Pentagon ponders making IT subject to same rules as weapons

Frank Kendall

Defense Undersecretary Frank Kendall said "Nunn-McCurdy-like metrics" should be applied to IT contracts.

Should Defense Department IT be subject to the same cost safeguards as weapons-system contracts? Sen. Joe Donnelly raised the idea and Undersecretary of Defense for Acquisition, Technology and Logistics Frank Kendall entertained it at an April 30 Senate Armed Services Committee hearing. 

Defense weapons-system contracts are governed by the three-decade old Nunn-McCurdy Amendment, which requires the Pentagon to notify Congress when a contract’s per-acquisition-unit cost rises 30 percent above its original baseline estimate.

A different metric, known as the "Critical Change" process, applies to major DOD IT contracts. The threshold for a critical change review is when the estimated total acquisition cost for the program increases by 25 percent or more from the original estimate, according to a handbook from the DOD-backed Defense Acquisition University.  

Donnelly, an Indiana Democrat, voiced concern about the department’s ability to rein in costly IT projects. A "government-built IT solution that’s just becoming more and more and more of a quagmire" calls for having "some kind of roadmap or metric that you’re using to make sure that we don’t continue down that path," he told Kendall.  

But it is unclear just how Donnelly would apply Nunn-McCurdy to IT (his office was unavailable to comment). The numeric thresholds for reporting cost overruns set by Nunn-McCurdy and Critical Change are very similar. Further, experts have not traditionally considered the amendment’s cost-per-unit measurement applicable to IT, Jonathan Etherton, a senior fellow at the National Defense Industrial Association, said in an interview.

Kendall, DOD's top acquisition official, said he supports using "Nunn-McCurdy-like" metrics for oversight of IT contracts. "When we have a program that has cost growth, we really should ask the questions that Nunn-McCurdy requires us to ask: Should you terminate or not? And do you still need this? And is it soundly managed?" Kendall said.  

The Critical Change process is carried out by individual military branches and reviewed by Kendall, but it is not a department-wide review.

One of the more high-profile applications of the Critical Change process was in assessing the Air Force’s Expeditionary Combat Support System, which the service canceled in November 2012 after spending $1 billion.  

The project carried on several months after the Critical Change review took place, Kendall told lawmakers. "That was a case where we did not have the right professionalism or expertise on either the government side or the contractor side to successfully deliver that product. We probably should have recognized that earlier," he said.  

In submitted testimony, Kendall highlighted DOD’s efforts to shrink IT acquisition timelines, including what he called a "major change" for information system requirements development. The department’s recently unveiled "IT Box" is meant to speed up the IT procurement process by delegating requirements authority to DOD’s Joint Requirements Oversight Council.

Tackling the IT workforce shortage is also a priority for the undersecretary. "Finding the expertise and skill sets required to develop and acquire capabilities for IT, particularly business systems, is a challenge for the department," Kendall said in his prepared remarks.

About the Author

Sean Lyngaas is an FCW staff writer covering defense, cybersecurity and intelligence issues. Prior to joining FCW, he was a reporter and editor at Smart Grid Today, where he covered everything from cyber vulnerabilities in the U.S. electric grid to the national energy policies of Britain and Mexico. His reporting on a range of global issues has appeared in publications such as The Atlantic, The Economist, The Washington Diplomat and The Washington Post.

Lyngaas is an active member of the National Press Club, where he served as chairman of the Young Members Committee. He earned his M.A. in international affairs from The Fletcher School of Law and Diplomacy at Tufts University, and his B.A. in public policy from Duke University.

Click here for previous articles by Lyngaas, or connect with him on Twitter: @snlyngaas.

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Reader comments

Thu, May 1, 2014 John weiler United States

This would be a terrible idea. IT programs already suffer from TOO much oversight, that does nothing to mitigate risk, only create them. Unfortunately, there is no one on his team with any real world IT program management expertise, including his FFRDCs. Anyone familiar with the state of Commercial IT practices would immediate recognize that the Weapon Systems processes have no place in the fast paced IT world. JCIDS/IT Box only affords small improve for s/w development projects and no support for COTS integration or Cloud. DODAF, TRL assessment, and other DOD5000 processes cost more to complete than it would to fail many times over. OSD seems OK to spend a billion dollars to fix a million dollar problem. Look at the failed BTA effort, which spent ONE BILLION on just their Business Enterprise Architecture, which was build on Mitre's DODAF architecture process (formerly C4ISR of 1987). Mr. Kendall needs to get rid of his gate guards who are keeping him ignorant of alternative processes and practices already proven in the market. Hopefully, Robert Work will encourage new thinking from outside the Pentagon rice bowls.

Thu, May 1, 2014

Wow! An IT project without the right expertise? Only $1 Billion wasted before they pulled the plug? Sound like more than a project management problem. My entire Agency run on less than $1B/ year and congress is trying to squeeze ever penny they can out of our budget and our IT has to run on some equipment for as long as 10 years, and run enterprise services on division level equipment! We are doing much more with much less! It seems they only question DOD projects after they over run their budget by 25% or 30% - then they decide if they want to cancel the project?? Trim the federal budget by actually doing a full audit on what we get for the money spent by DOD. False starts, cancelled project after spending the money, and other funding mismanagement should be brought out for all to see.

Thu, May 1, 2014

I think it is time I retire from the IT acquisition business....

Thu, May 1, 2014 Pentagon Wonk

Please stop the madness. This article highlights SO MUCH ignorance with DoD IT Acquisition. Major IT programs are already subject to Nunn-McCurdy like processes via the MAIS Significant and Critical change processes as dictated by Chapter 144A of Title X. They've been in place for 5 years now with many MAIS programs breaching which drive extensive program reviews, further delaying fielding of critical IT capabilities. IT programs are held to much more scrutiny than weapon systems as there are cost and schedule thresholds. Many IT programs break the 5-year threshold as they can't navigate the acquisition bureaucracy and develop the system in that time. The issue isn't more scrutiny and oversight for IT, but the need to delegate decisions and streamline processes. The IT Box policy is one of the lone IT reforms that have been made, but almost no programs are using that process. The article further got it wrong to state requirements approval are delegated TO the JROC. IT Box delegates requirements approval after the initial document FROM the JROC to a lower level board within the Services/Agencies.

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