Armed forces are becoming smart shoppers No longer is price taking a back seat to function

A cultural revolution

Contractors are judged in terms of providing most for fixed amount

December 15, 1996|By Greg Schneider | Greg Schneider,SUN STAFF

Everyone has heard about the $4,000 toilet seat.

Now the Pentagon would rather tell the tale of the $18,000 bomb guidance system.

To the car-buying public, $18,000 for a warhead computer that's just going to blow up may sound like a lot -- like sticking a Honda Civic on every bomb in the arsenal.

But it could be worse. The system was supposed to cost more than twice that much.

This is the modest miracle of acquisition reform. And while the term might not sound very inspiring, defense officials say acquisition reform is nothing less than a cultural revolution that could help pay for the military of the future.

What it means is that the Pentagon, that Sphinx of vengeful bureaucracy, is embracing common-sense commercial business practices.

"It's what the industry has wanted for a very long time," said Charles L. Jones Jr., a vice president of Northrop Grumman Corp. "It's really a fundamental shift in how the government has done business, really about as right-angle a shift as you can come across."

Instead of giving defense contractors excruciating specifications on how to build everything from T-shirts to computer systems, the Defense Department now just says what it wants and lets companies figure out the best way to build it.

Instead of asking companies for all possible technology and flash, while worrying about cost later, the Pentagon is now apt to lay down a price and choose defense contractors based on which can give the most for that amount.

Pentagon bureaucrats actually work with companies while weapons are in development, rather than waiting until a billion-dollar gizmo is handed in to critique it and send it back for costly changes.

The military is encouraging projects to be shared jointly by the four branches, rather than letting the Navy and the Air Force require different types of rivets, say, for the same vehicle.

The reform trickles into even deeper layers -- using more computers and less paper, for instance -- in a turnaround that demonstrates how strange and obtuse the Pentagon's old method of buying hardware really was.

Paul G. Kaminsky, who oversees procurement for the Pentagon, issued a detailed confessional earlier this year in a speech in Huntsville, Ala.

"We have become so risk averse that we end up spending billions to make sure we do not lose millions," Kaminsky said.

Changing acquisition policy "will take us from a very detailed, centralized management approach that was widely perceived as inflexible and overly bureaucratic to a set of more flexible policies and procedures that emphasize the use of professional judgment and common sense."

Industry observers give Kaminsky and Defense Secretary William J. Perry high marks for mounting the effort, which has been escalating for the past three years. Congress spurred the shift by passing the Federal Acquisition Streamlining Act in 1994 and the Federal Acquisition Reform Act this year.

But as Andrew Krepinevich of the Center for Strategic and Budgetary Assessments points out, "We're not aware that the Defense Department has released any data that says they realized x billions of savings because of acquisition reform."

Defense officials say it is hard to get a handle on the overall impact of acquisition reform. They can point only to a billion here, a drastic cut in paperwork there and a handful of cases where old deadlines were beaten by weeks.

By abandoning military specifications for T-shirts and switching to commercial brands, for instance, T-shirt costs dropped about 20 percent, said Donna Richbourg, who works in the Pentagon's acquisition reform organization.

The bomb guidance system that dropped in estimated cost by more than half -- the Joint Direct Attack Munition, or JDAM, program -- could wind up with an overall savings of $1.5 billion, according to Kaminsky.

JDAM also generated far less paperwork than previous projects. The Pentagon's statement of work on the program numbered 137 pages when it came out in late 1993. Now the planning document consists of two pages.

For the Space Based Infrared System, a satellite network that warns of enemy missile launches, the Pentagon cut more than 1,000 pages of support documentation down to 47 pages, Kaminsky said.

The time it takes to move from abstract concept to purchased good is speeding up, too. In 1994, the average time it took a weapons system to get a last round of Pentagon comment before Kaminsky issued the order to buy was 23 days.

Today, the average is getting close to two days, Richbourg said.

"I think it certainly makes it easier to do business with the Pentagon," said LeRoy Haugh, a vice president with the Aerospace Industries Association who has been involved with the acquisitions process for decades.

While Haugh said the current reform is more than he would have thought possible just six years ago, he pointed out that a crucial component is still on the drawing board.

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