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The problems of the weapons acquisition process are well known. The path toward solution is less clear. For many years there have been a great deal of analyses of the problems, all of which have resulted in little real improvement.

Early in 1981 the Deputy Secretary of Defense assembled experts from within and outside Government to survey all prior studies relative to the weapons acquisition dilemma and asked them to prescribe solutions.

The resulting Acquisition Improvement Program identified the problems and delineated 32 initiatives to unclog the system. A great deal of follow-up study ensued, and a start has been made toward effecting some of the changes. The most significant accomplishment so far was the limited introduction of multiyear procurement into the l983 budget.

- The Office of the Secretary of Defense (OSD) Task Force supports the goals of the Acquisition Improvement Program and believes that faster progress toward implementation would be desirable.

As a recent progress report on the Acquisition Improvement Program notes, "Cultural change in a vast organization takes some time. Our challenge is to incorporate the initiatives in the day-to-day operations and decision processes of the department. This requires publicizing the initiatives to ensure a clear understanding at all levels, as well as overcoming the normal organizational resistance to change."

The OSD Task Force believes that the problem is an urgent one, with immense cost implications to the nation. The efforts of the Department of Defense leadership are heartily endorsed, but even more decisive steps should be taken to effect that change expeditiously.

Our recommendations in the weapons acquisition area

support the department's initiatives and suggest specific steps to speed the process.

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One omission from the Acquisition Improvement Program is any consideration of organizational change. In our view, many of the bottlenecks and the institutional resistance are an inevitable result of the organization of the Department of the Defense (DOD). This problem is addressed specifically with respect to weapons acquisition in Issue OSD l5. A broader analysis has been provided in the opening chapter.

Given the limited timeframe of this survey, it was necessary to divide the weapons issues into discrete areas. In practice, they are not discrete, but complementary. The adoption of any of the recommendations will help cure the deficiencies ascribed to the other issues.

The savings that can be produced from these recommendations will be available to meet the ambitious weapons development program that is planned for the remainder of the decade.

The savings calculations were based upon data provided

in the proposed 1983 budget. In that proposal, the total obligational authority for weapons procurement was:

($ billions)

Aircraft $32.1
Missiles l3.l
Ships 18.6
Other weapons 6.3

Total §70.I

Expenditures for Research, Development, Test and Evaluation were proposed at $24.3 billion, of which $17.3 billion was to be contracted with industry. In-House DOD expenditures of $5.5 billion were planned, with the remainder going to Federal Contract Research Centers and Universities.

Other President's Private Sector Survey task forces also reviewed aspects of the weapons acquisition process.

For further information, refer to task force reports on:

o Air Force

o Army

o Navy

o Procurement/Contracts/Inventory Management

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II. ISSUE AND RECOMMENDATION SUMMARIES (CONT'D)

B. WEAPONS (CONT" D)

OSD 15: IMPROVED ORGANIZATION OF THE
ACQUISITION FUNCTION

Summary Recommendation

The Department of Defense (DOD) should initiate a program to modernize and streamline the total acquisition process. It is our assessment that consolidation of the management of the acquisition process within the Office of the Secretary of Defense (OSD) would improve program efficiency and provide opportunities for significant cost savings. While the OSD Task Force recommends virtually full consolidation of the acquisition process into OSD, interim steps, somewhat short of that goal, are also possible.

Financial Impact

Potential Savings: Dollar savings, while considerable, are difficult to quantify and will vary widely depending on the degree of change implemented. In the Savings and Impact Analysis section of this issue, we have estimated some benchmark savings increments possible if recommended changes are implemented to improve the efficiency of the process.

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In the existing system, acquisition policy and guidance are provided by the Office of the Under Secretary of Defense for Research and Engineering. This organization is responsible for basic and applied research, the gathering and exchange of scientific and technical information, establishment of DOD-wide acquisition policies and procedures, oversight of design and engineering functions, and guidance and oversight_for the major weapons acquisition process. Each of the services has a similar organization reporting to the Service Secretary, which develops acquisition policies and procedures and oversees the acquisition process -- essentially duplicating the functions performed within OSD.

Each service is structured to provide its own threat evaluation, countermeasure development and engineering design. The acquisition function is performed by large commands reporting to the Service Chiefs who manage the programs and implement the acquisition process. These service commands are:

DARCOM - Army Materiel and Readiness Command
NAVMAT - Naval Materiel Command

AFSC - Air Force Systems Command

AFLC - Air Force Logistics Command

The current acquisition process is complex and lengthy. Guidelines, policies and procedures on acquisition of major weapons systems are provided to the Services in DOD Directive 5000.1 and DOD Instruction 5000.2. A system is designated as major when Research, Development, Test and Evaluation (RDT&E) funds exceed $200 million or production funds exceed $1 billion.

The systems acquisition process is divided into four distinct phases -- concept exploration, demonstration and validation, full-scale development, and production and deployment. These are illustrated in Exhibit II-4 at the end of this issue.

Before the four acquisition stages are initiated, a service must determine that there is a mission need (i.e., potential threat) for which existing capability is deficient. In the case of major systems, the service then prepares a Justification of Major System New Starts (JMSNS), which is a precise articulation of what is required of a new weapons system or what modifications are required in existing systems to meet the stated mission. The JMSNS is submitted to the Secretary of Defense with the service's Program Objectives Memorandum for the budget year in which funds are requested to initiate a new program start.

In Phase 1, concept exploration, the services identify and explore various alternatives to satisfy the mission need. The results are summarized in the System Concept Paper, which contains those concepts that will be carried into the next phase, the reasons for eliminating other concepts, and a description of the acquisition strategy. The Secretary of Defense, through the Defense Systems Acquisition Review Council (DSARC), must provide authority to proceed into the next phase. This point is called Milestone I. ' _

In Phase 2, demonstration and validation, the system is refined through extensive study and further analysis. Some hardware may be developed and tested in order to provide a better definition of performance, cost and producibility. Usually, prototypes are created by several firms in competition for the production contract. This phase provides the input and rationale for deciding which system, if any, should move into full-scale development. The decision, made by DSARC, to move into the next phase is called Milestone II. This is a critical point in the process where the commitment is made to expend major resources.

Phase 3 is full-scale development. The decision to go into full-scale development is supported by information in the Decision Coordinating Paper (DCP) and the Integrated Program Summary (IPS), prepared by the appropriate program office. The DCP identifies the alternatives, goals, thresholds and costs. The IPS, which should not repeat data in the DCP, provides more specific information and a comprehenmive summary of the program. It is at this stage that major contracts are negotiated with private industry. Engineering models of the weapon and principal support items are designed, developed, fabricated and tested. Procurement of long lead-time production items and limited production of the system often occur during this phase. Documentation of test results, cost estimates and proposed schedules are presented to DSARC for the Milestone III decision that is needed to put the weapon into production.

Phase 4, production and deployment, is the final phase in the process, when the weapon is produced in volume. It is an ongoing phase that ends when the last system is delivered and accepted, or when the weapon becomes obsolete. Normally, 80 percent of the weapons systems costs are incurred in this phase.

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