DEEP DIVE – It’s a rare area of bipartisan agreement in Washington: a belief that the U.S. must reform the way it develops and obtains its weapons. The current procurement system is widely considered to be burdened by red tape and regulatory processes that lead to crucial systems being delivered late and over budget, and other smart weapons not being produced at all.
There is also agreement on another point: Fixing the problems won’t be easy.
The Trump administration issued three executive orders in April designed to address the issues, citing a need to “accelerate defense procurement and revitalize the defense industrial base,” “rapidly reform our antiquated defense acquisition processes,” and to bring “common sense to federal procurement.”
The orders were rare in that they received little opposition in Washington. For the most part, Republicans and Democrats alike believe that China is outpacing the U.S. in new weapons procurement, and existing rules and regulations risk stifling American innovation – which has long been a comparative advantage for the U.S.
On June 3, the Aerospace Industries Association (AIA), a group representing U.S. defense giants including Boeing and General Dynamics, sent a letter to Secretary of Defense Pete Hegseth praising the orders, and urging the elimination of 50 current regulations and requirements for weapons acquisition that it called “burdensome” and damaging to national security.
In a statement accompanying the letter, AIA President and CEO Eric Fanning said the existing rules “slow the acquisition process, increase barriers to entry, and inject risk into the defense industrial base. A flexible and agile acquisition system is required to deliver the latest technology and best-in-class capabilities to the warfighter.”
In an interview with The Cipher Brief, Fanning urged a pivot to what he called “smart risk” in the procurement process.
“We have for many years, tried to stamp out risk anywhere we can at the expense of speed and agility,” he said. “We need to find some ways to reinsert smart risk.”
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“Two words should really go at the forefront of this discussion,” Carlton Haelig, a Defense Fellow with the Center for a New American Security, told The Cipher Brief. “The first is speed and the second is scale. The [Defense] Department, as well as the White House, feels that they are not doing enough, fast enough.”
The first of the White House procurement orders, issued April 9, titled “Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base,” gave the Department of Defense (DoD) 60 days to propose reforms to what the White House called an “antiquated” process of acquiring new weapons systems, and said the streamlining of procurement should include a prioritizing of commercial solutions.
The Order also directed Pentagon leadership to complete a comprehensive review of all major defense acquisition programs (MDAPs, in the Pentagon parlance) within 90 days. Any program found to be more than 15 percent behind schedule, 15 percent over cost, unable to meet key performance metrics, or “unaligned” with “mission priorities,” would be at risk of cancellation.
Experts say those guidelines put several big programs in the cross-hairs for cancellation – but the message is clearly that such delays and cost overruns won’t be tolerated in the future. The order placed a premium on “speed, flexibility, and execution,” greater risk-taking, and a preference for commercial solutions in future weapons contracts.
Separate White House orders deal exclusively with drone weapons and shipbuilding, the latter aiming for a restoration of U.S. “maritime dominance.” As The Cipher Brief reported in May, China now far outproduces U.S. shipbuilders, in both the commercial and military sectors.
“In each case, it is fantastical, the delta between us and the Chinese,” retired Rear Admiral Mark Montgomery tells The Cipher Brief. “[China is] producing four or five times the number of warships we're producing each year. But in commercial shipping, it's 200 to one. I mean, it's a ludicrous number. We are not constructing ships at anywhere near the rate we need to.”
The key drivers of the policy shift, and the executive orders themselves, can be found in two very different corners of the globe: China and Ukraine.
China’s military is advancing rapidly on all fronts – drone manufacturing, nuclear weapons, shipbuilding and more. And experts say Beijing is unencumbered by long regulatory or funding debates in its policymaking ecosystem. Put simply, if Chinese President Xi Jinping and the ruling elite decree that the nation must produce more aircraft carriers, more carriers will be built. Quality may suffer, but more often than not, say experts, the job will get done, on time and at cost.
“The sirens, at least within the Department of Defense as well as the White House, are starting to blink very red and very quickly, in that they're worried about a conflict with China coming within the next five years,” Haelig said. “Unfortunately, the United States military is still largely comprised of the same systems that it took to war in the 1990s, in the early 2000s, and then really kind of worked into the ground over the next 20 years. Some new systems are starting to come online, but they're not coming online at the speed and the scale that they need to. They're looking for ways to speed that up, to scale that up and to do so with the most efficiency.”
Russia’s war against Ukraine is relevant to the U.S. procurement discussion because of the stunningly fast and high quality of military innovation shown by the Ukrainians in the drone sector in particular. The existential nature of the conflict for Ukraine, and the pre-war presence of a strong tech community in the country, combined to produce innovation and new weapons production at a pace unseen anywhere at the moment.
Fanning and others see lessons from the Ukrainian experience for procurement policy in the U.S.
“They have really mobilized their private sector and incentivized them in a number of different ways,” he said of the Ukrainians. “And we need to do more of that here. All companies in the industrial base have things that they want to bring to the customer, to the Pentagon. And what happens is they bring something interesting, and the Pentagon then puts it in the queue for a competition, you know, that we call the Valley of Death. So, there is technology out there already. There are platforms out there already. There are solutions out there now. But it has to go through the Pentagon process.”
Fanning said that while some vetting processes are obviously necessary, “it's become so burdensome now. I think what we want to do, which you see our adversaries doing, is getting things into the hands of war fighters earlier.”
Obviously, a nation at war will rush new weapons to the front with minimal delays and learn and adapt as it goes, in real time. Ukraine, and Russia are both engaging in that trial-and-error innovation as the war unfolds. But experts say the U.S. could do more when it comes to speed-vetting critical systems. Haelig notes that the U.S. has been doing some of this in the Indo-Pacific already, using drills to test systems that may be used in the event of a conflict with China.
In June, the Senate confirmed Michael Duffey as the Pentagon’s new undersecretary of defense for acquisition and sustainment. He’ll have his hands full. In written responses to questions posed by the Senate Armed Services Committee during his confirmation hearings, Duffey acknowledged that a “multi-pronged approach” would be needed to effect the changes.
“This includes streamlining the acquisition and budgeting processes to provide clearer demand signals and proactive engagement with smaller, lesser-known companies, Duffey said, “to demonstrate that the DoD values their innovation and is committed to expanding the industrial base.”
Current processes and systems have been in place for decades, and they have put a premium on 100% accuracy and risk mitigation, with what Haelig called “the luxury of security and time and money and all sorts of things that allow you to go through the innovation process from the beginning of an idea through into the end of the acquisition process.” Speed and scale can suffer when those are the parameters.
“Everything with innovation, adaptation, experimentation, a lot of times it comes back to culture,” Haelig said. “The Department of Defense has a very entrenched culture when it comes to its acquisitions process. And it's a culture that has been built up over decades to prioritize routinization of evaluation standards, of practices, of all sorts of contracting regulations and all sorts of requirements.”
Fanning agreed that success will require more than rewriting regulations and processes. “It's also got to be about the culture and the workforce. We've got to incentivize on the government side that creative, thoughtful risk taking. There are a lot of authorities that contract officers have, that acquisition officers have. But we don't incentivize them to use that. We incentivize them not to make any mistakes.”
“There's no silver bullet to acquisition reform and capability into the hands of warfighters faster,” Fanning said. “It's such a complex process because a lot of what's built, especially at the high end, is very complicated and very technologically advanced.”
Experts say that while the short-term impact of the procurement orders will be seen in the Pentagon’s mandated reviews, it will take a while to know whether a cultural change is taking hold.
The AIA’s Fanning, whose organization prepared the list of 50 recommendations, believes each one of them could be implemented quickly. Taken together, those recommendations were a call to slash what the organization said were costly procurement regulations. The list highlighted rules involving “cyber maturity, ” cost accounting standards (CAS), commercial procurement processes, independent research and development oversight. Fanning said all of these are unnecessary, costly and disincentivizing for innovators.
“There's nothing that's been studied more and written about more than acquisition reform for the Pentagon,” he said. “What you need is a will to do something about it.”
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