Acquisition Reform

Faced with substantial funding cuts for defense procurement, the Pentagon has made acquisition reform a top priority. The challenge for the Defense Department (DOD) is to maintain technological superiority and ensure a strong national industrial base while reducing acquisition costs. The need to reform the military's acquisition system is well known; however, acquisition reform has been an elusive goal. DOD has on several occasions tried to introduce a commercial-style procurement system that would take advantage of commercial products and processes and, whenever possible, eliminate contracting, technical, and accounting requirements that are unique to the military. According to DOD, acquisition reform could cut costs by as much as 30 percent. This report discusses a pilot program, known as "Military Products From Commercial Lines," set up by the Air Force with one of its contractors. GAO evaluates the pilot program to determine (1) its potential for producing the benefits sought through reform and (2) any barriers to achieving these benefits.

GAO found that: (1) the pilot program has demonstrated that redesigning military components for commercial production appears technically feasible; (2) pilot program officials believe that if the use of commercial practices and policies is permitted, military production costs could be reduced by an average of 40 percent and the Air Force's requirements for the F-22 could be met; (3) other expected benefits from the pilot program include accelerated assembly, a more technically advanced and lighter weight product, and valuable lessons learned for future large electronic procurements; (4) for the pilot program to be successful and to encourage commercial participation, significant differences in commercial and military business practices have to be overcome; (5) although the pilot program has been successful in identifying government-unique requirements that present barriers to the most efficient use of commercial production lines, acquisition reform measures have not removed these barriers; (6) DOD must also overcome an acquisition culture that has historically resisted change and does not provide sufficient incentives for acquiring products from commercial producers; and (7) unless waivers are granted for many of the defense-unique requirements or workarounds, the pilot program will be limited in demonstrating that military items can be produced commercially at substantially lower prices.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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