Acquisition Reform in House- and Senate-Passed Versions of the FY2016 National Defense Authorization Act (H.R. 1735)

Acquisition Reform in House- and Senate-Passed Versions of the FY2016 National Defense Authorization Act (H.R. 1735)

Acquisition Reform in House- and Senate-Passed Versions of the FY2016 National Defense Authorization Act (H.R. 1735)

July 2, 2015 (R44096)

Contents

Introduction

Comparison of House and Senate Bills

House-Passed Version

Senate-Passed Version

Tables

Table A-1. Selected Sections in the House Bill Relating to Acquisition Reform

Table B-1. Selected Sections in the Senate Bill Relating to Acquisition Reform

Appendixes

Appendix A. Sections in the House Bill Relating to Acquisition Reform

Appendix B. Sections in the Senate Bill Relating to Acquisition Reform

Introduction

For purposes of this analysis, CRS selected 35 sections of the House-passed version of FY2016 National Defense Authorization Act (H.R. 1735), and 47 sections of the Senate-passed version of FY2016 NDAA (also H.R. 1735) that appear closely linked to the respective committee's efforts to reform the acquisition system (excluding Sense of Congress).¹ Each section is identified as fitting into one (or more) of the following four overarching categories:

1. gathering information for future action,

2. streamlining the current process,

3. improving the effectiveness of the current process, and/or

4. improving the performance of the workforce (through recruitment, professional development, or empowering decision-making).

Comparison of House and Senate Bills

The acquisition reform sections of the House and Senate versions of the FY2016 NDAA have many similarities. More than half of the provisions in the Senate bill address the same issues found in the House bill. (See Appendix A, Table A-1 for analysis of the sections in the House bill that correspond to sections in the Senate bill.) In some sections, the language in each bill is virtually identical.² Despite these similarities, the bills have striking differences in length (the Senate version is longer), the philosophical approach taken to reform acquisitions, and the content of the bills.

Taken as a whole, the House bill was not intended to be a panacea for what ails defense acquisitions. Rather, it is intended to serve as an initial step in a multi-year, collaborative effort to improve acquisitions. As the committee's report states, " ... this bill is the first substantive step towards comprehensive reform, the committee recognizes that instituting lasting reform is a long-term, collaborative effort, and therefore, it looks forward to working with all key stakeholders to build upon this product."³ The bill requests more information than does its Senate counterpart. Viewed in this context, the House bill's effectiveness in improving defense acquisitions may depend less on the extent to which provisions of the bill make substantive changes to acquisitions, and more on the extent to which the bill sets forth a vision, and sets in motion a chain of events, that lead to comprehensive (and effective) acquisition reform in the future.

In contrast, the Senate bill takes a more sweeping and immediate approach to acquisition reform; by itself, the Senate bill would have a significant effect on defense acquisitions. One example of the differing approaches of the two bills is how each addresses the role of the military services in acquisitions. The House bill calls for the military services to submit a report to Congress on the role of service chiefs in the acquisition process (Section 802) and a report on how to link requirements, acquisitions, and budgeting (Section 801) within the respective services. In contrast, the Senate version calls for immediately implementing changes that would enhance the role of the military departments in acquisitions (Section 801), including designating service acquisition executives as the milestone decision authority for Major Defense Acquisition Programs (Section 843).

House-Passed Version

Two sections of H.R. 1735 as passed by the House (Sections 800 and 821) seek to articulate the guiding principles underlying the acquisition reform effort. As articulated, the House assumptions underpinning the acquisition reform efforts can be summarized as follows:

1. The Department of Defense (DOD) buys more goods and services than can be realistically supported by the defense budget;

2. Both DOD and Congress are complicit in pursuing acquisition strategies that downplay technical risk and underestimate cost (often without clearly defined and carefully thought out requirements);

3. The acquisition process is weighed down by too many rules, bureaucratic hoops, and outdated regulations, resulting in an acquisition process that is not agile enough, too risk averse, and takes too long to deliver; and

4. Past reform efforts have floundered, in part, because they failed to address the motivational and environmental factors in which they must be implemented.

The House bill does not directly address budget issues, focusing instead on various issues relating to the acquisition workforce, streamlining reporting and approval processes, tweaking the current acquisition system, and requesting information or analysis that can be used for future action. Of the sections in the House bill related to acquisition reform,⁴ approximately

25% seek to gather information by requiring reports or mandating reviews;

30% seek to streamline the acquisition process;

40% mandate changes to the system intended to improve the process; and

30% seek to improve the performance of the acquisition workforce through recruitment, development, training, retention, and/or empowering decision-making.⁵

Two of the more significant sections in the bill relate to workforce: Section 811, which would make permanent the Defense Acquisition Workforce Development Fund, and Section 812, which would create a dual-track career path in operational and acquisition disciplines for uniformed personnel. Also of note is Section 854, which would increase the Simplified Acquisition Threshold from $150,000 to $500,000.⁶ (To see how each section is categorized, see Appendix A, Table A-1.)

Senate-Passed Version

Of the sections in the Senate-passed version of H.R. 1376 that relate to acquisition reform, approximately

10% seek to gather information by requiring reports or mandating reviews;

40% seek to streamline the acquisition process;

30% mandate changes to the system intended to improve the process; and

40% seek to improve the performance of the acquisition workforce through recruitment, development, training, retention, and/or empowering decision-making.⁷

Like the House bill, the Senate bill extends the Defense Acquisition Workforce Development Fund and creates a dual-track career path for uniformed personnel, to encompass acquisitions. However, the Senate bill has other sections that, if enacted, would have a significant impact on defense acquisitions. Perhaps the most controversial and far reaching sections of the bill are those related to enhancing the role of the service Chiefs of Staff and the military departments in the acquisition process (Sections 801, 843, 849, and 851). As some analysts have pointed out, these sections

significantly reverse course on the direction of the last 30 years by altering the flow of acquisition authority established under the Goldwater-Nichols Act of 1986 and reducing the authority of the combatant commanders and the Joint Staff.⁸

Reversing course and giving the service chiefs more authority over acquisitions is precisely what some analysts and officials have called for, most notable John Hamre of the Center for Strategic and International Studies, and Army Chief of Staff General Ray Odierno.⁹ Many other analysts have taken the opposite view, and the Administration "strongly objects" to these provisions, arguing that if enacted, they would

significantly reduce the Secretary of Defense's ability—through the Under Secretary of Defense for Acquisition, Technology and Logistics USD(AT&L)—to guard against unwarranted optimism in program planning and budget formulation, and prevent excessive risk taking during execution—all of which is essential to avoiding overruns and costly delays.¹⁰

The Senate bill also seeks to create a new acquisition process for rapid prototyping and fielding of middle tier programs (Section 803), and has a number of sections that could have a significant effect on workforce policies (sections 847, 1101-1103). The Senate bill also calls for establishing a panel to conduct an in-depth analysis of the rules and regulations of the acquisition system, and to provide recommendations within two years of enactment of the bill (Section 808). A number of these sections seek to clarify accountability within the acquisition process. (To see how each section is categorized, see Appendix B, Table B-1.)

Appendix A. Sections in the House Bill Relating to Acquisition Reform

Table A-1 categorizes select sections of the House-passed H.R. 1735 into four overarching categories or goals:

1. Gathering information for future action,

2. Streamlining the current process,

3. Improving the effectiveness of the current process, and

4. Improving the performance of the workforce (through recruitment, professional development, or empowering decision-making).

Workforce is further identified by three subcategories:

1. Empowering the workforce/enabling decision-making,

2. Developing and improving the capabilities of the workforce, and

3. Recruitment/retention of the workforce.

Because sections 800 and 821 are Senses of Congress that articulate the intent of the acquisition reform effort, these sections are identified in Table A-1 as guiding principles.

Table A-1. Selected Sections in the House Bill Relating to Acquisition Reform

Section

Description

Goal

Title III—Operations and Maintenance (Subtitle C—Logistics and Sustainment)

321

Assigning appropriate workforce (uniformed, civilian, or contractor) based on cost-efficiency

Improving effectiveness

Title VIII—Acquisition Policy, Acquisition Management, and Related Matters

800

Sense of Congress—Desired tenets of the acquisition system

Guiding principles

Subtitle A—Acquisition Policy and Management

801

Report by the Military Services on linking requirements, acquisitions, and budgeting

Gathering information

802

Report by Military Services of the Role of Service Chiefs in the acquisition process

Gathering information

803

Report on Bid Protests by independent research organization

Gathering information

804

Establishing centralized capability for making commercial item determinations

Improving effectiveness

805

Easing and simplifying ability to make commercial item determination for major weapon systems and subsystems

Streamlining/Workforce (empowering)

806

Easing use of Multiyear Procurement

Streamlining/Workforce (empowering)

807

Requiring compliance with service inventory data collection

Gathering information

Subtitle B—Workforce Development and Related Matters

811

Permanent Extension of DAWDF (Defense Acquisition Workforce Development Fund)

Workforce (developing/ recruitment)

812

Dual-track career path in operational and acquisition disciplines

Workforce (recruitment)

813

Granting joint-duty credit for acquisition duty

Workforce (recruitment)

814

Requiring assessment of acquisition skills in strategic workforce plans

Gathering information

815

Training acquisition personnel in market research

Workforce (developing)

816

Report by independent organization on effectiveness of DOD acquisition workforce strategic planning

Gathering information

817

Extending the civilian acquisition workforce personnel demonstration project

Workforce (developing)

Subtitle C—Weapon Systems Acquisition and Related Matters

821

Sense of Congress—Desired tenets of weapon systems acquisition

Guiding principles

822

Requiring an acquisition strategy for each Major Defense Acquisition Program; consolidating requirements

Improving effectiveness/streamlining

823

Requiring risk management strategy in the acquisition strategy

Improving effectiveness

824

Modifying requirements to contract type

Improving effectiveness

825

Written determination in lieu of certifications for Milestone A

Streamlining process

826

Written determination in lieu of certifications for Milestone B

Streamlining process

Subtitle D—Industrial Base Matters

835

Report by independent entity on rules and regulations governing intellectual property rights, and DOD proposals to revise related statutes

Gathering information

846/847a

Limiting reverse auctions

Improving effectiveness

Subtitle E—Other Matters

851

Requiring consideration of the effect of cost and schedule in operational testing and evaluation

Improving effectiveness

852

Allowing prior purchase price as determination of price reasonableness

Improving effectiveness

854

Raising the Simplified Acquisition and Micro-purchase Threshold

Improving effectiveness/ Workforce (empowering)

856

Repealing requirement for a stand-alone manpower estimate

Streamlining process

857

Requiring DOD to examine and then issue guidance on the acquisition of services

Gathering information/improving effectiveness

858

Reorganization of the process and responsibilities for acquiring business systems

Streamlining/ Improving effectiveness

860/864a

Require best value for acquiring personal protective equipment/Require stricter metrics for using LPTA for acquiring audit services

Improving effectiveness

862

Altering roles of Deputy Assistant Secretaries of Developmental Testing and of Systems Engineering from approval authority to advisory role

Streamlining/Workforce (empowering)

Title X—General Provisions (Subtitle G—Repeal or Revision of National Defense Reporting Requirements)

1076

Repeal of annual report on root causes of cost growth

Streamlining process

Source: H.R. 1735, the National Defense Authorization Act for FY2016; H.Rept. 114-102, Report of the Committee on Armed Services of the House of Representatives on HR. 1735.

Notes:

a. Sections consolidated due to their similarity. For purposes of analysis, consolidated sections are counted as a single section.

Appendix B. Sections in the Senate Bill Relating to Acquisition Reform

Table B-1 categorizes select sections of the Senate-passed H.R. 1735 into four overarching categories or goals:

1. Gathering information for future action,

2. Streamlining the current process,

3. Improving the effectiveness of the current process, and

4. Improving the performance of the workforce (through recruitment, professional development, or empowering decision-making).

Workforce is further identified by four subcategories:

1. Empowering the workforce/enabling decision-making,

2. Developing and improving the capabilities of the workforce,

3. Recruitment/retention of the workforce, and

4. Establishing more accountability for certain personnel.

Table B-1. Selected Sections in the Senate Bill Relating to Acquisition Reform

Section

Description

Goal

House (H.R. 1735) Equivalent

Title V—Military Personnel Policy (Subtitle A—Officer Personnel Policy)

503

Dual-track career path and joint-duty credit for uniformed personnel in acquisitions

Workforce (recruitment)

812/813

Title VIII—Acquisition Policy, Acquisition Management, and Related Matters

Subtitle A- Acquisition Policy and Management

801

Enhancing role of service chiefs in acquisition process

Improving effectiveness/ Workforce (accountability)

802

802

Expanded rapid acquisition authority

Streamlining/Workforce (empowering)

-

803

Creation of new process for rapid prototyping and fielding of middle tier programs

Streamlining process

-

805

Require DOD to establish new processes for acquiring capital assets and services that are streamlined and flexible

Streamlining process

-

806

Authority to waive acquisition laws in specified circumstances

Streamlining/ Workforce (empowering)

-

808

Establishing panel to review acquisitions regulations

Gathering information/improving effectiveness

-

809

Require DOD review of requirements, budgeting, and acquisitions

Streamlining process

801

810

Require DOD review and issue policies to improve program management and career development

Workforce (development)

814/816

Subtitle B—Amendments to General Contracting Authorities, Procedures, and Limitations

821

Require preference for fixed price contracting in development programs

Improving effectiveness

824

823

Raising the threshold for cost or pricing data for non-commercial items and implementing a risk-based approach for requesting such data

Improving effectiveness/ streamlining

852

824

Limiting reverse auctions and lowest price technically acceptable contracting for protective equipment

Improving effectiveness

860/846/847

825

Amending statute on technical data as it relates to weapon systems and requiring DOD review of statutes relating to technical and proprietary data

Gathering information

835

Subtitle C—Provisions Relating to Major Defense Acquisition Programs 

841

Requiring an acquisition strategy for each Major Defense Acquisition Program; consolidating requirements

Improving effectiveness/ streamlining

822

842

Requiring risk management strategy in the acquisition strategy

Improving effectiveness

823

843

Designating service acquisition executives as the milestone decision authority for MDAPs

Streamlining process

802

844

Determination in lieu of certifications for Milestone A

Streamlining process

825

845

Determination in lieu of certifications for Milestone B

Streamlining process

826

846

Revise DOD guidance on tenure of program managers

Workforce (recruitment and retention)

-

847

Accountability and authority of program managers

Workforce (empowering/ accountability)

-

848

Repealing requirement for a stand-alone manpower estimate

Streamlining process

856

849

Military services pay penalty for cost overruns in MDAPs

Workforce (accountability)

-

850

Altering reporting requirements of the Assistant Secretary of Defense for Research and Engineering

Streamlining process

-

851

Requiring Configuration Steering Boards to get Service Chief approval of changes in program requirements

Improving effectiveness/ workforce (accountability)

-

Subtitle D—Provisions Relating to Commercial Items 

861-863/866a

List of laws and regulations that do not apply to purchases of commercial items/preference for commercial items in IT/commercial item determinations

Streamlining/improving effectiveness

804/815

864

Easing and simplifying ability to make commercial item determination for major weapon systems and subsystems

Streamlining/ workforce (empowering)

805

865

Limit conversion of commercial acquisition to non-commercial acquisition

Improving effectiveness

804

Subtitle E—Other Matters 

871

Reorganizing the process and responsibilities for acquiring business systems

Streamlining/ Improving effectiveness

858

872

Extension of DAWDF (Defense Acquisition Workforce Development Fund); modification of acquisition strategic workforce plans

Workforce (developing/recruiting)

811/814/816

873

DOD report on how to better procure and deploy IT services

Gathering information

-

874

Require DOD to develop a strategy for cloud computing for the Secret Internet Protocol Network

Improving effectiveness

-

875

Promoting time-certain development for major automated information systems

Streamlining process

-

879

Report on cost of complying with acquisition regulations

Gathering information

-

880

Report on Bid Protests by GAO

Gathering information

803

881

Identifying potential unfair competitive advantages

Improving effectiveness

-

Title X—General Provisions (subtitle F—Studies and Reports) 

1062

Termination of requirement to submit reports to Congress required by statute

Streamlining process

1076

Title XI—Civilian Personnel Matters

1101-1103a

General civilian workforce provisions that would significantly impact civilian acquisition personnel

Workforce (accountability)

-

1106

Five year extension of expedited hiring authority for acquisitions

Workforce (recruitment)

811

1110

Extending the civilian acquisition workforce personnel demonstration project

Workforce (developing)

817

1112

Pilot exchange program for acquisition personnel

Workforce (developing)

-

1113

Pilot program on pay authority for limited acquisition and technology personnel

Workforce (recruitment)

-

1115

Direct hiring authority into the acquisition workforce for technical experts

Workforce (recruitment)

-

Source: Senate-passed H.R. 1735; S.Rept. 114-49, Report of the Committee on Armed Services of the House of Representatives to Accompany S. 1376.

Notes:

a. Sections consolidated due to their similarity. For purposes of analysis, consolidated sections are counted as a single section.

Footnotes

1.

Because the House Armed Services Committee's focus on small business predates the current reform effort, and because small business provisions also affect only a specific segment of the industrial base, not the overall acquisition system, such sections were excluded from the analysis. Sections making pilot programs permanent were also generally excluded from the analysis because previously established pilot programs predate the current effort.

2.

See the Senate bill, sections 841, 842, 844, 845, 848, 864, 872. For similar sections in the House bill, see Table B-1.

3.

U.S. Congress, House Committee on Armed Services, Report of the Committee on Armed Services House of Representatives on H.R. 1735, 114th Cong., 2nd sess., May 5, 2015, H.Rept. 114-102, p. 3. This is consistent with numerous prior statements of Chairman Mac Thornberry. In a speech at the Center for Strategic and International Studies on March 23, 2015, Chairman Thornberry reportedly stated that H.R. 1597 (Agile Acquisitions to Retain Technological Edge Act), the acquisition reform bill that was the basis for much of the acquisition reform sections found in H.R. 1735 (National Defense Authorization Act for FY2016) will not fix acquisition but that it is a good start and that "reform must be one of our top priorities" for him and his Senate counterpart Senator John McCain. See http://news.usni.org/2015/03/23/thornberry-announces-acquisition-reform-legislation.

4.

Excluding Section 800 and 821.

5.

Percentages do not equal 100% because some sections of the bill fall into more than one category.

6.

The simplified acquisition threshold determines what purchases can use a simplified acquisition—a streamlined method for making purchases of supplies or services as described in FAR Part 13.

7.

Percentages do not equal 100% because some sections of the bill fall into more than one category.

8.

Andrew Hunter, So You Say You Want a Revolution?, Center for Strategic and International Studies, A Primer for Understanding Senate and House Proposals for Defense Acquisitions, June 15, 2015, p. 1.

9.

John Hamre, "Commentary: Return Acquisition Role to Service Chiefs," DefenseNews, May 26, 2015, http://www.defensenews.com/story/defense/commentary/2015/05/26/return-acquisition-role-service-chiefs-ddre-goldwater-nichols-packard-carter/27970691/; Daniel Wasserbly, "AUSA Global 2015: Odierno supports expanded acquisition role for chiefs, streamlined testing," IHS Jane's Defence Weekly, vol. 52, no. 20 (April 1, 2015), at http://www.janes.com/article/50394/ausa-global-2015-odierno-supports-expanded-acquisition-role-for-chiefs-streamlined-testing.

10.

Executive Office of the President Office of Management and Budget, Statement of Administration Policy, S. 1376—National Defense Authorization Act for FY 2016, June 2, 2015, p. 3, https://www.whitehouse.gov/omb/114/legislative_sap_date_2015.