WSARA: Baselining Programs Early Compounds the Problems
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The document discusses issues with section of the Weapon System Acquisition Reform Act (WSARA) that requires major defense acquisition programs to establish cost and schedule baselines early at Milestone A. [1] Baselining programs so early compounds problems as estimates at Milestone A are developed years before technologies are mature or requirements are solidified. [2] Exceeding the initial baseline estimates by 25% now triggers a Nunn-McCurdy breach, which could terminate the program. [3] This motivates program managers to inflate estimates and increases costs, risks, and bureaucracy.
WSARA: Baselining Programs Early Compounds the Problems
- 1. WSARA: Baselining Programs Early Compounds the Problems Peter Modigliani C ongress unanimously approved the Weapon System Acquisition Reform Act in 2009 because if there’s one issue that everyone in Washington can agree on, it’s that defense acquisition needs additional reform. While enhanced discipline and rigor is required, the section of the law that attempted to control cost growth with additional organizations, processes, and requirements early in the acquisition life cycle will actually increase the costs and risks of many large programs. Modigliani is an assistant vice president for program management at Alion supporting Air Force acquisition. He is a Project Management Profes- sional and Level III certified in program management. Defense AT&L: July-August 2010 12
- 2. The biggest pitfall of WSARA is baselining major defense acquisition programs at Milestone A and driving Nunn- McCurdy breaches if programs exceed the initial cost and schedule estimates by 25 percent. At Milestone A, the effort We all want to develop major is still in the early concept stages. The users have developed an initial capabilities document to define the capability gap and have conducted an analysis of alternatives of proposed programs faster and cheaper, materiel solutions. The acquisition community developed a technology development strategy to reduce technology yet the bureaucracy risk and determine the appropriate set of technologies to integrate. The Milestone A estimates are developed years encumbers speed and agility. prior to having mature technologies demonstrated on repre- sentative prototypes, a preliminary design, or requirements solidified in a capability development document. While esti- mates are valuable at this stage, WSARA requires cost and schedule baselines prior to finalizing the scope. based on inflated cost estimates, the scope and costs will naturally grow to take advantage of the increased reserves In the past, if cost estimates increased by 25 percent, the to reduce risks or add capabilities. program manager was required to notify the milestone deci- sion authority, typically the Office of the Under Secretary of An Example Defense for Acquisition, Technology and Logistics, who then Let’s examine a program that, by all accounts, is a well- consulted with the Joint Requirements Oversight Council performing, high-demand program in the early stages of on requirements and determined if the program warranted the life cycle. It baselined costs and schedule at Milestone the resources required. In WSARA, Congress added new A and is maturing technologies via competitive prototypes schedule criteria, and now, exceeding cost or schedule es- and other early systems engineering efforts. The program timates by 25 percent drives a Nunn-McCurdy breach, in manager comes to the realization that some of the critical which the default plan would be to terminate the program. technologies will cost more or take longer to develop than If DoD wanted to continue with such a program, it would was originally planned two years ago based on initial as- need to re-accomplish the Milestone A and face additional sessments. There is full support from all key stakeholders oversight, reporting, and scrutiny. (combatant commanders, the Pentagon, and Capitol Hill) to proceed with this program, but it must now take a bu- The Fallout of WSARA reaucratic time out. Now, I will be the first to admit that DoD needs to get a tighter grip on scope and cost growth, and 25 percent cost The Joint Requirements Oversight Council will call for a se- growth on a major defense acquisition program is a signifi- ries of review boards to revalidate requirements. The Office cant amount, but let’s take a step back and look at what of the Secretary of Defense’s director of cost assessment WSARA truly does here. In the early stages of the acqui- and program evaluation will need to conduct an in-depth sition life cycle, you are still defining the scope based on cost estimate, which typically takes six months. The new initial requirements, technology maturity, funding, cost, and director of performance assessment and root cause analy- schedule estimates. WSARA requires baselining based on sis will need to conduct a root cause analysis, and it could the initial analysis, with severe consequences on breaching. take months to audit the program. This is all in addition to The fidelity of the cost and schedule estimates is low due to the analysis and reviews conducted by the users, program the significant amount of unknowns with the effort. office, program executive office staff, and Service headquar- ters staffs. Finally, the milestone decision authority will need To reduce the risk of a Nunn-McCurdy breach, program to conduct additional reviews and the staffs will compile a managers will now be motivated to inflate their cost and report to submit to Congress. While WSARA dictates that schedule estimates to account for all the unknowns and a report be sent to Congress within 30 days upon the pro- allow for more of a buffer. Yet presenting a higher cost es- gram manager notifying the milestone decision authority, timate likely exceeds the current program budget, thereby no one finds that to be a realistic timeframe. It is difficult to raising a full funding issue. If the cost estimates are too high, staff a simple one-page memo through the Pentagon within leadership may decide not to continue with an otherwise 30 days, let alone a major analysis determining the fate of valuable program. If the program does get approval, it will a major defense acquisition program. The program can likely require funds from other sources to ensure funding is either fail to meet the 30-day suspense to Congress and/ at an acceptable cost confidence level. While independent or the program manager delays formal milestone decision cost estimates may help keep the program manager honest, authority notification. Congressional staffers and members they will also be based on an undefined scope and ample un- will also likely call for meetings or hearings to discuss the knowns. Once a program manager has an approved program program further. 13 Defense AT&L: July-August 2010
- 3. Avoiding termination, the program is now required to spend the next six months re-accomplishing its Milestone A be- fore it can resume technology development and prototyping. A Six-Pack of Tips for Both the Nunn-McCurdy process and re-accomplishing the previous milestone can easily delay the program a year or Defense AT&L Authors two, which increases costs and compounds risk. The Of- fice of the Secretary of Defense and the Service will need to rebalance funding profiles while government and industry will reallocate resources during the delays. This scenario was 1 all because the estimates done prior to fully understanding the program did not properly account for all the unknowns. Look at back issues of the magazine. If we printed an article on a particu- Focusing on Milestone B lar topic a couple of issues ago, we're The DoD Acquisition Framework traditionally focused on unlikely to print another for a while—unless the acquisition program starting at Milestone B, following it offers brand new information or a different ample planning and analysis of requirements, technologies, point of view. 2 and costs as well as a sound acquisition strategy. The in- creased emphasis on early systems engineering, analysis We look on articles much more favor- of alternatives, and cost estimates helps leadership make a ably if they follow our author guide- sound decision at Milestone B on whether to grant approval lines on format, length, and presen- to begin development. At Milestone B, the milestone deci- tation. You'll find them at <http://www. sion authority approves the acquisition program baseline, dau.mil/pubs/pdf/DAT&L%20author%20 and the program manager must manage cost, schedule, and guidelines_080528.pdf> . 3 performance within those limitations. Baselining programs at Milestone A effectively forces planning and analysis to Number the pages in your manuscript be performed years sooner. It’s almost getting to the point and put your name on every page. It where once someone comes up with the need for a mate- makes our life so much easier if we riel solution, he had better have all the details known the happen to drop a stack of papers and your next day. If Congress reversed those aspects of WSARA, it article's among them. 4 would put the focus back on Milestone B, allowing for proper planning and still permitting the Office of the Secretary of Do avoid acronyms as far as pos- Defense and Joint Staff to conduct checks and balances if sible, but if you must use them, costs or schedules grow 25 percent higher than originally define them—every single one, estimated. It would allow for more realistic Milestone A cost however obvious you think it is. We get and schedule estimates and reduce overall program cost testy if we have to keep going to acronym and schedule risks. finder.com, especially when we discover 10 equally applicable possibilities for one ac- A Major Concern ronym. 5 At a recent conference, I raised this issue to a panel of cur- rent and former senior DoD acquisition executives, and Fax the Certification as a Work of they all agreed this was a major concern that will plague the U.S. Government form when the department for years. As the expanded defense acqui- you e-mail your article because we sition bureaucracy spends the next few years defining and can’t review your manuscript until we have implementing the new roles, policies, and processes, I hope the release. Download it at <http://www. they provide feedback to Congress on these unintended con- dau.mil/pubs/pdf/DAT&L%20author%20 sequences. The draft IMPROVE Act of 2010 on Capitol Hill guidelines_080528.pdf> Please don't make . these days does not address this early baselining issue, but us chase you down for it. And please fill it rather adds performance metrics. We all want to develop out completely, even if you've written for major programs faster and cheaper, yet the bureaucracy us before. 6 encumbers speed and agility. If we truly want to address cost growth, we need to develop innovative approaches to We'll acknowledge receipt of your streamline the bureaucracy, not expand it. submission within three or four days and e-mail you a publication decision in four to five weeks. No need to remind us. We really will. Scout’s honor. The author welcomes comments and questions and can be contacted at peter.modigliani@yahoo.com. Defense AT&L: July-August 2010 14