Defense Acquisition Reform: Status and Current Issues

Publication Date: May 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Military and defense

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Abstract:

The end of the Cold War and its impact on defense spending has created a strong need to reform Department of Defense's (DOD) acquisition system. With procurement spending down, DOD expects to depend on savings from acquisition reform to help finance future force modernization. Policymakers believe that DOD should use more commercial products because, in many instances, they cost less and their quality is comparable to products built according to DOD military specifications. Many such reform proposals are based on recognition that DOD regulatory barriers and a Cold War acquisition "culture" have inhibited the introduction of commercial products.

The need to encourage greater interaction between the defense and commercial industries is considered vital to keeping U.S. military technology the best in the world -- a major objective of U.S. defense policy. Many high-technology commercial products (e.g., electronics) are state-of-the-art and changing so fast that DOD's military specifications, or "milspecs." system cannot keep pace. Congress has passed several important reforms, among them the Federal Acquisition Streamlining Act of 1994, Federal Acquisition Reform Act of 1996, Defense Reform Act of 1997, and the Federal Activities Inventory Reform Act of 1998. DOD has lowered or abolished regulatory barriers; experts agree, however, that more work is required to make the system responsive to U.S. defense needs.

Restructuring DOD's Acquisition Organization. Enacted reforms will mean greater freedom to innovate, make quicker decisions, and improve DOD program development -- running DOD more like a private sector operation. At issue is just how to change DOD personnel management policies, and introduce DOD's acquisition reform initiatives to the private sector.

Privatizing DOD's Functions Through Outsourcing. Although DOD had begun outsourcing some functions, expanding its use has been a major goal. Success stories and studies estimated that outsourcing could reduce costs and increase efficiency. Basic questions include (1) how much can be saved over the long-term and how will savings be measured; (2) can DOD's structure effectively manage the new outsourcing proposals; (3) do outsourcing proposals go beyond the "proper" limits of DOD's mission to protect U.S. national security; and (4) can outsourcing harm DOD's military readiness or war-fighting capability?

Oversight of Reform Initiatives. Congress will continue to exercise a strong oversight role because of its longtime interest in streamlining DOD's acquisition processes. Its attention will be directed at several congressionally mandated DOD reports on acquisition reform issued in 1996. Important topics will include how DOD is streamlining and restructuring its acquisition processes, practices and infrastructure; increasing efficiencies in acquiring defense maintenance and repair services; and outsourcing DOD support functions that are considered commercial in nature. Congress will rely on the recommendations of several reports, including the Task Force on Defense Reform, Defense Science Board Task Force on Procurement Reform, and the Section 912 (c) report on streamlining acquisition processes, workforce and infrastructure.