Defense Management Reform

The National Security Personnel System (NSPS) was initiated at a time of consensus that the old civil service system was overly bureaucratic, inflexible, and in need of reform. It received an unprecedented level of resources, but still failed. The Bush administration helped strengthen opposition by insisting on comprehensive changes to the collective bargaining and employee appeals systems that were largely unrelated to the reform's core purpose of linking pay to performance. The NSPS made changes to parts of the system that needed to be changed, but it also changed parts of the system that were working reasonably well. In the end, it failed because of the controversy generated by parts of the new system that may not have been necessary at all, and this failure dragged down the prospect of constructive reform for at least another decade.

Over the last forty years, the DOD has undertaken at least five cycles of acquisition reform, seeking at various times to centralize control over major defense acquisition programs, to devolve more responsibility to the military services, to reign in acquisition abuses with additional guidance, and to rid the DOD and its contractors of excess regulations. While these reforms were all driven by public outrage about cost growth and acquisition abuses, they had wildly different results. The Packard Commission reforms and the Weapon Systems Acquisition Reform Act of 2009 were the most successful of the reforms because they identified poor front-end decision making as the most significant source of cost growth in the acquisition of major weapon systems and developed a focused set of solutions for that problem.

Over the last three decades, the DOD has invested hundreds of millions of dollars in planning activities, billions of dollars in efforts to compile and reconcile financial data, and tens billions of dollars in new financial systems, but has gotten no closer to an auditable financial statement. In fact, an auditable financial statement provides little value for management purposes and may not even be the right goal. The department's bookkeeping problems are the result of a maze of deficient systems, poor controls, dysfunctional processes, and stovepiped organizations, none of which can be fixed by management fiat. The DOD has made the most progress in addressing these problems when it has taken an incremental approach and settled for improved systems and processes that were less than perfect for audit and accounting purposes.