Editorial: Unintended consequences

An attempt by Congress to curtail long-term contracts at the Defense Department could have consequences lawmakers most likely never considered.

Section 843 of the Defense Authorization Act, signed into law last December, limits the length of certain DOD contracts to five years, including options. The provision clearly is intended to protect defense agencies from their own bad habit of sticking with contracts year after year until their funding expires.

It's a tempting strategy from a contracting officer's perspective. Despite several generations of procurement reform, it takes a lot of time and energy to award a major contract. But lawmakers are concerned that DOD is not creating an environment that is competitive enough to keep costs low and quality high.

The provision, though, does not give the department enough leeway for the kind of large-scale, complex projects needed to carry out its vision of transformation. The man-hours of development and integration work on some projects can eat up five years easily, with still more time needed for deploying systems and training users. It does not make sense to force a defense agency to recompete a contract when the basic work is still in progress.

The five-year limit could also make it difficult to set up share-in-savings contracts, which lawmakers have supported in the past. Theoretically, a vendor will bear some of the upfront costs of developing a system in exchange for receiving a share of some of the savings in future years. But a five-year contract might not allow enough time for them to recoup their investment.

These kinds of complex deals, of course, come with considerable risk of cost and schedule overruns, which Congress clearly wants to avoid. But a blanket rule barring long-term contracts is not an appropriate response.

That's not to say limits aren't needed. Deidre Lee, DOD's director of defense procurement and acquisition policy, recently acknowledged that the procurement officials ended up in this fix because they had not done enough police work of their own.

Lee, the good soldier, also said she would make sure the provision is enforced for its one-year endurance. Meanwhile, Congress should be working with the department to come up with more thoughtful measures to address the problems they see and rectify this mistake next year.

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