Defense Acquisition: Overview, Issues, and Options for Congress

Defense Acquisitions: Overview, Issues,
and Options for Congress
Updated June 18, 2008
Moshe Schwartz
Analyst in Defense Acquisition Policy
Foreign Affairs, Defense, and Trade Division

Defense Acquisitions: Overview, Issues,
and Options for Congress
Department of Defense (DOD) efforts to acquire goods and services are often
complex and controversial. These efforts are referred to as defense acquisitions. The
structure DOD utilizes to plan, execute, and oversee those activities is an intricate
and multi-variate “system of systems” composed of the requirements, resource
allocation, and acquisition systems. This system of systems has evolved over time,
its foundation being the report published by the Packard Commission in 1986, many
of whose recommendations became part of the Goldwater-Nichols Department of
Defense Reorganization Act of 1986. This evolution continued, as the requirements
system changed from a threat-based to a capabilities-based system; the resource
allocation system added execution reviews and concurrent program/budget reviews;
and the acquisition system became a flexible, tailored process.
The complexity of this system of systems combined with the magnitude of
personnel, activities and funding involved in its operation can result in problems,
including inefficient operations, fraud/waste/abuse, and inadequate implementation
or enforcement of the laws and regulations that govern it. Congress has tried to help
mitigate these types of problems and accompanying issues over the years. Today,
there are a number of challenging issues that Congress could consider to improve the
defense acquisition structure. Some of those issues include defense acquisition
transformation, cost/schedule/performance in Major Defense Acquisition Programs
(MDAPs), outcomes of cost-reimbursement contracts, interagency and services
contracting practices, and the defense acquisition workforce. To address cost
overruns in MDAPs for example, Congress might consider establishing termination
criteria if a program reaches an unacceptable cost level. Supporters might argue such
criteria would help prevent “gold-plating” requirements and “low-ball” cost estimates
since a program breach would guarantee termination. Opponents might argue that
program termination does not terminate the warfighter’s requirement for fielding a
necessary warfighting capability and could cause harmful delays by beginning a new
program to deliver the capability.
Congress is considering several provisions for the FY2009 Duncan Hunter
National Defense Authorization Act (H.R. 5658), including (1) establishing a
program to ensure that the acquisition workforce attracts quality personnel, including
requiring a minimum number of general and flag officers in the workforce; (2)
establishing “Configuration Steering Boards” to contain cost and schedule growth for
major defense acquisition programs; (3) developing a conflict of interest policy for
contractors akin to the policy in place for DOD civilian employees; (4) establishing
a contingency contracting corps; (5) developing DOD regulations barring private
security companies from performing inherently governmental functions in an area of
combat operations; (6) prohibiting the use of contractors to interrogate detainees; and
(7) requiring that the domestic industrial base be a factor when DOD awards a
contract for an MDAP. This report will be updated as events warrant.

In troduction ......................................................1
Background ......................................................2
DOD Defense Acquisition Structure...............................2
Origin ...................................................2
Statutory Foundation.......................................3
The Structure.............................................3
Recent Analysis of Defense Acquisition...........................14
Major Reports...........................................14
Periodic GAO Reports.....................................16
DOD Efforts to Improve Defense Acquisition.......................18
Potential Issues and Options for Congress..............................19
Defense Acquisition Transformation..............................19
Cost, Schedule, and Performance in Major Defense
Acquisition Programs (MDAPs).............................21
Outcomes of Cost Reimbursement Contracts.......................23
Interagency and Services Contracting Practices.....................25
The Defense Acquisition Workforce..............................29
FY2009, FY2008, FY2007 Defense Acquisition Legislative Activity........31
The Proposed FY2009 Duncan Hunter National Defense
Authorization Act (H.R. 5658)..............................31
2008 National Defense Authorization Act (H.R. 4986/P.L. 110-181) ....32
FY2007 John Warner National Defense Authorization Act
(H.R. 5122/P.L. 109-364)..................................33
Appendix A. Selected List of Additional Defense Acquisition Information....34
Appendix B. Evolutionary History of the Defense Acquisition Structure
Prior to Goldwater-Nichols.....................................38
Revolutionary War to World War II..............................38
World War II to the Goldwater-Nichols Act........................39
List of Figures
Figure 1. DOD’s Defense Acquisition Structure.........................4
Figure 2. RGS vs. JCIDS...........................................5
Figure 3. JCIDS Analysis Process....................................6
Figure 4. PPBES Process Overview...................................8
Figure 5. PPBES Concurrent Program/Budget Review....................9
Figure 6. Defense Acquisition Milestones.............................11
Figure 7. Acquisition Categories....................................13

Defense Acquisitions: Overview, Issues,
and Options for Congress
Congress has been concerned with the defense acquisition structure — the
requirements, resources and acquisition “system of systems” that provides
warfighting capability — for many years. Congressional concern has ranged from
“micro-level” practices, such as characteristics of a particular contract, to “macro-
level” practices, such as DOD’s management and execution of Major Defense
Acquisition Programs (MDAPs).1 In response to these concerns, Congress has
legislated many changes to improve the defense acquisition structure and its
practices. Despite these changes, concerns remain about the structure and its
practices. One example of stated Congressional concern over the structure and its
practices was included in the House Armed Services Committee’s report on the
FY2007 defense authorization bill:
Simply put, the Department of Defense (DOD) acquisition process is broken. The
ability of the Department to conduct the large scale acquisitions required to
ensure our future national security is a concern of the committee. The rising costs
and lengthening schedules of major defense acquisition programs lead to more
expensive platforms fielded in fewer numbers. The committee’s concerns extend
to all three key components of the Acquisition process including requirements2
generation, acquisition and contracting, and financial management.
DOD’s process for acquiring goods and services is highly complex and does not
always produce the desired outcomes. Some of the weaknesses of the acquisition
process include defense acquisition transformation, cost/schedule/performance
problems in MDAPs, the defense acquisition workforce, outcomes of cost
reimbursement contracts, and services and interagency contracting.
This report will provide an outline of DOD’s defense acquisition structure
followed by a discussion of the most recent major reports addressing defense
acquisition and DOD’s defense acquisition transformation efforts. This report also

1 MDAPs are statutorily defined in 10 U.S.C. 2430 as DOD acquisition programs whose
value based on FY1990 constant dollars exceeds $300 million of Research, Development,
Test and Evaluation funding (approximately $442 million in FY2009 dollars), $1.8 billion
of Procurement funding (approximately $2.578 billion in FY2009 dollars), or are designated
MDAPs by the Under Secretary of Defense for Acquisition, Technology, and Logistics.
2 H.Rept. 109-452. Report of the Committee on Armed Services, House of Representatives
on H.R. 5122. May 5, 2006, p. 350.

includes a description of some significant issues the second session of the 110th
Congress might consider as well as some options to address these issues.
DOD Defense Acquisition Structure
Origin. DOD’s defense acquisition structure evolved over a long period of
time, since the founding of the nation.3 During this time, the United States has
fielded arguably the most technologically superior military force in the world.
Fielding such a force has been difficult and costly, as evidenced by numerous reports
of cost and schedule or performance failures in acquisition programs and practices
along the way. These problems occurred despite efforts to mitigate them, such as
revisions to DOD’s defense acquisition policy documents, reports and
recommendations of numerous commissions, studies, or panels, and efforts to
simplify and streamline defense acquisition processes such as Congress’ passage of
the Federal Acquisition Regulation System in 1980 and Deputy Secretary of Defense
Frank Carlucci’s set of 32 initiatives introduced in 1981.
The ineffectiveness of previous efforts combined with public reports of DOD
purchasing $600 toilet seats and $400 hammers4 led President Reagan to sign
Executive Order 12526, The President’s Blue Ribbon Commission on Defense
Management, on July 15, 1985. This Commission became known as the Packard
Commission after the President designated David Packard as its chairman. The
Commission was established to analyze and improve defense management practices,
specifically including acquisitions. The President directed that the Commission’s
first task was to “devote its attention to the procedures and activities of the
Department of Defense associated with the procurement of military equipment and
materiel.”5 After the Packard Commission’s report was released in June of 1986, its
recommendations had a high degree of policy significance. This was because many
of the Commission’s recommendations were included in the Goldwater-Nichols
Department of Defense Reorganization Act of 1986, viewed by many as the most
significant piece of defense legislation passed since the 1947 National Security Act.
Examples of Commission recommendations included in Goldwater-Nichols, other
related legislation, and presidential directives were the Under Secretary for

3 For a longer history of the evolution of the defense acquisition structure, see Appendix B.
4 Reports later surfaced that the $600 toilet seat was in fact not a toilet seat, but a corrosion
resistance shroud to cover the entire toilet system of a P-3 aircraft, and the $400 hammer
was a matter of an incorrect invoice that the government never actually paid. For additional
detail, see the transcript of a Washington Post interview with President Reagan from
February 1986, at [].
5 Executive Order 12526, [].

Acquisition position, the SAE-PEO-PM6 structure, a simplified acquisition code, a
more professional acquisition corps, and baselining requirements.7
Statutory Foundation. Title 10 of the United States Code governs the
organization, structure, and operation of the Armed Forces of the United States.
Title 10 does not devote a specific chapter to “defense acquisitions” but its tenets are
spread throughout, including the responsibilities of many positions within the defense
acquisitions’ organization, procedures that must be followed in defense acquisition
practices, provisions for different methods of acquisitions and congressional
reporting requirements. Title 10 also requires DOD to use the Federal Acquisition
Regulation (FAR) for its procurement (or contracting) practices via its inclusion of
and reference to the definitions and requirements outlined in Chapter 7 of Title 41 of8
the United States Code. National Defense Authorization Acts enacted into law may
add or modify sections of Title 10 which address the defense acquisition structure or
its practices, or even assign unique statutory requirements above and beyond those
prescribed within the title.
The Structure. DOD’s defense acquisitions structure consists of three
interrelated and interdependent systems. The first system is the Joint Capabilities
Integration and Development System (JCIDS), known as the requirements system.
The second system is the Planning, Programming, Budgeting, and Execution System
(PPBES), known as the resource allocation or budgeting system. The third system
is the Defense Acquisition System (DAS), known as the acquisition or procurement
system, also referred to as “little a” acquisition. These three systems do not report
to or fall under an overarching “system”, but they do operate in a manner similar to
a “system of systems” (SOS)9 and are referred to as “Big A” acquisition. DOD’s
defense acquisition structure is characterized in Figure 1.

6 SAE-PEO-PM stands for Service Acquisition Executive, Program Executive Officer, and
Program Manager, respectively. The SAE is a political appointee in the secretariat of the
military department who is responsible for all acquisitions and acquisition programs within
the Service as prescribed by Title 10. The SAE selects a number of PEOs who oversee some
number of acquisitions and acquisition programs while PMs are responsible for all aspects
of an individual acquisition or acquisition program. The Packard Commission
recommended this acquisition chain-of-command.
7 Murdock, Clark A., Flournoy, Michèle A., et al. “Beyond Goldwater-Nichols - Defense
Reform for a New Strategic Era - Phase 2 Report.” Center for Strategic and International
Studies. July 2005, p. 90.
8 DOD also issues a variety of Defense-unique supplements to the FAR which are referred
to as “_FARS”, the blank being a various designation depending on which DOD component
issues and maintains the supplement (D would stand for DOD, AF for Air Force, etc.).
9 Page GL-19 of Chairman of the Joint Chiefs of Staff Instruction (CJCSI) 3170.01F defines
a system of systems as “a set or arrangement of interdependent systems that are related or
connected to provide a given capability. The loss of any part of the system will significantly
degrade the performance or capabilities of the whole. The development of an SOS solution
will involve trade space between the systems as well as within an individual system

Figure 1. DOD’s Defense Acquisition Structure

Source: Defense Acquisition Performance Assessment Report, February 2006, p. 4.
The three individual systems are described in more detail below.
Joint Capabilities Integration and Development System (JCIDS).
JCIDS is a system which is responsible for “identifying, assessing and prioritizing
joint military capability needs as specified in title 10, United States Code, sections10
153, 163, 167 and 181.” The JCIDS is governed by Chairman of the Joint Chiefs
of Staff Instruction (CJCSI) 3170.01F and utilizes the procedures described in
Chairman of the Joint Chiefs of Staff Manual (CJCSM) 3170.01C. Created in 2003
and most recently updated in May 2007, this system replaced the Requirements
Generation System (RGS), which had been the method for identifying warfighter
requirements for the previous 30 years. The primary reason behind changing the
requirements system from RGS to JCIDS was DOD’s policy shift from a threat-based
assessment of warfighter needs to a capabilities-based assessment of warfighter
needs. In other words, instead of developing, producing and fielding systems based
on perceived threats to the nation, DOD’s policy is to develop, produce and field
capabilities based upon strategic direction and priorities such as the National Military
Strategy (NMS) and National Defense Strategy (NDS). Figure 2 below illustrates the
difference between the two systems:
10 Chairman of the Joint Chiefs of Staff Instruction (CJCSI) 3170.01F, 1 May 2007, Page

1. [].

Figure 2. RGS vs. JCIDS

Source: Brief by Major General Bromburg, USA, Deputy Director for Force Projection, J8 February
1, 2006.
According to CJCSM 3170.01C, “(t)he (Capabilities Bases Assessment, or
CBA) is the analysis part of the JCIDS process that defines capability needs,
capability gaps, capability excesses, and approaches to provide those capabilities
within a specified functional or operational area.”11 A CBA may be based on a Joint12
Requirements Oversight Council (JROC) approved Joint Integrating Concept
(JIC)13; a Concept of Operations (CONOPs) endorsed by a Combatant Command
(COCOM), military department, or defense agency; or an operational need. A CBA
results in the production of the following documents, in chronological order:
(T)he functional area analysis (FAA), a description of the mission area being
assessed; the functional needs analysis (FNA), an assessment of how well the
current or programmed force performs that mission; and the functional solutions
11 CJCSM 3170.01C, May 1, 2007, page A-1; at [
12 The JROC is the organization responsible for identifying and prioritizing warfighter
requirements within DOD. The JROC is a statutorily established council, defined in 10
U.S.C. 181.
13 A JIC describes how a joint force commander integrates functional means to achieve
operational ends. It includes a list of essential battlespace effects (including essential
supporting tasks, measures of effectiveness, and measures of performance) and a CONOPS
for integrating these effects together to achieve the desired end state.

analysis (FSA), an analysis of possible solutions to shortcomings in mission
FAA and FNA results are captured in a Joint Capabilities Document (JCD) which
lists and outlines capability shortfalls or overlaps identified in the FAA and FNA.
Once a JCD is approved, it is used as a baseline for the FSA. This analysis considers
both material and non-material solutions to resolve capability shortfalls or overlaps
to develop a range of alternative solutions to resolve capability shortfalls or overlaps.
Once the FSA is complete, one or both of two documents may be produced; an Initial
Capabilities Document (ICD) for material solutions and a Joint Doctrine Change
Request (Joint DCR) for non-material solutions. Once these actions are complete,
any further material analysis or acquisition is performed under the DAS instead of
JCIDS, though further JCIDS documents such as the Capability Development
Document (CDD) and Capability Production Document (CPD) will both use
information gained from the DAS’s efforts and define requirements DAS efforts
must meet. Figure 3 below illustrates the JCIDS analysis process:
Figure 3. JCIDS Analysis Process

Source: Figure A-2, CJCSM 3170.01C, May 1, 2007.
14 CJCSM 3170.01C, 1 May 2007, Page A-1.

Planning, Programming, Budgeting and Execution System
(PPBES).15 According to the Department of Defense:
The ultimate objective of PPBS is to provide the operational commanders-in-
chief the best mix of forces, equipment, and support attainable within fiscal
constraints. Based on the anticipated threat, a strategy is developed.... The
purpose of the PPBES is to produce a plan, a program, and finally, a budget for16
the Department of Defense.
The PPBES was originally the Planning, Programming and Budgeting System
(PPBS), first implemented in the early 1960s by then-Secretary of Defense Robert
McNamara. The policy documents that govern PPBES are DOD Directive (DODD)
7045.14 and DOD Instruction (DODI) 7045.7 though neither document has been
updated since PPBS was modified to become the PPBES via Management Initiative
Decision 913 of 22 May 2003. The PPBES process in its entirety is not exercised
every year even though DOD must request funding from Congress annually.
Planning and programming activities occur in even-numbered years (called “on-
years”) while budgeting and execution activities occur in both on-years and “off-
years” (odd-numbered years). In the off-years, Budget Change Proposals (BCPs) can
be requested by programs or result from DOD review of program execution metrics.
Figure 4 below illustrates the PPBES process:

15 For additional detail, see CRS Report RL30002, A Defense Budget Primer, by Mary T.
Tyszkiewicz and Stephen Daggett. Additionally, DAU offers an online course on PPBES
at [].
16 Department of Defense Directive 7045.14. The Planning, Programming, and Budgeting
System (PPBS).May 22, 1984, certified as current November 21, 2003, page 2.

Figure 4. PPBES Process Overview

Source: Defense Acquisition Guidebook, Chapter 1.2,
[https://akss. dau. mil/dag/Guidebook/IG_c1.2.asp#Figur e2].

The PPBES process consists of four stages; planning, programming, budgeting,
and execution. The planning stage includes analysis of combatant command
(COCOM) issues and problems against the backdrop of the security and defense
strategies of the nation. The planning stage results in the production of the Joint
Programming Guidance (JPG) document, which guides DOD components’17
preparation of proposed programs to meet criteria outlined in the JPG. The
programming stage is when these proposed programs are constructed and the
Program Objective Memorandum (POM) is submitted to propose these programs.
If proposed programs do not meet established criteria in the JPG or other issues
necessitate changes to proposed programs, a Program Decision Memorandum (PDM)
can be issued that directs what the programs will be. The next stage, budgeting,
occurs concurrently with the programming phase and proposed budgets are reviewed
in a different manner than proposed programs (see Figure 5). Upon issuance of
PDMs or as a result of budgetary reviews, Program Budget Decisions (PBDs) are
issued and once all PBDs are final the DOD components have a final opportunity to
appeal decisions by submitting Major Budget Issues (MBIs) to the Secretary of
Defense (SECDEF). The SECDEF may make a decision based on information
presented or consult the President if significant issues remain between DOD’s top
line budget prescribed by the Office of Management and Budget (OMB) and DOD’s
required programs. The final phase, execution, begins once the President signs the
annual appropriations bill for DOD. During this stage, programs are evaluated on
their ability to meet established performance metrics, which can include funding
obligations and expenditures.
Figure 5. PPBES Concurrent Program/Budget Review

Source: DAU PPBES Continuous Learning Course CLB009, [].
17 DOD Components include the Office of the Secretary of Defense (OSD); the Military
Departments; the Chairman, Joint Chiefs of Staff (CJCS) and Joint Staff; the Unified
Combatant Commands (UCCs); the Defense Agencies; and DOD field activities.

Defense Acquisition System (DAS). The DAS is
the management process by which the Department of Defense provides effective,
affordable, and timely systems to the users (and it) exists to manage the nation’s
investments in technologies, programs, and product support necessary to achieve18
the National Security Strategy and support the United States Armed Forces.
This management process begins in acquisition program offices. The offices are
headed by a Program Manager (PM) who is the single individual in the program
office responsible for all facets of the office’s operations. The PM is usually
supported by a staff that can include engineers, logisticians, contracting officers and
specialists, budget and financial managers, and test and evaluation personnel, who
are responsible for their individual facets but also provide guidance and advice to the
PM. PMs can be military officers or federal civil servants and usually report to a19
Program Executive Officer (PEO). PEOs can have many PMs who report to them.
PEOs can also be military officers or federal civil servants and report to a Component20
Acquisition Executive (CAE). Most CAEs report to the Under Secretary of
Defense for Acquisition, Technology, and Logistics (USD(AT&L)), who also serves21
as the Defense Acquisition Executive (DAE). This PM-PEO-CAE-DAE
organizational construct was one of the recommendations of the Packard
DOD uses a variation of the decision milestones system devised by an earlier,
1969 Packard Commission to oversee and govern the initiation and progress of
acquisition programs, each of which have a specific set of warfighter requirements
to fill along with statutory and regulatory criteria that must be met for approval by the22
Milestone Decision Authority (MDA). Formal initiation of acquisition programs
by the MDA occurs upon Milestone B approval except for ships which can occur
upon Milestone A approval. Figure 6 illustrates this process and its relationship to
JCIDS (requirements) documents and processes.

18 Department of Defense Directive (DODD) 5000.1. The Defense Acquisition System. May

12, 2003, pp. 2-3.

19 Some PMs are labeled “Direct Reporting Program Managers” (DRPMs), who report
directly to the Component Acquisition Executive or Milestone Decision Authority.
20 A Service Acquisition Executive (SAE) is the CAE for a military department.
21 DODD 5000.1 states that the DAE takes precedence on all acquisition matters after the
Secretary and the Deputy Secretary of Defense. Examples of some other reporting chains
include the Defense Information Systems Agency (DISA), who reports to the Director of
DISA and the Special Operations Command (SOCOM) Acquisition Executive, who reports
to the SOCOM Commander.
22 At program initiation, a program must be fully funded across the Future Years Defense
Program (FYDP) as a result of the Program Objectives Memorandum (POM)/budget
process, that is, have an approved resource stream across a typical defense program cycle,
for example Fiscal Year (FY) 2006-2011. Concept Refinement (CR) and Technology
Development (TD) phases are typically not fully-funded and thus do not constitute program
initiation of a new acquisition program in the sense of DODI 5000.2. See DAU Glossary of
Defense Acquisition terms [].

Figure 6. Defense Acquisition Milestones

Sources: Defense Acquisition Milestones from the Defense Acquisition Guidebook,
[] . Requirements interface from page A-5 of CJCSI 3170.01F, 1 May

An acquisition program can enter the above framework at any one of the three
milestones, depending on factors such as technological maturity, when the capability
is required and resources available for the acquisition. Each stage of the framework
has different purposes and entrance criteria, which can be regulatory or statutory.
During concept refinement, an initial concept developed during JCIDS efforts is
refined, an analysis of alternatives (AOA) is conducted, and a Technology
Development Strategy (TDS) is developed, based on results from the AOA. If a
program receives Milestone A approval at the end of concept refinement, technology
risk reduction efforts outlined in the TDS will be executed to determine what
technologies are appropriate to be introduced into the intended system.
All technologies intended for the system are not required to be mature to
proceed to Milestone B. Some technologies that may be appropriate but are
immature may remain in technology development while others proceed to Milestone
B as long as the technologies proceeding to Milestone B provide an affordable,
militarily useful capability.23 If a program receives a Milestone B approval, then the
program proceeds to begin development of the capability and reduction of integration
and manufacturing risk. This stage consists of two sub-stages, system integration and
system demonstration. During system integration, the various subsystems that
together would make up the entire system are integrated and a development model
or prototype is to be produced. During system demonstration, the development
model or prototype enters into developmental testing to demonstrate its military
utility and identify/correct operational, logistical or manufacturing deficiencies. If
demonstrated performance and supportability are acceptable, manufacturing risks are
not significant, and other criteria are met, a program may receive a Milestone C
Milestone C represents the beginning of low rate initial production (LRIP),
which is intended to both prepare manufacturing and quality control processes for a
higher rate of production and provide production-representative articles for
operational test and evaluation (OT&E). Upon completion of OT&E and
demonstration of adequate control over manufacturing processes, a full rate
production decision may be granted, allowing the program to produce the remaining
assets planned for the program. When enough systems are delivered and other pre-
defined criteria are met, an Initial Operating Capability (IOC) can be attained,
allowing for some degree of operations. Eventually, full operational capability
(FOC) would be achieved when the system is ready to operate as much as required.
Management and oversight of acquisition programs increases as the value of the
program increases. Programs are divided into acquisition categories (ACATs) based
primarily on program value. The most significant DOD and Congressional oversight

23 DOD’s approach to proceeding with detailed design and integration of mature
technologies while continuing risk reduction of other less mature technologies that will be
integrated later is called Evolutionary Acquisition. For additional information on
Evolutionary Acquisition, see CRS Report RS21195, Evolutionary Acquisition and Spiral
Development in DOD Programs: Policy Issues for Congress, by Gary Pagliano and Ronald

activities apply to MDAPs24, which are categorized as ACAT I programs25. Figure

7 below illustrates the thresholds and decision authorities for all ACATs:

Figure 7. Acquisition Categories

Source: DODI 5000.2, [].
24 A number of statutory reporting and oversight requirements applicable only to MDAPs
are codified in the U.S. Code, Chapter 144 of Title 10.
25 Major Automated Information Systems (MAIS) have different dollar thresholds than
MDAPs, as shown below in figure 7.

DOD procurement activities are governed by three sets of federal government
regulations. The first set of regulations that apply to the entire federal government
(including DOD unless specifically noted otherwise) are outlined in the Federal
Acquisition Regulation (FAR); the second set of regulations apply only to DOD and
are outlined in the Defense Federal Acquisition Regulation Supplement (DFARS);
the third set of regulations apply only to individual DOD Components and are
outlined in Component-unique FAR Supplements.26 Procurement actions in DOD
must adhere to the various regulations, including those executed as part of DOD’s
acquisition programs, and PMs must take the regulations into account during the
planning and execution of their programs.
Recent Analysis of Defense Acquisition
Managing and reforming defense acquisitions has historically presented a great
challenge for both DOD and Congress. This challenge was apparent when upon
review the Packard Commission’s recommendations were “a virtual mirror-image
of the Fitzhugh Commission report”27 of 1970. In 1989, the House Armed Services
Committee held oversight hearings to determine what remaining work DOD had to
fully implement the Commission’s recommendations. It was found that important
recommendations “such as the JRMB (Joint Requirements Management Board) and
milestone budgeting were either never implemented or attempted but quickly
abandoned.”28 Some believe that the Commission and Goldwater-Nichols efforts
were very constructive, making major contributions in reforming DOD’s acquisition
structure and practices. Others argue however, that “(a) case can be made that
Goldwater-Nichols never implemented the Packard Commission principles”29 and
that “Goldwater-Nichols reforms attempted, but ultimately failed, to get at the root
of DoD’s acquisition execution problems.”30 Today, DOD acquisition structure and
practice challenges continue, as do efforts to improve them.
Major Reports. Three major reports were published between 2005 and 2006
that discuss the challenges facing defense acquisitions and make recommendations
to mitigate them. These reports are the Center for Strategic and International Studies’

26 The Army, Air Force, Navy and Marine Corps, Defense Logistics Agency and U.S.
Special Operations Command each have unique supplements.
27 Reeves, p. 16. The Fitzhugh Commission report was the result of a major examination of
Defense Acquisition practices. It is both summarized and published in its entirety in CRS
LTR 88-1399, available through request to CRS.
28 Murdock, Flournoy, et al., p. 90.
29 Murdock, Flournoy, et al., p. 96.
30 Scruggs, David, et al. Beyond Goldwater-Nichols - An Annotated Brief - Department of
Defense Acquisition and Planning, Programming, Budgeting and Execution System Reform
- Phase III. August 2006, p. 19. Additionally former Senator Sam Nunn, who was
instrumental in the formulation and passage of Goldwater-Nichols, states in the foreword
of Locher’s book that “Although the services now fight jointly, greater jointness may now
be required in how the department ‘organizes, trains and equips’ - the title 10 U.S. Code,
functions assigned to the separate services.”

(CSIS) Beyond Goldwater-Nichols (BGN) Series Volume Two31 (July 2005), the
Defense Acquisition Performance Assessment (DAPA) Report.32 (January 2006), and
the Defense Science Board’s (DSB) Summer Study on Transformation: A Progress
Assessment, Volume One. (February 2006).33
In 2007, two DOD reports were issued that look at non-procurement
acquisitions and make recommendations for improving the acquisition process. The
reports were the Report of the Acquisition Advisory Panel to the Office of Federal
Procurement Policy and the United States Congress34 (January 2007), which focuses
on the acquisition of services, and Urgent Reform Required: Army Expeditionary
Contracting — Report of the Commission on Army Acquisition and Program
Management in Expeditionary Operations35 (October 2007), which focuses on
contingency contracting.
Together, these reports make many observations and recommendations on how
to improve defense acquisitions. All of the reports recognized the need for far-

31 Of the four volumes published in the BGN series, volume two includes the most focused
analysis of defense acquisitions, including a dedicated chapter. The chapter gives a brief
history of acquisition reforms in the 1980s, an outline of current challenges and three
recommendations for improving Defense Acquisition. The chapter also gives consideration
to the “Big ‘A’” and “little ‘a’” definition of defense acquisition and also makes
recommendations to improve the JCIDS and PPBES processes elsewhere in volume two and
the annotated brief of volume three respectively. See [
32 The DAPA report focused solely on Defense Acquisition as was clearly directed by the
Acting Deputy Secretary of Defense Gordon England in his June 7, 2005 request for “an
integrated acquisition assessment to consider every aspect of acquisition.” The DAPA
report contains six individual major elements; organization, workforce, budget,
requirements, acquisition and industry. Each major element contains the panel’s
performance assessment, major findings, performance improvement and implementation
criteria. See [
33 See [
34 The FY2004 National Defense Authorization Act enacted the Services Acquisition
Reform Act of 2003, which authorized the Acquisition Advisory Panel (the SARA panel).
The panel sought to identify current commercial practices for making acquisitions, with an
emphasis on service acquisitions by large businesses. Based on these commercial practices,
the panel made a number of recommendations aimed at improving the government
acquisition process.
35 The Commission was chartered “to review the ‘lessons learned’ in recent operations, and
make recommendations to assist the Department of the Army in ensuring that future such
operations achieve greater effectiveness, efficiency, and transparency.” The report, also
known as the Gansler report after commission chairman Dr. Jacques Gansler, made a
number of recommendations centered around four main themes: (1) increasing the stature
of the acquisition workforce, (2) restructuring the acquisition process and creating clear
lines of responsibility, (3) improving training and provide better resources to contracting
personnel, and (4) creating a legislative, regulatory, and policy framework to improve
contracting effectiveness.

reaching and significant improvements to the acquisition process. The various reports
generally echo similar themes, including the following:
!Recognize the importance of having military requirements, resource
allocation, and acquisition processes work together throughout the
acquisition process.
!Focus more attention on developing requirements and making sure
that Combatant Commanders are more involved in the requirements
generation for weapons systems.
!Implement specific reforms relating to the office of the USD(AT&L)
such as elevating the role of the Director of Defense Research and
Engineering (DDR&E) and requiring the USD(AT&L) to develop
a multi-year business plan relating resources to mission purposes
!Implement acquisition “best practices” including (1) risk-based
source selection; (2) time certain development; (3) a return to spiral
development; (4) using judgment-based instead of requirement-
based execution and; (5) expanding and rationalizing the use of rapid
!Improve the defense acquisition workforce by (1) recruiting the best
leaders and specialists from industry; (2) developing improved
personnel developmental opportunities and establishing clear
acquisitions career paths; (3) increasing the number of federal
employees in critical skill areas; and (4) establishing a consistent
definition of the acquisition workforce.36
!Generally, transform the Army’s culture to recognize the importance
of contracting.
Periodic GAO Reports. The Government Accountability Office (GAO)
regularly produces in-depth reports that address specific issues and make
recommendations on those issues to improve the defense acquisition structure and
acquisition practices. From January through April 2008 alone, GAO published seven3737
reports on defense acquisitions and testified before Congress five times.
GAO has identified DOD contract management a high-risk area, finding that
“DOD continues to experience poor acquisition outcomes and missed opportunities

36 This brief list is not all-inclusive or as detailed as the individual reports themselves, but
is meant to serve as a brief summary of the common themes of the reports. An additional
source that compiled the recommendations of each of the reports was published by CSIS and
can be delivered upon request.
37 A summary of GAO reports on various DOD challenges, including defense acquisitions
and related topics, can be found at [].

to improve its approach to buying goods and services”.38 GAO has also identified
DOD weapons systems acquisitions as an area of high-risk, noting the “cascading
number of problems in managing”such acquisitions.39 These problems have
contributed to significant cost growth in weapons systems: FY2007 costs for major
defense programs increased 26% over initial estimates.40
GAO has made a number of recommendations to improve DOD’s acquisition
process. For example, in its report, Suggested Areas for Oversight for the 110th
Congress, the GAO makes the following recommendations:
!Require agencies with significant acquisition budgets, such as the
Department of Defense (DoD) and the National Aeronautics and
Space Administration (NASA), to better align requirements, budget,
and acquisition processes to reconcile the differences between wants,
needs, affordability, and sustainability, given current and future
demands and resources.
!Monitor the implementation of agency action plans to address the
GAO high-risk areas related to acquisition and contract
management. These include contracting at DoD, the Department of
Energy, and NASA, as well as interagency contracting practices
through the General Services Administration and other means.41
In short, GAO recommends that better alignment among interrelated processes
combined with resolution of high-risk areas42 may result in improvements in how
acquisition programs and individual procurements are executed in the federal
government, including DOD.

38 GAO. High Risk Series - An Update (Washington D.C.: January 2007), GAO-07-310, p.


39 Ibid, p. 61.
40 GAO. Assessments of Selected Weapon Programs, (Washington D.C.: March 31, 2008),
GAO-08-467SP, p. 4.
41 GAO-07-235R, p. 8, [].
42 Details of GAO’s high-risk areas, including the acquisition and contract management ones
described above, can be found in High Risk Series - An Update, GAO report GAO-07-310,
January 2007. See []. The GAO describes their
high-risk series as an attempt to “focus on the need for broad-based transformations to
address major economy, efficiency, or effectiveness challenges. Since 1990, GAO has
periodically reported on government operations it has designated as high risk. In this 2007th
update for the 110 Congress, GAO presents the status of high-risk areas identified in 2005
and new high-risk areas warranting attention by Congress and the executive branch. Lasting
solutions to high-risk problems offer the potential to save billions of dollars, dramatically
improve service to the public, strengthen confidence and trust in the performance and
accountability of the U.S. government, and ensure the ability of government to deliver on
its promises.”

DOD Efforts to Improve Defense Acquisition
DOD has begun experimenting with measures aimed at improving the defense
acquisition structure and its practices. The USD(AT&L) published a broad set of
goals and associated outcomes in 2006 to “help guide Acquisition, Technology and
Logistics in adapting to (the new realities from the QDR) and to do our part to keep
the Department on course....”43 The goals and associated outcomes are part of the
2007 Strategic Goals Implementation Plan (SGIP).44 DOD’s 2008 Strategic Goals
Implementation Plan reports on the status of the goals outlined in the 2007 report and
lays out the metrics and timelines against which to measure progress.45
Congress has acted in its oversight role to stay informed of the latest DOD
efforts. Section 804 of the Fiscal Year 2007 John Warner National Defense
Authorization Act (H.R. 5122/P.L. 109-364) requires DOD to submit biannual
reports on the implementation of acquisition reform in DOD. The report must be
submitted by January 1, and July 1 of each year until December 31, 2008, and is
required to take into consideration the Defense Acquisition Performance Assessment
report, Defense Science Board Summer Study on Transformation, CSIS report
Beyond Goldwater-Nichols, and the Quadrennial Defense Review of 2006.46 DOD’s
first report, submitted February 2007,47 summarized the initiatives DOD is pursuing
in six areas; workforce, acquisition, requirements, budget, industry, and organization.
These initiatives were often linked to aspects of DOD’s SGIP. DOD’s second report,
submitted July 2007, updated DOD progress in all six areas outline above.48 In it’s
third report, submitted in May 2008, DOD tracked its progress in implementing all

55 recommendations for improving defense acquisitions found in the DAPA,

Defense Science Board, and CSIS reports.49

43 In the Line of Fire, remarks as delivered by the Under Secretary of Defense for
Acquisition, Technology and Logistics Kenneth J. Krieg to the Contract Services
Association, San Antonio, TX, March 21, 2006, p. 4, at [
previous_krieg_speeches/03-21-06% 20NR-ContractServicesAssoc.doc].
44 USD(AT&L). Strategic Goals Implementation Plan, Fiscal Year 2007, pp. 6-7.
45 USD(AT&L). Strategic Goals Implementation Plan, Fiscal Year 2007. See
[ p.pdf].
46 Within the QDR, defense acquisitions are addressed in the section entitled “Reshaping the
Defense Enterprise”. There is only a brief subsection that is specifically titled Improving
Defense Acquisition Performance which notes that “there are several ongoing reviews of
defense acquisition improvements being conducted both within and outside the Department
in an effort to address these issues. Their results will inform the Department’s efforts to
reshape defense acquisitions into a truly 21st century process that is responsive to the joint
warfighter.” See []. Section 941
of H.R. 4986 authorizes the conduct of the next QDR.
47 See [
feb_2007.pdf ].
48 See [].
49 According to statute, the report was to be submitted to Congress by January 1, 2008.
However, the report was not submitted until May 2008. The report is not yet available to the

Potential Issues and Options for Congress
Some in Congress contend that DOD can do more to better its acquisition
structure and processes, which many see as extremely complex taking into account
that sometimes there exist conflicting objectives. For example, the highly publicized
Mine Resistant Ambush Protected (MRAP) vehicle program has been accelerated to
be able to field as soon as possible, filling an urgent warfighting operational need.
The trade-off in executing an acquisition program on a highly accelerated basis
however, is a reduced opportunity to minimize the life cycle costs of the vehicles
through reliability, maintainability or production line enhancements. In the case of
the MRAP, the urgent operational needs of operational commanders took precedence
over the need of DOD to minimize the life cycle cost of the platform.
This section examines some major challenges and issues facing DOD to
improve its acquisition structure and processes. One such challenge is in making
changes through “transformation”, a term inclusive of numerous initiatives to address
a range of acquisition issues. Others include cost/schedule/performance in Major
Defense Acquisition Programs (MDAPs), outcomes of cost reimbursement contracts,
interagency and service contracting practices, and the defense acquisition workforce.
The challenges and issues are examined below along with potential options Congress
could pursue to address them.
Defense Acquisition Transformation
DOD’s current defense acquisition transformation efforts are in their infancy.
The Strategic Goals Implementation Plan (SGIP) was first produced in September
2006 and many of the initiatives are still underway. Additionally, DOD submitted
their first Section 804 report to Congress in February 2007. The infancy of DOD’s
acquisition transformation raises three questions Congress might consider: 1) When
is it probable that acquisition transformation would succeed? 2) How will Congress
know that acquisition transformation has succeeded? 3) What impact will the
departure of the USD(AT&L) and the Vice Chairman of the Joint Chiefs of Staff
have on acquisition transformation? To help address those questions, Congress could
consider the following options:
!Establish a statutory acquisition transformation plan. Some
analysts point out that DOD’s acquisition reforms lack clear
benchmarks against which to measure success. Congress could set
specific transformation requirements with detailed completion
criteria so that DOD has a defined end state to work towards.
Supporters could argue that such a plan would ensure acquisition
transformation is not impeded by changes in senior leadership.
Supporters could also argue that acquisition transformation can
occur more rapidly if an end state is known and specific actions can
be planned and implemented to achieve a defined end state.
Opponents could argue that establishing such a plan removes

49 (...continued)
public but was provided to CRS.

flexibility from DOD and the plan could easily become obsolete and
ineffective due to unforeseen events. Opponents could also argue
that efforts to determine what improvements should be made are
ongoing and deciding which ones should be implemented at one
point in time risks unintended consequences that could be avoided
through current DOD efforts.
!Establish dates to complete acquisition transformation.
Congress could require that all improvements DOD intends to make
via its acquisition transformation efforts be accomplished by
prescribed dates so that transformation’s effectiveness may be
captured and evaluated. Supporters could argue that defining
completion date will accelerate the pace of improvements and allow
DOD to focus more quickly on promising initiatives and cancelling
problematic ones. Supporters could also argue that establishing
timelines will create benchmarks against which to measure success.
Opponents could argue that setting a date could discourage or inhibit
continuous improvement efforts as a way to constantly transform.
Opponents could also argue that DOD may execute a lower number
or less effective improvements than would be optimal so that the
deadline could be met.
!Establish performance criteria for DOD’s entire acquisition
structure. Individual defense acquisition programs have cost,
schedule, and technical performance objectives and thresholds that
collectively define program performance. However, DOD’s defense
acquisition structure does not appear to have a similar standard for
performance. Congress could establish such a standard which
DOD’s acquisition structure must meet or operate within, so that
transformation efforts have defined goals. Supporters could argue
that establishing such criteria or metrics may allow DOD to maintain
tradeoff flexibility within the performance parameters. Supporters
could also argue that such parameters could serve as a useful link
between the defense acquisition structure and the warfighting
capabilities of the nation. Opponents could argue that such
parameters would add new and complex tracking, reporting, and
management requirements that would impair structural performance.
Opponents could also argue that criteria or metrics could either
change so frequently or become obsolete due to many factors that
DOD may never be able to meet targets or if DOD did that they
would no longer be the best ones.
!Require DOD to develop risk management techniques to help
with its acquisition transformation. Many programs and projects
in both government and industry experience failure. Risk is a term
often used to represent the chances that a program or project may fail
due to any number of factors. DOD’s approach towards acquisition
transformation, arguably similar to a weapon system that attempts to
concurrently develop and integrate a number of immature
technologies, may have risks that necessitate the use of risk

management to ensure success. To date, DOD has not published a
risk assessment or risk management plan for its acquisition
transformation efforts. Congress could require DOD to use this
approach in its acquisition transformation efforts to ensure that
mitigation plans exist if and when problems or challenges are
encountered. Supporters could argue that requiring risk management
will ensure that DOD develops alternatives to the initiatives
currently being pursued in the event one or many of those initiatives
fail. Supporters could also argue that risk management will ensure
detailed planning and tracking of initiative and transformation
progress. Opponents could argue that DOD must identify risks and
obstacles before fully engaging risk management practices, which is
why DOD is initially using experiments and trial initiatives to pursue
improvement. Opponents could also argue that risk management
could impair the pace of improvement through additional tracking,
reporting and management activities.
Cost, Schedule, and Performance in
Major Defense Acquisition Programs (MDAPs)
Cost overruns, schedule slips, and performance shortfalls have plagued large
weapon system acquisition programs since World War II. Despite statutory reporting
requirements on a regular basis and when cost or schedule problems occur, current50
MDAPs continue to experience overruns, slips and shortfalls during their execution.
Observers have identified a range of contributing factors to these problems including
requirement and funding instability, less then optimal knowledge at decision points,
and technology immaturity among others. Some may argue that some level of each
problem is unavoidable due to DOD’s longstanding practice of pursuing
technological superiority over all potential threats. Some could also point out that
even private industry experiences similar issues, such as the well publicized wiring
problems with the Airbus A380 aircraft or component problems and shortages with51
Sony’s Playstation 3 video gaming console. However, others may argue that DOD
has experienced the same problems for over 50 years and that controls should be in
place by now to prevent more occurrences.
To address the challenges of reducing future MDAP execution problems,
Congress might consider the following options.

50 The GAO submits annual reports of many DOD MDAPs. The most recent report is
Defense Acquisitions: Assessments of Selected Weapon Programs (Washington D.C.: March

31, 2008), GAO-08-4675SP.

51 For example, on problems with the Airbus A380, see Wall, Robert, “EADS Confirms
Further A380 Delays”, Aviation Week, September 24, 2006, at [http://www.aviationweek.
com/aw/generic/story_generic.jsp?channel=awst&id=news/aw092506p3.xml]. Also for
example on problems with the Sony PlayStation 3 gaming console, see the June 9, 2006
press release from Sony Computer Entertainment Europe regarding the European launch
delay, at [

!Require DOD to send more information to Congress prior to
MDAP initiation. Currently, prior to the formal initiation of an
MDAP, DOD performs a range of analyses, prepares related
documentation, and holds a tiered series of reviews prior to initiation
of an MDAP. DOD is not required to deliver that information to
Congress, although a program summary and limited characteristics
of the initiated program are outlined in the Selected Acquisition
Reports (SARs). Congress could require DOD to “propose” MDAPs
to Congress in a manner that is similar in detail as defense
contractors who respond to “requests for proposals” (RFPs) so that
Congress could openly discuss important programs early and make
any potential necessary changes. Supporters could argue that such
a construct would enhance program stability by ensuring program
changes in areas such as requirements or funding are only made
when necessary. Supporters could also argue that poorly structured
or high risk MDAPs would be prevented from initiation or at least
monitored more closely. Opponents could argue that DOD best
knows what it needs and how to manage it. Opponents could also
argue that the time necessary to initiate an MDAP may increase and
therefore delay the timely fielding of necessary capability to the
!Establish congressional MDAP termination criteria. Neither
statute nor policy requires the cancellation of an MDAP due to cost,
schedule or performance problems. DOD is required to certify to
Congress that a program needs to continue if the unit cost of an
MDAP exceeds a certain threshold. Both DOD and Congress have
the option of terminating programs that experience these problems,
but have rarely done so.52 Congress could establish MDAP
termination criteria such that if a cost, schedule or performance
measure met or breached the criteria the program would
automatically cancel. Supporters could argue that such criteria could
help prevent requirements “gold-plating” and “low-ball” cost
estimates or proposals since a program breach would guarantee
termination. Supporters could also argue that fiscal responsibility in
DOD could be enhanced since moving funding around to new or re-
prioritized programs could cause others to terminate. Opponents
could argue that program termination does not terminate the
requirement and the fielding of warfighting capability would be
delayed due to the cancellation and start of a new program to deliver

52 For example, data provided by DOD indicates that only three programs with Nunn-
McCurdy unit cost breaches not caused by cancellation since 2000 have been cancelled by
DOD; Air Force B-1 Defense System Upgrade Program (DSUP), Navy Area Theater
Ballistic Missile Defense (TBMD), and Army Tactical Missile System-Brilliant Anti-Armor
Submunition (ATACMS-BAT). Congressional cancellations in general are rare and are
usually due to many issues which may or may not include cost, schedule, and performance
problems. Examples include the MEADS program in 1998, the Seawolf submarine program
in 1996, and the XM-803 Main Battle Tank program in 1971.

Outcomes of Cost Reimbursement Contracts
The two types of contracts most commonly used for the procurement of goods
and services in the federal government, including DOD, are cost-reimbursement and
fixed-price.53 Fixed-price contracts are typically used in procurements that are
judged to have little or manageable risk whereas cost-reimbursement contracts are
typically used in procurements that are judged to have more significant risk. History
shows that developmental efforts procured for Major Defense Acquisition Programs
(MDAPs) are among those procurements that are commonly judged to have the most
significant risk and therefore justify the use of cost-reimbursement contracts.54
Cost-reimbursement contracts have come under renewed scrutiny, as an
example, as a result of the Department of the Navy’s termination of its cost-
reimbursement contract for the third Littoral Combat Ship (LCS) that was being built
by Lockheed-Martin.55 This contract was terminated due to a significant escalation
in the cost of the ship and the inability of the Navy and Lockheed-Martin to agree on
a modification to change the contract from cost-reimbursement to fixed-price for the
ship’s completion in order to better control costs.
Many experts believe the desire for technological superiority in DOD weapon
systems and military capabilities arguably necessitates the continued use of cost-
reimbursement contracts because of the risks involved in developing such cutting
edge technology. To improve the outcomes of such contracts, Congress could
consider the following options:
!Require congressional approval to use cost-reimbursement
contracts. Currently, DOD may not award a Multi-Year
Procurement (MYP) contract that exceeds $500M unless certain
statutory criteria are met and authority is provided in an56
Appropriations Act. Congress could consider a similar construct
for DOD’s use of cost-reimbursement contracts which meet or
exceed specific criteria and exceed a set threshold. Supporters could
argue that with additional approval authority, Congress could gain
additional insight into the details surrounding the cost-

53 A matrix comparing characteristics of each contract type can be found at
[ p/contractpricing/ vol4chap1.htm#1.1].
54 The Defense Federal Acquisition Regulation Supplement (DFARS) section 235.006
permits the use of fixed-price contract types for certain procurement types, including those
typically associated with MDAPs. Such use requires the approval of the USD(AT&L). See
55 For additional information on the LCS, see CRS Report RL33741, Navy Littoral Combat
Ship (LCS) Program: Oversight Issues and Options for Congress by Ronald O’Rourke.
56 10 U.S.C. 2306b. An MYP is a particular type of contract where DOD agrees to buy
many years of goods or services at once, committing future Congresses to fund the contract
in the agreed-upon manner. Whereas a multiple year contract is where the goods or services
may be procured over multiple years but only the first year is guaranteed to be bought, an
MYP guarantees all years will be bought unless the contract is terminated.

reimbursement contract. Supporters could also argue that an
approval requirement could promote more technology
demonstrations and other risk reduction activities by DOD.
Opponents could argue that Congress already approves such
contracts since DOD discloses certain contract information in the
budget material delivered to Congress. Opponents could also argue
that acquisition programs could be significantly delayed while
waiting for Congressional approval or in the event of a disapproval.
!Require cost-reimbursement contracts to convert to fixed-price
contracts as risk is reduced. When DOD awards a cost-
reimbursement contract, the contract typically remains cost-
reimbursement throughout its life even as efforts are completed. As
these efforts are completed however, the uncertainty in a contractor’s
tasks is reduced and risk is lessened. Congress could require that
upon accomplishment of certain events or criteria that remaining
effort be converted to a fixed-price to complete remaining efforts
under the contract since the level of risk remaining may no longer
support continued use of a cost-reimbursement contract. Supporters
could argue that as a contract is performed, more knowledge is
gained and eventually there is insufficient risk inherent in remaining
performance to justify continuing the cost-reimbursement
arrangement. Supporters could also argue that a conversion would
better prepare contractors for fixed-price follow-on or development-
to-production procurements. However, opponents could argue that
funding regulations could prevent such a conversion as cost-
reimbursement contracts may be incrementally funded while fixed-
price contracts must be fully funded, which may force DOD to
“guess” when the accomplishments may happen to ensure that full
funding is available. Opponents could also argue that the costs in
terms of time, complexity, and additional planning to segregate cost-
reimbursement and fixed-price efforts would outweigh any potential
benefits of such a conversion.
!Require contractors to submit both a cost-reimbursement
contract proposal and a fixed-price contract proposal to
quantify contract performance risk. When DOD determines the
level of risk inherent in an effort, factors such as schedule
requirements, level of detail in technical performance requirements
and the technical maturity of the system and its components are
typical considerations. However, quantifying those risks in terms of
dollars can be nearly impossible without feedback from prospective
contractors regarding what a contract’s value would be for different
contract types. To help quantify the difference between a cost-
reimbursement development contract and a fixed-price development
contract, Congress could require DOD to acquire proposals of both
types when procuring developmental efforts. Supporters could argue
that only a contractor’s proposal offers sufficient data to measure
how much risk is inherent in a particular effort. Supporters could
also argue this approach could spur industry to identify other risks

that may not have been apparent to the government and result in a
better contract type selection. Opponents could argue that the costs
and time associated with the preparation of two proposals and their
evaluation outweighs the potential benefits of the additional
information. Opponents could also argue that this may make
competitive procurements impossible as it would be impossible to
fairly evaluate multiple offerors on a standard set of criteria.
!Establish a cost-reimbursement corps and training program to
execute and manage major cost type contracts. “Cost type”
contracts — whereby contractors are paid for costs incurred as
spelled out in the contract — increase the risks of cost overruns
because the contractor does not have a financial incentive to contain
costs. Rigorous and effective contract management and oversight
can reduce the cost risk to the government. Congress could consider
establishing a program that would produce certified acquisition
experts in cost type contracts. Supporters could argue that cost type
contracts pose a significant cost risk to government that justifies
creating a specialized workforce that possesses the contract
management and oversight skills necessary to maintain fiscal
discipline. Opponents could argue that the factors leading to cost
overruns in cost type contracts are a result of complex technologies
and other factors, not the adequacy of the acquisition workforce.
Opponents could also argue that the appropriate remedy for cost
overruns in such contracts is not to increase training for cost type
contracts but to increase the use of fixed-price contracts. Supporters
could counter that in certain circumstances and with effective
management of the contractor, cost type contracts could be less
expensive that fixed price contracts. For example, in research and
development contracts where neither the contractor nor the
government knows how much work will be required, a fixed price
contract will factor into its cost the risk to the contractor of the work
being more intensive than estimated. However, in a cost type
contract the government only pays for the work actually performed,
thereby saving the government money if the work is completed
quicker or more efficiently than estimated.
Interagency and Services Contracting Practices
Two particular types of contracting that have come under renewed scrutiny
recently are interagency contracting and services contracting. Interagency contracting
is a process where DOD uses the contracts of other federal agencies to procure goods
or services from private industry. DOD typically uses these contracts to save time
or money (or both) compared to using its own contract vehicles. DOD procures
services from private industry when DOD does not have sufficient numbers or
expertise within its civil service staff to accomplish department needs, or believes
time or money could be saved compared to using civil servants, or finally, if the need
is temporary and does not justify hiring a permanent employee. In recent years, DOD
has significantly increased spending on service acquisitions. From FY1996 to 2005,

obligations for service contracts increased from some $82 billion to over $141
billion, respectively.57
The GAO and Department of Defense Inspector General (DODIG) have
published reports on poor practices in DOD’s interagency contracting and DOD
services contracting as distinct from equipment contracting practices.58 Some of the
problems noted in the reports include the following:
!Circumventing numerous procurement and funding regulations; the
GAO and DODIG reports cited examples including inadequate
competition, issuing task orders outside the scope of the overarching
contracts, inadequate justification of actions, and potential violations
of the Anti-Deficiency Act (ADA).
!Insufficient management oversight capacity and practices; the GAO
and DODIG reports cited examples such as some contracts not
having oversight personnel assigned to them, some were without a
quality assurance surveillance plan, and increased managerial
difficulty in those contracts where the requiring agency (DOD) is not
also the contracting agency.
Although the problems raised by the GAO and DODIG reports can contribute to
undesirable and costly outcomes in interagency and services contracting, it is unclear
whether they directly or indirectly resulted in fraudulent, wasteful or abusive
practices by government or contractor personnel.
In October 2006, DOD published a new acquisition of services policy59 in
response to Section 812 of the Fiscal Year 2006 National Defense Authorization Act
(H.R. 1815/P.L. 109-163). This policy established new requirements for services
acquisitions including the following:
!standards and procedures for all services acquisitions,
!a new management structure for services acquisitions,
!acquisition strategy requirements, and
!data collection requirements.

57 GAO. GAO-07-20, DEFENSE ACQUISITIONS: Tailored Approach Needed to Improve
Service Acquisition Outcomes, (Washington D.C.: November 9, 2006), Highlights.
58 For example, see GAO report GAO-07-359T, DEFENSE ACQUISITIONS: DOD Needs
to Exert Management and Oversight to Better Control Acquisition of Services,
Tailored Approach Needed to Improve Service Acquisition Outcomes,
[]; DODIG report D-2006-010, Acquisition:
Contract Surveillance for Service Contracts, [
010.pdf]; and DODIG report D-2005-096, Acquisition: DoD Purchases Made Through the
General Services Administration, [].
59 DOD’s policy can be found at [

06%20AT % 26L%20812%20Acq%20of%20Servi ces.pdf].

DOD has not published an interagency contracting or interagency acquisition
policy similar to its acquisition of services policy, nor has it been required to do so.
However, DOD has entered into a new memorandum of agreement (MOA) with the
General Services Administration (GSA), which outlines 22 objectives to achieve
acquisition excellence.60
It is currently unclear whether DOD’s new acquisition of services policy or its
MOA with the GSA will improve DOD’s interagency and services contracting
practices. In addition to congressional oversight on these new DOD initiatives,
Congress could consider additional options to improve other aspects of these
contracting practices including the following.
!Establishing a services acquisition corps and training program.
The size and capabilities of the entire defense acquisition workforce
is an issue Congress could consider and is discussed in a later
section. However, services acquisition and oversight present unique
size and capability challenges to the acquisition workforce
responsible for such actions. DOD has training courses for services
acquisition and oversight, but does not have a curriculum or program
dedicated to producing services acquisition and oversight experts.
Congress could consider establishing such a program that would
produce certified services acquisition personnel. Supporters could
argue that services acquisition is so complex that only a specialized,
detailed training program with “graduation” criteria is adequate to
ensure DOD has sufficient expertise to protect taxpayer and DOD
interests. Supporters could also argue that the establishment and
maintenance of such a cadre of experts is the only way to
institutionalize services acquisition best practices. However,
opponents could argue that most DOD services acquisitions are
executed well, and current or emerging challenges can be addressed
through updated training courses. Opponents could also argue that
career opportunities for corps members could become limited due to
the specialized nature of their work.
!Require quantitative cost/benefit analysis for each services or
interagency procurement action and establish minimum savings
criteria. One of the most common rationales used by DOD to
procure a service or to use an interagency contract is the savings in
time or dollars such use will generate for the requiring component
compared to using internal resources to fulfill its requirements.
DOD is not currently required to discretely estimate and capture
these cost or schedule savings to support such a procurement
decision. Congress may consider establishing minimum cost or
schedule savings criteria and the documentation of specific
cost/benefit analysis to ensure that those criteria are met to pursue a
service or interagency contract. Supporters could argue that such a
requirement is the only way for Congress to ensure that DOD

60 The MOA can be found at [].

actually saves significant time or money through the use of such
procurement actions. Supporters could also argue that this
requirement will help ensure that thorough market research is
performed for a procurement action. But, opponents could argue
that the cost and time necessary to perform the analysis may
consume any potential cost or schedule benefit from the procurement
of a service or use of an interagency contract. Opponents could also
argue that DOD may forego substantial savings in a procurement and
cause a procurement to be unnecessarily expensive or lengthy only
because it didn’t meet a minimum savings criteria. Opponents could
also argue that agencies often contract out for services because they
lack the authority to hire enough FTEs (full time employees) to
perform the work in-house.
!Limit the amount of funding that may be used for the
acquisition of services or the use of interagency contracts. Each
services acquisition or procurement through an interagency contract
can have its own sets of advantages and disadvantages. The
advantages and disadvantages of an individual action, when weighed
against each other, may not obviously indicate whether the action is
prudent or not. To avoid questionable use of these actions, Congress
could consider limiting the amount of funding used for them.
Supporters could argue that such a restriction would incentivize
DOD to only pursue those that produced the greatest benefit.
Supporters could also argue that DOD would be incentivized to
better plan and analyze potential actions to gauge advantages and
disadvantages. Opponents could argue that such a restriction would
limit the flexibility of Program Managers and Contracting Officers
to meet component needs. Opponents could also argue that such a
restriction could result in increased cost or time to DOD since some
procurements may be forced into a costlier or more time-consuming
vehicle or process to meet DOD requirements.
!Require a DOD or GAO report on actual benefits of services
acquisition and interagency contracting. Despite the scrutiny that
each of these practices has received, no data appears available to
judge whether procuring services or using interagency contracts is
actually saving DOD time or money compared to using comparable
internal resources. Congress may consider requiring DOD or the
GAO to investigate and report on whether savings in either category
have been realized and if so quantify how much those savings were.
Supporters could argue that legislative or policy actions to improve
these practices could be better informed by a rigorous analysis of
whether DOD has benefitted from their use. Supporters could also
argue that such a study could be a good way to evaluate the
effectiveness of current statute and policy. Opponents could argue
that capturing such data may be prohibitively expensive and difficult
given personnel turnover, trying to recreate assumptions or
knowledge at the time an action was pursued, etc. Opponents could
also argue that new policies in place for both the acquisition of

services and interagency contracting would not be reflected in the
data, therefore making the data set obsolete.
The Defense Acquisition Workforce61
The size and capabilities of the defense acquisition workforce has been a subject
of much debate for over 15 years. Some believe the defense acquisition workforce
is undersized and incapable to do all that is asked by DOD, evidenced by poor
performance in both acquisition programs and Iraq reconstruction efforts.62
The current Under Secretary of Defense for Acquisition, Technology and
Logistics [USD(AT&L)] has made a “high performing, ethical, and agile workforce”
his number one goal.63 The AT&L Human Capital Strategic Plan (HCSP)64 is the
USD(AT&L)’s plan to achieve this objective. The HCSP consists of five goals, each
of which are refined into enabling objectives, outcomes and measures. For example,
one of the HCSP’s goals is to establish a comprehensive, data-driven workforce
analysis and decision-making capability. To achieve this goal, DOD is pursuing
improvements in the metrics and data that quantify the capabilities, needs and
characteristics of the acquisition workforce. DOD is also pursuing improvements in
the information systems that capture and analyze the metrics and data along with
making the metrics and data more transparent to enable workforce leadership to
better plan and decide on departmental strategy.
The HCSP appears quite comprehensive and the linkage of goals all the way
back to metrics appears sound. However, the details of how each link is measure
appear vague and the HCSP does not appear to outline how these goals and
supporting linkages will improve acquisition programs and practices.
Some options Congress may consider to improve the defense acquisition
workforce include the following:
!Increase the size of the defense acquisition workforce. During
the 1990s, Congress required DOD to reduce the size of its
acquisition workforce as a result of a perceived “peace dividend”

61 For additional information on the defense acquisition workforce, see CRS report 98-938,
Defense Acquisition Workforce: Issues for Congress, by Valerie Grasso. Current defense
acquisition workforce statistics from DOD can be found in the USD(AT&L) Human Capital
Strategic Plan at [] and in a presentation made by
Scott Ilg of the Defense Acquisition University at [
aspx?id=120926&pname =file&a id=25176].
62 For examples, see GAO report GAO-07-640R, Defense Services Acquisition: Questions
for the Record, pp. 6-8, []; GAO-06-1130T,
REBUILDING IRAQ: Continued Progress Requires Overcoming Contract Management
Challenges, [], pp. 8-10; GAO-07-730T,
SPACE ACQUISITIONS: Actions Needed to Expand and Sustain Use of Best Practices,
[], pp. 16-17; and p. 12 of the DAPA report.
63 February 2007 Section 804 report, p. 7.
64 See [].

from the 1991 Gulf War. By 2000, the acquisition workforce
contracted by almost 50%.65 However, despite significant increases
in defense spending over the last decade, the acquisition workforce
has remained relatively stable, resulting in fewer people managing
ever greater workloads at a time when many contracts are becoming
more complex. DOD’s current high level of operational
requirements may invite congressional action to authorize an
increase in the size of DOD’s acquisition workforce. Supporters of
such an increase could argue that the cost of the additional
workforce would be outweighed by probable benefits, such as
reduced cost overruns on acquisition programs and more reasonable
pricing and delivery on procured hardware and services. Supporters
could also argue that a larger workforce could be better prepared to
handle future unexpected contingency operations where demand on
the acquisition workforce could spike. Opponents could argue that
increasing the workforce would divert needed funding for
operational and equipment requirements. Workforce demands are
already at an all-time high and increasing the workforce to meet that
demand will result in excess workforce capacity and less money for
operations and acquisition needs.
!Specify a maximum level of contractor support allowed for
acquisition or acquisition-related functions. To better identify
shortfalls or gaps in DOD’s acquisition workforce, Congress could
specify a DOD-wide, DOD Component-specific or acquisition
program-specific maximum level of contractor support for
acquisition or acquisition related functions. Supporters could argue
that holding contractor support levels constant will allow DOD to
hire only the best and brightest contractor support for acquisition and
acquisition-related functions. Supporters could also argue that a set
maximum level could increase competition for available
procurements and thereby reduce support costs. Opponents could
argue that Program Managers would be unnecessarily restricted in
their ability to staff their program offices in a manner they believe
is best for their program. Opponents could also argue that the
industrial base and level of qualified contractor support in the private
sector may be diminished as fewer opportunities exist for
procurements and employment.

65 Report of the Acquisition Advisory Panel to the Office of Federal Procurement Policy and
the United States Congress, p. 3.

FY2009, FY2008, FY2007 Defense Acquisition
Legislative Activity
The primary mechanism for which Congress has exercised its legislative powers
to improve the performance of the defense acquisition structure on a recurring basis
has generally been the annual National Defense Authorization Acts (NDAAs),
though annual Appropriations Acts still exert significant influence via Congress’
“power of the purse.”66 Sections of the acts have prescribed requirements applicable
to both specific acquisition programs and the structure overall, the latter of which has
typically been addressed in Section VIII of the acts which is usually titled
“Acquisition Policy, Acquisition Management, and Related Matters”. Generally, the
requirements prescribed in this section have tended to be focused on specific issues
rather than comprehensive reform of the defense acquisition structure.
The Proposed FY2009 Duncan Hunter National Defense
Authorization Act (H.R. 5658)
On May 22, 2008, the House passed the Duncan Hunter National Defense
Authorization Act for FY2009 (H.R. 5658).On May 12, 2008, the Senate placed its
version of the National Defense Authorization Act for FY2009 (S. 3001) on the
Senate legislative Calendar.
The House bill’s section on Acquisition Policy, Acquisition Management, and
Related Matters (Title VIII) is subdivided into five sections: Subtitle A, Acquisition
Policy and Management; Subtitle B, Amendments to General Contracting
Authorities, Procedures, and Limitations; Subtitle C, Provisions Relating to
Inherently Governmental Functions; Subtitle D, Defense Industrial Security; and
Subtitle E, Other Matters. Key provisions in the act include a requirement that the
Secretary of Defense commission a study to assess the effectiveness of the process
used to generate urgent operational need requirements (Section 802); a requirement
that the impact to the domestic industrial base be a source selection factor for major
defense acquisition programs (Section 805); a requirement that policies be
established to ensure that the acquisition workforce attracts quality officers and
civilian personnel, including the establishment of a minimum number of billets
reserved for general and flag officers in the acquisition workforce (Section 815); and
a requirement that a conflict of interest policy be developed for employees of defense
contractors akin to the policy in place for DOD civilian employees (Section 821).
The Senate bill’s section on Acquisition Policy, Acquisition Management, and
Related Matters (Title VIII) is subdivided into six sections: Subtitle A, Provisions
Relating to Major Defense Acquisitions; Subtitle B, Acquisition Policy and

66 For a brief procedural overview, see CRS Report RS20371, Overview of the
Authorization-Appropriations Process, by Bill Heniff, Jr. For a history of Defense
Authorization and Appropriations Bills from FY1970 through FY2007, see CRS Report
RL33405, Defense: FY2007 Authorization and Appropriations, by Stephen Daggett and
CRS Report 98-756, Defense Authorization and Appropriations Bills: FY1970-FY2007, by
Thomas Coipuram, Jr.

Management; Subtitle C, Amendments relating to General Contracting Authorities,
Procedures, and Limitations; Subtitle D, Department of Defense Contractor Matters;
Subtitle E, Matters Relating to Iraq and Afghanistan; and Subtitle F, Other Matters.
Key provisions in the title include the establishment of Configuration Steering
Boards designed to control cost and schedule growth for major defense acquisition
programs (Section 803); the establishment of a contingency contracting corps
(Section 812); the development of guidance to ensure that urgent requirements
submitted by operational commanders are expedited for review (Section 813); and
the issuance of regulations that ensure private security companies are not authorized
to perform inherently governmental functions in an area of combat operations
(Section 841). The bill also mandates the prohibition of using contractors to
interrogate detainees (Section 1036) and that each strategic human capital plan
required by the act specifically address the defense acquisition workforce (Section


2008 National Defense Authorization Act
(H.R. 4986/P.L. 110-181)
The original bill, H.R. 1585, was vetoed by the President on December 28,
2007. A new bill, H.R. 4986, was introduced in the House on January 16, 2008, and
passed the same day. The bill passed the Senate on January 22, 2008, and was signed
by the President January 28, 2008. The FY2008 Defense Authorization Act’s section
on Acquisition Policy, Acquisition Management, and Related Matters (Title VIII)
was subdivided into eight subtitles: Subtitle A, Acquisition Policy and Management;
Subtitle B, Provisions Relating to Major Defense Acquisition Programs; Subtitle C,
Amendments to General Contracting Authorities, Procedures, and Limitations;
Subtitle D, Accountability in Contracting; Subtitle E, Acquisition Workforce
Provisions; Subtitle F, Contracts in Iraq and Afghanistan; Subtitle G, Defense
Materiel Readiness; and Subtitle H, Other Matters. Four of the FY2008 act subtitles
(Accountability in Contracting, Acquisition Workforce, Contracts in Iraq and
Afghanistan, and Defense Materiel Readiness) were not in the FY2006 or FY2007
authorization acts.
Key provisions in the act include a prohibition on future contracts for the use of new
Lead System Integrators for major systems67 ( Section 802); a requirement that the
Secretary of Defense (as part of the Strategic Human Capital Plan for 2008) include
a section focused on the military and civilian acquisition workforce (Section 851);
the establishment of a Defense Acquisition Workforce Development Fund to be used
for recruitment, training, and retention of acquisition personnel (Section 852); the
establishment of regulations for private security contractors (Section 861); the
establishment of a Defense Materiel Readiness Board (Section 871); and the
authority of the Secretary of Defense to designate critical readiness shortfalls (Section
872). Additionally, Title IX of the bill contains four significant mandates that relate
to acquisitions: the designation of the Deputy Secretary of Defense as DOD’s Chief
Management Official and creation of an Under Secretary of Defense for Management

67 For a brief discussion on the role of the Lead System Integrator, see CRS Report
RS22631, Defense Acquisition: Use of Lead System Integrators (LSIs) — Background,
Oversight Issues, and Options for Congress, by Valerie Bailey Grasso.

(Section 902); the removal of the private sector service requirement for an individual
appointed to be the USD(AT&L) (Section 903); the appointment of three-star
military deputies to each military service’s acquisition executive (Section 905); and
adding the USD(AT&L) and the Director of Program Analysis and Evaluation as
advisors to the JROC (Section 942).
FY2007 John Warner National Defense Authorization Act
(H.R. 5122/P.L. 109-364)
The FY2007 John Warner Defense Authorization Act was organized in the same
way as the FY2006 Defense Authorization Act to the level and nomenclature of the
subtitles. The act’s section on Acquisition Policy, Acquisition Management, and
Related Matters was subdivided into five subtitles; Subtitle A, Provisions Relating
to Major Defense Acquisition Programs; Subtitle B, Acquisition Policy and
Management; Subtitle C, Amendments to General Contracting Authorities,
Procedures, and Limitations; Subtitle D, United States Defense Industrial Base
Provisions; and subtitle E, Other Matters. Each subtitle included a number of
sections that addressed a variety of topics within each subtitle. Some of the most
significant mandates include a new requirement for the department to update
Congress biannually on the implementation of acquisition reform in the department
(Section 804), the establishment of a preliminary trial program on time-certain
development in acquisition of major weapon systems (Section 812), a requirement
for the Milestone Decision Authority (MDA) of a Major Defense Acquisition
Program (MDAP) to select the contract type used for development programs and
document the rationale for that decision (Section 818), the establishment of a
Strategic Materials Protection Board (Section 843) and the development of a strategy
to enhance DOD Program Managers (PMs) in developing and carrying out Defense
Acquisition programs (Section 853).

Appendix A. Selected List of Additional Defense
Acquisition Information68
Glossary of Defense Acquisition Acronyms and Terms
Defense Acquisition University Training and Continuous Learning69
[ BrowseCertCourses]
DOD Policy Documentation
DOD 5000 series70
[ ]
Chairman of the Joint Chiefs of Staff (CJCS) 3170 series
[ ectives/cdata/unlimit/3170_01.pdf]
[ ectives/cdata/unlimit/m317001.pdf]
Planning, Programming, Budgeting and Execution System (PPBES)
[] 71
Financial Management Regulation (FMR)

68 This list of information sources for Defense Acquisition is not comprehensive but focused
on more significant and recent publications. However many of the sources listed also
include additional references within their text that may be helpful. For additional historical
references, see pp. 31-35 of the previously noted report by Edward Bair on Defense
Acquisition at [
U2&doc=GetT RDoc.pdf].
69 The first link here is for DAU training curriculum, which covers a variety of acquisition
functions such as program management, contracting, test & evaluation, etc. Users should
begin with ACQ-101, the basics of Defense Acquisition. The second link is for continuous
learning courses which can cover more specific topics. Both allow browsing courses
without the need for testing or grading of progress.
70 The first two links are the policy documents, the third is a guidebook to the documents
and their concepts while the fourth is an integrated framework chart of the Defense
Acquisition System.
71 This is not policy documentation but is also helpful in understanding PPBES.

Federal Acquisition Regulation (FAR) and supplements
Under Secretary of Defense for Acquisition, Technology and Logistics
(USD(AT&L)) Strategic Goals Implementation Plan
[http ://
Under Secretary of Defense for Acquisition, Technology and Logistics
(USD(AT&L)) Human Capital Strategic Plan
Major Reports
February 2007 Section 804 Report
[ ents/804Reportfeb2007.pdf]
Quadrennial Defense Review (QDR) 2006
Defense Acquisition Performance Assessment (DAPA)
[ h ttp://]
Defense Science Board (DSB)
Center for Strategic and International Studies (CSIS) Beyond Goldwater Nichols
Urgent Reform Required: Army Expeditionary Contracting
[ nal_071031.pdf]
Report of the Acquisition Advisory Panel
Selected Government Accountability Office (GAO) reports72
Major Management Challenges at the Department of Defense main site73
Assessments of Selected Weapons Programs
[ GAO-08-467SP]

72 Some links are to testimony given by GAO vice major reports.
73 This will provide a list of various GAO reports on Defense Management challenges,
including Defense Acquisition.

An Integrated Portfolio Management Approach to Weapon System Investments Could
Improve DOD’s Acquisition Outcomes
[ h ttp:// GAO-07-388]
DOD Needs to Exert Management and Oversight to Better Control Acquisition of
Contracting for Better Outcomes
DOD Faces Challenges in Implementing Best Practices
Better Matching of Needs and Resources Will Lead to Better Weapon System
Employing Best Practices Can Shape Better Weapon System Decisions
Improved Program Outcomes Are Possible
[ h ttp://]
Eliminating Underlying Causes Will Avoid Billions of Dollars in Waste
[ h ttp://]
High Risk Series: Defense Weapon Systems Acquisition
[ h ttp://]
[ h ttp://]
WEAPONS ACQUISITION: A Rare Opportunity for Lasting Change
[ h ttp://]
DEFENSE ACQUISITIONS: Tailored Approach Needed to Improve Service
Acquisition Outcomes
DSMC Comparisons of Foreign Acquisition Systems
[ h ttp://]
[ h ttp://]
LTR 88-1399 available by request.74

74 This CRS report includes a summary and full text of other major commission reports that

Jones Jr., Wilbur D. Arming the Eagle: A History of U.S. Weapons Acquisition since

1775. Defense Systems Management College Press. 1999.

Lederman, Gordon Nathaniel. Reorganizing the Joint Chiefs of Staff - The
Goldwater-Nichols Act of 1986. Contributions in Military Studies, Number 182,
Greenwood Press. 1999.
Locher III, James R. Victory On The Potomac: The Goldwater-Nichols Act Unifies
the Pentagon. Texas A&M University Press. 2002.

74 (...continued)
address Defense Acquisition from 1949-1988.

Appendix B. Evolutionary History of the Defense
Acquisition Structure Prior to Goldwater-Nichols
The evolution of the defense acquisition structure can be generally categorized
into three distinct periods; the Revolutionary War to World War II, World War II to
The Goldwater-Nichols Act and The Goldwater-Nichols Act to the present. While
each period experienced challenges unique to their times, each also exhibited some
characteristics that one could argue are similar to varying degrees and are useful in
consideration of defense acquisition issues today. The first two periods are discussed
below while the third is discussed in the main body of this report.
Revolutionary War to World War II
In comparison to the other two eras in the evolution of the defense acquisition
structure, there is relatively little documented analysis or examination of the structure
during this time period. Such limited information appears to have been due to four
principal reasons; first was a political environment unfavorable to focused analysis
of Defense Acquisition evidenced by:
strong antimilitary sentiments (that) dominated public attitudes from the time of
independence until Pearl Harbor (and) Americans focus(ing) on the military’s75
technical skills, producing an overemphasis on engineering and science....
Second, “(f)or most of our history prior to 1940, the federal budget was76
balanced, except in years of war or economic recession.” Third, and possibly as an
acknowledgment of the shortcomings in engineering and science:
Until World War II, weapons acquisition in the United States was more a
political than a military problem. Shielded from large external threats, the
country had no pressing need for sophisticated weapons; with few exceptions it
was content to let European militaries take the lead in developing and fielding77
new weaponry.
Finally, while there were instances of fraud and waste during the era, no
occurrences of cost overruns or other poor performance in the execution of major
programs as have been experienced since WWII appear evident. The lack of such
instances of poor major program performance may be primarily due to the fact that
prior to WWII, the US defense “industry” was made up of “a mix of public arsenals

75 Locher III, James R. Victory On The Potomac: The Goldwater-Nichols Act Unifies the
Pentagon. Texas A&M University Press. 2002, p. 16.
76 Cogan, John F. “Federal Budget”. The Concise Encyclopedia of Economics. Indianapolis:
Liberty Fund, Inc., ed. David R. Henderson, 2002, at [
LIBRARY/Enc/FederalBudget.html ].
77 McNaugher, Thomas L. “Weapons Procurement: The Futility of Reform”. International
Security. Volume 12, No. 2 (Autumn 1987), p. 67.

and ad hoc private efforts to produce weapons systems.”78 The combination of the
environmental characteristics described above gave the public (and therefore
Congress) little reason to devote attention to the structure. However, that involatile
mix did not completely stifle Congressional action. Despite such an environment:
Legislators worried, on the one hand, that private industrialists would rob the
federal treasury by charging high prices for shoddy weapons. Yet they sought,
on the other, that the industrialists in their own states and districts got their fair79
share, or more, of the military contracts there were to be won.
Congress appeared to have been aware of issues relating to such a basic conflict,
but taking significant action appeared to require a significant catalyst, usually a time
of war or national economic distress. In 1809, Congress first called for competition
in government contracting; in 1861 the first commission to study defense acquisition
fraud was formed (which was followed by numerous related commissions through
the early 1900s); and the 1930s saw Congress focus intensely on the concept of
government procurement for socioeconomic benefit.
The era prior to WWII was one of infancy for the defense acquisition structure.
While there was little to distinguish the challenges of the structure with those of
federal government acquisition overall, the structure’s subsequent evolutionary eras
would bring about significant change.
World War II to the Goldwater-Nichols Act
Nearly every factor influencing and shaping the defense acquisition environment
changed just after WWII. Not only were the nation’s antimilitary sentiments reversed80
due to the attack on Pearl Harbor but the existence of and potential for external
threats to the nation became cemented. Additionally, the emergence of the Cold War
presented the US with a persistent, international security threat. “(T)he ‘real’ enemy
was always the spread of communism beyond the Soviet periphery. Likewise,
weapons systems would now be developed almost exclusively against a Soviet
‘threat’ counterpart.”81 Not only did the US have a persistent, international enemy,
but the enemy’s characteristics forced weapons system development down a road in
which “(t)he perceived Cold War imperative to attain qualitative superiority ensured
that state-of-the-art technological advances would be applied rapidly to weapons
systems capabilities”82 in contrast with the previous defense acquisition landscape,

78 Bair, Edward T. “Defense Acquisition Reform: Behind the Rhetoric of Reform -
Landmark Commissions Lessons Learned”. The Industrial College of the Armed Forces,
National Defense University. 1992, p. 5.
79 McNaugher, p. 67.
80 Locher notes that the antimilitary attitudes of the nation ended with the Pearl Harbor
attack (pages 16 and 18).
81 Reeves, p. 10.
82 Bair, p. 5.

even “in 1947...(where) the emphasis was on simplicity, reliability and
Although just before this era “(d)eficits returned...and remained for the rest of
the decade — due to the Great Depression and the spending associated with President
Roosevelt’s New Deal,” it was “World War II (that) forced the Nation to spend
unprecedented amounts on defense and to incur corresponding unprecedented
Now, not only was the American public intensely interested in defense activities
due to the Soviet threat but it also became interested in how the nation’s resources
were being applied, especially in the Defense sector of the economy. In fact the first
of three questions one scholar notes regarding the resolution of budget deficits is
“(h)ow much should we spend on national defense versus domestic programs?”85
The “guns vs. butter” debate has been a significant political topic since the nation
was founded and this very debate led to the beginning of the end of the Reagan
Administration’s increases in defense spending as
[b]y the mid-1980s...Congress stopped the buildup. With the budget deficit
soaring and with important domestic needs going unmet, members of Congress
argued that the nation could no longer afford the Reagan administration’s86
ambitious plans.
One final contributing factor to the defense acquisition environment was the
establishment and maintenance of a permanent domestic defense industrial base.
However for this establishment to occur, there had to be a market for its products as
a catalyst; this market was born when
the comparatively small and unsophisticated U.S. peacetime ‘militia’ envisioned
by the Federalists and the U.S. Constitution was becoming a permanent, large
peacetime force. Supporting this force was an even larger industry dedicated to
developing and producing sophisticated, technologically superior weapons.
These developments began the hothouse environment of military research and
development that produced the international arms race, military-industrial
complexes here and abroad, and the expansion of military interests into new
realms such as computers, communications, spaceflight, microelectronics,87
astrophysics and a host of other fields.
In sum, a number of factors contributed to the defense acquisition structure
becoming a significant issue not just to those directly involved in its oversight or
practice, but a significant issue in the nation’s political landscape. Acquisition

83 Przemieniecki, J.S. Acquisition of Defense Systems. American Institute of Aeronautics
and Astronautics. 1993, p. 13.
84 See [].
85 Kettl, Donald F. Public Budgeting In Its Institutional and Historical Context. 1992, pp.


86 Kettl, p. 42.
87 Reeves, p. 11.

programs and practices became more complex, more costly and more prominent than
at any time in the nation’s history. President Eisenhower recognized this
development relatively early on and “warned of a military-industrial complex that
would demand a huge share of America’s wealth to perpetuate its power.”88
The environmental factors discussed above, in combination with other factors
such as the advent of joint military operations and organizational change within the
military, thrust the defense acquisition structure into a greater role in national debate.
The results of the defense acquisition structure appear to have served as a
springboard for a characteristic of this era that has perpetuated into defense
acquisition today: the use of commissions, studies, or panels to cure the ills of the
defense acquisition structure.

88 Kettl, p. 39.