Congress frets over program to streamline Pentagon procurement

Four years ago, Section 804 of the defense authorization law freed certain Pentagon programs from the usual acquisition rules, from documenting why a program is needed to how much Pentagon experts who do not work for the same armed service think it will cost.

But now virtually every congressional panel, including both authorizers and appropriators, has expressed in legislation or in reports some degree of concern about how these programs to develop new missiles, satellites, helicopters and combat vehicles are being implemented.

Four Armed Services and Appropriations measures for fiscal 2020 all have something to say on the subject. Most require one or more reports from the Pentagon on issues such as the Section 804 program’s budgets, costs and testing plans and methods for determining the reasonableness of contractors’ prices.

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The report accompanying the House Armed Services Committee’s bill, for example, directs the Defense secretary to brief the committee on “lessons learned” about these efforts. The House bill also directs the Defense secretary to set up a process for getting information from the services about the technical maturity of Section 804 systems.

With its bill, the Senate Appropriations Committee report encapsulates congressional concerns about the new programs — including, but not limited to, Section 804 efforts. For example, the Defense Department can buy some assets, such as mine-resistant vehicles, outside the normal acquisition rules if commanders say they are needed on the front lines.

The Senate panel reckons the Navy, in particular, wants to use either Section 804 or other types of faster acquisition authorities to execute nearly $1.8 billion in research programs in the current fiscal year, from unmanned ships to modernized missiles.

“The spectrum of programs exercising these types of acquisition authorities ranges from existing programs that have already deployed prototypes to new programs that by virtue of their scope and cost would otherwise be subject to reporting requirements and acquisition regulations applicable to traditional major acquisition category I programs,” the Senate panel said, a reference to initiatives that cost at least half a billion dollars.

Senate appropriators expressed concerns that the “growing trend” toward using Section 804 to build prototypes of weapons instead of more traditional approaches limits the Navy’s ability to manage its programs well. Their report says the risks include an inadequate understanding of costs and a possible reduction in competition.

The committee is partly concerned that, after contractors build prototypes under the new approach, they will have to compete again for the right to produce deployable products. By comparison, under the current system, those companies are virtually assured of producing whatever it is they develop.

Some in Congress worry that, without assurances of a payoff in production, industry will not spend its own money on research work and some companies may not even compete for some important programs, denying the Pentagon access to certain talent.

To others, though, the need to compete again after the prototyping phase is a virtue that will keep contractors sharp and their prices low.

The Senate Armed Services Committee’s report released with its bill earlier this year reflected another worry: a lack of coordination among the Defense Department’s rapid prototyping efforts.

Depending on what House and Senate negotiators write in the final versions of the defense appropriations and authorization bills, some of these provisions may not make it into law.

But most of the message has already been sent in report language: If the Pentagon wants to continue and even expand on the number of programs using streamlined authorities, it will have to execute them effectively and keep Congress informed in the process.

For more on defense procurement, please read CQ.com.