How the US Buys Weapons

"The weapon systems acquisition process apparently is out of control. Initial time and cost estimates and even updated estimates cannot be depended upon. Mandatory engineering changes arise continually throughout the process. Management information and control systems do not identify impending problems in time for preventive action to be taken."

I am quoting from the book "Arming America: How the US Buys Weapons", by J. Ronald Fox.

It was published in 1972. From 1969 – 1971, Fox served as assistant secretary of the army for procurement.

The quoted section above comes from page 4, and is the first of four points he makes to summarize what’s wrong with the acquisition process. Thirty-five years later, the same basic problems can be found described in almost any recent GAO report.

I’m heading up to Pratt & Whitney today for a media tour, so in lieu of my own writing, I’ll instead re-publish his other three points about the problems of the DOD acquisition system in the early 1970s.

"Second is the claim that bargaining positions are unbalanced; first one side, then the other has the advantage. The theory of countervailing pressures acting to produce fair and realistic contract terms does not hold. With emphasis on economies of scale and series production there are only a small number of weapon systems competitions each year and prospective contractors believe that their very existence may be jeopardized by failure to win. Hence the DOD is in the dominat position and can compel an unreasonable bargain. Following award of the contract, the DOD, committed to the timely success of the program, is in the weaker position as the sole source contractor negotiates for contract changes, product acceptance and follow-on business.

Third is that incentives both for efficient operation and for candor about expectations are lacking. Heavy reliance on historical costs in pricing, lack of adequate consideration of capital required in negotiating profit rates, and the high risk of low future utilization of contractor-owned facilities impede investment and modernization of the plant. The hazard of program survival, of high cost, long duration, or looming technical difficulties, as each program competes with others in and out of the DOD, motivates extreme optimism by DOD and contractor personnel alike.

Fourth are allegations of confusion connivance and deception by the DOD-contractor combination. Close cooperation and common interest are held in contrast to the arm’s length relationship preferred by much of regulation and policy. Policy notwithstanding, the military departments receive advice and assistance from prospective contractors in preparation of requests for proposals. Contractors receive aid from government personnel in performance of contract. Contracts fail as instruments of control.    

 

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