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Chapter 15

ACQUISITION REFORM

Acquisition reform is partner to the Departmentís Defense Reform Initiative and the Presidentís National Performance Goals 2000. Acquisition reform results in more efficient business practices, creating an environment for DoD to acquire goods and services better, faster, and cheaper.

CIVIL MILITARY INTEGRATION

Civil military integration, eliminating the distinction between doing business with the government and other buyers, is critical to meeting future military, economic, and policy objectives. In order to accomplish civil-military integration of a national industrial base, DoD must be able to adopt the business processes of world-class customers and suppliers and stop applying government-unique terms and conditions to the maximum extent practicable. Civil military integration objectives are designed to take acquisition reform to a new level and focus on the long-term emphasis on commercial solutions to military requirements. DoD has developed a strategic plan targeted at reducing that distinction and attracting commercial companies to the defense sector. This plan includes a set of initiatives, policy, and behavioral and cultural changes which together will enable the Department to achieve these goals.

DEFENSE ACQUISITION GOALS 2000

The Department identified 12 specific goals as the cornerstones of its National Performance Review Reinvention Impact Center. Each goal identifies a measurable outcome with significant return to the Department in terms of reducing cost and time. Achieving the Year 2000 Goals will enable the Department to increase its investment accounts and realize required modernization without requiring a top-line increase in budget authority.

Goal 1: New weapons in less time. Deliver new major defense systems to the users in 25 percent less time.

The Department needs to be more flexible and responsive in meeting the needs of the warfighter by fielding new systems in much less time. A shorter cycle time will reduce cost growth and accelerate modernization efforts.

The goal is to reduce the cycle time of new programs (i.e., the time between starting a new program and achieving initial delivery) by 25 percent. That means the average cycle time of new programs started since 1992 will be less than 99 months by the end of 2000óa 25 percent reduction from the recent historical average of 132 months (based on average cycle time of currently active programs started prior to 1992).

Since 1992, the Department has employed acquisition reforms like the use of commercial items and the latest computer technologies in design, manufacturing, and management of programs. This helped reduce cycle time, but the Department plans to do more. DoD will use shorter cycle time as a planning constraint in structuring new programs, strictly enforcing shorter cycle time in approving new programs, and closely monitoring programs in process of acquiring, programming, and budgeting to limit cycle time growth.

The Department is changing the way it manages programs to achieve shorter cycle time. Specifically, the Department is emphasizing the urgency of near-time requirements and the availability of proven technologies as key criteria in authorizing new programs. The Department can now satisfy warfighter needs incrementallyóby infusing new technologies, as they become available, with each subsequent delivery.

Goal 2: Improve logistic supply services. To achieve visibility of 90 percent of DoD materiel assets while resupplying military peacekeepers and warfighters and reducing average order to receipt time by 50 percent.

Through continued development of the DoD Total Asset Visibility Program, the Department will have direct access to timely, accurate information about the status, location, and movement of units, personnel, supplies, and equipment.

The Department will use information systems to reduce delivery times by increasing the volume of electronic transactions with vendors. Additionally, the Department plans to reduce order-to-receipt times by using commercial practices, contracting with vendors to provide direct support, and using faster transportation services to deliver customer orders. These steps will enable DoD to meet the warfighterís needs more rapidly, while improving military readiness and reducing the size of the inventory. Similarly, the Department will encourage vendors to process orders quickly by adopting flexible manufacturing practices.

The Department made some progress in meeting the goal of better logistic supply services. Solid gains were made in providing cross-Service visibility of assets, and there was a reduction in the time it takes to deliver products to customers. The average number of days it takes for the warfighter to receive an order decreased from 36 days in 1997 to 32 days today.

Goal 3: Simplifying buying of goods and services. Simplify purchasing and payment through use of purchase card transactions for 90 percent of all DoD micropurchases while reengineering the processes for requisitioning, funding, and ordering.

Buying a product for less than $2,500 is called a micropurchase. In the past, micropurchases were treated like all other purchases and were generally done only by processing requests through government procurement offices. This added to the cost of buying the product and to the time it took to receive the order. The Department adopted the use of the government-wide commercial purchase card, which allows users to purchase goods and services directly from vendors, provided the amount is below the micropurchase threshold. Every study shows significant savings from use of the government-wide commercial purchase card.

There are currently about 160,000 card holders in the Department. In FY 1998, the government-wide purchase card was used for over 7 million defense micropurchases worth over $3 billion. The Department is already approaching its 2000 goal of using the government-wide commercial purchase card for 90 percent of micropurchases.

Goal 4: Educating the defense acquisition work force. Create a world-class learning organization by offering 40 or more hours annually of continuing education and training to the DoD acquisition related work force.

In the last few years, the Department underwent dramatic changes in how it buys goods and services. Many of these changes are based on best commercial practices and are often very different from the way DoD performed jobs in the past. DoD offers quality education and training to help buyers adjust to this new environment. This education and training includes a description of the new practices and an understanding of why these changes were made. The Department must continue training throughout careers to ensure that the work force stays current with best commercial and government practices. Only by continuing education can DoD avoid creating a new system as rigid as the old.

DoD plans to meet the three-year goal of educating the defense acquisition work force by having buyers take a mandatory 40 hours of continuing education annually, or 80 hours over two years. In the near term, most of this training will take place in traditional classrooms. The Department is rapidly expanding its use of computing and telecommunications technology to provide more cost-effective and timely training via satellite and the Internet. DoD is making good progress toward meeting the goal of giving the entire work force 40 or more hours of continuing education annually by the end of 2000.

Goal 5: Modernizing defense. With no top-line budget change, achieve annual defense procurement of at least $54 billion toward a goal of $60 billion in 2001.

Post-Cold War defense spending decreased dramatically. This reduction was particularly significant in the buying of new weapons and equipment. This made sense because the inventory of newer weapons was sufficient to meet the needs of reduced troop levels. Over the intervening years, the budget for buying new weapons was further reduced by unplanned events, such as regional conflicts, peacekeeping, and humanitarian missions.

Today, the defense inventory is showing its age and needs to be replaced. As the level of technology used by potential adversaries increases, DoD needs to continue fielding new weapons and equipment to maintain its technological edge.

To meet the Departmentís goal of modernizing defense, the annual budget for new weapons and equipment will increase to at least $54 billion in 2000 and $60 billion by 2001. This represents an increase of almost $10 billion over 1997. More importantly, the Department will achieve this increase through cost reductions in other DoD activities, preserving the governmentís drive toward a balanced budget.

DoD is striving to achieve the goal of modernizing defense by fully implementing the recommendations of the Quadrennial Defense Review and continuing with the Defense Reform Initiative (DRI). The DRI provided that more money would be available for buying new weapons and equipment by better planning for operating and support costs, reforming business practices, streamlining the work force, and closing additional military bases.

DoD is also watching all budget submissions closely to verify that they support the goal of investing at least $54 billion on new weapons and equipment in FY 2000 without violating the overall defense budget ceiling. The progress toward meeting the investment goal of $54 billion on new weapons and equipment in FY 2000 is evidenced by the increase from FY 1997, when purchases were $43.2 billion, to FY 1998, where the purchasing budget totals $45.1 billion.

Goal 7: Decreasing paper transactions. Decrease paper transactions by 50 percent through electronic commerce and electronic data interchange.

Industry is rapidly moving away from paper-based business practices toward electronic commerce and electronic data interchange. DoD made some progress in this area, but lags behind industry. To make up for lost time, the Department is setting up computer networks for all people, removing regulations and other barriers to exchanging information electronically, and improving business practices to take advantage of information technology advancements.

The Departmentís goal is to accelerate its transition from paper to electronic transactions. Paperless transactions will improve efficiency and effectiveness, reduce processing times and costs, and provide more timely insight. DoD embarked on a three-year effort to increase paperless electronic business transactions and improve business practices. To move away from a paper-based system, the Department is capitalizing on electronic contracting, program management, and logistics support information.

The business efficiencies of digital transactions will significantly reduce the total costs of owning, operating, and maintaining weapons and equipment. The Department is measuring progress and studying additional actions to better support the customer and save money. The Department is developing additional measures for progress in the digital program management and logistics support areas.

Goal 9: Streamlining the work force. Eliminate layers of management through streamlined processes while reducing the DoD acquisition related work force by 15 percent.

Since 1989, DoD reduced the acquisition work force by over 40 percent. By streamlining organizations further, DoD will reduce the work force by an additional 15 percent by 2000. DoD is resizing the work force to match the workload more efficiently. The Department is eliminating redundant jobs and simplifying procedures. Program teams are given more responsibility, and unnecessary reviews and oversight are being cut. As a result, DoD is less bureaucratic and more professional, and is continuously looking for additional opportunities to do business better, cheaper, and faster with fewer people. In the acquisition pilot programs, full-time staffs were reduced by 27 to 47 percent. Overall, DoD is already one-third of the way to achieving the streamlining work force goal of a 15 percent work force reduction.

Goal 10: Providing improved visibility of total ownership costs. Define requirements and establish an implementation plan for a cost accounting system that provides routine visibility into weapon system life-cycle costs through activity-based costing and management. The system must deliver timely, integrated data for management purposes to: permit understanding of total weapon costs; provide a basis for estimating costs of future systems; and feed other tools for life cycle cost management.

In 1995, DoD established total life-cycle cost as equal to performance with the promulgation of a Cost as an Independent Variable policy. Department efforts to fully implement the Cost as an Independent Variable were hampered by limited visibility into true ownership costs. DoD currently relies on the Visibility and Management of Operating and Support Costs (VAMOSC) system to provide weapon system level cost insight; however, Servicesí differences in implementation and lack of process costs have previously limited the applicability of VAMOSC data on a department-wide basis.

Current near-term action is the development of a strategy and plan for DoD-wide implementation of activity based costing/activity based management (and/or other approaches deemed appropriate to the core objective of providing visibility into total operational costs). VAMOSC improvement activities are also being considered as a potentially significant contribution to increased management visibility of weapon system costs. The ultimate goal is to provide one or more systems together which will constitute a system that is not only comprehensive, but also practical and accessible to ultimate users by 2000.

Goal 11: Reducing excess inventory. Dispose of $2.2 billion in excess National Defense Stockpile inventories and $3 billion of unneeded government property while reducing supply inventory by $12 billion.

The National Defense Stockpile is a large inventory of strategic and critical materials set aside for a national emergency. The 1997 market value stockpile was $5.3 billion. DoD can sell or otherwise dispose of excess inventory with congressional approval. By law, DoD must try to avoid causing undue market disruption. The goal is to dispose of $2.2 billion in excess stockpile inventories by 2000. DoD is aggressively marketing its inventory of critical and strategic materials. The Department is working closely with Congress and industry to ensure a good price for the inventory without unfairly undermining the commercial market.

The Department is working to reduce the amount of DoD property held by defense contractors. DoD often loans contractors government tooling or equipment to perform defense-unique tasks. Since the 1980s, the original value of property in contractor hands has grown in spite of repeated efforts to curb growth. The goal is to dispose of $3 billion worth by 2000. In the future, DoD will rely on commercial suppliers to use their own equipment.

Finally, DoD is looking to reduce supply inventories to match the current needs of reduced troop levels. From a 1989 high valued at $107 billion, DoD is now reducing supply inventories from $68 to $56 billion by 2000. To reduce supply inventory, the Department is being more selective in what and how it buys. DoD is improving equipment reliability, decreasing order and delivery times, and bypassing government warehouses.

DoD is making significant progress in the effort to dispose of strategic and critical materials, government property at contractor sites, and surplus inventory. The goal is to reduce the $6.1 billion in materials stored in 1996 by $2.2 billion. To date, DoD has disposed of $858 million worth of materials. To achieve the goal, however, the Department will need new congressional authority for additional material sales of excess stockpile inventories in 2000, as well as a continued robust world market. DoD is already close to achieving the goal of $3 billion in special tooling and equipment.

Goal 12: Minimizing weapons cost growth. Minimize cost growth in major defense acquisition programs to no greater than one percent annually.

Historically, DoD overspent original budgets for major new weapons. Some of this cost growth was necessary to accommodate technology changes, schedule slips, and inaccurate estimates of the original cost. The Departmentís goal is to minimize cost growth of major new weapons by achieving greater program stability. The Department is monitoring major weapons programs quarterly, focusing on cost growth when making programming and budgeting decisions, and looking closely at how much money programs are asking for in the program acquisition process.

The Department has effectively met the 2000 goal for the last two years. Based on the FY 1999 Presidentís budget, DoD had a slightly negative cost growth at minus three-tenths of a percent. The early projection for the FY 2000 Presidentís Budget, however, shows DoD missing the goal, due to major cost growth attributed to Army and Ballistic Missile Defense Organization programs.

EXPANDED SINGLE PROCESS INITIATIVE

DoDís transition to a Performance Based Business Environment, maximizing the use of commercial items and practices, is a key step toward achieving civil military integration. The Single Process Initiative is the mechanism that the Department chose to implement changes to existing contracts. Over the past two and one half years, the Single Process Initiative has expedited the transition of existing contracts to common best processes, making a positive impact on the way the Department conducts business, by facilitating industry consolidation and plant modernization, encouraging innovation, and by encouraging subcontractor reform. While a solid beginning was established with this initiative, particularly in the transition of at least 140 facilities to the ISO 9000 quality standard, the Department has a long way to go. The replacement of multiple government-unique management and manufacturing processes with common, best, facility-wide processes that adopt best practices drawn from both commercial and government experience is an objective that requires a long-term vision.

The Principal Deputy Under Secretary of Defense (Acquisition and Technology) now chairs a Single Process Initiative Council, which includes the Component Acquisition Executives and representative from corporate management councils and industry associations, to facilitate this reform initiative.

DoD continues to emphasize integrating suppliers into a performance-based business environment as well. To assist in this integration, industry is working with the supplier base to facilitate supplier reform and acceptance of best practices. Additionally, several defense contractors initiated corporate Single Process Initiative Management councils designed to expedite reform and facilitate best practices. The Councils serve to expedite the spread of common best practices among defense contractors and the sectors in which they operate, further facilitating the integration of the defense industrial base and improving access to best value goods and services.

GOVERNMENT PROPERTY

Reform of government property practices is an essential component of civil-military integration. The Department objective is to establish an accurate accounting of current property assets while concurrently reducing the number of both new and existing assets. DoD established a policy designed to ensure that the Department ceases the practice of taking title to special tooling and test equipment, material, and particularly general-purpose equipment. Program Managers will now consider the total ownership cost in any decisions made regarding government property. Any decision to retain or take ownership must be based on a sound economic analysis demonstrating ownership cost benefit. An Integrated Product Team was formed to develop detailed implementation guidance.

PAST PERFORMANCE

Confidence in a prospective contractorís ability to satisfactorily perform is an important factor in making a best-value source selection decision. One method of gaining this confidence is the evaluation of a prospective contractorís performance on recently completed or ongoing contracts for the same or similar goods or services. Past Performance Information (PPI) is very useful in motivating contractors to improve their performance because of the potential use of that information in future source selections. It is equally useful as a means of communication, providing feedback and justifying additional performance incentives for ongoing contracts. A contractor that delivers what the contract requires without extensive follow-up effort on DoDís part is clearly delivering better value than a contractor that charges the same price, yet needs constant surveillance by DoD personnel to ensure performance.

DoD policy is to collect Past Performance Information using a consistent management approach across the designated business sectors categorized as key or unique. DoD established business sectors and common assessment elements and ratings to standardize the methodology used to rate contractor performance under defense contracts. Buying activities share this information with other government buying activities to the maximum extent possible, while ensuring it is managed as source selection information.

Source selection authorities are given maximum latitude to focus on those specific areas of contractor performance that will provide the best predictors for successful performance of the instant acquisition. Evaluation of Past Performance Information is tailored to fit the needs of each specific acquisition. DoD-wide implementation of collection and use of PPI complies with the regulatory thresholds in Federal Acquisition Regulations as modified by an authorized class deviation. Automated collection systems are under development to assist the PPI collection effort.

PERFORMANCE-BASED CONTRACTING

The Presidentís Management Council identified performance-based contracting as an initiative with significant potential payback to the federal government and one which was identified by the National Partnership for Reinventing Government in early 1998 as being essential to increasing the efficiency of government.

The Department of Defense is moving from traditional military specification and military standard nonperformance-based contractual requirements to performance-based contractual requirements. Performance-based contracting requirements move contract products and services to commercial solutions by focusing upon the purpose of the work to be performed rather than the manner in which it is to be performed.

The Department of Defense spends a significant amount of its annual procurement budget in services. As compared with traditional service contracting methods, performance-based service contracting demonstrated cost savings of approximately 15 percent and resulted in estimated customer satisfaction increases of 18 percent. The use of performance-based service contracting by the Department continues to yield significant rewards.

Performance-based contracting facilitates the Departmentís access to leading edge commercial technology and is an objective that is consistent with the goals of the Government Performance and Results Act. The Department reports its progress to Congress through the Office of Management and Budget.

PRICE-BASED ACQUISITION

To continue its Revolution in Business Affairs, DoD must eliminate or reduce the difference between the terms and conditions the Department uses as a buyer and those used by commercial buyers to obtain goods and services. DoD will do this in order to reduce the price of military products, enabling defense companies to integrate their military business with their commercial or potential commercial business, and to ensure greater access to commercial products, technology, and services. This will provide the warfighters with best-value goods and services.

The Department has already begun to describe its needs by using performance specifications for all new acquisitions. The Department has begun to change the way in which it administers contracts that have already been awarded through the Single Process Initiative. The next step is to determine how price-based acquisition (outcome oriented) works in the commercial environment, as opposed to cost-based acquisition (input oriented), and how it can best be used in DoD.

Cost-based acquisition, i.e., contracts that are based on costs incurred or projected to be incurred by the contractor, requires the tracking and allocation of costs, often in government-unique accounting systems, governed by federal Cost Accounting Standards (CAS). They also require that an offeror provide certified cost or pricing data. Both the government and industry have created and maintain infrastructures to administer the process of determining the allowability and allocability of all contractor costs and compliance with CAS. Defense contractors must maintain a cost accounting system frequently different from a commercial cost accounting system based on generally accepted accounting principles to meet CAS cost measurement, assignment, and allocation requirements. Even though recent acquisition reforms have somewhat reduced the requirements for certified data, the continuing requirement that any data submitted be compliant with the governmentís unique accounting system remains a significant barrier to the Departmentís ability to access a full range of technologies and opportunities. In addition, there is a need to understand what accounting practices commercial firms use to account for costs and track cost and schedule status and how these practices might fit DoD acquisitions.

Price-based acquisition is the establishment of contractual relationships using price analysis instead of cost analysis. Price analysis may include comparisons to prices of other offers, market prices, competitive alternatives, and parametric analysis. Price analysis is the standard approach in the commercial world.

PRIVITIZATION/OUTSOURCING

Although the principal responsibility for outsourcing and privatization falls into the purview of other offices, many of the issues associated with outsourcing and privatization must be viewed through the acquisition prism. Given the Departmentís commitment to competitively source significant portions of its non-core requirements, the process by which such sourcing takes place is vital and related directly to acquisition reform. Indeed, that commitment is substantial. Some 229,000 full-time equivalents are being considered for competitive sourcing during 1997 through 2005. Achieving that ambitious goal requires a close look at the processes, time, and resources involved, and at the tools available to the work force.

Specifically, the Acquisition Reform team is focusing on potential revisions to OMB Circular A-76, the types and quality of training available to the DoD work force charged with procuring services, which will be largely defined through the Section 912(c) study on Services Training (all 912(c) studies are being coordinated by Acquisition Reform), and additional initiatives to improve the Departmentís use of performance-based statements of work, best value procurements, and more. In short, as competitive sourcing by the Department expands, the means by which the Department achieves its goals of procuring both goods and services from the best value sources is critical.

STATUTORY REPORT

Section 50001(b) of Federal Acquisition Streamlining Act of 1994 included an annual report requirement to Congress relating to achievement, on average, of 90 percent of cost, performance, and schedule goals for major and non-major programs. DoD was directed to decrease, by 50 percent or more, the average period for converting emerging technology into operational capability.

As of September 30, 1998, all but three Major Defense Acquisition Programs (MDAPs) are meeting more than 90 percent of the aggregated number of cost schedule and performance goals for that program. The three exceptions are Cooperative Engagement Capability, Forward Area Air Defense System Command Control and Intelligence, and PAC-3 Patriot programs, which are being reviewed by the military departments.

At the lawís enactment date (October 13, 1994), the average period for converting emerging technology into operational capability for major programs was calculated to be 115 months from program initiation dates to initial operating capability dates for all current major programs. As of September 30, 1998, this average period declined to 109 months. The calculation of the average period of all MDAPs described above includes a significant number of older programs that were structured and developed using the traditional acquisition process. A more accurate assessment of the effects of DoDís acquisition reform efforts would be to concentrate on those programs that were initiated under the new acquisition reform process. MDAPs started since 1992 have an average period of 85 months for converting emerging technology into operational capability. The reduction is due to starting more modification and upgrade programs to fully employing regulatory reform, including specification streamlining, procurement reform, and integrated product teams to reduce cycle time.

TOTAL OWNERSHIP COST

DoD total ownership cost is the sum of all financial resources necessary to organize, equip, sustain, and operate military forces sufficient to meet national goals in compliance with all laws; all policies applicable to DoD, all standards in effect for readiness, safety, and quality of life; and all other official measures of performance for DoD and its components. DoD total ownership cost is comprised of costs to research, develop, acquire, own, operate, and dispose of weapon and support systems, other equipment, and real property; the costs to recruit, train, separate, and otherwise support military and civilian personnel; and all other costs of business operations of DoD.

DoD made the reduction of total ownership cost one of the principal elements of the Revolution in Business Affairs. As systems are retained for longer periods, the cost of maintaining them increases dramatically. DoD took several actions to reduce total ownership cost. First, DoD is integrating the management of development and production for systems with the management of operations and support. This integration will provide a total ownership cost focus to development so that trade-offs can be made between investments in development and reduced costs in support. Second, DoD is reforming the logistics process by reducing logistics response time and the logistics footprint. Third, DoD is developing a system that will provide improved insight into total ownership costs and provide management information necessary to make more informed decisions. Finally, DoD established pilot programs to initiate, implement, and test innovative approaches designed to substantially reduce total ownership costs.

WORK FORCE ISSUES

The number of people in the acquisition work force and supporting the acquisition work force in acquisition organizations continues to decline sharply. In June 1998, a reduction of 20,000 for FY 1998 was mandated by the Secretary of Defense to comply with congressional guidance. Additional reductions are programmed for future years to meet National Partnership for Reinventing Government targets. Qualitatively, DoDís needs are changing as well. In the future, DoD will need managers to manage suppliers, not supplies, and engineers to design systems, not components. A smaller, differently skilled work force will have to be well educated, fully trained, and continuously learning. Accordingly, the Department has strongly supported the acquisition career programs of the Defense Acquisition University and in 1998, added a major initiative in continuing education to provide the means to keep people current professionally, as well as to shape the skill mix for the next millennium. Personnel management must also be reformed. Under authority granted by Congress, the Department is preparing to implement a major civilian personnel demonstration project for the acquisition work force. The Department continues to monitor promotion rates of military officers in the Acquisition Corps, as directed by Congress, to determine whether actions are needed, either within the Department or statutorily, to ensure the quality of military members of the Corps.

Training the Acquisition Work Force

In an era of diminishing resources, the Department can no longer afford to continue training employees in traditional methods. Because of the need to get timely information to the acquisition work force, other training methods and approaches must be utilized.

Through the use of satellite training broadcasts, web-based training, and other distance learning methodologies, the Department is able to deliver critical acquisition information to the acquisition work force in a timely manner and at reasonable costs. Over the past two years, the Department has conducted approximately 15 interactive satellite training broadcasts as a means to provide the acquisition work force with timely, consistent, and relevant information. The broadcasts focus on regulatory changes, cultural changes, and new acquisition processes. The broadcasts include educational videos, panels of industry and government experts, and opportunities for frontline professionals to ask questions on the air. Through satellite training, the Department is able to simultaneously reach several thousand people with consistent and timely acquisition reform information so that employees can make the best decisions and take the most effective actions.

The New Acquisition Work Force Vision

On April 1, 1998, the Secretary of Defense submitted to Congress a report, required by Section 912(c) of the National Defense Authorization Act for FY 1998, on actions to streamline acquisition organizations, infrastructure, and work force. In that report, the Secretary identified his vision of the acquisition work force for ten years from now. The Secretary envisioned an acquisition work force that is smaller and in fewer organizations; is focused on managing suppliers, rather than supplies; and is focused on the total cost of ownership to provide and support high quality goods and services required by U.S. forces. It will be a work force that is engaged primarily in working with the DoD components to determine affordability of requirements; helping to establish and execute budgets; working to reduce cycle times; establishing contractual vehicles that are easily accessed by DoDís customers within DoD; overseeing contracts to make sure the work gets done on time, within tough performance parameters and within budget; and all the while, ensuring the publicís trust and confidence.

The Department has already reengineered a number of processes in a manner that allows DoD to provide the required best-value goods and services to the warfighter, while reducing the work force by over 42 percent from its peak in 1989. Further reductions are planned for FY 2000 and beyond. In addition, the Secretary proposed a number of significant new initiatives that fall into one of five categories: restructure research, development, and test; restructure sustainment; increased acquisition work force education, and training; integrated, paper-less operations; and future focus areas (i.e., a price-based approach to acquisition and more fully integrating the Departmentís test and evaluation activities into the DoD acquisition process). The Department is conducting the studies identified in the Secretaryís report. The studies are focused on implementation of actions to move towards the Secretaryís vision.

INTEGRATING ENVIRONMENT, SAFETY, AND OCCUPATIONAL HEALTH INTO THE ACQUISITION PROCESS

More than 80 percent of the DoDís hazardous waste is generated in the production, operations, and maintenance of weapons systems. By integrating environment, safety, and occupational health (ESH) considerations into the acquisition reform process, DoD is helping reduce weapons system total ownership costs driven by hazardous wastes and other environmental requirements, while also improving performance. At the heart of the integration efforts are sound business practices such as the Institutionalization of Pollution Prevention to Achieve Compliance program, which is developing new tools and guidance to shift the focus from end-of-pipe controls to pollution prevention solutions to fulfill environmental legal requirements. In addition, the Joint Acquisition Sustainment Pollution Prevention Activity is being established by the joint logistics commanders to work with depots and industry to eliminate hazardous materials in the manufacturing and sustainment of weapon systems. These efforts will help in the implementation of long-term pollution prevention improvements.

DoD Directive 5000.1 lists the Departmentís policies and principles that guide all defense acquisition programs. To implement DoDís policy, DoD Regulation 5000.2 requires that every weapon system program integrate ESH considerations into its systems engineering process. This integration, which must be initiated at the earliest possible time in the acquisition process and updated continually, identifies the key ESH issues that affect total ownership costs, program schedules, and system performance.

CONCLUSION

Acquisition reform continues to be an important element of the Departmentís strategy to meet the requirements of the warfighter, by buying smarter and faster, by getting better products at a cheaper price, and by accomplishing these goals with fewer resources. Acquisition reform is a continuous process, focused on identifying and eliminating impediments to new and innovative business processes, as well as incorporating best practices from the marketplace.

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