Lynn: Government must take care with Pentagon reform

Deputy Secretary of Defense William Lynn cautioned on Wednesday that Congress and the Obama administration should be careful not to make things worse in overhauling the Pentagon’s weapons-buying practices.

“We need to keep in mind the importance of not making the system worse in our efforts to achieve reform,” Lynn said in testimony prepared for the House Armed Services Committee. “This has happened in the past.”

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Lynn told lawmakers the Pentagon will hire 20,000 new personnel to manage weapons acquisition as part of sweeping reforms that President Obama and Congress have been pushing for.

Both the House and Senate are considering legislation to reform the Pentagon’s buying practices. The House Armed Services Committee is marking up its version of the bill today, while the full Senate is considering its version on the floor this week.

Meanwhile, the Pentagon is expected to formally submit its 2010 budget request to Congress on Thursday.

In warning that the government must take care not to make things worse, Lynn noted there have been nearly 130 studies on reforming Pentagon acquisition programs since the end of World War II.

“Many very smart people have tried, some with limited success,” Lynn said in his testimony.

One of the past mistakes the Obama administration and to some degree Congress are trying to redress is the lack of skilled acquisition personnel. Under the “guise of streamlining” in the 1990s, the Pentagon’s workforce was whittled down as those functions were outsourced to contractors, Lynn said.

“The intent was to create … leaner acquisition,” said Lynn, a former executive at the defense contractor Raytheon.

But instead, contractors ended up doing what Lynn called “inherently governmental jobs,” and the endeavor left the Pentagon bereft of technical and business talent “we now need to restore.”

The proposal to hire 20,000 new employees is “aggressive,” Lynn said, but the Pentagon needs program managers, cost estimators, software engineers and systems engineers. He said Pentagon leadership will start bringing the new people in at the beginning of fiscal 2010.

“We are mindful it is going to be an organizational challenge,” Lynn said.

The Pentagon plans to fill the 20,000 positions by 2015, including 9,000 in contracting, cost estimating, pricing and contract oversight positions at the Defense Contract Audit Agency and Defense Contract Management Agency. Those new positions “will help ensure that [the Pentagon] knows what it is buying and gets what it pays for.”

The remainder of the slots will come from the conversion of contractor positions to federal civilian positions, Lynn explained. These positions will be primarily in program management, systems engineering, logistics and business management.

“We will also be making significant increases in training and retention programs in order to bolster the capability and size of the acquisition force,” he added.

In the last 10 years, defense contracts tripled while the Pentagon’s workforce fell by more than 10 percent, according to Lynn.

As far as contracts are concerned, Lynn said that the Pentagon is planning to tie more contract fee structures to performance and will make sure that multiyear contracts are awarded only when “real, substantial savings are accrued to taxpayers.”

Pentagon leadership also plans to explore the greater use of fixed-price contracts for the development of weapons systems, Lynn added.

He stressed, however, that communication with the defense industry “must be open and in a manner that clearly articulates out requirements and expectations.”