response to such mistakes the government imposes additional
rules, adding to Box B, rather than clarifying the existing ones into guidelines wherein
qualified employees can exercise good judgment. If there is a well-designed system
with proper training, authorized work is productive (occurs in Box A) and such
mistakes are not an issue. However these mistakes remain an issue for program
offices and other government systems because the addition of new rules to respond to
the mistakes of new personnel are ultimately responsible for Box C behavior.
Lack of Training
Sometimes even well-designed systems fail if they are accompanied without
proper training. Training is often a major undertaking, and because it is extremely
costly, programs often do without training for newly implemented guidelines. In a
well-designed system, employees understand what is expected of them and why. The
absence of a clearly defined purpose in the acquisition system leaves the “why”
portion unclear. Most program office personnel expressed that they benefit a great
deal from training. One of the most common burdens associated with the acquisition
process is the lack of training when new rules and regulations are implemented.
However good the system design is, it must involve training in the knowledge and
skills required to achieve the system’s purpose. One program manager stated that,
“Better training and education in regards to new acquisition initiatives should be
mandatory for all personnel, old and new.”
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Most program offices are made up of both military and civilian personnel.
Seeing as employee turnover in governmental organizations is significantly higher
than turnover in the private sector, the negative consequences of time and money
required to recruit and train replacements is much higher when the organization is an
accumulation of rules. In a poorly designed system the positive elements of high
turnover rates, such as introducing a novel way of thinking and problem solving, are
overshadowed by the negative aspect of inexperience and a complex learning curve.
One of the main concerns program managers and executive officers raised is
that the incentive structure within the personnel system is not well designed for
civilian personnel, making it extremely difficult to retain them. Furthermore, the
current system is not designed in a way which allows program offices to transfer
lessons learned from departing to new personnel. Many interviewees expressed
concern that this may attribute to repeating the same costly mistakes that impact cost,
schedule or performance more than once.
New Rules for the Wrong Reasons—Discretion and Authorities
In view of the fact that it is difficult to measure the bad behavior that is
prevented from a rule being in place, more often than not rules are created to prevent
bad, unproductive behavior rather than encourage good, productive behavior. Such a
system leaves little room for individual judgment and discourages personnel from
exercising discretion. The ability to use judgment and make decisions to achieve a
goal is a human characteristic.
4
Systems should be designed with the understanding
that employees are people with minds and ideas.
5
In addition to discretion, individuals
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must be able to exercise authority at all levels within an organization. Every role must
have authority because without it no decisions can be made and no work can be done.
If people in roles are not able to exercise their own discretion, they are in effect no
more than machines.
6
When a system becomes an accumulation of rules telling people “how” to do
something, rather than what needs to be done, the system often moves further from
achieving its goal. If a system is designed with the understanding that people are able
to adjust their work to most efficiently achieve the system’s purpose given the
constantly changing environment, far fewer rules would be built into the system. If a
system is well-designed and guided by a clear purpose, rather than innumerable rules,
the people working within the system can alter their behavior to best achieve the goal
of the system at any given time.
Most of the interviewees expressed that the current system is designed as
though all people working within the system are incapable or corrupt. When
designing a system it should always be designed with the idea in mind that individuals
working within the system are competent and want to do a good job. Most
importantly, it must leave room for people to exercise good judgment, something the
current system does not.
Many interviewees identified problems which indicate that the authorities of
the system are not properly spelled out. For example, most of the complaints relating
to the DoD 5000 indicate that it does not support IT acquisitions well. The fact that IT
acquisitions are guided by the same rules as those which guide non-IT acquisitions
creates hurdles that must be overcome by program managers when acquiring IT. A
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reevaluation of the system should include an in-depth analysis of the DoD 5000 and its
relation to IT acquisitions.
Color of money issues also present an example of inadequate authority. When
program managers must justify moving money from one part of the program to
another, much time is wasted overcoming bureaucratic hurdles and unnecessary delays
result. If the program manager is responsible for the final outcome of the program,
this manager should have the necessary authorities to guide the program. In the
current system the multiple controls appear to be excessive and upon reevaluation
these controls should be replaced with more authority at the program office level.
One “Bad Apple”, Punish the Bunch
When designing a governmental system it is crucial that the system be
designed to promote good, productive behavior and to identify individuals who abuse
the system. In a well-designed system the purpose should be positive in order to
encourage and reinforce such behavior.
7
Most of the interviewees expressed that the
current system is designed to punish bad, or unproductive behavior rather than
encourage good, productive behavior.
Furthermore, many program officer personnel explained that they were
currently abiding by burdensome rules that were designed in response to another
individual’s bad decision-making. A well-designed system is one which fosters the
good employees and punishes or removes the bad ones. In the case of program office
personnel more often than not individuals felt that they were being punished for
someone else’s bad behavior.
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One of the problems that came to light in this research is that new rules are
often implemented in response to special cause variation, rather than common cause
variation. Common cause variation is the normal variation within a system caused by
random and independent changes that can be traced back to key elements of the
system such as personnel and equipment.
8
If a system experiences only common
cause variation, the output of the system forms a stable distribution over time. Special
cause variation is the result of unpredictable, intermittent events which lead to a
change in the output of the system. When special cause variation exists the system is
unstable and the output of the system is unpredictable. The problems caused by
special cause variation are not a result of the system. Since the problems are not
caused by the system design, the response to these problems should not be changing
the way the system works.
Returning to the Matrix for the Analysis of Systems (Figure 4.1), in order to
prevent authorized, counterproductive work (Box B) and unauthorized, productive
work (Box C) behavior, the system must be redesigned so that all productive work is
authorized and all authorized work is productive. Often times, new rules and
regulations are implemented to prevent and punish Box D behavior. If these rules are
not well designed, they may actually lead to such behavior to become more prominent.
In program offices Box D behavior occurred only when people felt they were being
punished for someone else’s bad behavior.
133
Good Leadership
Management and leadership are crucial to the consideration of a well-designed
system. Good leadership is important to running a system well. One of the key
characteristics of a good leader is the ability to inspire people toward a common goal,
in this case the system’s purpose. However, a good leader should be able to authorize
his employees to do the work they are qualified to do safely, exercising their best
judgment as to how to accomplish the leader’s purpose. Under the current system
design this is simply not possible because the rules and regulations tell people not just
what to do, but specifically how to do it. In such a system, no matter how well
intentioned the leader, the system often hinders the leader’s objective. More
importantly, the program manager’s exercise of authority is hindered by too many
layers of organization, leading to inefficiency.
WHO’S IN CONTROL?
The management of a system is responsible for devising the plans for the
system and for assuring that they are executed in accordance with the original ideas. It
is the management’s responsibility to determine why this is not always the case. This
activity is known as the “control.” The control in a system provides information as to
whether or not the system is being operated correctly, the people working within it are
exercising good judgment as they carry out their work and the system is working as
intended. The control provides data to the operator, the system custodian and the
system owner, often around key decision points. While there are often good controls
134
regarding financial and technical aspects of systems, the social and information
aspects are often neglected. In a well-designed system, management is responsible for
making corrections when the controls indicate a problem. Only the system owner can
authorize changes to the system, though the system custodian often makes
recommendations for change. Making changes to the rules guiding a program office is
especially difficult because the system is owned by Congress and run by the
Department of Defense.
The interviews conducted as part of this study reveal that a “control”
mechanism does not exist within program offices. The absence of controls makes it
difficult to identify problems. When problems are identified, program managers do
not have the proper authority to make the necessary changes to address them.
Program managers cannot make the necessary changes to their individual systems
without going through various elements of the Department of Defense or even the
Congress. Crucial to the design of a well-functioning system are building good
controls into the system. In this case a control in a program office should act to
provide information as to whether or not the system is working as designed. In the
weapons acquisition community the program offices act as the controls for the
acquisition system, but there is no control within program offices. They are
responsible for abiding by the rules of the system, which in this case are the statutes
and regulations. In order to monitor whether or not the controls are working properly,
an audit process is necessary. None of these elements were found in this system.
Because the purpose is not well-defined, there is no clearly defined system, and the
control and audit function are absent.
135
A large part of the oversight community works outside the program office and
is therefore a part of the program office’s environment. Even though the environment
is outside the system’s direct control, it is crucial in determining how the system
performs. For example, the environment also includes the budget that is given to it by
Congress. Congress also maintains the ability to control movement of money from
one appropriation to another. While activities within the system cannot change the
budget, the budgetary constraints are a part of the system’s environment. Since the
program manager who cannot control the budget, is held accountable for the system’s
performance, the system is likely to be frustrating the program manager’s purpose. In
fact, if reevaluated it would likely be concluded that such a regulation may be
counterproductive to achieving the purpose of the system.
This example illustrates a poorly functioning control. Given the current
system design, the oversight community is not a part of the system, but rather a part of
the system’s environment. Even though the environment is not under the system’s
direct control, it is crucial in determining how the system performs. Under a well-
designed system this oversight community would be part of the larger system, rather
than the system’s environment. Thus, anyone who is associated with the program is
driven by the system’s purpose to guide the program to its ultimate goal.
Seeing as systems are the means by which policy becomes a reality, it is
crucial to involve as many knowledgeable people in the process as early as possible.
One program manager suggested differentiating between stakeholders and observers,
and involving all stakeholders in the process as early as possible. In order to create
incentives for the community at large to strive towards the success of the program,
136
they must be guided by the same purpose of the overall system. Because this is
currently not the case, most of the oversight community has little or no association
with the end product. One program manager expressed concern with the current
system because, “People who have never seen the capability demonstrated, or the
common operation pictured, are evaluating it without having all of the necessary
information.”
Prior to designing my questionnaire, meetings were held with several
acquisition experts who suggested that much of the compliance work is outsourced by
the program office to the contractor. When the RAND study measured the “cost” of
compliance by measuring the amount of time program offices spend abiding by
particular statutes and regulations, this aspect of compliance was not taken into
account. This research indicates that the percent outsourced to the contractor varies
from office to office. Answers ranged from a low of 10% to a high of 40%, but most
said it was to difficult to determine.
Because the role of program management offices is to manage and direct the
development and production of a weapon system that meets cost, schedule and
performance objectives defined by the respective service and approved by the
Secretary of Defense; the role of a program office is oversight by definition. Given
that it is the program office’s responsibility to “control” the contractor, allowing the
contractor to self-control creates additional problems for the system. The reason this
occurs is because the authorities of the system are not properly spelled out and
multiple controls outside the program office may be excessive.
137
NO EFFECTIVE AUDIT
Although financial audits exist, and evaluations of particular aspects of the
system are evaluated by organizations such as the GAO (Government Accountability
Office), there are no systems audits. An audit is different from control in that it first
checks from time to time that the controls are in place and being used correctly. It
then reviews whether or not the system is achieving its purpose in the best way
possible. In the case of weapons acquisition the audit process should respond to
questions such as: Are the controls effective? Are there too few, or too many
controls? What this research appears to show is that these questions are rarely raised.
In addition, many of the controls are outsourced to the organization they are designed
to control.
It is no surprise that much of what this research uncovered has not come to
light because this would have required regular systems audits. The insight gained
during an audit should be used to provide recommendations to bring about changed
systems where necessary. The audit not only analyzes the system, but also reviews the
leadership of the organization. It is during such a process that the concerns of the
individuals working within the system can be addressed. Without such a process
personnel in program offices are led to feel that their concerns are not of interest or
concern to their leadership. It is also the audit function which is responsible for
identifying rules and regulations which are burdensome and obstruct achievement of
the system’s purpose. When such rules are not identified, they cannot be eliminated.
As a result the system becomes an accumulation of unnecessary rules which are not
designed to achieve a purpose.
138
REEVALUATING THE SYSTEM
Governmental organizations such as program offices are largely immune to
market forces. Market forces, such as competition, impose change when inefficiencies
arise in the private sector, but no such forces exist for governmental organizations.
For this reason, governmental organizations must have proper controls built into the
system to provide information as to whether or not the system is working as intended,
and an effective audit process to review whether or not the system is achieving its
purpose in the best way possible. How systems are designed determines the
productivity of the entire organization. In the private sector, poorly designed
organizations are eliminated by more efficient and well-designed organizations.
Government organizations are largely impervious to the market forces that weed out
inefficient systems in the private sector; thus many of today’s governmental
organizations are outdated and counterproductive. These ill-designed (or non-
designed) systems lack a clearly defined purpose, operate without controls and audits,
and as a result are not only inefficient, they also frustrate employees who work within
them.
The way a system is designed and put into practice has a considerable effect on
people’s behavior and accordingly the efficiency of the organization. A well-designed
system can turn the goal of the organization, as defined in its purpose, into a reality.
Thus, the “work” done within an organization can be defined as “turning purpose into
reality.” This research has shown that no matter how well-intentioned the program
manager is, or even how hard the manager works, the system often thwarts the
organization’s goal. Given the importance of designing an organization well, it is
139
surprising how many systems within the Department of Defense are not properly
designed and implemented. For the most part this is because the importance of a well-
designed system is underestimated. The responses to the questions in the previous
chapter and the recommendations in this chapter support this idea and propose
solutions to bring about change.
Currently the program manager is not the owner of the system. The system’s
owner must be someone with the authority to implement or make significant changes
to the system.
9
Several program managers explained that although they are able to
propose change, they often choose not to because the change process is too lengthy
and the people who can make the change are too far removed from their program
office. Most program managers also explained that they share no part in the design of
the system. Although a program manager should not be responsible for designing the
system on his or her own, there must be some involvement at the program office level
when a system is designed to achieve the program office’s purpose.
The current “system” under which program offices work has accumulated its
processes through the actions of various agencies of the Department of Defense and
the Congress. Over time this system has become difficult to understand, overly
complicated, and does not take the program managers’ views into account. As a result
the system is designed around many unnecessary and conflicting rules. Because of the
lack of a system owner who is authorized to make changes to the system, the system
ends up being unproductive (Box B) with rigid rules developed by DoD and Congress.
This creates a system which encourages people to find ways to work around the rules
by knowing who to see, who will sign off or other informal methods.(Box C). This in
140
itself creates a burden because if something goes wrong the individual who used the
informal method can be subjected to severe penalties. The Catch 22 is that if he or she
does not use the informal system, programs are delayed and good weapon systems
may not be available when needed.
Furthermore, when personnel working daily within an inefficient system are
not asked for suggestions on how to they can be more effective, they frequently work
in an unconstructive manner in part because no one seems to care that the system is
broken. This brings us once again to work that moves from Box B (authorized, but
counter-productive) to Box C (unauthorized, but productive) without the potential to
return to Box A (authorized and productive).
SUGGESTIONS FOR FUTURE RESARCH
As far as the author could determine, this was the first research of its kind—a
systems analysis of the weapons acquisition process at the program office level. This
has led to many more questions that could not be answered in only one study. Given
the understanding that government program offices do not face the same economic
incentives as business in the private sector, a similar study could be conducted in
contractor program offices to identify whether similar problems exist. Several
interviewees indicated that Navy and Space program offices are more efficient than
Army and Air Force offices. A study to compare the approaches of these program
offices with those of the Army and Air Force would allow greater generalization
regarding the importance (or lack thereof) regarding systems as the main driver of
behavior.
141
Assuming it is correct that military Program Offices are controls for the larger
weapon systems acquisition process, how should such control systems be designed?
Does the program office have a dual purpose of both control and of driving the
acquisition process once a contractor has been selected? If so, is this dual purpose
compatible with effective production as well as control?
If the primary purpose of the Program office is as a control, is it proper or
effective to assign much of the control work to the contractor whose work is to be
“controlled?” How does the contractor self-regulate? The role of the action officers
in DOD was an issue for many of the people interviewed. It would be useful to learn
who these people are (political appointees or civil servants) and what their role in the
acquisition process is. Program managers expresses concern with the idea that these
individuals have the final say on aspects of the program when they appear not to be
involved in the process and have little knowledge about the program itself.
Although this research uncovered problems with the manner in which the rules
of the acquisition community are written, further research is needed to determine if the
rules are too broad, too narrow, or both. Exploring how to create a system within the
government where roles and relationships, authorities and accountabilities are clear
and the rules set clear boundaries while leaving room for the proper exercise of
discretion by qualified employee would be useful for both practitioners and scholars.
The whole issue of systems design, or lack thereof in government agencies
needs to be studied, as many of the complaints about bureaucracy both from within
and without government may be due to poor systems design. The lack of clear
purpose, well designed controls (neither too obtrusive nor too relaxed) and systems
142
audits needs considerable study, not just in the Department of Defense but in other
federal agencies as well as state and local governments. Replications of this study in
other agencies would help to confirm and generalize the finding or could lead to
alternative perspectives.
Although well beyond the scope of this study, the relationship between
military and civilian employees needs considerable study. The military officers
typically have a fixed tour of duty and then they leave. They also have clear career
paths and promotional reviews. The civilians are meant to stay in program offices but
for reasons left unexplored leave too often to maintain a stable and knowledgeable
workforce. What incentives might improve the retention of civilian personnel in
government program offices? One could also compare the incentive structure and
career paths of civilians with that of military personnel working in government
program offices.
SUMMARY OF FINDINGS
This study suggests why the RAND study concluded the rules imposed on the
program offices are not burdensome, while the people working within these offices
believe they are burdensome. The burden does not come from the time spent on
certain rules as studied by Rand. The burden is caused by all the rules which make up
an incoherent and complex system. In order to get anything done, program office
employees must act based on what they determine is the purpose of the “system”
always knowing they can be punished if they are wrong. Employees must not only
learn how the “system” is supposed to work (as if it were all in Box A), but they
143
quickly recognize that most of the authorized systems are unproductive (Box B), so
they must develop workarounds through learning other ways of working and who can
actually get things done – sign offs, meetings, etc. Informal networks are essential.
Again, if something goes wrong, they will be punished, but if they don’t use
workarounds, nothing gets done. All of this creates considerable stress and a real
burden on the people in the organization.
The current “system” is an accumulation of rules, not an effective system
designed to achieve a purpose. This accumulation is burdensome for new employees
as well as employees who have mastered working around them to get their job done.
New employees lack the connections required to work around the bureaucratic hurdles
imposed by the vast number of rules. Inadequate training further creates an
environment in which mistakes occur frequently. In a system in which retention of
good employees is difficult proper training and the elimination of unnecessary rule is
crucial.
Working in such an environment is burdensome because the rules are designed
to control bad behavior rather than encourage good behavior. These rules are not
guidelines for the job, but rather tell employees exactly how to do something leaving
little room for individual discretion. When employees are unable to improve on the
way they do their work, the work becomes a burden and the system often moves
further away from achieving its goal. The incentive to work hard in a system which
does not allow much room for change also creates a burden as people perform work
they feel is unnecessary to achieve a purpose which is unclear to them.
144
Systems in Weapons Acquisition Program Offices lack a clear purpose. The
only stated purpose is inherently contradictory and leaves employees the additional
task of figuring out what they are meant to do. It is crucial that a system be guided by
a clear purpose rather than innumerable rules so that the people working within the
system can alter their behavior to best achieve the system’s purpose at any given time.
The first step for designing a good system is identifying the system’s purpose and
making sure that all work within the system is designed to achieve it.
There are both too many controls and too few controls designed to do what a
well designed control is intended to do. In the weapons acquisition community the
program offices act as the controls for the acquisition system, but there are no controls
within program offices. Without controls to identify whether the system is being
operated correctly and whether the people working within it are exercising good
judgment as they carry out their work, it is difficult to address problems of the system.
When the problems are not addressed, adding new rules and regulations to a poorly-
designed system becomes the only solution to dealing with its many problems.
In order to monitor whether or not the controls are working properly, an audit
process is necessary. There are no systems audits on program offices. Without such
audits there is no check on whether the controls are in place and being used correctly.
The audit function is responsible for identifying rules and regulations which are
burdensome and obstruct the achievement of the system’s purpose.
The design of a system impacts the behavior of all who work within it.
Redesigning the weapons acquisition system to include a clear purpose, controls and
an audit function will significantly reduce the burden of working in government
145
program offices. This research has identified many of the system’s problems and
proposed numerous suggestions to mitigate the burden.
146
CHAPTER FIVE ENDNOTES
1
Ian MacDonald, Catherine Burke, and Karl Stewart, Systems Leadership,
Creating Positive Organisations, Gower Publishing Company, 2006, p. 113.
2
Ibid, p. 216.
3
Ibid, p. 216.
4
Ibid, p. 115.
5
Ibid, p. 116.
6
Ibid, p. 131.
7
Ibid, p. 216.
8
Edwards W. Deming, Out of the Crisis, Cambridge, MA: The MIT Press,
2000.
9
Ibid, p. 215.
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153
APPENDIX A
ACQUISITION SYSTEMS QUESTIONNAIRE
Section 1—Personal Information
All of the information provided is confidential. Your name will not be used in any
way. If you could somehow be identified, I will check with you first before using any
information.
1. What is your name?
2. Which program office are you affiliated with?
3. What is your position?
4. What is your rank or GS-level?
5. What is your email address?
6. What is your telephone number?
Section 2—Program Office Information
Oversight of a program office is designed to provide information as to whether or not
the organization is being operated correctly, that is working as intended and that the
people working within it are exercising good judgment as they carry out their work.
Oversight can be automatic and built into an organization in such a way it does not
add an excessive burden to those working within the organization. On the other hand it
can be intrusive, require work that appears needless and interfere with achieving the
program office's purpose. Such oversight is typically disliked and burdensome.
1. What about your job is burdensome?
2. What about compliance/oversight is burdensome?
154
3. On a continuum from non-burdensome to extremely burdensome, where do you feel
the oversight in your organization lies?
Non-
burdensome
Mildely
burdensome
Somewhat
burdensome
Extremely
burdensome
Rankings from
least to most
burdensome
Please explain.
4. Who benefits from this oversight?
5. The oversight community has been described as political appointees, members of
Congress and OSD. In what ways do they help or hinder you getting the job done?
6. What can be done to reduce the burden of oversight?
7. What proportion of compliance work is outsourced to the contractor?
Section 3—Organizational Questions
Organizations are essentially a set of rules. The problem with government rules is that
they often have lots of boundaries which dictate exactly how something should be
done. In actuality, people never do the same thing the same way twice because they
usually find a way to improve the process.
1. Do you feel your organization is well designed, or do you find yourself working in
an organization that is an accumulation of rules? Please explain.
155
2. Do the rules and regulations facilitate or hinder the achievement of the program
office's purpose? Please explain.
3. Do you feel you are ever forced to comply with rules that were once designed to
achieve a purpose which may no longer be the case? Please provide examples.
4. Are there any laws, policies, statutes or regulations which conflict with one
another? Please provide examples.
5. Do you sometimes have to work around the rules and regulations to get the job
done? Please provide examples.
6. If certain statutes and regulations are not productive, or prevent effective work, why
are they not eliminated?
7. Over the years many reforms have been instituted to increase productivity. Which if
any have achieved this purpose? Which have been counterproductive?
8. How do changes in statutes and regulations impact your work?
156
9. Are the statutes and regulations that impact your job written too narrowly (leaving
little room to exercise good judgment)? Or, are they written too broadly (providing
little direction on what to do)?
Section 4—Reporting Requirements
1. Are you required to produce some reports for which you receive no feedback? If
yes, do you believe they are used?
2. Are there some reports that are redundant? or unnecessary? If yes, please give
examples.
3. Do you have any suggestions on how to improve DOD 5000?
Section 5—Questions on Work Environment
A well designed organization typically tells people what to do, not how to do it. The
"how" is left to individual judgment. Too much "how" will feel like a burden because
people are not allowed to make improvements in the way they work.
1. Do you believe there are resources within your organization that are not being used
as effectively and efficiently as possible? Please give examples.
2. Is authority and accountability clear in your workplace? For example, do you have
the authority to make the necessary changes to make yourself most efficient and
productive? Do you have access to information and resources you need to get the job
done?
157
3. If you find a better way of doing your work, are you allowed to change the way you
work? If not, is there someone else who can authorize the change?
4. Does anyone ever ask you how the process can be made better? If yes, are your
suggestions implemented?
Section 6—Additional Information
1. Are there any other questions you think I should have asked to get at the problem of
excessive burdens in program office operations?
2. Please feel free to include any additional information which you believe will be
beneficial to this research.
158
APPENDIX B:
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Creator Gavrieli, Dikla (author)

Core Title Regulatory burden: a systems analysis of weapons acquisition in the U.S. Department of Defense

School College of Letters, Arts and Sciences

Degree Doctor of Philosophy

Degree Program Political Economy

Publication Date 03/25/2008

Defense Date 01/15/2007

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag DOD,OAI-PMH Harvest,regulatory burden,weapons acquisition

Place Name USA (countries)

Language English

Advisor Burke, Catherine G. (committee chair), Al-Sabea, Taha (committee member), Wise, Carol (committee member)

Creator Email dikla.gavrieli@gmail.com

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m1034

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