McCain eyes acquisition reforms at the Pentagon

Sen. John McCain (R-Ariz.), after winning two key victories in battles with the Pentagon in recent weeks, is hinting at making more sweeping changes to how the military buys its pricey weapon systems. His goal is to increase government oversight of defense systems, reversing a trend over the past decade that gave industry greater power over program management and, in some cases, scaled back traditional reporting requirements.

Sen. John McCain (R-Ariz.), after winning two key victories in battles with the Pentagon in recent weeks, is hinting at making more sweeping changes to how the military buys its pricey weapon systems.

His goal is to increase government oversight of defense systems, reversing a trend over the past decade that gave industry greater power over program management and, in some cases, scaled back traditional reporting requirements.

During a Senate Armed Services Airland Subcommittee hearing last week, McCain expressed concern that irregularities in defense contracting and procurement were not limited to a handful of programs but rather were part of a wider problem within the Pentagon.

McCain, who chairs the panel, has questioned the Army and Air Force on the commercial-type contracts for both the Future Combat Systems (FCS) and C-130J programs, which lacked standard clauses requiring contractors to submit cost and pricing data to the government. In the last month, both services have said they will convert the agreements to standard defense contracts.

The Arizona Republican also was successful last year in dismantling an agreement between Boeing and the Air Force to lease aerial refueling tankers. The deal was mired in controversy surrounding several key officials, including Darleen Druyun, a Boeing vice president and former Air Force acquisition official who is serving nine months in jail for violating federal conflict-of-interest laws.

“Defense acquisition anomalies go beyond the Boeing tanker scandal and the C-130J program,” McCain said in his opening statement Thursday. “We need true acquisition reform. … I fear that we have only scratched the surface.”

The subcommittee’s leading Democrat, Sen. Joseph Lieberman (Conn.), echoed McCain’s comments and called on the Air Force in particular to develop a new crop of leaders committed to ethics.

“I am concerned that we may have stopped building the kind of strong, experienced leaders that we need to take on industry — and their own leadership, when necessary — to protect the interests of the Department of Defense and the taxpayers of the United States,” Lieberman said.

Sen. John Warner (R-Va.), chairman of the Armed Services Committee, also stopped in to the hearing briefly and voiced his support for McCain’s efforts.

Changes could include increasing the number of contracting officers and government auditors, one Senate aide said. Since the end of the Cold War, the number of acquisition officials within the Pentagon has been slashed by roughly 50 percent.

Reforms also could involve placing a uniformed officer in charge of the services’ acquisition shops, the aide said. Right now, civilian appointees hold those positions.

“It’s not open-heart surgery, but we seem to be treating only the symptoms,” the aide said. “The bleeding is still going on.”

Meanwhile, the U.S. Attorney’s Office for the Eastern District of Virginia, which prosecuted the Druyun case, has established a procurement-fraud working group to increase scrutiny of and pay greater attention to “who is doing what,” said U.S. Attorney Paul McNulty.

Throughout the 1990s, defense spending was on the decline, ultimately leading the government to devise ways to give more authority to prime contractors in order to cut down on department spending, said Jeff Bialos, who served as deputy undersecretary of defense for industrial affairs during the latter years of the Clinton administration.

The use of commercial-type contracts and the creation of new contractor constructs — including the lead-system-integrator approach, which gives suppliers unprecedented program management authority — were all on the rise in the past decade.

“Now the pendulum is swinging — concerns of fraud are leading it to swing the other way,” Bialos said.

However, Bialos cautioned that Congress must not mandate a role for the Pentagon that it doesn’t have the personnel to perform. More audits, thus, should mean more auditors.

Additionally, he recommends not completely negating the changes made during the 1990s.

“They should take the good things from those models,” Bialos said. “Don’t throw out the baby with the bathwater.”

But some are concerned that the tanker scandal in particular has unfairly tainted both the industry and acquisition officials.

“What I worry about is what went on in the Air Force is not typical of what went on in the other services,” said John Douglass, president and chief executive officer of Aerospace Industries Association. “We are certainly confident that Congress understands they’re not all like Darleen.”