WASHINGTON — Each year, the Defense Department buys more than $330 billion worth of services from outside companies, wasting billions in taxpayer dollars in the process, Rep. Rob Andrews, D-N.J., said on Wednesday. He and four fellow members of the House Armed Services Committee presented a bill to reduce that amount, arguing that more rigorous accounting standards and incentives for employees tasked with contract oversight could help save taxpayers $135 billion over the next five years.
“This legislation would require the Defense Department to adopt the basic management practices that are necessary for anything as complex as the acquisitions system to function properly,” said Ike Skelton, D-Mo., committee chairman.
The lawmakers want the Pentagon to set clear objectives for the contractors, and hire qualified employees to oversee the contracts. They also want to set financial incentives for those employees, and to increase competition among defense contractors to “gain access to more innovative technology,” as Skelton said, and save taxpayer money.
Andrews said the bill would reduce contracting costs for services by six to seven percent each year, leading to savings of $135 billion over a five-year span.
Last year’s Weapon Systems Acquisition Reform Act addressed the processes of buying large weapons systems. Sponsors said the new bill would focus on “the remaining 80 percent of defense acquisition,” said Howard McKeon, R-Calif., the highest ranking Republican on the committee. That includes contracts for services and computer programs.
Contracting for these services provides a particular challenge because the Defense Department’s contracting process doesn’t fit well with rapidly changing technology needs, said Laura Peterson, senior policy analyst for national security at the non-partisan watchdog group Taxpayers for Common Sense.
“The technology just tends to change as these contracts are going through the motions,” Peterson said. Figuring out the standards a new computer system should meet, finding a contractor and putting the new program into place can take years. By that time, the technology may be outdated.
Bill takes up bipartisan recommendations
The House committee created the bipartisan panel in March 2009 to review the defense acquisition process.
“While the nature of defense acquisition has substantially changed, the defense acquisition system has not kept pace,” the panel’s members wrote in a report published last month after a yearlong review of the acquisition structure. The current process is “particularly poorly designed for the acquisition of information technology.”
Setting clear standards is one way of addressing that problem, but ensuring adequate oversight is another challenge. Defense Department employees may lack the technological expertise to assess computer systems, Peterson said. The bill would require the Defense Department to “strengthen the part of the acquisition workforce that specializes in information technology,” for example by offering career incentives to IT experts.
The Pentagon lacks adequate records needed to provide an audit of the contracts, Rep. Mike Conaway, R-Texas, said.
The current deadline the Pentagon set for itself to produce those financial statements is 2017. The new bill, called the Implementing Management for Performance and related Reform to Obtain Value in Every Acquisition or IMPROVE Act, attempts to speed up that process by offering incentives to those agencies within the Pentagon that complete the audit process before then. That includes faster access to funding. The auditing itself would be contracted out.
“You would have independent accounting firms who would be performing the audits, through a contract, on behalf of the taxpayers,” Conaway said.