Understand Bureaucratic Behaviors to Improve Systems Acquisition in the DoD

Several years ago, I began thinking more about the idea that bureaucratic, management, and leadership behaviors are identifiable and underlie the eventual outcomes that we associate with acquisition processes and system. To achieve an outcome more closely aligned with what is desired, the requires modifying behaviors. Modifying the behaviors of the US Department of Defense (DoD) acquisition workforce requires a foundational understanding of what prompts or motivates behaviors to be modified.

By Dave Patterson

Note: The views expressed here are those of the author and do not necessarily represent or reflect the views of SMA, Inc.

In testimony before the Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, Michael Sullivan (the Government Accountability Office’s Director of Acquisition and Sourcing Management), explained the concept this way: “For example, some have described it as a ‘conspiracy of hope,’ in which industry is encouraged to propose unrealistic cost estimates, optimistic performance, and understated technical risks during the proposal process and DoD is encouraged to accept these proposals as the foundation for new programs.”[1] Incidentally, Sullivan’s testimony is as timely today as it was in 2008, only some of the issues have changed.

Explaining why this phenomenon is important—in fact critical—Sullivan went on to testify, “Meaningful and lasting reform will not be achieved until DoD changes the acquisition environment and the incentives that drive the behavior of DoD decision-makers, the military services, program managers, and the defense industry.”

First, the acquisition workforce behavior exists inside a bureaucracy that persistently flexes enough to choose bureaucratic solutions but operates within a relatively inflexible hierarchy that implements those bureaucratic solutions. It seems paradoxical, but it is nonetheless true. It is unreasonable to expect or anticipate that a bureaucracy will be the incubator for non-bureaucratic (innovative or thought leader) approaches. Sometimes it happens, but generally through no fault of the bureaucracy.

Bureaucratic behavior is neither good nor bad—it just is.

Typical example of a bureaucratic solution to a bureaucracy challenge took place in the 1990s when DoD was directed by Congress to “reduce the number of ‘shoppers.’” Congress believed there were simply too many DoD employees involved with acquiring weapons, equipment, and services. Congress’ thinking was that the DoD would evaluate the various functions, offices, and agencies involved and eliminate those that were not value added. But that was NOT a bureaucratic approach. The bureaucratic approach was to do what would create the least institutional turbulence, preserving the bureaucracy status quo. DoD human resources requested all those acquisition workforce career professionals eligible for early retirement be identified and then let them go at a rate that brought the total remaining down to the congressionally acceptable level.

Challenge met, efficiently. But there was a problem. The people that left the acquisition workforce were the most experienced and the most highly skilled, as you would expect. This left a significant shortfall in acquisition talent. The bureaucracy rallied and hired contractors to fill the void. As rule, the very same folks that opted for early retirement were hired back as contractors, or Highly Qualified Experts, and often at higher cost to the government.

Some twenty years later, the DoD workforce began to recover to 1990 levels of experience. Bureaucratic behavior does not fully anticipate or process the potential for unanticipated consequences.

A bureaucracy will all too often favor process over outcome or product. Process is something the bureaucracy can develop and have some control over with the assumption that the perfect process produces the perfect product. This, of course is faulty thinking. Unfortunately, the process is applied by people, who don’t always get it right.

Congress, despite its intention to the contrary, more often than not perpetuates bureaucratic behavior. The 2009 Weapon System Acquisition Reform Act (WSARA) mandated the establishment of a Director of Developmental Test and Evaluation (DT&E) as a means of testing oversight principally during an acquisition program prior to the production phase. It’s unclear if Congress ever asked the question, “why is there not a Director, DT&E?” The assumption was that the lack of a Director, DT&E, was an oversight in, well, oversight and should be re-established with all the attending staff and, yes, bureaucracy.

There actually was a good reason for not having this new organization. Acquisition programs in the development and test phase have built-in testing and evaluation, accountable to existing standards in testing procedures and processes. It is part of both the government and contractor program management responsibilities. But, bureaucratic behavior seeks to establish an environment where there is minimal, if not zero risk of failure, and rather than simply identify and fix development test problems when they occur, a bureaucracy will establish a layer of oversight—adopting a version of the adage “redundancy reduces risk in reliability.” (I made this up, but it is apt.)

Modifying acquisition workforce bureaucratic behaviors with the intention of achieving a desired outcome is not without peril and to be successful must consider the unintended outcomes and avoid moral hazards. In simplest terms, the desired outcome of acquisition programs and the behaviors necessary are having programs, on cost or better, on schedule or better, and performing as called for in the contract terms and conditions.

To achieve modified behaviors, the use of incentives for both contractors and the government is a reasonable approach. For contract incentives to be effective, they must be Focused, Clear and Specific, Measurable and Achievable, and Motivating.

Focused means that the incentive is directly linked to achievement of the contract’s key performance parameters only, i.e. on cost, schedule, and technical accomplishment. The contractor should not earn incentives for performing in accordance with the contract terms: it should be rewarded for either exceeding the required performance or for overcoming unforeseen risks and problems which are not otherwise accounted for within the contract’s terms.

Clear and Specific means that the incentive provisions are not subject to significantly different interpretations over the life of the program by the government or the contractor. Measurable and Achievable means that the incentives objectively link payment to improved contractor performance on one or more Key Performance Parameters or other performance standards. Motivating means that the incentives are of a nature and magnitude sufficient to change the contractor’s behavior to invest energy and resources to outperform contract standards.

One breathtakingly naïve comment was heard when a program manager was asked why he gave the contractor a glowing Contractor Performance Assessment Report (CPAR) for substandard performance. The answer was that he wanted to inspire the contractor to better performance by showing the contractor what was possible if the contractor improved. NO! What the program manager demonstrated in the most compelling way was what the contractor could achieve if the contract retained substandard performance. Bureaucratic thinking run amok.

The hierarchical nature of the acquisition workforce provides fertile ground for behaviors that give rise to moral hazards. The acquisition workforce generally and program management specifically should be cautious regarding imposed new requirements, policies or cost and schedule modifications provided by those in the acquisition hierarchy who will not be held accountable or be subject to the consequences should these new conditions go bad. Congress has an insatiable propensity for this behavior. Changing Congress’ behavior is tricky, but doable. Find out early what the subcommittee with jurisdiction is. Learn what their motives are. Engage with the staffer leading the initiative and persuade that staffer that there is a better solution or that the problem identified is not a problem. Do not let the appropriations or authorization process go unchallenged.

Bureaucratic behavior is an area that has had very little research or study and virtually none as the subject applies to the DoD acquisition workforce. Yet, the realities of the impact that bureaucratic behaviors have on government and industry outcomes undeniable. Understanding the behaviors seems appropriate as the first step in modifying undesirable behaviors to achieve a desired end state.

Dave Patterson is an SMA Executive Advisor, former Executive Director at the National Defense Business Institute at the University of Tennessee, and former Principal Deputy Under Secretary of Defense, Comptroller in the Bush ’43 Administration.

[1] Sullivan, Michael J., “Fundamental Changes Are Needed to Improve Weapon Program Outcomes,” Testimony before the Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, Committee on Homeland Security and Governmental Affairs, U.S. Senate, GAO-08-1159T, September 25, 2008