Defense Acquisition Reform, 1960–2009

An Elusive Goal

By

J. Ronald Fox

with contributions by

David G. Allen

Thomas C. Lassman

Walton S. Moody

Philip L. Shiman

CENTER OF MILITARY HISTORY

UNITED STATES ARMY

WASHINGTON, D.C., 2011
Library of Congress Cataloging-in-Publication Data

Defense acquisition reform 1960–2009 : an elusive goal / J. Ronald 

Fox ; contributions by David G. Allen ... [et al.].

 p. cm.

 Includes bibliographical references and index.

 1. United States—Armed Forces—Procurement—History—20th 

century. 2. United States—Armed Forces—Procurement—

History—21st century. 3. United States—Armed Forces—Weapons 

systems—Purchasing. 4. United States. Dept. of Defense—

Procurement. I. Fox, J. Ronald (John Ronald), 1929– II. Allen, 

David Grayson. 

 UC263.D368 2011

 355.6’2120973—dc23

 2011042992

First Printing

CMH Pub 51–3–1
iii

Page

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Principal Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

Chapter

1. The Defense Acquisition Process . . . . . . . . . . . . . . . . . . . 1

The U.S. Defense Establishment . . . . . . . . . . . . . . . . . . . . . 1

Major Weapon Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Defense Acquisition Historical Perspective . . . . . . . . . . . . 7

Defense Acquisition Versus Commercial Operation . . . . . 12

Government Acquisition Regulations . . . . . . . . . . . . . . . . 13

Participants in Defense Acquisition . . . . . . . . . . . . . . . . . 14

Defining New Defense Systems . . . . . . . . . . . . . . . . . . . . . 15

Congressional Authorization and Appropriation . . . . . . . 19

Stages in the Acquisition Process . . . . . . . . . . . . . . . . . . . 20

The Transition Between Phases . . . . . . . . . . . . . . . . . . . . 28

Selecting a Contractor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Controlling Schedules and Costs . . . . . . . . . . . . . . . . . . . . 30

The Basis for Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Limited Rates of Production . . . . . . . . . . . . . . . . . . . . . . . 32

Limitations of Government Program Managers . . . . . . . . 33

2. Defense Acquisition Reforms in the 1960s and 1970s . . . 35

Acquisition Reform During the 1960s—The McNamara 

 Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

The Transition from Robert McNamara to Melvin Laird . . . 40

Deputy Secretary of Defense David Packard . . . . . . . . . . . . . 43

Secretary Laird Creates the Blue Ribbon Defense 

 Panel (1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Defense Systems Acquisition Review Council . . . . . . . . . . . . 47

Industry Advisory Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Packard Confronting Resistance . . . . . . . . . . . . . . . . . . . . . . . 53

Pushing Against Inertia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

The Blue Ribbon Defense Panel Issues Its Report (1970) . . . 62

Consolidating Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Codifying the New Acquisition Process—DoD 

 Directive 5000.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Contents
iv

Chapter Page 

Leadership in the Post-Packard Era . . . . . . . . . . . . . . . . . . 79

The Congressional Commission on Government 

 Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Office of Federal Procurement Policy . . . . . . . . . . . . . . . . . 84

Procurement of Research and Development . . . . . . . . . . . 88

Reforming Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Legislating Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Office of Management and Budget Circular A–109 . . . . . 95

3. The 1980s: The Carlucci Initiatives and the 

 Packard Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Setting the Stage: PPBS and the Cycles of Weapons 

 Acquisition Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

From PPBS to the Acquisition Improvement Program . . . . . 106

AIP in Action: Implementation and Execution . . . . . . . . . 115

Responding to Charges of Fraud, Waste, and 

 Mismanagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

The Packard Commission, 1985–1989 . . . . . . . . . . . . . . . . 125

Under Secretary of Defense for Acquisition . . . . . . . . . . . 132

The Battle for Control of Weapons Systems 

 Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

The Legacy of 1980s Weapons Acquisition Reform . . . . . . 146

1980s Retrospective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

4. Acquisition Reform from 1990 to 2000 . . . . . . . . . . . . . . . 151

A Mandate for Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

Organizing the Reform Process . . . . . . . . . . . . . . . . . . . . . 154

Tools for Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

The Broad Reach of Reform . . . . . . . . . . . . . . . . . . . . . . . . 165

Changing the Acquisition Process . . . . . . . . . . . . . . . . . . . 175

Results of 1990s Acquisition Reforms . . . . . . . . . . . . . . . . 180

Views of Army Headquarters Personnel . . . . . . . . . . . . . . . . 183

Views of the Army Program Management 

 Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184

What Has Been Good About Acquisition Reform? . . . . . . . . . 185

What Has Been Bad About Acquisition Reform? . . . . . . . . . 185

Summary of Rand Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

5. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

The Defense Marketplace . . . . . . . . . . . . . . . . . . . . . . . . . . 193

Relationships Between Government and Industry . . . . . . 194 

Reexamining the Program Manager Concept . . . . . . . . . . 198

Differing Perceptions of Defense Acquisition . . . . . . . . . . 200
v

Page 

Government and Contractor Incentives . . . . . . . . . . . . . . . . 203

The Need for Extended Follow-up Actions . . . . . . . . . . . . . . . 205

Appendixes

A. Four Acquisition Reform Studies Conducted from 

 2001 to 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

B. Changes to the Acquisition Process, DoD 

 Directive 5000.1, 1971 to 2008 . . . . . . . . . . . . . . . . . . . . . . . . . 221

C. Carlucci Thirty-Two Acquisition Reform 

Initiatives, 1983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229

D. Rand Corporation Study of Sixty-Three 

 Acquisition Reform Initiatives, 2002 . . . . . . . . . . . . . . . . . . . 231

Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235

Selected Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255

Tables

No.

1. Defense Outlays, FY 1950–FY 2008 . . . . . . . . . . . . . . . . . . . . 2

2. DoD’s Budget Authority by Component . . . . . . . . . . . . . . . . . 3

Figures

1. Total Federal Outlays: Non-Defense and Defense . . . . . . . . . 4

2. The Defense Acquisition Management System . . . . . . . . . . . . 24

3. The Systems Acquisition Process . . . . . . . . . . . . . . . . . . . . . . . 57

vii

Defense acquisition reform initiatives have been Department 

of Defense perennials over the past fifty years. Yet reforming the 

acquisition process remains a high priority each time a new administration comes into office. Many notable studies of defense acquisition with recommendations for changes have been published, 

and each has reached the same general findings with similar 

recommendations. However, despite the defense community’s intent to reform the acquisition process, the difficulty of the problem and the associated politics, combined with organizational 

dynamics that are resistant to change, have led to only minor 

improvements. The problems of schedule slippages, cost growth, 

and shortfalls in technical performance on defense acquisition 

programs have remained much the same throughout this period.

The importance of the Department of Defense’s huge acquisition projects over the years cannot be overstressed. The United 

States has often turned to cutting-edge technological solutions to 

solve strategic and operational challenges. To highlight the importance of acquisition issues, the Department of Defense began 

a project in 2001 to write a history of defense acquisition from 

the end of World War II to the start of the twenty-first century. 

The U.S. Army Center of Military History served as the executive 

agent for that project until funding was effectively withdrawn in 

2009. Two volumes of that history are nearing publication, which 

will take the story up to 1969. To capitalize on essential information on defense acquisition reform initiatives from the three unpublished draft volumes covering the period from 1969 to 2000, 

the Center decided to publish extracts from those volumes, with 

additional analysis by J. Ronald Fox, a subject matter expert on 

acquisition and an adviser to the project. Much of chapter two 

of this acquisition reform study was written by Walton S. Moody 

and David G. Allen for their draft Volume III (1969–1980) of the 

Defense Acquisition History Project and then edited, analyzed, 

and augmented by Fox. Similarly, most of chapter three was taken from Thomas C. Lassman’s draft chapters three and five of his 

Volume IV (1981–1990), and much of chapter four was written by 

Philip L. Shiman as chapter eight of his Volume V (1991–2000) 

of the Defense Acquisition History Project. Fox was able to take 

their chapters, provide additional analysis and insights, and consolidate and edit them with his own work to prepare this important volume focusing on defense acquisition reform. This volume 

Foreword
viii

is the result of all of their research and writing efforts and their 

collective insights into an incredibly complex system.

Professor Fox’s Defense Acquisition Reform, 1960–2009: An 

Elusive Goal, provides valuable historical analysis of the numerous attempts over the past fifty years to reform the defense acquisition process for major weapons systems. It identifies important 

long-term trends, insights, and observations that provide perspective and context to assist current defense decision makers, acquisition officials, and the acquisition schoolhouse. It is an important 

work on an important subject that continues to defy solution.

Washington, D.C. RICHARD W. STEWART

31 October 2011 Chief Historian
ix

J. Ronald Fox is a member of the Harvard Business School 

faculty where he chaired the General Management Area. His research deals with the management of large engineering and construction projects and defense acquisition. He taught courses in 

project management, competition and strategy, defense and aerospace marketing, and business-government relations. He holds a 

bachelor of science in physics, cum laude, from Le Moyne College, 

and a master of business administration and Ph.D. from Harvard 

University. 

Fox served as assistant secretary of the Army in which he was 

responsible for Army procurement, contracting, and logistics. Prior 

to his appointment as assistant secretary, he served as deputy assistant secretary of the Air Force. His work in these governmental positions earned him the Exceptional Civilian Service Award 

from the Air Force and the Distinguished Civilian Service Award, 

the highest decoration for public service awarded by the Department of the Army. He chaired the Board of Visitors of the Defense 

Acquisition University, was trustee of the Logistics Management 

Institute and the Aerospace Corporation, and was director of the 

American Society for Macro Engineering. In 2004, he was named 

senior adviser on acquisitions to the Defense Acquisition History 

Project. In 2006, he was named to the Defense Acquisition University Hall of Fame.

He is the author of several books, including Arming America: 

How the U.S. Buys Weapons (1974); Managing Business-Government Relations (1982); The Defense Management Challenge: Weapons Acquisition (1988); Critical Issues in the Defense Acquisition 

Culture (1994); and Challenges in Managing Large Projects (2006). 

Principal Author

xi

Early in 2009, Richard W. Stewart, chief historian at the U.S. 

Army Center of Military History (CMH), suggested that I prepare 

a monograph describing the frequent recurring studies of government efforts to reform the defense acquisition process. He proposed 

that I present my observations on acquisition reforms, supplemented by selections of unpublished material CMH received from 

contract historians David G. Allen, Thomas C. Lassman, Walton S. 

Moody, and Philip L. Shiman. I agreed to undertake that project, 

resulting in this monograph. 

From 1960 through 2009, more than twenty-seven major studies 

of defense acquisition were commissioned by presidents, Congress, 

secretaries of defense, government agencies, studies and analyses 

organizations, and universities. The U.S. Government Accountability 

Office (formerly U.S. General Accounting Office) has published 

numerous other noteworthy studies on defense acquisition. The 

reform studies over the nearly fifty-year period arrived at most of 

the same findings and made similar recommendations. 

The following major studies on acquisition reform were 

conducted from 1960 to 2009:

1960–1962 The Weapons Acquisition Process—Harvard 

Business School, Merton J. Peck and Frederic M. 

Scherer

1970 Blue Ribbon Defense Panel (Fitzhugh Commission)

1972 Congressional Commission on Government 

Procurement

1974 Arming America: How the U.S. Buys Weapons—

Harvard Business School, J. Ronald Fox

1979 Defense Resources Board

1979 DoD Resource Management Study

1981 Carlucci Thirty-Two Acquisition Initiatives

1982 Special Panel on Defense Procurement, House 

Armed Services Committee

1982 The Defense Industry—Jacques S. Gansler

1983 The Grace Commission

Preface
xii

1985 Center for Strategic and International Studies

1986 Blue Ribbon Commission (Packard Commission)

1988 The Defense Management Challenge—Harvard 

Business School, J. Ronald Fox

1989 Secretary of Defense Management Review

1989 Affording Defense—Jacques S. Gansler

1989 New Weapons, Old Politics—Thomas L. McNaugher

1990 Defense Science Board Streamlining Study

1993–1994 Defense Science Board Streamlining Task Force

1993–1998 Defense Acquisition Reform Initiatives

1995 Defense Conversion—Jacques S. Gansler

2005 Reexamining Military Acquisition Reform—Rand 

Corporation

2006 Comparative History of DoD Management 

Reform, Naval Post Graduate School 

2006 Office of the Secretary of Defense Acquisition 

Performance Assessment (DAPA)

2007 Commission on Army Acquisition and Program 

Management in Expeditionary Operations

2007 Defense Acquisition: Options for Congress—

Congressional Research Service (CRS), Stephen 

Chadwick

2009 Creating a DoD Strategic Acquisition Platform—

Department of Defense and the Defense Science 

Board

2009 CNA Independent Assessment: Air Force 

Acquisition

Despite the many studies and the similarity of their findings, 

major defense programs still require more than fifteen years to 

deliver less capability than planned, often at two to three times 

the initial cost. Most attempts to implement improvements in the 

management of the defense acquisition process during the past fifty years have fallen short of their objectives. It is increasingly evident that barriers to improving the acquisition process derive, not 

from a lack of ideas, but from the difficulties encountered by senior 

government managers (in Congress as well as in the Department 

of Defense) in identifying and changing counterproductive incen-
xiii

tives for government and industry. There seems to be little hope of 

solving the chronic problems if the usual attempts at reform are 

tried once again. A more comprehensive approach is required—

one based on a better understanding of how and why the Defense 

Department and its contractors work they way they do and how 

government and industry incentives stimulate and reinforce the 

seemingly intractable problems.

This monograph discusses reform initiatives from 1960 to 2009 

and concludes with prescriptions for future changes to the acquisition culture of the services, Defense Department, and industry. 

The acquisition process has a number of built-in, even cultural, 

aspects that resist change. These include a workforce frequently 

with too little training, experience, and stable tenure to monitor 

and manage huge defense acquisition programs; the short tenure 

of senior politically appointed acquisition officials, averaging a 

mere eighteen months in office; an irregular and erratic flow of 

weapons systems appropriations; the very nature of cutting-edge, 

highly risky research and development; an ill-informed requirements process that virtually mandates changes to contracts as 

requirements are added or changed; and the many financial incentives that reward lowball contractor bids and provide negative 

sanctions for failing to spend all allocated funds. These cultural 

challenges within the current acquisition system have great value to many key participants in industry, the services, and Congress and predispose them to be generally resistant to change. 

In addition to the contributions made by David Allen, Thomas 

Lassman, Walton Moody, and Philip Shiman, many others played 

an invaluable role in producing this publication. Richard Stewart, CMH chief historian, suggested this publication, reviewed the 

chapters, and provided helpful comments. Office of the Secretary 

of Defense historian Alfred Goldberg, along with historians Nancy 

K. Berlage and Glen R. Asner, also read my draft material and provided comments and suggestions. 

Others at CMH also greatly contributed to this publication, 

most notably, editor Hildegard J. Bachman and visual information 

specialist Michael R. Gill. 

I would also like to acknowledge the assistance provided by

the Acker Library staff members at the Defense Acquisition University for their valuable assistance in locating names, dates, and 

documents useful in the study of acquisition reform: circulation 

manager Thelma N. Jackson and reference librarians Edward R. 

Fishpaw and Mary T. Klemmt. 

I also benefited from my associations with Jeffrey J. Clarke, 

former chief of military history at CMH, who provided valuable 

advice and guidance throughout the early years of the Defense Ac-
xiv

quisition History Project. Elliott Converse, senior contract historian on the Defense Acquisition History Project, and CMH contract 

historians Walter S. Poole, David G. Allen, Walton S. Moody, and 

Philip L. Shiman, all helped introduce me to the world of Defense 

Department historical research.

Acknowledgments would be incomplete without mentioning 

the immense help I received early in my career at the Harvard 

Business School from faculty colleagues Robert N. Anthony and 

J. Sterling Livingston who introduced me to the topic of defense 

acquisition in the 1960s. I am also indebted to the immeasurable support and assistance I received in those early years from a 

highly competent and dedicated public servant, Thomas D. Morris, 

then-assistant secretary of defense.

Finally, I am grateful for the encouragement and very helpful 

reviews of each draft of this manuscript by my wife and partner, 

Dorris. She has consistently been a morale builder as well as a 

careful, conscientious, and critical reader. 

Any errors or inaccuracies in the text are, of course, the responsibility of the author.

Boston, Massachusetts J. RONALD FOX

31 October 2011
DEFENSE 

ACQUISITION

REFORM

1960–2009

AN ELUSIVE GOAL

ChapterOne

The U.S. Defense Establishment

The U.S. Department of Defense (DoD) is by far the largest 

and most complex business organization in the world. It operates more than 5,400 installations worldwide and executes more 

than 15 million contracts per year.1 It also develops and produces 

the most sought-after weapons and equipment in the free world.

In 2009, the Defense Department employed more than 4.6 

million Americans: 1.4 million active military personnel, 718,000 

civilian DoD employees, more than 800,000 National Guard and 

reservists, 1.5 million military retirees, and an estimated 250,000 

private-sector employees. Among full-time DoD employees are 

tens of thousands of military and civilian personnel who work 

on multibillion-dollar weapons and equipment development and 

production programs.2 They include contracting officers, program 

managers, plant representatives, engineers, cost estimators, 

pricing specialists, auditors, inspectors, and their superiors up 

the chain of authority to the secretary of defense.

The Defense Contract Management Agency operates over 

900 offices around the world, staffed by 18,697 contractors, to 

oversee 324,296 active contracts totaling $2.4 trillion.3 

The defense budget is described in various ways. The term total 

obligational authority refers to the value of the congressionally approved defense programs for each fiscal year, regardless of the financing method (which could include balances available from prior years, 

other resources available from prior years, or resources available 

from the sale of items in inventory). The term budget authority, on 

the other hand, refers to the value of annual new authority to incur 

obligations. Outlays refer to expenditures or checks issued. Defense 

outlays are often presented in terms either of a percentage of the 

gross domestic product (GDP) or of total federal outlays (see Table 1).

1 Office of Management and Budget, Executive Office of the President, Management 

of the United States Government, Fiscal Year 2007 (Washington, D.C.: U.S. Government 

Printing Office, 2008). 2Department of Defense Statistical Information Analysis Division, Workforce 

Publications. See also Department of Defense, Office of the Assistant Secretary of Defense 

(Comptroller), “The Defense Budget and Future Years Defense Program, FY 2006–2011.” 3Defense Contract Management Agency (DCMA) Fact Sheet (Alexandria, Va.: 31 

March 2009). 

THE DEFENSE ACQUISITION PROCESS
Table 1—Defense Outlays, FY 1950–FY 2008 

Fiscal Year Percent of Gross 

Domestic Product

Percent of Total 

Federal Outlays

1950 4.9 27.4

1955 9.1 51.3

1960 8.2 45.0

1965 7.4 38.7

1970 8.1 39.4

1975 5.6 25.5

1980 5.0 22.5

1985 6.2 25.9

1990 5.2 23.8

1995 3.7 18.2

2000 3.0 16.5

2001 3.0 16.4

2002 3.4 17.3

2003 3.7 18.7

2004 4.0 19.9

2005 4.0 20.0

2006 4.0 19.7

2007 4.0 20.2

2008 4.1 19.3

Source: Joint Economic Committee, Office of Management and Budget, 

and Congressional Budget Office. 

Note: See Federal Outlays table at http://www.house.gov/jec/fiscal/

budget/restrain/update/tbl-4.gif and also Center for Strategic and Budgetary 

Assessments, Washington, D.C. The 2008 data is from the Congressional 

Budget Office “Total Federal Spending Outlays” and USGovernmentSpending.

com. 
THE DEFENSE ACQUISITION PROCESS 3

The defense budget is distributed among the military services and a variety of smaller defense agencies, although not 

equally. In the 1980s, the Army share of the budget authority was 

about 30 percent less than the share for either the Air Force or 

the Navy. In 2009, the Army share was approximately 40 percent higher than that of the Air Force or the Navy (see Table 2).4

 In 1965, 43 percent ($50.6 billion) of the total federal outlays 

were devoted to national defense and 57 percent ($60.6 billion) to 

social programs and entitlements. In 2009, the percent devoted to 

national defense had fallen to 22 percent ($661.0 billion) and social 

programs and non-defense outlays had risen to 76 percent ($2.3 

trillion) (see Figure 1). 

From World War II until the 1970s, military research and development (R&D) constituted by far the largest single share of the 

total federal R&D effort. In 1960, for example, the Defense Department’s R&D budget was $5.6 billion, of a total federal R&D budget 

of $8.7 billion, or 64.4 percent.5By 2007, the U.S. defense R&D budget had risen to $69.3 billion, accounting for 50 percent of the total 

federal R&D budget of $137.2 billion.6

4Office of the Assistant Secretary of Defense (Comptroller), “National Defense Budget 

Estimates,” 2008 and 2009. 5Office of Management and Budget (OMB), U.S. Federal Budget, 2007 (Washington, D.C.: 

U.S. Government Printing Office). 6OMB, Special Analyses of the Budget of the U.S. Government, Fiscal Year 1972 and 

Fiscal Year 2007 (Washington, D.C.: U.S. Government Printing Office, 1972 and 2008).

Table 2—DoD’s Budget Authority by Component (in Millions of Dollars) 

Fiscal Year 2009 Percent of Total 

Army 233.0 41.4

Navy 166.1 29.5

Air Force 163.5 29.1

TOTAL 562.6 100.0

Source: Office of the Assistant Secretary of Defense (Comptroller), 

“National Defense Budget, Financial Summary Tables,” 2009.
$100

$1,000

$900$800$700$600$500$400$300$200

$2,400$2,300$2,200$2,100$2,000$1,900$1,800$1,700$1,600$1,500$1,400$1,300$1,200$1,100

1955 1970 2008 2007 1995 1990 1985 1975 2009 1965 1960 1980 2000 2005

Defense Outlays

Non-Defense Outlays

Year

Figure 1—Total Federal Outlays: Non-Defense and Defense (in Billions of Dollars)

Source: Office of Management and Budget, Historical Tables, Outlays by Function and Subfunction
THE DEFENSE ACQUISITION PROCESS 5

Major Weapon Systems

The Defense Department contracts for and oversees the research, 

development, and production of weapon systems and equipment on 

time and at a reasonable cost. In pursuit of this mission, DoD engages 

tens of thousands of prime contractors—including most of the major 

firms in the United States—and tens of thousands of suppliers and 

subcontractors.7 

The defense acquisition structure consists of three interrelated 

and interdependent systems. The first is the requirements system, 

currently the Joint Capabilities Integration and Development System 

(JCIDS). The second is the Planning, Programming, Budgeting, and 

Execution System (PPBES, formerly PPBS), the primary resource allocation process for DoD. The third is the Defense Acquisition Process, 

known as the acquisition or procurement system, also referred to as 

“little a” acquisition. These three systems do not report to or fall under 

an overarching system, but they operate in a manner similar to a system of systems and are referred to as “Big A” acquisition.8

The PPBES was originally called the Planning, Programming, 

and Budgeting System (PPBS), first implemented in the early 1960s 

by then-Secretary of Defense Robert S. McNamara. Planning and programming activities occur in even-numbered years (called on-years) 

while budgeting and execution activities occur in both on-years and 

off-years (odd-numbered years).9

Since the late 1950s and early 1960s, the major products of the 

defense industry have been described as weapon systems. The term 

weapon system—or often major weapon systems or major programs—

refers to technically complex items such as aircraft, missiles, ships, and 

tanks. A weapon system includes not only the major item of equipment 

itself but also the subsystems, logistical support, software, construction, and training needed to operate and support it. Subsystems can 

include power plants; armaments; equipment for guidance and navigation, ground support, test and checkout, maintenance facilities, communications, and training; spare parts; and technical data, including 

operating and maintenance handbooks and parts catalogs. (In 2009, 

major systems were those whose estimated research, development, 

test, and evaluation [RDT&E] costs were $365 million or more in fiscal 

7DCMA Fact Sheet, 31 March 2009.

8Congressional Research Service (CRS) Report for Congress, “Defense Acquisition: 

Overview, Issues, and Options for Congress,” RL34026, 20 Jun 2007, p. 3 (hereafter cited as 

CRS Report, 20 Jun 2007). 9Department of Defense (DoD) Directive 7045.14, “The Planning, Programming, and 

Budgeting System (PPBS),” 22 May 1984; DoD Instruction 7045.7, “Implementation of the 

Planning, Programming, and Budgeting System (PPBS),” 23 May 1984; CRS Report, 20 Jun 

2007 pp. 7, 9.
6 DEFENSE ACQUISITION REFORM, 1960–2009

year [FY] 2000 constant dollars, or whose production costs were estimated to be $2.19 billion or more in FY 2000 constant dollars).10

One result of the amorphous nature of the term weapon system

is that there is no general agreement among DoD, Congress, Office of 

Management and Budget, and U.S. Government Accountability Office 

(GAO) (formerly the U.S. General Accounting Office) on what is and is 

not included in a cost estimate. (The Defense Acquisition University 

defines weapon systems cost simply as the sum of the procurement 

cost for prime mission equipment and the procurement cost for support items.) Two or more organizations (that is, Office of the Secretary 

of Defense, a military service, or Congress) preparing separate cost estimates for the same weapon system can make different assumptions 

about the development program, spare parts, logistics, training, or any 

of a variety of associated hardware and service costs. Hence, the same 

weapon system can be identified with widely differing cost estimates 

at different times.

During the 1980s and 1990s, increasing percentages of the defense 

budget were devoted to major weapon systems. In 2009, ninety-six major defense systems were at various stages of development and production. Programs included jet fighters, bombers, and transport aircraft; 

new combat and support vessels; and thousands of tanks and cannoncarrying troop transports, strategic and tactical missiles, and satellite 

programs. The GAO reported that the estimated total investment in 

those programs had grown from $1.2 trillion to $1.6 trillion (FY 2009 

dollars) since 2003. The $1.6 trillion amount exceeds the total gross national product of all but the seven largest economies of the world (United 

States, China, Japan, Germany, France, United Kingdom, and Italy).11

Major weapon systems development and production programs are 

technologically advanced and complex. Indeed, they are often designed 

to achieve performance levels never before realized, using many components and some materials never before used in military applications. 

Production is characteristically low volume, with the final cost of a major system frequently running into billions of dollars. This substantial 

expenditure of time and money occurs in an environment of rapidly 

evolving technology and unexpected changes in priorities for individual programs. This predicament creates an environment of uncertainty 

and risk for buyer and seller alike, exacerbated by the difficulties in 

estimating technical performance, development time, and cost. 

10 DoD Instruction 5000.02, “Operation of the Defense Acquisition System,” 8 Dec 2008.

11Major systems are those requiring more than $365 million in research and development 

or $1 billion in production (fiscal year [FY] 2000 dollars). DoD Directive 5000.01, “Acquisition 

of Major Defense Systems,” 8 Dec 2008, p. 33. See also U.S. Government Accountability Office 

(GAO) Report, Major Weapon Systems Continue to Experience Cost and Schedule Problems, 

GAO–06–368, Mar 2006.
THE DEFENSE ACQUISITION PROCESS 7

Military aircraft illustrate the complexity of modern weapon 

systems. The Air Force F–22 is an advanced fighter aircraft that 

replaces the F–15 as America’s front-line, air superiority fighter. 

Prior to its full-scale development, a four-year demonstration/validation phase was conducted for the program. Thirty-nine percent of 

the F–22 aircraft is fabricated with titanium and 24 percent from 

composite materials. More than 240 firms in 37 states participate 

in the development and production program. The empty weight of 

the aircraft is 31,670 pounds and the wing area is 840 square feet. 

The aircraft has two engines generating 35,000 pounds of thrust, 

enabling the F–22 to travel at a speed of Mach 1.8 and perform tactical maneuvers at an altitude of 12 miles, twice the altitude at which 

other jets can perform tactical maneuvers. The F–22 was originally 

expected to cost $88 billion in 2009 dollars for 648 aircraft. In March 

2009, the program was estimated to cost $73.7 billion for the much 

smaller quantity of 184 aircraft.12

The amount of electronics equipment in a modern fighter aircraft is 

astounding. An Air Force general captured the essential change: “In the 

past, the Air Force used to buy airplanes and add electronics. Today the 

Air Force buys computers and puts wings on them.”13Forty percent or 

more of the funds for DoD aircraft are spent on electronics equipment.

Managing the cost, schedule, and technical performance of major acquisition programs becomes more complex as technology advances. It is virtually impossible for any one individual—or any one 

contractor—to comprehend every aspect of the research, engineering 

design, and production stages of a major acquisition program. These 

programs usually extend for ten years or more, during which time 

many thousands of components must be designed and manufactured 

to work together as a unit. Individuals and firms involved in defense 

work become increasingly specialized, as does the equipment employed. Coordination of the many operations of acquisition is itself a 

major Defense Department activity.

Defense Acquisition Historical Perspective

Since the earliest days of our nation, U.S. military forces have 

relied on private enterprise to supply the material, equipment, and 

services needed in peace and war. Although the government has 

always manufactured some war materials—especially ammunition—at no time have the armed forces been fully independent of 

12 GAO Report, Major Weapon Systems Continue to Experience Cost and Schedule 

Problems, GAO–06–368, Mar 2006. See also Artemis March, “Note on the Aerospace Industry 

and Industrial Modernization,” Harvard Business School Note 0–687–009, under the 

supervision of Professor David A. Garvin. 13Quotation from Rick Atkinson and Fred Hiatt, “Military in a Fix,” Washington Post, 18 

August 1985.
8 DEFENSE ACQUISITION REFORM, 1960–2009

the private sector in meeting their needs. Food, clothing, and ordinary necessities have always been supplied by contract. Ordnance 

and ships have also been supplied primarily by private industry, 

although government shipyards and arsenals have played an important role.14

Few would challenge the statement that U.S. defense weapons 

and equipment are among the best in the world. Throughout the 

past forty years, the defense industry has attracted outstanding 

scientists and engineers. The industrial firms that design and produce weapon systems are among the largest in the country. The 

managers of these firms are trained and experienced technical experts who understand the rewards and penalties inherent in the 

process, and usually produce attractive profits for defense firms. 

Before and during World War II, the defense industry was usually compared with typical manufacturing industries, such as the 

auto industry. Since the late 1950s, however, the defense industry 

has been compared with custom design and development industries, in which contracting plays a major role. The Armed Forces 

Journal used the housing industry in a simple analogy.

The housing contractor hires an architect and before the first 

board is cut, unless he has another development down the road, 

the contractor has to reduce the architect’s effort to part time, 

or get the customer to agree to keep the architect on the payroll 

full time while the job requires the architect part time. The same 

thing follows with the carpenters, electricians, plumbers and roofers. In the aerospace business, a major effort is made by one or 

more firms to obtain a contract to develop and produce a defense 

program. Some preliminary design is accomplished, some computer modeling, and some independent research and development 

(R&D). Usually a large engineering team is amassed to demonstrate to the military buyers that the company has the capability 

in place to do the job. If the contract award is delayed, as is often 

the case, this high-cost team can stand virtually idle for months. 

In the absence of a rigorous determination to keep costs low, costs 

to the company and to the Government for these programs can be 

astronomical.15

In the 1950s, following a decline in the business of major defense companies after World War II, there was an expansion in the 

development and production of weapons and equipment. By 1959, 

14 Richard J. Bednar and John T. Jones Jr., “The Role of the DoD Contracting Officer,” Draft 

Report of the American Bar Association Section of Public Contract Law, Ad Hoc Committee, 

John E. Cavanagh, chairman, 11 January 1987, p. 23. 15R. Jameson, Armed Forces Journal, 6 January 1969. 
THE DEFENSE ACQUISITION PROCESS 9

the trend was away from long production runs to more research, 

development, testing, and evaluation.16 Emphasis was placed on 

the development and production of weapon systems that incorporated the most advanced technological innovations. Toward the 

close of the 1950s, heavy reliance was placed on sole-source procurement. By 1960, for instance, a majority of the contract awards 

made by the military services were noncompetitive, and more than 

40 percent were cost-plus-fixed-fee contracts.17

David D. Acker, a member of the Defense Systems Management 

College during the 1970s and 1980s, characterized the defense acquisition environment of the 1950s.

Money was authorized to develop almost any new defense system 

that appeared capable of giving the United States a performance 

advantage over any potential adversary. Such considerations as 

“should cost,” “design-to-cost,” and “life-cycle cost” were not uppermost in the minds of defense planners until the late 1950’s. 

Both development and production were carried out under cost-reimbursement contracts. In this environment, production costs did 

not pose a major constraint on engineering design. When a design 

was discovered to be impractical in production—or to be inoperative in field use—it was modified in accordance with governmentfunded engineering changes.

 The lack of a well-organized and integrated DoD financial management system, along with the practice of “piecemeal” procurement, led to unstable employment in the defense industry and 

the emergence of a transient work force. Many of the contractors 

being challenged to develop and produce defense systems on the 

outer fringes of technology found it difficult to create and maintain smoothly functioning program management teams.18

The Rand Corporation reports that before the 1960s there 

was no formal acquisition policy across DoD, largely because the 

secretary of defense either did not have the authority or did not 

choose to enforce such a policy. When the Department of Defense 

was established, in 1947, it was by design a loose confederation 

of the three military departments, and the secretary of defense 

was limited to providing general direction to those departments.19

16David D. Acker, “The Maturing of the DoD Acquisition Process,” Defense Systems 

Management Review (Summer 1980): 14. 17Charles J. Hitch, “Evolution of the Department of Defense,” in American Defense Policy, 

3d ed., eds. Richard Head and Eavin J. Rokke (Baltimore: Johns Hopkins University Press, 

1973), p. 347. 18Acker, “The Maturing of the DoD Acquisition Process,” p. 14.

19Hitch, “Evolution of the Department of Defense,” p. 347.
10 DEFENSE ACQUISITION REFORM, 1960–2009

The first secretary of defense, James V. Forrestal (1947–1949), lost 

no time in recommending that “the statutory authority of the Secretary of Defense should be materially strengthened . . . by making it 

clear that the Secretary of Defense has the responsibility for exercising direction, authority and control over the departments of the National Military Establishment.”20 That power was only slowly granted, 

however, and throughout the 1950s, the individual services generally 

ran their own acquisition programs with very little interference from 

the Office of the Secretary of Defense (OSD), each service buying the 

weapon systems suitable for the kind of conflict it envisioned. The 

higher military budgets, resulting from the increased international 

role of the United States following the Korean War, presented this 

decentralized decision-making system with a twofold challenge: (1) 

efficient management of the first peacetime defense industry in U.S. 

history and (2) effective coordination of military R&D efforts.21

In the late 1950s, Brig. Gen. Bernard A. Schriever developed 

the weapon systems management concept and adopted the acquisition strategy of “concurrency” of development and production 

efforts while overseeing the development of the U.S. intercontinental ballistic missile (ICBM). At the same time, the military 

services began adopting program management in managing major acquisition programs. Development and production work required for each weapon or equipment program, formerly managed by functional departments within each military service, 

were brought together into one enterprise, known as a program 

(or project) management office, or, simply, program office. This 

change was made to smooth the transition from engineering to 

production and to allow for the consideration of such issues as 

operational support and maintenance during the early design 

phases. The concept of the program office meant that the development and production of a major weapon system was to be 

managed by a program manager, serving as the single individual 

in the program office responsible for all facets of the office’s operations. The program manager was usually supported by a staff 

that could include engineers, logisticians, contracting officers and 

specialists, budget and financial managers, and test and evaluation personnel, who were responsible for their individual functions but would also provide guidance and advice. In addition, 

before a program office could engage in business with private industry, a contracting officer must become involved. Only contract20First Report of the Secretary of Defense, 1948 (Washington, D.C.: U.S. Government 

Printing Office, 1948), p. 3. 21Staff Report to the Senate Committee on Armed Services, “Defense Organization: The 

Need for Change,” 16 Oct 1985, p. 530.
THE DEFENSE ACQUISITION PROCESS 11

ing officers were authorized to execute contracts with industrial 

firms; they had a mandate to comply with government policy and 

to ensure fairness in government-business practices.22 Program 

managers were usually military officers. Since the 1960s, each 

military service has organized its acquisition activities into system commands overseeing the performance of a number of research, development, and production programs and/or providing 

assistance to the programs.23

DoD program offices are responsible for ensuring that the acquisition of major defense programs is accomplished efficiently and 

effectively.24 Surprisingly, however, DoD provides its contractors 

with few incentives to control and reduce costs. In fact, through 

its profit policy and source-selection process, it often inadvertently 

does just the opposite—rewards cost increases and penalizes cost 

reductions.

For each weapon system, the military services usually contract 

with one firm (a prime contractor) for system design and integration functions. With limited exceptions (for example, governmentfurnished equipment), the prime contractor directs subordinate 

contractors (subcontractors), who develop and produce particular 

subsystems and components, which the prime contractor brings 

together to produce a totally integrated defense weapon system.25

Most major defense programs encounter repeated setbacks 

before achieving an acceptable technical performance objective. 

Consequently, most of the military and civilian personnel who remain in Defense Department acquisition are, by temperament, unfailingly optimistic. In dealing with inquiries from Congress, the 

press, or the public, most government (and industry) managers 

downplay the significance of performance failures, cost overruns, 

and schedule changes. Their progress reports and predictions are 

usually positive, no matter what setbacks their programs actually 

experience. The gap between prediction and performance engages 

public attention only when there are significant increases in costs 

or problems in technical performance. These disparities are, however, a fact of daily life.

22GAO Report, DoD Acquisition: Strengthening Capabilities of Key Personnel in Systems 

Acquisition, GAO/NSIAD–86–45, May 1986, p. 10; Federal Acquisition Regulation (FAR), 

Subchapter A, Subpart 1.6, Reissue 2005. 23DoD Instruction 5000.02, “Operation of the Defense Acquisition System,” 8 Dec 2008, 

p. 1; Merton J. Peck and Frederic M. Scherer, The Weapons Acquisition Process: An Economic 

Analysis (Boston: Division of Research, Harvard Business School, 1962), pp. 82–83. 24DoD Directive 5000.01, “The Defense Acquisition System,” May 2003; DoD Instruction 

5000.02, “Operation of the Defense Acquisition System,” 8 Dec 2008. 25GAO Report, DoD Acquisition: Strengthening Capabilities of Key Personnel in Systems 

Acquisition, GAO/NSIAD–86–45, May 1986, p. 10.
12 DEFENSE ACQUISITION REFORM, 1960–2009

Defense Acquisition Versus Commercial Operation

In the private-sector marketplace, two exchanges occur when goods 

are produced: income is drawn from those who buy the goods and is 

paid to the producers. The creation of purchasing power is matched by 

the sale of goods, the receipts from which absorb the purchasing power. 

But a government purchase—civilian or military—completes only half 

of the two-way transaction. Charles L. Schultze, former chairman of the 

president’s Council of Economic Advisors, pointed out that in the defense business, although the government pays income to the producers, 

it does not then resell those goods in the marketplace.26Consequently, it 

does not absorb an equivalent amount of income and purchasing power. 

Because the extra income earned in production is not absorbed by the 

sale of an added supply of goods in the market, the government must 

borrow money or levy taxes to absorb the added purchasing power created when goods are produced for it. Although the government need not 

cover every dollar of its purchases by taxes, large-scale failure to absorb 

the added purchasing power—that is, large-scale budget deficits—can 

cause inflation and high interest rates. Under these conditions, purchasing power has been added to the system but not reabsorbed. 

In sum, government purchases do not add to market supply in the 

economic sense of the term. The military nature of the goods, however, is largely irrelevant to economic consequences. If the government 

bought massive amounts of food, clothing, and houses and distributed 

them free of charge, it would add nothing to the economic supply of 

goods in the country. Inflation would result, no matter how “useful” the 

goods in question.

Schultze criticized the frequently heard proposition that the lower 

share of defense spending in the economy of Japan (and to a lesser 

extent, Germany) compared with that of the United States was an important reason for Japan’s higher rate of productivity growth. That assertion is questionable. If the U.S. defense share of the gross national 

product (GNP) were to be at the expense of investment instead of consumption, reduction of investment might indeed lower U.S. productivity and competitiveness. But there is no economic reason, in principle, 

why the United States cannot alter the tax system so that it provides 

revenue to support defense spending by depressing consumption instead of investment. Indeed, if the United States does otherwise, the 

resulting fall in investment has to be recognized as a conscious choice 

and not a characteristic result of defense spending. In any event, Schultze pointed out that in the postwar period there was little evidence that 

the business investment spending share of GNP followed changes in 

26Charles L. Schultze, “Economic Effects of the Defense Budget,” Brookings Bulletin, Fall 

1981. 
THE DEFENSE ACQUISITION PROCESS 13

the defense spending share of GNP, which ranged between 4 and 10 

percent.27That observation has not changed from 1970 through 2009.

Hence, there is nothing inherent in defense spending that leads to 

inflation or lowers productivity, and that should therefore prevent the 

United States from maintaining the spending level it believes necessary for national security, so long as it is willing to pay for increased 

defense spending through higher taxes.

The rules of the game in the defense business differ markedly from 

those in the commercial marketplace. Many authors have sought to 

describe the unusual business environment of the defense industry. 

Defense scholar Robert J. Art points out that in the classic theory of industrial capitalism, the business firm is characteristically autonomous. 

Corporate management is the formal decision maker regarding what 

it will produce, the method of production, quantity, price, and distribution. Moreover, in the commercial marketplace, the pressures of competition compel participants to minimize costs, to a greater or lesser 

degree, on behalf of profits, which, in turn, are the basis for further 

investment by private industrial management.28

In analyzing the defense acquisition process, the classical concepts 

of the industrial firm do not apply: price is usually not an overriding 

factor; product and quantity are determined, not by the management 

of the firm, but by governmental authority; and competition normally 

focuses on proposed design rather than the physical product, and on 

promises of performance rather than the performance itself. For major 

acquisition programs (for example, aircraft, tanks, ships, weapon systems), the supplier often holds a monopoly and the purchaser holds a 

monopsony (i.e., one buyer only).29

Government Acquisition Regulations

DoD procurement activities are governed by three sets of federal 

government regulations. The first set of regulations/directives applies 

to the entire federal government and is contained in the Federal 

Acquisition Regulation (FAR). The second set of regulations applies 

only to DoD and is contained in the Defense Federal Acquisition 

Regulation Supplement (DFARS). The third set of regulations 

applies only to individual DoD components (Army, Navy, Air Force) 

and is contained in component-unique FAR supplements.30

27 Ibid.

28Robert J. Art, “Bureaucratic Politics and American Foreign Policy: A Critique,” Policy 

Sciences (December 1973), cited by Paul M. Bradburn, in “Strategic Postures in the Military 

Aircraft Industry: A Comparison of Two Companies,” paper prepared at Massachusetts 

Institute of Technology, June 1986, p. 16. 29Bradburn, “Strategic Postures in the Military Aircraft Industry,” p. 8.

30Federal Acquisition Regulation System, Jul 2009; U.S. Department of Defense, Defense 

Federal Acquisition Regulation Supplement, 21 Jul 2009. See also CRS Report, 20 Jun 2007, pp. 7, 9.
14 DEFENSE ACQUISITION REFORM, 1960–2009

The regulations governing business operations of the Defense 

Department and private industry have increased markedly since 

World War II. In 1947, the Armed Services Procurement Regulation 

(ASPR) numbered approximately 125 pages; in 2009, Federal Acquisition Regulation and Defense supplements to the FAR, the successors to ASPR, constituted several large volumes, totaling more than 

2,000 pages. Additional regulations by the military services add to 

the regulatory requirements.

Despite their size, these volumes do not cover all acquisition 

requirements. The Office of the Secretary of Defense and the 

military services supplement them with additional directives 

and instructions. A team planning to develop and produce a 

weapon system must conform to DoD Directive 5000.1 and DoD 

Instruction 5000.2, as well as hundreds of directives concerning all phases of the acquisition process, including, for example, 

logistics support, reliability, configuration management, parts 

numbering, milestone reporting, cost estimating, budgeting, 

measuring technical performance, training, and maintenance, 

as well as other matters of varying importance. Since the early 

1970s, the quantity and detail of these government regulations 

have increased.

Participants in Defense Acquisition

The major participants in the acquisition process are Congress, the Office of Management and Budget, the Office of the 

Secretary of Defense, the Office of the Service Secretary, the 

Service Acquisition Executive, the military service materiel 

commands, program management offices, functional support organizations, and industry. Until these groups resolve their differences, little is accomplished. In some instances, the executive 

branch (through OSD and a military department) advocates a 

particular program, but faces serious opposition in Congress. In 

other instances, the administration and Congress agree to adopt 

one system, but industry exerts what influence it has with particular congressional members to obtain certain favorable decisions on another system.31 In many instances, traditional areas 

of responsibility are blurred. For example, Congress has become 

more involved in specifying program technical requirements, as 

when it imposed a weight restriction on the Small ICBM.32

Each participant in the acquisition process exercises an oversight responsibility to ensure that laws and regulations are ob31Defense Systems Management College, “Acquisition Strategy Guide,” Jul 1984, pp. 

2–3. 32 Ibid.
THE DEFENSE ACQUISITION PROCESS 15

served and programs pursued efficiently. Consequently, there 

are numerous oversight and monitoring agencies. The executive 

branch has the Justice Department and the Office of Management 

and Budget; the Department of Defense and each military service 

have an independent inspector general and auditing office; and 

Congress uses the Government Accountability Office for program 

audits and assessment, the Congressional Budget Office for budget 

and program cost estimates, and the Congressional Research Service and Office of Technology Assessment for analyses. Industry 

has its legal resources, Washington representatives, and industry 

associations to protect its interests. The government manager of a 

major systems acquisition program must be sensitive to all participants’ positions and their vested interests.33

(Note: The sections of this chapter beginning with “Defining 

New Defense Systems,” below, along with four subsequent sections—“Congressional Authorization and Appropriation,” “Stages 

in the Acquisition Process,” “The Transition Between Phases,” and 

“Selecting a Contractor”—are included for readers less familiar 

with the defense acquisition process. Readers familiar with the 

process may want to move ahead to “Controlling Schedules and 

Costs,” near the end of the chapter.)

Defining New Defense Systems

As new defense systems emerge over a period of years and improvements are made to existing systems, a large group of people 

in Congress, OSD, and the military services establish priorities 

among major acquisitions. Not only do the decision makers in 

this group change frequently, but so do the perceptions of the 

conditions on which acquisition judgments are based. An individual acquisition program, therefore, is usually subjected to frequent changes in funding, schedules, and technical performance 

requirements.34

The changes are caused by many variables, including altered 

perceptions of

• the current security threat;

• the future threat;

• changes in technology;

• the capability against the current threat;

33 Ibid. 

34GAO Report, Can the United States Major Weapon Systems Acquisition Process Keep 

Pace with the Conventional Arms Threat Posed by the USSR? GAO/PSAD/GP, 27 May 1980, 

pp. 23–24; Defense Acquisition Performance Assessment Report (Washington, D.C.: Office of 

the Secretary of Defense, January 2006), pp. 6–30.
16 DEFENSE ACQUISITION REFORM, 1960–2009

• the best weapon mix to meet the current threat;

• the best mix of systems that can be acquired, given the 

 available funding; and

• congressional support.35

Defense program managers (who must devote a significant 

amount of time to promoting their programs) often view this large 

group of decision makers as impediments to rapid completion of 

their programs. Overseers within the higher-level decision-making 

groups, reviewing a large number of complex systems on a regular basis, may easily lose sight of the uniqueness and importance 

of individual systems. A funding cut of a few million dollars can 

be disastrous to a program manager, whereas to a congressman it 

represents much less than .0001 percent of the defense budget and 

an even smaller portion of the total federal budget.36

The DoD budget, sent to Congress each year, is the result of 

a complicated consensus-building exercise. Literally hundreds of 

organizational units within the Defense Department contribute to 

decisions and their justifications. Each unit has its “staffed” positions and rebuttals representing its perspective on the myriad 

questions needing resolution in the course of developing plans, 

programs, and priorities. Each unit has written operational procedures and regulations governing the flow of information and (especially) paper work that punctuates the process. Finally, the unit 

position from previous years is known and offered as a starting 

point; most changes are therefore incremental.37

Congress authorizes and appropriates funds for all defense 

programs. As it has become much more directly involved with the 

technical details of the acquisition process, Congress has made 

numerous additions or amendments to authorization and appropriation bills, specifying constraints on and objectives for many 

weapon system programs.

The lack of satisfactory information appears to be one of the 

reasons Congress delves into the daily management of the acquisition process and changes funding levels throughout the life of 

a program. Three main reasons why this information may not be 

forthcoming from the Defense Department are as follows:

1. The complexity, advanced technology, and first-of-a-kind 

nature of many weapon systems preclude precise esti35 Ibid.

36 Ibid.

37 Ibid.; Bradburn, “Strategic Postures in the Military Aircraft Industry,” pp. 54–69.
THE DEFENSE ACQUISITION PROCESS 17

mates of schedules, costs, or technical performance. There 

is frequently disagreement over how much information 

should be given to Congress.

2. When there is no general agreement on a well-defined 

mission need, program managers, their staffs, and higher headquarters cannot state confidently how effective a 

weapon will be. Decision makers at all levels become indecisive, and programs stretch out in time.

3. Program managers or their superiors are concerned that 

program funding will be curtailed and promotions may 

not be forthcoming if problems are candidly portrayed. 

DoD Directive 5000.1, “The Defense Acquisition System,” discussed in Chapter Two, provides the policies and principles that govern the defense acquisition system. DoD Instruction 5000.01, “Operation of the Defense Acquisition System,” in turn establishes the 

management framework that implements these policies and principles. The Defense Acquisition Management System provides an 

event-based process whereby acquisition programs proceed through 

a series of milestones associated with significant program phases. 

One key principle of the defense acquisition system is the use 

of acquisition program categories, where programs of increasing 

dollar value and management interest are subject to more stringent oversight. Specific dollar and other thresholds for these acquisition categories are contained in DoD Instruction 5000.02, 

“Operation of the Defense Acquisition System.” The most expensive programs are known as Major Defense Acquisition Programs 

(MDAPs) or as Major Automated Information Systems (MAISs). 

These major programs have the most extensive statutory and 

regulatory reporting requirements. Major acquisition programs 

are defined by the following acquisition categories (ACATs). 

In 2009, ACAT I programs have a dollar value estimated by 

the under secretary of defense for acquisition technology and logistics to require an eventual total expenditure for RDT&E of 

more than $365 million in FY 2000 constant dollars, or for procurement of more than $2.190 billion in FY 2000 constant dollars, 

or one which the under secretary for acquisition technology and 

logistics, as the defense acquisition executive (DAE), designates 

as special interest. ACAT ID programs are those ACAT I programs 

for which the under secretary of defense for acquisition technology and logistics retains Milestone Decision Authority (MDA); 

the “D” in ACAT “ID” refers to the DAE. ACAT IC programs are 

those ACAT I programs for which the DAE has delegated MDA 

to the Component Head, or if further delegated, to the Component 
18 DEFENSE ACQUISITION REFORM, 1960–2009

Acquisition Executive (CAE). The “C” reflects the delegation of MDA 

to the component level.38

ACAT IA programs pertain to the development of an automated information system (that is, a system of computer hardware 

and software, data, or telecommunications) that performs functions such as collecting, processing, storing, transmitting, and displaying information. Excluded are computer resources (hardware 

and software) that are an integral part of a weapon or weapon 

system or used for other highly sensitive information technology 

programs.39

ACAT IA programs either are designated by the MDA as a major automated information system or are estimated to exceed the 

following: 

• $32 million in FY 2000 constant dollars for all expenditures, for all increments, regardless of the appropriation 

or fund source, directly related to the automated information system (AIS) definition, design, development, and 

deployment, and incurred in any single fiscal year; or 

• $126 million in FY 2000 constant dollars for all expenditures, for all increments, regardless of appropriation or 

fund source, directly related to the AIS definition, design, 

development, and deployment, and incurred from the beginning of the Materiel Solution Analysis Phase through 

deployment at all sites; or

• $378 million in FY 2000 constant dollars for all expenditures, for all increments, regardless of appropriation or 

fund source, directly related to the AIS definition, design, 

development, and deployment, and incurred from the beginning of the Materiel Solution Analysis Phase through 

sustainment for the estimated useful life of the system.

ACAT II programs are acquisition programs that do not meet 

the criteria for ACAT I but have a dollar value estimated by the 

DoD Component Head to require an eventual total expenditure for 

RDT&E of more than $140 million in FY 2000 constant dollars, or 

for procurement of more than $660 million in FY 2000 constant 

dollars.

ACAT III programs are those that do not meet the above criteria for ACAT I or ACAT II.40

38DoD Instruction 5000.02, “Operation of the Defense Acquisition System,” 8 Dec 2008, 

pp. 12–33. 39 Ibid.

40 Ibid.
THE DEFENSE ACQUISITION PROCESS 19

Congressional Authorization and Appropriation

The contracting authority of DoD and other federal agencies 

is derived from congressional appropriations. Appropriations are 

made for a specified period of time and are usually stated in maximum dollar amounts. Those amounts are often amended one or 

more times a year.

There are three main types of appropriations: no-year, multiyear, and annual (single-year). No-year appropriations remain 

available for obligation until expended, and multiyear appropriations are available for a specific time, such as two or three years. 

Annual appropriations are available for obligation only during the 

current fiscal year, unless otherwise specified by law. Multiyear appropriations are the most prevalent form of congressional funding 

for the R&D and production phases of acquisition programs, and 

annual appropriations are used for operating expenses of federal 

agencies.

Subject to the availability of multiyear appropriated funds, 

Congress occasionally authorizes a government agency to execute 

a contract for more than one year’s requirements for an R&D or 

production program in the hope of achieving schedule and cost 

economies. In these cases, parties to the contract are released from 

their mutual obligations only upon completion or termination of 

the contract. In contrast, a single-year contract (with options for 

extension beyond one year) allows the government the choice of 

extending the contract beyond one year, but it does not give the 

contractor a guarantee that it will do so. Not knowing whether the 

contract will be extended, the contractor usually has little inducement to make cost-reducing investments.

Congress budgets funds for an acquisition program into separate 

appropriations (for example, procurement, construction, or RDT&E) 

for each military service, and there are prohibitions against transferring funds from one account to another to accommodate unexpected 

short-term exigencies.

Reprogramming among appropriations is permissible within 

thresholds ($20 million for procurement and $10 million for RDT&E) 

if certain conditions are met. If thresholds are exceeded, DoD must 

return to Congress for reprogramming or a supplemental appropriation. The military services are allowed to reprogram funds within 

each appropriation without obtaining prior approval from Congress to 

finance cost increases for existing programs, with some exceptions.41

The net result of the congressional funding process is an operating budget with limited management reserves. Almost every program is underfunded, not overfunded. And the buying organizations 

41 Ibid. 
20 DEFENSE ACQUISITION REFORM, 1960–2009

also lack discretionary reserves. Reserves, if identified in the budget 

where congressional staff members can find them, are usually spotlighted, renamed slush funds, and deleted. These actions, in reality, 

punish prudent management.42

The complete absence of management reserves might be less significant if perfect short-term planning were possible. In the main, 

however, program budget estimates are prepared six to twelve months 

before their submission to Congress. Congress then spends the better 

part of a year deciding how much and where to increase or decrease 

requested program funding (usually with little awareness of the resulting imbalances across program phases). It can then be as much 

as two years before all the appropriated funds are actually “outlaid.” 

Hence, the funding requirements can be three to four years out of 

date when the time comes to spend the money.

Stages in the Acquisition Process43

The acquisition of a weapon system is a two-stage process. The 

first stage, development, includes planning, research, testing, and 

evaluation; the second stage is production. Stage one is summarized below in the order in which it has generally occurred.

 1. DoD identifies a security threat or defense operational 

mission. (A military service within DoD would normally 

take the lead in this and each of the following steps.)

 2. DoD, often with suggestions from defense contractors, 

analyzes alternatives, designs an engineering development program to achieve the needed capability, and prepares an acquisition strategy and budget.

 3. Congress authorizes and appropriates funds for the program.

 4. The administration releases funds for the planned program.

 5. DoD and interested contractors develop detailed technical approaches for the program (often simultaneously 

with steps 1 and 2).

 6. DoD prepares a contract statement of work, with formal 

or informal assistance from contractors.

 7. DoD issues requests for proposals (RFPs) to interested 

contractors and arranges pre-proposal conferences for 

bidders.

42Leonard Sullivan, “Characterizing the Acquisition Process,” paper prepared for the 

Defense Acquisition Study, Center for Strategic and International Studies, Georgetown 

University, Jan 1986, p. E–6. 43DoD Instruction 5000.02, “Operation of the Defense Acquisition System,” 8 Dec 2008.
THE DEFENSE ACQUISITION PROCESS 21

 8. Contractors submit proposals to DoD, where they are evaluated.

 9. DoD selects one or more contractors, and the parties sign 

a contract for development of the weapon system.

10. The contractor begins work under the contract and each 

party initiates negotiated changes and modifications 

where required or deemed desirable (often as many as 

several changes a week, usually negotiated with the government monthly).

11. The contractor delivers items to DoD for testing and 

evaluation.

The formal acquisition process normally begins with a threat 

analysis, which evolves into an operational requirement. For example, if the Marine Corps defines a response to a threat for a 

new landing craft with access to a larger percentage of the world’s 

beaches and with a higher speed than that of existing landing craft, 

a military requirement to meet such a gap would be established. If 

the Navy determines that a foreign power has made certain submarine advances, the Navy then defines the need to counter with 

an antisubmarine warfare helicopter with certain capabilities. 

That helicopter is then established as an operational requirement. 

Both requirements would reflect the estimated capabilities of potential adversaries.

There is often an earlier informal acquisition process that has 

its origin in defense laboratories or defense contractor firms, where 

engineers conceive of a new device or a new subsystem. Representatives of a firm may approach a military service, describe how they 

believe a device or subsystem will enhance the defense capability of 

the service, and then help the service prepare the justification and 

RFP to conduct a more formal study of the idea. This assistance nurtures the idea until it evolves into a military requirement.44

A defense firm wishing to obtain a contract to develop a new 

weapon system usually becomes involved in the program two 

to four years before a formal RFP is issued, or it is unlikely to 

qualify as a prospective contractor. This involvement generally 

means assisting the buying service in defining elements of the 

planned weapon system. The cost of conducting this initial work 

generally becomes part of contractors’ overhead costs (for example, bid and proposal expense or independent research and 

development expense), which the Defense Department usually 

reimburses in part or in full. After several firms have completed 

44Background Information, Senior Steering Group, Office of the Secretary of Defense, 

DoD Acquisition Study, 7–8 November 1985, pp. 8.9 to 8.10. 
22 DEFENSE ACQUISITION REFORM, 1960–2009

this work, the sponsoring service generally has sufficient information to request budget authority in the annual request of the 

department.

The acquisition process then proceeds from Definition of the 

Requirement to Materiel Solution Analysis, to Technology Development, to Engineering and Manufacturing Development, to 

Production and Deployment, to Operations and Support. As a 

system moves through the acquisition process, a program management office assumes responsibility for identifying, monitoring, and solving problems that affect schedule, cost, and technical performance. At each milestone, reviewers appraise the 

sources of risk and the progress achieved toward reducing it (see

Figure 2).

The basic DoD Directive for major systems acquisition, 5000.01, 

version 8 December 2008, describes four key decisions and four 

phases of activity in the DoD acquisition process.45DoD Instruction 

5000.02, version 8 December 2008, cites seventy-nine references 

containing information relevant to developing or producing acquisition systems. 

The Materiel Development Decision precedes entry into any 

phase of the acquisition process. It is based on an analysis of user 

needs, technology opportunities, and resources. Competitive prototyping is required during the Technology Development Phase. 

For Major Defense Acquisition Programs (MDAPs), a preliminary design review (PDR) must be conducted before Milestone B. 

PDRs for programs less than MDAPs may be conducted at the most 

appropriate time—either before or after Milestone B; however, a 

PDR that is conducted after Milestone B requires a post-PDR assessment by the Milestone Decision Authority (MDA).

Following the Materiel Development Decision, the MDA may 

authorize a program’s entry into the acquisition management system at any point consistent with phase-specific entrance criteria 

and statutory requirements. Progress through the acquisition 

management system depends on obtaining sufficient knowledge to 

continue to the next phase of development. 

User Needs and Technology Opportunities. The capability 

needs and acquisition management systems use joint concepts, integrated architectures and an analysis of doctrine, organization, training, materiel, leadership and education, personnel, and facilities in 

an integrated, collaborative process to define needed capabilities to 

guide the development of affordable systems. Representatives from 

multiple DoD communities assist in formulating broad, time-phased, 

45DoD Instruction 5000.02, “Operation of the Defense Acquisition System,” 8 Dec 2008, 

pp. 12–28.
THE DEFENSE ACQUISITION PROCESS 23

operational goals and describing requisite capabilities in the Initial 

Capabilities Document. Promising technologies are identified from 

all sources domestic and foreign, including government laboratories 

and centers, academia, and the commercial sector.46

Evolutionary acquisition is the preferred DoD strategy for 

rapid acquisition of mature technology for the user.47An evolutionary approach delivers capability in increments, recognizing up 

front the need for future capability improvements. The objective 

is to balance needs and available capability with resources and to 

put capability into the hands of the user quickly. The success of the 

strategy depends on the phased definition of capability needs and 

system requirements and the maturation of technologies that lead 

to disciplined development and production of systems that provide 

increasing capability over time. 

Materiel Solution Analysis Phase.

48This phase begins with 

the Materiel Development Decision review as the formal entry 

point into the acquisition process. A Materiel Development Decision is mandatory for all programs. The purpose of this phase is to 

assess potential materiel solutions and to satisfy the phase-specific entrance criteria for the next program milestone designated by 

the MDA. Entrance into this phase depends on an approved Initial 

Capabilities Document resulting from an analysis of current mission performance and an analysis of potential concepts across the 

DoD components, international systems from allies, and cooperative opportunities. 

At the Materiel Development Decision review, the Joint Staff 

presents the Joint Requirements Oversight Council recommendations and the DoD Component presents the Initial Capabilities Document, including the preliminary concept of operations, a 

description of the needed capability, the operational risk, and the 

basis for determining that existing capabilities and non-materiel 

approaches will not sufficiently mitigate the capability gap. The 

Director, Cost Assessment and Program Evaluation (DCAPE), or 

the DoD component equivalent, develops and approves the study 

guidance for the Analysis of Alternatives (AoA). The MDA directs 

initiation of the AoA, determines the acquisition phase of entry, 

identifies the initial review milestone, and designates the lead 

DoD component(s). MDA decisions are documented in an acquisition decision memorandum. 

46 Ibid.

47 Ibid., p. 13. 

48 Ibid., p. 15.
Figure 2—The Defense Acquisition Management System

User Needs

Technology Opportunities and Resources

● The Materiel Development Decision precedes entry into any phase of the acquisition management system.● Entrance criteria must be met before entering a phase.

A

B

C IOC FOC

Materiel

Solutions

Analysis

Technology

Development

Engineering and

Manufacturing

Development

Production and

Deployment

Operations

and Support

MaterielDevelopmentDecision

PostPDR A Post- CDR A LRIP/IOT&E

FRPDecisionReview

Pre-Systems Acquisition Systems Acquisition Sustainment

= Decision Point = Milestone Review = Decision Point if PDR is not conducted before Milestone B

LegendCDR = Critical Design ReviewCDR A = CDR AssessmentFOC = Full Operational CapabilityFRP = Full-Rate ProductionIOC = Initial Operational CapabilitySource: Department of Defense Instruction 5000.2, 8 December 2008.

IOT&E = Initial Operational Test and ReviewLRIP = Low-Rate Initial ProductionPDR = Preliminary Design ReviewPDR A = PDR Assessment

(ProgramInitiation)

Figure 2—The Defense Acquisition Management System
THE DEFENSE ACQUISITION PROCESS 25

Technology Development Phase.49 The purpose of this 

phase is to reduce technology risk, determine and mature the appropriate set of technologies to be integrated into a full system, 

and demonstrate critical technology elements (CTEs). Entrance 

into this phase depends on completing the AoA, identifying a proposed materiel solution, and obtaining full funding for planned 

Technology Development Phase activity. 

Prior to Milestone A preceding the Technology Development 

Phase, the Technology Development Strategy (TDS) is submitted 

to the MDA and approved. The TDS documents the following:

a) The rationale for adopting an evolutionary strategy (the 

preferred approach), or using a single-step-to-full-capability strategy (e.g., for common supply items or commercial off-the-shelf items). For an evolutionary acquisition, the TDS includes a preliminary description of how 

the materiel solution will be divided into acquisition 

increments based on mature technology and an appropriate limitation on the number of prototype units or 

engineering development models that may be produced 

in support of a Technology Development Phase.

b) A preliminary acquisition strategy, including overall 

cost, schedule, and technical performance goals for the 

total research and development program.

c) Specific cost, schedule, and technical performance goals, including exit criteria, for the Technology Development Phase.

d) A description of the approach that will be used to ensure 

data assets will be made visible, accessible, and understandable to any potential user as early as possible.50

e) A list of known or probable critical program information 

and potential countermeasures such as antitamper in 

the preferred system concept and in the critical technologies and competitive prototypes to inform program 

protection.51

f) A time-phased workload assessment indentifying the 

manpower and functional competency requirements for 

successful program execution and the associated staffing plan, including the roles of government and nongovernment personnel.

g) A data management strategy.

49 Ibid., p. 16.

50DoD Directive 8320.02, “DoD Data Sharing,” 2 Dec 2004.

51DoD Instruction 5200.39, “Security Intelligence and Counterintelligence Support to 

Acquisition Program Protection,” 16 Jul 2008.
26 DEFENSE ACQUISITION REFORM, 1960–2009

h) A summary of the approved Cost and Software Data Reporting (CSDR) Plan(s) for the Technology Development 

Phase.52

Engineering and Manufacturing Development (EMD) 

Phase.

53The purpose of the EMD Phase is to develop a system or 

an increment of capability; complete full system integration (technology risk reduction occurs during Technology Development); develop an affordable and executable manufacturing process; ensure 

operational supportability with particular attention to minimizing 

the logistics footprint; implement human systems integration; design for producibility; ensure affordability; protect critical program 

information by implementing appropriate techniques such as antitamper; and demonstrate system integration, interoperability, 

safety, and utility. The capability development document, acquisition strategy, systems engineering plan, and test and evaluation 

master plan guide this effort.

At Milestone B, the MDA determines the Low-Rate Initial 

Production (LRIP) quantity for MDAPs and major systems. LRIP 

quantities are minimized. The LRIP quantity for an MDAP (with 

rationale for quantities exceeding 10 percent of the total production quantity documented in the acquisition strategy) is included 

in the first selected acquisition report after its determination. Any 

increase in quantity after the initial determination must be approved by the MDA. The director of operational test and evaluation, 

following consultation with the program manager, determines the 

number of production or production-representative test articles 

required for live-fire test and evaluation and initial operational 

test and evaluation of programs on the OSD Test and Evaluation 

Oversight List. 

Production and Deployment Phase.

54 The purpose of 

the Production and Deployment Phase is to achieve an operational capability that satisfies mission needs. Operational test 

and evaluation determines the effectiveness and suitability of 

the system. The MDA decides to commit the Department of Defense to production at Milestone C and documents the decision 

in an acquisition decision memorandum. Milestone C authorizes 

entry into LRIP (for major acquisition programs), into production or procurement (for nonmajor systems that do not require 

52The Director of Cost Assessment and Program Evaluation (DCAPE) approves the 

CSDR Plan. DCAPE was formerly known as CAIG (Cost Analysis Improvement Group). 53DoD Instruction 5000.02, “Operation of the Defense Acquisition System,” 8 Dec 2008, 

p. 20. 54 Ibid., p. 26. 
THE DEFENSE ACQUISITION PROCESS 27

LRIP), or into limited deployment in support of operational testing for Major Automated Information System (MAIS) programs 

or software-intensive systems with no production components. 

Operations and Support Phase.

55 The purpose of the Operations and Support Phase is to execute a support program that 

meets materiel readiness and operational support performance 

requirements and sustains the system in the most cost-effective 

manner over its total life cycle. Planning for this phase begins prior to program initiation and is documented in the life-cycle sustainment plan. Operations and Support has two major efforts: lifecycle sustainment and disposal.

The program manager works with the user to document performance and sustainment requirements in performance agreements 

specifying objective outcomes, measures, resource commitments, 

and stakeholder responsibilities. The program manager employs 

effective performance-based life-cycle product support planning, 

development, implementation, and management. 

The company that developed the weapon system is normally 

awarded the first (and often subsequent) production contracts. 

Potential cost savings from competition may therefore not be 

realized because of the impracticality of introducing a second 

source or because of a sense of urgency; a second bidding procedure (if included) requires time and money. In addition, both 

the development contractor companies and the military services 

often argue persuasively that the expertise (acquired during the 

development program) required for the first production contract 

cannot realistically be transferred from one contractor to another 

because so many modifications to the design are made during 

initial production engineering. The policy of awarding production 

contracts before prototypes are completely tested makes it even 

more difficult to award the initial production contract to any firm 

other than the developer. For obvious reasons, the development 

contractor encourages this overlap (i.e., concurrency) between development and production.

There is good reason for the impatience of the military to proceed to production. The beginning of the acquisition process—

DoD’s planning and congressional budget hearings—can last from 

12 to 24 months, or longer. Further, more than half the DoD procurement account (for items other than ammunition) is not spent 

until three or more years after Congress appropriates the funds. 

From initial planning to expenditure of funds for production, there 

can be a time lag of eight years.

55 Ibid., p. 28.
28 DEFENSE ACQUISITION REFORM, 1960–2009

The Transition Between Phases

An acquisition program can enter the above framework at any 

one of the three milestones (A, B, or C), depending on factors such 

as technological maturity, when the capability is required and 

when resources are available for the acquisition. Each phase has 

different purposes and entrance criteria, which can be regulatory 

or statutory. During Materiel Solution Analysis, an initial concept developed during the Joint Capabilities Integration and Development System (JCIDS) effort is refined, an AoA is conducted, 

and a TDS is developed based in part on results from the AoA. If 

a program receives Milestone A approval at the end of Materiel 

Solution Analysis, technology risk reduction efforts outlined in 

the TDS are conducted to determine what technologies are appropriate to be introduced into the intended system.56

 If a program receives a Milestone B approval, then the program proceeds to begin development of the capability and reduction of integration and manufacturing risk.57

Milestone C represents the beginning of low-rate initial production, which is intended both to prepare manufacturing and 

quality control processes for a higher rate of production and to 

provide production-representative articles for operational test and 

evaluation (OT&E). Upon completion of OT&E and demonstration of adequate control over manufacturing processes, a full-rate 

production decision may be granted, allowing the program to produce the remaining assets planned for the program. When enough 

systems are delivered and other predefined criteria are met, and 

initial operating capability can be attained, some degree of operations can be achieved. Eventually, full operational capability would 

be achieved when the system is ready to operate as much as required.58

In practice, the lines between phases of the acquisition process 

are frequently blurred because of the iterative nature of development and initial production. Indeed, it has been management of 

the transition from one phase to the next that has posed significant problems for senior defense managers over the years. 

Program appraisal has many possible approaches. Usually, one 

or more technical experts identify particular components of a system being developed and then describe or rate the risk associated 

with each component. Their ratings reflect the level of risk and 

56 Ibid., pp. 2–28.

57CRS Report, 20 Jun 2007, p. 12n23. DoD’s approach to proceeding with detailed design 

and integration of mature technologies while continuing risk reduction of other less mature 

technologies that will be integrated later is called evolutionary acquisition. 58CRS Report, 20 Jun 2007, p. 12.
THE DEFENSE ACQUISITION PROCESS 29

sometimes the consequences of potential technical problems for 

the cost, schedule, or technical performance of the overall system.59

Prolonging the acquisition process is a common occurrence. The 

lengthy acquisition process (ten years or longer) for major weapon 

systems is a central problem and causes substantial cost increases 

as well. 

Selecting a Contractor

The government source selection process includes preparation 

and issuance of an RFP and the selection of one or more contractors. 

The RFP requests whatever information is needed to select contractors who can accomplish the development or production program at 

a reasonable cost. Included in the RFP, and available to contractors 

when preparing their proposals, are the technical, managerial, and 

cost criteria against which the proposals are to be evaluated.60

The secretary of a military service designates the service acquisition executive (or sometimes the secretary himself) to be the 

source selection authority (SSA), and three or more people are assigned to serve as members of a Source Selection Advisory Council 

(SSAC). After a military service has issued an RFP to prospective 

contractors and the contractors have responded with their (multivolume) proposals, the SSAC convenes a temporary committee 

called the Source Selection Evaluation Board (SSEB).61The time 

and effort spent on these evaluations vary widely, but six months 

or more is typical for major acquisition programs.

Most contractor proposals for the development of complex weapon 

systems are subdivided into the areas of technical, management, and 

cost information corresponding with the evaluation criteria. In evaluating the technical information, for example, the SSEB normally 

identifies a number of key technical items that are further divided 

into factors, with chairmen assigned. Factor chairmen evaluate each 

contractor proposal according to their specialty. On large proposals 

there can be more than eighty factors and the total number of source 

selection personnel may exceed two hundred. Factor scores are tallied 

to arrive at an item score; item scores are tallied to arrive at an area 

score. 

The SSEB then prepares and submits an evaluation report to the 

SSAC. If the SSAC decides to assign weights (their use is not mandatory) to areas of contractor proposals, the weights must be assigned 

before receiving contractor proposals. After analyzing the SSEB’s 

findings and applying any weights, the SSAC prepares a report for 

59GAO Report, Technical Risk Assessment, GAO/EMD 86–5, Apr 1986. 60Bradburn, “Strategic Postures in the Military Aircraft Industry,” pp. 54–69.

61 Ibid.
30 DEFENSE ACQUISITION REFORM, 1960–2009

the SSA. The report may or may not recommend a specific contractor, 

depending on the SSA’s preferences. The SSA then selects the winning contractor or contractors based on (1) comparative evaluations 

of proposals, (2) costs, (3) risk assessment, (4) past performance, (5) 

contractual considerations, and (6) surveys of contractor capabilities.

During the source selection process, government personnel at 

times, often through suggestions to improve the quality of all proposals, disclose the technical and design approaches of a company 

as described in its proposal, to other prospective contractors to allow 

them to consider incorporating the proposal’s better or less costly 

features (or both) into their own proposals. Industry generally considers this practice, known as technical leveling, unethical, particularly because it has no counterpart in the commercial marketplace. 

The possibility for technical leveling to unduly influence the ultimate selection of a contractor is substantial.

Controlling Schedules and Costs

Notwithstanding substantial budget increases during the past 

thirty years, major defense programs have repeatedly experienced 

significant schedule delays and cost increases. About nine in ten 

programs exceed initial cost estimates, excluding the effects of 

quantity changes and inflation.62

A review of the history of major weapons procurement reveals that 

the discrepancies between estimated and actual costs have been significant for many years. Some believe the discrepancy is due to deficient 

cost estimating; others believe it is due to deficient cost control, or due 

to both. A 1962 Harvard University study (discussed in Chapter Two), 

based on twelve major weapon programs of the 1950s, concluded that 

development costs were generally significantly higher than originally 

estimated.63Production costs also tended to exceed original estimates 

by significant margins. These systems also experienced schedule delays, which averaged 36 percent beyond the projected time for completion. In the 1960s, cost increases continued to occur on major systems. 

No systems were found that had been completed at the cost projected, 

and none was found to have cost less than predicted.64

62U.S. Congress, Senate, testimony of Norman Augustine, president of Martin Marietta and 

former under secretary of the Army, Hearing before the Committee on Governmental Affairs, 

Acquisition Process in the Department of Defense, 21–27 October and 5 November 1981; Jacques S. 

Gansler, “Program Instability: Causes, Costs, and Cures,” paper prepared for the Defense Acquisition 

Study, Center for Strategic and International Studies, Georgetown University, 1 Mar 1986. 63Peck and Scherer, Weapons Acquisition Process, 1962, pp. 429–30; U.S. Congress, House, 

Committee on Government Operations, Inaccuracy of Department of Defense Acquisition Cost 

Estimates, 16 November 1979, p. 4. 64Report of the Acquisition Cycle Task Force, Defense Science Board, 1977 Summer Study, 

15 Mar 1978, p. 68; House, Committee on Government Operations, Inaccuracy of Department 

of Defense Acquisition Cost Estimates, 16 November 1979, p. 4.
THE DEFENSE ACQUISITION PROCESS 31

Whereas the 1960s and 1970s saw numerous cases of significant cost increases in defense acquisition programs, the 1980s 

and 1990s witnessed even greater cost increases, evidenced by 

OSD records and GAO analyses of cost growth on major acquisition programs.65

In an insightful report issued in 1979 titled Impediments to Reducing the Costs of Weapon Systems, the GAO outlined several aspects of the acquisition process that contribute to the cost of large 

defense programs.66

On government programs, annual congressional review of the 

DoD budget and changing priorities, whether political or military, often mean a change in funding levels on a major program 

one or more times a year. Pentagon and congressional reductions 

in quantities and delays in approving funds frequently disrupt 

the development or production process, thereby increasing the 

unit cost of a weapon system. In particular, funding uncertainty 

makes long-term production planning extremely difficult and decreases the probability that contractors will benefit from any attempt to reduce production costs, increase productivity, or both. 

Because increasing and decreasing labor resources is easier than 

acquiring and disposing of capital investments to cope with fluctuating business volume, defense contractors may elect not to 

invest in labor-saving equipment. As a result, production costs 

remain high.

The Basis for Profits

The bulk of major defense systems acquisition money is expended through contracts. Once the contracting parties agree on 

the estimated costs, profit is negotiated largely as a percentage of 

these costs. 

Unfortunately, this method of contracting also provides little 

incentive for contractors to reduce costs; in fact, it often encourages higher costs. For the past four decades, studies by DoD, the 

Logistics Management Institute, the GAO, and other organizations have concluded that changes in the method by which profits are earned are necessary to motivate contractors to reduce 

costs. In the late 1970s and 1980s, OSD directed DoD negotiators 

to place more weight on invested capital and less on cost in the 

negotiation of profit. In fact, however, this directive produced no 

65GAO Report, Major Weapon Systems Continue to Experience Cost and Schedule 

Problems, GAO–06–368, Mar 2006; GAO Report, Assessments of Selected Weapon Programs, 

GAO–09–326SP, Mar 2009. 66GAO Report, Impediments to Reducing the Costs of Weapon Systems, PSAD–80–6, 8 

Nov 1979. 
32 DEFENSE ACQUISITION REFORM, 1960–2009

more than a minimal shift away from cost-based profit determination. It is not yet clear whether this is because of limited potential benefits to the contractors or the lack of implementation 

skills by government personnel. Although the Defense Department has devised various theoretical incentives for cost reduction, the costs actually incurred on a prior contract usually serve 

as the baseline for negotiating costs of follow-on contracts. Thus, 

a cost-based profit structure discourages the acquisition of plants 

and equipment or any other actions by management that could 

lower the overall acquisition costs to the government.67

One of the most common complaints from defense contractors 

has been that doing business with the government is difficult, time 

consuming, and costly, particularly when compared to commercial 

practices. Indeed, there is no doubt that government procurement 

practices are complex, time consuming, and costly. Two factors contributing to these results are the perceived need by government 

to protect its interests and to provide safeguards for the proper 

expenditure of public funds. 

In addition, the government may seek to use the procurement 

process to help accomplish its socioeconomic objectives. Eligibility for government contracts thus depends on compliance with 

regulations promoting a variety of social objectives.68These objectives include maintaining employee health and safety, protecting 

the environment, supporting small business, supporting minority 

businesses and employment programs, maintaining wage-level supports, aiding the economy and protecting domestic business, encouraging NATO (North Atlantic Treaty Organization) standardization, and providing employment for the handicapped. 

Limited Rates of Production

In the commercial sector of the U.S. economy, production volume is largely determined by company management based on production efficiency and market analyses. In the case of defense systems, however, production rates are often dictated by constraints 

set by Congress, Office of Management and Budget, OSD, and the 

military services and in part by product efficiencies. Major weapon systems, subject to annual review, are often revised numerous 

times. Again, either Congress, OSD, or the military services can 

(and often do) dictate that production of items be conducted at 

less-efficient low rates to ensure that an active industrial base, 

that is, an in-place production capability, is maintained.69

67 Ibid. The comments in this report were as relevant in 2009 as they were in 1979.

68 Ibid.

69 Ibid.
THE DEFENSE ACQUISITION PROCESS 33

Uneconomical production rates of new DoD hardware can also 

result from concurrent development and production, dictating that 

a limited production rate be maintained until the hardware has 

been tested and proved effective. Both new and standard hardware 

may also be produced at a limited rate because sufficient funds are 

not available in the DoD budget to produce a greater number in 

a given year. Whatever the reasons for limiting production to less 

than the optimal rate, the result is often a loss of productivity and 

an increase in the cost of major weapon systems.70

Limitations of Government Program Managers

The acquisition of large defense development and production 

programs poses one of the most challenging industrial management problems in the world. Controlling and reducing costs is difficult in any industry, but even more so in larger and more complex 

engineering development and production programs. Costs tend 

to rise in all organizations unless managers and their staffs are 

skilled in industrial management and determined to control or reduce costs. Yet the Army, the Navy, and, to a lesser extent, the Air 

Force provide limited industrial management training for military 

officers whom they assign to key managerial positions in major 

acquisition programs. Military officers assigned to acquisition programs often have extensive combat arms experience (for example, 

as pilots, ship captains, armor commanders). Government civilians 

as well as military officers assigned to acquisition programs frequently have little or no advanced training and experience in contractor operations and the planning and control of large industrial 

development and production programs.

A procurement system with few cost-reduction incentives, directed by government managers with limited industrial knowledge, skills, and minimal industrial management experience, understandably will have significant cost problems. Given the variety 

of factors described in the preceding paragraphs, it would be surprising if defense programs did not experience significant cost increases.

70 Ibid.

ChapterTwo

DEFENSE ACQUISITION REFORMS 

IN THE 1960s AND 1970s

In 1962 and 1964, two innovative books resulted from a threeyear research project at the Harvard Business School on the development of advanced weapons: The Weapons Acquisition Process: An Economic Analysis, by Merton J. Peck and Frederic M. 

Scherer, and The Weapons Acquisition Process: Economic Incentives, by Frederic M. Scherer.1 The first volume described the basic 

structure of the acquisition process and presented a comprehensive 

economic analysis. The second volume built on the first but focused 

on economic incentives inherent in defense acquisition. 

Peck and Scherer examined six specific problems in the management of research, development, and production programs conducted by industry and Department of Defense (DoD): (1) schedule 

slippage, (2) cost growth, (3) lack of qualified government personnel, (4) high frequency of personnel turnover, (5) inadequate methods of cost estimation, and (6) insufficient training in the measurement and control of contractor performance. Fifty years later, 

acquisition reforms continue to seek remedies to the same problems.

Acquisition Reform During the 1960s—The McNamara Innovations

The Department of Defense Reorganization Act of 1958 authorized the defense secretary to assign the development, production, 

and operational use of weapon systems to any military department 

or service. Although this legislation provided the groundwork for 

the expanding role of the Office of the Secretary of Defense (OSD) 

in the management of defense acquisition programs, the authority 

to direct and control DoD was not fully exercised until 1961 when 

Robert S. McNamara, a former Ford Motor Company executive, became secretary of defense. McNamara believed in active management from the top, choosing to play a role in all aspects of programs 

rather than wait for problems to be brought to his attention.2

1 Merton J. Peck and Frederic M. Scherer, The Weapons Acquisition Process: An Economic 

Analysis (Boston: Division of Research, Harvard Business School, 1962); Frederic M. Scherer, 

The Weapons Acquisition Process: Economic Incentives (Boston: Division of Research, Harvard 

Business School, 1964). 2 Alain C. Enthoven and K. Wayne Smith, How Much Is Enough? Shaping the Defense 

Program, 1961–1969 (New York: Harper & Row, 1971), p. 32.
36 DEFENSE ACQUISITION REFORM,1960–2009

During Secretary McNamara’s first year in office, he decided to 

centralize authority and planning for the defense establishment at 

the OSD level and to decentralize operations to the military services. He achieved the centralization of the planning and operational 

decisions during his term of office, but only partially achieved decentralization of operations.3

The OSD and the military services produced innovations in 

three acquisition areas during the 1960s: program planning and 

selection, source selection and contracting, and management of ongoing acquisition programs.

During the administrations of John F. Kennedy and Lyndon B. 

Johnson (1960–1968), in response to numerous cost overruns of the 

1950s and early 1960s, OSD discouraged the use of cost-plus-fixed-fee 

contracts in favor of fixed-price and incentive contracts, attempting to 

stimulate more rigorous control of costs. In the early 1960s, Secretary 

McNamara (1961–1968) and his Pentagon management team developed and sought to implement a number of additional improvements. 

McNamara centralized the functions of planning, programming, and 

budgeting (subsequently called the Planning, Programming, and 

Budgeting System, or PPBS) in the Pentagon and assigned more decision-making authority to a new staff of younger military and civilian systems analysts working in OSD. PPBS provided the secretary 

and the president with an organized approach to major program decisions and to the allocation of resources within DoD, though it was 

not designed to have a major impact on the acquisition process. These 

organizational changes were intended to improve efficiency and cost 

effectiveness, reduce waste, and also mitigate strong interservice rivalries, which had generated overlapping—and in some cases, such 

as long-range missiles—duplicate weapons programs. 

Another improvement was the creation of the Office of Systems 

Analysis to perform cost-effectiveness studies aided by improved 

cost estimating, with the help of research at Rand Corporation.4

Subsequently, the military services each adopted or strengthened 

their own systems analysis organizations. Some in the military 

services saw this development as a matter of self-preservation, the 

only means by which to survive the more rigorous program evaluations being conducted by the Office of the Secretary of Defense.

To enhance contractor source selection and contracting, several 

improvements were adopted: parametric cost estimating,5 formal 

3 David D. Acker, “The Maturing of the DoD Acquisition Process,” Defense Systems 

Management Review (Summer 1980): 14–17. 4 Background Information, Senior Steering Group, Office of the Secretary of Defense, 

DoD Acquisition Study, 7–8 November 1985. 5

Parametric cost estimating derives cost estimates from employing historical costs 

related to physical or performance characteristics. 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 37

source selection procedures, contractor performance evaluations, 

total package procurement, contract definition, and incentive contracting. In the management of ongoing programs, innovations in 

the 1960s included the adoption of the program manager concept; 

the consolidation of contract administration across the military 

services; the Program Evaluation and Review Technique (PERT) 

for scheduling; the Cost and Schedule Control System Criteria 

(C/SCSC), which subsequently became the Earned Value Management System (EVMS); Systems Engineering; Cost Information Reports; Contractor Funds Status Reporting; Configuration Management; and Technical Performance Measurement (TPM). The large 

number of management innovations taxed the capabilities of the 

services to implement the new techniques.

While these reforms produced a number of positive results, especially in terms of matching available resources to mission requirements, the services continued to resist OSD’s control of the weapons 

acquisition process. Moreover, several well-publicized procurement 

fiascos, most notably the Air Force’s ill-fated F–111 fighter-bomber 

and C–5A cargo transport programs, revealed the limits of McNamara’s centralized management policies vis-à-vis the services. 

The McNamara team also developed and implemented, to greater 

or lesser degrees, a variety of acquisition organizations and techniques, including the Defense Supply Agency, Defense Contract 

Administration Service (DCAS), Defense Contract Audit Agency 

(DCAA), Total Package Procurement (TPP), and the Development 

Concept Paper (DCP), as well as increased competition among prospective contractors.6

Among McNamara’s acquisition improvements, TPP appears 

to have encountered the most serious difficulties in its implementation. It required firms to contract, on a fixed-price basis, for 

both the acquisition program development and production stages 

at the same time, as a means of preventing a winning contractor 

(for the development program) from facing little or no competition 

in bidding on the subsequent production stage. TPP was applied 

on acquisition programs such as the Lockheed C–5A cargo plane, 

the General Dynamics F–111 fighter aircraft, and the Grumman 

F–14A Tomcat fighter aircraft. Each of these acquisition programs 

experienced large cost overruns. TPP was judged to be ineffective 

for two reasons: (1) the military services introduced or allowed numerous contract changes in the programs, thereby obscuring any 

incentives for cost control and accountability for cost growth; and 

6 U.S. Congress, Senate, testimony of Laurence E. Lynn, Professor Public Policy, Harvard 

University, hearing before the Committee on Governmental Affairs, 21–27 October and 5 

November 1981, pp. 133–35.
38 DEFENSE ACQUISITION REFORM,1960–2009

(2) the services, reluctant to incur delays by shifting to new contractors, decided not to enforce most of the fixed-price TPP contracts. In 1966, Secretary McNamara abandoned the TPP concept.7

One of the most important elements in the McNamara approach 

to management during the 1960s was the commitment to centralized decision making in OSD. The new Planning, Programming, 

Budgeting System correlated resource inputs with categories of 

performance (e.g., strategic retaliatory forces, tactical air forces, 

general-purpose forces, and research and development). The newly 

created office of assistant secretary of defense for systems analysis 

employed more than one hundred professional personnel preparing and using parametric cost estimates in cost-benefit analyses 

for use by the secretary of defense and other decision makers in the 

Pentagon. In addition to these centralization initiatives, Secretary 

McNamara’s office issued a number of new acquisition policies and 

directives, including:

•	 Planning procedures for integrated logistics support for 

systems and equipment (the integration of supply and 

maintenance considerations and planning into the systems engineering and design process);

•	 Procedures for contractor proposal evaluation and 

source selection;

•	 Procedures for improved quality assurance (the enforcement of technical criteria governing the quality of materials, data, supplies, and services);

•	 Information systems for planning and control of acquisition schedules and costs;

•	 Value engineering (a program to eliminate or modify unessential equipment features and thus minimize costs);

•	 Configuration management (technical and administrative 

procedures to [1] identify and document functional and 

physical characteristics of a configuration item, [2] control 

changes to those characteristics, and [3] record and report 

change processing and implementation status); and 

•	 Work breakdown structure (WBS) frameworks (productoriented family trees used to subdivide large programs 

into their parts consisting of hardware, software, services, and work tasks that result from engineering efforts 

during development and production of defense systems 

or equipment).8

7 Gordon Adams, Paul Murphy, and William Grey Rosenau, Controlling Weapons Costs: 

Can the Pentagon Reforms Work? (New York: Council on Economic Priorities, 1983), pp. 19–20. 8 Acker, “The Maturing of the DoD Acquisition Process,” pp. 35–37.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 39

New planning and control techniques for streamlining the acquisition process were introduced at a school for Army, Navy, and 

Air Force prospective program managers established by OSD at 

Wright-Patterson Air Force Base in Dayton, Ohio. Several private 

consulting firms also developed and offered acquisition courses for 

training DoD and contractor personnel in these new techniques. 

McNamara promoted the program management concept as a 

means of centralizing responsibility for major acquisition programs. 

One person was to direct and be held accountable for the development and/or production of a weapon system. In testimony before the 

House Appropriations Committee in 1964, McNamara stated:

I want to look to a point of central control and information in the 

form of a program manager for each major weapon system. . . . 

He shall be rewarded in his career for prompt and analytical disclosure of his problems as well as for his successes. This is a key 

position in our military departments, demanding the best managerial talents on which I want to place full reliance for our future 

weapons inventories.9

Unfortunately, limited managerial training available to DoD 

acquisition managers during the 1960s fell far short of the level 

of knowledge and skill required to implement the new policies, 

directives, and techniques.10 After several years of sustained effort, serious cost, schedule, and technical performance problems 

continued to disrupt the acquisition process. Defense critics made 

frequent allusions to the costly discrepancies between projected 

and actual performance by defense contractors. Although the reform concepts appeared sound, their implementation had fallen 

far short of expectations. 

Seven years later, in 1971, Deputy Secretary of Defense David 

Packard told the same committee: 

With the long tradition of putting a general in charge of the battle, or putting an admiral in charge of a fleet, one would think it 

would be easy to get the services to accept the proposition that 

you should have one man with authority in charge of a weapon development and acquisition program. We have been able to get this 

done in a few isolated cases, but it simply has not been fully accepted as a management must by any of the services.11

9 U.S. Congress, House, testimony of Robert S. McNamara, Secretary of Defense, before 

the Appropriations Committee, 1964. 10 J. Ronald Fox, Arming America: How the U.S. Buys Weapons (Boston: Division of 

Research, Harvard Business School, 1974), pp. 198–213. 11 U.S. Congress, House, testimony of David Packard, Deputy Secretary of Defense, before 

the Appropriations Committee, 1971. 
40 DEFENSE ACQUISITION REFORM,1960–2009

Military officers assigned to program management positions 

usually failed to have the requisite training and experience in 

procurement and general business management to oversee and 

negotiate effectively with industrial contractors. Their management assignments were frequently brief due to the established 

military policy of assignment rotations. 

Problems of cost, schedule, and technical performance continued to plague defense acquisition throughout the 1960s. In 1968 

Robert Charles, the assistant secretary of the Air Force, told an 

audience at George Washington University: “A review of six recent 

contracts indicates that actual technical performance of the operational equipment came to less than 86% of the contractor’s proposed technical performance on which the decision to proceed was 

based.”12 In 1969 Robert Benson, who had just completed two years 

as an analyst in the Office of the Secretary of Defense, testified 

during government hearings that “about 90% of the major weapon systems that the Defense Department procures end up costing 

at least twice as much as was originally estimated.” Also in 1969, 

Richard Stubbing, an analyst in the U.S. Bureau of the Budget, 

told the same congressional committee: “Of eleven major weapon 

systems begun during the 1960’s, only two of them had electronic 

components that performed up to standard. One performed at a 

75% level of the technical performance requirement and two at a 

50% level. But six—a majority—of the eleven performed at a level 

25% or less of the technical performance standards and specifications set for them.”13 In the same year, the U.S. General Accounting Office (later called the U.S. Government Accountability Office) 

performed a survey of thirty-eight ongoing major weapon systems 

programs and found cost estimates already 50 percent higher than 

the original contract figures.14

The Transition from Robert McNamara to Melvin Laird

After serving more than seven years as secretary of defense, 

Robert McNamara left the Pentagon in March 1968 to become 

president of the World Bank. Cost growth, schedule slippages, and 

technical performance shortfalls in major acquisition programs, 

combined with the failure of the Total Package Procurement method, prompted President Richard M. Nixon in 1970 to appoint the 

12  Address by the Honorable Robert Charles, Assistant Secretary of the Air Force 

(Installations and Logistics) to the George Washington University R&D [Research and 

Development] Contracts Conference, Washington, D.C., 7 November 1968. 13 U.S. Congress, Joint Economic Committee, testimony of Richard Stubbing, U.S. Bureau 

of the Budget, Hearings on Defense Procurement, Washington, D.C., 10 March 1969. 14 Comptroller General of the United States, Report to the Congress on Major Weapons 

Programs, 1969. 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 41

Blue Ribbon Defense Panel (Fitzhugh Commission). In 1972, Congress appointed the Congressional Commission on Government 

Procurement to identify the causes of weapons cost overruns and 

to propose new methods of cost control.15

As the 1970s began, critics of the Defense Department within 

Congress and the media became more vocal and more persistent. In 

March 1970, the Washington-based Logistics Management Institute 

prepared a preliminary report on government-contractor relationships in defense acquisition. The report summarized the most common shortcomings of the Defense Department management of the 

acquisition process:

First is the observation that the defense acquisition process apparently is out of control. Initial time and cost estimates—and even updated estimates—cannot be depended upon. Mandatory engineering 

changes arise continually throughout the process. Management information and control systems do not identify impending problems 

in time for preventive action to be taken.

Second is the claim that bargaining positions (between government and contractors) are unbalanced; first one side, then the other 

has the advantage. The theory of countervailing pressures acting to 

produce fair and realistic contract terms does not hold. With emphasis on economies of scale and series production, there are only a 

small number of weapon systems competitions each year and prospective contractors believe that their very existence may be jeopardized by failure to win. Hence, the Department of Defense (DoD) is 

in the dominant position and can compel an unreasonable bargain. 

Following award of the contract, the DoD, committed to the timely 

success of the program, is in the weaker position as the sole source 

contractor negotiates for contract changes, product acceptance, and 

follow-on business.

Third is the assertion that incentives both for efficient operation 

and for candor about expectations are lacking. Heavy reliance on 

historical costs in pricing, lack of adequate consideration of capital 

required in negotiating profit rates, and the high risk of low future 

utilization of contractor-owned facilities impede investment and 

modernization of contractor plants. The hazard to program survival, 

of high-costs, schedule delays, or looming technical difficulties, 

as each program competes with others in and out of the DoD, 

motivates optimistic and less than candid forecasts of program 

performance by DoD and contractor personnel alike.

Fourth are allegations of confusion, connivance, and deception by the DoD-contractor combination. Close cooperation and 

15 Adams, Murphy, and Rosenau, Controlling Weapons Costs, 1983, pp. 19–20. 
42 DEFENSE ACQUISITION REFORM,1960–2009

common interest are held in contrast to the arm’s length relationship preferred by much of regulation and policy. Policy notwithstanding, the military departments receive advice and assistance 

from prospective contractors in preparation of requests for proposals. Contractors receive aid from Government personnel in 

performance of contracts, reducing the effectiveness of contracts 

as instruments of control.16

In 1969, at the beginning of Richard Nixon’s first presidential 

term, Melvin R. Laird was appointed secretary of defense. Laird 

was determined to end the Vietnam War he inherited from the prior administration and to improve his department’s standing with 

the American people and Congress. An eight-term representative 

from Wisconsin, Laird had served on the House Appropriations 

Subcommittee on Defense. 

Laird’s mandate for change grew out of an increasing perception that the military establishment, in Vietnam as well as in the 

area of weapons acquisition, had somehow gone astray. The massive 

defense expenditures of the sixties had seemingly failed to provide 

the United States with any discernable military advantage over 

the Communist bloc. Television images in American homes every 

night demonstrated that in Vietnam, expensive high-tech weapons 

did little to affect the bloody stalemate that continued to sap the 

nation’s political will. In both nuclear and conventional arms, the 

Soviet Union appeared to be capable of outproducing the United 

States, threatening to swamp the nation’s forces with relatively 

unsophisticated but nevertheless effective weapons if an all-out 

war ever came. 

In his quest to reform the Defense Department, Laird wanted to move quickly. He needed to end the war in Vietnam and 

to restructure the department’s defense posture in the postwar 

period. In addition, Laird had a self-imposed time limit. The 

new secretary had publicly vowed not to serve beyond the end of 

Nixon’s first term.17

In many ways, the new secretary’s background had prepared 

him for tackling procurement reform. Laird’s connections with 

House and Senate leaders would help smooth over relations 

between DoD and Congress, while his knowledge of the political 

aspects of defense acquisition would help him navigate the 

interrelationship between the military and commercial elites.

16  Report, Logistics Management Institute, The DoD-Contractor Relationship—

Preliminary Review, Task 69–21 (McLean, Va.: Logistics Management Institute, March 1970), 

pp. 8–10. 17 Interv, Defense Acquisition History Project (DAHP) with Melvin R. Laird, 18 Nov 2004, 

Office of the Secretary of Defense (OSD) Historical Office, Washington, D.C., p. 6. 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 43

Although Vietnam absorbed most of Laird’s energies, he refused 

to let the war sidetrack his determination to study and implement 

changes to the Pentagon procurement practices. High-profile 

failures and cost overruns had eroded congressional confidence 

in Defense Department acquisition management, and Laird 

hoped reforms would improve both results and his department’s 

standing on Capitol Hill.

Deputy Secretary of Defense David Packard

In seeking a strong acquisition reform program, Secretary Laird 

brought aboard one of the nation’s most successful industrial managers as deputy secretary of defense. David Packard had honed his 

management skills as the head of Hewlett-Packard (HP), where he 

helped grow the company from a garage workshop into a leading 

electronic instrument manufacturer with over 13,000 employees 

and hundreds of millions of dollars in revenue. Packard was widely 

recognized as a management expert and was well regarded in his 

dealings with the Defense Department relating to the management of defense acquisition programs.18

Packard’s position as a major shareholder of his company initially created a potential problem: how could he, as the secretary of 

defense’s point man on the acquisition of weapons and equipment, 

make decisions that might affect the value of his massive holdings in a major defense contractor? On the other hand, Packard 

explained at his confirmation hearing that he would have to sell 

over three million shares of company stock in order to comply with 

federal conflict-of-interest laws; such an enormous volume of stock 

sales would depress the HP share price and hurt ordinary shareholders.19

Packard solved this problem by arranging to put his holdings in 

trust during his tenure at defense, foregoing all company dividends 

and even any appreciation in the value of his stock.20Laird also barred 

Packard from taking any official actions relating to Hewlett-Packard.21

This arrangement satisfied conflict-of-interest rules but cost Packard 

millions. In his autobiography, he noted that after three years in office 

his “HP stock had increased in value and I estimated that I’d given 

18 Interv, OSD Historical Office with David Packard, 9 Nov 1987, p. 4. 

19 “Nominations of Laird, Packard, and Darden,” Hearings before the Senate Armed 

Services Committee, 91st Cong., 1st sess., 14 January 1969, pp. 61–62. 20 Interv, OSD Historical Office with Packard, 9 Nov 1987, p. 3.

21 Memo, Melvin R. Laird, Secretary of Defense, for Listed Parties, 24 Jan 1969, sub: 

Matters Involving the Hewlett-Packard Company, Comptroller Subject Decimal File, 1969 

(75–0089), box 11, 020 OSD, 69, Record Group (RG) 330, Washington National Records Center 

(WNRC), Suitland, Md.
44 DEFENSE ACQUISITION REFORM,1960–2009

away about $20 million.”22Eventually his commitment to his company 

played a major part in his decision to leave DoD.

Laird gave Packard a free hand to run research, development, 

and procurement functions within DoD and appointed a new team 

to work with Packard in these fields. A key participant was Barry 

Shillito, a former business executive and assistant secretary of the 

Navy for installations and logistics, to serve as assistant secretary of 

defense for installations and logistics. In that position, Shillito would 

oversee weapons system procurement under Packard’s direction.23

Other important members of the Defense Department acquisition team included Assistant Secretary of Defense (Comptroller) 

Robert C. Moot, who had entered office the previous summer and 

had already earned accolades. John S. Foster continued to serve as 

director of defense research and engineering (DDR&E), a post he 

had held since 1965. DDR&E had responsibility for formulating a 

department-wide plan for research, development, test, and engineering, based on the latest threat assessments, technological possibilities, and the requirements of the services.24As the secretary’s 

point man on research and development, Foster also reviewed the 

development status of weapons systems that the services presented to Laird for production approval decisions. 

The Office of Systems Analysis presented a special case. This 

controversial DoD component played a major role in defense acquisition but had fallen into disfavor with Congress.25 The office 

under its initial director, Alain C. Enthoven, took the blame for 

many of the errors that occurred during McNamara’s tenure and 

became the target of service complaints when the office proposed 

procurement targets that differed from the services’ own stated 

requirements.26 Congressman L. Mendel Rivers, who chaired the 

House Armed Services Committee and often sided with the military services, had especially intense feelings against the Systems 

Analysis office. During an appearance by Laird and Packard before 

this committee, Rivers lashed out against the office:

[A]s sure as the sun rises in the heavens and you are sitting 

in that seat, if you retain this organization you are headed for 

trouble with this committee. . . . We have had trouble with that 

Systems Analysis, and we have sworn by the eternal gods that it 

will not run this country any longer, like it did in the other ad22 David Packard, The HP Way: How Bill Hewlett and I Built our Company, eds. David 

Kirby and Karen Lewis (New York: HarperBusiness, 1995), p. 185. 23 Interv, DAHP with Barry Shillito, 6, 8 Jun 2005, p. 17. 

24 Interv, DAHP with John S. Foster, 19 Feb 2003, p. 3.

25 Interv, OSD Historical Office with Packard, 9 Nov 1987, p. 6.

26 Interv, DAHP with Foster, 19 Feb 2003, p. 17. 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 45

ministration. It just about ruined NATO, and it sure ruined the 

Department of Defense.27

Mendel Rivers and other members of Congress resented and were 

unaccustomed to the strong analytical arguments supporting McNamara’s weapons acquisition decisions—arguments that sometimes undermined the non-quantitative judgments of influential members of 

Congress and of a number of senior military officers. Laird named outgoing Assistant Secretary Alain Enthoven’s deputy, Ivan Selin, as acting assistant secretary for systems analysis. But a number of members 

of Congress expected him to clean house so far as Systems Analysis 

was concerned; simply replacing Enthoven with his deputy would not 

do. Congressman Rivers warned Laird about congressional opposition 

to the Systems Analysis office personnel who, in Rivers’ view, allegedly “had injected their own views in strategic and tactical decisions 

to such an extent that they negated the statutory functions imposed 

on the Joint Chiefs of Staff.”28 Not surprisingly, Selin was tarred with 

the same brush as his former boss and could never get Senate confirmation. Senator Barry M. Goldwater wired Secretary Laird in August 

that he was “shocked” to learn that Laird’s nominee “was author of 

[the] report [Senator William] Proxmire used indicating Air Force does 

not want a second buy [of the] C–5A. [He] thought this man [i.e., Selin] 

had departed long ago, for the best interests of defense, urge separation immediately.”29After nearly a year of tension and frustration, Selin gave up and submitted his resignation in late 1969.30The secretary 

reluctantly accepted it and replaced Selin with Gardiner Tucker, who 

served as assistant secretary of defense for systems analysis for the 

remainder of Laird’s term. 

Secretary Laird Creates the Blue Ribbon Defense Panel (1969)

With his acquisition team in place, Secretary Laird began a 

two-track effort to change the way the Pentagon did business. 

While Packard provided the internal push for adoption of his progressive management techniques, an independent outside panel 

reviewed DoD’s practices and organization with the goal of recommending improvements to both. The panel resulted in part from

27 U.S. Congress, House, Hearings before the Committee on Armed Services, 91st Cong., 

1st sess., Military Posture, pt. 1, 1970, p. 1710. 28 Ltr, Congressman L. Mendel Rivers to Packard, 7 May 1969, Deputy Sec Subject File, 

1969 (74–132), box 2, RG 330, WNRC. 29 Ltr, Barry Goldwater to Laird, 21 Aug 1969, Comptroller Subject Decimal File (75–

0089), box 57, 452 (Jun–Aug), RG 330, WNRC. 30 Memo, [Ivan] Selin [Acting Assistant Secretary of Defense for Systems Analysis] to 

Laird, n.d. [11 Dec 1969?]; Memo, Laird to Selin, 17 Dec 1969, both in Comptroller Subject 

Decimal File, 1969 (75–0089), 020 Systems Analysis (Jul 69), RG 330, WNRC. 
46 DEFENSE ACQUISITION REFORM,1960–2009

one of Nixon’s campaign promises to conduct an in-depth study of 

DoD, a proposal that Laird had supported as a congressman. In 

early April 1969, the secretary publicly announced that he would 

appoint a panel to carry out Nixon’s promised study and began the 

process of selecting its members. 

Laird drew the members of the Blue Ribbon Defense Panel, as 

it was known, from a broad spectrum of professions and areas of 

expertise. DoD vetted prospects from non-defense businesses such 

as insurance and cruise lines, from organized labor, and from the 

legal field. The prospects also included bankers, economists, educators, and journalists, though spots were also created for engineers 

and others with a more direct interest in military affairs.31 Laird 

eventually chose Gilbert W. Fitzhugh, the chairman of Metropolitan 

Life Insurance Company, to chair the panel. Fifteen other successful 

candidates joined Fitzhugh on the panel, including other corporate 

executives, attorneys, educators, and even a representative from the 

NFL Commissioner’s office.32

In July 1969, the Blue Ribbon Defense Panel was ready to begin 

work, with a goal of completing its analysis and submitting its recommendations to the president by 1 July 1970. Laird gave the panel a 

four-point charter. He expected them to conduct a one-year study on: 

(1) department organization and management, including the Joint 

Chiefs, defense agencies, and services, as they affected the department’s mission performance and decision-making process; (2) defense 

research and development efforts and their impact on mission fulfillment, costs, organization, time, and relations with the scientific 

and industrial community; (3) department procurement policies and 

practices as they related to costs, time, and quality; and (4) other matters submitted at the secretary’s request.33Such a broad charter could 

potentially produce an overly inclusive and therefore useless survey, 

so Laird urged the panel members to focus on how to help DoD run 

smoothly, rather than try to determine the direction it was headed.34

(The panel recommendations are discussed later in this chapter.)

As Fitzhugh and his colleagues organized their staff and began 

work, the internal activities of Laird’s reorganization effort, led by 

Packard, picked up speed. The secretary had always expected that 

31 Prospect List, Blue Ribbon Defense Panel, n.d., Comptroller Subject Decimal File, 1969 

(75–0089), box 10, Blue Ribbon Defense Panel, RG 330, WNRC. 32 Report to the President and the Secretary of Defense on the Department of Defense, Blue 

Ribbon Defense Panel (Washington, D.C.: U.S. Government Printing Office, 1 July 1970), p. iii 

(hereinafter cited as Blue Ribbon Panel Report). 33 Blue Ribbon Panel Report, p. v.

34 Outline of Remarks of Secretary of Defense Melvin R. Laird to Blue Ribbon Defense 

Panel (24 July 1969), Comptroller Subject Decimal File, 1969 (75–0089), box 10, Blue Ribbon 

Defense Panel, RG 330, WNRC.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 47

his deputy would manage the day-to-day operations of the department while he provided strategic direction and handled external 

affairs, such as relations with Congress. Laird viewed the arrangement like a corporation; he would fill the role of a chief executive 

officer, while Packard would serve as chief operating officer.35

Defense Systems Acquisition Review Council

Given primary authority for determining how the Pentagon did 

business, Packard wasted little time in trying to integrate his HP 

management philosophy into DoD operations. The management by 

objective method had been a “fundamental part of HP’s operating philosophy since the very early days of the company,” Packard 

later wrote. Management by objectives moved away from a tightly 

controlled military management style to “a system in which overall objectives are clearly stated and agreed upon, and which gives 

people the flexibility to work toward those goals in ways they determine best for their own areas of responsibility. It is the philosophy of decentralization in management and the very essence of 

free enterprise.” The philosophy had worked well with HP, a highly 

trained, highly motivated workforce in the private sector. Packard’s management by objective and decentralization would be seen 

repeatedly in the changes he would bring to DoD acquisition.36

Packard’s vision of acquisition reform extended beyond his 

management style. Given his background, it was not surprising 

that he relied on improved technology and believed that the United States could field more capable forces with fewer troops and 

lower financial costs.37 Beginning in early 1969, he set about trying to change the way the military procured such technology in its 

weapon systems. Shortly after taking office, he circulated a letter 

to all DoD personnel reminding them that they needed to continue 

to improve practices and urging them to come forward with specific 

suggestions on improving operations.38Whatever practical effect it 

may have had, the message served notice that the new deputy secretary intended to shake things up.

In May 1969, Packard took a major step to modify DoD’s 

acquisition practices at the highest level, creating a new body to 

advise him of the “status and readiness of each major system to 

proceed to the next phase of effort in its life cycle.”39 He named this 

35 Interv, OSD Historical Office with Melvin R. Laird, 2 Sep 1986, p. 15.

36 Packard, HP Way, 1995, pp. 152–54. 37 Interv, OSD Historical Office with Packard, 9 Nov 1987, p. 18.

38 Msg, Packard to all DoD Personnel, 14 Feb 1969, IV B, box 558, OSD/DOD Organization, 

1969–1972, OSD Historical Office Subject Files; Packard, HP Way, 1995, pp. 176–78. 39  Memo, Packard for Service Secretaries, Assistant Secretary of Defense (ASD) 

Comptroller, ASD (Installation and Logistics [I&L]), Director of Defense Research and 
48 DEFENSE ACQUISITION REFORM,1960–2009

new organization the Defense Systems Acquisition Review 

Council (DSARC) and placed it within the Office of the Secretary 

of Defense. In essence, the new group was to act as a high-level 

source of advice to Packard and Laird on how major weapons 

programs were progressing as they reached critical decision 

points. 

In creating this body, the deputy secretary had not acted alone. 

The idea for DSARC, or something like it, had been circulating 

within OSD prior to Packard’s announcement; Assistant Secretary 

of Defense (Comptroller) Robert Moot and Assistant Secretary 

of Defense for Installations and Logistics Barry Shillito had exchanged proposals on the subject earlier that month. Moot’s belief 

that “the major systems acquisition process needs to be improved, 

coordinating OSD attention from just after the force level decision 

through at least the first production buy.” Moot’s proposed Weapons System Acquisition Review Committee closely resembled the 

body that Packard created.40 According to one source, the concept 

of a review council may have actually originated with Packard’s 

assistant secretaries. Whatever the source, Packard embraced and 

expanded the idea.41

An advocate of pragmatic, flexible management, Packard conceived of the DSARC as a temporary ad-hoc advisory group to help 

him improve the quality of acquisition decisions within DoD.42

Like many of the programs that DSARC evaluated, this simple 

concept eventually evolved into a more complex entity, adding 

new features, growing in size, and extending in time far more 

than its creator had imagined. Packard had hoped that DSARC 

would become a forum in which representatives of the services 

and members of his staff could implement his goal of management by objectives. Ideally, the various parties would use DSARC 

reviews to agree on objectives for each weapon system, which the 

service managing the program would then be free to pursue with 

minimal OSD interference.43

Packard distributed a charter for DSARC, in which he detailed 

the council’s functions. The council would consist of Packard’s prinEngineering (DDR&E), and ASD (Systems Analysis), sub: Establishment of a Defense 

System Acquisition Review Council, 30 May 1969, with attachment, Charter, Defense System 

Acquisition Review Council, VIIIA, box 992: Management, 1969–1970, OSD Historical Office 

Subject Files. 40 Memo, Assistant Secretary of Defense (Comptroller) for Assistant Secretary of Defense 

(Installations and Logistics), 19 May 69, sub: Major Weapon System Acquisition, Comptroller 

Subject Decimal File, 1969 (75–0089), box 54, 400.13 (May 1969), RG 330, WNRC. 41 Interv, DAHP with Shillito, 6, 8 Jun 2005, pp. 19, 26–27.

42 Interv, OSD Historical Office with Packard, 9 Nov 1987, pp. 20–21.

43 Ibid., pp. 21–22.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 49

cipal deputies, the director of defense research and engineering, the 

assistant secretary of defense for installations and logistics, the assistant secretary of defense (comptroller), and the assistant secretary of defense for systems analysis. The charter directed DSARC 

to evaluate each major weapons system at three major decision 

points, or milestones, in the life of a program as it moved from definition to production and deployment. At each stage, DSARC members would draw guidance from the Development Concept Paper 

(DCP), which laid out each program’s characteristics, objectives, 

plans, and performance targets as the basis for approval of program initiation. Thereafter, the DCP served as the basis for monitoring the program against the standards that had been set and 

for approving or disapproving changes beyond the threshold limits 

set therein.44 Packard envisioned DSARC as a complement to the 

DCP, which would continue as the formal Pentagon management 

and decision-making system for major weapons programs. 

Packard’s creation of DSARC marked his first major step to use 

organizational changes to impose his management philosophy on 

DoD acquisition practices. Ideally, DSARC reviews would act as a 

filter, preventing seriously flawed weapons programs from moving downstream through the procurement process from initiation 

to production. The knowledge that major weapons systems would 

have to pass a formal OSD review at three separate stages would 

presumably motivate the sponsoring service to correct major deficiencies before bringing the program before a DSARC review.

Packard viewed DSARC as only a partial and interim step in reforming the acquisition process. In the months following the establishment of this body, Packard’s deputies worked on implementing broader 

changes that would encompass the entire life span of a weapons system, not just three decision points. Efforts to achieve more far-reaching 

reforms raised the question of the extent to which OSD could or should 

become involved in the actual management of acquisition programs. 

Defining the scope of DoD responsibilities for program management 

would presumably help clarify where Packard and his team might 

most profitably direct their ideas for management reforms.

Industry Advisory Council

Shortly after establishing DSARC, Packard began preparations 

for more fully integrating his management philosophy into the 

Pentagon acquisition process. He started with the Industry Advisory Council (IAC) to the Department of Defense, an influential ad44 Memo, John S. Foster for Packard, 7 Jul 1969, sub: Management of Weapons Systems 

Acquisition, Comptroller Subject Decimal File, 1969 (75–0089), box 54, 400.13 (June 1969), 

RG 330, WNRC.
50 DEFENSE ACQUISITION REFORM,1960–2009

visory group of about twenty-five business executives (largely from 

defense contractor firms) who met three times a year at the Pentagon from 1962 to 1972. Packard, who had been chairman of the 

IAC, was highly critical of and had strong opinions about military 

procurement, especially the catastrophic results brought about by 

Total Package Procurement.45

As defense deputy secretary, Packard established several IAC 

panels to study the acquisition process and recommend changes. In early 1969, Packard created “Panel A,” chaired by Foster, 

to “study and review ways and means of increasing the effectiveness of the major systems acquisition process.”46Panel A presented 

its preliminary findings in mid-June. It reported that during the 

1950s and 1960s, acquisition programs suffered from chronic cost 

overruns and development delays, despite attempts by earlier defense secretaries to fix the process. Given the complexity of the 

systems involved, Panel A warned that “although we can expect 

improvement, we can never expect perfection.”47 In addition to cost 

growth and schedule slippage, the panel identified other current 

problems such as changes inserted in operational performance objectives and a lack of clearcut delegation of authority to and within 

the services. 

The panel criticized both the concept formulation and program 

execution stages of current acquisition programs. The concept 

formulation problems included inadequately defined operational 

performance objectives, insufficient hardware demonstration, unreliable cost estimates, insufficient initial funding, and premature 

commitment to system development that left major technological 

problems unsolved. Once acquisition programs were under way, 

management weaknesses contributed to poor control over results. 

Panel A found program management deficient due in part to excessive high-level meddling in details of development and production. 

The proliferation of management systems among different government offices added to these difficulties, as did a lack of highly qualified program managers in the services. All of these management 

weaknesses exacerbated the problems created when the services 

45  On Packard’s independently arrived at views on Total Package Procurement and 

competitive prototyping, see Michael S. Malone, Bill & Dave: How Hewlett and Packard Built 

the World’s Greatest Company (New York: Portfolio, 2007), pp. 257–60. 46  Memo, Office of the Assistant Secretary of Defense (Installations and Logistics) 

for Laird and Packard, 9 Oct 1969, sub: Industry Advisory Council, 10–11 October 1969, 

Comptroller Subject Decimal File, 1969 (75–0089), box 43, 334 Industry Advisory Council 

(July 1969), RG 330, WNRC. 47 Report by Panel A of the Industry Advisory Council on the Major Systems Acquisition 

Process, 14 Jun 1969, Comptroller Subject Decimal File, 1969 (75–0089), box 54, 400.13 (July 

1969), RG 330, WNRC.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 51

rushed systems into production before solving the major development problems and without securing adequate funding. 

Panel A recommended addressing concept formulation weaknesses by slowing down the process, requiring formal risk analyses, 

and increasing the emphasis on studying possible trade-offs among 

cost, schedule, and technical/operational aspects of a system. The 

report proposed setting cost, schedule, and technical performance 

targets and challenging suppliers to design the best system within those limits. This approach would encourage study of possible 

trade-offs at the earliest point in a system’s life cycle. The panel 

also suggested reducing risk by relying more on prototypes and 

less on paper studies, especially in critical technical areas. Bringing costs under control would require improved cost-estimating capabilities within the military services, while OSD would need the 

capability to review service cost proposals. Panel A also suggested 

that OSD establish policies to discourage the unrealistic optimism 

in cost estimating that had become the norm in Pentagon procurement. There was no mention of increasing contractor incentives to 

meet program technical objectives with more effective cost control. 

The industry panel concluded that improved program management required more clarity on the roles and responsibilities 

assigned to OSD and to the services. OSD should approve a program’s objectives and thresholds on key characteristics, then stand 

back and monitor the program so long as it remained within those 

thresholds. By contrast, the sponsoring service should manage the 

program within the thresholds and periodically report to OSD for 

review at specified milestones. Program budgets should include reserves for inevitable design changes during development, and the 

lead military service for a program should control such changes 

within program thresholds. The panel also wanted the services 

to improve their program management training and capabilities 

while reducing the number of management systems, cutting excessive documentation, and limiting the number of Defense Department program reviews and reviewers.48

Packard showed his interest in the industry panel by attending 

the meeting where the panel presented its preliminary report. The 

deputy secretary discussed Panel A’s findings with IAC members, 

asking the attendees to offer suggestions on prioritizing the virtual 

wish list of recommendations it had developed. Those present at the 

meeting included Eugene G. Fubini, author of the existing department acquisition directive, who formerly served in DoD as assistant 

secretary of defense for research and engineering under Defense 

Secretary Harold Brown in the early 1960s. Fubini declared that he 

48 Ibid.
52 DEFENSE ACQUISITION REFORM,1960–2009

had erred in drafting the existing directive by placing too much emphasis on contract definition instead of stressing the importance of 

concept formulation, and he suggested that DoD revise its existing 

contract definition directive—3200.9—accordingly. 

In early July 1969, DDR&E reported to Packard that while Panel 

A’s findings were still in draft form, OSD had begun to implement 

some of the less controversial proposals. These included a thorough review of the Defense Weapons Systems Management Center, 

at Wright-Patterson Air Force Base, Ohio, where DoD had trained 

future program managers since 1964. DoD had also undertaken a 

study analyzing management systems and data requirements, with 

a view toward reducing documentation requirements that increased 

contractor overhead. The study also considered plans to augment the 

department’s internal cost-estimating capabilities.49Foster concluded 

that the Defense Department should apply specific agreed-upon management improvements to existing programs rather than issue a series of broad policy directives. Using that approach, Packard and his 

deputies could learn which reforms actually worked in practice. He 

reiterated the view that OSD should manage major programs only by 

“thresholds,” allowing the sponsoring service to perform the detailed 

management within the agreed-upon parameters contained in the 

DCP. After approving these thresholds at program initiation, OSD 

could review them at key predetermined “achievement milestones.”50

Between those milestones and within the thresholds, the sponsoring 

service would manage the program, submitting periodic progress reports to OSD with information about costs, schedules, technological 

problems, and proposed solutions. Barry Shillito, the assistant secretary of defense for installations and logistics, agreed that OSD had 

to emphasize its nonparticipation in the conduct of weapon system 

procurement functions. After reading Foster’s memo to Packard, Shillito cautioned DDR&E against using the phrase “OSD management” 

in reference to acquisition programs so as to avoid any inference that 

OSD actually played a managerial role.51

When the IAC’s Panel A issued its report in mid-July 1969, its 

recommendations essentially mirrored those presented to Packard 

and others a month earlier. As analyzed later that year, the recommendations dealt with initial program activities and included 

thorough concept formulation, greater reliance on critical experiments, increased cost-estimating capabilities at the services and 

OSD levels, and contractor competitions that stressed design at49 Memo, Foster for Packard, 7 Jul 1969. 

50 Ibid.

51 Memo, Barry Shillito for John S. Foster, 22 Jul 1969, Comptroller Subject Decimal File 

1969 (75–0089), box 54, 400.13 (July 1969), RG 330, WNRC. 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 53

tributes rather than simply costs. To better execute and manage a 

program, the panel recommended clarifying OSD and service roles, 

relying on milestone achievement to measure progress, providing 

funding reserves, employing a flexible contracting policy, reducing 

documentation and reviewing overhead costs, improving program 

management, and controlling engineering changes.52

Foster reminded Packard that DDR&E had already begun 

implementing some of the suggestions, while other suggestions 

required more study. Foster believed that Packard could take immediate action by clarifying OSD-service responsibilities, applying 

improvements to individual programs, and streamlining management by reducing documentation. Other improvements, such as 

designing to cost, requiring realistic cost estimates from contractors, and employing more prototypes, would require more study 

and possibly the drafting of new management directives.53

Because the services would have responsibility for program 

management between DSARC reviews, OSD would have to rely 

on them to implement most of Panel A’s recommendations for improving acquisition management. Commenting on Foster’s report 

to Packard, Shillito wrote: “I suggest that there not be any inference that OSD manages any programs. We monitor, we approve, 

we set parameters, we establish policy, but we attempt to continuously ensure that management responsibilities are retained in the 

services.” This demarcation of responsibility presented a potential 

problem for Packard. While he could fine-tune OSD’s acquisitionrelated activities, reforming the management practices of three 

very different and nominally independent services would prove 

more difficult. At the same time, he would need the services’ help 

in convincing defense contractors to accept the possible burdens 

his new management practices might impose.54

Packard Confronting Resistance

In mid-1969, Packard explained his management reform objectives directly to the service secretaries. In a three-page memorandum, he first noted that the need for improvements in weapons 

system acquisition had been obvious from the day he took office, 

but that he had wanted to study the situation before taking ac52 Memo, Office of the Secretary for Defense for Industry Advisory Council and Defense 

Participants, 4 Nov 1969, sub: Summary Minutes of the 10–11 October 1969 Meeting, Table B, 

Chart 1, VIII G, Installations and Logistics (1969–2000), Industry, 1969–1971, box 1022, OSD 

Historical Office Subject Files. 53 Memo, Foster for Packard, 18 Jul 1969, sub: Report by Panel A of the Industry Advisory 

Council, Comptroller Subject Decimal File, 1969 (75–0089), box 54, 400.13 (July 1969), RG 

330, WNRC. 54 Memo, Shillito for Foster, 22 Jul 1969.
54 DEFENSE ACQUISITION REFORM,1960–2009

tion.55 With the panel reports in hand, the deputy secretary believed the time had come to try out some of the recommendations 

with an eye to making the successful reforms part of DoD policy. 

Packard wanted each service to focus on three areas to reduce cost 

overruns: improved cost estimates (both from contractors and the 

services), better system definition to reduce the need for mid-program changes, and earlier identification and analysis of risk factors during the concept formulation stage. Packard also urged the 

services to rely more on prototypes and less on paper studies and 

to carry out adequate tests before making a production commitment. Finally, Packard asked each secretary to report on how his 

service was implementing the changes. 

Packard saw his July 1969 memo on acquisition management 

practices as merely the beginning of his effort to reform the way the 

services handled their major weapon systems programs. In October, 

he told a meeting of IAC that the services could achieve success in 

managing major programs only if they selected the right people for 

the program management jobs and established ground rules that 

would enable good managers to carry out their responsibilities successfully. He believed that the OSD could most effectively improve 

management practices by issuing broad policy edicts and delegating 

other responsibilities.56At this meeting, Foster emphasized that the 

services would exercise greater control over acquisition and management; consequently, they would have to develop their own capabilities to evaluate contractor estimates of cost and scheduling and 

would need to select appropriate program managers. 

In addition to exhorting the services to improve weapon system management, Packard also acted that summer to improve 

the training of potential program managers. In June 1969, he 

ordered a study of the Defense Weapons Systems Management 

Center at Wright-Patterson Air Force Base, the services’ joint 

school for weapons system planning and acquisition. This study, 

headed by the deputy DDR&E, recommended moving the school 

to the Washington, D.C., area to provide access to senior DoD 

officials and suggested the development of a new curriculum to 

enhance the depth and quality of training the students received. 

The Army volunteered to provide facilities for the school at Fort 

Belvoir, Virginia, and to operate the school at that location where 

it began developing and offering courses on program manage55 Memo, Packard for Service Secretaries, 31 Jul 1969, sub: Improvement in Weapon 

System Acquisition, 31 July 1969, Comptroller Subject Decimal File 1969 (75–0089), 400.13 

(July 1969), RG 330, WNRC. 56 Memo, Office of the Secretary of Defense for Industry Advisory Council and Defense 

Participants, 4 Nov 1969.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 55

ment. The school was renamed the Defense System Management 

School; later it changed from school to college57 and in 1992 served 

as the core organization in the creation of the Defense Acquisition University.

In response to Packard’s demand for reports on acquisition reform in the services, the three service secretaries duly replied that 

their organizations had already instituted procedures and initiated changes guaranteed to improve major weapons system procurement results. Army Secretary Stanley R. Resor reported that 

he fully agreed with Packard’s reform objectives, but noted that 

the Army would require “far-reaching revisions to our acquisition 

processes” to fully implement the deputy secretary’s program. The 

Army had taken immediate measures to reduce overoptimism in 

cost estimates, control changes, improve risk assessment, and to 

meet Packard’s other goals. It also had “an integrated approach to 

address the problems of the acquisition of a weapon system, beginning with concept formulation and extending through production.” In light of these initiatives, Resor concluded that the Army 

required no further directives or policy guidance from Packard’s 

office.58 In a similar vein, Navy Under Secretary John W. Warner 

assured the deputy secretary that, consistent with Packard’s desire to test the proposed reforms, the Navy had “initiated a series 

of remedial action experiments vectored to meet the objectives you 

have discussed.”59

Facing more scrutiny than the other services, due to the highly publicized problems with the C–5A and F–111, the Air Force 

produced a more detailed response to Packard’s query. The secretary of the Air Force passed on a letter from his service’s chief 

of staff detailing the improvements that the Air Force had made 

to its acquisition practices and addressing the deputy secretary’s 

major areas of concern. The Air Force claimed to have improved 

its cost estimating capabilities, including those relating to design changes. It also had embraced Packard’s views on controlling 

design changes, emphasizing contract flexibility, and using more 

analytical studies early in the acquisition process. Finally, the Air 

57 David D. Acker, A History of the Defense Systems Management College (Washington, 

D.C.: U.S. Government Printing Office, 1986), p. 15. For a more extensive treatment of the 

Defense Systems Management School/College, see Chapter 9. 58 Memo, Stanley R. Resor, Secretary of the Army, for Packard, sub: Improvement in 

Weapon System Acquisition, 2 Oct 1969, attached to memo, Packard for Resor, 10 Oct 1969, 

Comptroller Subject Decimal File (75–0089), box 54, 400.13 (October 1969), RG 330, WNRC. 59 Memo, John W. Warner, Navy Under Secretary, for Packard, sub: Improvement in 

Weapon System Acquisition, 20 Oct 1969, Comptroller Subject Decimal File 1969 (75–0089), 

400.13 (October 1969), RG 330, WNRC.
56 DEFENSE ACQUISITION REFORM,1960–2009

Force had increased its reliance on competitive prototypes and 

hardware testing, especially in the F–15 development program.60

These assurances by the secretaries that they had adopted or 

were studying his earlier directives failed to satisfy Packard. He was 

concerned that without a major push from above, each service would 

continue with business as usual. Shortly after receiving the service 

responses to his requests, Packard circulated a series of detailed 

charts that explained in some detail the powers and responsibilities 

of the major players during each phase (discussed in Chapter One) of 

the DSARC review of acquisition programs. These charts divided the 

acquisition process and each major acquisition program into phases 

and decision points, from conception through deployment.61Each program began with a conceptual phase, where DDR&E took primary 

responsibility for overseeing the service sponsor and initiating a 

DCP. This phase ended when DDR&E presented the completed DCP 

at the program decision meeting, where it also chaired the DSARC. 

Upon approval the validation phase followed, where the service had 

primary responsibility—with DDR&E oversight—for developing the 

system’s major characteristics and reporting any breaches of DCP 

thresholds to OSD. The phase led to the ratification decision, where 

the DDR&E-chaired DSARC decided whether to continue on to fullscale development. During the full-scale development phase, the service and its contractor(s) would design, build, and test the system, 

including supporting elements, while protecting against breaches of 

the DCP thresholds. At the production decision meeting, the assistant 

secretary of defense for installations and logistics assumed the chair 

of DSARC, though DDR&E, having monitored the previous phase, 

would still have responsibility for preparing the DCP. If successful, 

the system would move on to the production and deployment phases. 

This Packard-era acquisition process is shown in Figure 3 and is contrasted with the procedure followed in the 1960s.

Packard’s charts clearly stated that between decision points, 

the sponsoring service would have primary responsibility for reporting to OSD any breaches of agreed-on thresholds for its programs. In May 1970, Packard expanded on this requirement, explaining in a memorandum to the services and his staff that the 

responsible service secretary had to report immediately to DDR&E 

any threshold breaches or failures to meet milestones in the de60 Memo, Robert C. Seamans Jr. [Secretary of the Air Force] for Packard, 5 Dec 1969 

with attached letter, Gen. J. C. Meyer to Seamans, sub: Improvement in Weapon Systems 

Acquisition, 20 Oct 1969, Comptroller Subject Decimal File 69 (75–0089), 400.13 (September 

1969), RG 330, WNRC. 61 Memo, Packard for Service Secretaries, 15 Dec 1969, sub: Responsibilities in the Process 

of Acquiring Major Weapon Systems, app. to “Policy Changes in Weapon System Procurement,” 

House Committee on Government Operations, 91st Cong., 2d sess., 22 September 1970.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 57

velopment schedule. Otherwise, in keeping with Packard’s aim of 

reducing reporting requirements, the service program manager 

could limit communications regarding a program to quarterly reports and informal communications with OSD staff.62

Although most of these changes affected only internal DoD operations, the deputy secretary’s new policies had to pass muster 

62 Memo, Packard for Listed Parties, 14 May 1970, sub: Reports to the Secretary of 

Defense by the Military Departments and Defense Agencies on Approved Major Weapon 

Systems during Development, app. to “Policy Changes in Weapon System Procurement,” 

House Committee on Government Operations, 91st Cong., 2d sess., 22 September 1970.

Figure 3—The Systems Acquisition Process

Secretary

of Defense

Decision

Secretary

of Defense

Program

Decision

Program

Initiation

Full-Scale

Development Production

Milestone I

Equivalent

Milestone III

Secretary of Defense

Decision

CONCEPT

FORMULATION

TOTAL PACKAGE

PROCUREMENT,

DEVELOPMENT,

AND PRODUCTION

CONTRACT

DEFINITION

CONCEPTUAL

PHASE

VALIDATION

PHASE

FULL-SCALE

(ENGINEERING)

DEVELOPMENT

PHASE

PRODUCTION

PHASE

McNamara Era (1960s) Packard Era (1970–1973)

Milestone II

Secretary of Defense

Decision

Milestone I

Secretary of Defense

Decision

Figure 3—The Systems Acquisition Process
58 DEFENSE ACQUISITION REFORM,1960–2009

outside the Pentagon as well. In March 1970, Packard testified before 

the Senate Armed Services Committee regarding military appropriations for fiscal year 1971. Amid a series of questions about the troubled 

C–5A program, he took the opportunity to give a brief description of 

his reform program and noted that he had established procedures designed to prevent future technical problems like those plaguing the 

Lockheed transport. The deputy secretary added that his acquisition 

reform effort emphasized improved program management. He promised to convince the services to keep program managers in their positions long enough for them to manage effectively and to promote officers who performed well in the management field.63These promises 

turned out to be more difficult to implement than Packard anticipated. 

Pushing Against Inertia

During his first year in office, Packard approached his reform effort 

in a piecemeal fashion and the services had responded in kind. In May 

1970, he issued a broad policy edict in an attempt to change the status 

quo. Perhaps anticipating the results of the Blue Ribbon Defense Panel 

study that was due that summer, the Packard policy memorandum 

included additional guidance for the services and OSD regarding the 

changes he expected to see in major weapons programs. Writing to the 

service secretaries and his own staff, he explained that while DoD had 

taken some steps to improve acquisition practices, he was now ready 

for “a concerted effort to firmly establish additional new policies and 

to implement them.”64Packard expressed his dissatisfaction with the 

progress the services had made to date. He explained that improvements would come only to the extent that they embraced them and 

that they would have to do better in the future than they had done in 

the past. He reminded them that OSD had responsibility for approving 

service acquisition policies and evaluating how well they implemented 

approved policies, as well as deciding whether major programs should 

move forward at each major milestone. 

The policy guidance focused on four areas: management, development, production, and contracting. Because actual management 

of acquisition programs and assignment of management personnel remained a service responsibility, Packard could only indirectly 

affect the makeup and day-to-day operations of the management 

team. He sought to accomplish this by directing the services to ensure that program managers had the required management skills, 

63  U.S. Congress, Senate, Armed Services Committee, 91st Cong., 2d sess., Military 

Procurement for Fiscal Year 1971, 10 March 1970, pp. 857–60. 64 Memo, Packard for Listed Parties, 28 May 1970, sub: Policy Guidance on Major Weapon 

Systems Acquisition, IV B, OSD/DOD Organization, 1969–1972, box 558 (1970–1971), OSD 

Historical Office Subject Files.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 59

give them adequate authority to make major decisions at each stage 

of the program, and minimize the layers of authority between the 

program manager and the service secretary. In addition, program 

managers could use their increased authority effectively only if 

they stayed with a program long enough to thoroughly understand 

it and implement the new procedures. In that regard, the services 

would have to offer successful program managers career advancements and other rewards comparable to military operations officer 

advancements and rewards in order to convince talented managers to accept program manager assignments. Packard’s statement 

of requirements had a mixed reception within the services that 

understandably preferred to have military operations officers as 

program managers responsible for acquisition programs and for 

deciding when to report acquisition problems through the traditional chain of command.

Packard expressed his views on the issue of overdocumentation 

and unneeded layers of authority in a letter later that year to George 

P. Shultz, director of the Office of Management and Budget. Packard 

quoted with approval a long statement by Admiral Hyman G. Rickover 

regarding the reporting burdens of weapon program managers. 

So long as the bureaucracy consists of large numbers of people at 

many levels who believe they perform their function of evaluation 

and approval properly, by requiring vast and detailed information to be submitted through the many levels of the bureaucracy, 

program managers will never be found who can effectively manage their jobs. A program manager today would require at least 

48 hours a day of his own time just to satisfy the requests for 

detailed information from the Navy and DoD bureaucracies, the 

Congress, the General Accounting Office [GAO], and various other parties who have the legal right—and use it—to place demands 

on his time. As long as we operate a system where the checkers 

(those charged with the responsibility of evaluating and approving) outnumber the doers (those responsible for carrying out the 

work), the doers are condemned to spend their time doing paper 

work for the checkers.65

Packard stressed the need to improve the process of system 

development, both at the conceptual and full-scale engineering 

stages. He argued that the control over system costs ultimately 

depended on a management team’s ability to make intelligent 

trade-offs between operating capabilities and engineering designs 

at each stage of a program and to provide contractors with sufficient 

65 Ltr, Packard to George P. Shultz, director of the Office of Management and Budget, 27 

Oct 1970. 
60 DEFENSE ACQUISITION REFORM,1960–2009

incentives to exercise effective cost control. The program schedule 

should allow sufficient time to resolve the inevitable design and 

performance problems in a logical fashion, avoiding unnecessary 

overlapping of different development stages. 

Packard’s proposed management plan focused on reducing 

technical risk at the conceptual stage. First, managers should assess the risk involved in the design, decide how much effort would 

be needed to solve the engineering problems, and accurately assess 

the consequences of failure of each program element. The manager 

should continually consider and update the cost-benefit trade-offs 

between operating requirements and engineering design possibilities. Finally, actual testing of components would provide the only 

sure way to determine whether the technical risks had been resolved. Proposals for OSD approval at the conceptual stage would 

have to include a description of how the program manager intended to handle risk assessment, trade-offs, and testing. These tasks 

appeared to exceed the skills of many program managers.

In order to move beyond the conceptual stage to full-scale development, the program manager would have to convince OSD (through 

the DSARC) that management had adequately addressed the risks 

during the conceptual stage. This would require proof of successful 

hardware tests for key subsystems and components. During the fullscale development stage, managers would need to shape contracts 

and procedures to eliminate unnecessary reports and documentation, 

focusing instead on perfecting and validating the system design. 

Before seeking approval for actual production, the responsible 

service would have to certify that all milestones demonstrating 

the achievement of a practical engineering design had been met 

and that all engineering problems encountered during development had been resolved with trade-offs that optimized production, 

maintenance, and operating costs. Plans for production startup 

would need to minimize financial commitments until the service 

could demonstrate that it had resolved all development problems, 

including production engineering and production tooling.

In the area of contracting, Packard expected the services to 

tailor system contracts to the risks involved. He favored cost-reimbursement contracts for the development stages of major systems, with subcontracts that maximized competition for vital system components. Finally, Packard noted that his new management 

rules might conflict with existing DoD directives and instructions. 

In all such cases, he ordered that his new rules take precedence 

and revealed that he had given DDR&E the task of rewriting the 

existing regulations to reflect his policy reforms.66

66 Memo, Packard for Listed Recipients, 28 May 1970. 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 61

The generic tone and broad scope of Packard’s policy directive 

illustrated the nature of his dilemma in attempting to reform Pentagon procurement. He had committed to the principle that OSD 

would refrain from interfering in the management of major system 

acquisition programs, a philosophy that fit with his belief in the efficacy of management by objectives. His office would confine itself 

to establishing general policy guidelines that would govern how 

the services managed their programs. It would measure compliance with these guidelines through periodic reports and during 

the scheduled reviews of programs by DSARC, both of which were 

designed to determine whether a system had met its agreed-upon 

targets for cost, technical performance, and scheduling. As a practical matter, this arrangement allowed Packard’s staff to enforce 

program management practices only through the threat of cancellation or delay if DSARC members disapproved of the progress the 

system had made since the last milestone. 

Packard’s policy of management by objectives assumed that the 

acquisition managers in the military services would be skilled to 

oversee and manage large engineering and production programs on 

budget and on schedule. But this assumption turned out to be only 

partially correct. The absence of detailed oversight practically invited the services to continue their established management methods, 

trusting that they could use political or economic arguments to get 

their programs through the DSARC review process when necessary. 

In a task as vital and complicated as managing the acquisition of 

major weapons and equipment for a military service, senior officials 

in the service could often do what they believed was best for the acquisition process and best for their individual service, irrespective of 

the wishes of OSD officials whose tenure was likely to be less than 

three years. The military services could wait them out. 

The deputy secretary obviously believed that his May 1970 

memorandum represented a significant step in the process of reforming Pentagon procurement. Shortly after circulating his new 

rules for acquisition, Packard held a press conference announcing the changes. He explained that his goals included improving 

the services’ performance, noting that he had “come down to the 

proposition that we have just got to get the services to do a better job; that we can’t sit up here topside, and make decisions, and 

run the programs, and have it make any sense.” He also stressed 

his continuing emphasis on empowering program managers with 

greater authority and incentives but also insisted on trade-offs 

within programs as a continuing part of the management process 

“at every stage in the program.” He concluded by explaining that 

his approach contained nothing really new but represented a sig-
62 DEFENSE ACQUISITION REFORM,1960–2009

nificant improvement over how the Pentagon had handled major 

procurement programs in the past.67

Packard must have realized that his reforms could only take 

effect once the services had individually adopted his management 

practices. The first step toward institutionalizing his guidance involved rewriting the standing DoD regulations on acquisition policy to reflect the deputy secretary’s views. OSD undertook this task 

almost immediately following the distribution of the policy guidance memorandum. In early June 1970, Packard informed an IAC 

meeting that he had established a task force to review and revise 

all policies and regulations affected by his proposed reforms.68

The process of reviewing and rewriting key procurement directives would take some time. Meanwhile, Packard wanted his new 

methods implemented immediately. In late July, DDR&E’s John 

Foster wrote the Joint Chiefs and service secretaries notifying 

them that “Mr. Packard does not want the application of these policies to await changes in DoD Directives and Instructions and corresponding regulations in the military departments and defense 

agencies.” Therefore, the recipients were instructed to review all 

their ongoing programs to (1) identify for each program where the 

program failed to comply with the deputy secretary’s new policies 

from the May 28 memorandum; (2) recommend changes to bring 

them into compliance (or explain why a change would be impractical); and (3) identify decision layers between the program managers and the service secretaries.69

The Blue Ribbon Defense Panel Issues Its Report (1970)

Shortly before Packard issued his order for the military services to begin implementing his new policies, the Blue Ribbon Defense Panel published its report on the issues. After a year of study, 

the panel issued a book-length report (1970)70 that covered a broad 

67 Statement of Deputy Secretary of Defense to the Press, 9 Jun 1970, app. to “Policy 

Changes in Weapon System Procurement,” House Committee on Government Operations, 

91st Cong., 2d sess., 22 September 1970. 68 Statement of Secretary of Defense to Industry Advisory Council, 13 Jul 1970, sub: 

Summary Minutes of the Industry Advisory Council Meeting on 12 and 13 June 1970, VIII 

G, Installations and Logistics (1969–2000), Industry, 1969–1971, box 1022, OSD Historical 

Office Subject Files. 69 Memo, Foster for Listed Recipients, 29 Jul 1970, sub: Application of New Policy Guidance 

to Major Weapon Systems, app. to “Policy Changes in Weapon System Procurement,” House 

Committee on Government Operations, 91st Cong., 2d sess., 22 September 1970. 70 Blue Ribbon Panel Report. The Blue Ribbon Defense Panel, chaired by Gilbert W. Fitzhugh, 

was appointed by the president and the secretary of defense in July 1969 to examine the following 

areas: (a) organization and management of DoD, including the Joint Chiefs of Staff, the defense 

agencies, and the military services; (b) defense research and development efforts from the 

standpoint of mission fulfillments, costs, organization, time, and interrelation with the scientific 

and industrial community; (c) defense procurement policies and practices, particularly as they 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 63

range of management issues affecting the Department of Defense. 

The panel had divided itself into four committees to study the four 

topics requested by Secretary Laird. The committees on Organization and Personnel Management and on Management of Material 

Resources directly addressed the areas affecting Packard and the 

acquisition process. 

Fitzhugh certainly had sufficient access to top DoD officials to 

develop a clear picture of Packard’s plans to reform the procurement process for major weapons. He took an office close to Secretary 

Laird’s, and the two met twice weekly so that Fitzhugh could update 

Laird on the Blue Ribbon Defense Panel’s progress.71 Barry Shillito, the assistant secretary of defense for installations and logistics, 

and one of Packard’s most active assistants in the reform effort, sat 

just down the hall and worked closely with Fitzhugh on the panel’s 

study.72 Packard also worked with the panel, though Fitzhugh and 

his colleagues independently investigated some areas that the deputy secretary and his staff had not considered in any detail.73

Not surprisingly, the panel’s final report adopted some of Packard and Laird’s views on changing the acquisition system. The 

panel concluded that DoD’s established policies had “contributed 

to serious cost overruns, schedule slippages and [technical] performance deficiencies,” and that reform would “require many interrelated changes in organization and procedures.”74

To address this and other problems, the panel recommended a 

sweeping high-level reorganization of the department. It suggested 

creating three major internal groups, each headed by a deputy secretary of defense. One would deal with operations. The second, under a deputy secretary of defense for resource management, would 

manage resources, including acquisition. The office would include 

assistant secretaries for research and advanced technology and for 

engineering development. The third body, under a deputy secretary of defense for evaluation, would evaluate functions ranging 

from accounting to weapon system performance. This office would 

include an assistant secretary of defense for test and evaluation 

responsible for DoD test and evaluation policy, and for the Defense 

relate to costs, time, and quality; and (d) such other matters as the secretary of defense may 

submit to it from time to time. (Melvin Laird was the Secretary of Defense.) The 237-page report 

contained six chapters: (1) Organization, (2) Management of Materiel Resources, (3) Management 

and Procedures, (4) Management of Personnel Resources, (5) Other Management Considerations, 

and (6) Conflicts of Interest. 71 Interv, OSD Historical Office with Laird, 2 Sep 1986, p. 9.

72 Interv, DAHP with Shillito, 6, 8 Jun 2005, p. 29.

73 Interv, OSD Historical Office with Packard, 28 Nov 1988, p. 2.

74 Blue Ribbon Panel Report, p. 2 (quotation). 
64 DEFENSE ACQUISITION REFORM,1960–2009

Test Agency, which the panel believed should design and conduct 

tests on systems and equipment. 

Based on these recommendations, the Blue Ribbon Panel would 

have—administratively, at least—separated the testing function 

from the procurement process, dividing Packard’s authority between two bodies just as he was working to integrate prototype 

and component testing into the developmental stage of each weapon system program. Just a few months earlier, Packard had issued 

a DoD directive explicitly charging DDR&E with responsibility for 

“research, development, test and evaluation of weapons, weapons 

systems, and Defense materiel.”75 This same directive assigned 

Foster to recommend research and engineering responsibilities for 

new weapon systems development. Clearly, Packard intended to 

keep control over testing and evaluation of major weapon systems. 

DDR&E believed that separating testing and development made 

no sense, as the development team would have the best ideas on 

how to model and interpret the tests.76 

The report failed to set out a clear rationale for separating 

weapon systems testing from research, engineering, and development. In calling for the creation of an assistant secretary of defense 

for testing, the panel’s report seemed to focus its concerns on problems with operational testing and evaluation. It noted that each 

service had a different system for operational testing, that neither 

OSD nor the Joint Chiefs had much control over these testing organizations, and that the services had no effective mechanism to 

conduct operational testing across service lines. The creation of an 

assistant secretary for testing and evaluation would presumably 

help coordinate service testing policies and ensure that the services devoted adequate resources to this area.77

The panel’s report appeared to analyze the existing major weapon system acquisition process from industry’s point of view. It noted 

that problems at each stage of the process cumulatively created the 

conditions for delays, cost overruns, and technical deficiencies, and 

then blamed a good part of this on the existing acquisition directive 

3200.9. The panel reported that, pursuant to DoD Directive 3200.9, 

the initial, or concept formulation phase of a program involved 

comprehensive studies and experimentation intended to bring the 

program to a point where: (1) experiments were complete and the 

needed technology available; (2) performance requirements were defined; (3) the best technical approaches had been selected; (4) tradeoffs thoroughly analyzed, (5) cost effectiveness had been determined 

75 DoD Directive 5129.1, “Director of Defense Research and Engineering,” 13 Mar 70.

76 Interv, DAHP with Foster, 19 Feb 2003, p. 37.

77 Blue Ribbon Panel Report, pp. 88–90.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 65

on a competitive basis; and (6) credible cost and schedule estimates 

were available. However, the report concluded that the prescribed 

prerequisites for obtaining a decision to proceed to engineering development “prove to be largely idealistic for application to the totality of a large weapon system and have not been strictly adhered to 

in practice.”78

The panel saved its strongest criticism for the contract definition phase of the process mandated by DoD Directive 3200.9, 

which occurred once OSD decided to proceed with engineering development. During this phase, the government issued a request for 

proposals, chose a number of would-be contractors to prepare and 

submit competing “detailed and voluminous” proposals for the engineering development stage of a program, and selected a winner. 

The Blue Ribbon Panel concluded that the scope of the proposals 

at this stage of the program required too much speculation and 

estimating by industry: 

The central purpose of the contract is concerned with engineering development, a matter of considerable technical uncertainty. 

To expect and require through contract definition that a contractor 

have the capability even to identify all end items of the system, let 

alone develop detailed specifications for each, in an advanced technological product, and concurrently to prepare reliable predictions 

in detail on the maintainability, reliability, and the requirement for 

operational training to use the product, is impractical.79

An additional problem arose because industry relied on paper 

studies prepared in “concept formulation.” As a result, their proposals tended to rest on the often erroneous assumption that technical risks had been reduced; the resulting cost estimates almost 

always proved unreliable. Due to “the unwarranted reliance on 

paper analysis” during concept formulation, potential contractors 

often found to their surprise that “the necessary technology to proceed with Engineering Development had not been accomplished.”80

Like Packard, the Blue Ribbon Panel recommended formulation 

of a new weapons development policy aimed at reducing technical 

risks by relying more on hardware testing of competitive prototypes and less on concurrent development and paper studies prior 

to approving full-scale development. The panel’s report mirrored 

Packard’s desire to increase flexibility in selecting contract types 

consistent with anticipated technical risks during system develop78 Ibid., p. 70.

79 Ibid. 

80 Ibid., p. 73.
66 DEFENSE ACQUISITION REFORM,1960–2009

ment and to reduce unnecessary paperwork (in this case, contract 

definition documents).81

The panel also seemed to support the deputy secretary’s view 

that improving management of programs required better selection, training, retention and empowerment of program managers. 

It found that military officers assigned to manage programs frequently had inadequate training and lacked scientific and industrial management knowledge and experience. They were usually 

rotated at short intervals (often at critical points in acquisition 

programs), giving the departing officers little or no opportunity 

to train their successors.82 They saw little potential for career advancement in program management and often viewed their assignment as a stepping stone to private-sector employment with 

industry.83

To compound the problems created by personnel policies, program managers remained bogged down by heavy reporting and 

documentation requirements that added to overall management 

costs. These requirements stemmed, in part, from the numerous 

command levels between managers and top service decision makers, which produced a demand for innumerable briefings while 

diluting the manager’s authority to make management decisions. 

While program managers were saddled with increasingly complex tasks and ever-widening responsibilities, the services had 

yet to establish a clear division of authority among the program 

manager, contracting officer, and contract auditor. 

The Blue Ribbon Panel laid some of the blame for acquisition problems on weaknesses in the DCP and its use as a tool for 

program initiation and management. The panel noted that DCPs 

varied in quality and that their very brevity—a twenty-page maximum—tended to obscure differences among the various contributors as to how a program should develop. While praising the flexibility the DCP provided to high-level decision makers, the panel 

warned against using it to justify an unstructured, ad hoc approach 

to program management. The report suggested better training of 

the personnel who prepared these documents as the best way to 

minimize this risk.84

The panel concluded that the Defense Department could not fix 

the problems in existing management practices on an ad hoc basis 

and recommended that the Pentagon revise basic directives and

81 Ibid., p. 74.

82 Ibid., p. 79.

83 Ibid.

84 Ibid., pp. 120–21.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 67

create new ground rules to resolve these fundamental weaknesses. 

The report advocated the use of more civilian managers and the 

creation of a program manager career path within the military, including industrial management training and experience, while giving program managers greater and more clearly defined authority. 

Once again, the panel’s proposals were consistent with Packard’s 

guidelines distributed two months earlier to the services. Either 

the panel had been swayed by Packard’s arguments or he had anticipated the panel’s findings. 

The Blue Ribbon Panel believed that all parties, including 

Congress and the public, placed too much faith in the accuracy 

of cost estimates, despite the inherent technical uncertainties in 

developing new advanced weapons systems. While the irreducible level of technological risk created unavoidable inaccuracies, 

other factors contributed to the problem of inappropriately low 

estimates, especially the incentive to gain strong and continuing 

support for a program from the end user and Congress. Fitzhugh 

and his colleagues believed that DoD could reduce—though never 

eliminate—the inherent unreliability of cost estimates by relying 

more on historical cost data for similar programs. Therefore, the 

panel concluded that the military services and contractors should 

be prepared to continually revise cost estimates as programs progressed from inception through production.85 In the absence of 

creating stronger incentives for the services and contractors to 

exercise vigorous cost control, and by playing down the importance or value of early cost estimates, the panel was essentially 

admitting that what most observers would consider “cost overruns” had become an inescapable part of producing major weapons systems. 

Although the panel’s report blamed DoD management shortfalls for most of the problems with weapons systems acquisition, 

industry did not escape censure entirely. The business-dominated panel argued that industry’s problems actually stemmed from 

companies’ eagerness to accommodate the Pentagon. This, in turn, 

led to “over responsiveness to every expressed or implied desire” 

of DoD and the military services. The supposedly obsequious attitude of contractors resulted in the acceptance of contract changes, 

adding program features, inefficient management rules, and increasing costs. It also resulted in industry reluctance to point out 

technical risks and uncertainties of certain complex systems, and 

reliance on overly ambitious design solutions to meet user requirements—all frequently imposing higher costs on the military services. The panel could suggest little to remedy this situation other 

85 Ibid., p. 84.
68 DEFENSE ACQUISITION REFORM,1960–2009

than urging contractors to use greater objectivity in their evaluations of proposed developments.86 

Apart from the proposal for a radical restructuring of the Defense Department at the highest level, Fitzhugh and his colleagues 

generally recommended following the same reform course that 

Packard had already undertaken on his own. Packard and Laird 

agreed that DoD did not need a triumvirate of deputy secretaries, 

which left them free to implement those recommendations that fit 

in with their management reform goals.87 Speaking at the dinner 

of the Armed Forces Management Association a month later, Packard explained that while he supported many of the Blue Ribbon 

Panel’s suggestions, he opposed creating three deputy secretaries. 

He noted that he favored greater decentralization of responsibility within the Pentagon and that the proposal to create additional 

high-level posts would undercut that goal. “We do not want to create a structure that adds more top-level involvement in the workingman’s business,” he said. “Three deputies would tend to pull 

even more decision making up to the top, and we do not want to 

move in that direction.”88

In the same address to several hundred defense industry representatives, Packard referred to the current state of defense procurement as “a mess”:

I suppose that some of our critics will call this a meeting of the 

military-industrial complex. So be it. I am not embarrassed by 

the fact that we need industry to help the Department of Defense. 

I am only embarrassed that we haven’t done a better job. Many 

of you, and certainly those not in the industry, may expect me to 

talk about what a grand job we have all done and how necessary 

we are for one another. I am not going to do that. I am going to talk 

about the things we do wrong and the things we have to do better.

Let’s face it—the fact is that there has been bad management 

of many defense programs in the past. We spent billions of the 

taxpayers’ dollars; sometimes we spent it badly. Part of this is due 

to basic uncertainties in the defense business. Some uncertainties will always exist. However, most of it has been due to bad 

management, both in the Department of Defense and in the defense industry. We can and are doing something about that. I am 

not talking just about cost overruns as so many of our critics do. 

Overruns are the end product of our mistakes rather than the key 

86 Ibid., p. 85.

87 Interv, OSD Historical Office with Packard, 28 Nov 1988, p. 1.

88 Address by David Packard to the Armed Forces Management Association, 22 August 

1970, app. to “Policy Changes in Weapon System Procurement,” House Committee on 

Government Operations, 91st Cong., 2d sess., 22 September 1970.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 69

issue to be addressed. I am surprised that our critics took so long to 

discover cost overruns. They have been around a long time, and many 

of the cost overruns that receive the most publicity were organized 

by defense and industry years ago. We are now paying the price for 

mistakes in contracting, in development, and in management.

Frankly, gentlemen, in defense procurement, we have a real 

mess on our hands, and the question you and I have to face up to 

is what are we going to do to clean it up.89

Packard also admitted that the services had not yet fully embraced his reforms. Referring specifically to his proposals for selecting, retaining, and empowering program managers, he complained 

that “all four services have accepted my recommendations—and 

their letters say that they agree. But on at least two occasions 

they have taken actions exactly contrary to those suggested.” At 

the same time, he clearly distanced himself from the Blue Ribbon Panel’s pro-industry views on who was to blame for problems 

in procurement. He told his audience of industry representatives 

that “the Defense Department has been led down the garden path 

for years on sophisticated systems that you promised would do all 

kinds of things for some optimistic [i.e., low] cost. Too frequently 

we have been wrong in listening to you, and more frequently you 

have been unable to deliver on either of these promises—what it 

would do or what it would cost.”90

Consolidating Gains

A month after his speech to the Armed Forces Management 

Association, Packard returned to Congress to promote and explain 

his proposed changes in weapons procurement policy. In his testimony before the House Committee on Government Operations 

in September 1970, he once again stressed the importance of employing the best trained, skilled, and motivated program managers 

and giving them sufficient leeway to make necessary decisions, especially regarding trade-offs among capability, schedule, and cost 

that arose in all major programs.91

The deputy secretary testified that most problems pertaining 

to major programs stemmed from unrealistic assumptions made at 

the program’s inception. Military planners tended to overstate the 

threat and demand unnecessary capabilities, while industry engineers promised more than they could deliver, leading to “a form 

89 Ibid.

90 Ibid.

91 “Policy Changes in Weapon System Procurement,” House Committee on Government 

Operations, 91st Cong., 2d sess., 22 September 1970, p. 25.
70 DEFENSE ACQUISITION REFORM,1960–2009

of management euphoria” that created unreasonably low cost estimates. In turn, those low estimates account for part of the cost 

overruns that draw so much public criticism.

Packard argued that a well-managed, flexibly organized program could avoid many of the mistakes that had dogged DoD acquisitions over the previous decade. Rigid requirements for capabilities and scheduling should give way to an approach that 

allowed trade-offs at any point throughout the life of a program. 

Such trade-offs could be considered by the program manager on 

a continuing basis, while DSARC would examine at selected intervals whether the program had adequately used this method to 

address technical challenges that arose during development. He 

claimed that by empowering program managers, the services could 

assume near-total responsibility for managing each program. This 

approach could work only if the services improved their personnel policies so that skilled managers remained on a program long 

enough to attain a high level of knowledge about the system they 

were managing and to have an effect on a program. The services 

would have to change their organizational structures in a way that 

removed the ability of various command levels to interfere with 

the trade-offs that would have to occur on nearly every program—

command levels that also had a strong influence on whether a program manager would or would not be promoted. One congressman 

summed up this portion of Packard’s vision with a single word, 

“Utopia.”92

The following day, Packard’s subordinates filled in the details 

of the reform program for interested committee members, but they 

also faced probing questions over whether the changes represented anything more than window dressing. V. Adm. Vincent De Poix 

of DDR&E testified that he chaired an OSD committee that had 

the task of harmonizing directives and regulations with the deputy 

secretary’s acquisition policies. De Poix and his group had completed the first phase of their work, which included reviewing existing 

acquisition directives and recommending changes or cancellation 

of those in conflict with the new regime. The second phase, already 

under way, involved drafting new, more comprehensive directives 

on weapons systems acquisition that would incorporate much of 

the substance of Packard’s May 1970 policy memorandum.93

Some members of Congress remained skeptical about the actual impact this process would have on contractors and military 

services determined to push through their desired programs and 

performance characteristics. Asked whether the services would ac92 Ibid., p. 18 (quotation).

93 Ibid., pp. 57–64.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 71

tually seek out trade-offs that compromised technical performance, 

De Poix could reply only that they would have no choice because 

the secretary had told them to look for trade-offs rather than coming back asking for more money. He explained that in future programs “if you find that it is going to take more money to hold to 

the original specifications of performance characteristics, you look 

at that aspect. You examine it to save yourself money, and because 

you have been told to do it by guidance from the Deputy Secretary 

of Defense.”94 Such assurances did little to assuage the members’ 

concerns, especially when De Poix admitted that the procedure reflected “very little change from the previous method.”95 One member suggested that the mood of the country, rather than the details 

of procedure, would prove decisive: “The directives, of course, come 

from the Secretary and from the Deputy Secretary, but basically 

it is the attitude of the country and what the country will accept. 

The military has got to accept it because they are being cut back in 

these areas so they cannot have Cadillacs all the time. They have 

got to have Chevrolets sometimes.”96

Early in 1971, Laird wrote Senator John C. Stennis, the chairman of the Senate Armed Services Committee, summarizing DoD’s 

progress in improving the acquisition of major weapons systems 

and describing the impact of the recommendations of the Blue 

Ribbon Panel. The secretary highlighted seven major areas of 

improvement, most of which echoed Packard’s earlier directives. 

Laird noted that his deputy had directed the service secretaries 

to improve the quality and increase the authority and longevity of 

program managers, while cutting away the layers of bureaucracy 

that inhibited the decision-making process.97

Laird’s letter to Senator Stennis also emphasized the creation 

of DSARC and the revitalization of the DCP as tools for guiding, recording, and implementing decisions on major weapons 

systems programs. He noted that DSARC had already conducted 

twenty-seven decision reviews on nineteen major programs, approving service recommendations twelve times and ordering the 

services to rework or redirect their programs fifteen times. He 

also explained how the Pentagon now used the DCP as a contract 

between the sponsoring service (or its program manager) and 

the secretary of defense, setting agreed-upon program objectives 

94 Ibid., p. 93 (quotation).

95 Ibid., pp. 69–70 (quotation).

96 Ibid., p. 93 (quotation).

97 Ltr, Laird to Senator John C. Stennis, 18 Mar 1971, with attachment, DoD Steps Taken 

to Improve the Acquisition of Major Weapon Systems, Comptroller Subject Decimal File, 1971 

(76–0197), 400.13 (February 1971), RG 330, WNRC.
72 DEFENSE ACQUISITION REFORM,1960–2009

against which DSARC could measure a weapon system’s progress 

at crucial decision points. 

Laird pointed out the progress his office had made in eliminating 

excess departmental instructions and updating directives in order to 

consolidate management authority and increase efficiency, especially 

by purging unnecessary paperwork. He explained that these changes facilitated the decentralization of Defense Department acquisition operations, giving the services more management responsibility 

while retaining for OSD the tasks of setting policy and performing 

oversight through DSARC reviews. Finally, DoD had recognized the 

need to tailor contract types to the perceived risk of a specific acquisition program, relying on cost-plus-incentive contracts for the development of major systems. At the same time, it had mandated increased 

controls over and limitations on mid-program changes. It was still 

studying what it would require in the way of updated information on 

cost, schedule, and technical performance from contractors.

Laird also informed the senator that he had established a DoD 

Blue Ribbon Action Committee under the assistant secretary of defense for administration to implement his decisions regarding the 

Blue Ribbon Panel’s recommendations. He claimed that the Defense 

Department had already enacted some of the panel’s most important 

recommendations in slightly different form, pointing out that Packard’s May 1970 memorandum on major weapons acquisition had effectively created a new policy that would reduce technical risks and 

increase acquisition flexibility, as the panel had suggested. Laird 

promised to issue a new policy directive for major systems to codify the 

changes. He added that Packard had already taken steps intended to 

improve the training, motivation, and authority of program managers 

in line with the panel’s proposals and was engaged in trying to reduce 

the reporting requirements and decentralize program management. 

In addition, OSD had cancelled the old acquisition Directive 3200.9, 

which had drawn the ire of defense contractors on the panel. 

On the issue of reorganizing his department at the highest levels, Laird told Stennis that the current organization required no 

such major changes. He reported that he had rejected the Blue 

Ribbon Panel’s recommendation to create an assistant secretary of 

defense for testing and evaluation reporting to a deputy secretary 

for evaluation. He claimed that splitting responsibility for testing between DDR&E and the chief of military operations would 

be sufficient to satisfy the panel’s desire to improve the stature 

and quality of operational testing and lead to the wider use of 

scientific testing techniques. These areas, therefore, required no 

major reorganization. Nor was Laird willing to require that the 

Advanced Research Projects Agency (ARPA) provide a formal risk 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 73

assessment for each new weapon system prior to the approval of 

the DCP for that program. He would leave this in the hands of the 

services and defense agencies directly involved, under the oversight of DDR&E.98

With agreement that their reform project had covered the most 

significant flaws in the procurement process, Packard and Laird felt 

free to praise Fitzhugh and his colleagues without accepting their 

conclusions regarding major changes at the Department of Defense. 

As a result, the Blue Ribbon Panel’s report had only a marginal impact on acquisition. In November 1970, the deputy secretary issued 

a memo announcing that the department would adopt eight of the 

Blue Ribbon Panel’s less sweeping recommendations.99

Overall, the panel’s study and report had reinforced Packard’s 

reform effort by highlighting the need for systemic changes to the 

Defense Department acquisition process. Given the panel’s limited 

time and resources, its study of an organization as large and complex as DoD naturally lacked depth. The report’s lack of detail allowed Laird and Packard to pick and choose the recommendations 

they supported. Not surprisingly, these recommendations tended 

to reflect their predetermined views on the subject—views they 

had undoubtedly made clear to Fitzhugh and his colleagues. In 

areas where the secretary and deputy secretary disagreed with the 

panel’s proposals, they could fall back on their superior knowledge 

of existing organizations and procedures, as opposed to the report’s 

often sketchy rationale for particular changes to the status quo. 

Laird and Packard agreed not to oppose the creation of a second 

deputy secretary that Congress created in 1972, but Laird left office with that position still unfilled.100

Codifying the New Acquisition Process—DoD Directive 5000.1

With the Blue Ribbon Panel’s study completed and its findings 

integrated into the reform effort, Packard could focus on translating his management by objective improvements into standard 

departmental acquisition procedures. During early 1971, De Poix 

led a joint OSD/service/agency task force that worked for several 

98 Ibid.

99 Memo, Packard for Listed Parties, 3 Nov 1970, sub: Blue Ribbon Decision Memorandum 

No. 1, IV B, Blue Ribbon Defense Panel, 1969–1970 (1), box 549, OSD Historical Office Subject 

Files.100 On the implementation of the Blue Ribbon Defense Panel’s recommendations, see 

Mark M. Lowenthal, “Defense Department Reorganization: The Fitzhugh Report, 1969–1970,” 

Congressional Research Service, CRS–76–153F, 19 August 1976, pp. 19–27; on an assessment 

of problems with blue ribbon commissions, including the Blue Ribbon Defense Panel, see 

William E. Kovacic, “Blue Ribbon Defense Commissions: The Acquisition of Major Weapon 

Systems,” in Arms, Politics, and the Economy: Historical and Contemporary Perspectives, ed. 

Robert Higgs (New York: Holmes & Meier, 1990), pp. 61–104. 
74 DEFENSE ACQUISITION REFORM,1960–2009

months on a new acquisition directive to replace the now-discarded 3200.9 and codify the changes announced in Packard’s 28 May 

1970 memorandum. The proposed directive went through a number of drafts during the spring of 1971, as different offices aired 

their views.101Exactly one year after issuing his program for acquisition reform, Packard circulated the new “Directive on the Acquisition of Major Defense Systems” for review.102Packard signed this 

directive, Number 5000.1, on 13 July 1971. It encapsulated in six 

pages the major elements of his management reform philosophy. 

DoD Directive 5000.1 applied to major acquisition programs 

only—those exceeding a development cost of more than $50 million, a production cost of over $200 million, or a program meeting some urgent national need.103The directive began by stressing 

Packard’s determination to decentralize responsibility for these 

programs and to place them under the authority of a single program manager with enough clout, skills, and independence to accomplish the program goals. To that end, it spelled out the division 

of responsibility between OSD and the services. (See Appendix B 

for a description of the changes made to DoD Directive 5000.1 during the period 1971 through 2008.)

The services had responsibility for identifying requirements 

and developing and producing the systems to meet those requirements, including the selection of contractors. DoD Directive 5000.1 

specified that reporting demands on program managers would be 

kept to a minimum and that OSD’s oversight function centered 

on approving the DCP and performing the threshold reviews assigned to DSARC. Thus, Packard and Laird would limit themselves 

to monitoring a program’s progress against agreed objectives, with 

the secretary making decisions for further program commitments 

based on the advice of DSARC. 

DoD Directive 5000.1 stated that the DCP, as the key program 

planning and evaluation document, would include the rationale for 

each program, along with a plan for meeting the stated requirement and an assessment of major issues, including technological 

risks. The sponsoring service would prepare the DCP based on the 

service’s conceptual formulation of the best answer to a particular operational requirement, coordinating with the appropriate 

OSD entity—usually DDR&E, but also the assistant secretary of 

101 Covering Brief, Foster to Packard, ca. May 1971, Comptroller Subject Decimal File, 

1971 (76–0197), 400.13 (April-May 1971), RG 330, WNRC. 102 Memo, Packard for Listed Parties, 28 May 1971, sub: DoD Directive on the Acquisition 

of Major Defense Systems, Comptroller Subject Decimal File, 1971 (76–0197), 400.13 (AprilMay 1971), RG 330, WNRC. 103 DoD Directive 5000.1, “Acquisition of Major Defense Systems,” 13 Jul 1971. See also 

Appendix B.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 75

defense for telecommunications for communications programs—to 

reach mutually agreeable thresholds on performance, schedules, 

cost, and other issues. The service would submit the program to 

DSARC review for approval of full-scale development and again at 

production initiation. 

The new directive admonished the services to structure program schedules around actual achievement of key objectives. Program managers should consider schedules as subject to trade-off, to 

the same extent as cost and technical performance parameters, and 

should allow for unforeseen problems and delays to avoid unnecessary overlapping of different phases. To manage risk, the sponsoring 

service would need to assess continually the progress achieved in 

meeting technical challenges, committing more resources only when 

confident that problems could be solved. This confidence could come 

only from early and frequent use of realistic tests, with results of 

operational testing presented to the DSARC at the time of the production decision. Whether the services would find it within their 

interest to adopt these changes remained to be seen. 

DoD Directive 5000.1 left to the services the responsibility for 

choosing contractors and contract terms but warned against total 

package procurement of complex new systems. The services were 

advised that cost-type contracts made sense on high-risk development programs, while the services could use fixed-price agreements once development had solved major problems. The directive 

enjoined the services to require would-be contractors to identify 

risks and uncertainties in their proposals, but at the same time 

to minimize the contractor’s expenses in the solicitation process. 

The services were free to penalize contractor proposals that included unreasonably low-cost estimates. Each program would require an effective management control system that would allow 

the service to plan assignments and monitor progress. Program 

managers should utilize contractor management and information 

systems for this task to the extent possible and hold paperwork to 

a minimum. 

The drafters of DoD Directive 5000.1 had clearly borrowed 

heavily from Packard’s memorandum of May 1970, to the extent 

of using the same language to admonish the readers regarding 

key items. For instance, in reference to the conceptual development stage of a program, the May 1970 memorandum held that “it 

is crucial that the right decisions be made during the conceptual 

stage. If wrong decisions are made during this period the problems that are generated cannot easily be overcome later in the 

program.” The 1971 directive matched this warning nearly word 

for word: “It is crucial that the right decisions be made during this 
76 DEFENSE ACQUISITION REFORM,1960–2009

conceptual effort; wrong decisions create problems not easily overcome later in the program.” 

In addition to borrowing the language of Packard’s May 1970 

memorandum in places, the authors of DoD Directive 5000.1 followed his reasoning. In both documents, the services were directed 

to rely on program managers with long-term assignments to run 

their programs, including plans for risk reduction in the DCP, and 

to tailor contract terms to the perceived level of technological risk. 

In addition, both DoD Directive 5000.1 and the May 1970 memorandum mandated that programs could progress only on demonstrated 

achievement of agreed development objectives such as completion of 

final engineering designs or successful component tests. 

However, DoD Directive 5000.1 went beyond a mere repetition 

of Packard’s earlier memorandum and reflected a more comprehensive approach to the acquisition process. The July 1971 directive concentrated largely on ensuring that programs identified 

technological risks and documented the solution to engineering 

problems. Thus, the directive made these steps prerequisites for 

moving a weapon system from one stage to the next through the 

Defense Department screening process. By the following year, OSD 

seemed willing to pass judgment on the operational requirement 

for and comparative value of weapon systems, in addition to their 

technological progress. This broadening of OSD authority, perhaps 

only making explicit what the services had already accepted in 

practice, was spelled out in the requirements for weapon system 

DCPs. Although DoD Directive 5000.1 gave the services responsibility for “identifying needs and defining, developing and producing systems to satisfy those needs,” OSD’s responsibilities included 

“assuring that major defense systems are pursued in response to 

valid needs.” The sponsoring service therefore had to include a justification for the proposed system as part of the DCP submitted 

for OSD approval. At each stage, DSARC review would cover “the 

need for the selected defense system in consideration of threat, 

systems alternatives, special logistics needs, estimates of development costs, preliminary estimates of life cycle costs and potential 

benefits in context with overall DoD strategy and fiscal guidance.” 

The new directive also stated that the rationale for each system 

“shall be challenged throughout the acquisition process.” Although 

obviously the secretary could cancel any program he believed had 

become superfluous, DoD Directive 5000.1 made assessing the justification for a weapon system an ongoing part of the OSD oversight function.

DoD Directive 5000.1 also covered topics that the Blue Ribbon 

Panel had raised in its report issued after the Packard memoran-
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 77

dum. The new directive addressed the contractor selection process, 

mandating that the services choose contractors based on capability 

to perform rather than just price. Its requirement that the services 

plan the solicitation and evaluation of proposals with the aim of 

minimizing contractor expense obviously reflected the concerns 

raised by the Blue Ribbon Panel over the extent and cost of such 

proposals. In addition, DoD Directive 5000.1 explained that system development would depend on an advanced technology base 

maintained by basic research and prototype testing divorced from 

any particular weapon system program. This part of the directive 

mirrored the panel’s recommendation for continued exploratory 

development of subsystems and advanced technologies, independent of a specific weapon system.104

Packard saw the publication of DoD Directive 5000.1 as the 

culmination of his attempt to reform acquisition practices at the 

OSD level, noting in September 1971 that it “completed a major 

DoD-wide effort which included a review of OSD-level Directives 

and Instructions relating to systems acquisition.”105 He further 

explained that a review of DoD acquisition publications resulted 

in replacing 125 old directives and instructions with only 59 new 

ones and urged the service secretaries to make similar reviews of 

their own organization’s publications and effect similar efficiencies. Packard expressed his appreciation that the services had already implemented some of the changes he had ordered in his May 

1970 memorandum, including greater emphasis on testing and 

evaluation. He concluded that new service acquisition regulatory 

documents would speed the reform process by removing unnecessary procedures. 

In some respects, the introduction of DoD Directive 5000.1 

produced few encouraging changes within the military services. 

Reassignments for additional tours of duty to program management positions were rare, except in the case of nonrated (nonflying 

status) officers in the Air Force. Promotion to the several hundred 

flag officer positions in the Army, Navy, and Air Force continued to 

be based largely on combat arms assignments and performance. 

There appeared to be little or no accountability for cost growth on 

acquisition programs. 

In December 1971, Packard left the Department of Defense to 

return to private life. Financial considerations apparently played 

a large part in his decision. Hewlett-Packard had flourished in his 

104 Blue Ribbon Panel Report, p. 74. 105 Memo Packard for Listed Parties, 23 Sep 1971, sub: Defense Systems Acquisition 

Policy, Comptroller Subject Decimal File, 1971 (76–0197), 400.13 (August-September 1971), 

box 47, RG 330, WNRC.
78 DEFENSE ACQUISITION REFORM,1960–2009

absence, and under the terms of the trust established when he 

took office he would have had to sacrifice an additional $20 million worth of company stock if he remained.106 After leaving office, 

Packard stayed on for a couple of months informally to help the 

department in the transition to a new deputy, and then returned 

to California to become chairman of Hewlett-Packard Company. 

In 1972, the Cost Analysis Improvement Group (CAIG) (earlier recommended by Packard) was formed as part of OSD to provide staff with independent program cost estimates to present 

to DSARC and to determine uniform DoD cost-estimating standards.107 Equally important, Packard sought ways to limit the expensive practice of putting a weapon system into production before 

completing its development. This reform, called fly-before-buy, entailed the development of prototypes and competitive fly-offs before choosing a contractor and entering production.108Nonetheless, 

defense acquisition programs continued to experience significant 

cost increases throughout the 1970s, due in part to the fact that 

the incentives for program managers and contractors intended to 

implement the initiatives remained largely unchanged. 

In early 1972 in preparation for budget hearings, Packard wrote 

Secretary Laird a lengthy memo summarizing his views of the LairdPackard team’s accomplishments over the preceding three years in 

the area of weapons development and procurement. The services had 

followed his vision, Packard believed, in part because he had struck a 

workable balance between OSD oversight responsibilities and service 

prerogatives. By restraining OSD offices from becoming involved in 

program management except at certain milestones through DSARC 

procedures, Packard encouraged the services to accept responsibility 

for improving the management of their programs. He believed that 

freeing the services from the threat of OSD interference (so long as 

the program was going well) had improved service attitudes toward 

OSD and their performance in program management. 

Addressing the issue of cost growth, Packard laid the blame 

for politically embarrassing overruns on unrealistic industry biding practices and the military’s willingness to suspend disbelief 

when selecting contractors. The result, he noted, was “we implicitly agreed to either see companies go into bankruptcy or else that 

we would cover the increased cost through one device or another 

in the future.”109 Better contracting procedures could help, but the 

106 Interv, OSD Historical Office with Packard, 9 Nov 1987, p. 3. 107 Staff Report to the Senate Committee on Armed Services, “Defense Organization: The 

Need for Change,” 16 October 1985, p. 532. 108 Adams, Murphy, and Rosenau, Controlling Weapons Costs, pp. 19, 20. 109 Ibid.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 79

twin problems of cost overruns and underbidding remained. These 

factors contributed to and were a symptom of the general malaise in the nation’s defense industry. Packard hoped that the use 

of different contract types for different phases of a weapons system program and the move away from total package procurement 

would improve the Defense Department’s relationship with industry. DoD also had several initiatives in place to support industry’s 

profits and encourage capital investment. 

Laird evidently agreed with his former deputy’s analysis. A 

month later, he incorporated Packard’s memo into his testimony 

before the House Appropriations Committee on the DoD fiscal 1973 

appropriations bill. The secretary praised Packard’s plain talk and 

warned the committee that a rough road lay ahead in procurement reform, but concluded that “thanks to Dave Packard, the road 

ahead is going to be easier.”110

The years in which Melvin Laird and David Packard worked to 

reform the acquisition process were marked by continuing debates 

in Congress over the role of the military-industrial complex. At the 

same time, the defense budget experienced downward pressures following the end of the Vietnam War. These pressures were intensified by increased government spending on programs aimed at social 

improvement and the strains of an inflationary economy. Although 

OSD had made great strides in improving the atmosphere between 

OSD and the services, Congress was troubled by the slowness of reform. The result was the creation of the study project known as the 

Congressional Commission on Government Procurement (1972), or 

the McGuire-Holifield Commission discussed later in this chapter. 

Leadership in the Post-Packard Era

After David Packard left the Pentagon in December 1971, President Nixon chose Kenneth Rush as deputy secretary of defense.111

Thirteen months later, he left the Pentagon to accept an appointment as deputy secretary of state in January 1973 at the beginning 

of Nixon’s second term. (Rush had previously been ambassador to 

West Germany.) During that same month, Melvin Laird stepped 

down as secretary of defense, in accordance with his commitment 

to serve no more than four years.

To lead the Defense Department after Laird’s departure, President Nixon turned to Elliot L. Richardson, then secretary of Health, 

110 U.S. Congress, House, Department of Defense Appropriations for 1973, Hearings before 

a Subcommittee of the Committee on Appropriations, 92d Cong., 2d sess., 22 February 1972, 

pp. 210–18. 111 Obituary of Attorney D. Kenneth Rush, former president of Union Carbide and Carbon 

Corporation and former ambassador to Germany, New York Times, 13 December 1994. 
80 DEFENSE ACQUISITION REFORM,1960–2009

Education, and Welfare. Moving from an agency with one of the 

largest budgets in the federal government to another, Richardson, 

who had no previous experience in defense acquisition or with the 

Defense Department other than his World War II service in the 

Army combat medical corps, had to present the Defense program 

and budget for fiscal 1974 to Congress and assess uncompleted acquisition reforms from the Laird-Packard era.112 Nixon simultaneously nominated William P. Clements Jr. of Texas to succeed Rush 

as deputy secretary. Clements was the founder of Southeast Drilling Company, a pioneering multimillion-dollar firm in the offshore 

oil-drilling business. He had served on the Blue Ribbon Panel in 

1970–1971 and in 1972 had co-chaired the Nixon re-election campaign organization in Texas. Richardson and Clements took the 

helm at DoD at the end of January 1973.113

Throughout 1973, attention to acquisition reform was eclipsed 

by changes in secretaries of defense and other presidential appointees throughout the government. The turmoil of the Watergate scandal began to affect OSD in the early months of 1973. On 

30 April, President Nixon reorganized the administration in response to further Watergate revelations. Attorney General Richard 

G. Kleindienst was among those resigning, and Richardson, after 

spending less than four months as secretary of defense was called 

on to replace him. The president then called for the recently named 

head of the Central Intelligence Agency (CIA), James R. Schlesinger, to become secretary of defense. 

Schlesinger, an economist by training, worked at the Rand Corporation and was familiar with defense issues. He served in the 

Nixon administration as chairman of the Atomic Energy Commission before moving to his brief tenure at the CIA.114 Schlesinger 

was not confirmed by the Senate for a month. Senator Proxmire 

put a hold on the nomination until he could question Schlesinger on his views on strategy in Southeast Asia. Schlesinger served 

meanwhile in an acting capacity until the hearings late in June 

1973, after which the confirmation went through and he took office 

on 2 July.115

112 U.S. Congress, House, testimony of Secretary of Defense Elliot L. Richardson before 

the Committee on Armed Forces, FY 1974 Defense Budget and FY 1974–1978 Program (10 

April 1973): 1–20. 113 “The Pentagon’s New No. 2 Man,” Business Week (27 January 1973): 40. 114 Roger R. Trask and Alfred Goldberg, The Department of Defense, 1947–1997: 

Organization and Leaders (Washington, D.C.: Office of the Secretary of Defense Historical 

Office, 2000), pp. 92–93. 115 Interv, Goldberg and Matloff with James R. Schlesinger, 12 Jul 1990, p. 1, OSD 

Historical Office; Trask and Goldberg, Department of Defense, 1947–1997, pp. 90–93. 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 81

By this time, the Nixon administration’s appointments tangle 

was taking its toll on OSD. The positions of assistant secretary of 

defense for installations and logistics and comptroller had been 

vacant since January, and Secretary of the Air Force Robert C. Seamans Jr. had left the Air Force without a replacement. John Foster was still DDR&E, but Clements’ lack of confidence in him was 

public knowledge.116 But by July 1973, the DoD team was finally 

filling in. The new DDR&E was Malcolm R. Currie, a business executive in the technology field with a doctorate from the University 

of California at Berkeley and naval service in the Second World 

War. The comptroller was Terence E. McClary, a business executive 

specializing in financial issues. The assistant secretary of defense 

for installations and logistics was Arthur I. Mendolia. Richardson 

had downgraded the position of assistant secretary of defense for 

systems analysis when Gardiner Tucker left the position. The new 

director of program analysis and evaluation reporting to the DoD 

comptroller was Leonard Sullivan. His position was reestablished 

at the assistant secretary level in 1974. Schlesinger persuaded 

John L. McLucas (Air Force under secretary since March 1969) to 

accept an appointment as secretary of the Air Force.117

In the fall of 1975, Schlesinger publicly voiced his objections 

to the budget cuts then under consideration in Congress, amounting to possibly $5 billion. His continual disagreements with Henry 

A. Kissinger over SALT (Strategic Arms Limitation Treaty); his 

quarrels with Clements, his deputy secretary; and a personal style 

many considered abrasive had weakened him with the genial President Gerald P. Ford. Accordingly, the president called for his resignation and Schlesinger left office on 19 November, completing 

seventeen months as secretary of defense.118

To succeed Schlesinger, President Ford turned to Donald H. 

Rumsfeld, a member of the White House staff. The 43-year-old Chicago native had served in Congress during the 1960s but joined 

the Nixon administration to hold a number of positions, including 

that of representative to NATO. Taking office as the 1976 election 

campaign was beginning, he was able to regain some of the funding 

that had been cut from Schlesinger’s budget.119 But funding for the 

Safeguard installation disappeared, and real spending decreased. 

116 “The Pentagon’s New No. 2 Man,” Business Week (27 January 1973): 40. 117 Trask and Goldberg, Department of Defense, 1947–1997, p. 93. 118 Interv, Goldberg and Matloff with James R. Schlesinger, 7 Feb 1991, pp. 30–36, 

OSD Historical Office; Trask and Goldberg, Department of Defense, 1947–1997, p. 93; Interv, 

Goldberg and Trask with Donald H. Rumsfeld, 12 Jul 1994, OSD Historical Office, pp. 16–20; 

Gerald R. Ford, A Time to Heal: The Autobiography of Gerald R. Ford (New York: Harper & 

Row, 1979), pp. 320–30. 119 Trask and Goldberg, Department of Defense, 1947–1997, pp. 94–95. 
82 DEFENSE ACQUISITION REFORM,1960–2009

Rumsfeld gave a high priority to developing a political consensus 

for increases in defense. He instituted a series of conferences with 

legislators and opinion leaders designed to present evidence about 

the Soviet buildup and the strategic balance.120 

The Congressional Commission on Government Procurement

In 1970, Congress had been paying increased attention 

to all aspects of defense management. Weapons acquisition 

was only one aspect of the problems that concerned Congress. 

Procurement throughout the federal government seemed in need 

of study. Despite the work of the Blue Ribbon Defense Panel, 

several congressional members continued to favor a major study 

of procurement throughout the government.121Beginning in 1966, 

congressional hearings and proposals had examined the need for 

such a study, and by 1970, when the panel turned in its report, 

a congressional commission on government procurement was 

already being formed. 

The Congressional Commission on Government Procurement 

(also called the Commission on Procurement and the McGuire-Holifield Commission) was to address the entire scope of procurement 

across the government. With the rise of spending in the civilian 

agencies, problems were not confined to defense. Still, the experience of the Defense Department as the government’s dominant 

buyer was a major focus for the commission. The acquisition of 

entire systems was a related issue, and notwithstanding the Blue 

Ribbon Panel’s report, the commission devoted an entire study to 

major systems in defense and elsewhere. Likewise, such issues as 

the procurement of research and development were connected to 

systems acquisition. Congress hoped that the commission would 

look at problems of cost and competition. Also, because a large body 

of law governed procurement, and Congress was often blamed for 

having created the problem through its legislation, the commission 

was to investigate the need for changes in the statutes. The commission addressed several controversial issues, including centralization, the independence of the Defense Contract Audit Agency, 

the role of the private sector in research and development, the role 

of industry in advancing technology, and the nature of the acquisition process itself.122

120 Interv, Goldberg and Trask with Donald H. Rumsfeld, 12 Jul 94, pp. 20–21. 121 Report to the President and the Secretary of Defense on the Department of Defense,

Blue Ribbon Defense Panel, 1 July 1970. 122  Report of the Commission on Government Procurement (Washington, D.C.: U.S. 

Government Printing Office, 31 December 1972), vol. 1, pp. vii–viii. The report referred to an 

“agency head,” which in the case of DoD meant the secretary of defense. The military services 

were defined as “agency components.”
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 83

On 26 November 1969, soon after the Blue Ribbon Panel had 

started work, Congress passed the law creating the Commission on 

Government Procurement. It was to have twelve members: three 

appointed by the presiding officer of each house of Congress, five 

appointed by President Nixon, and the Comptroller General of the 

United States. Two members of each house and two officials of the 

executive branch were to be included. The two senators chosen 

were Henry M. Jackson (D-Wash.) and Edward J. Gurney (R-Fla.). 

Gurney’s colleague, Lawton M. Chiles Jr. (D-Fla.), replaced Jackson early in 1972. Congressmen Frank Horton (R-N.Y.) and Chet 

E. Holifield (D-Calif.) came from the House of Representatives. Holifield became one of the two cochairmen, the other being Perkins 

McGuire, who was working as a consultant in Washington, D.C., 

but who had served as assistant secretary of defense for supply 

and logistics in the Eisenhower administration. The two executive branch officials were Frank P. Sanders, under secretary of the 

Navy, and Robert L. Kunzig, administrator of the General Services 

Administration, who was replaced by his acting successor, Arthur 

F. Sampson, in mid-1972. Elmer B. Staats, the comptroller general and head of the General Accounting Office, served ex officio. 

Besides McGuire, the private-sector members included business 

executives and, as a replacement, James E. Webb, former head of 

the National Aeronautics and Space Administration (NASA). 

The commission appointed thirteen study groups and submitted its final report on 31 December 1972, over a year after the 

Blue Ribbon Report. The heads of the study groups represented 

a variety of backgrounds extending from business and consulting 

firms to government agencies. A civilian official from the Air Force 

headed the research and development group, while John Russell 

Clark of LTV Aerospace Corporation chaired the group covering 

major systems acquisition. Other members of the group were from 

the public and private sectors.123

The experience of the Defense Department was central to the 

findings of the congressional commission. Although the commission addressed the full range of government procurement issues, 

the first one they mentioned was public concern over cost growth 

in weapons programs. Procurement was then taking up one-fourth 

of the federal budget, and defense acquisition was two-thirds of 

federal government procurement. The next agency in scale was the 

Atomic Energy Commission, which spent most of its procurement 

money in connection with nuclear weapons programs, in support of 

the Defense Department. 

123 Ibid., pp. iii–iv, 139–51.
84 DEFENSE ACQUISITION REFORM,1960–2009

The congressional commission attempted the task of addressing procurement throughout the government while dealing with 

the primary importance of defense programs.124 The issues addressed included research and development, acquisition of major 

systems, commercial products, construction, grant assistance programs, and such legal thickets as administrative remedies, liability, and intellectual property. Formal recommendations numbered 

149 in all, covering everything from proposals for legislation to 

editorial revisions in current regulations.125

 The commission concluded that procurement in the federal 

government was in need of modernization and simplification, as 

well as better management. Reform would require legislation, 

since much of what was wrong lay embedded in practices Congress 

had sanctioned over the years. At the same time, reform within the 

executive branch seemed to require congressional attention, beginning with the creation of an office to oversee procurement throughout the government. In the acquisition of major systems, the report 

called for a more open and competitive process in the early phases 

of programs, or “competition at the front end.”126

Office of Federal Procurement Policy

The congressional commission’s leading recommendation was 

that a law be passed creating a single office of federal procurement 

policy, preferably within the Office of Management and Budget. 

In analyzing the process of planning, solicitation, source selection, 

negotiation, awards, and contract administration, the report furnished an agenda for the proposed office. The report gave especially high priority to two issues: (1) the relationship between the 

government and the private sector and (2) the need for timely payment of contractors.127But it also addressed an array of complaints 

about government procurement based on years of experience. They 

included the disjunction between the Armed Services Procurement 

Act, which applied to defense acquisition, and the Federal Property and Administrative Services Act, which affected the civilian 

agencies of the government. A series of recommendations sought 

to bring coherence to procurement regulations and make procedures more in tune with current reality. For instance, the process 

that made negotiated contracts the exception to the rule of formal advertising and sealed bids justified by one of seventeen possible exceptions as stated in “determinations and findings” needed 

124 Ibid., pt. A, “General Procurement Considerations,” pp. 2–5. 125 Ibid., pp. 185–99. 126 Ibid., pp. 2–5. 127 Ibid., pp. v, 12–14. 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 85

change.128 As the commission noted: “The point is not that there 

should be more negotiation and less advertising but that competitive negotiation should be recognized in law for what it is; namely, 

a normal, sound buying method which the government should prefer where market conditions are not appropriate for the use of formal advertising.”129

Existing laws seemed to encourage practices such as technical leveling and “auctioning” in which the government brought on 

exchanges of information among bidders, until all bids were the 

same, and the most innovative bidder gained no benefit but instead had to keep its bid low to win.130

One contribution the proposed office of federal procurement 

policy could make was to simplify regulations, adopting a uniform 

structure and process, with the chance of reducing the “five-foot 

shelf” of regulations every office had to keep. The commission was 

also concerned with the quality, motivation, and state of training 

of the contracting officers and the procurement workforce throughout the government.131

Frequent statements of policy had supported the principle 

that favored reliance on the private sector for the acquisition of 

major weapon systems. Since 1966, Bureau of the Budget Circular A–76 had proclaimed that the government should rely on private sources for goods and services except in specific cases, one of 

which was, in essence, military necessity. Most politicians treated 

this principle as indisputable. The McGuire-Holifield Commission recommended writing A–76 into law, and the only dissenting 

views were those business members who favored procedures for 

stronger enforcement of the privatization standard. The view put 

forward by such critics as the economist John Kenneth Galbraith 

that the defense firms were really public assets and should be 

nationalized got short shrift.132

Concerning government-owned, contractor-operated facilities, 

the historic government defense plants, the commission simply 

noted that they seemed to give their operators an unfair competitive advantage and urged the proposed office of federal procurement policy to review the guidelines.133

128 Ibid., pp. 18–25. 129 Ibid., p. 21. 130 Ibid., pp. 20–25. 131 Ibid., pp. 31–38, 43–55; Interv, DAHP with James D. Schlesinger, 7 Feb 1991, p. 28. 132 Report of the Commission on Government Procurement, vol. 1, pt. A, pp. 57–65; 

John Kenneth Galbraith, “The Big Defense Firms Are Really Public Firms and Should Be 

Nationalized,” New York Times Magazine, 16 November 1969. 133 Report of the Commission on Government Procurement, vol. 1, pt. A, p. 66.
86 DEFENSE ACQUISITION REFORM,1960–2009

The commission devoted much attention to the issue of timely 

payment. For small businesses, the problem of delays in government payments could be a matter of survival. Likewise, subcontractors might suffer if the prime contractor chose to pass along 

funding delays to them. Undoubtedly, Congress had been concerned 

over constituents who had suffered from delayed government payments. But the commission devoted a good deal of attention to Congress’ own role in the problem, which was the failure to pass appropriations promptly. Continuing resolutions often failed to cover 

expenses of ongoing contract work and forced delays in beginning 

new work.134 The commission accordingly pointed the way toward 

reforms that were to emerge in the Budget Reform Act of 1974.

On such matters as cost accounting, the commission simply 

urged that the proposed office of federal procurement policy set 

uniform standards, so that contractors could follow the same procedures for all government work, regardless of the agency. Contractors 

needed a uniform standard on prices and allowable costs, including 

overhead, as well as profit and risk. The commission also feared that 

many contractors were overburdened by management and reporting requirements from a variety of government agencies.135

The government maintained field organizations for management and support of its contracts. The commission noted the wide 

range of agencies with such field organizations and the inefficiency 

and incoherence of the system of “plant cognizance,” even within 

the Defense Department. The Defense Contract Administration 

Service (DCAS), created to provide a unified approach to plant management, had not fulfilled its potential. As of 1972, the Army still 

had cognizance of five plants, the Navy fifteen, and the Air Force 

nineteen. Although willing to allow government-owned plants and 

all shipyards to remain under service cognizance, the commission 

urged centralizing the oversight of remaining plants under DCAS. 

To strengthen the service further, the report proposed separating 

it from the Defense Supply Agency and consolidating the Defense 

Contract Audit Agency (DCAA) with DCAS.136

The commission was far from united on the consolidation proposal. The majority report contended that the DCAA existed solely 

to audit contractors doing government work. It was accordingly 

a part of the management team for defense oversight of contractors and supported the contract management function. Although 

the commission mentioned the frequent suggestions from business 

that DCAS and DCAA be consolidated, opposition by the Defense 

134 Ibid., pp. 67–73. 135 Ibid., pp. 75–79. 136 Ibid., pp. 103–10.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 87

Department, confirmed by David Packard during his tenure, was 

also noted. Congressional committees had been opposed to the consolidation, as had the General Accounting Office. On the commission itself, Senator Chiles, Congressman Holifield, and Comptroller General Staats all lodged objections.137 Former NASA Director 

Webb not only objected but also asserted that an independent auditing function was an essential element of leadership in an agency. 

The quality and motivation of the procurement workforce depended 

on the knowledge that an independent auditing activity was receiving the full support of the top management of the agency. 

The commission also addressed two politically sensitive issues: 

the use of procurement to implement national policies and the 

role of small business. Congress and the White House had given a 

number of groups leverage to influence procurement policy. Organized labor, civil rights advocates, environmentalists, and business 

groups seeking to limit foreign competition had all seen their concerns legislated. Much duplication had resulted as, for example, 

the Buy American Act and DFARS, Subpart 225.7004, restricting 

the acquisition of foreign buses, were general and specific applications of the same concern. Moreover, objectives often conflicted. 

Procurement officials had become compliance officers for such 

concerns as limiting the use of nonunion labor, prohibiting racial 

discrimination, and ensuring compliance with the Clean Air Act, 

let alone efforts to ensure fair and honest procurement practices. 

Their need to report on these topics added to the cost and time 

needed to complete procurement actions. This burden was not often acknowledged as a factor in the costs and delays of weapons acquisition. The report of the commission called for a review of these 

policies, increasing the visibility of costs and establishing standard 

procedures for enforcement.138

Legislators who were closely involved with procurement 

seemed to be especially aware of the number of their constituents 

who were the owners of small businesses. Problems included defining what a small business was, what was a fair share of government procurement for small firms, the effectiveness of set-aside 

requirements, and the status of subcontractors. The commission 

called for a review of small business policy by the Small Business 

Administration and the new Office of Federal Procurement Policy. 

But it was clear that Congress would define competition in the 

procurement process in part in terms of the opportunities for small 

businesses to bid.139

137 Ibid. 138 Ibid., pp. 112–18. 139 Ibid., pp. 125–32.
88 DEFENSE ACQUISITION REFORM,1960–2009

Procurement of Research and Development

The role of the defense industry in research and development 

paralleled that of private-sector nonprofit organizations. Universities and, to a lesser extent, nonprofit foundations, performed essential research. But the post-1945 era had produced a group of independent nonprofit research organizations specifically organized to 

do work under contract with the government. These were the federally funded research and development centers (FFRDCs), long 

known in the Defense Department as federal contract research 

centers (FCRCs). Some of these were connected to educational 

institutions, while others had spun off from defense contractors. 

Most had a connection with a specific component of the Department of Defense.140

The FCRCs varied in size and specialization. The largest in 

1969 was the Aerospace Corporation, which worked with the 

Air Force, and specifically with the Air Force Space and Missile Systems Organization (SAMSO), with over 3,000 employees 

and programs valued at $74 million a year. Next in monetary 

value was the Lincoln Laboratory, connected with the Massachusetts Institute of Technology, at $68 million a year. Lincoln 

Laboratory performed work for the Air Force, largely connected 

with the Electronic Systems Division. Other groups included 

the Johns Hopkins University’s Applied Physics Laboratory; the 

Center for Naval Analyses; the Logistics Management Institute, 

which performed work for OSD and the military services; and 

the Army-connected Human Resources Research Organization 

(HumRRO). The Institute for Defense Analyses (IDA) worked 

for OSD. The Rand Corporation, which spun off from the Douglas Aircraft Corporation in 1948 to do work for the Air Force, 

had more than 1,200 employees and annual funding of over $20 

million.141

At the same time, the military services continued to operate 

their own laboratories throughout the United States. As the emphasis on competition and the role of the private sector continued, 

questions about the role of the federal laboratories were inevitable. The Procurement Commission alleged that few of the service 

laboratories had a strong reputation. The Army’s Harry Diamond 

Laboratory, then still in Washington, D.C., and the Navy’s Naval 

Weapons Center at China Lake, California, were singled out as 

deserving of their high reputations.142

140 Ibid. 141 Ibid., pp. 16–18. 142 Ibid., pp. 13–16.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 89

The Procurement Commission favored utilizing the government 

laboratories in support of contract research and development. It 

also believed that FCRCs needed strong oversight. The strongest 

suggestion of the commission was that federal agencies needed to 

be open to competition from unsolicited proposals. Encouraging innovative ideas was the essence of competition in research and development. For this reason, the commissioners saw no difficulty in 

sustaining a variety of research and development organizations.143

The commission preferred cost-reimbursement contracts over 

fixed-price contracts for research and development projects. These 

projects were likely to be too high risk for fixed-price instruments, 

while the need for the government to manage research closely fit 

well with managing costs. The commission also supported DoD’s 

use of standing agreements with research and development contractors that simplified negotiation for specific projects.144

The commission’s support for research in the private sector led 

to its main policy recommendation, which was to provide for covering the cost of research by contractors. The manufacturers of major 

defense systems hoped to finance their research and development 

from the proceeds of their work on government contracts. Known 

as contractor independent technical effort (CITE), this work was 

normally funded from contractor overhead. The commission noted 

that in sealed-bid procurement, as in production for the commercial market, competition ensured that the manufacturer would 

control costs for research as well as production. When DoD or other agencies negotiated cost-reimbursement contracts, the contractor hoped to recover a fair share of overhead as an allowable cost, 

which normally included the cost of CITE.145

It had long been the practice in defense contractor accounting 

to subdivide these costs into independent research and development (IR&D) and bid and proposal (B&P), as well as development 

testing and evaluation (DT&E), a fairly recent addition. For bid 

and proposal work, it was the task of government to make sure 

that a winning bidder was qualified to do the work. The commensurate right of the bidder was to demonstrate qualifications for 

performing the required work. Development test and evaluation 

broke out the specific costs of testing, which in the wake of Packard’s reforms was a serious concern.146The Procurement Commission, in keeping with its support for the private sector, recommend143 Ibid., pp. 23–28. 144 Ibid., pp. 45–46. 145 Report of the Commission on Government Procurement, vol. 2, pt. B, “Acquisition of 

Research and Development,” pp. 31–34. 146 Ibid.
90 DEFENSE ACQUISITION REFORM,1960–2009

ed “a policy recognizing IR&D and B&P efforts as necessary costs 

of doing business.”147

Since the introduction of the Armed Services Procurement 

Regulation (ASPR) in 1949, the normal government practice had 

been to allow contractor reimbursement for independent technical 

effort. But the process of determining a fair reimbursement had 

undergone change. Though often interpreted as allowing simply 

the expenses of product development, the ASPR had been cited as 

authority for allowing research costs as well. A 1959 revision of 

the ASPR attempted to set distinct procedures for research and 

for development. In the early 1960s, DDR&E led a task group to 

work out a better solution. The proposed answer was to include 

all reasonable CITE in overhead. But the rising tide of criticism 

of the military-industrial complex led Congress in 1969 and 1970 

to impose a ceiling on the amounts a contractor could recover. Following a study by GAO and congressional hearings early in 1970, 

legislation removed the ceiling but imposed a “relevancy test” to 

determine appropriate expenses. Accordingly, OSD issued a revision to the ASPR on 1 September 1971.148

The revisions established definitions for recoverable costs as 

overhead for IR&D and B&P. The main feature was a requirement 

that major contractors negotiate annually with the government to 

establish a ceiling of allowable costs for research. This requirement in effect established that the big defense contractors would 

be operating government-subsidized research and development 

programs aimed at supporting their work in producing weapon 

systems for national defense. The Procurement Commission essentially supported this approach, as it engaged the private sector in 

furnishing technology to the government.149

The Procurement Commission’s recommendation asserted the 

principle that IR&D and B&P expenses should be treated in a uniform manner throughout the government. Businesses that relied 

primarily on fixed-price contracts or commercial sales should be 

allowed to treat research expenses as normal overhead. Those that 

relied on cost-reimbursement contracts would have to demonstrate 

the relevancy of the research to the mission of the agency (i.e., 

the Defense Department). But the commission was far from unanimous in its recommendation.150

The controversy was deep-seated. The commission agreed that 

ideally a contractor could take research costs out of profit. But it 

147 Ibid., p. 31. 148 Ibid., pp. 32–38. 149 Ibid. 150 Ibid., pp. 31–32.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 91

noted: “It is axiomatic that a business must generate income in 

excess of all of its costs if it is to survive.” In view of the controversy over the appropriate level of profit in the defense industry, it 

was prudent to treat CITE expenses as allowable costs (overhead) 

rather than as contractor deductions from profit. Critics of the defense industry tended to define bid and proposal as advertising. 

The entire issue of CITE was intensely controversial. It was easy 

for critics to believe that overhead costs, including IR&D and B&P, 

were rationalizations for waste.151

Dissenting commissioners included three of the legislators 

(Chiles, Holifield, and Horton), as well as Staats of the GAO and 

Webb. The dissenters favored the existing procedures as outlined 

in the ASPR, with an explicit requirement for visibility, allowing 

the government access to contractors’ records to make sure the 

costs were reasonable. Sanders, the under secretary of the Navy, 

supported in part by Sampson, the acting GSA (General Services 

Administration) administrator, suggested inventive ways to get 

around the “IR&D/B&P dilemma.” These included such ideas as 

allowing contractors to establish nonprofit subsidiaries to do their 

research, awards, grants, and tax breaks. Changes in overhead 

rules or profit policy could incentivize desired behavior.152

Reforming Requirements

The report of the Congressional Commission on Government 

Procurement included a penetrating assessment of the issues of 

systems acquisition based on the experience of the Defense Department over the years. From this, civilian agencies might profit 

in their own expanded concerns with systems acquisition. John 

Russell Clark, who headed the study group on acquisition, was 

general manager of the Vought Division of LTV as well as an aeronautical engineer with a degree from the Massachusetts Institute 

of Technology. The group included representatives from industry 

and government, one member being an employee of the Aerospace 

Corporation, an FCRC.153

The report on acquisition described a process that included 

contractors who overpromised technical performance in order to 

obtain work, military services that overmanaged the design process, defense secretaries who lacked the means to control the process, and a Congress bogged down in detail. In place of “patchwork” 

solutions, the commission urged an attack on the underlying prob151 William Proxmire, Report from Wasteland (New York: Praeger Publishers, 1970), pp. 

114–15. 152 Report of the Commission on Government Procurement, vol. 2, pt. B, pp. 39–42. 153 Ibid., vol. 1, app. B, p. 149. 
92 DEFENSE ACQUISITION REFORM,1960–2009

lems, instituting a systematic process by which all participants 

could have the needed information.154

The report’s most penetrating argument concerned the requirements process for weapon systems, in which the focus on 

predetermined technical solutions actually increased risk. The 

proposed solution, “competition at the front end”—an increased 

emphasis on competitive alternate solutions—involved increasing the role of industry in the development of weapons. Packard’s 

known interest in competitive prototypes suggested an even more 

all-embracing reliance on competition in the earliest phases of a 

weapons program. In place of the commonly understood requirements process, firms might be invited to submit a solution to a 

problem, a mission need rather than a design to meet predetermined specifications.155

In December 1972, the Congressional Commission on Government Procurement presented its report. The following five items 

were its principal findings and recommendations: 

•	 Congress was ill-equipped to evaluate performance, 

costs, and schedules for new defense systems programs in 

the context of national security objectives and priorities. 

Congress should establish an office of federal procurement policy, to be headed by a presidential appointee, to 

oversee procurement policies and systems throughout 

the government.

•	 Congress should consolidate all statutory procurement 

regulations into a single statute.

•	 DoD should upgrade the acquisition workforce by establishing an institution to provide necessary education and 

services.

•	 DoD should reduce the management and administrative 

layers between policy makers and program offices.

•	 Congress should have greater visibility in the acquisition 

process to exercise its responsibilities, i.e., provide the 

information needed to make key program decisions and 

commitments.

Pentagon officials adopted the position that DoD was already moving in the direction recommended in the commission’s report.156

Implementing the report of the McGuire-Holifield Commission 

was under way for several years but was never fully carried out. 

154 Ibid., vol. 2, pt. C, pp. 69–73. 155 Ibid., pp. 77–82. 156 Acker, “The Maturing of the DoD Acquisition Process,” pp. 41–43.
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 93

A scorecard of recommendations adopted would probably be impressive, but the soundness of the changes might never be fully assessed. Perhaps the greatest strength of the report can be attributed to the fact that Congress had commissioned it. Accordingly, the 

commission had been free to suggest ways in which the legislative 

branch had contributed to the problem and how legislation might 

bring change. At the same time, the executive departments were 

also forced to pay attention and to make careful arguments if they 

preferred to reject any of the commission’s proposals. The Defense 

Department could argue for its part that the report reflected its own 

experience. Indeed, many of the recommendations paralleled DoD’s 

own thinking.157

The response in the Defense Department proved to be slow. A 

study of the acquisition process by a group with extensive experience in the Pentagon asserted that the reform of requirements 

was not really needed. DoD devoted its attention to the internal 

reforms that Clements and others saw as necessary. 

Legislating Reform

During 1974, Congress adopted two major reforms. One was 

only tangentially connected with the commission’s report but was 

a critical issue in executive-legislative relations. This was passage 

of the Budget Act. The other was the creation of an Office of Federal Procurement Policy. 

Although Congress often voiced its criticisms of the acquisition 

process in DoD and the federal government in general, many members were aware of the deficiencies of Congress. The most urgent 

issue was the continuing delays in adopting appropriations, especially for the Defense Department, a practice known to impose serious hardships. Among the victims were smaller contractors who 

could not afford delays in payment. One recommendation of the 

McGuire-Holifield Commission had been to expedite payments to 

contractors.158

The Budget Act of 1974 was the most far-reaching reform of the 

congressional budget process since 1921. Broadly speaking, it was 

designed as an attack on the weakened President Nixon to end his 

practice of impounding funds that Congress had appropriated. It 

added reforms in the way Congress handled the budget, creating 

the Congressional Budget Office, revising the committee process, 

and changing the fiscal calendar of the federal government. Fiscal 

Year 1976 would be the last to end on 30 June. A transitional quarter running from July to September would be followed by fiscal 

157 Report on the Commission on Government Procurement, vol. 1, pp. vi–viii. 158 Ibid.
94 DEFENSE ACQUISITION REFORM,1960–2009

1977, ending on 30 September of that year. The act also mandated 

that by 1978 agencies were to provide Congress with budget data 

on research in a format designed to highlight mission needs. In the 

process, the reform of the fiscal calendar was designed to resolve 

the problem of late payments.159

A month later, Congress passed the legislation creating the 

Office of Federal Procurement Policy. In the Defense Department 

there was considerable doubt that such an office was necessary. 

Given the unique nature of defense acquisition and the scale of 

DoD’s procurement budget, senior defense officials believed that 

reform within the Defense Department was best managed in the 

Pentagon rather than in an organization outside DoD. Nonetheless, Congress concluded that an outside voice for reform was needed, and the law was passed in August 1974, the month of President 

Nixon’s resignation.160 The Office of Federal Procurement Policy 

was to be an element of the Office of Management and Budget. 

President Ford nominated Hugh E. Witt, then working in OSD under the assistant secretary for installations and logistics, to be the 

first administrator of the Office of Federal Procurement Policy. The 

Senate confirmed Witt in December 1974. In the meantime, other 

legislation was introduced to overhaul procurement legislation, 

help small business, reform bid contract protest procedures, and 

extend the Renegotiation Board.161

A number of changes came about within a year or two after the 

McGuire-Holifield Commission submitted its report. The Office of 

Management and Budget (OMB) assigned the recommendations of 

the commission to task groups headed by different federal agencies. 

It also updated OMB Circular A–76, which set policy on the role of 

private business in procurement.162 The Defense Department adopted a number of changes but took a stand against others. It formally rejected the proposals to reform the structure of DCAS and 

DCAA. Separating DCAS from the Defense Supply Agency would 

create too much duplication of staff, and the independence of the 

DCAA remained a fundamental principle of defense management. 

The question of independent research and development remained 

open as the Office of Federal Procurement Policy explored agency 

and industry views. Nonetheless, the effect of the commission’s at159 Ibid., pp. 37, 69–73. 160 Remarks by Senator Sam Nunn, Congressional Record, 93d Cong. 2d sess., S. 7575–

7577, 1974. 161 GAO Report, Legislative Recommendations of the Commission on Government 

Procurement: 5 Years Later, PSAD–78–100, 31 Jul 1978, pp. 7–11. 162 Ibid., pp. 11–15. 
DEFENSE ACQUISITION REFORMS IN THE 1960s AND 1970s 95

tention to this topic was to encourage a more supportive view of 

the efforts of private enterprise in research.163

Office of Management and Budget Circular A–109 

In 1976, the Office of Federal Procurement Policy published 

Circular A–109, which required more competition throughout the 

acquisition process and mission area analysis in the early stages of 

the process. Nonetheless, its implementation by successive defense 

secretaries often encountered resistance from the military services 

and contractors.164

Under A–109 requirements, the acquisition cycle began with a 

military service determination of a need for a particular weapon 

system to perform a mission. The service then prepared a missionneed statement, which expressed the need in terms of operational 

requirements rather than performance specifications or system 

characteristics. To acquire control over this portion of the acquisition cycle, OSD added a new Milestone Zero to the acquisition 

process, signifying OSD approval of a mission need proposed by a 

military service. This approval was required before the acquisition 

program could proceed.165

During the administration of Jimmy Carter (1977–1981), Defense Secretary Harold Brown (a former director of defense research and engineering) sought to regain some of the authority in 

weapons acquisition that Packard had relinquished to the services. 

Secretary Brown also issued a formal requirement to comply with 

OMB Circular A–109 for mission area analysis and mission-need 

statements.166

Throughout the 1970s, the Defense Department expended much 

effort to improve the Planning, Programming, and Budgeting System. The efforts involved identifying long-term mission needs and 

matching them to resource requirements, reviewing the outcomes 

against a variety of alternatives, and finally translating the results into firm budget proposals. By the end of the 1970s, however, 

several major initiatives undertaken during the Nixon, Ford, and 

Carter administrations to reform the weapons acquisition process 

had created serious functional bottlenecks in the PPBS, especially 

between the planning and programming phases. 

163 Report on the Commission on Government Procurement, pp. 38–45, 60–61. 164 U.S. Congress, Senate, testimony of Laurence E. Lynn, 21–27 October and 5 November 

1981, pp. 133–35. 165 Giles K. Smith and E. T. Friedmann, An Analysis of Weapon System Acquisition 

Intervals, Past and Present, Rand Report R–2605–DR&E (Santa Monica, Calif.: Rand 

Corporation, 1980), pp. 5–6. 166 Background Information, Senior Steering Group, Office of the Secretary of Defense, 

DoD Acquisition Study, 7–8 November 1985. 
96 DEFENSE ACQUISITION REFORM,1960–2009

In 1979, the Defense Resources Board completed a separate 

study of the acquisition process. It endorsed the use of the mission-need statement, schedule compression, multiple technologies 

in one weapon system, sought to improve incentives for program 

managers, and provide greater consideration of life-cycle costs. But 

the recommendations in the report were never acted on, and a new 

administration headed by Ronald W. Reagan was elected in November 1980.167

The Reagan administration would focus first on reviving the 

economy, controlling inflation, and strengthening U.S. defense capabilities. It would then conduct a comprehensive study and implementation of acquisition reforms described in the next chapter. 

167 Kosta Tsipis and Penny Janeway, eds., Review of U.S. Military Research and 

Development (Washington, D.C.: Pergamon-Brassey’s, 1984), pp. 14–15; Bradburn, “Strategic 

Postures in the Military Aircraft Industry,” pp. 45–53; U.S. Congress, Senate, testimony of 

Laurence E. Lynn, 21–27 October and 5 November 1981, pp. 133–35.
On 4 November 1980, former California Governor Ronald W. 

Reagan defeated incumbent Jimmy Carter to become the fortieth president of the United States. Reagan’s stunning win was 

matched by a strong Republican win in Congress. Unlike his 

predecessor, Jimmy Carter, whose presidency was marred by an 

intractable hostage crisis in Iran, an ailing national economy, 

rampant inflation, soaring oil prices, and a host of other domestic problems, Reagan entered the White House in January 1981 

with an election mandate to restore economic growth at home 

and strengthen American influence abroad. Reagan and his Republican allies in Congress cut taxes and reduced the size of 

the federal government while incurring huge budget deficits to 

help revive the economy, which was already crippled by sharp 

declines in industrial productivity and fierce foreign competition 

in key manufacturing sectors ranging from steel and automobiles to machine tools and consumer electronics.1 The economy 

responded to the tax cut stimuli, and the gross national product grew at an attractive rate of 3.85 percent per year during 

Reagan’s eight years in office. In his first inaugural address on 

20 January 1981, Reagan argued: “In this present crisis, government is not the solution to our problems; government is the problem.” The White House moved quickly to modernize and enlarge 

America’s military force structure, reversing the military decline 

of the late 1970s. During his first term in office, Reagan presided 

over the largest and most expensive peacetime expansion of the 

Army, Navy, and Air Force in American history. The budget for 

the Department of Defense (DoD) doubled, from $142 billion to 

1 On the decline of the manufacturing economy in the United States during the 1980s, 

see, for example, Paul R. Lawrence and Davis Dyer, Renewing American Industry (New York: 

Free Press, 1983); see also Alfred D. Chandler Jr., “The Competitive Performance of U.S. 

Industrial Enterprises Since the Second World War,” Business History Review 68 (Spring 

1994): 1–72; Margaret B. W. Graham, RCA and the VideoDisc: The Business of Research

(Cambridge: Cambridge University Press, 1986); Maryann Keller, Rude Awakening: The

Rise, Fall, and Struggle for Recovery of General Motors (New York: Morrow, 1989); Paul A. 

Tiffany: The Decline of American Steel: How Management, Labor, and Government Went

Wrong (New York: Oxford University Press, 1988); and John P. Hoerr, And the Wolf Finally

Came: The Decline of the American Steel Industry (Pittsburgh: University of Pittsburgh 

Press, 1988).

ChapterThree

THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION
98 DEFENSE ACQUISITION REFORM, 1960–2009

$286 billion, between 1980 and 1985, although inflation accounted for 30 percent or more of that increase.2 During that period, 

the Defense Department acquired new weapons systems for the 

military services: tactical aircraft, strategic bombers, intercontinental ballistic missiles (ICBMs), nuclear submarines, tanks, and 

attack helicopters. 

The Defense Department’s acquisition of major weapons systems 

has always been an inherently messy process replete with political 

rivalries and competing institutional priorities. After World War II, 

the Army, Navy, and the Air Force competed intensely against one 

another for resources to meet new mission requirements, while the 

Office of the Secretary of Defense (OSD) sought to limit this behavior through centralized oversight and managerial control. Congress, 

meanwhile, appropriated funds to the Defense Department annually, but weapons development—from concept to production—typically required many years of effort. Throughout the Cold War, changing 

funding levels prompted by annual budget fluctuations often led to 

inefficient production rates and schedule slippages in key weapons 

programs contracted out to industry. Concurrently, politicians and 

business advocates alike hailed competition as the most effective 

source of weapons innovation, but defense contractors operated in 

an economic environment that mitigated free-market behavior. The 

buyer-seller relationship was dominated, not by many independent 

actors competing against one another, but rather by a single buying 

organization—the federal government. The resulting market distortions and mismatched incentives between a small number of very 

large firms and the Defense Department encouraged institutional 

rigidity in the procurement process. High barriers to entry often enabled contractors to shift the burden of cost overruns during development and production directly to the government. Cost control was, 

and still is, a chronic problem in the weapons acquisition process.3

The acquisition process has also been constrained by the decentralized and adversarial nature of representative government 

in the United States. Workable solutions to technological problems 

that appear in the process of developing new weapons systems 

require managerial decisiveness, flexibility, and ready access to 

resources. The availability of such resources, however, is limited 

by the necessary trade-offs between disparate political constituencies—Congress, the White House, industry, and the military 

2 U.S. General Accounting Office (GAO), Major Acquisitions: Summary of Recurring 

Problems and Systematic Issues: 1960–1987, GAO/NSIAD–88–135BR (Washington, D.C.: 

General Accounting Office, September 1988), p. 12. 3 For an exhaustive examination of these issues, see Merton J. Peck and Frederic 

M. Scherer, The Weapons Acquisition Process: An Economic Analysis (Boston: Division of 

Research, Harvard University Graduate School of Business Administration, 1962).
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 99

services—who must reach agreement for acquisition programs to 

move forward. Decisive action in the weapons acquisition process 

has always been diffused to some extent by the decentralization of 

America’s political institutions.4

Reagan’s defense secretary, Caspar W. Weinberger (1981–1987), 

and his deputy secretary, Frank C. Carlucci, created an acquisition 

improvement program (1981) to reform the acquisition process. 

Whereas the predecessor secretary, Harold Brown, had sought to 

tighten control over key aspects of the process, Weinberger implemented what he called controlled decentralization, whereby subordinate line executives, especially program managers in the military 

services, were to be held accountable for executing policy decisions 

made by the secretary after consultation with top civilian and military advisers. Weinberger acted on the conviction that cost-overrun problems and hardware that failed to perform as planned were 

made worse by previous attempts at detailed, centralized control, 

especially by the senior civilian research and engineering advisers 

in the Defense Department.

The Acquisition Improvement Program (AIP) was designed to 

mitigate the effects of political and institutional constraints on the 

acquisition process. The program sought, for example, to eliminate 

through multiyear procurements the program instability caused by 

annual budget fluctuations in Congress; reduce program costs; maintain efficient production rates and delivery schedules in industry; improve the readiness, supportability and operating performance of deployed weapon systems; enhance long-range planning and establish 

more realistic budgeting guidelines; increase competition among contractors; and streamline acquisition management and oversight by 

the military services and OSD. To be sure, these goals were not new. 

The program was merely the latest in a long line of organizational 

reforms previously mandated by the Department of Defense and various independent review committees and study groups to improve the 

institutional mechanisms by which the government acquired weapons systems. By 1981, the concept of reform within the weapons acquisition community had become something of a litany. Recast in new 

terms, the program, like its predecessors, remained heavily dependent on ideas and practices dating back to the early 1960s. 

The concept of centralized policy formation in the Office of the 

Secretary of Defense and decentralized policy execution in the 

military services became the centerpiece of the Weinberger AIP. 

4 See Thomas L. McNaugher, New Weapons, Old Politics: America’s Military Procurement 

Muddle (Washington, D.C.: Brookings Institution, 1989); Laurence E. Lynn Jr. and Richard 

I. Smith, “Can the Defense Secretary Make a Difference,” International Security 7 (Summer 

1982): 45–69.
100 DEFENSE ACQUISITION REFORM, 1960–2009

Using this approach, Weinberger intended to push decision-making authority on major weapons systems back down to the services, thereby ending nearly two decades of predominately top-level 

management of the weapons acquisition process in OSD that began in 1961 when Robert McNamara joined President Kennedy’s 

cabinet as secretary of defense. 

The recurring patterns of centralization and decentralization in 

the Pentagon in the two decades before Reagan entered the White 

House highlight the extent to which institutional pluralism—Congress, the services, industry, and OSD—frustrated Weinberger’s 

attempts to impose order on the weapons acquisition process. The 

anticipated outcomes of the Acquisition Improvement Program may 

have looked good on paper, but the implementation at the service 

level was far more difficult to achieve. “As good as Weinberger makes 

decentralization sound,” one observer wrote in Fortune in 1981, “it 

could result in wild spending and conflicting programs. . . . [C]onvinced that Weinberger intends to leave them alone, the services 

are updating their wish lists, thus putting themselves on collision 

courses with one another and with the Secretary [of Defense].”5

Such conflicts also had broader implications. Increased spending by the military services during the Reagan years invited more 

oversight from Congress, thereby imposing restrictions on the 

discretionary freedom originally sought by Weinberger.6 It also 

prompted increased public scrutiny of the military’s competence 

and ability to direct and oversee large engineering development 

programs. Media descriptions of high-priced spare parts and the 

ensuing scandals that followed during this period further damaged 

the Pentagon’s image as an efficient buyer of goods and services 

from industry and fueled congressional criticism of the weapons 

acquisition process. 

Setting the Stage: PPBS and the Cycles of Weapons Acquisition Reform

The massive buildup of America’s conventional and nuclear 

forces during President Reagan’s first term in office stand in 

marked contrast to the sharp declines in defense spending that 

had begun in the late 1960s and 1970s as the United States 

slowly extracted itself from the war in Vietnam. Expenditures 

for weapons procurement dropped by more than half, from $44 

billion to $17 billion in constant dollars, between the late 1960s 

and the mid-1970s. A corresponding reduction in the size of the 

5 D. D. Holt, “Cap Weinberger’s Pentagon Revolution,” Fortune (18 May 1981): 79–82 

(quotation). 6 See, for example, Robert J. Art, “Congress and the Defense Budget: Enhancing Policy 

Oversight,” Political Science Quarterly 100 (Summer 1985): 227–48.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 101

defense industry accompanied this transformation as contractors cut their production rates of major weapon systems or exited 

the defense business altogether.7 The soaring inflation that compounded the debilitating effects of a deepening recession begun 

in the late 1970s only made the prospects for improvement in the 

defense industry that much worse. 

Early in the Reagan administration, the White House moved 

quickly to increase the size and strength of America’s military 

force structure to counter the growing Soviet threat. The Pentagon, Weinberger pointed out in testimony given before the Senate 

Armed Services Committee in February 1982, planned to double 

the monthly production rate of the Army’s Abrams M–1 main battle tank by the end of the year, from thirty to sixty units, and increase output another 50 percent by 1985.8 Secretary of the Navy 

John F. Lehman planned an equally ambitious expansion program 

for the submarine and surface fleets. In 1982, Secretary Lehman 

secured congressional approval to float a 600-ship Navy, including 4 refurbished Iowa-class battleships, 15 aircraft carrier battle 

groups, and 100 nuclear-powered attack submarines, by the end 

of the decade. The Navy’s annual shipbuilding budget jumped 61 

percent, from $7.5 billion to $12.1 billion, between 1979 and 1986, 

while the size of the fleet grew from 479 ships in 1981 to nearly 

580 in 1989. The Pentagon achieved similar outcomes to update 

America’s strategic nuclear arsenal. Even before Reagan was elected president, Jimmy Carter had faced pressure to modernize the 

strategic nuclear triad of aging B–52 Stratofortress long-range 

bombers, silo-based Minuteman ICBMs, and submarine-launched 

ballistic missiles (SLBMs) Polaris and Poseidon. Reagan revived 

the previously cancelled B–1 bomber program, ordering production 

of 100 of the low-level manned aircraft to offset the planned retirement of older B–52s. The first production B–1 rolled off Rockwell 

International’s assembly line in Palmdale, California, in October 

1984, and entry of the B–1 into the Air Force inventory began the 

following year. 

By the time Reagan entered the White House, the PPBS, while 

still functioning reasonably well, had become less efficient. Management participation by the services and zero-based budgeting 

had not been fully integrated into the current system. Instead, they 

7 Holt, “Cap Weinberger’s Pentagon Revolution.” See also Jacques S. Gansler, The 

Defense Industry (Cambridge, Mass.: MIT Press, 1980), pp. 4–6; Gansler, Affording Defense

(Cambridge, Mass.: MIT Press, 1989), pp. 9–10. 8 Testimony of Secretary of Defense Caspar W. Weinberger before the U.S. Senate, 

Armed Services Committee on the FY 1983 Budget, FY 1984 Authorization Request, and 

FY 1983–1987 Defense Programs, 2 February 1982, p. 16, Office of the Secretary of Defense 

(OSD) Historical Office, Puritano box 5, Folder: “DRB, February 12, 1982.”
102 DEFENSE ACQUISITION REFORM, 1960–2009

were merely layered on top of it, which resulted in excessive paperwork and cumbersome data reporting procedures, mismatched and 

often conflicting line and staff functions in OSD, and the reemergence of strong adversarial relations between OSD and the services.9According to an internal review of OSD’s organization directed 

by Carlucci’s predecessor, Deputy Secretary of Defense W. Graham 

Claytor, during the last months of the Carter administration, “[T]

he OJCS [Office of the Joint Chiefs of Staff] and the staffs of the 

Military Departments and Defense Agencies that must interact 

with the OSD complex are often confused by it, and frequently 

waste time.”10 It was within this context of prior reforms and the 

organizational rigidities resulting from their implementation over 

many years that Frank Carlucci and Vincent Puritano (executive 

assistant to the deputy secretary of defense), acting on Defense 

Secretary Weinberger’s behalf, undertook a major overhaul of the 

PPBS in 1981.

On 2 March 1981, Carlucci chartered five working groups involving all services—inviting inputs from industry—to make recommendations for improving the acquisition process. The report 

of the working groups was delivered on 31 March 1981. Carlucci 

discussed the report with the Joint Chiefs of Staff, the service secretaries, the under secretaries and assistant secretaries of defense 

as well as the AIP Steering Group comprised of experienced civilian and military personnel.

Carlucci expected quick results. The PPBS review should last 

no more than a few weeks. “I don’t want a study,” he insisted. “I 

want workable recommendations with all options considered and 

the major ones presented to me for decision. . . . These recommendations should be specific and provide for immediately instituting 

improvements without major disruptions in current operations.” 

To meet this goal, Carlucci charged the Steering Group to meet an 

ambitious set of objectives:

The overall objectives are: to use the PPBS to improve the match 

between capabilities and the demands of our policies and national 

military strategy, to streamline the DoD decision making process 

by avoiding unnecessary revisiting of decisions and the resulting program instability, and to improve the material acquisition

9 “SECDEF Weinberger’s Planning, Programming, and Budgeting System Brings 

Practical Management to the Defense Program,” Program Manager 10 (May-June 1981): 14. 

See also Vincent Puritano, “Streamlining PPBS,” Defense ’81 (August 1981): 20–23. 10 Memo, W. Graham Claytor Jr. for the Undersecretaries and Assistant Secretaries of 

Defense, 4 Dec 1980, p. 3 (quotation), OSD Historical Office, box 561, Folder: “OSD/DoD 1980-

81, Transition to Reagan Era.”
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 103

process by assessing the interface between PPBS and the acquisition system. This will require improved long-range planning in 

all aspects of the PPBS process. It will also require increased participatory management involving the Joint Chiefs of Staff and all 

of the Military services working together with the Secretary [of 

Defense]’s staff.11

While participatory management maintained an active role 

in the review process and ultimately in the reformed PPBS that 

emerged from it, zero-based budgeting was not so fortunate. After 

a thorough cost-benefit analysis, OSD dropped zero-based budgeting as an independent process and incorporated some of its more 

useful provisions into the PPBS.12

In the draft report to Puritano on the proposed PPBS 

improvements, the Steering Group admitted that “there is an 

almost unlimited number of options by which the current PPBS 

can be improved.” The members of the group reached consensus 

on several key points, most notably the need for greater 

strategic and long-range planning throughout the PPBS and the 

assignment of greater roles to the secretary of defense, the Joint 

Chiefs of Staff, and the services in the planning cycle. The group 

also considered specific operational problems, such as data and 

reporting procedures. Proposed action on these items centered 

on two options, but they differed more in degree than in kind. 

“Both options . . . have features that aim at improving front 

end policy and strategic planning,” the report concluded. “The 

major difference between the two is that, while the first option 

streamlines the programming and budgeting phases as does the 

second, the second option decentralizes much more responsibility 

11 “DRB [Defense Resources Board] Meeting, 2 February 1981, Talking Points—Carlucci,” 

p. 2, OSD Historical Office, Box: “Defense Resources Board, May–August 1981, PuritanoBureau Files,” Folder: “DRB, May 6, 1981.” See also Memo, F. C. Carlucci for Distribution 

List, 13 Feb 1981, p. 1, Washington National Records Center (WNRC), National Archives 

and Records Administration, Suitland, Md., Series 330–83–0102, box 26/48, Folder: “100.5 

(January–April 81) 1981.” 12 In a letter he wrote to Office of Management and Budget Director David A. Stockman 

shortly after the Steering Group completed its deliberations, Carlucci commented on the 

status of zero-based budgeting (ZBB): “As you know, this Department had a comprehensive 

PPBS in place for some time before ZBB was implemented. ZBB brought with it a useful 

emphasis on involvement by all managerial levels in budget formulation through basic 

reviews of missions and functions and explicit prioritization in support of higher level 

decision-making. These features should be retained in PPBS. Unfortunately, ZBB also 

introduced a tremendous volume of essentially nonproductive paperwork. I recommend that 

the revised DoD PPBS, which retains these two essential features of ZBB, be implemented 

as meeting the OMB ZBB requirements.” Ltr, F. C. Carlucci to D. A. Stockman, 22 Apr 1981, 

WNRC, Series 330–83–0102, box 26/48, Folder: “100.5 (January–April 81) 1981”; “DoD 

Reorganizes: Greater Budget Role for the JCS,” 6 April 1981, OSD Historical Office, Subject 

Files, box 561, Folder: “DoD Organization 1981.”
104 DEFENSE ACQUISITION REFORM, 1960–2009

to the services from OSD.” Option one sought management 

improvements through organizational reform at the top, freeing 

the defense secretary to devote more time and effort to planning 

and policy matters, whereas option two set out to achieve the 

same results through administrative decentralization; that is, 

shifting certain management responsibilities from OSD to the 

services. In the case of the former, maintaining a centralized 

management structure preserved “a system which has served 

the Department [of Defense] well for twenty years and with 

which we are all familiar—thereby eliminating surprises.” In 

the case of the latter, delegating responsibilities to the services 

promised clarification of line and staff roles and functions and 

less micromanagement from OSD. Perhaps most importantly, 

the Steering Group concluded that more participation by the 

services in planning and program development would guarantee 

a “broader level of expression, thereby promoting stability.”13

Both options also had drawbacks. In the case of option one, 

the report expressed concern about the availability of “adequate 

time . . . for top leadership participation in planning and program 

review.” Option two raised similar concerns at the service level. 

“Individual service program and budget priorities are more likely to 

predominate,” the Steering Group noted, “possibly resulting in crossservice program mismatch and duplication.”14Carlucci discussed the 

report’s findings with the Steering Group; the Joint Chiefs of Staff 

(JCS); the secretaries of the Army, Navy, and the Air Force; Defense 

Secretary Weinberger; and other senior staff in OSD. After careful 

review, Carlucci selected the provisions of option two to guide the 

reform of the PPBS. OSD enhanced service participation through 

decentralization, but it also retained an active interest in planning 

and programming issues “that cut across service lines and programs 

and those that were of priority to Presidential and Secretary of 

Defense interest.” The services, meanwhile, continued to have direct 

responsibility for the execution of programs and the day-to-day 

management of the resources under their control.15

Renewed emphasis on service participation in the PPBS signaled a sharp reversal of OSD policy. During McNamara’s tenure 

in OSD, the programming function had experienced significant 

growth and influence at the expense of planning by the services. 

13 “PPBS Review, Draft—Internal Use Only,” 12 March 1981, pp. 9–10, 12, 17, 20, 24, 

WNRC, Series 330–83–0102, box 26/48, Folder: “100.5 (January–April 81) 1981.” See also 

David D. Acker, “The Maturing of the DoD Acquisition Process,” Defense Systems Management 

Review (Summer 1980): 41–43. 14 “PPBS Review, Draft—Internal Use Only,” pp. 17–18 (quotation), 25. 15 Memo, F. C. Carlucci for Distribution List, 27 March 1981, pp. 1–6, WNRC, Series 

330–83–0102, box 26/48, Folder: “100.5 (January–April 81) 1981.”
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 105

By the time Carlucci convened the PPBS Steering Group in the 

spring of 1981, OSD programming no longer functioned as an effective bridge between JCS planning and service budgeting. Carlucci 

resolved this organizational confusion by reforming the functions 

and membership of the Defense Resources Board. Established in 

April 1979, the board served as the principal advisory arm to OSD. 

The board’s original membership included the OSD senior staff 

at the assistant and under secretary levels. Service input was initially limited to the chairman of the Joint Chiefs of Staff, but this 

constraint disappeared after the Steering Group issued its PPBS 

review report.16The board provided general oversight and supervision of resource allocation throughout the Defense Department, 

ensuring that major programs remained closely aligned to the 

PPBS. It also resolved problems on behalf of the secretary of defense. The board had no statutory authority, however, and its recommendations carried no weight unless specifically approved by 

the chairman, a position held by the deputy secretary of defense. 

Participation by the secretary of defense was discretionary. 

Under Carlucci’s guidance, the Defense Resources Board assumed a more proactive and expansive role, ensuring that major 

weapons acquisition programs remained closely aligned to the 

newly updated PPBS. No longer serving as an advisory board that 

provided non-binding assistance to OSD, the newly reconstituted board controlled management of the PPBS through regularly 

scheduled monthly meetings chaired by Carlucci. Full membership 

grew to include, in addition to the chairman of the Joint Chiefs 

of Staff, the secretaries of the Army, Navy, and Air Force, and the 

commanders in chief of the specified and unified commands.17OSD 

16 David D. Acker, Acquiring Defense Systems: A Quest for the Best (Fort Belvoir, Va.: 

Defense Systems Management College Press, July 1993), pp. 209–10. See also David. D. 

Acker and G. R. McAleer Jr., “The Acquisition Process: New Opportunities for Innovative 

Management,” Concepts 5 (Summer 1982): 84; David. D. Acker, “Defense Systems Acquisition 

Review Process: A History and Evaluation,” Program Manager 13 (January-February 1984): 

10. 17 Input from the commanders in chief (CINCs) comprised assessments of the weapon 

systems required for theater operations (e.g., Pacific Command, European Command, 

Strategic Air Command). CINC participation in the PPBS was streamlined in 1985, when the 

commanders submitted the first of a series of Integrated Priority Lists (IPLs) to the Defense 

Resources Board for evaluation. The CINCs compiled these lists to help the board match 

specific weapon systems to operational requirements. Major problem areas identified that 

year covered four broad areas: command, control, communication, and intelligence (C3I); 

mobility; readiness and sustainability; and force structure and modernization. In the last 

category, for example, the CINC of the Pacific Command proposed, under the category “longrange attack,” development of the F–15E tactical fighter and the B–52G strategic bomber. 

Under “strategic programs,” the chief of the Strategic Air Command advocated deployment 

of the new Peacekeeper (MX) ICBM and continued development of the B–1 bomber. Although 

they lacked sufficient cost data to assess the strengths and weaknesses of alternatives, the 

IPLs, as an internal OSD report confirmed, “spurred an increase in communication between 
106 DEFENSE ACQUISITION REFORM, 1960–2009

also granted de facto membership to four military service chiefs 

to provide input on major programs. The addition of greater service representation acknowledged a major weakness highlighted 

by the Steering Group in its just-completed PPBS review. “It is now 

generally perceived,” the report concluded, “that the DRB [Defense 

Resources Board], having only CJCS [Chairman of the Joint Chiefs 

of Staff] to represent service views, tends to dampen service influence in the crucial final stages of the PPBS process.”18Emboldened 

by increased service representation on the board, the Joint Chiefs 

of Staff, through the chairman, assumed a more active role in the 

planning and implementation of strategic goals. The JCS chairman also focused on the resource implications of these functions to 

reduce the disparity between mission requirements and budgeted 

funds. Guided by the decentralization of policy execution, another 

foundational element of the new PPBS, the defense secretary completed the process by instructing the services to recommend the 

most effective ways of meeting objectives within their budgets.19

From PPBS to the Acquisition Improvement Program

The Planning, Programming, and Budgeting System constituted only one part, albeit a significant one, at the beginning of the 

weapons acquisition process. The reform of the PPBS was merely 

the first step in what became the Acquisition Improvement Program, known informally as the Carlucci initiatives, named after 

the program’s primary architect, Deputy Defense Secretary Frank 

Carlucci. Whereas the PPBS structured resources to mission requirements, the acquisition process, through various organizational units working in concert with the PPBS, dealt with the development and procurement of actual weapons systems—aircraft 

and missiles for the Air Force; surface ships and submarines for 

the Navy; and guns, artillery, and other ordnance materials for 

the Army. The revision of the PPBS set in motion many of the reforms that OSD subsequently institutionalized in the Acquisition 

Improvement Program. 

the services, the CINCs, OSD, and the OJCS [Office of the Joint Chiefs of Staff].” See “Report 

to the Deputy Secretary of Defense on the Integrated Priority Lists Submitted by the 

Commanders-in-Chief of the Unified and Specified Commands” (n.d.), pp. 2–3, 5 (attached to 

Memo, M. L. Dominguez for D. S. C. Chu, 13 Feb 1985), OSD Historical Office, Puritano box 

12, Folder: “DRB Wrap-Up/Offsets, 18/13/85.” 18 “PPBS Review, Draft—Internal Use Only,” p. 25 (quotation). See also Acker and 

McAleer, “The Acquisition Process,” p. 84. 19 “SECDEF Weinberger’s Planning, Programming, and Budgeting System Brings 

Practical Management to the Defense Program,” p. 14. See also “DoD Reorganizes: Greater 

Budget Role for the JCS,” 6 April 1981, OSD Historical Office, Subject Files, box 561, Folder: 

“DoD Organization 1981.”
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 107

Any understanding of this outcome and the concomitant effect 

on weapons procurement must begin with a brief delineation of 

the basic framework of the acquisition process as it existed in the 

1980s. In addition, this section will also examine the Office of Management and Budget Circular A–109, DoD Directive 5000.1 (The 

Defense Acquisition System) and DoD Instruction 5000.2 (Operation of the Defense Acquisition System), the Under Secretary of 

Defense for Research and Engineering, the Defense Systems Acquisition Review Council (DSARC), and how their roles and functions evolved during the first half of the 1980s.

When Reagan entered the White House in 1981, the Office of 

the Secretary of Defense managed the acquisition of major weapon 

systems through the guidance of three critical documents. The first 

one, A–109, issued by the Office of Management and Budget five 

years earlier, in April 1976, recommended the appointment of a 

defense acquisition executive to formulate and execute acquisition 

policies throughout the Defense Department. Passed in 1978 by 

Congress, Public Law 95–140 acted on this recommendation by upgrading the existing position of director of defense research and engineering (DDR&E) to the under secretary of defense for research 

and engineering (USD [R&E]). The new position, now known as 

the defense acquisition executive, ranked third behind the secretary and deputy secretary of defense. The USD (R&E) also served 

as the principal adviser and staff assistant to the defense secretary on all facets of weapon systems acquisition.20

On the policy side, DoD Directive 5000.1 and DoD Instruction 

5000.2 (described in Chapter Two) set forth the policies and procedures by which the Defense Department acquired major weapon 

systems. Programs with projected costs in excess of $100 million 

(fiscal 1980 dollars) for research, development, test, and evaluation 

(RDT&E) or $500 million (fiscal 1980 dollars) for procurement fell 

under this category. While these dollar thresholds served only as general guidelines and did not necessarily reflect the importance of any 

individual weapon system, major programs nevertheless accounted 

for approximately 30 percent of the RDT&E costs and 45 percent of 

the procurement costs incurred by the military services in 1981. In 

most cases, the Army, Navy, and Air Force initiated major weapon 

systems programs through their respective commodity commands: 

Department of the Army Readiness Command (DARCOM) (formerly 

the Army Materiel Command), Navy Material Command (NAVMAT), 

Air Force Systems Command (AFSC), and Air Force Logistics Command (AFLC). These commands performed research, development, 

20 Acker, Acquiring Defense Systems, pp. 199–200. See also Acker, “Defense Systems 

Acquisition Review Process,” p. 8.
108 DEFENSE ACQUISITION REFORM, 1960–2009

test, evaluation, and procurement, either in house or through contracts with private-sector organizations.21

The Defense Systems Acquisition Review Council (DSARC), 

established in 1969 by Deputy Secretary of Defense David Packard, managed the weapons acquisition process by conducting periodic milestone reviews of major programs at specified points in 

the acquisition program cycle (e.g., contract definition, engineering 

development, and production), recommending appropriate actions 

to the secretary of defense, and monitoring their implementation 

in the services.22The Army, Navy, and Air Force established similar 

councils—service systems acquisition review councils—to prepare 

for DSARC reviews and to correlate DSARC decisions with servicespecific weapons programs. Chaired by the defense acquisition executive—in this case the under secretary of defense for research and 

engineering—the DSARC reflected Packard’s original intention to 

delegate more responsibility for defense systems acquisition and 

management to the Army, Navy, and Air Force and, by extension, 

into the hands of program managers designated by the services to 

oversee major weapon programs. The DSARC, in Packard’s mind, 

enabled broad but limited program oversight of the services without 

the burden of managing the entire acquisition process in OSD. 

Carlucci instructed Puritano to organize and direct a review 

of the weapons acquisition process and to recommend improvements. He expected firm proposals to be submitted to his office 

by the end of March 1981. Puritano recruited a broad range of 

acquisition specialists, including experts from OSD, industry, and 

the military services (especially the commodity commands), and 

he divided them into five working groups to tackle specific problem 

areas: cost, acquisition time and scheduling, support and planning, 

DSARC, and multiyear procurement.23

21 On the origins of the 5000-series regulations, see Acker, Acquiring Defense Systems,

p. 169–70. On in-house and contracted research and development in the services, see also 

Thomas C. Lassman, Sources of Weapons Systems Innovation in the Department of Defense: 

The Role of In-House Research and Development, 1945–2000 (Washington, D.C.: U.S. Army 

Center of Military History, 2008); Harvey M. Sapolsky, Science and the Navy: The History 

of the Office of Naval Research (Princeton: Princeton University Press, 1990); and Nick A. 

Komons, Science and the Air Force: A History of the Air Force Office of Scientific Research

(Arlington, Va.: Historical Division, Office of Information, Office of Aerospace Research, 1966). 22 At the outset, the Defense Systems Acquisition Review Council (DSARC) membership 

included the under secretary of defense for policy; comptroller; assistant secretary of defense 

for manpower, reserve affairs, and logistics; and the assistant secretary of defense for program 

analysis and evaluation. In special cases, others might be invited to attend a specific council 

meeting. 23 Col. G. Dana Brabson, United States Air Force (USAF), “Department of Defense 

Acquisition Improvement Program,” Concepts: The Journal of Defense Systems Acquisition 

Management 4 (Autumn 1981): 55. See also Vincent Puritano, “Getting Ourselves Together on 

Systems Acquisition,” Defense ’81 (October 1981): 9–10.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 109

All five groups reviewed prior studies of the acquisition process and 

solicited the input of key participants involved in weapons procurement. 

Congressional critics, for example, blasted the services for rampant cost 

growth and schedule slippages. Aggressively pushing the frontiers of 

technology prompted cost overruns, they argued, while fierce interservice competition for funds encouraged overly optimistic program cost 

estimates. The services, meanwhile, complained about excessive paperwork and reporting procedures required by the DSARC milestone reviews; micromanagement of weapons programs by OSD and Congress; 

and unrealistic demands for accurate cost estimates, especially when 

unknowns existed in the early stages of weapons program planning.24

Program managers directed similar criticisms at both OSD and the 

services, while OSD criticized the services for failing to restrict the 

number of weapon systems competing for limited resources. Other service shortcomings, according to OSD, included inadequate support and 

readiness for fielded weapons systems and lengthy acquisition cycles. 

Industry directed its frustrations across the board—at OSD, Congress, 

and the services. Program instability—caused by sudden production 

starts and stops, program stretch-outs, redirections, and long decision 

times—threatened the bottom line and risked financial ruin, while micromanagement and excessive surveillance of programs by OSD and 

the services disrupted efficient contractor performance. Industry representatives also believed that OSD’s emphasis on increasing price competition among contractors resulted in poor cost realism.25

Carlucci was well aware that throughout the 1970s similar 

measures had been urged—and many tried—but few significant 

improvements had been made. In Carlucci’s view, DoD did not need 

another study. The time for action had arrived. This time the state24 Observers outside the Pentagon rarely missed the opportunity to join the fray and 

comment on the tense relations between the major participants in the weapons acquisition 

process. The question of congressional oversight drew an especially acerbic, though 

entertaining, commentary from the editor of the journal Government Executive in the fall of 

1981: “Congress,” he wrote in the 4 October issue, “says that the [weapons acquisition] process 

is a mess, but when it comes time to act, all that happens is that a parade of DoD, industry, and 

military personnel go before Congress over and over again to make the same arguments and 

have the same discussions about plans to make long-lasting changes. Congress, meanwhile, 

does not act in any productive way.” Even when Congress did act, the writer cynically pointed 

out, the outcome produced few beneficial results. “Its [Congress’] committee structure for 

coping with the broad issues of internal defense management policy and developing forces 

relevant to the threat estimate and support of foreign policy is an antiquated organizational 

sarcasm. Its penchant for micromanaging individual weapon projects, wielding authority 

without accepting responsibility for the result, chopping down trees with nary a pause to 

consider the forest, is a classic textbook example of bone-headed brainwork.” C. W. Borklund, 

“The Carlucci Initiatives and Congress,” Government Executive (4 October 1981): 6. 25 Puritano, “Getting Ourselves Together on Systems Acquisition,” p. 12.
110 DEFENSE ACQUISITION REFORM, 1960–2009

ment of actions would be accompanied by a commitment to implement the actions.26

After careful review and evaluation of the accumulated data, 

the working groups, under Puritano’s guidance, collectively submitted to Weinberger on 31 March 1981 a list of thirty-one actions 

or initiatives to improve the weapons acquisition process.27

Three months later, on 27 July 1981, Carlucci added the thirtysecond initiative, “Increase Competition,” to the original thirty-one 

initiatives. The primary objective of this initiative was to stimulate 

innovation (both in design and in manufacturing practice) and to 

stimulate investment. Where competition was effective, the program manager potentially could realize both cost savings and risk 

reduction. In addition to competition, the more significant initiatives called for more multiyear procurement contracts, stabilized 

programs, more realistic budgeting, and more fixed-price contracts.28

(See Appendix C for a list of the thirty-two Carlucci initiatives.) 

Carlucci’s thirty-two AIP initiatives sought to streamline the 

process by reducing weapon program costs and shortening the acquisition cycle time, both of which had increased sharply since the 

1960s. The initiatives were rooted in eight fundamental management principles. These principles were stated by Vincent Puritano 

in an article in the October 1981 issue of Defense ’81:

•	 We must improve long-range planning to enhance acquisition 

program stability.

•	 Both OSD and the services must delegate more responsibility, authority and accountability for programs; in particular, 

the service program manager should have the responsibility, 

authority and resources adequate to execute efficiently the 

program for which he is responsible.

•	 We must examine evolutionary alternatives which use a lower risk approach to technology than solutions at the frontier 

of technology.

•	 We must achieve more economic rates of production.

•	 We must realistically cost, budget, and fully fund in the FiveYear Defense Plan, and Extended Planning Annex, procurement, logistics and manpower for major acquisition programs.

26 Brabson, “The Department of Defense Acquisition Improvement Program,” pp. 54–75, 

and personal discussions with Frank Carlucci in 1982. 27 The thirty-second and last initiative, which focused on improving competition, was 

added to the original list of thirty-one actions later in the year. 28 Background Information, Senior Steering Group, Office of the Secretary of Defense, 

DoD Acquisition Study, 7–8 November, 1985.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 111

•	 Readiness and sustainability of deployed weapons are primary objectives and must be considered from the start of weapon 

system programs.

•	 A strong industrial base is necessary for a strong defense. The 

proper arms-length relationships with industry should not be 

interpreted by DoD or by industry as adversarial.

•	 Defense managers at all levels should expand their efforts to 

obtain maximum competition for their contractual requirements.29

Although the thirty-two initiatives did not address all the major causes of cost growth in weapon systems, many of the initiatives dealt with longstanding problems, the correction of which 

could do much to lower costs. Once again, however, the underlying principles were not new. For the preceding ten years, similar 

measures had been urged—and many tried—but few significant 

improvements had been made.30

The most significant initiatives coalesced around four broad 

goals: reduction of acquisition costs, shortening of acquisition times, 

improved support and readiness, and reorganization of the DSARC. 

The first goal, reduction of acquisition costs, depended on improvements in program stability, multiyear procurement, administrative efficiency, capital investment in industry, and economic production rates. Similarly, shortening of acquisition times required 

more front-end planning and the introduction of a new concept—

preplanned product improvement, otherwise known in shorthand 

as P3I. The working groups expected that weapons support and 

readiness would also benefit from more front-end planning during 

the early stages of program development, expansion of contractor 

incentives, and greater emphasis on the procurement of standard 

equipment. Finally, improvements in the operation and effectiveness of the Defense Systems Acquisition Review Council depended 

on a set of initiatives designed to overhaul the council’s entire organization and integrate it more fully into the Planning, Programming, and Budgeting System (PPBS). In addition to these four 

broad goals, the AIP, like the PPBS, delegated more responsibility, authority, and accountability from OSD to the service program 

managers overseeing the development of major weapon systems. It 

also encouraged the use of evolutionary rather than radical technology alternatives during weapon systems development, preferring low-risk resolution of technical problems rather than more 

29 Puritano,“Getting Ourselves Together on Systems Acquisition.” 30 Robert Foelber, “Cutting the High Cost of Weapons,” Backgrounder No. 172 

(Washington, D.C.: The Heritage Foundation, 16 March 1982) pp. 5–6.
112 DEFENSE ACQUISITION REFORM, 1960–2009

expensive and sometimes less operationally reliable state-of-theart solutions. Moreover, given the sharp decline of the manufacturing sector as the economy entered a deep and protracted recession, 

the Acquisition Improvement Program sought to energize the defense industrial base by using more flexible contracting procedures 

and second-sourcing production of major weapons systems to more 

firms to enhance vendor competition.31

Weinberger announced the details of the Acquisition Improvement Program to the public on 30 April 1981. During the next two 

years, Carlucci and Puritano with the assistance of the under secretary of defense for research and engineering—the defense acquisition executive—sought to recast the institutional landscape 

of the weapons acquisition process.32From the outset, they placed 

major emphasis on changes to the DSARC, requiring full integration with the PPBS, accelerated centralization of policy direction 

in OSD, and controlled decentralization of policy execution in the 

services. “[W]e are not going to allow [weapons] systems to pass 

DSARC . . . if the money in the budget is not sufficient to support 

the DSARC decision,” Under Secretary of Defense for Research and 

Engineering Richard D. DeLauer insisted late in 1981. “For years,” 

DeLauer continued, “DSARC has approved systems that were underfunded and budgets have included systems with no [mission 

requirements]. We’ve just stopped that.”33

Reform of the DSARC proceeded along several different but related lines. Carlucci mandated a reduction in the number of milestones required for program review in OSD, thereby delegating 

more responsibility to the services. He also invited the secretaries 

of the Army, Navy, and Air Force to sit on the DSARC as permanent 

members and initiated an overhaul of the 5000-series regulations 

governing the minimum-dollar thresholds required for DSARC reviews of major weapons systems. By raising the funding limits, he 

expected to reduce further OSD’s role in DSARC evaluations in 

favor of more service participation. Finally, Carlucci planned to im31 Brabson, “The Department of Defense Acquisition Improvement Program,” pp. 54–58, 

64, 67–69. See also Puritano, “Getting Ourselves Together on Systems Acquisition,” pp. 16–17. 32 News Release, 30 Apr 1981, sub: Secretary of Defense Weinberger Announces 

Decisions, Management Principles, to Improve Acquisition Process, p. 1, OSD Historical 

Office, Acquisition History File. On the AIP management structure in the Office of the Under 

Secretary of Defense for Research and Engineering, see Memo, J. P. Wade Jr. for the Secretary 

and the Deputy Secretary of Defense, 6 Apr 1981, pp. 1–3, WNRC, Series 330–83–0102, box 

26/48, Folder: “100.5 (January–April 81) 1981”; and Memo, R. F. Trimble for the Deputy 

Secretary and Secretary of Defense, 7 Sep 1981, p. 1, WNRC, Series 330–84–0014, box 4/15, 

Folder: No Title. 33 “View from the Top: Dr. Richard DeLauer, Undersecretary of Defense for Research and 

Engineering,” Military Electronics/Countermeasures (November 1981): 13 (quotation).
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 113

prove efficiency by streamlining the DSARC reporting procedures 

and data requirements between OSD and the services.34

When Puritano commenced his survey of the weapons acquisition process in the spring of 1981, major programs scheduled 

for review by the DSARC typically had to pass four milestones: 

Concept Exploration (Milestone 0), Demonstration and Validation 

(Milestone 1), Full-Scale Development (Milestone 2), and Production (Milestone 3).35 In an effort to execute controlled decentralization, reduce the defense secretary’s direct involvement in the 

DSARC, and eliminate complicated reporting and data requirements, OSD cut the number of required milestones in half, from 

four to two. This consolidation produced two new DSARC decision points: requirements validation and full-scale development/

production—otherwise known as program initiation and program 

go-ahead, respectively. Both milestones, while still requiring full 

participation from the DSARC and the defense secretary, generalized the program approval process in OSD by delegating more 

management responsibility to the services. The milestone for program go-ahead, for example, provided broad oversight of serviceproposed actions, including full-scale development and production 

and program planning for weapons testing, evaluation, support, 

and readiness. Under the new system, authority to approve or reject these and other actions rested squarely with the services. At 

the same time, the funding thresholds required for DSARC review 

of major weapons systems in OSD doubled from $100 to $200 million for RDT&E and from $500 million to $1 billion for production. 

The DSARC immediately cut ten weapons systems whose funding 

levels now fell below the new thresholds and transferred them to 

the service acquisition review councils for evaluation.36This reduction marked a 20-percent drop in the number of DSARC-level programs scheduled for OSD review in 1981.37

34 Brabson, “Department of Defense Acquisition Improvement Program,” pp. 59–61. 35 Passing through all four milestones was not mandatory. In some cases where, for 

example, the level of technological complexity in a weapon system did not require intensive 

research and development, the defense secretary could bypass one or more milestones in the 

DSARC review. 36 The Army, for example, assumed decision authority for two former major weapons 

systems that would have otherwise been evaluated by DSARC: the Force Level and Maneuver 

Control System, also called SIGMA, and the Infantry Manportable Antiarmor Assault Weapon 

System, otherwise known as the RATTLER. Moreover, the increases in the RDT&E and 

production thresholds for the DSARC were matched by corresponding enlargements for the 

same categories assigned to the Army Systems Acquisition Review Council. “Defense Acquisition 

Improvement Program (Weinberger/Carlucci Initiatives): Army Implementation Activities,” 

March 1982, n.p., in “Acquisition Improvement Program: General Army Implementation,” copy 

in David D. Acker Library, Defense Acquisition University, Fort Belvoir, Va. 37 “DoD, Phasing in DSARC Reforms, Wants Services to Decentralize Too,” Aerospace 

Daily (25 August 1981): 305; see also Puritano, “Getting Ourselves Together on Systems 
114 DEFENSE ACQUISITION REFORM, 1960–2009

Although the compressed DSARC milestone review mandated 

more service participation, implementation of the policies at that 

level proved more difficult to achieve than originally envisioned. 

Some programs already undergoing full DSARC review, such as 

the joint Navy–Air Force Advanced Medium-Range Air-to-Air 

Missile (AMRAAM), effectively transitioned to the new procedure, 

but many other weapons systems continued to abide by the 

old guidelines, observed Robert Trimble, DeLauer’s deputy for 

acquisition policy, to avoid “changing horses at midstream.” But 

Trimble also acknowledged that maximizing the effectiveness 

of the new DSARC would require a corresponding realignment 

of the decision points in the service acquisition review councils. 

The Army and the Air Force agreed to the mandated changes, 

but the Navy balked, prompting one observer who had discussed 

the matter with Trimble to conclude that “the Navy still believes 

strongly that it needs its own top-level reviews at the old (four) 

DSARC milestones.”38 Although he did not press the issue and 

agreed, in the short-term, to maintain the status quo on Navy 

program reviews, Trimble nevertheless cautioned that postponing 

full integration would complicate management and reporting 

procedures resulting from the overlap of the two new DSARC 

milestones onto those retained by the Navy. Despite the Navy’s 

initial intransigence, however, the DSARC proceeded with plans 

to waive production decisions on several key weapons systems in 

1981, including variants of the submarine-launched Tomahawk 

cruise missile manufactured under contract with the General 

Dynamics Corporation. The Army and Air Force, meanwhile, 

received the same authority from the DSARC to execute 

production decisions on other major systems, such as the M–1 tank 

(manufactured under contract with the Chrysler Corporation), 

Hughes Aircraft’s imaging infrared Maverick missile, and the 

ground-launched version of the Navy’s Tomahawk.39

Acquisition,” p. 16; Acker, “Defense Systems Acquisition Review Process,” p. 10; J. D. Edgar, 

“The New Acquisition Environment: Challenge and Opportunity,” Concepts: The Journal of 

Defense Systems Acquisition Management 5 (Summer 1982): 12. 38 Kosta Tsipis and Penny Janeway, eds., Review of U.S. Military Research and 

Development (Washington, D.C.: Pergamon-Brassey’s, 1984), pp. 14–15 (quotations). See also 

Paul M. Bradburn, “Strategic Postures in the Military Aircraft Industry: A Comparison of Two 

Companies,” paper prepared at Massachusetts Institute of Technology, June 1986, pp. 45–53; 

and U.S. Congress, Senate, Committee on Governmental Affairs, testimony of Laurence E. 

Lynn, Professor of Public Policy, Harvard University, 21–27 October and 5 November 1981, 

pp. 133–35. 39 “DoD, Phasing in DSARC Reforms, Wants Services to Decentralize Too,” pp. 305–06.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 115

AIP in Action: Implementation and Execution

Less then two months after the Pentagon announced the details of the Acquisition Improvement Program to the public, OSD 

already faced strong opposition from the services. A candid letter 

from Lawrence J. Korb, Assistant Secretary of Defense for Manpower, Reserve Affairs, and Logistics, clearly revealed the scope of 

the problem Carlucci and his staff faced. “I would like to call your 

attention,” Korb wrote Carlucci in June, “to instances where the 

military departments (particularly the Air Force and Navy) appear 

to be resisting new initiatives by circumventing your office and 

trying to obtain negative reactions from congressional committees. 

These actions could affect your desires to achieve greater economies and efficiencies in the management of DoD.”40Meanwhile, according to a survey of one hundred major defense firms conducted 

by the journal Government Executive one year later, the respondents generally agreed that the Carlucci initiatives constituted 

“an excellent package,” but that “after more than a year, they’re 

still mostly top-level talk and grass-roots inaction.”41

Also, in 1981, Weinberger, Carlucci, Puritano, and their subordinates in OSD faced the critical problem of how to reconcile 

budget volatility (resulting from fluctuations in the annual appropriations authorized by Congress) and funding requirements of 

major weapons programs whose acquisition cycles (from concept to 

production) always required years to complete. Other factors contributing to program instability included technological uncertainties, changes in the priorities of competing programs within the 

services, and adjustments to the threat environment, all of which 

could—and often did—lead to sharp reductions or rapid increases 

in the quantities of specific weapon systems procured from industry. In cases where Congress cut the defense budget, the services 

typically responded by reducing production runs and spreading or 

stretching out the available funds over an extended period, thereby 

keeping the programs active, but reducing manufacturing efficiencies on the factory floor. Viewed from a long-term perspective, this 

tactic tended to result in high total program costs as production 

rates dropped and economies of scale diminished.42

40 “Talking Notes—Carlucci, DRB Meeting, June 11, 1981, 2:00–3:00 PM,” p. 1; Ltr, L. 

J. Korb to F. Carlucci, 1 Jun 1981, pp. 1–2 (quotation), both in OSD Historical Office, Box: 

“Defense Resources Board, May–August 1981, Puritano-Bureau Files,” Folder: “DRB, June 

11, 1981.” 41 “Why the ‘Carlucci Initiatives’ Aren’t Working,” Government Executive (August 1982): 

30 (quotation). 42 H. J. Schutt and David D. Acker, “Program Stability: An Essential Element in 

Improved Acquisition,” Concepts: The Journal of Defense Systems Acquisition Management

5 (Summer 1982): 148, 150. Program stability also suffered from the mandatory rotation of 
116 DEFENSE ACQUISITION REFORM, 1960–2009

Because Congress, OSD, the services, and the defense industry operated interdependently, fluctuations in funding, procurement, scheduling, or the threat environment invariably produced 

a rippling effect that reverberated throughout the entire weapons acquisition process. Congressional budget cuts, for example, 

increased the likelihood of production shortfalls and schedule 

slippages in industry, while program cost growth in the services 

typically invited more scrutiny and oversight from Congress. OSD 

sought to mitigate this problem—and hence lower weapon systems 

costs—by encouraging the services to prioritize their major programs, cancel marginal ones before they grew too large to stop, 

and restrict the number of new program starts still on the drawing 

board. Program cancellations, if they occurred, also had the added 

benefit, at least on paper, of releasing additional resources to fund 

higher priority programs in their entirety. The services, however, 

opposed this strategy, because, in their view, it required trade-offs 

that reduced managerial control and operational flexibility in their 

own backyards and reduced the number of acquisition programs 

under way. Rather than cut programs outright, the Army, Navy, 

and Air Force favored maintaining the same number of programs 

but proceeding at a lower rate, increasing unit cost, and placing 

much of the blame for structural problems in the weapons acquisition process on OSD and Congress.

Despite sharply rising defense budgets in the early 1980s, 

the services often resisted multiyear procurement because they 

believed requirements for heavy up-front funding to keep major 

programs on track would likely limit managerial flexibility even 

further and leave fewer resources available for other programs 

deemed worthy of support.43 Notes Carlucci wrote to himself for 

upcoming meetings of the Defense Resources Board in the fall of 

1981, just a few months before his appearance before the Senate Armed Services Committee, highlight the extent to which he 

felt pressure to obtain cooperation from the services. “We have to 

show some program kills now, next year will be too late, and we 

have to signal that the 32 points [initiatives], on program stability and efficient production rates particularly, are real,” he wrote 

in November. “These are two major issues which will not only 

program managers through the military ranks. Military officers typically held these positions, 

and short tours of duty resulted in a recurring brain drain within the weapons acquisition 

process. See also W. D. Brown, “Program Instability: Fighting Goliath,” Program Manager

12 (November-December 1983): 32; and J. Ronald Fox, Arming America: How the U.S. Buys 

Weapons (Boston: Division of Research, Graduate School of Business Administration, Harvard 

University, 1974), ch. 9. 43 Memo, W. A. Long for the Under Secretary of Defense for Research and Engineering 

(n.d.), p. 8, WNRC, Series 330–84–0035, Box 10, Folder: “1305—July 1–30.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 117

affect the budget internally but also the DoD image externally 

[emphasis in original].”44 While he understood that the services “feel that OSD is about to do business the old way . . . and 

drive unwanted decisions down their throat,” Carlucci nevertheless refused to back off his agenda. He wanted to reassure 

the services and encourage their participation, but, at the same 

time, he strongly reaffirmed OSD’s commitment to reductions in 

cost, schedule slippages, and stretch-outs in major weapons programs. “Tell the services this is real,” Carlucci reminded himself. “They have to do better and find [program] cancellations, or 

[I] will find them for [the] services.”45

In the summer of 1982, while the services labored to improve 

the support and standardization of weapons systems operating in 

the field, Carlucci assessed the AIP’s progress in a brief foreword 

written for a special edition of Concepts (a Defense Systems Management College publication) that focused on the status of weapons acquisition reform in the early 1980s. His discussion exuded 

much enthusiasm:

As I reflect over the past year, I am pleased to report significant progress toward our objective of improving the acquisition 

process. We have decreased the number of programs over which 

the Secretary of Defense retains decision-making authority; 

the principle of controlled decentralization is being embraced 

by the services. We have achieved economies in the acquisition process; major multi-year procurements are in place, and 

selected programs have been restored to economic production 

rates. We have begun to make the defense marketplace more 

attractive to industry; flexible process payments are easing 

cash-flow problems, and increased investments in manufacturing technology are accelerating the pace of modernization. 

We have increased the readiness of our systems in the field; 

supportability and maintainability are being accorded the 

same emphasis as cost, schedule, and performance, and recent 

budget decisions provided additional resources to support the 

readiness of key systems.46

Behind the scenes, however, the results had been more sobering. Four years later, the General Accounting Office (GAO) issued 

44 “Carlucci Talking Notes, DRB Meeting, Monday, November 23, 1981, 2:00 to 4:00 PM,” 

(n.d.), p. 2 (quotation), OSD Historical Office, Puritano Box 4, Folder: “DRB, November 23, 

1981.”45 “Frank Carlucci, DRB Talking Notes, Wednesday, October 14, 1981,” (n.d.), pp. 1–2 

(quotation), OSD Historical Office, Puritano Box 4, Folder: “DRB, October 14, 1981.” 46 Frank C. Carlucci, “Foreword to Special Edition,” Concepts: The Journal of Defense 

Systems Acquisition Management 5 (Summer 1982): n.p. 
118 DEFENSE ACQUISITION REFORM, 1960–2009

a report claiming that only eight of the original thirty-two Carlucci 

initiatives had been fully implemented. Displeased with the GAO’s 

conclusions, OSD responded sharply, “This is a highly subjective 

finding. Even reasonable men will never see eye-to-eye on the degree 

of monitoring required to conclude that a management initiative is 

fully implemented.”47Though defensive in tone, this statement, in effect, captured what turned out to be the central problem in weapons 

acquisition reform during the first half of the 1980s: a broadly conceived but locally contingent disjunction between policy formulation 

in the Office of the Secretary of Defense and policy execution in the 

military services. The competing motives and organizational rivalries among the major participants—OSD, Congress, the Army, Navy, 

and the Air Force, and myriad industrial contractors—continuously 

recast the institutional landscape of the weapons acquisition process, thereby complicating the efforts undertaken by Carlucci and 

his staff to impose clear direction and broad oversight from the top.

While it is true that Congress had authorized successively lower defense budgets below approved planned levels each year since 

1981, an outcome that frustrated OSD and the services, it is also 

true, as the GAO concluded in 1986, that Congress “approved what 

amounts to nearly a 100 percent increase in DoD’s procurement 

budget from fiscal years 1980 to 1985”48 Predictably—at least in 

part because of the disparity between planned and actual budgeted funds—major programs destabilized, costs rose, and schedules 

slipped. While critics outside the Pentagon often placed blame on 

what they considered to be a poorly planned and executed weapons 

procurement system, the Acquisition Improvement Program nevertheless did record, as Carlucci pointed out in 1982, a number of 

significant successes, ranging from reform of the Defense Systems 

Acquisition Review Council to closer, if often strained, relations 

between OSD and the services.

In retrospect, it is clear that DoD experienced a number of 

problems implementing the Carlucci initiatives. In July 1986, five 

years after their introduction, more than half of a GAO sample of 

fifty-four program managers (who had been in their jobs more than 

two years) thought that the initiatives had made little or no difference in the acquisition process. The GAO survey suggested that 

47 General Accounting Office (GAO) Report, Status of the Defense Acquisition 

Improvement Program’s 33 Initiatives, GAO/NSIAD 86–178BR (Washington, D.C.: General 

Accounting Office, September 1986), p. 62 (quotation). 48 GAO Report, DoD’s Defense Acquisition Improvement Program: A Status Report, 

GAO/NSIAD–86–148 (Washington, D.C.: General Accounting Office, July 1986), pp. 11–12 

(quotation).
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 119

the senior-level commitment to change had not filtered down to the 

program management level.49

The GAO study concluded that DoD had once again “not carried through with its action plans on most of the Carlucci initiatives” and was “not monitoring actions to ensure that results were 

being achieved.” It added that although DoD had made some progress in implementing the program, implementation had not been 

completed, and consequently, results had not been fully achieved.50

The core idea of the Carlucci initiatives was that overregulation thwarts efficiency and increases costs. The principle is sound 

to a certain point, after which problems arise, according to critics. 

Some decentralization may increase efficiency—assuming government program managers and their superiors are properly trained 

and can be held responsible for their program’s performance. But 

initiatives such as reduced oversight of fixed-price contracts make 

industry less accountable to senior DoD management and less accountable to Congress and the public.51

Defense analyst Gordon Adams pointed out that the defense 

initiatives of the early 1980s, which collectively sought increased 

“up-front” spending and more “realistic” budgeting, were reforms 

that attempted to streamline an inefficient procurement system 

without attacking the real sources of cost overruns. For example, 

if the cost data from industry are not strictly and independently 

verified by DoD program managers or auditors, many of the Carlucci initiatives could have precisely the opposite result from the 

one intended. Specifically, “more realistic” (i.e., higher) estimates 

of costs and inflation, longer-term contracts, greater reliability, 

and more test items could result in large budget increases. These 

reforms, by themselves, could provide contractors with less incentive to control and to minimize costs while providing DoD with a 

rationale to accept rising costs as “more realistic.” In short, the 

Carlucci initiatives would have made a great deal of sense, but 

only if the Defense Department had created incentives for cost reduction and had sufficient numbers of skilled personnel assigned 

to manage large industrial programs.52

In 1982, Senator Sam Nunn (D-Ga.) and Senator Dave McCurdy 

(D-Okla.) introduced an amendment in the 1982 Defense Authorization 

Act, made permanent in 1983, to curtail cost growth in weapons 

acquisition programs. Known as the Nunn-McCurdy Amendment, it 

required notification of Congress of cost growth of more than 15 percent 

49 Ibid., pp. 5, 14. 50 Ibid., pp. 12–13 (quotation). 51 Gordon Adams, Paul Murphy, and William Grey Rosenau, Controlling Weapons Costs: 

Can the Pentagon Reforms Work? (New York: Council on Economic Priorities, 1983), p. 36. 52 Ibid., pp. 32–33 (quoted words).
120 DEFENSE ACQUISITION REFORM, 1960–2009

and called for the termination of acquisition programs whose total cost 

grew by more than 25 percent above the original estimate, unless the 

secretary of defense submitted a detailed explanation certifying that the 

program was essential to national security, that no suitable alternative 

of lesser cost was available, that new estimates of total program costs 

were reasonable, and that the management structure was (or had been 

made) adequate to control costs. 

While this amendment rarely led to the cancellation of an acquisition program, it led to frequent changes in programs. For 

example, the meteorological satellite program NPOESS (National Polar-Orbiting Operational Environmental Satellite System) 

was redesigned with lesser capability after being affected by the 

amendment, as were a number of subsequent programs.

By the mid-1980s, OSD oversight of the Defense Acquisition Improvement Program had begun to fade. OSD continued to monitor selected initiatives internally, but, as a GAO study concluded in the summer of 1986, “OSD has not formally reported on the program’s status 

since June 1984, and does not plan to issue any further reports.” Service 

reporting to OSD on the status of program implementation had also 

stopped.53Moreover, both Carlucci and Puritano—the program’s major 

architects and advocates—left OSD in 1983 and 1984, respectively, to 

pursue careers in industry. By 1985, damaging reports of overpriced 

spare parts and other forms of alleged waste and fraud sensationalized 

by the media drew widespread attention and scrutiny from Congress. 

Prompted by these and other crises, Caspar Weinberger reorganized 

OSD’s executive leadership, while President Reagan, bowing in part to 

public pressure, appointed the Blue Ribbon Commission on Defense—

headed by Hewlett-Packard cofounder and former Deputy Secretary 

of Defense David Packard—to review the entire weapons acquisition 

process and recommend reforms for improvement. 

Responding to Charges of Fraud, Waste, and Mismanagement

Even though he won a landslide victory against democratic opponent Walter Mondale in the 1984 presidential election, Ronald 

Reagan began his second term in the White House under a cloud 

of controversy. Charges of fraud, waste, and mismanagement in 

the Department of Defense had been circulating in the media for 

several years, but by the beginning of 1985 following the defense 

buildup, some of those charges had already led to formal government investigations of major defense contractors, and in some 

cases, criminal charges and convictions. Allegations of fraud and 

corruption at the Electric Boat Division of the General Dynam53 GAO Report, DoD’s Defense Acquisition Improvement Program, GAO/NSIAD–86–148, 

Jul 1986, pp. 12–13 (quotation).
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 121

ics Corporation, builder of the Navy’s nuclear-powered attack and 

ballistic missile submarines, prompted a major investigation by 

the Defense Department and Congress. The Pentagon also threatened to seek punitive damages against Texas Instruments, one of 

the military’s largest suppliers of precision electronic components, 

for delivery of improperly tested computer chips to other defense 

contractors. Although the government took appropriate action in 

many instances, these and other embarrassing problems drew 

sharp criticism from the general public. Some observers demanded more congressional oversight of major weapon programs and 

increased regulation of defense contractors. Republican Senator 

Alan Simpson of Wyoming blasted the Pentagon for using “bookkeeping gimmickry” to conceal what he believed to be outright incompetence in the Defense Department’s management of weapons 

procurement.54

On 5 July 1985, ten days before the president issued Executive Order 12526 establishing the Packard Commission, Deputy 

Secretary of Defense William H. Taft IV activated the new position 

of assistant secretary of defense for acquisition and logistics, also 

commonly referred to as the defense acquisition executive (DAE).55

Taft and other top officials in the Pentagon openly acknowledged 

in the press that this move had been taken, as the Washington 

Post reported in January, “to help Weinberger fend off expected 

prodding from Congress this year for more far-reaching changes.”56

Those changes would come in the form of the Packard Commission 

six month later. In the meantime, however, Weinberger, who had 

officially announced his plans to set up the new post in January 

1985, assigned the assistant secretary of defense for acquisition 

and logistics (ASD [A&L]) responsibility for managing weapon sys54 J. F. Fitzgerald, “Pentagon to Create Procurement Chief Post,” Hartford Courant, 30 

January 1985, p. 5. For other examples of contractor misconduct, see also “Former Defense 

Official Sentenced for Fraud,” Aviation Week and Space Technology 121 (26 November 1984): 

59–60; C. P. Alexander, “Scandal Rocks General Electric,” Time 125 (27 May 1985): 60; T. 

Morgenthau, “Waste, Fraud, and Abuse?” Newsweek 105 (3 June 1985): 22–23; J. Nielsen, 

“The Party’s Over for Arms Makers,” Fortune 112 (5 August 1985): 88–92; J. K. Gordon, 

“House Subcommittee Charges Overpricing by F–16 Contractors,” Aviation Week and Space 

Technology 123 (30 September 1985): 26–28; “Defense Department Suspends Litton from 

Receiving New Contracts,” Aviation Week and Space Technology 125 (21 July 1986): 22; J. K. 

Gordon, “Defense Department Has Debarred 322 Contractors for Fiscal 1986,” Aviation Week 

and Space Technology 125 (6 October 1986): 69; “Sunstrand Admits Guilt: Fines Total $128 

Million,” Aviation Week and Space Technology 129 (17 October 1988): 37; and P. Mann, “GE 

Charged with $21 Million Fraud Scheme Against Army,” Aviation Week and Space Technology

129 (5 December 1988): 33. 55 News Release, 5 Jul 1985, sub: Assistant Secretary of Defense (Acquisition and 

Logistics) Established, OSD Historical Office. 56 M. Struck and F. Hiatt, “Defense Post to Be Added,” Washington Post, 29 January 

1985.
122 DEFENSE ACQUISITION REFORM, 1960–2009

tems acquisition. In addition to reporting directly to the secretary 

of defense, the assistant secretary would, according to a Pentagon 

news release, “strengthen controls, clarify responsibilities and provide emphasis for certain programs requiring additional management attention.”57 Weinberger also charged the ASD (A&L) with 

monitoring suspected fraud and abuse and preventing purchases of overpriced spare parts and substandard weapon systems.58

While the reorganization of acquisition management in OSD may 

have looked good on paper, effective implementation at the working 

level proved far more difficult to achieve. Even without resistance 

from the military services, a problem that had impeded progress of 

the Acquisition Improvement Program earlier in the decade, effective policy formation and execution in the Office of the Assistant 

Secretary of Defense for Acquisition and Logistics was often sidetracked by conflicting personalities in OSD.

Prior to the establishment of the Office of the Assistant Secretary of Defense for Acquisition and Logistics, management 

of weapons acquisition—from initial concept to operation in the 

field—had been split between two organizations: the Office of the 

Assistant Secretary of Defense for Manpower, Installations, and 

Logistics (ASD [MI&L]) occupied since 1981 by Lawrence Korb, 

and the Office of the Under Secretary of Defense for Research and 

Engineering (USD [R&E]) headed by Richard DeLauer. Korb managed weapons operation and maintenance (logistics), while DeLauer controlled research and development (R&D) and the purchase of 

weapon systems (procurement). The new ASD (A&L) absorbed the 

acquisition management and policy functions from the USD (R&E) 

and the logistics and spare parts procurement functions from the 

ASD (MI&L). The ASD (A&L) also took over management of the 

Defense Logistics Agency.59

Korb and DeLauer lost some managerial authority when 

Weinberger restructured OSD’s acquisition management functions. 

An article in Defense Week suggested that Weinberger had been 

displeased with Korb’s performance as a consequence of reports 

published in the press that the Pentagon had paid unreasonably 

high prices for spare parts. Korb dismissed this explanation, but 

doubts apparently lingered. Similar rumors circulated about 

DeLauer, who also stood to lose power with the appointment of the

57 News Release, 29 Jan 1985, sub: Secretary of Defense Weinberger Announces 

Management Streamlining, OSD Historical Office, p. 1 (quoted words). 58 P. Bedard, “Pentagon Acquisition Czar,” Defense Week 7 (4 February 1985): 13. 59 Struck and Hiatt, “Defense Post to Be Added,” p. 17. See also News Release, 29 Jan 

1985, sub: Secretary of Defense Weinberger Announces Management Streamlining, p. 1.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 123

first ASD (A&L). He opposed Weinberger’s plan to shift control of 

weapons acquisition from his office to the new position, which may 

have prompted his resignation from the Defense Department in 

December 1984 near the end of Reagan’s first term. 

When Taft activated the Office of the Assistant Secretary of Defense for Acquisition and Logistics in the summer of 1985, the Office of the Under Secretary of Defense for Research and Engineering had already been vacant for more than six months. To fill the 

position, Weinberger next turned to James P. Wade Jr., a graduate 

of the United States Military Academy at West Point and a Ph.D. 

physicist who had spent nearly twenty years working in the Pentagon and who had also helped implement the Acquisition Improvement Program earlier in the decade. At the time, Wade was serving 

simultaneously in two senior OSD positions—acting under secretary of defense for research and engineering, DeLauer’s old post, 

and assistant secretary of defense for development and support 

(ASD [D&S]). The ASD (D&S) disappeared when Wade accepted 

appointment as the first defense acquisition executive.60

Wade initially had to wear two hats as the assistant secretary 

of defense for acquisition and logistics. First, he had to define the 

operating parameters of his new position, which translated into 

convincing other senior policymakers and acquisition organizations—such as the USD (R&E), the secretary of defense, and the 

military services—to fall in line behind his strategies for acquisition management. Second, Wade had to regain the public’s confidence in the weapons acquisition process, which had already been 

badly damaged by the procurement scandals that seemed to appear in the press and other media outlets on a daily basis. One 

day after Wade took office, the Washington Post reported that “administration supporters believe the procurement scandals have 

undercut the president’s political consensus for a strong defense 

and given congressional doves ammunition in their fight for deep 

cuts in military spending.”61

While Wade brought considerable experience to the Office of 

the Assistant Secretary of Defense for Acquisition and Logistics, 

he did not inspire confidence among some Pentagon associates who 

believed that his preference for consensus building would not suffice in a position where hard and decisive choices had to be made 

concerning the distribution of limited resources among competing 

weapon systems in the military services. Nonetheless, Wade set 

60 M. Weisskopf, “Defense ‘Procurement Czar’ Named,” Washington Post, 6 July 1985. See 

also News Release, 5 Jul 1985, sub: Assistant Secretary of Defense (Acquisition and Logistics) 

Named, OSD Historical Office; Struck and Hiatt, “Defense Post to Be Added.” 61 Weisskopf, “Defense ‘Procurement Czar’ Named.”
124 DEFENSE ACQUISITION REFORM, 1960–2009

out to achieve a broad range of goals. He intended to emphasize 

what he called “front-end” planning in the acquisition process, using standard commercial components rather than specialized parts 

produced in small quantities and at high cost.62 “That’s how you 

end up with $600 ashtrays,” he said. Wade also planned to improve 

training programs for acquisition officers and promote greater cooperation among the services to streamline purchasing.63 Ambitious as these goals may have been, however, Wade never came 

close to achieving them. He had fallen out of favor as the defense 

acquisition executive before the year was out.

Wade’s troubles began before Weinberger appointed him 

ASD (A&L). Preliminary evidence suggests that he initially opposed Weinberger’s plans to create the office, hoping that he 

would be elevated to DeLauer’s old and more senior post as USD 

(R&E). The appointment went to Donald Hicks instead. Hicks 

was an experienced industrial physicist and senior vice president at the Northrop Corporation who had worked previously 

at the Boeing Company and the Lawrence Berkeley National 

Laboratory.64 When Hicks left the aircraft industry for a job in 

the Pentagon, he soon found himself in conflict with Wade concerning the separation of management functions between their 

two offices. Deputy Secretary of Defense Taft, Defense Week reported in December 1985, “never really spelled out the lines of 

authority between Hicks and Wade, and confusion arose as to 

areas of responsibility.” Since nearly a year had passed following DeLauer’s departure from the Office of the Under Secretary 

of Defense for Research and Engineering, Wade had taken over 

many of its functions by default while serving as ASD (A&L), 

thereby handling management of most acquisition functions. Taft 

apparently disapproved of this outcome, while Hicks sought to 

consolidate his authority as the new research and engineering 

chief. Tensions rose over an acceptable division of labor between 

Wade and Hicks until Taft took over the functions of the ASD 

(A&L) and designated himself defense acquisition executive. 

Wade and Hicks retained their official titles and posts, until the 

spring of 1986, when, with the Packard Commission’s interim report in hand, Reagan announced plans to establish a new Office of the Under Secretary of Defense for Acquisition (USD [A]).

62 The Packard Commission had also recommended the use of off-the-shelf commercial 

parts.63 M. Weisskopf, “Pentagon’s New Troubleshooter,” Washington Post, 16 July 1985. 64 The Lawrence Berkeley National Laboratory was one the leading centers for highenergy physics research in the United States. See Robert W. Seidel, “Accelerating Science: 

The Postwar Transformation of the Lawrence Radiation Laboratory,” Historical Studies in the 

Physical Sciences 13(2) (1983): 375–400.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 125

Within a few months, the Office of the Assistant Secretary of 

Defense for Acquisition and Logistics had been downgraded to a 

subordinate position under the new Office of the USD (A), a move 

that prompted Wade to leave the Pentagon and seek employment 

elsewhere. Similarly, Hicks left the Pentagon in October 1986 as 

the Office of the Under Secretary for Research and Engineering 

was downgraded to Office of the Director of Defense Research and 

Engineering under the USD (A).65

The Packard Commission, 1985–1989

In 1985, Senator Goldwater (R-Ariz.), along with Senator Nunn 

(D-Ga.), then one of the most knowledgeable and respected defense 

experts in the Senate, issued a lengthy report critical of the Defense Department. The report highlighted the problems of cost 

increases and cost mischarges and concluded that DoD was in a 

mess, that U.S. combat readiness was in a lamentable state, and 

that the correlation between spending a lot of money and acquiring better defense did not exist. The report also blamed Congress 

for meddling with the defense budget and thereby contributing 

heavily to waste and inefficiency.66

In mid-1985, Senator Charles E. Grassley (R-Iowa) expressed 

similar criticism of the acquisition process: “I and others here in 

Congress have charged that the defense industry is fat, wasteful, 

poorly managed, and consequently contributes to an erosion of our 

national defense. Now I plead guilty to having called the defense 

industry the new generation of welfare queens, and I intend to 

verify this, right or wrong, through strictly empirical data and 

analysis.”67

Again in 1985, House Armed Services Committee Chairman 

Leslie “Les” Aspin (D-Wisc.) launched a series of hearings addressing the question: What have we received for a trillion dollars? He 

was referring to the trillion-dollar defense spending total for the 

first half of the 1980s. Aspin’s answer: Not enough. In a twentyfive-page report, the Wisconsin Democrat cited “skimpy improvements in the U.S. defense posture despite the huge increases in 

defense spending over the years.”

65 “Taft Tightens His Grip,” Defense Week 9 (December 1985): 15 (quotation). See also 

“Who’s in Charge?” Washington Post, 4 April 1986, and “The Roles and Authorities of the 

Director of Defense Research and Engineering,” Office of the Under Secretary of Defense for 

Acquisition, Technology, and Logistics, October 2005, p. 27. 66 “Don’t Ignore These Pentagon Critics,” Business Week (28 October 1985): 130. 67 U.S. Congress, Senate, statement of Senator Charles E. Grassley before the 

Subcommittee on Administrative Practice and Procedure of the Committee on Armed 

Services, Agency Flow of Information, 23–24 July 1985, p. 2.
126 DEFENSE ACQUISITION REFORM, 1960–2009

The Pentagon dismissed Aspin’s charges as “uninformed and 

inaccurate,” and Defense Secretary Weinberger continued to assert 

that there was nothing basically wrong with the military establishment. “If a thing ain’t broke,” he repeatedly argued, “don’t fix it.”

Not surprisingly, the dissatisfaction in Congress with defense 

spending and management mirrored the increasingly vocal dissatisfaction among the general public. In March 1985, a Business 

Week/Harris survey revealed that 70 percent of Americans were 

convinced that defense contractors routinely overcharge the Pentagon. The respondents also thought, by a three-to-one margin, that 

the congressional committees in charge of military programs “are 

so influenced by defense contractors that they won’t crack down 

on wasteful spending.” And 56 percent thought that Defense Secretary Weinberger was doing at best a “fair” and at worst a “poor” 

job of managing the Pentagon’s budget. Only 4 percent gave him 

an “excellent” rating.68

In analyzing the poll, Business Week concluded that the public was unhappy enough to want dramatic action. By a margin of 

57 percent to 36 percent, those surveyed would bar any company 

found to have overcharged the Pentagon from receiving any new 

defense contracts. Approximately 60 percent would cancel “some 

or all” of the offending company’s existing contracts. Respondents 

would also like to see anyone found guilty of fraud go to jail, “no 

matter how important they are.” Most of the respondents thought 

that the costs of defense programs were inflated because of design 

changes to defense systems while they were being developed and 

produced.

In the summer of 1985, President Reagan established the Blue 

Ribbon Commission (the Packard Commission) on Defense Management, marking the culmination of numerous related and sometimes conflicting reform initiatives that had been under way in 

Washington since the early 1980s.69 Representative examples include the President’s Private Sector Survey on Cost Control (the 

Grace Commission), established by the White House in 1982 as 

part of a larger effort to reduce the size of the government and 

streamline federal operations; and the Military Reform Caucus, 

a congressional bipartisan group founded by Colorado Senator 

Gary Hart, that questioned the anticipated outcomes of Reagan’s 

defense buildup and sought alternatives to existing weapons pro68 Business Week/Harris Poll reported in Business Week, 25 March 1985. 69 The Packard Commission continued a long tradition of Defense Department reviews 

that had been conducted by various study groups and panels since the end of World War II. 

See, for example, Defense Acquisition: Major U.S. Commission Reports (1949–1988), vol. 1, 

prepared for the use of the Defense Policy Panel and Acquisition Policy Panel of the Committee 

on Armed Services, House of Representatives, 100th Cong., 2d sess., 1 November 1988.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 127

curement procedures.70 Congress also assumed a more active and 

direct role in the oversight of weapons acquisition that went beyond control of defense appropriations. In the Senate, for example, the Armed Services Committee established the Defense Acquisition Policy Subcommittee, chaired by Indiana Senator James 

Danforth “Dan” Quayle. Meanwhile, Pentagon whistleblowers and 

grass roots organizations, such as Dina Rasor’s Project on Military 

Procurement, further inflamed public outrage with allegations of 

widespread criminal misconduct and mismanagement in the military services and the defense industry that quickly put the White 

House on the defensive and threatened to undermine political support for the president’s rearmament program.71 Regardless of the 

veracity of these charges, Reagan established the Packard Commission in part as a preemptive measure to deflect the litany of 

growing criticism leveled against his administration and the Pentagon by external pressure groups, Congress, and the media. 

The Packard Commission comprised a group of distinguished 

defense experts who, among other things, recommended a sweeping reorganization of the weapon systems acquisition process—

centralization of all management functions under civilian authority in OSD. The following year, Congress, which had closely followed 

the commission’s deliberations, enacted legislation establishing 

the position of USD (A) recommended by the commission. Ranking third behind the defense secretary and the deputy secretary of 

defense, this new post expanded OSD control of weapons procurement at the expense of weakened acquisition organizations in the 

Army, Navy, and Air Force. Though controversial and often criticized by the services, the Office of the Under Secretary of Defense 

70 On the recommendations of the Grace Commission, see President’s Private Sector 

Survey on Cost Control, A Report to the President (Washington, D.C.: U.S. Government 

Printing Office, 1983). The Military Reform Caucus is discussed in Daniel Wirls, Buildup: 

The Politics of Defense in the Reagan Era (Ithaca: Cornell University Press, 1992). See also 

D. M. Alpern and J. J. Lindsay, “Fighting to Win the War,” Newsweek 98 (14 September 1981): 

27; G. Hart, “What’s Wrong with the Military?” New York Times Magazine, 14 February 1982, 

16–19; Hart, “The Need for Military Reform,” Air University Review 36 (September-October 

1985): 41–46; A. K. Marsh, “Military Reform Caucus Seeks Targets,” Aviation Week and 

Space Technology 116 (29 March 1982): 55–56; D. Griffiths, “An Unlikely Alliance Takes on 

the Pentagon,” Business Week, 5 August 1985, 54–55; S. Crock, “Military Reform: Congress 

May Steal Reagan’s Thunder,” Business Week (14 October 1985): 53; and P. Mann, “Congress 

Continues Drive for Procurement Reform,” Aviation Week and Space Technology 125 (3 

November 1986): 36–37. 71 See Dina Rasor, ed., More Bucks, Less Bang: How the Pentagon Buys Ineffective 

Weapons (Washington, D.C.: Fund for a Constitutional Government, 1983). See also Rasor, 

The Pentagon Underground: Hidden Patriots Fighting Against Deceit and Fraud in America’s 

Defense Program (New York: Basic Books, 1985); A. Ernest Fitzgerald, The Pentagonists: An 

Insider’s View of Waste, Mismanagement, and Fraud in Defense Spending (Boston: HoughtonMifflin, 1989).
128 DEFENSE ACQUISITION REFORM, 1960–2009

for Acquisition nevertheless served as the focal point of weapons 

acquisition reform during the second half of the 1980s. 

The Packard Commission characterized the defense acquisition 

process as expensive, inefficient, and cumbersome. It observed that 

“the increasing complexity of the process meant unnecessary delays 

occur in acquiring needed goods and supplies and that higher costs 

were paid for what was acquired.” In brief, the Packard Commission concluded that “the defense acquisition process is not being operated and managed effectively, and that this is having a disastrous 

effect on the cost and efficiency of the system.”72

The lengthy acquisition process (seven to ten years or longer) 

for major weapon systems was a central problem and produced 

other acquisition problems. The Packard Commission pointed out 

three typical hazards:

•	 It leads to unnecessarily high costs of development. Time is 

money, and experience argues that a ten-year acquisition cycle is clearly more expensive than a five-year cycle.

•	 It leads to obsolete technology at the time of deployment.

•	 It aggravates the concern that is one of its causes. Users, 

knowing that the equipment designed to meet their requirements is fifteen years away, make extremely conservative 

(i.e., high) threat estimates. Because long-term forecasts are 

uncertain at best, users tend to err on the side of overstating 

the threat.73

The 1986 Packard Commission also found that the general 

public held “professional military personnel” in very high esteem. 

The public placed the military, on a scale of zero to one hundred, in 

the range of eighty, along with doctors, ministers, and other professional people with high status and recognition. On the other hand, 

“the defense industry was down at 25 percent, and in some of the 

detailed questions the public indicated that they thought half the 

defense budget was being wasted by the defense industry.”74

In response to the reported cost problems, congressional members adopted a fragmented approach to reform, introducing a large 

number of bills designed to impose new requirements on DoD and 

72 President’s Blue Ribbon Commission on Defense Management, A Quest for Excellence, 

June 1986, cited in John C. Yoder and Jan Horbaly, “Department of Defense Procurement 

Alternatives,” paper prepared for the Defense Acquisition Study, Center for Strategic and 

International Studies, Georgetown University, 17 March 1986, pp. 7–10 (quotation). 73 President’s Blue Ribbon Commission on Defense Management, A Quest for Excellence: 

Final Report to the President (Washington, D.C.: U.S. Government Printing Office, June 1986), 

p. 47.74 David Packard press conference on A Quest for Excellence, 2 July 1986.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 129

the defense industry. In 1985, members of Congress introduced 

more than one-hundred-forty bills related to improving the defense 

acquisition process, many of which were accompanied by numerous press conferences, public expressions of outrage, and assertions that the new legislation would plug a few more holes in the 

dike. In 1986, once again, members of Congress introduced more 

than one hundred bills concerning defense acquisition.75

As a result of the paperwork required by the various defense 

acquisition initiatives of the past, the program management task 

of researching, interpreting, and applying the various rules and 

regulations to the numerous contracts issued each year required 

large government and contractor staffs. The problem, as the Packard Commission observed, was that much of the work performed by 

those who reviewed the proposals, plans, contracts, reports, and 

legal documents was now unproductive and costly. To address this 

and other major problems, the Packard Commission made four major recommendations:76

•	 Create a new Under Secretary of Defense for Acquisition, who 

would “set overall policy for procurement and research and 

development (R&D), supervise the performance of the entire 

acquisition system, and establish policy for administrative 

oversight and auditing of defense contractors.

•	 Create the senior position of Service Acquisition Executive 

(SAE) in each service, who would be a civilian presidential 

appointee reporting to the new DoD Under Secretary, as well 

as to the service secretary.

•	 Create Program Executive Officers (PEOs) appointed by the 

SAEs. Each PEO would oversee a group of program managers 

in charge of major acquisition programs reporting up this civilian chain of command from the Program Executive Officers 

to the Service Acquisition Executives to the Under Secretary 

of Defense for Acquisition. 

•	 Give the chairman of the Joint Chiefs of Staff more authority and 

create a vice chairman, who, along with the new Under Secretary, 

will be part of a Joint Requirements Management Board, which 

will establish requirements for new weapons and approve or reject them at each step along the path to production.77 

75 Yoder and Horbaly, “Department of Defense Procurement Alternatives,” pp. 11–12. 76 President’s Blue Ribbon Commission on Defense Management, An Interim Report 

to the President (Washington, D.C.: U.S. Government Printing Office, 28 February 1986), 

p. 16.77 Ibid. The commission also recommended other reforms, including recruitment 

of more qualified acquisition personnel; elimination of “goldplating” (overstated 

requirements, leading to unrealistic specifications and higher costs); more frequent 
130 DEFENSE ACQUISITION REFORM, 1960–2009

These recommendations were subsequently implemented 

throughout DoD. Since the late 1980s, defense program managers 

have reported to program executive officers. Program executive officers can have many program managers reporting to them. Program executive officers can also be military officers or federal civil 

servants and report to a service acquisition executive in a military 

service.78The service acquisition executive is a political appointee 

and is usually an assistant secretary of a service, responsible for 

all acquisition and acquisition programs within the service. Service acquisition executives report to a service secretary and to the 

under secretary of defense for acquisition, technology, and logistics 

(USD [AT&L]), who also serves as the defense acquisition executive.79

In 1986, the Packard Commission released its final report focusing on four broad subject areas: national security planning and 

budgeting; military organization and command; acquisition organization and procedures; and government-industry accountability.80

All four areas touched on the organization of the military services 

and weapon systems acquisition. In the case of national security 

planning and budgeting, for example, the commission extended a 

programming element of the Acquisition Improvement Program—

use of commercial parts rather than specially designed components based on military 

specifications; expanded testing of prototype weapons systems prior to production (flybefore-buy); and multiyear procurement and base-lining (establishment of firm internal 

agreement on system requirements, design, production, and cost) to improve program 

stability. The report also dismissed claims that fraud and waste were rampant in the 

Defense Department. The commission argued instead that the acquisition system suffered 

from managerial and operational inefficiencies in OSD and in the services. Rather than 

recommend more external oversight and regulation (from Congress, for example), the 

commission believed that “meaningful change will come . . . only with major institutional 

change.” This interpretation of the problem of weapons acquisition reform prompted 

the establishment of the USD (A) and the new acquisition management positions in the 

services. 78 A service acquisition executive is the component acquisition executive for a military 

department. 79 Congressional Research Service Report for Congress, “Defense Acquisition: Overview, 

Issues, and Options for Congress,” RL34026, 20 Jun 2007. DoD Instruction 5000.1 states 

that the defense acquisition executive takes precedence on all acquisition matters after the 

secretary and the deputy secretary of defense. 80 The commission submitted the full report, which elaborated on the recommendations 

in the interim report, in June. See President’s Blue Ribbon Commission on Defense 

Management, A Quest for Excellence: Final Report to the President. The commission also 

issued supplemental reports on specific topics: John Norton Moore and Robert F. Turner, 

The Legal Structure of Defense Organization: Memorandum Prepared for the President’s 

Blue Ribbon Commission on Defense Management (Washington, D.C.: 15 January 1986); 

President’s Blue Ribbon Commission on Defense Management, A Formula for Action

(Washington, D.C.: April 1986); National Security Planning and Budgeting (Washington, 

D.C.: June 1986); and Conduct and Accountability (Washington, D.C.: June 1986), all copies 

in OSD Historical Office.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 131

reform of the annual budget process to avoid funding fluctuations 

in major weapons programs. Suggested alternatives proposed by 

the commission included biennial budgeting and authorizations of 

appropriations for programs at key development milestones. 

In addition to calling for a new under secretary of defense for 

acquisition, the Packard Commission also favored the extension of 

civilian management and coordination of procurement functions in 

each of the military services. It also encouraged greater use of offthe-shelf commercial products rather than components designed 

to rigid military specifications; rigorous testing of prototypes prior 

to production (a concept typically known as fly-before-buy); and 

a more active role for the Defense Advanced Research Projects 

Agency (DARPA) in weapon systems prototyping and other development work not sufficiently emphasized in the services.81

The Packard Commission report also contained strong recommendations for improving the training and experience of government personnel assigned to defense acquisition, citing the need 

to “enhance the quality of [government] acquisition personnel.” It 

stated that “significant improvements should be made in the seniorlevel appointment system” and cited a GAO report confirming the 

central importance of “improving the quality of training for program 

managers and contracting officers.” The Packard report continued, 

“We support recent legislation that has further defined career paths 

for all program managers.” In 1984, Congress established a minimum four-year tenure for program manager assignments. 

The 1986 Defense Authorization Act prescribed requisite qualifications and training, including at least eight years of acquisitionrelated experience and appropriate instruction at the Defense Systems Management College (or equivalent training). The Packard 

report highlighted in particular the need for business-related education and experience.82

Even though many of the Packard Commission recommendations 

became law, they did not all bring about significant procedural changes 

in the weapons acquisition process or in the training, assignments, 

or tenure of program managers. Waivers were frequently granted 

to program manager candidates (as continued to be the practice in 

2009). Congress enacted reform legislation that simply overlaid new 

81 President’s Blue Ribbon Commission on Defense Management, An Interim Report to 

the President, pp. 5, 9–10, 14–18, copy in OSD Historical Office. The concept of fly-before-buy 

was not new. Packard had implemented the same policy into the weapons acquisition system 

during his three-year tenure as deputy secretary of defense, from 1969 to 1971. 82 President’s Blue Ribbon Commission on Defense Management, A Quest for Excellence: 

Final Report to the President, pp. 65–70 and GAO Report, DoD Acquisition: Strengthening 

Capabilities of Key DoD Personnel in Systems Acquisition, GAO/NSIAD–86–45 (Washington, 

D.C.: U.S. General Accounting Office, May 1986).
132 DEFENSE ACQUISITION REFORM, 1960–2009

institutional mechanisms, such as the USD (A), on existing acquisition 

organizations in the Office of the Secretary of Defense and the military 

services. This outcome created serious management bottlenecks and 

conflicting priorities, as evidenced, for example, by rapid turnover of 

occupants in the Office of the Under Secretary of Defense for Acquisition 

described later in this chapter. Moreover, the resulting organizational 

ambiguity enabled the Army, the Navy, and the Air Force to maintain 

considerable control over weapons acquisition. 

Under Secretary of Defense for Acquisition

The Packard Commission’s recommendation that the White House 

set up the Office of the Under Secretary of Defense for Acquisition was 

a continuation of policies and procedures favoring the centralization 

of weapons acquisition management in OSD, a process that had begun when Weinberger merged the functions of the ASD (MI&L) and 

part of the USD (R&E) into the Office of the Assistant Secretary of 

Defense for Acquisition and Logistics in 1985. But the commission also 

recommended more sweeping reforms that called for major changes 

to the acquisition organizations in the military services and more involvement in weapons acquisition by the Joint Chiefs of Staff and the 

commanders in chief of the unified and specified commands. Congress 

institutionalized these reforms in the authorization legislation for fiscal years 1986 and 1987, the Military Retirement Reform Act of 1986, 

and the Goldwater-Nichols Department of Defense Reorganization Act, 

which President Reagan signed into law on 1 October 1986.

The authority embodied in the legislation enacted by Congress 

in 1986 to reform acquisition management in the Defense Department did not immediately translate into effective compliance at 

the working level. Conflicts about organizational efficiency, military career paths, and jurisdictional authority persisted in OSD 

and the military services long after Congress completed its task. 

The legislative reforms endorsed by the White House and enacted 

by Congress in 1986 transferred and centralized the management 

of weapons acquisition to a high-ranking civilian presidential appointee—USD (A)—in OSD. Perhaps not surprisingly and with 

some justification, the services resisted the Packard Commission’s 

recommendations and the provisions of the enabling legislation. 

In many cases, the service chiefs initially bypassed or ignored the 

measures taken by the USD (A) to impose new management strategies on major weapons programs. Moreover, the limits of oversight acceptable to the services differed substantially from the expectations advocated by reformers in Congress who favored the 

assignment of broad regulatory authority to the USD (A). This 

tension between service autonomy and greater oversight pushed 
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 133

by reformers in Congress, in combination with Defense Secretary 

Weinberger’s initial opposition to the Packard Commission’s recommendations, helped to create a hostile working environment for 

the USD (A) during the second half of the 1980s.

In its interim report to the president, the Packard Commission 

had identified the lack of coordination between the Office of the 

Secretary of Defense and the military services as the major problem in acquisition management:

Responsibility for acquisition policy has become fragmented. 

There is today no single senior official in [OSD] working full-time 

to provide overall supervision of the acquisition system. . . . In the 

absence of such a senior OSD official, policy responsibility has 

tended to devolve to the services, where at times it has been exercised without the necessary coordination or uniformity. Authority 

for acquisition execution, and accountability for its results, have 

[sic] become vastly diluted.83 

Without calling attention to the Acquisition Improvement Program, 

perhaps an odd omission given that the program deliberately 

encouraged greater service autonomy in the acquisition process, 

the commission proposed the establishment of the Office of the 

Under Secretary of Defense for Acquisition to deal with the lack of 

coordination and uniformity. This office, which replaced the current 

Office of the Assistant Secretary of Defense for Acquisition and 

Logistics, would “set overall policy for procurement and research 

and development (R&D), supervise the performance of the entire 

acquisition system, and establish policy for administrative oversight 

and auditing of defense contractors.”84

As part of its overall plan to improve the acquisition management organization, the Packard Commission also recommended 

sweeping changes to the military command structure, a process 

that had already been under way before the commission convened. 

The commission identified a lack of integration between the commanders in chief of the unified and specified commands, who managed combat operations, and the service chiefs, whose procurement organizations determined weapon system requirements and 

carried out logistics functions. At the time, the chairman of the 

Joint Chiefs of Staff served as the primary communications link 

between the secretary of defense and the commanders in chief. 

The JCS chairman, defense secretary, and the commanders in

83 President’s Blue Ribbon Commission on Defense Management, An Interim Report to 

the President, p. 14. 84 Ibid., p. 16.
134 DEFENSE ACQUISITION REFORM, 1960–2009

chief, for example, all sat on the Defense Resources Board. This 

advisory unit assigned to OSD provided management oversight 

of the PPBS, which matched available resources to weapons requirements. Pointing out the growing emphasis on joint combat 

operations, the commission intended to cement this relationship 

even further along two separate but related lines. The new position of vice chairman of the Joint Chiefs of Staff would represent 

the views of the commanders in chief. In this way, the commanders 

in chief, through the vice chairman, would have the opportunity to 

participate directly in acquisition planning and resource allocation 

and be assured that the strategies and tactics of the unified and 

specified commands received full support.85

These functions would be executed by a newly reconstituted 

Joint Requirements Management Board (JRMB) headed by the 

vice chairman of the Joint Chiefs of Staff and the Under Secretary of Defense for Acquisition. Established in 1984, the JRMB 

(renamed two years later as the Joint Requirements Oversight 

Council [JROC]) had been modeled on the Defense Systems Acquisition Review Council (DSARC), set up by then-Deputy Defense Secretary Packard in 1969 to help manage the acquisition 

process by conducting periodic milestone reviews of major weapons programs at specified points in the procurement cycle.86 Under these guidelines, the JROC defined and validated new weapon 

systems requirements; trade-offs between cost and performance; 

alternatives to the initiation of new programs at the research and 

development stage; and the development and production recommendations for joint programs.87 In 1987, the Defense Acquisition 

Board (DAB) was created, replacing the Defense Acquisition Review Council as the senior-level forum for advising the under secretary of defense for acquisition on critical decisions concerning 

major acquisition category (ACAT) 1D programs. The under secretary of defense for acquisition (later expanded to acquisition, 

technology, and logistics) chaired the DAB, and the vice chairman 

of the Joint Chiefs of Staff served as vice chairman. Other DAB 

members included the service secretaries and several DoD acquisition officials. 

85 Ibid., pp. 9–12. See also Gordon Nathaniel Lederman, Reorganizing the Joint Chiefs of 

Staff: The Goldwater-Nichols Act of 1986 (Westport, Conn.: Greenwood Press, 1999); James R. 

Locher III, Victory on the Potomac: The Goldwater-Nichols Act Unifies the Pentagon (College 

Station: Texas A&M University Press, 2002). 86 The Defense Systems Acquisition Review Council (DSARC) was created by the deputy 

secretary of defense to achieve better coordination in the major weapons acquisition process. 87 A. F. Klick, “The Newly Created Office of the Under Secretary of Defense, Acquisition,” 

National Defense (January 1987): 34–36. 
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 135

Even before the Packard Commission issued its final report 

on acquisition reform, the president and Congress moved quickly 

on the legislative front. On 1 April 1986, Reagan issued National 

Security Decision Directive (NSDD) 219, Implementation of 

Recommendations of President’s Commission on Defense Management. “This directive,” Reagan wrote, “outlines the steps I have 

approved for the implementation of the initial recommendations 

of the [Packard] Commission on Defense Management. . . . We 

must . . . be especially mindful of the need to move quickly and 

decisively to implement those changes.” Anticipating legislative 

approval by Congress, Reagan endorsed establishing the 

Office of the Under Secretary of Defense for Acquisition and 

implementing a three-tiered acquisition management chain of 

command within each service consisting of a service acquisition 

executive, program executive officer, and program manager. He 

also endorsed restructuring the Joint Requirements Management 

Board cochaired by the USD (A) and the new vice chairman of 

the Joint Chiefs of Staff, to define weapons requirements, select 

programs and provide alternatives, streamline the program review 

process, and strengthen the acquisition workforce. The directive 

also authorized the Packard Commission’s other recommendations 

concerning national security planning and budgeting and 

government-industry accountability.88

In mid-November 1986, shortly after Reagan signed the Goldwater-Nichols Defense Reorganization Act into law, Congress 

passed the National Defense Authorization Act for Fiscal Year 

1987 (Public Law 99–661; Title XI of the Defense Acquisition Improvement Act of 1986). The National Defense Authorization Act 

and the Military Retirement Reform Act of 1986 created and authorized the responsibilities of the Office of the Under Secretary 

of Defense for Acquisition; set baseline descriptions for each of 

the Defense Department’s major weapons acquisition programs; 

expanded multiyear procurement; increased the authority of program managers; and required prototype competitions (fly-beforebuy) to identify among several alternatives the most suitable and 

cost-effective weapon systems.89

88 Memo, John M. Poindexter for Distribution List, 1 Apr 1986; National Security 

Decision Directive (NSDD) 219, Implementation of the Recommendations of the President’s 

Commission on Defense Management, 1 April 1986, (Reagan, quotation p. 1); copies of memo 

and directive in OSD Historical Office. 89 Klick, “The Newly Created Office of the Under Secretary of Defense, Acquisition,” pp. 

33, 37. See also William E. Kovacic, “Blue Ribbon Defense Commissions: The Acquisition of 

Major Weapon Systems,” in Arms, Politics, and the Economy: Historical and Contemporary 

Perspectives, ed. Robert Higgs (New York: Holmes and Meier, 1990), pp. 82–83. When Congress 

passed the National Defense Authorization Act for Fiscal Year 1987, the Pentagon had already 
136 DEFENSE ACQUISITION REFORM, 1960–2009

In February 1987, several months after it had filled the USD (A) 

position, the Office of the Secretary of Defense issued DoD Directive 5134.1, which outlined the functions of the USD (A). The holder 

of this position, the directive stated, would serve as “the principal 

staff assistant and adviser to the Secretary of Defense for all matters relating to the acquisition system; research and development; 

production; logistics; command, control, communications, and intelligence activities related to acquisition; military construction; and 

procurement.”90

Title V of the Goldwater-Nichols Act, which Reagan had 

signed into law less than two months before Congress passed the 

fiscal year 1986 authorization legislation, established the legal 

guidelines used by the military services to restructure their acquisition organizations based on the Packard Commission’s recommendations. To create the commission’s three-tiered military 

and civilian acquisition management structure—service acquisition executive, program executive officer, program manager—the 

Army, Navy, and Air Force each merged the separate acquisition 

organizations previously assigned to each service secretary’s office and the corresponding office of the service chief of staff. The 

creation of the newly combined acquisition organizations in the 

offices of the secretary of the Army, Navy, and Air Force apparently expanded civilian authority of the acquisition process. But 

as William W. Thurman, the GAO’s deputy director for planning 

and reporting (National Security and International Affairs Division), observed during his testimony before the Subcommittee on Investigations of the House Armed Services Committee 

in April 1988, “the consolidation . . . was not intended to exclude 

the service chiefs from participating in these functions. . . . Title 

V specifies that in the acquisition area the service secretary may

[emphasis added] assign responsibility for military requirements 

and test and evaluation to the service chiefs, thus allowing responsibility for these functions to remain in the service Chiefs’ 

organizations.”91

selected Northrop Grumman’s B–2 stealth bomber program as the leading test case for flybefore-buy competition. The company’s B–2 prototype completed its maiden test flight in the 

summer of 1989. On the development of the B–2, see Michael E. Brown, Flying Blind: The 

Politics of the U.S. Strategic Bomber Program (Ithaca, N.Y.: Cornell University Press, 1992), 

pp. 294–304. 90 DoD Directive 5134.1 quoted in GAO, Status of Recommendations by Blue Ribbon 

Commission on Defense Management, GAO/NSIAD–89–19FS (Washington, D.C.: General 

Accounting Office, November 1988), p. 30 (quotation). 91 U.S. Congress, House, statement of William W. Thurman, Deputy Director for Planning and 

Reporting (National Security and International Affairs Division, GAO), before the Subcommittee 

on Investigations, Committee on Armed Services, Reorganization of the Military Departments’ 

Acquisition Management Structures, GAO/T–NSIAD–88–28, 20 April 1988, pp. 2–3 (quotation).
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 137

The Army began reorganizing its internal acquisition functions 

in March 1987. At the time, acquisition policy, management, and 

oversight resided in the Office of the Assistant Secretary of the 

Army for Research, Development, and Acquisition (ASA [RD&A]), 

who reported directly to the Under Secretary of the Army. The Office of the Deputy Chief of Staff for Research, Development, and 

Acquisition (DCS [RD&A]) reported to the Vice Chief of Staff and 

handled the execution of all of the Army’s acquisition functions 

through the major commands. After Congress enacted GoldwaterNichols, both offices combined to form a new acquisition organization headed by the ASA (RD&A), also known as the Army acquisition executive. The DCS (RD&A), a position previously held 

by a lieutenant general, became the principal deputy to the ASA 

(RD&A) responsible for overseeing day-to-day execution of operations and providing general staff support. Goldwater-Nichols 

prompted a similar reorganization of acquisition management 

functions in the Air Force. Acquisition responsibilities at Air Force 

headquarters had been divided between the assistant secretary of 

the Air Force for acquisition and logistics (ASAF [A&L]) and the 

deputy chief of staff for research, development, and acquisition 

(DCS [RD&A]). Like the Army, the Air Force merged the offices of 

the ASAF (A&L) and the DCS (RD&A). The civilian ASAF (A&L) 

served as the Air Force acquisition executive. “This integration [in 

the Army and the Air Force],” Thurman told the House Committee, 

“is designed to provide [the] assistant secretaries with authority 

and direct control over the people directing, managing, and executing acquisition activities.”

The realignment of management authority for weapon systems acquisition from the deputy chief of staff of the Army and 

the Air Force to the corresponding assistant secretaries extended 

all the way down to the major commands. Before 1987, the Army 

Materiel Command directed the management and execution of 

weapons acquisition programs in its subordinate commodity commands. Under the new organizational structure, the weapon system program offices shifted to the three-tiered chain of command, 

leaving the Army Materiel Command to provide staff support. 

The program managers and program executive officers, for example, maintained small staffs but received functional support from 

Army Materiel Command’s commodity commands. Essentially, 

the Army had split its acquisition management functions along 

two separate lines: one functional and under the direction of the 

Army Materiel Command, the other programmatic and controlled 

at the top by the assistant secretary of the Army for research, development, and acquisition—the Army acquisition executive. The 
138 DEFENSE ACQUISITION REFORM, 1960–2009

provisions of Title V of Goldwater-Nichols prompted a similar division of labor between the acquisition management and support 

functions at the command level in the Air Force and the Navy.92

When he issued NSDD 219 in the spring of 1986, Reagan specified, as the Packard Commission had, that the proposed under 

secretary of defense for acquisition “should have a solid industrial background.”93 Ever since he had entered the White House, 

Reagan had sought to apply the lessons of efficient business management to government operations, and it is likely that the same 

concept guided his approach to weapons acquisition reform.94

Packard had also adopted a business model to solve the same 

problem on two separate occasions, first as deputy secretary of 

defense from 1969 to 1971 and then as chairman of the President’s Blue Ribbon Commission on Defense Management in 1985 

to 1986.95To be sure, Packard’s preference for a business solution 

to resolve the difficulties of acquisition reform seemed consistent 

with his background and experience as cofounder and head of 

Hewlett-Packard, one of the largest and most successful diversified electronics industrial firms in the United States conducting 

engineering development and production programs. It was also 

consistent with the industrial tasks of engineering development 

and production inherent in major acquisition programs. Guided 

by this experience, the Packard Commission concluded that unlike an industrial firm in which managers at the headquarters office maintained clear lines of authority to and from the manufacturing divisions, the Pentagon’s acquisition organization lacked 

an equivalent centralized mechanism to regulate weapons acquisition from OSD to the services. The proposed under secretary of 

defense for acquisition would fill the need for centralization at 

the top, whereas the Army, Navy, and Air Force acquisition executives, like the general managers in charge of a firm’s manufactu92 Ibid., pp. 5–14. For a more detailed discussion of the organizational changes in the 

U.S. Army Materiel Command, see U.S. Army Materiel Command Annual Historical Review, 

Fiscal Year 1987 (Fort Belvoir, Va.: Headquarters, U.S. Army Materiel Command Historical 

Office, August 1989). 93 NSDD 219, Implementation of the Recommendations of the President’s Commission 

on Defense Management, p. 4. See also President’s Blue Ribbon Commission on Defense 

Management, An Interim Report to the President, p. 16 (quotation). 94 Reagan’s views on business management and government operations are discussed in 

his autobiography, An American Life (New York: Simon and Schuster, 1990). 95 Fox, Arming America. See also J. Ronald Fox, The Defense Management Challenge: 

Weapons Acquisition (Boston: Harvard Business School Press), 1988, pp. 322–23.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 139

ring divisions, would oversee—through their program executive 

officers—acquisition projects in the services.96

Not all observers, however, agreed with Reagan, Packard, and 

other like-minded officials in OSD that employing a business model promised the quickest route to a more efficient weapons acquisition management organization. Some critics charged that drawing on contemporary corporate management practices ignored the 

unique institutional structure of the defense establishment. Perhaps the strongest opposition to the under secretary of defense for 

acquisition came from the military services, the leaders of which 

saw the new position and its first occupant—Richard P. Godwin—

as a direct assault on their autonomy to manage major weapons 

programs.97

Weinberger handpicked Richard Godwin to fill the position of under secretary of defense for acquisition. Even before Godwin set foot 

in Washington, however, his appointment had created controversy 

in the Pentagon, Congress, and the press. Since 1961, Godwin had 

been employed at the Bechtel Group, a huge engineering and construction firm headquartered in San Francisco. By the mid-1970s, 

he had worked his way up through the corporate ranks to become 

vice chairman of the company and a member of the board of directors. During the same period, Godwin had worked with Weinberger, 

at the time vice president and general counsel of the company, and 

also with George P. Shultz, who left Bechtel in 1982, a year after 

Weinberger departed for the Defense Department, to join Reagan’s 

cabinet as secretary of state. Godwin’s previous ties to Weinberger 

and Shultz, what the press often referred to as the “Bechtel Mafia,” 

served as the basis for some of the discontent with Godwin.

When Weinberger announced in the spring of 1986 that Godwin 

would be the first under secretary of defense for acquisition, some 

critics in Congress immediately expressed their dissatisfaction 

with the appointment. Several Republican senators, including 

96 S. Eisenstadt, “The Packard Reforms: A Year Later,” Military Logistics Forum 3 (May 

1987): 40, 42. See also on the history of business organization and management at large firms 

such as Hewlett-Packard, Alfred D. Chandler Jr., Strategy and Structure: Chapters in the 

History of the American Industrial Enterprise (Cambridge, Mass.: MIT Press, 1962); Chandler, 

Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, Mass.: Belknap Press 

of Harvard University Press, 1990); and Chandler, “The Competitive Performance of U.S. 

Industrial Enterprises since the Second World War,” Business History Review 68 (Spring 1994): 

1–72.97 Harold J. Brumm Jr., an economist at the General Accounting Office writing for 

the Defense Management Journal, also questioned the wisdom of centralizing acquisition 

management in OSD. He argued that such an outcome would reduce competition between the 

services, inhibit technological innovation, and lower operating efficiencies. See H. J. Brumm Jr., 

“Bureaucratic Competition and Weapon System Procurement,” Defense Management Journal

22 (Third Quarter 1986): 13–17.
140 DEFENSE ACQUISITION REFORM, 1960–2009

Barry Goldwater (Arizona), Pete Wilson (California), Dan Quayle 

(Indiana), and William Philip “Phil” Gramm (Texas) preferred 

Donald Hicks, under secretary of defense for research and 

engineering (USD [R&E]), instead. Quayle, for example, disliked 

Godwin’s ties to Bechtel and his association with Weinberger and 

Secretary of State Shultz. Unlike Hicks, Godwin had no experience 

working in the Department of Defense, and Bechtel operated 

almost exclusively in the civilian sector. The company had very 

little experience working in the defense business.98 Support from 

the Senate, especially members of the Armed Services Committee 

(whose members included Goldwater, Wilson, and Quayle) was not 

enough to put Hicks in a favorable position to be the first USD (A).

 When it became clear that the White House would not budge on 

Godwin’s appointment, the Senate Armed Services Committee 

backed off and, in September, confirmed him as the first USD (A).

Meanwhile, Hicks prepared to leave OSD. Under the new 

acquisition management structure, Weinberger eliminated the 

Office of the USD (R&E) and downgraded the Pentagon’s research 

and development management function to the position—director 

of defense research and engineering (DDR&E)—reporting directly 

to Godwin.99 “I didn’t come to the Pentagon to be a director instead 

of an under secretary,” Hicks reportedly confided to his colleagues 

in OSD.100 He announced his resignation as USD (R&E) shortly 

after Godwin’s Senate confirmation. So did James Wade, who still 

served as ASD (A&L). “I do not want to be a professional secondtier bureaucrat,” Wade told Defense News. Godwin’s appointment 

as the USD (A), he continued, “is an example [of] the system picking 

its top guys from outside” even though, as Defense News later 

paraphrased in its write-up of an interview with Wade, “capable 

people are already working within the [Pentagon] bureaucracy.”101

98 C. W. Coddry, “Weinberger’s Support of Bechtel Official for Acquisition Post Angers 

Senators,” Baltimore Sun, 23 May 1986; see also S. Eisenstadt, “Godwin Opposition May Be on 

the Wane,” Defense News, 8 September 1986; J. Kitfield, “ ‘Acquisition Czar’ Gains Supporters,” 

Military Logistics Forum (October 1986): 13. 99 OSD established the Office of the Director of Defense Research and Engineering 

(DDR&E) in 1958. In 1977, Secretary of Defense Harold Brown abolished the DDR&E 

position and elevated its functions to the new Office of Under Secretary of Defense Research 

and Engineering. See Appendix D, “A Brief History of the Office of the Director of Defense 

Research and Engineering,” in Defense Science Board Task Force on the Roles and Authorities 

of the Director of Defense Research and Engineering (Washington, D.C.: Office of the Under 

Secretary of Defense for Acquisition, Technology, and Logistics, October 2005). 100 Donald Hicks quoted in Marjorie Williams, “Insult and Injury as ‘Weapons Czar’ 

Assumes New Post,” Washington Post, 6 October 1986. 101 “Godwin Proposes to Abolish Hicks’ Job in New ‘USDA’ Reorganization,” Inside the 

Pentagon, 26 September 1986; see also James Wade quoted in S. Eisenstadt, “Wade to Close 

Curtain on Career in Pentagon,” Defense News, 22 September 1986; Eisenstadt, “Officials Do 

the Procurement Post Shuffle,” Defense News, 13 October 1986.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 141

By the time Godwin entered office, the Army, Navy, and Air 

Force had assumed significant management control over the 

development and procurement of major weapon systems. To be 

sure, Godwin faced a steep learning curve when he entered office. 

One industry observer who had worked in the Pentagon pointed 

out that “Godwin will basically have only two years left in this 

administration in which to organize a whole new office.”102 Thomas L. 

McNaugher, a defense analyst at the Brookings Institution, a think 

tank in Washington, D.C., offered a more pessimistic assessment 

of Godwin’s prospects for success. “It’s an incredible act of faith to 

think that one man is now going to come fresh into an intricate 

organization of thousands of people and make a real difference.”103

Confirming McNaugher’s opinion of the difficulties the new USD (A)

would likely face—though perhaps unknowingly—Secretary of the 

Navy John Lehman acknowledged that he would appeal directly 

to Weinberger if he and Godwin failed to reach agreement on any 

acquisition issue.104

A clear indication of the resistance that Godwin would face as 

“acquisition czar” first appeared during conferences held in the 

Senate and the House of Representatives to iron out differences in 

the proposed fiscal year 1987 defense bill, which authorized the position of the USD (A). The House version of the bill stipulated that 

the new position would “direct” all functions of the weapons acquisition procurement process, which were at the time managed by 

the services. The Senate bill, by contrast, stipulated that the USD 

(A) would only “supervise” weapon systems purchased by the services. Although all three services “strongly opposed the more intrusive role the [USD (A)] would have in their affairs under the House 

language,” reported the Congressional Quarterly, “the House conferees dug in and the conference accepted the House position.”105

The authority of the under secretary to “direct” remained in the 

bill. Backed by legislative authority from Congress, Godwin, in one 

of his first actions as USD (A), reorganized OSD’s civilian acquisition command structure, as planned, into five subordinate offices 

that reported directly to him: Assistant Secretary of Defense for 

Acquisition and Logistics, Wade’s old post; Assistant Secretary of 

Defense for Command, Control, Communications, and Intelligence 

(C3I); Assistant Secretary of Defense for Research and Technol102 Kitfield, “ ‘Acquisition Czar’ Gains Supporters,” p. 13 (quotation). 103 Thomas McNaugher quoted in J. Kitfield, “Sizing Up Godwin,” Military Logistics 

Forum 3 (March 1987): 11.

104 Ibid., p. 14. 105 P. Towell, “Pentagon Gets a New Procurement ‘Czar,’” Congressional Quarterly (25 

October 1986): 32 (quotation).
142 DEFENSE ACQUISITION REFORM, 1960–2009

ogy; Assistant Secretary of Defense for Atomic Energy; and Director of Defense Research and Engineering, previously occupied by 

Hicks.106

Even after he had made these organizational changes, however, 

Godwin’s position as USD (A) had still not completely stabilized 

within OSD. In March 1987, for example, Weinberger received a 

letter signed by Congressman Les Aspin (D-Wisc.), Congressman 

William Dickinson (R-Ala.), Senator Sam Nunn (D-Ga.), and Senator 

John Warner (R-Va.) demanding that Godwin only report directly 

to him on matters of acquisition, bypassing Deputy Secretary of 

Defense Taft’s office.107Preliminary evidence suggests that the letter 

had been prompted by congressional concern over Godwin’s ability 

to “wield true authority in [Defense Department] acquisition” and 

Weinberger’s detached management style, which had also led some 

defense experts to conclude that the USD (A) did not have sufficient 

support from OSD to enforce critical acquisition decisions. It is likely 

that conflicting expectations for acquisition reform coming from 

different constituencies—Congress, the military services, industry, 

and OSD—manifested themselves in the managerial difficulties that 

Godwin experienced. Commenting on this problem of mismatched 

priorities, R. James Woolsey, a lawyer, consultant, and former under 

secretary of the Navy who had served on the Packard Commission, 

pointed out that legislators in Congress who sought improvements 

in the Defense Department’s acquisition process had, to some extent, 

misunderstood the commission’s original expectations for the USD 

(A). The position had not been conceived to consolidate full authority 

over the entire acquisition process in an all-powerful acquisition czar. 

Rather, Woolsey argued, it had been set up to manage the acquisition 

process on behalf of OSD and the military services. “I had conceived 

of the under secretary [of defense] for acquisition to be an extremely 

important person for policy and procedures,” he recalled in a story 

about the status of the Packard Commission reforms published in 

Military Logistics Forum shortly after Weinberger had received the 

letter about Godwin’s role as USD (A) from Aspin, Dickinson, Nunn, 

and Warner.108

The Battle for Control of Weapons Systems Acquisition

Whether or not Woolsey’s recollection about the Packard 

Commission’s stated intentions for the Office of the Under Secretary 

106 Williams, “Insult and Injury as ‘Weapons Czar’ Assumes New Post.” 107 Congressman William Dickinson and Senator John Warner also served as the ranking 

members and chairmen of the House and Senate Armed Services Committees, respectively. 

J. Kitfield, “Godwin: Battling the Powers That Be,” Military Logistics Forum 4 (July-August 

1987): 56. 108 Eisenstadt, “The Packard Reforms,” p. 43 (quotation).
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 143

of Defense for Acquisition had an impact on reformers in Congress, 

evidence suggested that the leaders of the military services did not 

assign much significance to his clarification of Godwin’s expected 

role in OSD. It is likely that the services interpreted Godwin’s 

actions as an all-out assault on their prerogatives to control weapon 

systems acquisition. According to press coverage and several reports 

issued by the GAO, the sharpest opposition came from the Navy and 

the Air Force, both of which bypassed the new civilian management 

functions Godwin assigned to their acquisition organizations and 

appealed directly to Deputy Secretary Taft to resolve conflicts. 

Frustrated and without sufficient support from Weinberger and Taft 

to execute the functions of the USD (A), Godwin abruptly resigned 

from the Pentagon in September 1987, less than a year-and-a-half 

after his appointment. Evidence suggests that his replacement 

as USD (A)—Robert Costello—fared better, despite continued 

resistance from the services.

Godwin began experiencing major problems with the service 

acquisition organizations almost as soon as he set foot inside the 

Pentagon. More than six months after he had entered office with 

a mandate from the Packard Commission and the White House to 

reform the weapons acquisition process, Military Logistics Forum

reported that “working the changes into the Pentagon system has 

been slow. Not until March 1987, a year after Godwin had been 

named under secretary, did the services put into effect the alterations in their acquisition hierarchies.” Several months earlier, Godwin had clashed with Secretary of the Navy John Lehman, the architect of President Reagan’s ambitious plan to expand the Navy’s 

surface and submarine fleets to a combined total of six hundred 

ships by the end of the decade. Godwin, believing he had the authority to overrule the service secretaries, reversed Lehman’s prior 

decision to cancel development of the Deadeye, a five-inch laserguided projectile designed for use in amphibious assault missions. 

Lehman bypassed Godwin and appealed directly to Taft, complaining that the USD (A) did not have the authority to reactivate the 

Deadeye program. Taft agreed, and in February, he issued a directive that the USD (A) could not overrule service secretaries in 

cases, such as the Deadeye program, in which disputes arose over 

program execution. Only the deputy secretary of defense—Taft or 

whoever held the office at the time—could make that decision.109

Taft, prompted by Secretary of the Air Force Edward “Pete” 

Aldridge, also weakened the civilian acquisition management 

structure that OSD had set up in the Navy and the other services. Guided by the recommendations of the Packard Commission 

109 Ibid., pp. 40, 42 (quotation).
144 DEFENSE ACQUISITION REFORM, 1960–2009

for a single, unified acquisition, Godwin wanted each of the newly 

appointed service acquisition executives to report directly to him 

rather than through Lehman, Aldridge, and Secretary of the Army 

John Marsh. This adjustment, he concluded, would eliminate a 

bureaucratic layer from the reporting structure and put him in a 

more effective position to manage weapons acquisition. Lehman 

and Aldridge flatly rejected the proposed reorganization. So did 

Donald Hicks, former under secretary of defense for research and 

engineering, who observed, “If they [the service acquisition executives] report directly to the under secretary [Godwin], I am not 

sure I understand why they [the Army, the Navy, and the Air Force] 

have service secretaries,” implying oddly that the policy, personnel, logistics, financial management, and advocacy roles of the service secretaries were insignificant. Meanwhile, Aldridge suggested 

that Godwin’s new reporting arrangement would “separate those 

people that have acquisition responsibility from those people who 

have the responsibility for operating the forces once they are fully 

developed and deployed. It’s like the White House directing an assistant secretary of defense without telling Weinberger . . . and that 

wouldn’t fly more than about two seconds.”110Godwin shot back by 

pointing out that he did not want to control individual weapon programs. To the contrary, his intent all along had been to streamline 

the management structure to ensure accurate and timely reporting of data to avoid problems in major programs. Perhaps troubled 

by Aldridge’s comment, Godwin replied more directly in the Washington Post, “[W]e can’t have a decision based simply on how glib a 

service secretary is or how good his slide presentation is.”111

As he had done for Lehman during the Deadeye controversy, 

Taft sided with Aldridge. After consulting Pentagon lawyers, and 

receiving tacit approval from Weinberger, Taft concluded that 

Godwin’s reorganization plan illegally appropriated the power of 

the service secretaries and would have to be altered. While Godwin 

retained management control over acquisition functions, the service 

acquisition executives reported directly to the service secretaries, 

who then reported to the USD (A).112 But Godwin’s authority also 

suffered from service opposition to the management hierarchy at 

the working level. Here too, the Air Force proved to be a formidable 

adversary.

While Aldridge opposed Godwin’s policies at the senior management level, evidence suggests that ongoing efforts to integrate 

110 Donald Hicks and Edward Aldridge quoted in R. J. Smith and M. Moore, “Pentagon 

Purchasing Chief to Quit,” Washington Post, 14 September 1987. 111 Richard Godwin quoted in Smith and Moore, “Pentagon Purchasing Chief to Quit.” 112 Kitfield, “Godwin: Battling the Powers That Be,” p. 61.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 145

the new three-tiered acquisition management organization into 

the Air Force’s existing procurement structure proceeded slowly 

and showed mixed results. “Although there have been some organizational changes in the Air Force’s combined [military-civilian] 

acquisition organization[s],” the GAO’s Thurman told the House 

Subcommittee on Investigations in the spring of 1988, “there appears to be little integration of the previous secretariat and military staffs.” Thurman elaborated: 

Acquisition personnel previously assigned to the Deputy Chief 

of Staff for Research, Development, and Acquisition continue to 

function much as they did before the reorganization—formulating 

acquisition policy, reviewing procurement documents, performing 

day-to-day acquisition program integration functions with other 

secretariat and military staff organizations, developing acquisition budget estimates, and responding to congressional and other 

external requests for Air Force acquisition information. The most 

significant change in these organizations is that they now report 

to the Assistant Secretary [of Defense] for Acquisition, and he appears to be much more involved in the day-to-day activities of 

managing Air Force acquisition programs.113 

Thurman also explained that the Air Force’s progress lagged behind that of the other services, especially the Army: “The Air Force 

Chief of Staff continues to play an active role in the acquisition 

process. Documents are routinely routed to the chief of staff’s office for approval or coordination. In the Army, officials characterize 

the chief’s involvement as significantly reduced. The Army Staff no 

longer routinely reviews the paperwork supporting many acquisition-related actions.”114

The following year, Frank C. Conahan, the GAO’s assistant 

comptroller general (National Security and International Affairs 

Division), confirmed that all three of the services had merely 

overlaid the three-tiered acquisition structure onto their existing 

management organizations. Even the Army, which the GAO had 

credited with integrating the Packard Commission reforms more 

completely than the Air Force and Navy, did not escape criticism. 

“The Army’s [new civilian] acquisition chain is dependent upon resources of the existing [military] command chain to manage and

113 U.S. Congress, House, statement of William W. Thurman before the Subcommittee on 

Investigations, Committee on Armed Services, Reorganization of the Military Departments’ 

Acquisition Management Structures, 20 April 1988, pp. 18–19. 114 Ibid., pp. 19–20.
146 DEFENSE ACQUISITION REFORM, 1960–2009

execute programs,” Conahan reported in testimony given before 

Senator Gary Hart’s Congressional Military Reform Caucus in August 1989.115

The GAO found much to criticize in service efforts to implement the acquisition reforms recommended by the Packard Commission and required by law in the Goldwater-Nichols Act. Indeed, 

the seemingly intractable conflicts between Richard Godwin and 

Secretaries Lehman and Aldridge corroborate some of what the 

GAO had to say about the level of service compliance. By late 

summer 1987, two years before the GAO’s Conahan testified before the Military Reform Caucus, rumors abounded in Washington that Godwin, frustrated by his dealings with Lehman and Aldridge and the general slow pace of organizational reform in the 

services, had decided to leave the Pentagon. Perhaps in response 

to these problems, Packard told Reagan directly that the USD (A) 

had not been given sufficient authority to manage the weapons 

acquisition process.116Commenting on his brief tenure as USD (A), 

Godwin acknowledged, “When we brought in a new system and 

superimposed it on top of the current one we came down on everyone’s toes.” In mid-September 1987, Godwin told the Baltimore 

Sun, “I haven’t been able to carry out the recommendations of the 

Packard Commission.”117 Later that year, after Godwin resigned, 

Weinberger, in one of his last acts before stepping down as defense 

secretary, appointed Robert Costello, assistant secretary of defense 

for acquisition and logistics and previously the head of materials 

procurement at the General Motors Corporation, as under secretary of defense for acquisition.118

The Legacy of 1980s Weapons Acquisition Reform

In 1992, former Deputy Secretary of Defense Frank Carlucci 

reflected on the significance and impact of weapons acquisition reform during the 1980s. Given his role as one of the major architects

115 Statement of Frank C. Conahan, Assistant Comptroller General (National Security 

and International Affairs Division, GAO) before the Congressional Military Reform Caucus, 

Defense Management: Streamlining the Acquisition Process, 2 August 1989, p. 2. 116 GAO Report, Status of Recommendations by Blue Ribbon Commission on Defense 

Management, GAO/NSIAD–89–19FS, Nov 1988, pp. 30–31. 117 Richard Godwin quoted in Smith and Moore, “Pentagon Purchasing Chief to Quit.” 118 V. A. Guidry Jr., “Pentagon Procurement Chief Quits, Says ‘Business as Usual’ Foiled 

Reforms,” Baltimore Sun, 9 September 1987, p. 6 (quotation). On Robert Costello and his 

policies, see, for example, “Acquisition Reform Under Costello,” National Security Record

(March 1989): 2–3; News Release, 9 Mar 1989, sub: Improving the Acquisition Process, OSD 

Historical Office; Memo, R. Costello for Distribution List, 15 Feb 1989, OSD Historical Office. 

Costello’s tenure as USD (A) is also discussed in Philip L. Shiman’s Volume V of the Defense 

Acquisition History series, currently in draft.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 147

of the Defense Department’s Acquisition Improvement Program 

earlier in the decade, it is perhaps not surprising that he leveled 

the sharpest criticism at those would-be reformers in Congress 

who attempted to change the weapons acquisition system from the 

outside in response to widespread allegations of waste, fraud, and 

mismanagement in the Pentagon:

The magic isn’t in reform. People like to talk about reform. If you 

reform the Pentagon every year, it will never function properly. The 

proper words are stability, consistency, long-range planning and 

buying on the basis of quality, not just price. . . . It is not a problem of overpricing or spare parts. That takes pieces of the problem 

instead of standing back and looking at the forest. . . . Everybody 

wants to grab a chunk. [Senator] Barbara Boxer wants to create a 

separate procurement agency; [Senator Charles] Grassley wants 

to strengthen the whistle-blowers. The more you chip away at the 

pieces, the more complex and cumbersome the system becomes, and 

the more abuses you are going to have in it. You need to simplify 

the system, put it on a stable course, and express some confidence 

in it. . . . You will find that costs will go down enormously.119

While perhaps overly optimistic about the anticipated cost reductions for weapon systems and no doubt benefiting from hindsight, Carlucci nevertheless had a point. Greater oversight of 

weapons programs and monitoring of contractor compliance did 

expose cases of fraud, waste, and mismanagement, but increased 

scrutiny also introduced institutional rigidity and instability into 

the acquisition process, typically leading to higher unit costs and 

extended production schedules. The conflicting motivations, mismatched priorities, and institutional rivalries behind the actions of 

Congress, the White House, and the Pentagon also constrained the 

acquisition system’s flexibility.120 The establishment of the Office 

of the Under Secretary of Defense for Acquisition may have made 

lasting reform possible, but only to the extent that these three constituencies were able to work together to change the incentives 

reinforcing the behavior patterns long established in contractor 

plants and in the government acquisition workforce. The long-term 

backing required to improve the chances of a positive outcome for 

119 Frank C. Carlucci, “Looking Back: Reflections by Former Secretaries of Defense,” 

December 1992, OSD Historical Office, p. 32. 120 David D. Acker, “Issues and Actions Affecting the Systems Acquisition Process (July 

1983–July 1984),” Program Manager 13 (September-October 1984): 36. See also William E. 

Kovacic, “The Sorcerer’s Apprentice: Public Regulation of the Weapons Acquisition Process,” 

in Arms, Politics, and the Economy: Historical and Contemporary Perspectives, ed. Robert 

Higgs (New York: Holms and Meier, 1990).
148 DEFENSE ACQUISITION REFORM, 1960–2009

acquisition reform, for example, might exceed the short-term political compromises required by legislators to remain in office.121

During Ronald Reagan’s first term in the White House, the 

Weinberger team had transformed the internal mechanisms of the 

weapon system acquisition process to handle more efficiently the 

rapid growth in defense spending, only to see the results of their efforts—decentralized execution of acquisition policy in the military 

services—assaulted from all sides by Congress, the Military Reform 

Caucus, and other reformers after the president won re-election in 

1984. Clearly, the demands for change in the way the Pentagon did 

business proved exceedingly difficult to implement at the working 

level in the services where the acquisition workforce had limited 

training and few incentives to change their way of operating.

In its interim progress report to President Reagan, the Packard 

Commission acknowledged the central premise of the Acquisition 

Improvement Program. “In general,” the report concluded, “Congress should permit the Secretary [of Defense] to organize his Office as he chooses to accomplish centralized policy formulation and 

decentralized implementation within the Department.”122 Putting 

aside his initial hostility to the commission’s deliberations as a 

corrective action for what some observers interpreted as his own 

managerial shortcomings, Weinberger did not enjoy the discretionary freedom suggested in the report. Congress’ expectations for 

acquisition reform turned out to be very different from his own. 

Pentagon critics wanted the under secretary of defense for acquisition to have broad powers of authority over weapons procurement, 

whereas Weinberger, his subordinates in OSD, and especially the 

secretaries and chiefs of staff of the services favored the status quo 

or at least a far more circumscribed role for the USD (A). Richard 

Godwin’s brief and tumultuous tenure as the USD (A) illustrates 

the extent to which these differences manifested themselves and 

complicated relations between his office and the services. But perhaps nowhere were the mismatched priorities between Congress 

and the Pentagon more evident than in the caustic reactions of the 

Army, Navy, and Air Force to the three-tiered acquisition organization recommended by the Packard Commission. They strongly 

opposed constraints on their own acquisition decisions and the imposition of a new management structure that transferred weapons 

acquisition authority to a civilian executive in OSD. It also shifted 

121 On this point, see Kovacic, “Blue Ribbon Defense Commissions: The Acquisition of 

Major Weapon Systems.” 122 President’s Blue Ribbon Commission on Defense Management, An Interim Report to 

the President, p. 6 (quotation). See also Ltr, D. Packard to the President, 28 Feb 1986, copy in 

OSD Historical Office.
THE 1980s: THE CARLUCCI INITIATIVES AND

THE PACKARD COMMISSION 149

line management of weapons acquisition from the offices of the 

chiefs of staff to civilian managers—headed by the service acquisition executives—outside the military chain of command. 

1980s Retrospective

Few people have been as dedicated to improving the acquisition process as David Packard. Although he did not forget what 

had proved successful for him at Hewlett-Packard, there were 

crucial differences between that company and the government. 

At Hewlett-Packard, large numbers of career professionals were 

skilled in managing development and production programs and 

highly motivated to reduce costs to produce profits. In the Defense Department, acquisition managers normally incur penalties, not rewards, for failing to expend at least their entire budget. 

At Hewlett-Packard, there were strong incentives for performing 

work at or below budget. In government, a successful agency is 

usually expected to increase, not decrease, its budget year after 

year. Therefore, positive evaluations go to acquisition managers 

in the military service who achieve their technical performance 

objectives, spend the money allotted in one year and can justify 

an increase for the next year, while incurring the least amount of 

opposition.123

In 1986, the Packard Commission characterized the defense acquisition process as expensive, inefficient, and cumbersome. It observed that “the increasing complexity of the process means unnecessary delays are incurred in acquiring needed goods and supplies 

and that higher costs are paid for what is acquired.” In brief, the 

Packard Commission concluded that “the defense acquisition process is not being operated and managed effectively, and that this is 

having a disastrous effect on the cost and efficiency of the system.”124

As noted earlier, the problem with any reform recommendation that rests on DoD reorganization is that the underlying counterproductive incentives usually remain unchanged. The Defense 

Department has grown accustomed to reorganizations; they occur 

at least once every four years. A DoD acquisition manual stated:

The central cry heard in the halls of the Pentagon when things go 

wrong is reorganize, restructure the management system. Some 

think that if enough organizational boxes or enough people are 

moved, the problem will go away. Of course, it doesn’t, yet those 

responsible for creating the organizational mess think so. Consequently, we are left with a legacy that only grows worse with time. 

123 “The Pentagon: Waste Probers Faulted,” Boston Globe, 27 July 1986. 124 President’s Blue Ribbon Commission on Defense Management, A Quest for Excellence, 

June 1986, cited in Yoder and Horbaly, pp. 7–10.
150 DEFENSE ACQUISITION REFORM, 1960–2009

Why is this the case? Most probably because it is the path of least 

resistance.125 

In considering improvements to the acquisition process, one 

may do well to remember that there is no sovereign power in Washington; instead, there are many independent powers. It is easier to 

block the policy initiatives of others than to translate one’s own 

initiatives into action.126

Acquisition reforms up to 1987 tended to attack the symptoms 

of cost increases, not their causes, and at best have been only partially implemented. They have left the basic negative incentives 

for government and industry personnel largely undisturbed.

125 U.S. Department of Defense (DoD) Manual 4245.7-M, Transition from Development 

to Production, Assistant Secretary of Defense for Acquisition and Logistics, September 1985, 

p. 1-3.126 Robert J. Art, “Bureaucratic Politics and American Foreign Policy: A Critique,” Policy

Sciences, December 1973, cited by Bradburn, “Strategic Postures in the Military Aircraft 

Industry,” p. 8.
Significant cost growth and schedule slippages on major defense 

acquisition programs continued to occur during the two decades from 

1990 to 2009, although this chapter will focus on 1990 to 2000. In 1993, 

the administration of William J. “Bill” Clinton came into office with 

high hopes for reforming the defense acquisition process, and though it 

left an uncertain legacy, it was a sustained eight-year effort to achieve 

that goal. 

Inspired by new ideas in management, the Clinton administration 

adopted “reinventing government” as its mantra and called for the improvement of government processes, including procurement, through 

streamlining and the application of technologies such as computers 

and data networks. Secretary of Defense Leslie “Les” Aspin came to the 

Pentagon from the U.S. House of Representatives with concerns that 

acquisition cost and schedule problems would threaten the ability of 

the military services to continue to acquire the latest high technology 

of the kind that had performed so impressively during the Persian Gulf 

War. He brought with him from the House Armed Services Committee 

his “resource strategy,” which proposed ways that DoD might afford 

such technology in an era of lean budgets and reduced force structure.

Yet it was William J. Perry in 1993 who, as deputy secretary 

and later as secretary of defense, would become the driving force 

behind the acquisition reform program that marked DoD during the 

Clinton years. Perry came to office from the defense industry with 

many fully formed ideas about what needed to be done to reform the 

acquisition process. These stemmed from his long and impressive 

experience with defense acquisition, as a DoD official, an industrialist, and as a member of the Packard Commission. When Perry left 

the Pentagon in 1981 as under secretary of defense for research and 

engineering, he was proud of his role in promoting the development 

of more sophisticated weapon systems, but he also regretted his failure to tackle the problem of acquisition reform.1 Reforming the acquisition process subsequently became one of his primary concerns. 

His next opportunity came a few years later when David Packard, 

chairman of the President’s Blue Ribbon Commission on Defense 

1 Ashton B. Carter and William J. Perry, Preventive Defense: A New Security Strategy for 

America (Washington, D.C.: Brookings Institution Press, 1999), p. 181.

ChapterFour

ACQUISITION REFORM FROM 1990 TO 2000
152 DEFENSE ACQUISITION REFORM, 1960–2009

Management, asked him to lead the acquisition task force. Perry 

seized that opportunity, and under his leadership, the acquisition portions of the Packard Commission report became one of the 

more influential acquisition reform documents ever published. 

Perry called the report a “blueprint for transforming the acquisition system.” Some of his recommendations were implemented—

the creation of an “acquisition czar,” the adoption of a streamlined 

acquisition organization, and improvement in workforce training, 

standards, and career management—but implementing these and 

other recommendations proved to be a difficult challenge. Most notably, the Pentagon had made little progress in expanding its use 

of commercial products and practices—the fundamental theme of 

the report.2

Perry was determined to see acquisition reform carried through. 

“[M]y passion for this goal was my principle reason for returning to 

DoD,” he explained in 1984 to the Business Executives for National 

Security (BENS), an industry group.3He told a colleague at the time 

that he wanted to leave a legacy of change, especially tearing down 

the “Chinese firewall” between civilian and defense procurement 

processes.4When he recruited John M. Deutch in 1993 to be the under secretary for acquisition, the first thing they talked about was 

acquisition reform.5Perry’s first action after being confirmed as deputy secretary of defense, he later recalled, “was to pull this blueprint 

(Chinese firewall) off the shelf and use it to lay out the department’s 

plan of action for acquisition reform.”6

Perry started the program cautiously, initially focusing the 

department’s efforts on concrete steps and near-term measures. He 

spoke of his goals freely and earnestly and did not downplay the 

obstacles. “[T]he acquisition reform agenda I described to you will 

be very difficult to implement. I have no illusions on that point,” he 

explained to the House Armed Services Committee in June 1993.7He 

2 Ibid., pp. 180–83. See also the President’s Blue Ribbon Commission on Defense 

Management, A Quest for Excellence: Final Report to the President, June 1986, pp. 52–71; 

idem, National Security Planning and Budgeting: A Report to the President, June 1986, pp. 

20–21. For more on the Blue Ribbon Panel’s recommendations, see Chapter 3, above. 3 Ltr, Secretary of Defense [William J.] Perry to Friends [Business Executives for 

National Security], 12 Apr 1994, William J. Perry Papers, Disk 2, Office of the Secretary of 

Defense (OSD) Historical Office, Washington, D.C. 4 “Running the Pentagon—Aspin Style,” Navy News & Undersea Technology (27 

September 1993). 5 U.S. Congress, Senate, Committee on Governmental Affairs and Committee on Armed 

Services, Federal Acquisition Streamlining Act of 1993: Joint Hearings on S. 1587, 103d Cong., 

2d sess., 1994, p. 19. 6 Carter and Perry, Preventive Defense, pp. 183–84 (quotation). 7 U.S. Congress, House, Committee on Armed Services, Acquisition Reform: Fact or

Fiction, 103d Cong., 1st sess., HASC No. 103-26, 1994, Hearing before the Military Acquisition 

Subcommittee, 15 June 1993, pp. 6–7, 12–13.
ACQUISITION REFORM FROM 1990 TO 2000 153

rejected suggestions that he convene a blue ribbon panel to launch the 

program. “I agree with you that the opposition to reform is entrenched 

and powerful,” he told BENS. “But I am skeptical that an independent 

commission, like the Base Realignment and Closure Commission, is 

the best way to overcome this resistance . . . [w]e certainly don’t need 

another commission to study the problem yet again.”8Perry received 

much support in Congress, which had long been prodding DoD to 

pursue reforms. But not unexpectedly, there was skepticism as well—

the hearing at which Perry testified in June was entitled Acquisition 

Reform: Fact or Fiction.

A Mandate for Change

Perry finally answered that question on 9 February 1994, in the 

form of a white paper he delivered to the House Armed Services 

Committee at a hearing on acquisition reform. He had been secretary of defense for only six days. (As secretary, Perry succeeded 

Les Aspin, who left office on 3 February 1994 for health reasons.) 

Seated next to Perry was a member of his staff, Colleen A. Preston, 

making her first appearance on Capitol Hill as the deputy under 

secretary of defense for acquisition reform. Aspin and Perry created this new position to provide a full-time focus for their acquisition reform efforts and, perhaps, to underscore their serious commitment to change.

The eighteen-page paper, entitled “Acquisition Reform: A 

Mandate for Change,” laid out the themes that by now were 

familiar to those who had been listening to Perry. Referring to 

the Bottom-Up Review, DoD’s vision for the U.S. armed services 

announced the previous fall, Perry stated flatly, “DoD will not be 

able to carry out this blueprint, without dramatic changes in its 

acquisition processes—from determining what the Department 

needs, to logistics support and reutilization requirements.” Change, 

he declared, “is imperative.” DoD was losing access to state-ofthe-art technology, it could not buy from commercial companies, 

and its costs of doing business were just too high. To fulfill its 

mission, DoD needed to be able to maintain its technological 

edge while reducing its costs. Maintaining that edge required 

breaking down the barriers that deterred or prevented commercial 

firms from selling the latest technologies to the government and 

promoting the integration of the civilian and military industrial 

sectors. Costs were to be reduced by modernizing the Pentagon’s 

business practices and reducing the unnecessary costs imposed 

on contractors by government-unique contract terms, burdensome 

oversight, and arcane (and archaic) military specifications and 

8 Ltr, Perry to Friends [Business Executives for National Security], 12 Apr 1994.
154 DEFENSE ACQUISITION REFORM, 1960–2009

standards that encouraged inefficient business practices. To 

address these problems, DoD must reengineer its acquisition 

system in three crucial areas: requirements determination and 

resource allocation (i.e., what to buy); the acquisition process (i.e., 

how to buy); and contract terms and conditions.9

“A Mandate for Change” was little more than a statement of 

principles, but it had a significant effect. It impressed many in 

the defense community—the uniformed services, the civilian workforce, and industry—that the DoD leadership was serious about the 

subject and was giving it high-level attention. Perry, an effective 

business manager, who knew exactly what he wanted if not yet how 

to get it, was firmly committed to acquisition reform. Perry, along 

with Colleen Preston and others worked tirelessly—persuading, 

cajoling, teaching—to instill their vision in others. The intricacies 

of Perry’s plans were unclear to many in the acquisition workforce, 

but the message they heard was to perform acquisition “faster, better, cheaper”: products must be acquired faster, they must be better quality, and they must become cheaper. The major challenge 

was finding ways to achieve those goals. Implicit in this mantra 

was the philosophy of Total Quality Management: the process can 

always be improved. “Faster, better, cheaper” became the unofficial 

vision for acquisition reform, first in parts of the services, later in 

parts of OSD itself.10

Organizing the Reform Process

Possibly the two most important actions that Perry chose to 

launch the acquisition reform program were to create the position 

of deputy under secretary for acquisition reform and to appoint 

Colleen Preston to it. Preston was a long-time staff member of 

the House Armed Services Committee (HASC) who came to the 

Pentagon with her HASC boss, Congressman Les Aspin. Preston 

seemed ideal for the job. She had both Pentagon and congressional 

experience and a strong background in acquisition and acquisition 

reform issues. A lawyer by training, she had spent four years in 

the Department of the Air Force, where she advised the secretariat 

and the Air Staff on contracting and other acquisition matters. In 

1983, she joined the HASC staff, rising to general counsel. During 

her ten years with the HASC, she had a hand in many of the key 

acquisition reform studies and legislation, including the Competi9 Paper, Secretary of Defense William J. Perry, “Acquisition Reform: A Mandate for 

Change,” n.p., 9 February 1994. 10 Charles L. Beck Jr., Nina Lyn Brokaw, and Brian A. Kelmar, A Model for Leading 

Change: Making Acquisition Reform Work, Report of the DSMC [Defense Systems 

Management College] Military Research Fellows, 1996–1997 (Fort Belvoir, Va.: Defense 

Systems Management College Press, December 1997), ch. 5, p. 10.
ACQUISITION REFORM FROM 1990 TO 2000 155

tion in Contracting Act, the Defense Procurement Act of 1984, the 

Defense Procurement Improvement Acts of 1985 and 1986, and the 

Defense Acquisition Workforce Improvement Act. She was a leading proponent of the effort to catalog and overhaul the acquisition 

statutes, culminating in the establishment of the Section 800 Panel for which she served as an adviser and liaison with the HASC.11

One of her first tasks on coming to the Pentagon was to plan the 

organization of the new acquisition reform office. Perry and Deutch 

chose her to be the deputy under secretary because, Perry would 

write, she is “one of the toughest, most informed, and most committed professionals we know.”12 She was officially confirmed in 

that position on 24 June 1993.13 She later described her activities 

in Program Manager magazine: 

We started off initially with following up on the Section 800 Panel 

recommendations because we believed that we had a one-time opportunity to take advantage of what the panel recommended and 

we had a receptive Congress. For the first year we practically did 

nothing but focus on that legislative effort day-to-day. . . . Then 

we started working the Process Action Teams [PATs], and we 

worked the ones that we believed were most critical. We started 

with electronic commerce because that was critical to our ability 

to get the simplified acquisition threshold increase. And we had 

to know what we were capable of doing within the Department in 

terms of electronic commerce before we could make commitments 

that Congress wanted us to make in return for increasing that 

threshold.

Then, of course, one of Dr. Perry’s (Secretary of Defense February 1994–January 1997) primary objectives was to deal with 

the Specifications and Standards issue, which we took on as our 

second Process Action Team.

And then in terms of priorities, we looked at contract administration, the procurement process, and oversight and review of 

the systems acquisition process. That particular PAT process was 

very difficult because it focused on the relationship between OSD 

and the services in terms of oversight. It’s a lot easier to talk 

about our oversight of industry, but when you get into the inter11 The Section 800 Panel was chartered by Section 800 of the National Defense 

Authorization Act for fiscal year 1991 to assess laws affecting defense procurement, to 

encourage the use of commercial and non-developmental items, and to expand the exemption 

for “adequate price competition” in the Truth in Negotiations Act. 12 Ltr, Perry to Friends [Business Executives for National Security], 12 Apr 1994. 13 Colleen A. Preston biographical data. Files are in the office of Philip Shiman, OSD 

Historical Office, Washington, D.C.
156 DEFENSE ACQUISITION REFORM, 1960–2009

personal reviews that occur within the Pentagon, it’s much more 

challenging.14

Preston would be responsible for laying out the broad reform 

program, establishing the short- and long-term priorities and goals, 

formulating specific initiatives, planning for executing them, and 

then overseeing the implementation. To accomplish this mission, 

the deputy under secretary would direct or work with the various 

responsible offices in the Pentagon, from the secretary of defense 

down to the military departments where acquisition programs 

were conducted. She would also coordinate with the White House 

and other executive departments and agencies, an essential job 

given that reform was to span the executive branch and that many 

of the relevant regulations originated from outside DoD, especially 

in the Office of Federal Procurement Policy, a part of the Office of 

Management and Budget in the Office of the President. And, of 

course, she would work with Congress to formulate the necessary 

legislation and see it enacted into law. Finally, the deputy under 

secretary was given oversight of the Defense Acquisition University and the Defense Systems Management College, reflecting the 

new administration’s view of the importance of training and education in changing the acquisition culture. The job was part planner, part manager, part salesperson, and part cheerleader. 

Preston was responsible for “directing the conception, development, adoption, implementation, and institutionalization of new 

and innovative acquisition policies and processes.” She was not 

burdened with the day-to-day problems of acquisition management and contracting, which continued to be conducted and controlled by the military services.15

Preston’s office was deliberately small, only about twenty-two 

people, including the president of the Defense Acquisition University and the commandant of the Defense Systems Management 

College. She received assistance from several groups. At the highest level, an Acquisition Reform Senior Steering Group, which she 

chaired, was to advise her in planning and implementing the reform agenda. The group nominally comprised fourteen senior OSD 

and service officials, although in practice it was made up of staff at 

14 Brig. Gen. Richard A. Black, “Colleen Preston on Acquisition Reform,” Program 

Manager (Special Issue, January-February 1997): 22–31. 15 Draft Memo, Deputy Secretary of Defense for Secretaries of the Military Departments, 

et al., n.d., sub: Strategic Plan for Acquisition Reform, attached to Memo, Colleen Preston, 

Deputy Under Secretary of Defense for Acquisition Reform (DUSD [AR]), to Deputy Secretary 

of Defense, 27 May 1993, sub: Proposed Strategic Plan to Pursue Acquisition Reform, with 

attached draft memo, Washington National Records Center (WNRC) 330–97–0030, USD (A) 

Chronological Files, 1993, filed under 28 May 1993 (hereafter cited as DUSD [AR], Proposed 

Strategic Plan). 
ACQUISITION REFORM FROM 1990 TO 2000 157

the principal deputy level, and it acted more to disseminate information and speed up interoffice coordination than to make highlevel decisions on its own. It met biweekly.16Most of the work of formulating the initiatives and devising specific proposals would fall 

to ad hoc process action teams (PATs) and working groups comprising members from throughout DoD. These PATs were intended 

to bring together workers with a range of experience and workinglevel expertise to plan the practical details of the reforms. PATs 

varied in size from roughly 25 to 50 members, with further assistance from research and support staff. The members represented a 

wide variety of line and staff organizations in the military services, 

defense agencies, and OSD. Most had working experience in the 

acquisition policy under consideration. They could also call on experts and officials from within and outside DoD. The work of each 

PAT was overseen by a board of advisers or “directors” comprising 

senior DoD officials. The experience of working on such a study 

with other practitioners was educational for the members. “As the 

PAT members shared their insights and experiences with each 

other, substantial differences emerged,” the Procurement Process 

Reform PAT observed in its report. “Many PAT members with 15, 

20, or more years of experience on the front lines of procurement 

who thought they had pretty much done it all or at least mostly 

seen it all had their eyes opened by the experiences of others.”17

The PATs were not intended to perform their studies de novo. 

They were not to revisit the issues and draw new conclusions. Their 

focus was to find ways to implement policies that had largely been 

predetermined by the leadership. For example, the PAT studying 

specifications and standards was told in its charter exactly what 

the secretary wanted to accomplish and told in detail what was 

expected of it.18 Each PAT was to follow a fifteen-step process 

16 Beck et al., A Model for Leading Change, ch. 5, pp. 3–5. The Acquisition Reform 

Senior Steering Group officially included the Vice Chairman of the Joint Chiefs of Staff; 

the DoD General Counsel; the DoD Comptroller; the DoD Inspector General; the Director of 

Defense Research and Engineering; the Director of Program Analysis and Evaluation; the 

Assistant Secretary for Command, Control, Communications, and Intelligence; the Director 

of the Defense Contract Audit Agency; the Directors of Defense Procurement and Acquisition 

Program Integration; the Service Acquisition Executives; and the Director of the Defense 

Logistics Agency. 17 The report of the Contract Administration Reform Process Action Team listed almost 

two hundred individuals from DoD and industry as “contributors.” See Final Report of the 

Contract Administration Reform Process Action Team to the Under Secretary of Defense for 

Acquisition and Technology, February 1995, pp. xi–xv (quotation). 18 Memo, Preston for Perry (through USD [A]), 1 Sep 1993, sub: Process Action Team 

on Military Specifications and Standards—Information Memorandum, WNRC 330–97–0030, 

USD (A) Chronological File, 1993 (filed under 1 September 1993); Blueprint for Change: Report 

of the Process Action Team on Military Specifications and Standards (Washington, D.C.: Office 

of the Under Secretary of Defense for Acquisition and Technology, April 1994), app. A.
158 DEFENSE ACQUISITION REFORM, 1960–2009

for analyzing the issue, deciding on the actions to be taken, and 

preparing a proposal for approval and implementation. It was given 

sixty or ninety days to complete its work and submit a report. The 

emphasis was on practical plans and concrete actions. PAT reports 

were to discuss the actions required to implement the policies, 

designate the agency or office that should be responsible for those 

actions, establish a timetable for implementation, and identify 

the expected resources and costs. In the case of specifications and 

standards, a second panel reviewed the PAT’s report and prepared 

a new implementation plan that accepted most—but not all—

of the PAT’s recommendations.19 If the Office of the Secretary of 

Defense (OSD) accepted a PAT report and plan, the secretary or 

the under secretary issued a memorandum explaining the policy 

and ordering its implementation in accordance with the plan. 

PATs dealt with program management, the procurement process, 

cost estimating, electronic commerce, specifications and standards, 

contract administration, and the use of commercial practices and 

components. 

Finally, the task of implementing the reform program fell 

to the services. They developed their own acquisition reform 

organizations that worked closely with Preston’s office. These 

offices were responsible for relaying the directives issued by OSD 

and translating them into initiatives to be applied by the service. 

Each service had its own set of initiatives: the Air Force had its 

“Lightning Bolts,” the Navy had its “Cardinal Points,” and the 

Army had its “Thrust Areas.” The establishment of the reform 

offices, and the selection of pro-reform acquisition officials in the 

military departments, provided some measure of uniformity within 

the services and OSD, and minimized official resistance to their 

reform programs.

Tools for Reform

To conduct the acquisition reform program, Aspin, Perry, and 

Preston needed to accomplish several tasks: they had to test their 

ideas, measure and evaluate the results, and then disseminate the 

lessons learned to the entire acquisition community. To accomplish 

these tasks, the leaders had a variety of tools at their disposal. To 

try out their ideas, they had the Defense Acquisition Pilot Programs, which were similar in concept to the Defense Enterprise 

Programs established by Congress in 1986 to implement the Pack19 Implementation Plan for the Process Action Team Report on Specifications and 

Standards (Washington, D.C.: Office of the Assistant Secretary of Defense for Economic 

Security, 23 June 1994). 
ACQUISITION REFORM FROM 1990 TO 2000 159

ard Commission recommendations. Although the enterprise programs were offered relief from DoD regulations, policies, directives, and administrative rules, they were still required to follow 

the Federal Acquisition Regulation (FAR), the Defense FAR Supplement (DFARS), and existing procurement statutes. Believing 

that the enterprise programs were more trouble than they were 

worth and that ongoing reforms were providing the same regulatory relief, DoD showed little enthusiasm for the initiative and allowed it to lapse by 1990.

After urging from DoD, Congress passed the pilot program legislation, requiring DoD to collect and analyze data on contractor performance in the pilot programs. The law also specified some of the 

reforms that should be applied to one or more of the pilot programs, 

in the realm of contracting, program management, and workforce incentives. It called for DoD to use the lessons from the pilot programs 

to reduce the acquisition systems management and administrative 

costs by at least 25 percent by October 1998. These provisions, included as suggestions, were not binding on DoD. The Defense Department 

was largely given a free hand in managing the pilot programs, but it 

had to obtain approval not only for the selected programs but also for 

waiving applicable statutes for each program.20

Perry wanted the pilot programs approved and launched as 

quickly as possible, so choosing the candidate programs, submitting the nomination packages for submission to Congress, and suggesting legislation to the White House’s Office of Management and 

Budget became one of Preston’s top priorities.21 Preston was looking for programs that were still early in their cycle, were assured 

of relatively stable funding, had an approved requirement, and had 

low technological risk. Of course, the prospective pilot programs 

had to be conducive to some aspect of acquisition reform; those 

that could satisfy their military requirement using commercial or 

non-developmental items were preferred.22 Finding and selecting 

the programs proved difficult. Program managers of prospective 

pilot programs had to go to considerable effort to prepare a pilot 

program acquisition strategy, identify the laws and regulations 

to be waived, and justify the waivers (usually in terms of dollars 

saved)—all while preparing a standard acquisition strategy in the 

20 Public Law 103–160, National Defense Authorization Act for Fiscal Year 1994, secs. 

831–39. 21 Memo, DUSD (AR) Preston for Deputy Secretary of Defense Perry, 16 Jul 1993, 

sub: Status Report on Short Term Acquisition Reforms, WNRC 330–97–0030, USD (A) 

Chronological File (filed under 19 July 1993). 22 Memo, USD (A) [John M.] Deutch for Secretaries of the Military Departments, et 

al., 21 Jul 1993, sub: Defense Acquisition Pilot Programs, WNRC 330–97–0030, USD (A) 

Chronological File. 
160 DEFENSE ACQUISITION REFORM, 1960–2009

event the application for pilot program status was rejected.23 Ultimately, OSD selected six programs. The Joint Primary Aircraft 

Training System (JPATS), for example, was to demonstrate DoD’s 

ability to procure a non-developmental aircraft using extensive 

commercial components. The Joint Direct Attack Munition (JDAM) 

would demonstrate the value of regulatory relief as well as a new 

approach to engineering called the integrated product and process 

development (IPPD).24

Preston hoped to have the nomination packages ready for Congress by the summer of 1993, but the selected programs were not 

submitted until October, the day the Federal Acquisition Streamlining Act was introduced.25 Congress folded the pilot programs 

into the bill, which then took another year to pass. In the meantime, DoD began the pilot programs but could waive only internal 

regulations, not statutory or FAR requirements. 

The DoD reformers wanted more than just surveys and anecdotal evidence on the success of the reform program. They devoted 

considerable attention to the development of metrics, objective 

yardsticks with which to track and judge the progress of reform 

initiatives.26 Critical to the acquisition reform effort, the use of 

metrics would demonstrate to Congress and (no less importantly) 

to the workforce that the reform effort could achieve results. Furthermore, OSD needed to know as early as possible how the effort to streamline its processes to save time, money, and personnel, 

largely driven by the relentless pressure of the declining defense 

budget, was affecting the ability of the acquisition system to fulfill 

23 U.S. Congress, House, Committee on Government Reform and Oversight, Oversight of 

Implementation of Federal Acquisition Streamlining Act of 1994, 104th Cong., 1st sess., 1995, 

p. 53. 24 Memo, Preston for Perry, 16 Jul 1993. 25 DUSD (AR), Proposed Strategic Plan; U.S. Congress, Senate, Armed Services 

Committee, Subcommittee on Defense Technology, Acquisition, and Industrial Base, 

Department of Defense Authorization . . . National Defense Authorization Act, Fiscal Year 1994,

p. 449. 26 A metric was any concrete measurement that could be compared to a standard or 

starting point (a benchmark) and with other data over time, to indicate a trend. Examples of 

metrics include unit procurement or life-cycle costs, the length of the acquisition cycle from 

program start to production, contractor overhead, production lead time from contract award 

to delivery. Any statistic that could be calculated, input into a database, and displayed on 

a spreadsheet or chart could conceivably be used as a metric. There were essentially three 

kinds of metrics: (1) “go/no-go” metrics that simply recorded whether an event had occurred—

whether a report had been issued, for example, or a particular developmental milestone was 

passed; (2) “activity” metrics that determined the extent to which an activity was taking place, 

such as the use of commercial or non-developmental items in the development of a given 

system; and (3) “effectiveness” metrics that measured whether the actions being taken were 

leading to the desired results. See Final Report of the Contract Administration Reform Process

Action Team to the Under Secretary of Defense for Acquisition and Technology, February 1995,

ch. 3, p. 21.
ACQUISITION REFORM FROM 1990 TO 2000 161

its mission.27Finally, a set of suitable metrics was mandated by the 

Government Performance and Results Act of 1993, the first in a series of landmark measures to promote efficiency and accountability in government.28 The act required federal agencies to prepare 

strategic plans identifying long-term goals, link those long-term 

goals to short-term goals in annual performance plans, and issue 

annual reports on their success at meeting those goals. Although 

most agencies, including DoD, were not required to present their 

strategic plans until September 1997 and their performance plans 

until 2000, the deadlines provided added pressure to devise a set of 

suitable metrics for measuring the progress of acquisition reform 

programs and to ensure that the means were in place to collect and 

evaluate the necessary data.29

The development of accurate and meaningful metrics was challenging. It was often difficult to connect goals with statistics that 

were easily collected and calculated, especially if the goal was unclear and subjective, or if it involved improving a process. Furthermore, the complexity and varied nature of acquisition programs 

made it difficult to find standard metrics for them. Ideally, metrics would be tailored for each program to be meaningful. Yet how 

would DoD devise metrics at the enterprise level—that is, giving 

trends for the entire acquisition system—when the “subordinate 

metrics” varied from program to program and from activity to activity? Finally, the metrics had to measure the progress of a program or initiative while it was still under way, which was far more 

difficult to do than analyzing the results after the fact. One could 

never be quite certain that a measurement of progress was in fact 

showing any progress.30

The first attempts to devise metrics for the early reforms 

demonstrated these problems. Preston directed that the process action 

teams must identify the metrics for any reforms they proposed. Most 

suggested some objective measures such as statistics on the number 

of users of a new technique or system, or the number of entries 

in a database, or the number of design specifications converted to

27 “AR’s Benchmarking Initiative,” Acquisition Reform Today 3, no. 1 (Jan/Feb 1998): 1. 28 Public Law 103–62, Government Performance and Results Act of 1993, enacted 3 

August 1993. 29 U.S. Congress, Senate, Committee on Governmental Affairs, Government Performance 

and Results Act [GPRA] of 1993, 103d Cong., 1st sess., 16 June 1993, S. Rpt 103–58, pp. 28–29; 

“GPRA Spurs Efforts to Measure Results,” Acquisition Reform Today 2, no. 4 (July/August 

1997): 1, 7. 30 Aron Pinker, Charles G. Smith, and Jack Booher, “Selecting Effective Acquisition 

Process Metrics,” Acquisition Review Quarterly 4 (Spring 1997): 189–91. See also Joseph 

Kevin Pope, “Measuring the Effect of the Defense Acquisition Workforce Improvement Act” 

(Master’s thesis: Naval Postgraduate School, June 1997), p. 25. 
162 DEFENSE ACQUISITION REFORM, 1960–2009

performance specifications. The metrics could be dollars saved (which 

were difficult to determine, given the other possible variables) or 

positions eliminated (probably not a happy idea for the front-line 

workers participating in the PATs). Furthermore, the relationship 

between the metrics and the ultimate goals they were measuring 

were frequently unclear. Some PATs responded to the task vaguely—

even the practitioners sometimes did not know what to look for. 

Customer satisfaction was indeed a key element of many of these 

reforms, to end the longstanding hostility between line commands 

and procurement offices. But customer satisfaction was a subjective 

and even nebulous yardstick that might give little indication of what 

was actually being measured, especially if the customers did not fully 

understand the goals of a given reform. In general, the identification 

of useful and appropriate metrics proved to be an ongoing problem. 

Indeed, the effort revealed a weakness in the process of implementing 

any acquisition initiatives, for without good metrics of some sort, 

failure was likely.31

A more organized approach to developing metrics began in 

April 1995 when the Defense Standards Improvement Council 

formed the Tiger Team on Metrics. The tiger team proposed a set of 

twenty-three strategic outcome metrics for measuring the impact 

of acquisition reform.32 The metrics were divided into four general categories relating to cost, acquisition technical performance, 

schedule, and training, and included algorithms for calculating 

them. The team evidently chose these particular metrics because 

they were easy to collect.33

Preston established the Acquisition Reform Benchmarking 

Initiative in September 1995 to finalize and track metrics related 

to progress in achieving acquisition reform. This effort was the 

responsibility of the Acquisition Reform Benchmarking Group, which 

superseded the tiger team. After reviewing the metrics efforts within 

DoD, in other federal agencies, and in the commercial sector, the 

group devised its own hierarchy of metrics. This framework included

31 Pinker, Smith, and Booher, “Selecting Effective Acquisition Process Metrics,” p. 

191. 32 The term tiger team originally referred to an ad hoc group of experts who tested the 

security of facilities or computer systems by trying to break in. More recently, and in the sense 

used here, it refers to a group called in to provide expert analysis of a particular problem or 

system design. 33 Briefing, “Acquisition Reform: Tiger Team on Metrics, April 1995-August 1995,” 19 Sep 

1996, copy in the files of Philip Shiman, OSD Historical Office. See also Pinker, Smith, and 

Booher, “Selecting Effective Acquisition Process Metrics,” pp. 191–92, 206. In 1996, the tiger 

team won the Heroes of Reinvention Hammer Award from the National Performance Review 

for its metrics work (“Acquisition Reform Efforts Win Hammer Award,” DoD News Release 

No. 542-96, 20 September 1996).
ACQUISITION REFORM FROM 1990 TO 2000 163

three levels: enterprise metrics, used to assess the efficiency gains of 

the total acquisition process; subordinate or “process” metrics, used 

to measure the subordinate tasks or elements that contributed to 

enterprise metrics; and program metrics, used to measure factors 

relating to specific acquisition programs. The enterprise metrics 

were further subdivided into cost metrics, schedule metrics, training 

metrics, and technical performance metrics.34

The quest for useful metrics remained a problem throughout 

the 1990s. In December 1996, during the waning days of the first 

Clinton administration, Under Secretary Paul Kaminski worried 

that “while we are making good progress with our acquisition reform initiatives, there are few good measures of that progress.” 

He solicited suggestions from senior DoD acquisition officials for 

metrics, focusing on two areas: cycle-time reduction and program 

stability. In 1999 even the Defense Science Board was called in to 

study the problem. The DoD leadership understood that the reform 

program had to show results and that in order to do that, it needed 

a yardstick.35Metrics were adopted but the acquisition problems of 

schedule slippage, cost growth and technical performance shortfalls persisted.

Finally, Preston and her staff organized a “communications 

program” to publicize the results of acquisition reform and 

disseminate the lessons to the workforce.36 This was a key part of 

the acquisition reform effort because the reformers believed that 

its success or failure depended on the attitude and actions of the 

workers. “I am firmly convinced that fundamental reform will not 

occur unless those who are part of the existing system participate 

in developing and implementing the changes,” Perry wrote in the 

memorandum announcing the acquisition reform program to 

DoD. “DoD will not succeed in fundamentally re-engineering the 

acquisition system unless those ‘on the front line’ of the acquisition 

34 Memo, DUSD (AR) Preston, 3 Sep 1996 [misfiled under 18 Sep 1995], sub: Acquisition 

Reform Benchmarking Initiative Charter; Acquisition Reform Benchmarking Group, 1997 

Final Report, 30 June 1997, ch. 1, copy in the files of Philip Shiman, OSD Historical Office. See 

also Pinker, Smith, and Booher, “Selecting Effective Acquisition Process Metrics,” p. 192; Pope, 

“Measuring the Effect of the Defense Acquisition Workforce Improvement Act,” pp. 35–56; 

Curtis K. Munechika, “Acquisition Reform: ‘This, Too, Shall Pass...?’ ” (Research paper, Air 

Command and Staff College, March 1997), pp. 55–60. 35 Munechika, “Acquisition Reform,” p. 55; Memo, USD (A&T) [Under Secretary of 

Defense for Acquisition and Technology] Kaminski for PDUSD (A&T) [Principal Deputy 

Under Secretary of Defense for Acquisition and Technology] et al., 3 Dec 1996, sub: Metrics 

for Measuring Acquisition Reform, copy in the files of Philip Shiman, OSD Historical Office; 

Defense Science Board, Report of the Defense Science Board Task Force on Acquisition Reform 

Phase IV (Washington, D.C.: Office of the Under Secretary of Defense for Acquisition and 

Technology, July 1999). 36 “E-Mail Bulletin Added to Effort for AR Info,” Acquisition Reform Today 1 (MarchApril 1996): 4.
164 DEFENSE ACQUISITION REFORM, 1960–2009

process embrace this effort. I know they are the experts, not those of 

us sitting in the Pentagon.”37

One approach to engaging the workforce was through the publication of periodicals. For discussion of broader acquisition issues, 

including reform, the Acquisition Review Quarterly was founded 

in 1994; the lead article in its first issue was a piece by Preston 

entitled “Acquisition Reform: Making It a Reality.”38 In early 1996, 

Preston’s office began publication of a bimonthly newsletter, Acquisition Reform Today. Yet Preston also made use of the new media 

that were becoming more widespread. A month after Acquisition 

Reform Today appeared, Preston’s office began emailing bulletins 

called Acquisition Reform Now, with brief notices on key reform 

news, events, and links to relevant World Wide Web pages. 

The most significant of these communications projects was 

the Defense Acquisition Deskbook, a digital compendium of reference materials and how-to guides. First released in July 1996, the 

Deskbook was distributed on a CD-ROM, by download from the 

Internet, and via the World Wide Web. Instead of fishing through 

endless volumes of bulky binders for critical information, acquisition workers could now search and read up-to-date information in 

a user-friendly format on their desktop workstations. The Deskbook, which was updated quarterly, applied to all DoD components. 

It included mandatory guidelines, lessons learned, tips and hints 

about successful business practices, a reference library, and a feature called “Ask a Professor,” in which workers could ask Defense 

Acquisition University professors about current acquisition policies and procedures.39

Preston relied on more than passive means of communication. 

She and her staff tirelessly disseminated the message of reform 

through speeches, traveling “road shows,” and other events. She 

spent increasing amounts of time visiting front-line workers in various offices. Under Secretary Kaminski designated 31 May 1996 as 

Acquisition Reform Acceleration Day. The workforce was expected 

to spend the day listening to lectures and participating in training exercises, workshops, and roundtable discussions. (The workers’ 

37 Memo, Secretary of Defense Perry for Distribution, 15 Mar 1994, sub: Acquisition 

Reform, Defense Systems Management College, Acker Library, Vertical File: “Defense 

Acquisition—Reform.” 38 Acquisition Review Quarterly 1 (Winter 1994): 6–11. See also documents relating to 

“Acquisition Reform Day #1–May 31, 1996” on the Web site of Office of the Deputy Under 

Secretary of Defense for Acquisition Reform (ODUSD [AR]), archived at http://web.archive.org/

web/19970605161357/www.acq.osd.mil/ar/arday1.htm. 39 “Deskbook: New Info Source Looms at AR ‘Best Seller,’ ” Acquisition Reform Today 

1 (Aug/Sep 1996): 1. See also U.S. Congress, House, Committee on Government Reform and 

Oversight, Implementation of Federal Acquisition Streamlining Act, 104th Cong., 1 sess., 

1995, p. 18.
ACQUISITION REFORM FROM 1990 TO 2000 165

feedback from these discussions was carefully studied by Kaminski 

and Preston.)40 This was followed by another Acquisition Reform 

Day, 19 March 1997, which expanded into Acquisition Reform 

Week. The theme was “Sustaining the Momentum.” Every government-industry team was expected to take a day to focus on 

learning about acquisition reform initiatives. Activities included 

speeches, workshops, roundtable discussions, and various training exercises, all of which were broadcast live via television and 

the Internet and later made available on videotape. The military services, defense agencies, and OSD all organized events. 

Program offices and teams were to develop their own specially 

tailored local activities.41 Another Acquisition Reform Week was 

held in 1998 with the theme, “Leading and Embracing Change: 

Institutionalizing and Accelerating Acquisition Reform.”42 While 

the communication problems were successful, aligning individual 

and contractor incentives with the desired reform goals remained 

difficult to attain.

The Broad Reach of Reform

The reform impulse extended beyond the executive branch to 

Congress, which had long been prodding DoD to streamline its 

procedures and adopt commercial procurement practices. With 

DoD struggling to put its leadership team in place and slow to 

submit its own proposed bill, the legislators put forward several 

of their own.43 The most important of these measures was H.R. 

2238, the Federal Acquisition Improvement Act (FAIA), introduced 

in May 1993 by Congressmen John Conyers Jr. of Michigan and 

Ronald Dellums of California, the respective chairmen of the 

Government Operations Committee and the House Armed Services 

Committee. The bill encouraged commercial product acquisition,

40 See documents relating to “Acquisition Reform Day #1–May 31, 1996,” archived at 

http://web.archive.org/web/19970605161357/www.acq.osd.mil/ar/arday1.htm. 41 Memo, USD (A&T) Kaminski, 20 Dec 1996, sub: Planning Guidance for Acquisition 

Reform Day 2, March 19, 1997, copy in the files of Philip Shiman, OSD Historical Office. Web 

pages for Acquisition Reform Week on the ODUSD (AR) Web site, archived at http://web.

archive.org/web/19970605143530/http://www.acq.osd.mil/ar/#arweek; “AR Week: March 17-21 

Theme ‘Sustaining the Momentum,’ ” Acquisition Reform Today 2 (Jan/Feb 1997): 1, 7; “AR 

Week Wrap-Up,” Acquisition Reform Today 2 (Mar/Apr 1997): 4–5. 42 “AR Week ’98 Embraces Change,” Acquisition Reform Today 3 (Mar/Apr 1998): 1, 3. 

See also “AR Week III Kickoff Ceremony,” Acquisition Reform Today 3 (Jul/Aug 1998): 1, 3–4; 

Web pages for “AcqReform Week III” on the Web site of USD (A&T), archived at http://web.

archive.org/web/19980425053420/www.acq.osd.mil/arweekIII/. 43 U.S. Congress, Senate, 103d Cong., 1st sess., Hearing on S. 554, Solicitation 

Enhancement Act of 1993; S. 555, Procurement Protest Clarification Act of 1993, and S. 556, A 

Bill to Amend Chapter 35 of Title 31, United States Code, to Improve the Procurement Protest 

System. 
166 DEFENSE ACQUISITION REFORM, 1960–2009

enhanced competition, strengthened the bid protest process, 

and streamlined small purchases. It also reserved $3 billion in 

additional business for small firms.44 The original bill was not 

comprehensive, however; it contained little of substance regarding 

the acquisition of commercial products and left out most of the 

Section 800 Panel recommendations. Perry described the bill as “a 

modest, useful step,” but he told HASC it was only “a small step in 

the direction we want to go.”45

However, at this point neither DoD, the White House, nor the 

Senate were interested in small steps. They were looking for a 

broader reform package that would apply to the entire federal government. The Section 800 Panel report, though directed at defense 

acquisition laws, became the basis of the broader reform legislation. Immediately after receiving the report in January 1993, a 

bipartisan group of reform-minded senators and their staffs from 

the three committees launched an intensive effort on a comprehensive reform package, meeting weekly for nine months. The resulting bill, S.1587, the Federal Acquisition Streamlining Act or 

FASA, was largely completed by September and unveiled late the 

following month.46

The procurement reform bill (FASA) followed the structure of 

the Section 800 Panel’s report and accepted the bulk of its recommendations, supplemented by a few reform proposals from the vice 

president’s National Performance Review and some congressional 

ideas left over from the previous term. It emphasized commercial acquisition, a threshold of $100,000 for simplified acquisition 

procedures, and various changes in defense acquisition, including 

statutes covering major systems. However, being the product of 

three distinct committees, each with its own traditional concerns 

and constituencies, the bill hedged on some key issues. For example, instead of giving procuring offices the freedom to use innovative methods and their own judgment to obtain the “best value” for 

their organizations, the bill included new restrictions and oversight, a nod to the powerful old-line Democratic committee chairmen who were strongly attached to the old regulatory laws that 

not infrequently bore their names. It provided no simplification or 

streamlining at all for contracts valued over $100,000. The bill also 

showed particular sensitivity to the interests of small business44 U.S. Congress, House, Congressional Record, 103d Cong., 1st sess., The Federal 

Acquisition Improvement Act of 1993, Congressman John Conyers, Extension of Remarks, 24 

May 1993, p. E1337. 45 U.S. Congress, House, Committee on Armed Services, Acquisition Reform: Fact or

Fiction, 103d Cong., 1st sess., S. 11547, testimony of William J. Perry, 15 June 1993, p. 14. 46 For a time the Federal Acquisition Streamlining Act (FASA) was often called FAStA or 

FASTA, but that usage eventually disappeared.
ACQUISITION REFORM FROM 1990 TO 2000 167

es, which had a powerful hold on the Small Business Committee. 

Nonetheless, FASA represented a considerable compromise among 

the various participants, each of whom acknowledged the need for 

a major overhaul of the acquisition system.47

Some members of the acquisition workforce believed the bill 

went too far in relaxing restrictions and oversight of contractors. 

Their experiences on large acquisition programs led them to believe that rigorous government oversight of contractors was necessary on programs where engineering and design changes occurred 

with high frequency. Senator William V. Roth Jr. (R-Del.) bolted 

from the bill when the eleventh-hour compromises threatened the 

monetary savings it was supposed to offer. Two days later, Roth 

and two other reform-minded Republican senators, Charles Grassley and William Cohen, introduced a more comprehensive bill (S. 

1587) calling for overhaul of DoD acquisition that included a single DoD acquisition agency, a simplified acquisition program cycle, 

and streamlined procedures, though not the broad deregulation 

that DoD wanted.48 But the problems of cost growth and schedule 

slippages continued. 

Controversy continued to rage within the administration over 

the Senate’s procurement reform bill. In the working group assembled to formulate the administration’s position on FASA, DoD 

squared off against the vice president’s office. The latter was not 

particularly happy with the Senate bill but was anxious for a legislative victory—or even just the appearance of victory—for the National Performance Review, to maintain the momentum of the reform effort. Vice President Al Gore’s staff favored accepting the bill 

whether or not the administration obtained the changes it wanted. 

Their primary concern was to pass the bill—any bill—before the 

end of the congressional session in December.49 DoD strenuously 

opposed this approach. The refusal of the White House to accept 

DoD’s draft bill, and its endorsement of FASA S. 1587 instead, was 

a sharp blow to Colleen Preston and the acquisition reform office, 

which believed the Senate bill did not go far enough. DoD refused 

to abandon its own stillborn proposals and assumed what one 

47 S. 1587, Federal Acquisition Streamlining Act of 1993, version as introduced, 103d 

Cong., 1st sess., 26 October 1993. 48 U.S. Congress, Senate, Congressional Record, 103d Cong., 1st sess., S. 14376, statement 

of Senator William V. Roth Jr., 26 October 1993; and S. 1598, The Department of Defense 

Acquisition Management Reform Act of 1993, introduced 28 October 1993. 49 Steven Kelman, Implementing Federal Procurement Reform, Ash Institute for 

Democratic Governance and Innovation, John F. Kennedy School of Government, Harvard 

University, Spring 1998, p. 11. See also U.S. Congress, Senate, Congressional Record, 103d 

Cong., 2d sess., S. 6491, statement of Senator Roth, and S. 6493, statement of Senator John H. 

Glenn, both statements on 7 June 1994. 
168 DEFENSE ACQUISITION REFORM, 1960–2009

observer described as a “passive-aggressive” stance: it did not 

openly disagree with the vice president’s support for FASA, but it 

aggressively promoted all of the revisions it sought.50

After long discussions with the executive branch and three 

hearings on the subject, the Governmental Affairs and Senate 

Armed Services committees released on 26 April a new bill. This 

bill, which included many of the provisions proposed by Roth, 

Grassley, and Cohen, pleased many of the DoD reformers. “Over 

the last six months,” Senator Roth told his colleagues, “the reforms 

that we are making have grown from Tonka toys to a full-blown 

paving crew that can pave the way to significant savings.”51The administration offered strong support for S. 1587. DoD, too, “wholeheartedly” backed the bill, even though it did not get everything 

it wanted.52 The Senate’s version of FASA passed on 8 June 1994, 

the House version (H.R. 2238) on the twenty-sixth. After two more 

months of wrangling, the Senate approved the compromise bill in 

August and the House two months later. President Clinton signed 

it into law on 13 October 1994.

FASA’s primary thrusts sought to promote the use of commercial products and simplify the process of awarding and managing 

contracts in the hopes of luring more commercial firms into the 

defense market. For example, it broadened the definition of commercial items and reduced the requirements placed on offerors of 

such items. One of the most important changes amended the Truth 

in Negotiations Act to relax the requirement for bidders to reveal 

cost and pricing data, a major deterrent for commercial firms. The 

law also required the government to increase its use of electronic 

commerce and electronic data interchange and created the Federal 

Acquisition Network (FACNET), which would ease public access to 

the acquisition system.

While DoD was pleased with most of these provisions—Preston 

later told the Congress that FASA gave DoD 95 percent of what it 

needed to reengineer its business processes—it did not get everything 

it wanted. It did not, for example, receive blanket waivers of some 

existing statutes, including the Davis-Bacon Act and the WalshHealy Act.53 It also failed to obtain changes regarding operational 

testing and evaluation. The Pentagon had long sought to weaken the 

50 Kelman, Implementing Federal Procurement Reform, p. 11. 51 U.S. Congress, Congressional Record, 103d Cong., 2d sess., S. 1587, statement of 

Senator Roth, 7 June 1994. 52 Ibid. 53 U.S. Congress, House, Committee on Government Reform and Oversight, Implementation 

of Federal Acquisition Streamlining Act, 104th Cong., 1st sess., 1995, pp. 36–37, requiring all 

government contracts over $10,000 to pay employees at or above the federal minimum wage 

and time-and-a-half pay for work over forty hours.
ACQUISITION REFORM FROM 1990 TO 2000 169

independence of the director of operational test and evaluation and 

to dilute the rigorous testing requirements imposed by Congress. The 

original Senate bill would have given the Pentagon the right to waive 

existing statutory testing requirements if the secretary of defense 

certified “that such testing would be unreasonably expensive and 

impracticable, cause unwarranted delay, or be unnecessary because 

of the acquisition strategy for that system.” The reformers in the 

Senate, who dubbed this provision the “Mack-truck loophole” because 

“it would have opened a loophole large enough to drive a Mack truck 

through,” rebelled.54 Although the final bill allowed the secretary to 

waive full live-fire testing under certain circumstances, it reaffirmed 

the independence of the director of operational test and evaluation 

and left the operational testing requirements largely intact.55

FASA was a landmark piece of legislation. Some in Congress 

called it the most important acquisition legislation since the Competition in Contracting Act in 1983, and Chairman Sam Nunn of the 

Senate Armed Services Committee described it as the second installment on major changes in the Department of Defense begun by the 

Goldwater-Nichols Act in 1987.56 It was a bipartisan effort; while the 

two parties haggled over such issues as the Davis-Bacon Act, they 

broadly agreed on FASA’s goals and methods. Indeed, acquisition reform was one of the few issues on which Republicans and Democrats 

did agree—FASA passed the House by a unanimous vote of 425 to 0—

and the preparation and passage of reform legislation continued after 

Congress came under the control of the Republicans in early 1995. 

Of primary significance, FASA demonstrated to acquisition 

managers and workers the commitment of Congress and the 

executive branch leadership to modernizing the government’s 

business practices. It helped fuel a spirit of reform; as a result of 

FASA, agencies began making changes not covered by the act at 

all! The reform measures in the act itself were actually relatively 

modest and incomplete. Steven Kelman, the director of the Office of 

Federal Procurement Policy, later reflected that FASA “accomplished 

less than some of the rhetoric suggested.”57 In February 1995, after a 

bitter battle between reformers and traditionalists, Congress passed 

54 U.S. Congress, Senate, Congressional Record, 103d Cong., 2d sess., S. 6587, statement 

of Senator David Pryor, 8 June 1994; S. 1597, Federal Acquisition Streamlining Act, introduced 

26 October 1993, sec. 3013. 55 FASA, Title III, secs. 3011–15. 56 U.S. Congress, Senate, Committee on Governmental Affairs and Committee on Armed 

Services, Federal Acquisition Streamlining Act of 1993: Joint Hearings on S. 1587, 103d Cong., 

2d sess., S. Hearing 103-849, 1994, p. 6. 57 Steven Kelman, Unleashing Change: A Study of Organizational Renewal in 

Government (Washington, D.C.: Brookings Institution Press, 2005), pp. 136–37. See also 

Kelman, Implementing Federal Procurement Reform, p. 12.
170 DEFENSE ACQUISITION REFORM, 1960–2009

a new act, the Federal Acquisition Reform Act (FARA), which together 

with the Information Technology Management Reform Act (ITMRA) 

became known as the Clinger-Cohen Act.58 More radical than FASA, 

the act included changes intended to promote commercial purchasing 

and it overhauled the procurement integrity laws governing postemployment restrictions. It eliminated the General Services Board of 

Contract Appeals, which heard bid protests in computer procurements. 

Ultimately, FARA, too, passed unanimously in the House.59FASA and 

FARA moved the defense acquisition behemoth in the right direction 

but left most DoD and contractor activities largely unchanged.

Unlike the Defense Management Report of the previous 

administration, there was no single road map for acquisition 

reform during the Clinton administration. Perry’s white paper, 

“The Mandate for Change,” presented a broad statement of 

principles and overall goals. The program that flowed out of this 

document, still ill-defined and unfocused, would evolve over the 

next seven years, during which time OSD issued a blizzard of 

memorandums, directives, and instructions. There never has been 

an official count of the various Clinton-era acquisition reform 

initiatives. A 1997 Coopers & Lybrand study identified fifty-two 

initiatives that it called change elements.60 In 2005, a careful 

review by the Arroyo Center of the Rand Corporation (described 

later in this chapter) identified sixty-three initiatives, a list Rand 

acknowledged was “not exhaustive.” Three of these initiatives 

predated the Clinton administration and one followed it.61Among 

the rest, the large majority, forty-nine, came during Clinton’s first 

term, almost half of them in 1995 alone; only ten were begun 

during the second administration. They ranged in importance 

from high priority areas such as military specifications and 

standards to small, incremental reforms such as allowing oral 

presentations of industry proposals.62

58 Federal Acquisition Reform Act of 1996, Division D of the National Defense 

Authorization Act of 1996 (Public Law 104–106), approved 10 February 1996. 59 Kelman, Unleashing Change, p. 137. See also Kathleen Day, “Streamlining 

Procurement Begins Phase 2,” Washington Post, 9 February 1996. 60 Coopers & Lybrand, “Acquisition Reform Implementation: An Industry Survey,” 

Exhibit 1, October 1997. 61 Competitive sourcing, DoD purchase card, and performance-based service acquisition 

were three initiatives that predated the Clinton administration, and contractor cost sharing 

was an initiative that followed it. 62 Christopher H. Hanks, et al., Reexamining Military Acquisition Reform: Are We There 

Yet? (Santa Monica, Calif.: Rand Arroyo Center, 2005), pp. 5–17, 97–99. For a description of 

each initiative, see pages 81 to 96. Rand grouped these initiatives into four primary categories 

(some appear in more than one): (1) Rationalizing and Improving the Industrial Base–18 

initiatives, (2) Streamlining–40 initiatives, (3) Civilian-Military Integration–27 initiatives, 

and (4) Logistics Transformation and Total Life-cycle System Management–6 initiatives.
ACQUISITION REFORM FROM 1990 TO 2000 171

The assault on the requirements generation process began by 

focusing on the problem of military specifications and standards, 

usually known collectively as “milspecs.” Changing the nature and 

application of milspecs had long been a key goal of military reformers. Many studies had examined the problem over the years, and 

Congress had weighed in from time to time. DoD sought to reduce 

its reliance on milspecs, but its efforts achieved only modest results. The detailed specifications for fruitcakes, chocolate syrup, 

and dog combs became the subject of much public amusement and 

ridicule, yet by 1993 many serious analysts believed that the overuse of milspecs was strangling the acquisition system by adding 

significantly to the cost of products ranging from commodities to 

major systems and preventing commercial firms from offering innovative technology to the Pentagon.63

As noted earlier, milspec reform constituted “an area of intense 

interest” for Perry because he believed it was critical to achieving civil-military integration.64 In August 1993, Preston chartered 

a process action team to prepare a milspec reform plan. In March 

1994, the PAT released its report, Blueprint for Change, proposing 

a broad range of changes, including sharp restrictions on the use 

of milspecs in favor of commercial specifications and performancebased specifications.65 The analyses and recommendations were 

not new; the PAT’s analysis was limited to the review of previous 

studies. However, Blueprint for Change went into much more de63 U.S. Government Accounting Office (GAO) Report, Acquisition Reform: DoD Begins 

Program to Reform Specifications and Standards, GAO/NSIAD–95–14, Oct 1994, pp. 4–5, 

21; Jacques S. Gansler, “How the Pentagon Buys Fruitcake,” Air Force Magazine (June 

1989): 94; House Committee on Armed Services, Investigations Subcommittee, DoD Military 

Specifications and Standards, Hearing, 102d Cong., 2d sess., HASC No. 102-75, 1993, pp. 1–29, 

106–11, 206–23; Steering Committee on Security and Technology, Integrating Commercial 

and Military Technologies for National Strength: An Agenda for Change (Washington, D.C.: 

Center for Strategic and International Studies, March 1991), pp. 41–52; Working Group on 

Military Specifications and Standards, Road Map for Milspec Reform (Washington, D.C.: 

Center for Strategic and International Studies, 1993). 64 Memo, Deputy Secretary of Defense Perry to Jacques Gansler, 17 Sep 1993, attached 

to Memo, ASD (ES) [Assistant Secretary of Defense for Economic Security] Walter B. Bergman 

for Perry, 1 Sep 1993, sub: Report on Military Specifications and Standards, WNRC 330–97–

0030, USD (A) Chronological File, 1993, box 7 (filed under 13 Sep 1993). 65 Performance specifications told contractors what performance was required but not 

how to achieve it. According to the Defense Standards Improvement Council, a performance 

specification states requirements in terms of the required results with criteria for verifying 

compliance but without stating the methods for achieving the required results. A performance 

specification defines the functional requirements for the item, the environment in which 

it must operate, and the interface and interchangeability characteristics. See Defense 

Standardization Program Standardization Document (SD)-15, Performance Specification 

Guide (Washington, D.C.: Office of the Assistant Secretary of Defense for Economic Security, 

29 June 1995), p. 6. 
172 DEFENSE ACQUISITION REFORM, 1960–2009

tail than previous plans.66 Another PAT followed this report with 

an implementation plan.67

On 29 June 1994, in his first major acquisition reform memorandum, Perry “wholeheartedly” accepted the PAT’s recommendations and ordered that they be implemented. He prohibited the 

use of military specifications and standards in any acquisitions 

except as “a last resort,” and even then required a waiver for their 

use. Otherwise, performance specifications were to be preferred, 

with non-governmental specifications as second choice. Whereas 

previously program managers were required to seek permission to 

use commercial standards, now they were required to obtain permission not to use them. “[W]e are . . . turning the present system 

upside down,” Perry commented.68

As some observers noted at the time, a few of these policies were 

hardly new. For example, DoD had preferred performance specifications for several years. Yet, as Perry himself recognized, cultural 

change was required. The PAT’s plan largely focused on changing DoD’s culture through training and education, incentives, and 

leadership initiative. Perry wanted to shock the system and get its 

attention. Severely restricting the use of milspecs got people’s attention. The idea seems to have spread that Perry was abolishing 

their use altogether, which was not the case.69 But it was still a 

bold and challenging move difficult to implement. Perry noted: “[T]

he problem of unique military systems did not begin with the standards. The problem was rooted in the requirements determination 

phase of the cycle.”70

66 Memo, DUSD (AR) Preston for Deputy Secretary of Defense Perry, 1 Sep 1993, sub: 

PAT on Mil Specs and Standards—Information Memorandum, WNRC 330–97–0030, USD 

(A) Chronological File, 1993, box 7; Process Action Team on Military Specifications and 

Standards, Blueprint for Change: Report of the Process Action Team on Military Specifications

and Standards (Washington, D.C.: Office of the Under Secretary of Defense for Acquisition 

and Technology, April 1994); GAO Report, Acquisition Reform, GAO/NSIAD–95–14, Oct 1994, 

pp. 4–567 Implementation Plan for the Process Action Team Report on Specifications and 

Standards, version 1.0 (Washington, D.C.: Office of the Assistant Secretary of Defense for 

Economic Security, 23 June 1994). 68 Memo, Secretary of Defense Perry for Distribution, 29 Jun 1994, sub: Specifications 

& Standards—A New Way of Doing Business, Perry Papers, Disk 2, OSD Historical Office; 

Thomas E. Ricks, “Pentagon, in Streamlining Effort, Plans to Revamp Its Purchasing 

Procedures,” Wall Street Journal, 30 June 1994. 69 Walter B. Bergmann, “Message from Chairman, Defense Standards Improvement 

Council,” DoD Standardization Newsletter (Special Edition, October 1994): 1; “Chairman’s 

Message: Waiver Requests—A Matter of Balance,” Standardization Newsletter (October 

1995): 2. 70 Memo, Perry for Distribution, 29 Jun 1994, p. 4. See also GAO Report, Acquisition 

Reform, GAO/NSAID–95–14, Oct 1994, pp. 4–11. 
ACQUISITION REFORM FROM 1990 TO 2000 173

Perry considered his document, “A Mandate for Change,” to be 

the effective start of the acquisition reform program. Five years 

later he would write:

A far-reaching reform was stated in a single sentence, clear and 

direct; the idea thus expressed was, in Victor Hugo’s words, “more 

powerful than the tread of mighty armies.” It read: “The use of 

military specifications and standards is authorized as a last resort, with an appropriate waiver.” The time had come; acquisition 

reform was launched.71

By the end of 1995, it became apparent that milspec reform 

had hit a serious snag. The restrictions on the use of military 

specifications and standards applied only to new contracts. Existing programs were exempted. This meant that a company performing both old and new contracts might have to use multiple 

manufacturing and management processes in one facility. At one 

factory, for example, a defense contractor was forced to use eight 

different soldering specifications, including five for the government and three for commercial clients. The workers had to be 

trained on all eight soldering and inspection techniques and the 

company had to maintain eight different types of production documentation. Needless to say, this drove up costs; it also made 

plant managers reluctant to adopt new processes while still committed to the old.72

Therefore, in December 1995 DoD established the Single Process Initiative (SPI), which allowed companies to make “block 

changes” to its contracts, shifting all of them over to a single process 

at each facility. Contractors were encouraged to submit proposals 

that would be reviewed and approved by the onsite administrative 

contracting officer (ACO) assigned to the facility. The government 

would even pay for the changes if the contractor could demonstrate 

that they would produce significant long-term savings.73

The first two block change agreements were with Texas Instruments Defense Systems and Electronics. Within nine months, 103

71 Carter and Perry, Preventive Defense, p. 185. 72 Speech, USD (A&T) Kaminski to the Lockheed-Martin Common Processes Conference, 

Arlington, Va., 18 Jan 1996, copy in the files of Philip Shiman, OSD Historical Office. 73 Memo, Secretary of Defense Perry for Distribution, 6 Dec 1995, sub: Common Systems/

ISO-9000/Expedited Block Changes, Perry Papers, Disk 2, OSD Historical Office. See also 

Memo, USD (A&T) Kaminski for Distribution, 8 Dec 1995, sub: Single Process Initiative, copy 

in the files of Philip Shiman, OSD Historical Office; and “Department of Defense Announces 

Policy on Single Process Initiative,” Office of the Secretary of Defense for Public Affairs (OASD 

[PA]), News Release No. 647–95, 8 Dec 1995.
174 DEFENSE ACQUISITION REFORM, 1960–2009

contractors submitted 341 proposals covering 426 process changes, 

of which 349 process changes were accepted.74 OSD believed this 

approach was critical to the success of milspec reform and ultimately civil-military integration; it came to see the initiative as a 

primary vehicle for introducing best business and manufacturing 

practices among its contractors. DoD maintained the Single Process Initiative through the rest of the decade, periodically tweaking and reinforcing it.75

After restricting the use of milspecs in favor of commercial standards and performance specifications, a logical next step was to mandate the use of open systems. The open systems approach, a design 

and business philosophy, emphasized common, non-proprietary standards, especially for interfaces and operating systems. The use of such 

standards was expected to expand DoD’s supplier base, because any 

company could apply them to its products to sell to the government. 

When used in conjunction with such concepts as modularity and functional partitioning—the use of self-contained functional components 

to build systems—the open systems approach was also expected to 

reduce costs, make technology upgrades easier, and lessen the reliance on military-unique systems. The goal was to promote “plug-andplay” (or, at the level of operating forces, “plug-and-fight”): different 

products, including technology upgrades and modular technological 

add-ons, that could be swapped in and out of the larger system with 

no delay and no degradation of performance.76

Five months after Perry issued his memorandum, “Specifications and Standards—A New Way of Doing Business,” Under Secretary Kaminski took the first steps toward adopting the open systems approach by ordering that it be applied to the acquisition of 

weapon system electronics. He also established the Open Systems 

Joint Task Force “to promote and oversee the enactment of this 

policy, identify opportunities for implementing open systems architectures, develop training and education programs, and coordinate 

the identification and selection of open systems specifications and 

standards.”77 In March 1996, the newly revised DoD 5000-series 

74 Robert W. Drewes, “SPI—Progress Made and Lessons Learned,” Program Manager

(Special Issue, January-February 1997): 37. 75 See especially Memo, USD (A&T) Jacques Gansler for Distribution, 3 Jun 1998, sub: 

The Single Process Initiative—A Long Term Perspective, copy in the files of Philip Shiman, 

OSD Historical Office. 76 For descriptions of the open systems approach, see Matt Gillis, “Open Systems Joint 

Task Force Gets the Word Out,” Program Manager (July-August 1999): 44–47. See also 

Michael Hanratty, Robert H. Lightsey, and Arvid G. Larson, “Open Systems and the Systems 

Engineering Process, Acquisition Review Quarterly (Winter 1999): 47–58. 77 Memo, USD (A&T) Kaminski for Distribution, 29 Nov 1994, sub: Acquisition of 

Weapons Systems Electronics Using Open Systems Specifications and Standards, copy in the 

files of Philip Shiman, OSD Historical Office.
ACQUISITION REFORM FROM 1990 TO 2000 175

regulations expanded this order to cover all weapon system components. After a workshop late that spring studied the practical 

aspects of implementing the policy, Kaminski ordered the component acquisition executives to implement the policy and report 

their progress regularly. DoD Regulation 5000.2-R was revised periodically to clarify and strengthen the mandate to apply the open 

systems approach.78

Changing the Acquisition Process

Although Perry’s highest priorities were to change the system 

of specifications and standards, begin procurement reform, and 

launch the pilot programs, he did not wait long to begin the overhaul of the acquisition process. At the end of August 1994, Perry 

chartered a process action team on acquisition oversight and review, giving it ninety days to produce “a comprehensive plan to reengineer the oversight and review process for systems acquisition, 

in the services and OSD, to make it more effective and efficient, 

while maintaining an appropriate level of oversight.” The PAT had 

a mandate to suggest radical changes; it did not disappoint. Its 

report, issued in December, made thirty-three recommendations 

covering the milestone process, oversight organization and documentation, management of joint programs, and workforce issues. 

The report included a separate volume with detailed plans for implementing its recommendations.79

With regard to the DAB (Defense Acquisition Board) process, 

the PAT sought to reduce the number of expensive and disruptive 

reviews and rely more heavily on continuous oversight based on 

improved flows of information to the decision makers. The PAT 

recommended reducing the number of milestone reviews to three: 

the Need Validation Decision, the Program Initiation Decision, and 

the Production Decision. Likewise, there would be three phases:

78 DoD Regulation 5000.2-R, “Mandatory Procedures for Major Defense Acquisition 

Programs (MDAPs) and Major Automated Information System (MAIS) Acquisition Programs,” 

sec. 4.3.4. See also Memo, Kaminski for DoD Component Acquisition Executives, 10 Jul 1996, 

sub: Open Systems Acquisition of Weapons Systems; Paper, Chien Huo, “Open Systems Policy 

Directions: The DoD 5000.2-R, Change 3,” 11 April 1998; and Paper, “Open Systems Policy in 

the DoD 5000.2-R,” 24 May 1999. Copies of memo and papers in the files of Philip Shiman, 

OSD Historical Office. 79 Memo, Secretary of Defense Perry for Distribution, 6 Sep 1994, sub: Process Action 

Team on Oversight and Review, Perry Papers, Disk 2, OSD Historical Office. See also 

Acquisition Reform Process Action Team, Reengineering the Acquisition Oversight and Review 

Process: Final Report to the Secretary of Defense (Washington, D.C.: Department of Defense, 

9 December 1994), p. 1; and John S. Caldwell Jr., “Reengineering the Oversight and Review 

Process for Systems Acquisition,” Program Manager (May-June 1995): 3–5.
176 DEFENSE ACQUISITION REFORM, 1960–2009

Concept Exploration, Development, and Production. The number 

of pre-DAB reviews would be reduced to no more than one, and the 

subsequent DAB meetings might be done away with in the absence 

of outstanding issues. This would be made possible by replacing 

the traditional DAB committee structure with integrated product 

teams (IPTs).80 IPTs would include representatives of OSD and 

the military services who would work with the program manager 

throughout the life of the program. Every program would have 

a top-level IPT (called an Overarching IPT, or OIPT) that would 

shepherd it through the development process, providing strategic 

guidance, assessing the program, and resolving issues; and one or 

more Working IPTs (WIPTs) that would have more of a hands-on 

role. Because these IPTs would include personnel from the various 

organization and management layers, they would obviate the need 

for multiple, serial committee meetings. They were expected to address problems as they arose instead of allowing them to fester 

until the next review.81

The PAT also recommended reducing the oversight burden in 

other ways. Whereas the 5000-series revision released by the previous administration included an extensive compilation of documents 

required of every program, the PAT proposed reducing the documentation by making the smallest number mandatory, then adding 

documents only as required. The PAT wanted to weaken the influence of the Defense Contract Management Command by prohibiting 

the Defense Plant Representative Offices from conducting independent investigations of contractors. It would reduce the frequency of 

routine DoD Inspector General audits. It even suggested reducing 

the oversight on well-performing contractors by allowing them to be 

self-governing.82The PAT report reflected the popular emphasis on 

employee empowerment and teamwork, as well as a modest faith in 

both the government workforce and the contractors to function well 

with minimum oversight. While contractors were generally enthusiastic about the reduced oversight, the modest faith was shared by 

some members of the DoD acquisition workforce and not by others. 

Kaminski accepted most, although not all, of the recommendations. He maintained the milestones and phases as they were, 

except for eliminating Milestone IV (Major Modification Approval), 

but he adopted the integrated product teams. “Rather than checking the work of the program office beginning six months prior to 

80 An integrated product team (IPT) is a multidisciplinary group of people who are 

collectively responsible for delivering a defined product or process. IPTs are used in complex 

development programs/projects for review and decision making. 81 “Acquisition Reform PAT,” Reengineering, 1: 8–9, 24–38. 82 Ibid., pp. 38–44, 47–48, 51–52.
ACQUISITION REFORM FROM 1990 TO 2000 177

a milestone decision point, as is often the case today,” he directed, 

“the OSD and Component staffs shall participate early and on an 

on-going basis with the program office teams, resolving issues as 

they arise, rather than during the final decision review.” The Overarching IPT for each program would decide which subordinate 

teams to establish. Prior to a review, the Overarching IPT would 

meet to determine if all issues had been resolved and the program 

was ready to move forward. When the program was deemed ready 

to move forward, a DAB readiness meeting would be held to advise 

the under secretary before the DAB. If no problems were anticipated, an Acquisition Decision Memorandum might be prepared 

and signed without holding a DAB meeting at all, an action known 

as a paper DAB. There should be no surprises, Kaminski noted, because the Overarching IPT would have been closely involved with 

the program from the start. He described this new policy as a shift 

from “after-the-fact oversight” to “early-and-continuous insight.”83

Kaminski also accepted the PAT’s approach to contractor oversight: “Once a contractor has demonstrated a system of stable, 

compliant processes leading to performance as contracted, the Defense Contract Management Command (DCMC) shall rely almost 

exclusively on contractor self-governance, rather than Government 

inspectors, auditors, and compliance monitors.” This reduction in 

oversight was of particular concern to the DoD Inspector General. 

However, the under secretary did not approve the recommendations to weaken DCMC oversight, for example, and he made clear 

that DCMC onsite personnel could continue to make independent 

investigations, although the program managers would have access 

to their reports.84

IPTs by themselves represented an important change, but 

they also provided the foundation for another change of equal significance, integrated product and process development (IPPD), “a 

management process that integrated all activities from product 

concept through production/field support” using multifunctional 

IPTs. Instead of proceeding through the development process in 

a strictly serial manner, with participants performing their parts 

in strict sequence, in IPPD the participants worked together in an 

IPT from the start. Early on, in the design phase, at which point 

changes were much easier and less costly, potential problems that 

83 “Paul Kaminski on Acquisition Reform,” Program Manager (Special Issue, JanuaryFebruary 1997): 7. See also Memo, USD (A&T) Kaminski for Distribution, 28 Apr 1995, sub: 

Reengineering the Acquisition Oversight and Review Process, copy in the files of Philip 

Shiman, OSD Historical Office; and U.S. Congress, Senate, statement of Paul Kaminski before 

the Subcommittee on Acquisition and Technology of the Senate Committee on Armed Services 

on FY 1997 DoD Acquisition and Technology Program, 20 March 1996, p. 31. 84 “Paul Kaminski on Acquisition Reform,” p. 7.
178 DEFENSE ACQUISITION REFORM, 1960–2009

could arise in the manufacturing or production phases were identified and resolved. 

IPPD grew out of an industry concept called concurrent engineering, a component of Total Quality Management (TQM) that 

called for a systematic approach to integrated design of products 

taking into consideration all elements of the system life cycle. By 

the late 1980s, at least nine major defense contractors were using 

concurrent engineering on weapon system programs, and reports 

by the Institute for Defense Analyses (IDA) and the Defense Science Board (DSB) recommended that DoD adopt the approach as 

policy.85 Under Secretary of Defense for Acquisition Robert Costello, a TQM advocate, did so, but he left office soon after and the 

idea was largely forgotten. Meanwhile, the Air Force had also been 

studying the concept, which it expanded from a technical design 

approach into a broader management philosophy called Integrated 

Product Development (IPD). IPD became a key element of the service’s Integrated Weapon System Management (IWSM), adopted 

officially in 1992. Because IPD (like concurrent engineering) involved the integrated design of products and processes, it came 

to be called integrated product and process development by 1993, 

when a Defense Science Board report strongly promoted the concept.86 On 10 May 1995, Secretary Perry ordered that the IPPD 

and IPT concepts be applied throughout the acquisition process. 

His memorandum and that of Kaminski accepting the Acquisition 

Oversight and Review PAT’s report were publicly announced together on 16 May.87

85 The Defense Acquisition University Glossary of Defense Acquisition Terms 

(September 2003) defines concurrent engineering as a systematic approach to the integrated, 

concurrent design of products and processes considering all elements of the system life cycle 

from requirements development through disposal, including cost, schedule, and technical 

performance. 86 Robert I. Winner, et al., The Role of Concurrent Engineering in Weapons System

Acquisition, IDA Report R–338 (Alexandria, Va.: Institute for Defense Analyses, December 

1988), pp. 1–49. See also Memo, USD (A) Costello for Secretaries of the Military Departments, 

9 Mar 1989, sub: Concurrent Engineering—A Total Quality Management Process, WNRC 

330–92–0136, USD (A) Chronological Files, 1989, box 3; U.S. Air Force, Air Force Materiel 

Command Guide on Integrated Product Development (n.p., 25 May 1993), pp. 4–10, 95–

106; and Defense Science Board Task Force, Engineering in the Manufacturing Process

(Washington, D.C.: Office of the Under Secretary of Defense for Acquisition, March 1993), 

ch. 1, pp. 1–13. 87 Memo, Secretary of Defense Perry for Distribution, 10 May 1995, sub: Use of Integrated 

Product and Process Development and Integrated Product Teams in DoD Acquisition, Perry 

Papers, Disk 2, OSD Historical Office. See also OASD (PA), “Department of Defense Announces 

Bold Reform for Major Systems Oversight and Review, News Release No. 264-95, 16 May 

1995. For a description of how IPPD was to be applied to defense acquisition, see DoD Guide 

to Integrated Product and Process Development, version 1.0 (Washington, D.C.: Office of the 

Under Secretary of Defense for Acquisition and Technology, 5 February 1996).
ACQUISITION REFORM FROM 1990 TO 2000 179

The various changes to the acquisition organization and process were codified with the release of the 5000-series revision on 

15 March 1996.88 The stark contrast in style and management 

philosophy between this administration and the previous one was 

clearly evident in the differences between the 1991 and 1996 versions. The 1991 regulations were contained in three documents 

(DoD Directive 5000.1, DoD Instruction 5000.2, and DoD Manual 

5000.2-M) that totaled almost nine-hundred pages. Although some 

of the guidelines were discretionary, it was difficult to distinguish 

them from those that were mandatory. Tailoring the oversight and 

review process and the documentation was discouraged. The documents appeared to require lockstep movement through the review 

process. In all, they emphasized discipline.89

The two new documents, DoD Directive 5000.1 and DoD Regulation 5000.2-R, had a very different look and feel to them. Together they 

totaled only one-hundred-forty pages; much of the material from the 

old documents now appeared in the Defense Acquisition Deskbook. 

There was one figure, showing the Integrated Test Program Schedule, and no other charts or tables. The documents promoted tailoring 

the procedures and the documents, with the clear suggestion that the 

fewer documents, the better. Overall, they emphasized flexibility.90

The new documents sought to reflect the themes of the acquisition 

reform program: teamwork, as opposed to functional stovepiping 

and adversarial committees; tailoring the process and organization 

to suit each program’s particular circumstances; empowerment of 

program managers, other acquisition workers, and the industry; cost 

control; the acquisition of commercial products; and the adoption of 

best business practices.91 In terms of specific changes to the process, 

there occurred some tweaking of the phases and milestones. The 

basic milestones remained the same (except for Milestone IV—

Major Modification Approval, which was deleted).92

88 DoD Directive 5000.1, “Defense Acquisition,” 15 Mar 1996. See also DoD Regulation 

5000.2-R, “Mandatory Procedures for Major Defense Acquisition Programs (MDAPs) and 

Major Automated Information System (MAIS) Acquisition Programs,” 15 Mar 1996. 89 Charles B. Cochrane, “Defense Acquisition Policy—A More Flexible Management 

Approach,” Program Manager (July-August 1996): 16. 90 Ibid. 91 Memo, USD (A&T) Kaminski, DOT&E [Director of Operational Test and Evaluation] 

Philip Coyle, and ASD (C3I) [Assistant Secretary of Defense for Command, Control, 

Communications, and Intelligence] Emmett Paige Jr. for the Defense Acquisition Community, 

15 Mar 1996, sub: Update of the DoD 5000 Documents. Copy in the files of Philip Shiman, 

OSD Historical Office. 92 The separate acquisition documents that had previously governed the acquisition 

of information systems (DoD Directive 8120.1, DoD Instruction 8120.2, and DoD Manual 

7920.2-M) were now cancelled, and such systems were subject to the DoD 5000 directives. 

Milestone IV, Logistics Readiness and Support Review, was deleted in 1991. 
180 DEFENSE ACQUISITION REFORM, 1960–2009

Phase I, formerly called Demonstration and Validation, was 

now Program Definition and Risk Reduction. A new Acquisition 

Category, ACAT IA, represented major automated information systems (MAIS). Programs requiring milestone review by the MAIS 

Review Council (MAISRC) were ACAT IAM, and those by the 

component only were ACAT IAC. The separate acquisition documents that had previously governed the acquisition of information 

systems (DoD Directive 8120.1, DoD Instruction 8120.2, and DoD 

Manual 7920.2-M) were now cancelled, and such systems were 

now subject to the 5000-series directives and instructions.

Results of 1990s Acquisition Reforms93

In 2002, the assistant secretary of the Army for acquisition, 

logistics, and technology sponsored a comprehensive Rand Corporation study of the acquisition reform initiatives adopted by OSD 

and the military services during the 1990s. 

As part of its study, the Arroyo Center of Rand Corporation 

conducted a thorough review of the latest DoD 5000-series regulations and instructions (i.e., the year 2000 version) to determine 

which acquisition reform initiatives had been incorporated into 

the established method of conducting DoD acquisition programs. 

Rand also interviewed representatives of the Army acquisition 

headquarters, industry, and the Army program management community (i.e., program managers, program executives, and acquisition functional specialists) to obtain their insights on acquisition 

reforms. The objective of the study was to understand how well 

acquisition reform initiatives had been implemented. 

In its study, Rand did not attempt to evaluate how acquisition 

reform initiatives affected acquisition program outcomes (i.e., the 

cost, schedule, and performance results). Rather, Rand assumed

93 Hanks, et al., Reexamining Acquisition Reform, pp. 1–78. The 5000-series documents 

have been the vehicle for specifying DoD acquisition policy since the early 1970s. (Prior 

to the 5000 series, DoD relied on the 3200-series documents, which date to the 1960s, to 

specify R&D and procurement policies and procedures.) The original 5000 series mandated 

a complicated acquisition process requiring the government to follow specific rules. In 

1995, Paul Kaminski, then-Under Secretary of Defense for Acquisition and Technology, 

issued a memorandum calling for the revision of the series, and a 160-page version was 

released in 1997 (significantly improving, at least in terms of page count, on the 1991 

version, which had 900 pages). The 2001 version of the 5000 series includes DoD Directive 

5000.1, “Defense Acquisition System,” 4 January 2001, 12 pages; DoD Instruction 5000.2 

Change 1, “Operation of the Defense Acquisition System,” 4 January 2001, 46 pages; and 

DoD Regulation 5000.2-R Change 1, “Mandatory Procedures for Major Defense Programs 

(MDAPs) and Major Automated Information System (MAIS) Acquisition Programs,” 10 

June 2001, 194 pages. All three of these documents were released in final form in April 

2002.
ACQUISITION REFORM FROM 1990 TO 2000 181

that by studying the acquisition reform initiatives in the 1990s and 

by enabling acquisition personnel to describe in their own words 

how their work was affected by the initiatives, they would collect 

information that would help the Army and the rest of the Defense 

Department understand what the acquisition reform movement 

had and had not accomplished in terms of changing the way the 

acquisition process operated. 

The Rand study focused on sixty-three of the 1990s reform initiatives, listed in Appendix D.94The list did not include any of the 

many acquisition reform initiatives aimed solely at improving the 

quality and training of the defense acquisition workforce. 

By the end of the 1990s, it had become clear to the Defense Department and to Rand that additional steps needed to be taken to 

implement acquisition reform initiatives effectively. First, official 

DoD acquisition policy had to be rewritten to institutionalize the 

new approaches, and responsibility had to be fixed somewhere in the 

system so that a specific and identifiable individual would always be 

accountable for acting on each initiative and monitoring progress. 

To accomplish these changes, DoD acquisition reform policymakers 

arranged for the production of a revised version of DoD’s official 

acquisition policy (the 5000-series directives and instructions). OSD 

designated acquisition program managers as the parties who would 

be responsible for the “total life-cycle system management” of all 

DoD systems, including all new systems still in acquisition, as well 

as all old (legacy) systems already in the field. 

The Rand study found that many of the sixty-three acquisition reform initiatives from the 1990s were not specifically mentioned or described in the June 2003 version of the 5000-series acquisition policy. Representatives of Army headquarters, the Army 

project management community, and industry were supportive of 

the goals of acquisition reform and believed that some progress 

had been made in implementing the reforms. The message that 

emerged from the Rand interviews, however, was that all three 

communities believed that much more needed to be done before 

the acquisition process could be said to be truly reformed. 

Under acquisition reform, program managers were being asked 

to “be more innovative” and “take more risks.” But Rand interviews 

with program management personnel in both the Army and industry 

clearly reflected a strong view that very little in terms of how resources (funds) were allocated and controlled, either within the Army or in 

the Defense Department, had changed to encourage program managers to take any more risks than they had before acquisition reform. 

Army program managers uniformly expressed the view that it made

94 Hanks, et al., Reexamining Acquisition Reform, p. 11. 
182 DEFENSE ACQUISITION REFORM, 1960–2009

no sense for them to be held “responsible and accountable” for “total 

life-cycle system management” unless new resourcing methods were 

put in place that would give them the leverage and management authority to be able to deliver on that responsibility and legitimately be 

held accountable. The Rand study also indicated that the operational 

side of the Army resisted making the changes in the military personnel system that would produce a professional acquisition management 

and program management capability that was comparable to the professional workforce in the Air Force, including the acquisition-related 

fields of engineering, logistics, auditing, and financial management. 

In conducting its study, Rand examined the relevance of each 

of sixty-three acquisition reform initiatives from the 1990s to the 

different functional activities that made up or supported the overall acquisition process. The examination began by considering the 

following twelve acquisition-related career fields:95

•	 Auditing

•	 Business, Cost Estimating, and Financial Management

•	 Communications and Computer Systems

•	 Contracting

•	 Industrial Property Management

•	 Logistics

•	 Manufacturing and Production

•	 Program Management

•	 Purchasing and Procurement Assistance

•	 Quality Assurance

•	 Systems Planning, Research, Development, and Engineering

•	 Test and Evaluation

To measure coverage of the sixty-three acquisition reform initiatives from the 1990s, Rand turned to the version of the 5000 series released in 2001. The 2001 version, written by a joint DoD task 

force working over the 1999–2001 period to prepare a new 5000 

series, incorporated and institutionalized what had been accomplished by acquisition reform in the 1990s. The 2001 version thus 

reflected a consensus among its joint authors about what parts 

of acquisition reform in the 1990s merited inclusion in the DoD 

5000-series acquisition policy documents, as compared to putting 

them somewhere else, for example, in the Defense Supplement to 

the Federal Acquisition Regulation.96

95 Ibid., pp. 20, 21. 96 Joseph Ferrara, “DoD’s 5000 Documents: Evolution and Change in Defense 

Acquisition Policy,” Acquisition Review Quarterly, Fall 1996, available at http:www.dau.mil/

pubs/arq/94arq2/ferrar.pdf. 
ACQUISITION REFORM FROM 1990 TO 2000 183

Rand concluded that while the argument for using the DoD 

5000-series documents made practical sense (it would be unwieldy 

to try to capture every detail of all acquisition reform initiatives in 

these documents), the DoD 5000 series was also the place where 

program managers were supposed to go for policy guidance on how 

to perform their jobs and what they could and could not do. Given 

that program managers had been designated as the responsible 

parties, that meant they must orchestrate the efforts of the entire acquisition community (requirements determiners, contracting personnel, testers and evaluators, financial managers, and engineers) to make the acquisition process work. Accordingly, Rand 

took the view that it was not unreasonable to expect the 5000 series to contain, if not detailed guidance on every initiative, at least 

mention of the initiatives and pointers or references to where guidance could be found.97

Rand used electronic (Adobe PDF format) copies of the DoD 

5000-series documents and employed keyword searches to find either explicit mention of an initiative or phrases and terms closely 

enough related to an initiative that one would be justified in saying 

that the initiative was mentioned. Using the approach described 

above, Rand found that just under 50 percent of the sixty-three 

acquisition reform initiatives from the 1990s received mention in 

the 2001 version of the DoD 5000 series.

Views of Army Headquarters Personnel98

For the Army headquarters view, Rand met on three occasions 

with Kenneth Oscar, the acting assistant secretary of the Army for 

acquisition, logistics, and technology (ASA [ALT]). Oscar was in 

that position from January 2001 through March 2002 and was the 

original sponsor for the acquisition reform study. Rand also met, in 

separate meetings, with personnel in the ASA (ALT) Directorates 

for Acquisition Policy and Procurement; Plans, Programs, and Resources; and Integrated Logistics Support. Oscar’s views are represented in the paragraphs below.

•	 Acquisition reform had improved the acquisition process. 

Acquisition reform made it possible for each acquisition 

process to work more along the lines that Oscar, as the 

leader for acquisition in the Army, wanted to see it work. 

The use of integrated process teams (IPTs) helped mitigate the otherwise natural tendency of functional staff to 

97 Rand, Reexamining Military Acquisition Reform, pp. 27–28. 98 Ibid., pp. 35–42.
184 DEFENSE ACQUISITION REFORM, 1960–2009

talk only with their functional counterparts as they communicated up and down the chain of command. 

•	 Many contracts were still being written in ways that 

produced results opposite to what the government really 

wanted. To take spare parts contracts as an example, Oscar noted: “If we solicit for 50 spare parts a year for a 

particular piece of equipment, the only way the contractor can increase his profit is by selling more spare parts. 

If we instead solicit for the contractor to keep the equipment in spare parts for five years, he can increase his 

profit by making the parts last longer.” 

•	 Much remains to be done with respect to acquisition 

reform. Acquisition was still “too bureaucratic” and the 

Army headquarters was still “a problem” in that it is still 

too slow to approve programs, too quick to change them, 

and much too quick to take money away and stretch programs out from year to year. 

•	 Although many acquisition reforms were aimed at making life easier for program managers, contracting officers, and others, it did not always work out that way. 

Many of the senior personnel in the Rand survey expressed 

concerns that unless ways were found to preserve and pass on 

the valuable lessons they had learned, there was a danger that 

some of what was put in place as acquisition reforms in the 1990s 

could cause old problems to return, such as waste, fraud, and mismanagement—problems which had motivated much of the reform 

effort in the 1980s. 

Views of the Army Program Management Community99

Rand interviewed a cross-section of both military and civilian 

personnel working in Army program management. Participants 

were asked to provide—on a not-for-attribution basis—their 

views about three issues: what had been good about acquisition 

reform, what had been bad, and what they would change. Rand 

conducted one-on-one interviews at two Army locations and conducted a group interview at a third location. Over the course of 

the interviews, interviewers met and spoke with more than thirty people in the Army program management community and obtained additional written comments from others who were unable 

to attend the interviews. Interviewees and respondents included 

one program executive officer, five deputy program executive officers, eight program managers (seven of whom were military), 

99 Ibid., pp. 43–60, especially pp. 43–44.
ACQUISITION REFORM FROM 1990 TO 2000 185

ten deputy program managers (nine of whom were civilians), and 

roughly a dozen civilian staff members from various Army program management offices.

What Has Been Good About Acquisition Reform?

Several interviewees noted that, in general, the acquisition reform movement had helped “raise consciousness” about the need 

to “do things differently” in acquisition, thus making some aspects 

of the job easier than they used to be. Several members of the program management community emphasized the useful role that the 

Defense Acquisition University (DAU) was playing in “reaching 

and preaching acquisition reform.” However, one person also noted 

that “most DAU instructors don’t have a clue about how PMs actually spend most of their time on each day.”100

Many of the interviewees cited specific acquisition reform initiatives that they felt had been helpful. The Modified Integrated Program Summary (MIPS) was mentioned as a great help in reducing 

the number of reports necessary for program management. Bestvalue contracting was described as a means of making it easier to 

select a contractor with “the right mix of technical, management, and 

cost performance.” In best-value contracting, contracts were awarded 

on the basis of best value rather than lowest cost. Thus, all relevant 

factors—cost, performance, quality, schedule, potential trade-offs—

could be taken into account. Elimination of military specifications 

(milspecs), reduced Contract Data Requirements Lists (CDRLs), electronic processing, and purchase cards were all mentioned as effective 

means of cutting red tape. Several interviewees expressed approval of 

Alpha Contracting. One program manager (military) said Alpha Contracting “works to build a team and joint effort.” The Single Process 

Initiative (SPI) was also mentioned as an effective idea for streamlining processes, while Other Transaction Authority (OTA) was cited as 

being helpful with Future Combat Systems (FCS). Other initiatives 

described as helpful included Post-Award Debriefing, Parametric Cost 

Estimating, Multi-Year Contracting, Use of Commercial Warranties, 

Alternative Dispute Resolution, Revised Cost and Pricing Thresholds, 

and the use of Cost-Schedule Reporting Standards Tailored to Industry Guidelines. 

What Has Been Bad About Acquisition Reform?101

While interviewees described much that they appreciated about 

the Army’s acquisition reform efforts, they were also forthcoming 

100 Ibid., p. 45. 101 Ibid., pp. 47–53.
186 DEFENSE ACQUISITION REFORM, 1960–2009

in depicting many problems that had plagued the acquisition reform (AR) movement.

•	 Many of the interviewees noted that although innovative AR approaches often generated increased risk, very 

little had been done to give program managers mechanisms for hedging against that risk. In other words, AR 

had encouraged program managers to be innovative and 

take chances, but it had not given them tools—for example, access to additional resources or schedule flexibility or ways to revise technical performance characteristics—that would help them deal with the problems 

that often arise when those chances are taken. 

•	 Program managers and their staffs lacked the financial 

flexibility to implement reforms due to constraints on 

shifting funds from one appropriation category to another. 

•	 Program managers were skeptical about their chances 

of gaining more control over financial decisions: “Recapitalization—PMs don’t control the money. Next year 

the promise is to send money directly to PMs, but that 

decision has been delayed a year already, so people are 

skeptical as to whether it will really happen.” 

•	 Many of those interviewed complained that although 

acquisition reform involved a lot of activity, nothing 

really new has occurred. The true impact of many of 

the reforms was questioned. Several of the participants provided frank assessments of the changes—or 

lack thereof—brought about under AR. A senior deputy program executive officer (PEO) commented that 

“AR has been good at cranking out policies, but hasn’t 

made anything faster, better, or cheaper, a remark with 

which many others participating in the group interview concurred.” 

•	 One individual submitted a written comment noting, 

“Acquisition reform will remain suboptimized until they 

reform the financial, logistics, test, engineering, contracting, and legal communities. These communities 

can unilaterally kill any AR program, since they have 

full veto authority in most cases, while not being held 

accountable for their decisions.” A similar view was expressed by a program manager (military) in an interview: “Too many people can say no.” The testing community was cited several times for its refusal to change. 

Among the comments heard: “The testing community is 
ACQUISITION REFORM FROM 1990 TO 2000 187

still in the old ways of doing business. . . . The test community is still living 30 years in the past” 

•	 One deputy PEO (civilian) described a recent experience 

with a contractor: “The contract wanted to have everything quick, so the contract was vague, and now [we are] 

spending dearly for that vagueness. The contractor is . . . 

using the vagueness to do changes—so the vagueness is 

working to the contractor’s benefit, not the government’s.” 

•	 One deputy PEO (civilian) noted that “Now we have 

‘CAIV’ [Cost as an Independent Variable] and a fixed 

schedule and are sacrificing performance. We’re ‘empowering’ people but not letting them come back and 

trade among cost, schedule, and technical performance. 

Schedule is now king—evolutionary acquisition will sacrifice technical performance and cost.” 

Summary of Rand Findings102

While the people Rand talked to in the Army program management community were supportive of the goals of acquisition reform 

and acknowledged that some progress had been made, the clear 

message that emerged from Rand interviews was that many in the 

Army program management community thought that much more 

needed to be done before the acquisition process could be characterized as having been truly reformed—or even changed much 

for the better. Indeed, many of the more senior people expressed 

concerns that some of the most reasonable-sounding acquisition 

reforms—the elimination of milspecs, the relaxation of other kinds 

of data requirements from contractors, the push to outsource as 

much system support as feasible—all could backfire when DoD 

found itself having to support the involved systems over the very 

long life spans that defense systems tended to have once they were 

operational in the field.

All the program management personnel Rand interviewed 

pointed out that nothing had changed in the way resources were 

allocated and controlled, either within the Army or within DoD, 

in a way that gave them any more reason to adopt reforms than 

they had in the past. In the same vein, they argued that it made 

no sense for them to be made “responsible and accountable” for 

“total life-cycle system management” unless a way was found to 

give them the commensurate leverage and authority they needed 

to fulfill that charge.

Rand concluded that whatever happened next, the Army program management community wanted to see other communities 

102 Ibid., pp. 58–59.
188 DEFENSE ACQUISITION REFORM, 1960–2009

with whom they worked—including the RD&E, Requirements, 

Contracting, Testing, Finance, and Logistics communities—

brought, through education and training, to the same level of understanding and appreciation of what acquisition reform (and now 

acquisition excellence) was trying to accomplish in the program 

management community.
In reflecting on the defense acquisition reform studies of the 

past five decades, it is clear that the acquisition system has been 

strongly resistant to change. Major defense programs continue 

to take ten years or more to deliver less capability than planned, 

often at two to three times the planned cost.1 Nearly twenty years 

ago, in 1992, the U.S. General Accounting Office (GAO) (renamed 

U.S. Government Accountability Office in July 2004) conducted a 

comprehensive study of defense acquisition, issuing an insightful 

report describing why the acquisition reform process had not been 

more responsive to reform efforts. The report entitled Weapons 

Acquisition: A Rare Opportunity for Lasting Change was based 

on a review of several hundred weapon system reports conducted 

during a fifteen-year period and was prepared by a team under 

project director Paul L. Francis.2

In reviewing its own acquisition studies, the GAO offered a 

valuable and somewhat unusual analysis of a seemingly intractable problem. The report was unique among acquisition reform 

studies in that it stressed the impact of the acquisition culture 

as erecting formidable barriers to acquisition reform, thereby enabling persistent problems of cost growth, schedule slippage, and 

technical performance shortfalls to continue. 

The GAO analysis identified counterproductive incentives for 

government and industry that continue to exist despite the many 

procedural changes resulting from the acquisition reforms described in the preceding four chapters. It seemed clear to GAO researchers that the Defense Department must remove and replace 

the counterproductive incentives before improved results could be 

realistically expected. 

The GAO supported the actions taken by the Office of the 

Secretary of Defense (OSD) to improve acquisition and concluded 

that the cultural dimension of acquisition problems went beyond

1 U.S. Government Accountability Office (GAO), Defense Acquisition: Major Weapon 

Systems Continue to Experience Cost and Schedule Problems under DoD’s Revised Policy, 

GAO–06–368, April 2006. 2 GAO Report, Weapons Acquisition: A Rare Opportunity for Lasting Change, GAO/

NSIAD–93–15, December 1992.

ChapterFive

CONCLUSIONS
190 DEFENSE ACQUISITION REFORM, 1960–2009

discipline and beyond the control of DoD acting alone, as it 

involved other participants, such as Congress and the defense 

industry. The GAO concluded that despite well-meaning attempts 

to reduce the time and cost of developing and producing weapons 

systems, “weapons still cost more, take longer to field, and often 

encounter performance problems.” The defense acquisition culture 

has changed little in almost twenty years since the 1992 report 

appeared.3

In 1992, it was not uncommon for weapon programs to take ten 

or more years to design, develop, produce, and deploy initial operationally capable units. Reported cost increases of 20 to 40 percent 

occurred frequently on major weapon programs, with a significant 

number of programs experiencing larger cost increases.

From the 1950s through the 1980s, the urgency of the military 

threat and the ability of weapon programs to help participants 

achieve goals created what the GAO described in 1992 as a culture 

that preferred continuing an acquisition program irrespective of 

its problems, to making difficult trade-offs to alleviate cost, affordability, duplication, and risks. 

The GAO pointed out that in a collective process that favors 

compromise, decision makers in the military services preferred to 

maintain more programs under way at lower funding levels rather 

than to fund fewer programs. In that culture, program sponsors 

were motivated to make optimistic (i.e., low-cost) assumptions 

and to reduce quantities or program scope or prolong schedules to 

make programs affordable and thereby avoid cancellations.4

Most acquisition programs have been initiated to respond to 

perceived deficiencies in the ability to carry out military missions 

against a projected threat. Program sponsors in the military services are encouraged to specify demanding performance requirements that further distinguish their weapon as the preferred solution. These demands produce what is known as “goldplating,” 

in which design features are added, even when their cost exceeds 

their expected value. The GAO found that while it may be easy 

to criticize the authors of such requirements, it should be kept in 

mind that “this approach works: it is a successful, if not essential, 

way to win program support from higher level participants.” As a 

result of their actions, the higher level participants in the services 

often reinforce the formulation of optimistic schedules and technical performance levels that are exorbitantly expensive, if they are 

achievable at all. Contractors contribute to the optimism by bidding low in their desire to participate in an acquisition program, 

3 Ibid., p. 15 4 Ibid., pp. 21, 38–39.
CONCLUSIONS 191

anticipating that government will initiate changes in the contract 

schedule, funding, or technical performance that will provide opportunities later in the program for the government and contractor 

to increase the price. 

As an acquisition program proceeds through development, it is 

not surprising for program advocates to forecast program status 

optimistically. They do so to overcome the challenges a program 

faces as it experiences schedule, cost, or technical difficulties and 

encounters criticisms. At the same time, program support grows 

because the time and money invested in the program build active 

sponsors for its continuation.5

The GAO pointed out that “even when the very underpinnings 

of a program are badly shaken, strong arguments are made by participants at all levels to continue the program as planned.” That 

tactic is common for programs that have entered the engineering 

and manufacturing development phase (formerly full-scale development), by which time it is generally conceded that programs are 

committed to production. 

In 2011 as in 1992, it is clear that the incentives inherent in 

the acquisition culture offer an explanation as to why weapon acquisition problems persist despite numerous attempts at reform. 

Reforms promoted sound management practices, such as realistic 

estimating, thorough testing, and accurate reporting. These practices, while recognized as improved acquisition management, had 

not been widely adopted because they were inconsistent with the 

very basic and strongly reinforced incentives to continue the development and production of a weapon system. In contrast, practices 

not normally viewed as good management techniques (concurrency and unrealistically low estimates) could be helpful to continuing 

acquisition development and production programs because they 

minimize the risk that programs will be stretched out, reduced, 

or canceled. There is little doubt that acquisition reforms produce 

limited, positive effects because they have not changed the basic 

incentives or pressures that drive the behavior of the participants 

in the acquisition process. 

Despite the more recent acquisition reform initiatives in the 

late 1980s and 1990s, the same familiar acquisition issues arose: 

substantial cost growth, schedule slippage, and technical performance shortfalls. Examples included the B–1B and B–2 bombers, 

V–22 Osprey program, and the belated discovery by DoD of significant cost overruns on the A–12 and F–22 aircraft development 

programs.

5 Ibid., pp. 21, 35. 
192 DEFENSE ACQUISITION REFORM, 1960–2009

As described throughout the past four chapters, procedural and 

organizational solutions have often been adopted to correct problems 

without affecting why the problems occurred in the first place. New 

organizational structures were proposed in attempts to reduce the 

strong tendency of program managers to report optimistic schedule 

and cost information to senior defense executives and to Congress. 

But the recommendations intended to improve the realism of cost 

estimates had not offset the incentives to submit excessively optimistic cost estimates in the first place. For example, accurate information about the status of the Navy A–12 aircraft development 

program was withheld by the Navy at the time of the major aircraft 

review (April 1990) by the secretary of defense.6

Acquisition reform proposals calling for prototype competition 

and the practice of “fly-before-buy” have been resisted, not because 

they were unsound or because program sponsors had an affinity 

for increasing technical risks. The resistance to fly-before-buy and 

testing was a logical reaction to the additional time and up-front 

cost required and to the reality that testing could jeopardize acquisition programs. This is particularly true of operational testing because it occurs outside the program manager’s control, exposes the 

weapon to harsh operating conditions, and poses the threatening 

question of whether the weapon can reliably carry out its mission. 

As such, one of the best ways program sponsors can insulate their 

program from the perils of the acquisition process is by adopting a 

strategy of concurrency, rather than fly-before-buy.

Most acquisition reform studies point out that the short tenures of program managers, and particularly the short tenures of 

high-level DoD acquisition executives, make it difficult for them 

to change the system of incentives because other participants can 

wait out the reforms they oppose. Even when acquisition executives 

take firm stands to restrict specific programs, such as to deny funding, they often do not have the power to make their decisions stick. 

The Marine Corps’ AV–8B Harrier and V–22 Osprey programs 

are examples. In each case, the secretary of defense excluded the 

programs from DoD’s budget request, believing they were not the 

most cost-effective solutions to the mission needs. Congress, however, agreed with the Marine Corps’ professed need for these new 

systems and provided funding.

In the 1990s, the GAO reported that to protect programs 

from criticism, the services were reluctant to provide OSD with 

current program information, such as updated cost estimates. In 

6

 Office of General Counsel, Office of the Secretary of the Navy, the Beach Report, 28 

November 1990, a study of events leading to the termination of the Navy A–12 aircraft 

development program.
CONCLUSIONS 193

fact, congressional or OSD demands for more realistic program 

information can intensify the protectionism of program advocates. 

For example, in January 1992, a panel of the National Academy 

of Public Administration reported that congressional demands for 

DoD to certify cost, performance, and reliability information on the 

Advanced Medium-Range Air-to-Air Missile, or AMRAAM, program 

during the 1980s instead yielded more unreliable information.7 

Since 1959, seventeen defense secretaries have made commitments to bring about effective and efficient management of the defense acquisition process. Indeed, each has taken specific steps to 

identify problems and to initiate improvements. But each has left 

office before reform implementation has become institutionalized.

The Defense Marketplace

The U.S. economic system is built on the concept of free enterprise regulated by competition. The private-sector marketplace is 

the testing ground for products and methods of production and 

management. A well-managed, efficient firm will prosper, and a 

poorly managed one will fail. Lower costs usually mean higher 

profits. Investors take risks that, if successful, will be rewarded by 

higher profits. The defense industry does not fit that model.

Many defense acquisition problems are rooted in the mistaken 

belief that the defense industry and the government-industry 

relationship in defense acquisition fit naturally into the freeenterprise model. Most Americans believe that the defense industry, 

as a part of private industry, is equipped to handle any kind of 

development or production program. They also by and large distrust 

government “interference” in private enterprise. Government and 

industry defense managers often go to great lengths to preserve 

the myth that large defense programs are developed and produced 

through the free-enterprise system. But major defense acquisition 

programs rarely offer incentives resembling those of the commercial 

marketplace. The limited positive effects of efforts to reform defense 

acquisition fail to address the causes of acquisition problems. 

In the defense industry, most of the major producers depend 

heavily on one customer, the Defense Department, for business. 

Defense firms hire and maintain throughout their projects large 

groups of engineers, draftsmen, scientists, technicians, production 

workers, and managers to retain their capability for defense work 

and to increase their chances of selection for the next defense 

contract. Few, if any, commercial projects would enable a firm to 

7 National Academy of Public Administration (NAPA). Beyond Distrust: Building 

Bridges Between Congress and the Executive (Washington, D.C.: National Academy of Public 

Administration, January 1992).
194 DEFENSE ACQUISITION REFORM, 1960–2009

support such a large and varied workforce. On many large defense 

projects, the federal government also supplies the major part of the 

working capital and investment. Once a weapon system contract has 

been signed, a firm risks little likelihood of cancellation for default 

because the interaction of government and industry managers 

involved makes it difficult to ascribe separate responsibility. The 

firms are further protected because contract cancellations would 

delay and risk program cancellation by Congress. 

Relationships Between Government and Industry

The functions of DoD managers of large acquisition programs 

are not those classically associated with the term manager.8This is 

because DoD does not develop or produce its weapon systems inhouse; rather, the development and production work is contracted 

through prime contractors. Hence, the principal functions of the 

program manager and staff are planning, contracting, monitoring, controlling, and evaluating the schedule, cost, and technical 

performance of contractors and the government agencies that provide services and support. This range of activities includes design, 

development, procurement, production, training, testing, and field 

support. The term technical performance is used here in the broadest sense to include not only the engineering aspects of a weapon 

system but also the contractor’s management of resources (costs) 

and subcontractors.

Managing technical performance, in this sense, poses demanding 

industrial management challenges. Government managers are required to oversee the performance of several private-sector industries 

involving many of the largest firms in the country—firms managed by 

experienced managers, familiar with the defense acquisition process, 

and with methods of estimating costs, measuring progress, allocating 

overhead, calculating profits, and measuring return on investment 

for high-tech programs. Most of the recurring problems of cost growth, 

schedule delays, and failure to achieve technical performance on large 

acquisition programs cannot be solved or avoided simply by better 

engineering, better forms of contracting, multiyear procurement, or 

more prototypes. Solutions require frequent negotiations between 

government and industry (monthly, weekly, and sometimes daily) in 

situations that require government managers to be knowledgeable 

about their acquisition programs and the industries in which they 

work, experienced in the acquisition process, and highly skilled in applying the tools of industrial management. 

8 Maj. Gen. Howard D. Graves, “The U.S. Army War College: Gearing Up for the 21st 

Century,” Parameters, December 1988.
CONCLUSIONS 195

One of the conclusions from studying the management of defense 

acquisition is that it requires specific technical knowledge and skills 

well beyond what many recent government managers, senior military 

officers, and assistant secretaries have acquired. There has always 

been an implicit assumption within parts of the Defense Department 

that natural leaders with little or no advanced training and experience in the management of large industrial programs could function 

effectively at any management level. This assumption has been a key 

factor leading to the disappointing results of virtually every acquisition reform program in the past fifty years. If the complex defense 

acquisition process is to be managed more effectively and efficiently, 

the Defense Department must develop better trained and more experienced acquisition managers and support staffs to manage the complex, continuing negotiations between one part of government and 

another and between government and large industrial firms. 

The relationship between a government program office and its 

major contractor is necessarily a close one. Government and industry program managers must work together to solve complex technical problems, and, on finding solutions, initiate contract changes to 

the work being performed. In this environment, both government 

and industry must recognize that on most large development and 

production programs, a contract mechanism, by itself, is an ineffective substitute for rigorous day-to-day evaluations and negotiations 

between managers in government and industry. A government manager is not simply a partner with private industry but an independent manager charged with supervising the use of public funds. 

Defense contractors, though usually motivated by a commitment 

to a strong defense program as well as economic gain, have three 

important goals: achieving the technical performance objectives of 

a program, meeting payrolls, and satisfying stockholders. Therefore, 

industry managers continually strive to obtain additional contracts 

that will provide work for their research and development (R&D) 

and production workforce. Members of Congress, usually beholden 

to contractors and contractor employees in their districts, often provide increased funding, lest contractors lay off employees. 

Meanwhile, Defense Department program managers and contracting officers are nominally responsible for monitoring three areas of contractor activity: achieving technical performance called for 

in the contract, meeting the schedule requirements, and performing work within the specified budget. If a major defense acquisition 

program is to run smoothly and efficiently, it should be structured 

so that contractors have a reasonable opportunity to earn a return 

on investment comparable to commercial returns, without undermining government program objectives. That is often not the case. 
196 DEFENSE ACQUISITION REFORM, 1960–2009

When contractors meet their obligations at reasonable costs, government program managers should be trained and empowered to 

recognize that performance and to reward contractors with attractive profits and improved opportunities for future defense business. 

On the other hand, when contractors fail to perform effectively at 

reasonable costs, government program managers and contracting 

officers should be sufficiently trained, experienced, and motivated 

to discover and report inadequate performance to higher echelons of 

the Defense Department and to take corrective actions. Members of 

Congress and government officials at all levels from program managers to the secretary of defense must be qualified and motivated 

to conduct this kind of responsible management. But the current 

acquisition process is often structured to frustrate that behavior.

Adversarial Relationships. Some government program managers deal with contractors as adversaries, failing to appreciate the 

need for the informal cooperation so necessary between buyer and 

seller in managing any large development program—especially a major weapon system under conditions of technical uncertainties and 

changing requirements. In an adversarial relationship, these managers at times attempt to enforce fixed-price contracts for engineering development work where cost-reimbursement contracts would be 

far more appropriate. Or they treat cost-reimbursement contracts as 

if they were fixed-price contracts, trying to enforce rigid task statements when the work inherently requires adaptation. 

Partnership Relationships. Other government program managers see themselves as no more than partners with industry. They 

may even be looking for an employer at the end of their current assignment when they retire from military service at age 45 or 50. And 

they may be unaware of the mixed motives inherent in the buyer-seller relationship. They share industry’s goal of producing a technically 

excellent product, but they often do not have the required industrial 

management skills to oversee and control giant contractors performing highly technical work on major acquisition programs. They sometimes are unprepared or lose sight of their role in conducting arm’slength buyer-seller negotiations throughout the life of a program, 

protecting taxpayer funds on programs where changes occur weekly, 

sometimes daily. These managers often express the mistaken view 

that “we know how much the program ‘should’ cost because that’s 

how much the contractor spent.” They seem unaware of how easy it is 

for contractor costs to increase out of control. Program managers are 

proud, as they should be, of the technical excellence of their products. 

But unlike their peers in commercial business, they usually incur no 

penalty for programs exceeding their original budgets. 

The challenge of managing major acquisition programs effectively and efficiently requires government program managers and 
CONCLUSIONS 197

contracting officers professionally skilled in achieving a critical balance between the adversarial role and the pure partnership role—a 

balance that produces what is referred to as a wise buyer.

9Achieving 

that balance requires years of acquisition training and experience; 

learning to cope with the complexities of the acquisition process; 

the day-to-day negotiations; and the marketing tactics within government, within industry, and between government and industry. 

What is needed is not an adversarial relationship characterized by 

animosity, suspicion, and mistrust, but a business relationship characterized by rigorous analyses, bargaining, and a tenacious regard 

for the best interests of one’s own side.10 But military and civilian 

assignment policies often fall short of enabling government program managers and their superiors to acquire these capabilities.

At present, government managers who handle crises effectively 

are given high performance ratings. Often, however, timely preventive action could have corrected problems before they became crises. Because preventive action requires attention to management 

detail, inexperienced program managers may be unlikely to appreciate the engineering and development work being performed by 

contractors. As a result, there is often little motivation to exercise 

rigorous, systematic control. 

The Liaison Manager. Some government and industry 

acquisition managers and officials describe the job of a 

government program manager primarily as one of promoting a 

program, preparing progress reports and briefings, negotiating 

with officials at the Pentagon and at various military commands, 

and resolving engineering conflicts between these organizations 

and contractors. They often act as though the responsibility 

for cost control belongs solely to the contractor. This is often 

called the liaison manager view. It is based on the belief that 

the defense business is part of the free-enterprise system and 

therefore regulated by competition in the marketplace. Those 

holding this mistaken view believe that general leadership 

training and leadership experience added to two or three years 

of significant acquisition experience are sufficient qualifications 

to manage a major acquisition program. They mistakenly believe 

9

 Ltr, General Henry A. Miley, U.S. Army (Ret.), former commander of the U.S. Army 

Materiel Command, to Jay R. Sculley, Assistant Secretary of the Army, 11 Jul 1984; U.S. 

Congress, Senate, testimony of General Miley before the Task Force on Selected Defense 

Procurement Matters of the Committee on Armed Services, Career Paths and Professional 

Development for Acquisition Managers in the Department of Defense, 13 December 1984, pp. 

17–2210 Richard J. Bednar and John T. Jones Jr., “The Role of the DoD Contracting Officer,” 

Draft Report of the American Bar Association (ABA) Section of Public Contract Law, Ad 

Hoc Committee, John E. Cavanagh, chairman, 11 January 1987, p. 120.
198 DEFENSE ACQUISITION REFORM, 1960–2009

that knowledge of industry and skills in industrial practices are 

“nice to have,” but not essential, and that relying on functional 

subordinates and “presiding” over a team of specialists can 

substitute for personal involvement by the program manager.

The Active Manager. Others describe the program manager’s 

role as one of planning and making key decisions associated with 

rigorous oversight of, negotiation with, and control of industrial 

firms performing the development and production work. This 

is called the active manager view. It is based on the belief that 

in this environment, the competitive forces of the marketplace 

do not alone produce the desired cost, schedule, and technical 

performance, often frustrated by contract changes occurring 

throughout the life of a program.

Those who hold the liaison manager view often talk about cost 

control in managing programs but fail to understand that the planning 

and control of large industrial programs are achieved neither by 

proclamation nor by good intentions. They occur only as the result of 

careful analyses and trade-offs associated with their program and with 

persistent control of engineering changes. The skills needed for these 

tasks require intensive practical training and acquisition experience in 

dealing with contractors, users, and other stakeholders, first on smaller 

acquisition programs, then on larger ones.

In reality, the responsibility for cost control belongs to the government program manager, the contracting officer, and the contractor. Significant cost reductions are often possible, depending 

on the government manager’s knowledge and skills in establishing 

and implementing challenging productivity and cost incentives, 

formal and informal, throughout the life of a program. 

Not surprisingly, those of the liaison manager view consider 

the government acquisition job a reasonable alternate assignment, 

or “shore duty,” for combat arms officers until they are next assigned to their primary duties in operational units. Proponents of 

the active manager view, however, consider the defense acquisition 

process as too complex, too costly, and too important to national 

security to be relegated to an alternate assignment. 

Reexamining the Program Manager Concept

The program manager concept works well in private industry. 

Why then does it experience serious problems so often in government? Consider the unique characteristics of industry program 

managers, who usually report to the company president.

•	 They have genuine decision-making authority regarding personnel assignments, promotions, technical matters, and budgets. 
CONCLUSIONS 199

•	 They usually have years of training and experience in 

the work of their industry (e.g., development and production of missiles, aircraft, tanks, ships, and guidance 

systems). They understand the goals and constraints of 

their customers and the ways in which their customers 

operate. 

•	 They understand the roles performed and the tactics 

employed within government, within industry, and between government and industry. They are experienced 

practitioners in dealing with these situations.

Lacking the training, experience, and stature of their privatesector counterparts, DoD program managers often encounter another serious obstacle to performing their jobs. Namely, they are 

required to respond to (indeed, often placate) many individuals in 

government capable of influencing their careers: senior officers in 

the buying commands, the using commands, the service headquarters staff, the service secretariat, OSD, and Congress. Within these 

groups there are diverse elements: some who support a particular 

acquisition program, some who oppose it, and some who are undecided. The people representing one or more of these stakeholder 

groups can change every few months, as assignments change. These 

groups have voracious appetites for data from DoD program managers: How much will it cost to reduce the aircraft by 200 pounds? 

What is the consequence of reducing the budget by $100 million? 

How much can we save by reducing the production rate by 50 percent? What will be the impact of replacing the radar? What caused 

the program delay? What will it take to regain the lost schedule? 

How much can we save by competing the next production contract? 

It is long past time to reexamine the current method of manning and operating government program management offices. The 

current job descriptions portray program managers as supermen 

and superwomen who 

•	 cut through the red tape generated by several hundred 

“interested” government managers;

•	 always obtain budget approvals from the service headquarters, OSD, and Congress; 

•	 work as partners with industry in solving technical problems; 

•	 obtain reliable measurement data from which to determine independently the schedule, cost, and technical 

performance status of a program; and

•	 provide incentives for industry to perform expeditiously 

at the lowest reasonable cost.
200 DEFENSE ACQUISITION REFORM, 1960–2009

All this is often expected of relatively inexperienced program 

managers with modest staffs directing and controlling an acquisition system for complex engineering development programs. 

Although there is a pressing need for the Defense Department 

to perform the active manager role, the current approach to program management is fundamentally flawed. After fifty years, we 

know that an Army or Air Force colonel or Navy captain (at the 

rank of O–6) with limited industrial management knowledge and 

experience is often ill prepared to direct and oversee a first-of-akind, multihundred-million-dollar industrial program with hundreds of complex challenges and dilemmas. If DoD is to perform 

the role of the wise buyer on major acquisition programs, a senior 

O–6 or a one- or two-star military officer or equivalent government 

civilian must be highly skilled in the acquisition process and business management, and committed to effective and efficient performance. There is too much at stake for on-the-job training in these 

positions. Too often, the training and experience have been far too 

shallow and brief. 

On most large engineering development programs, a fixed-price 

contract jeopardizes the quality of the product and restricts the information available to the Department of Defense. Over the past several 

decades, the Defense Department has learned repeatedly that fixedprice contracts (including fixed-price incentive contracts) cannot substitute for—indeed they inhibit—the week-to-week evaluations of progress, correlations of cost and progress, and negotiations of the hundreds 

of changes proposed by both government and contractor personnel. 

Differing Perceptions of Defense Acquisition

One impression that stands out from conversations with people 

involved in defense acquisition is that government and industry 

managers have very different perceptions of the current condition 

of the acquisition process. Some describe it as poorly managed and 

plagued by serious problems; others see it as having few problems. 

These differing perceptions do not reflect the conventional dichotomies of military versus civilian or government versus industry. 

Rather, they reflect differing views of the government’s role in 

managing the acquisition process.

Those with the liaison manager view, described earlier, believe 

government program managers do not need years of training and 

experience in business management and methods of industrial 

cost control. If the program manager is limited to promoting the 

program, preparing progress reports, and performing technical liaison, then experience as a pilot, tank commander, ship captain, or 

engineer, and possibly ten to fifteen weeks at the Defense Acquisi-
CONCLUSIONS 201

tion University may be sufficient. But for those who hold the active 

manager view, military experience and fifteen weeks of training 

are far from sufficient for the job.

For decades, many have observed that government program 

managers and their staffs are intelligent and hardworking. Program managers, along with most other managers in defense acquisition, genuinely want to acquire advanced weapon systems that 

meet performance standards at reasonable costs. But in practice, 

too few government managers know much about industry financial incentives or the process of controlling costs, schedules, and 

technical performance in large industrial firms. As a result, government managers rarely make the difficult decisions required to 

create and reward lean industrial organizations.

Most of the proposed solutions to defense management problems in the past have been undermined in one of two ways. The 

first is the lack of continuity. When a Pentagon official introduces 

specific acquisition reforms, there is often a flurry of activity, and 

for a year or two progress is made. Then the sponsoring military or 

civilian official is transferred to another assignment or leaves the 

government. A new official takes over and shifts the focus to other 

activities, and the old problems begin to resurface. 

The second practice undermining proposed solutions to acquisition 

problems is the tendency to apply quick-fix solutions to reduce 

budgets for a particular program. For example, a funding stretch-out, 

a new contract form, or a new management technique is adopted, in 

the misguided hope that quick fixes, by themselves, will substitute for 

better trained, experienced, and more skilled and capable program 

management personnel.

Many of the so-called centralized or decentralized approaches 

to improve the acquisition process could succeed if experienced 

government managers—military and civilian—at each level, 

from the program office to OSD, understood the intricacies of the 

acquisition process, were skilled and committed to achieving its 

objectives, were deeply involved in the process for most of their 

careers, and received significant rewards for achieving improved 

performance. As it is, many defense managers often either have 

limited understanding of the desired improvements or lack the 

knowledge or skills to implement them. Their attempts to improve 

the process are often short-lived or ineffective and thus hinder 

the goals of the improvement program (e.g., imposing expensive 

reporting requirements on contractors in the hope that vast 

amounts of detailed data will alone achieve cost control).

Previous acquisition reform efforts described in Chapters Two, 

Three, and Four all call for more extensive training and experience 

for program managers. Improvements have been made in recent 
202 DEFENSE ACQUISITION REFORM, 1960–2009

years, but still more needs to be done as evidenced by the comments made in every acquisition study conducted. 

There appears to be no realistic alternative to providing clear 

and more comprehensive career paths for government acquisition 

managers from the level of functional managers, program managers, 

and program executive officers to the senior acquisition positions in 

the Pentagon. Experience to date indicates that managing taxpayerfunded acquisition programs costing hundreds of millions of dollars 

is too important and too complex to be conducted by government 

military and civilian personnel with part-time acquisition careers or 

acquisition careers so short as to require incumbents to look to their 

contractors for their next employment or for a referral for the next 

employment. Acquisition career paths for both military and civilian 

personnel need to include genuine promotion opportunities at least 

comparable to those provided in military operational career fields. 

Short of these steps, the Defense Department can expect yet one or 

more decades of studies and recommendations for improvements, 

with little accomplished in the way of lasting change. 

It seems only reasonable that the heads of the Army, Navy, and 

Air Force acquisition organizations should be among the most qualified acquisition managers available, based on years of acquisition 

training and practical acquisition experience. When selected for 

these positions, they should have sole responsibility for materiel 

acquisition and personnel recruitment, selection, and assignments 

of their acquisition workforce. To separate these responsibilities is 

to invite the problems of the past four decades. 

Although Defense Acquisition University (DAU) courses 

constitute important steps in training program managers and their 

staffs, more training time and courses are needed to provide students 

with extensive practice in analyzing and dealing with real-life 

examples of the challenges they will encounter on their jobs. Future 

program managers should be required to complete six months or 

more of formal advanced training in which they study and learn to 

deal effectively with hundreds of realistic examples of the challenges 

and dilemmas both they and contracting officers will encounter 

on acquisition programs. They should analyze these challenges, 

discuss the strengths and weaknesses of the options available for 

dealing with them, and plan the implementation programs for the 

selected option. Instructors will need to be familiar with industrial 

management practices, skilled in conducting practical training, 

comfortable with interactive classroom sessions, and current in 

practical knowledge of the opportunities and constraints that exist 

in the field. Instructors do not need to be academics or theorists. 

The training program should develop the wise buyer skills needed 

to resolve the complex problems that occur on major engineering 
CONCLUSIONS 203

development and production programs. The emphasis should be 

on making analyses and decisions, using simulations of contractor 

negotiations, exercises, case studies, and other techniques to plan 

effective implementation programs. DAU courses currently provide 

a useful start toward accomplishing this goal. An internship in a 

program management office would ideally precede and follow the 

one-year practical training program, with experienced program 

managers serving as supervisors. 

Military and civil service positions in acquisition usually have 

few similarities. Too few military program managers remain in 

their job assignments long enough to develop the required expertise and in-depth knowledge of their programs, while civil servants at times remain for so long in their functional assignments 

at one location that some resist innovation and change. 

Insufficient professional acquisition management training, experience, and incentives can be serious handicaps for civilians in 

the acquisition workforce. Those who devote their careers to acquisition management and procurement need professional acquisition 

training. But there should be an effective screening process for selecting candidates for demanding acquisition positions; only those 

with the requisite talent and motivation should be accepted. In addition, a personnel board, comprising senior military and civilian 

acquisition officials, should review applicants for all major positions and be authorized and motivated to remove government personnel whose performance is marginal or inadequate. The board 

should also have the authority to provide significant financial rewards for outstanding performance. 

Government and Contractor Incentives

If, as has been the case for five decades, the military promotion 

system will not respond to repeated attempts to provide attractive promotions and career opportunities for acquisition managers to attain flag or civilian equivalent grade, then the Defense 

Department should provide other incentives, such as additional 

pay and incentive compensation. If an extra $30,000 or more per 

year were paid to selected military officers and civilians (at the 

rank of O–6 and above) and career regulations permitted them 

to remain in the acquisition field, incentives to retire and join 

the defense industry would be minimized. The extra cost would 

be negligible compared to the benefits of retaining experienced 

acquisition managers. 

Such a proposal is not without precedent. Military officers on 

flight status and submarine duty as well as medical and dental officers and other special-skilled officers currently receive additional 
204 DEFENSE ACQUISITION REFORM, 1960–2009

pay. Indeed, Sweden’s government acquisition agency addresses 

the problem of attracting and retaining senior people—military 

and civilian—by a special law that allows an added salary increase 

for crucial acquisition positions. Thus, a Swedish colonel serving as 

a program manager can receive a significantly higher salary than 

other colonels and even the director general of the agency. This incentive provides prestige and draws highly qualified, experienced 

people to senior acquisition positions.11

Were there a more attractive government career in DoD acquisition management, it would then be possible to minimize the conflicts 

associated with frequent turnover of military personnel and widespread military retirements to industry, while preserving the rights 

of individuals to careers in acquisition management. The basic goal of 

any legislative remedy must be achieving and maintaining outstanding competence and integrity to the defense acquisition system. 

With respect to contractors, the Defense Department customarily does business with an inverted system of rewards and penalties. As noted earlier, contractors are often rewarded for higher 

than planned program costs with increased sales, higher contributions to overhead, and higher profits. The system also encourages 

government and industry managers to place far higher priority on 

gaining congressional approval to begin new acquisition weapon 

programs or obtain additional funding for ongoing programs than 

it does on controlling cost.12 In a New York Times article, Arthur E. 

Fitzgerald noted that the acquisition cost problems of the 1980s, 

1990s, and 2000s are not aberrations; they are the result of many 

government and industry participants reacting in perfect accord 

with the distorted rewards and penalties inherent in the acquisition process.13

Reluctance to establish more appropriate incentives has been a 

serious deficiency in most DoD improvement programs during the 

past five decades.14 Contractors should be rewarded with higher 

profits for complying with schedules, satisfying promised technical 

performance standards, and delivering goods and services at or be11 Jacques S. Gansler, “Strengthening Government Acquisition Management Through 

Selected Use of Experienced Industrial Managers,” paper prepared for the Procurement 

Roundtable, Washington, D.C., 11 June 1987, p. 4. 12 Charles Mohr, “Critics See Key Flaw in Arms Cost Controls,” New York Times, 18 

May 1985. 13 Arthur E. Fitzgerald, Deputy for Management Systems, Office of the Assistant 

Secretary of the Air Force, New York Times, 18 May 1985. 14 Boston Globe, 27 July 1986. The Packard Commission reluctance to recommend 

changed incentives was most clearly seen at a press conference on 2 July 1986, at which 

David Packard, presenting the final report, said that waste and fraud in defense industries 

should be rooted out by “self-discipline,” not by government regulation. 
CONCLUSIONS 205

low contracted cost. Prospects for obtaining future contracts should 

be closely linked to performance on existing contracts.15 New contract forms; better planning, control, and reporting systems; and 

improved cost estimating and change control systems are unlikely 

to be effective unless government managers are skilled in the implementation and use of these techniques and are rewarded, along 

with contractors, for effective results.

The Need for Extended Follow-up Actions

A persistent problem associated with previous attempts at acquisition reform has been the failure of management to take vigorous action to ensure implementation of the best recommendations. 

The results of the acquisition reform efforts of the 1970s, 1980s, 

1990s, and 2000s have taught us that communicating acquisition 

reform actions from the Office of the Secretary of Defense down to 

the services, without significant follow-up by managers throughout the government hierarchy, produces no more than temporary 

or marginal improvements at best. Much activity is directed toward initiating reform efforts but little toward following through 

to ensure that lasting change occurs.

Many in government and industry want to improve the acquisition process. But it is unrealistic to expect any lasting improvement if an appropriate system of incentives and disincentives is 

not established and enforced. Specifically, 

•	 Unless changes are made in the current contractor 

source selection process, which makes optimistically lowcost estimates a significant advantage in competing for a 

contract, it is useless to discuss realistic contractor proposals. The source selection process must give far more 

weight to a contractor’s record of realistic cost estimates 

and past performance. 

•	 Unless changes are made in the current profit system that 

demands higher costs as a prerequisite for higher profits, it 

is futile to expect lower costs. Because profits are largely cost 

based, there is little economic motivation for contractors to 

reduce direct or indirect costs. The profit system needs a 

major overhaul to relate a significant portion of profit to 

contractor investment and performance.16

15 Richard A. Stubbing, The Defense Game (New York: Harper & Row, 1986), p. 416. 16 Testimony of Lt. Gen. James Stansberry, United States Air Force (Ret.) (formerly 

commander, Electronics Systems Division, Air Force Systems Command), before the Senate 

Subcommittee on Defense Acquisition Policy of the Committee on Armed Services, “Defense 

Procurement Process,” 20 February 1985, p. 20. 
206 DEFENSE ACQUISITION REFORM, 1960–2009

•	 Unless changes are made in the current military 

personnel system that makes short-term assignments 

necessary for military officers to acquire the number 

and variety of assignments required for promotion, any 

significant reduction in personnel turnover in defense 

program offices is unlikely. 

•	 Unless changes are made in the current OSD and 

congressional practice of routinely accepting program 

stretch-outs as a tactic for funding new programs, it 

is unrealistic to advocate economical production rates. 

•	 Unless changes are made in the current DoD practice of 

waiving training requirements and offering only short 

training courses, which limit coverage to introductory 

rather than in-depth practical treatment of industrial 

planning and control, it is unrealistic to expect improved 

training for acquisition managers.

•	 Unless changes are made in military careers that 

currently provide few opportunities beyond age 45 or 50, 

it is unrealistic to expect military officers not to seek a 

second career in the defense industry. In addressing this 

problem, DoD needs to listen to lieutenant colonels and 

colonels and Navy commanders and captains to learn 

their views on the advantages and disadvantages of the 

acquisition career field. 

•	 Without genuine promotion opportunities for individuals who make the difficult decisions associated with 

successful negotiating and wise buying, it is unrealistic 

to expect to retain in government service experienced 

program managers able to do much more than promote 

their programs, prepare progress reports, and conduct 

briefings. 

After nearly fifty years of initiatives to improve the acquisition process, it is increasingly evident that the schedule, cost, and 

technical performance problems of defense acquisition programs 

conducted by thousands of government and industry participants 

will not be corrected by short-term fixes. The persistence of acquisition problems is not due to lack of understanding of what practices need to be changed. The field of defense acquisition abounds 

with thoughtful recommendations developed by senior acquisition 

managers who have studied the acquisition process with care. The 

underlying stumbling block has been and continues to be one of 

implementing and institutionalizing the recommendations required to bring about more professional management.
CONCLUSIONS 207

Future attempts to correct the persistent and costly problems 

of defense acquisition must include more effective follow-up by senior and mid-level government managers who must understand 

and agree with the changes that need to be made. Today’s practice 

of reassigning military acquisition managers, at most levels every 

two or three years on acquisition programs that require ten years 

or more to complete, is unlikely to produce lasting improvements 

in managing those programs. The instruments of change must be a 

strong secretary of defense and senior acquisition executives chosen for industrial experience, with expert knowledge and skills in 

defense acquisition, who understand why acquisition reform efforts of the past have failed to achieve lasting improvements, and 

who have strong commitments to achieving efficient as well as effective acquisition program outcomes. 

It is clear that military and civilian acquisition managers need 

more extensive training in the practicalities of acquisition, need 

tenure longer than two or three years in program manager assignments, and need to be unambiguous in taking steps to improve 

management of acquisition programs. There is little likelihood 

that the cost of major acquisition programs will stabilize or decrease unless and until more skilled government acquisition managers, at all levels, have the ability and commitment to accomplish 

these objectives. Minor adjustments or corrections to the present 

acquisition process simply will not accomplish this vital job.

High federal deficits at the end of the first decade of the twentyfirst century, the continuing need for a strong defense, and a growing awareness to deal more effectively with the high cost of defense 

acquisition can provide the stimulus to bring about much needed 

improvements in the control of schedules and costs for defense 

engineering development and production programs. That view is 

reinforced by the findings of four insightful studies of defense acquisition, conducted from 2006 to 2009, commissioned by the Office of the Secretary of Defense, the Secretary of the Air Force, the 

Defense Science Board, and the Government Accountability Office. 

These studies (in Appendix A) describe the current state of defense 

acquisition and indicate, once again, the less-than-satisfying results of acquisition reform efforts conducted during the past four 

decades. The studies suggest that correcting the shortcomings in 

defense acquisition management deserves urgent and concerted 

action by the secretary of defense and his key assistants. 

Appendix A

FOUR ACQUISITION REFORM STUDIES 

CONDUCTED FROM 2001 TO 2009

From 2001 to 2009, the Office of the Secretary of Defense (OSD), 

the Army, the Navy, the Air Force, and the U.S. Government Accountability Office (GAO) undertook a number of insightful studies and 

reports on defense acquisition. Among those were the following four 

reports whose enduring effects on acquisition performance are still 

to be determined. A summary of each study is included below in the 

order in which they were completed.

1. OSD assessment of DoD acquisition management: Defense Acquisition Performance Assessment, a report commissioned by Gordon England, Acting Deputy Secretary 

of Defense, January 2006. 

2. CNA Independent Assessment: Air Force Acquisition, a 

report commissioned by the secretary of the Air Force 

and directed by the assistant secretary of the Air Force 

for acquisition (ASAF/AQ), February 2009.

3. Creating a DoD Strategic Acquisition Platform, a report 

by the Defense Science Board, an advisory board to the 

secretary of defense, March 2009.

4. Defense Acquisitions: Assessments of Selected Weapon Programs, U.S. Government Accountability Office, 

GAO–09–0326SP, March 2009.

1. Defense Acquisition Performance Assessment1

Conducted by the Office of the Secretary of Defense, January 2006

Initiated by Gordon England, Acting Deputy Secretary of Defense, the Defense Acquisition Performance Assessment (DAPA) 

study was conducted by Defense Department military and civilian 

personnel, with a report issued in January 2006. In commissioning 

the report, Secretary England acknowledged that 

1 Defense Acquisition Performance Assessment Report (Washington, D.C.: January 2006). 

A Department of Defense study commissioned by the Honorable Gordon England, Acting 

Deputy Secretary of Defense.
210 DEFENSE ACQUISITION REFORM, 1960–2009

[t]here is a growing and deep concern within the Congress and 

within the Department of Defense (DoD) Leadership Team about 

the DoD acquisition processes. Many programs continue to increase in cost and schedule even after multiple studies and recommendations that span the past 15 years. In addition, the DoD 

Inspector General has recently raised various acquisition management shortcomings.2

Among its major findings, the DAPA report found that DoD 

acquisition processes did not meet the standards set by the Packard Commission and issued by the Department of Defense twenty 

years earlier. The report acknowledged that in 2006 several “staff 

oversight organizations, lengthy lines of communication and adversarial relations” resulted in excessive and ineffective exercise 

of authority without accountability and “inhibit proper execution of our programs. . . . The current decision-making process is 

flawed.”3

Explaining this finding, the report concluded that “existing 

oversight relies upon overlapping layers of reviews and reviewers at the expense of quality and focus.” The DAPA report also 

concluded that “the Department of Defense does not have a single 

consistent, sufficient set of metrics applicable across programs to 

manage acquisitions or measure success. Key performance parameters . . . do not correlate with either force or system capability and 

often are not testable.”4

The DAPA assessment determined that correcting these vulnerabilities required “implement[ing] the intent of the Packard 

Commission more fully and regain[ing] stability in the Acquisition 

System by realigning authority, accountability and responsibility 

at the appropriate levels.”5 It also determined that increasing the 

stature and authority of the under secretary of defense for acquisition, technology, and logistics and the service acquisition executives would improve accountability. To successfully accomplish 

these changes, DAPA acknowledged, would require the personal 

involvement of the service secretaries, the Army and Air Force 

chiefs of staff, and the chief of Naval Operations. 

In describing other significant shortcomings in the acquisition system, the report stated that the definition of the acquisition 

workforce did not include requirements and budget personnel, that 

is, key personnel not covered in the Defense Acquisition Workforce 

Improvement Act. Requirements personnel were not assigned to 

2 Ibid., p. v, introductory letter to the report by Gordon England, and pp. 10, 26, 29.

3

 Ibid., p. 24.

4

 Ibid., p. 25.

5

 Ibid., p. 26.
APPENDIX A 211

acquisition organizations but to major commands and staff offices. 

Their mission was to establish and codify acquisition thresholds 

and objective performance requirements and to sit on requirements generation, control, and approval boards, representing the 

war-fighting community in acquisition decision-making forums. 

Budget officers were assigned to the services and OSD to allocate 

and manage program accounts. “Thus, no single organization is accountable for overall acquisition workforce career development, no 

consistent training or experience requirements exist for these key 

skills, and training and certification standards are not enforced.”6 

DAPA concluded that key DoD personnel responsible for requirements, budget, and acquisition did not have sufficient experience, tenure, and training to meet current acquisition challenges. 

Personnel stability in these key positions was not sufficient to 

develop or maintain adequate understanding of programs and 

program issues. The systems engineering capability within the 

Department of Defense was not sufficient to clearly define the interdependencies of program activities and to manage large-scale 

integration efforts.

The devaluation of experience and expertise in the acquisition 

workforce contributed to what the DAPA called a conspiracy of 

hope, in which the cost, risk, and technical readiness of acquisition 

programs were understated and could not be conducted within initial estimates. The DAPA report highlighted that “lack of experience and expertise is [particularly] apparent in [the] program management cadre.” The declining number of science and engineering 

graduates willing to enter either industry or government has led to 

an increase in contractor support in acquisition management, thus 

resulting in the loss of core competencies among government personnel. The DAPA report recommended “infusing program management expertise into the workforce in the near term by routinely 

[providing] expert mentoring to Program Managers.”7

With respect to budgeting, DAPA pointed out that “the variability between annual budget predictions and ultimate budget 

authority [made] program planning difficult.” Congressional inclination to take money from specific program elements for nonprogrammatic reasons as well as the services’ propensity to take 

procurement investment account money to pay military personnel 

and operations and maintenance bills had combined to create a 

root cause for program instablility.8

6

 Ibid., p. 28 (quotation).

7

 Ibid., pp. 29, 31.

8

 Ibid., pp. 29–32, 36.
212 DEFENSE ACQUISITION REFORM, 1960–2009

The DAPA team also cited significant problems with the DoD requirements process. Senior military leadership was not adequately 

involved in managing the requirements process. “Neither the Joint 

Capabilities Integration and Development System nor the services 

requirement development processes were well informed about the 

maturity of technologies that underlie achievement of the requirement or the resources necessary to realize their developments.”9

This has produced a significant disconnect between “requirements 

management and development” and the budget and acquisition 

processes in the acquisition system. Managing the requirements 

process was identified as the number one area that, if restructured 

or changed, would have the most positive influence on the overall acquisition system. While 96 percent of the respondents to the 

DAPA assessment agreed that changes in requirements adversely 

affected acquisition programs, there was not a common agreement 

on what drove those changes. Nonetheless, 87 percent of those interviewed believed there was insufficient training for government 

personnel involved in the requirements process. The lack of input 

from systems engineering in the requirements development process resulted in inadequate conversion of capability needs into 

measurable requirements. 

The DAPA report contained more than thirty recommendations, including the following:

•	 Seek legislation establishing the Service Acquisition Executives as Five-Year Fixed Presidential Appointments renewable 

for a second five-year term. This will add leadership continuity 

and stability to the Acquisition System.

•	 Immediately increase the number of federal employees focused 

on critical skill areas, such as program management, system 

engineering and contracting. The cost of this increase should be 

offset by reductions in funding for contractor support. 

•	 Fully implement the intent of the Packard Commission. Create 

a streamlined acquisition organization with accountability assigned and enforced at each level.

•	 Adjust program estimates to reflect “high confidence”—defined 

as a program with an 80 percent chance of completing development at or below estimated cost—when programs are baselined in the Stable Program Funding Account.

•	 Change [DoD’s] preferred acquisition strategy for developmental programs from delivering 100 percent performance to delivering useful military capability within a constrained period of 

9

 Ibid., p. 36.
APPENDIX A 213

time, no more than 6 years from Milestone A. This makes time 

a Key Performance Parameter.

•	 Direct the Service Acquisition Executives to appoint Program 

Managers to be held accountable for each baseline from Milestone B through completion of the Beyond Low-Rate Initial 

Production report.10

Although the Defense Department held the DAPA report in 

high regard, it became clear that significant barriers existed to 

implementing many of the DAPA recommendations. Three years 

after the DAPA report was issued, many of the recommendations 

were not yet implemented. 

2. CNA Independent Assessment: Air Force Acquisition11

Conducted by CNA, February 2009

The CNA report on Air Force acquisition was prepared in 2009 

by three former senior DoD officials. The report is based on the 

analysis and recommendations of a panel consisting of four retired 

Air Force general officers and three former OSD and Air Force civilian officials.

The CNA report documented significant cost growth on Air 

Force acquisition programs since the mid-1990s, exceeding the cost 

growth experienced by Army and Navy acquisition programs during the same period. The authors and their distinguished panel 

concluded that the apparent failure of the Air Force community 

to value acquisition as a profession in the Air Force or to enforce 

accountability or process discipline was a major impediment to 

achieving significant improvements in Air Force acquisition. They 

pointed out that it was “imperative that the acquisition profession be seen as a valued component of the Air Force” and that the 

individuals working in the acquisition function have career opportunities comparable to Air Force operations personnel. Without an effective acquisition function, the ability of the Air Force to 

provide the capability “demanded by the joint warfighter [was] in 

jeopardy.”12

In reviewing the acquisition organizational structure in the Air 

Force, the CNA team concluded that the SAF/AQ (the Office of the 

Service Acquisition Executive), the Air Force chief of staff, the commander, Air Force Materiel Command, and the commanders of the 

10 Ibid., pp. 9–14.

11 CNA Independent Assessment: Air Force Acquisition, (Alexandria, Va.: CNA, February 

2009). This report was commissioned by the secretary of the Air Force on 18 July 2008 and 

directed by the assistant secretary of the Air Force for acquisition. CNA is a federally funded 

research and development center. 12 Ibid., pp. 24–25.
214 DEFENSE ACQUISITION REFORM, 1960–2009

user commands “need to be more actively and personally involved 

. . . in defining requirements and resource priorities.”13

The CNA team also concluded that the wing/group/squadron 

structure of the Air Force acquisition workforce was not effective 

and was a major inhibitor to efficient execution of the acquisition 

process. Further, the team was frequently told that the command 

selection process for wing commanders “often [resulted] in wing 

commanders with limited acquisition experience.”14

The CNA team unanimously agreed that a return to a matrix 

structure with acquisition functional home rooms was a necessary 

ingredient in revitalizing the Air Force acquisition workforce. The 

team concluded that the current wing structure for the acquisition 

workforce:

•	 Inhibits functional management and development of the workforce;

•	 Inhibits deployment of critical skills and resources across and 

among wings and centers;

•	 Adds at least one additional organizational layer; and

•	 Confuses reporting and rating chains.15

The CNA team reported that most of those who discussed requirements with them complained that there were few, if any, constraints on Air Force requirements in terms of numbers, cost, or 

technological maturity. Acquisition participants in requirements 

high performance teams (HPTs) tended to feel either ignored or intimidated. They said acquisition members “are frequently chosen 

based on the fact that they are simply available and often were 

replaced at the next meeting.” With respect to the weapon system 

requirements process, the CNA team concluded that the process 

was seriously flawed.

•	 There [are] excessive numbers of KPPs [Key Performance Parameters].

•	 Evaluability and testability is often neglected.

•	 Technical feasibility is often overestimated.

•	 Performance trades are often not emphasized in requirements 

generation.

•	 There are disconnects between requirements, acquisition, and 

resource communities and processes.

13 Ibid., pp. 5–6.

14 Ibid., p. 6.

15 Ibid., p. 7.
APPENDIX A 215

•	 There is inadequate stratification of requirements to enable 

and institutionalize the concept of block acquisition.16

The CNA team was surprised to discover that the program control function in Air Force program management offices had been 

reduced to little more than a “budget shop.” The consensus opinion 

of the team was, “How can anyone run a program without the program control function?” When combined with the consequent move 

to place earned value functional personnel into financial job series, 

“it was no surprise that the earned value function had virtually 

disappeared from the Air Force.”17 The team recommended that the 

program control function be restored or revitalized, or both, within 

program offices.

3. Creating a DoD Strategic Acquisition Platform18

Conducted by the Defense Science Board, an advisory board to the secretary of defense, April 2009

The Defense Science Board (DSB) report was published in April 

2009 to inform the new administration that “fixing the acquisition 

process is a critical national security issue—requiring the attention of the Secretary of Defense. The incoming leadership must address this concern among its top priorities as the nation’s military 

prowess depends on it.”19

The DSB report pointed out that typical major defense system 

acquisitions still require ten to fifteen years to develop, though 

new product development in the commercial sector of similarly 

complex systems took one-third to one-half that time. The DSB 

explained that 

[t]hese development times are far outpaced by the rapid advances 

in technology, which means that subsystems technology can be 

one or two generations old by the time a system is provided to 

warfighters in the field–unless upgrades are incorporated before 

the system is fielded. Furthermore, DoD acquisition programs often have large cost overruns, long schedule delays, and unsatisfactory product quality and performance.20

16 Ibid., p. 9.

17 Ibid., p. 11.

18 Defense Science Board (DSB), Creating a DoD Strategic Acquisition Platform

(Washington, D.C.: March 2009). The DSB is a federal advisory committee established to 

provide independent advice to the secretary of defense. Ronald Kerber was the chair of the 

ten-person committee that conducted the study and prepared the report. 19 Ibid., introduction.

20 Ibid., p. 1.
216 DEFENSE ACQUISITION REFORM, 1960–2009

In exploring the causes of these problems, the DSB team asked why 

previous acquisition reform efforts had failed so often. Team members 

determined that it was, in part, because they did not address the root 

causes of the problems and focused instead on reengineering the mechanics of the acquisition decision process. “Many problems appeared 

to be caused by the use of immature technology, [changing] requirements, or funding instability. Such problems, however, were really only 

symptoms of the lack of experienced judgment on the part of [DoD] 

personnel who structured acquisition programs in a way that would 

almost certainly lead to failure.”21

The DSB report also observed that perhaps the most important 

reason previous acquisition reform efforts had failed was that the problems had been left to the under secretary of defense for acquisition, 

technology, and logistics. Effective acquisition is a challenge that exceeds the authority of the under secretary. 

Fixing defense acquisition is a challenge that can only be successfully addressed by the Secretary of Defense and it should be among his 

top priorities. The Secretary not only had to lead the charge within 

DOD to fix the acquisition process, but also to inform Congress of 

departmental actions and enlist its support for his agenda, lest Congress act independently in a way that undermined his efforts.22

Consequently, proven, relevant experience was needed in the Office of the Secretary of Defense, the military departments, and defense 

agencies. The DSB pointed out that many people were inexperienced 

in acquisition, from the leadership to program managers. Very few had 

a personal track record of repeated successes at acquisition. Trial-anderror and on-the-job training could be expensive.23

In supporting this observation, the DSB cited a key point from the 

1986 Packard Commission on the need for acquisition leadership to 

have “a solid industrial background.” Yet the commission’s intent was 

often ignored. The rules had been stretched so that acquisition executives in OSD and the services were appointed with little or no proven, 

relevant, or successful business experience. “Without relevant experience to guide decision-making, these leaders often rely on the bureaucracy to make decisions for them.”24

The DSB expressed the view that today’s acquisition leaders required a combination of business, technical, and human resource management capabilities and skills. Without these skills they might lead in 

some other field but would fail in managing the acquisition of major de21 Ibid., p. 4.

22 Ibid., p. 5.

23 Ibid., p. 13.

24 Ibid., pp. 13–14.
APPENDIX A 217

fense engineering development and production programs. Along with 

experienced leaders and program managers, acquisition functional 

specialists, military and civilian, needed upgrading as well. 

The DSB report stated that the first step was to select program 

managers of major systems programs who had demonstrated successful performance in managing acquisition programs of increasing 

complexity. Program success was more likely, even when delayed, if 

the right leadership could be put in place from the start so that the 

program began with goals and objectives that could be realized. 

The Secretary of Defense should issue guidance that top [senior] 

acquisition appointments be filled with individuals who have 

proven, successful, and relevant [acquisition] experience. 

The Under Secretary of Defense for Acquisition, Technology, 

and Logistics, should require that program executive officers and 

program managers have demonstrated successful performance in 

managing programs of increasing complexity before appointments 

are made [in which they are responsible for the conduct of] major 

systems programs.25

Experienced leadership needed the support of a well-trained 

and experienced workforce. But the acquisition workforce in general—both civilian and military—lacked the experience needed. 

The DSB also reported that the personal interests of many individuals involved in the acquisition process did not always align with the 

interests of the nation—their incentives could be counterproductive. 

“It is in the self interest of too many people not to fix the acquisition 

system: they are financially rewarded and their career is sustained by 

keeping things as they are.”26 Those responsible for technical performance usually had no organizational responsibility for meeting cost 

and schedule requirements. Yet their input could have a significant 

impact on program decisions and, in turn, program schedule and cost. 

4. Defense Acquisitions: Assessments of Selected Weapon 

Programs27

Conducted by the U.S. Government Accountability Office, March 2009

This report for Congress contained the GAO’s seventh annual 

assessment of selected Department of Defense weapon programs. 

25 Ibid., pp. 14–15.

26 Ibid., p. 15.

27 U.S. Government Accountability Office (GAO) Report, Defense Acquisitions: Assessments 

of Selected Weapon Programs, GAO–09–326SP (Washington, D.C.: March 2009). The GAO’s 

seventh annual assessment of selected weapon programs provides a snapshot of how well the 

Department of Defense plans and executes its major weapon acquisition programs—an area 

that has been on GAO’s high-risk list since its inception in 1990.
218 DEFENSE ACQUISITION REFORM, 1960–2009

The report examined how well DoD planned and executed the 

development and production of its weapon acquisition programs. 

While the overall performance of weapon system programs “was 

still poor,” the GAO reported that there had been some modest improvements in DoD’s acquisition outcomes. The report included an 

analysis of the overall performance of DoD’s portfolio of ninetysix major defense acquisition programs.28 Total cost growth for the 

2008 portfolio of ninety-six major defense acquisition programs 

had decreased marginally compared to the 2007 portfolio, and programs started in recent years were based on more knowledge about 

technology and design at key points in the acquisition process. 

The GAO pointed out that since 2003, DoD’s portfolio of major defense acquisition programs had grown from seventy-seven to 

ninety-six programs; its investment in those programs had grown 

from $1.2 trillion to $1.6 trillion (fiscal year 2009 dollars). The 

five-year cumulative cost growth for these programs compared to 

original estimates was $296 billion in fiscal 2009 dollars—and the 

problems were pervasive. For these programs, research and development costs were 42 percent higher than originally estimated, 

and the average delay in delivering initial capabilities had increased to twenty-two months.29 

The report also pointed out that for forty-seven programs the 

GAO assessed in-depth, the amount of knowledge that programs 

attained by key decision points had increased in recent years. 

However, most programs still proceeded with far less technology, 

design, and manufacturing knowledge than best practices suggested and faced a higher risk of cost increases and schedule delays. Programs that exhibited early system engineering, stable 

requirements, and disciplined software management had smaller 

cost increases and shorter schedule delays on average. Workforce 

challenges could also impair program execution. Most of the programs the GAO assessed were unable to fill all authorized program office positions, resulting in increased workloads, a reliance 

on support contractors, and fewer personnel available to conduct 

oversight. 

The under secretary of defense commented on the 17 March 2009 

GAO report in a letter to the acting comptroller general. The letter explained how current Defense Department practices were not the only 

cause of cost increases on acquisition programs, citing lengthy older 

programs, budget pressures, and the actions of Congress. The under 

secretary’s letter ended with the following paragraph:

28 Ibid., p. 7.

29 Ibid., p. 13.
APPENDIX A 219

We must continue to improve the acquisition process to more effectively and efficiently deliver products to our customers, and we 

need to continue to develop better metrics. The Department looks 

forward to working with the GAO in both important endeavors.30

30 Ltr, John J. Young Jr., Undersecretary of Defense, to Gene L. Dodaro, Acting Comptroller 

General, 17 Mar 2009, app. II to GAO Report, Defense Acquisitions: Assessment of Selected 

Weapon Programs, GAO–09–326SP, p. 171.

Appendix B

CHANGES TO THE ACQUISITION PROCESS

DOD DIRECTIVE 5000.1, 1971 TO 2008

Deputy Secretary of Defense David Packard signed the first 

DoD Directive 5000.1 in 1971. This eight-page document created 

the Defense Systems Acquisition Review Council (DSARC) and required three major decision points (milestones) with one supporting document. Over the next thirty-seven years, this DoD 5000 

process was revised fourteen times, reflecting frequent changes 

in personnel in the Office of the Secretary of Defense (OSD).

During the past four decades, the 5000-series documents have 

been issued and reissued as a directive; two directives; a directive 

and an instruction; a directive and a regulation; a directive and 

instructions and a manual; and a directive, an instruction, and 

a regulation. The 5000-series documents had a combined page 

count of as few as eight (1971) to as many as eight hundred and 

forty (1991). In 2008, DoD Directive 5000.01 (formerly 5000.1) 

and DoD Instruction 5000.02 (formerly 5000.2) totaled ninety 

pages.

Phases of the acquisition process have ranged from three (1971 

to 1977), to four (1977 to 1991 and 1996 to 2000), to five (2003 to 

2008).

The phases of the acquisition process include:

•	 Conceptual Effort

•	 Full-Scale Development 

•	 Production/Deployment

The milestones include:

•	 Program Initiation

•	 Full-Scale Development Decision

•	 Production Go-Ahead Decision

Milestones that indicate the beginning of a major acquisition 

program have been identified as follows: secretary of defense approval of the MENS (Mission Element Need Statement) (1977 to 

1980) and the POM (Program Objective Memorandum) (1982 to 

1985), as well as secretary of defense or under secretary of defense 

approval at Milestone 0 (1985 to 1991), Milestone I (1991 to 2000), 

and Milestone B (2000 to 2008).
222 DEFENSE ACQUISITION REFORM, 1960–2009

The number of milestones and other decision points requiring 

an OSD-level review has ranged from three (1971 to 1975), to as 

few as two (1982 to 1985), and as many as seven (2008).

The Secretary of Defense was the Milestone Decision Authority (MDA) for MDAPs (Major Defense Acquisition Programs) from 

1971 to 1991. (In 2009, the MDA was the under secretary for acquisition, technology, and logistics.) 

The first DoD-level requirements document, entitled the Mission Element Need Statement (MENS), appeared in 1977. The 

second, entitled the Operational Requirements Document (ORD), 

appeared in 1991. The format and content of both documents were 

directed by OSD until authority was transferred to the Joint Staff 

in 1996.

The major events in the acquisition reform process from 1971 

through 2008 are as follows:

1971

•	The Defense Systems Acquisition Review Council (DSARC) is 

created.

•	SECDEF (Secretary of Defense) decisions are documented in an 

approved Decision Coordinating Paper (DCP).

•	Major programs are defined as $50 million for RDT&E (research, development, test, and evaluation) or $200 million for 

procurement.

1975

•	Milestones are defined as:

– “Program Initiation”

– “Full-Scale Development Decision”

– “Production Go-Ahead Decision”

•	Major programs are redefined as $75 million for RDT&E or 

$300 million for procurement (in FY 1972 dollars).

•	Milestones are unchanged or redefined as follows:

– Milestone one remains unchanged: “Program Initiation.”

– Milestone two is redefined from “Full-Scale Development Decision” to 

“Full-Scale Engineering Development Decision.”

– Milestone three is redefined from “Production Go-Ahead” to “Production 

and Deployment Decision.”

•	The acquisition phases are redefined: 

– From “Conceptual Effort” to “Validation Phase.”

– From “Full-Scale Development” to “Full-Scale Engineering Development.”

– “Production/Deployment” phase remains the same.
APPENDIX B 223

1977

•	The names of the acquisition phases are changed and numbered as follows:

– Phase 0 is redefined as “Exploration of Alternative System Concepts.”

– Phase I is redefined as “Demonstration and Validation.”

– Phase II is redefined as “Full-Scale Engineering Development.”

– Phase III is redefined as “Production and Deployment.”

•	Milestones are redefined and numbered as follows:

– Milestone 0 becomes “Mission Element Need Statement” (MENS), Program Initiation approved by the secretary of defense.

– Milestone I becomes “Approval to Enter Demonstration and Validation.”

– Milestone II becomes “Approval to Enter Full-Scale Engineering Development.”

– Milestone III becomes “Approval to Enter Production and Deployment.”

•	MENS appears as the first DoD-level requirements document.

1980

•	Major programs are now defined as $100 million for RDT&E or 

$500 million for procurement (FY 1980 dollars).

•	Phases: 

– Phase 0 is changed from “Exploration of Alternative System Concepts” 

to “Concept Exploration.”

– Phase II is changed from “Full-Scale Engineering Development” to “FullScale Development.”

– Phase III remains the same, “Production and Deployment.”

•	Milestones:

– Milestones 0, I, II, and III remain unchanged.

– SECDEF Decision Memorandum (SDDM) is implemented to document 

milestone decisions.

1982

•	Major programs are now defined as $200 million RDT&E or $1 

billion procurement (FY 1980 dollars).

•	Milestones:

– Milestone 0 is changed from “Million Element Need Statement” to “Approval of JMSNS (Joint Materiel System Need Statement) in PPBS, 

Program Initiation.” The designation “Milestone 0” is discontinued. 

(PPBS = Planning, Programming, and Budgeting System)

– Milestone I is changed from “Enter Demonstration and Validation” to 

“Concept Selection.”

– Milestone II is changed from “Approval to Enter Full-Scale Development” to “Program Go-Ahead.”

– Milestone III is changed from “Enter Production and Deployment” to 

“Production Decision” (Delegated to Components).
224 DEFENSE ACQUISITION REFORM, 1960–2009

•	Programs may proceed to FSD (Full-Scale Development) with 

delayed MS II (Milestone II). Contracts must be written so program can be terminated at least cost to the government. 

1985

•	Milestone 0 returns and is named “Approval of JMSNS in PPBS, 

Program Initiation.”

•	Production Decision (may be delegated to Components).

1987 

•	Phases: 

– Phase 0 is changed from “Concept Exploration” to “Concept Exploration/

Definition.”

– Phase I is changed from “Demonstration and Validation” to “Concept 

Demonstration/ Validation.”

– Phase II is changed from “Full-Scale Engineering Development” to “FullScale Development and LRIP (Low-Rate Initial Production).”

– Phase III is changed to “Production, Fielding/Deployment, Operational 

Support.”

•	Milestones:

– Milestone 0 remains the same: “Approval of JMSNS in PPBS, Program 

Initiation.”

– Milestone I is changed from “Concept Selection” to “Approval to Enter 

Concept Demonstration/Validation.”

– Milestone II is changed from “Program Go-Ahead” to “Approval to Enter 

Full-Scale Development and LRIP.”

– Milestone III is changed from “Production Decision” (Delegated to Components) to “Approval for Full-Rate Production and Deployment.”

– Milestone IV is introduced as “Logistics Readiness and Support 

Review.”

•	Competitive Prototyping Strategy is required by law and by 

DoD Instruction 5000.2.

•	Joint Requirements Management Board (JRMB) is renamed 

JROC (Joint Requirements Oversight Council).

•	Defense Systems Acquisition Review Council (DSARC) is renamed JRMB.

•	JRMB is renamed Defense Acquisition Board (DAB).

1991

•	Major programs are now defined as $300 million for RDT&E or 

$1.8 billion for procurement (FY 1980 dollars).

•	Milestones:

– Milestone 0 is redefined as “Approval to Conduct Concept Studies.”

– Milestone I is redefined as “Concept Demonstration Approval.”

– Milestone II is redefined as “Development Approval.”
APPENDIX B 225

– Milestone II redefined as “Production Approval.”

– Milestone IV is redefined as “Major Modification Approval.”

•	Phases:

– A new phase, “Determination of Mission Need,” is inserted before Milestone 0. 

– Phase I is redefined as “Demonstration and Validation.”

– Phase II is redefined as “Engineering and Manufacturing Development.”

– Phase III is redefined as “Production and Deployment.”

– A new Phase IV is introduced as “Operations and Support.”

•	Acquisition Decision Memorandum (ADM), signed by the USD 

(A), replaces SDDM (SECDEF Decision Memorandum).

•	The provision for a delayed Milestone II is eliminated.

•	The acquisition category (ACAT) structure is created.

•	The JROC-approved MENS replaces the secretary of defense–

approved JMSNS at Milestone 0.

•	Operational Requirements Document (ORD) appears in DoD 

Instruction 5000.2 and is required at Milestone II and Milestone III.

1996

•	Phases:

– Phase 0 is redefined as “Concept Exploration.”

– Phase I is redefined as “Program Definition and Risk Reduction.”

– Phase II is redefined as “Engineering and Manufacturing Development.”

– Phase III is redefined as “Production, Fielding/Deployment, and Operational Support.”

– A new phase appears following Phase III: “Demilitarization and Disposal.”

•	Milestones:

– Milestone I is redefined as “Approval to Begin a New Acquisition Program.”

– Milestone II is redefined as “Approval to Enter Engineering and Manufacturing Development.”

– Milestone II is redefined as “Production or Fielding/Deployment 

Approval.”

•	Program Initiation is moved to Milestone I.

•	Automated Information System (AIS) acquisition programs are 

folded into the DoD 5000 process.

•	Competitive Prototyping requirement is eliminated.

2000

•	Major programs are redefined as $365 million for RDT&E or 

$219 billion for procurement (FY 2000 dollars).

•	Milestone identifications are changed from numbers to letters 

“A,” “B,” and “C.”
226 DEFENSE ACQUISITION REFORM, 1960–2009

•	Phases:

– Phase A becomes “Concept and Technology Development (Decision Review).”

– Phase B becomes “System Development and Demonstration (Interim 

Progress Review).”

– Phase C becomes “Production and Deployment (FRP Decision Review).”

– A phase following Phase C appears and is named “Operations and Support.”

•	Milestones:

– Milestone A is defined as “Approval to Enter Concept and Technology 

Development.”

– Milestone B is defined as “Approval to Enter Systems Development and 

Demonstration.”

– Milestone C is defined as “Approval to Enter LRIP/Production and Deployment.”

•	Program Initiation occurs at Milestone B.

•	Commitment to Production occurs at Milestone C (LRIP).

•	Evolutionary Acquisition (EA) becomes the preferred approach 

to major systems acquisition.

2002

•	“Technology Opportunities and User Needs” is changed to “User 

Needs and Technology Opportunities.”

•	 “Critical Design Review” is added to Phase B.

•	Deputy Secretary of Defense cancels all three DoD 5000 documents.

•	Interim Guidance documents are issued: “Defense Acquisition” 

for basic policy and “Operation of the Defense Acquisition System” for implementation procedures.

•	DoD 5000.2-R becomes the “Interim Defense Acquisition Guidebook.”

2003

•	Phases:

– A phase preceding Milestone A becomes “Concept Refinement (Concept Decision).”

– Phase A becomes “Technology Development.”

– Phase B becomes “System Development and Demonstration (Design 

Readiness Review).”

•	Milestones:

– A new milestone is created at the beginning of the Concept Refinement Phase. The milestone is named “Approval to Enter Concept 

Refinement.”

– Milestone A is redefined as “Approval to Enter Technology Development.”
APPENDIX B 227

•	The Defense Acquisition Guidebook (DAG) is made available 

online.

•	“Joint Capabilities Integration and Development System” 

(JCIDS) is created. MNS (Mission Need Statement) and ORD 

(Operational Requirements Document) are replaced.

•	“Initial Capabilities Document” is required at Milestone B; the 

“Capability Production Document” is required at Milestone C.

2008

•	Definition of major acquisition programs remains the same: 

$365 million for RDT&E or $2.19 billion for procurement (FY 

2000 dollars).

•	“User Needs and Technology Opportunities” becomes “User 

Needs and Technology Opportunities and Resources.”

•	Phases: 

– The phase preceding Milestone A is redefined to “Materiel Solution 

Analysis (Materiel Development Decision).”

– Phase B is redefined as “Engineering and Manufacturing Development” 

with two submilestones: “Post-PDR A” and “Post-CDR A.”

•	Milestones:

– The milestone at the beginning of the Materiel Solution Analysis Phase 

is redefined as “Approval to Enter Acquisition Process.”

– Milestone B is redefined as “Approval to Enter Engineering and Manufacturing Development.”

•	The Materiel Development Decision precedes entry into any 

phase of the acquisition process.

•	Competitive Prototyping returns and is required during the 

Technology Development Phase.

•	A Preliminary Design Review (PDR) after Milestone B requires 

a Post-PDR. The assessment is made by the Milestone Decision 

Authority.

Appendix C

CARLUCCI THIRTY-TWO ACQUISITION

REFORM INITIATIVES, 1983

1. Reaffirm Acquisition Management Principles

2. Increase Use of Preplanned Product Improvement

3. Implement Multiyear Procurement

4. Increase Program Stability

5. Encourage Capital Investment to Enhance Productivity

6. Budget to Most Likely Costs

7. Use Economical Production Rates

8. Assure Appropriate Contract Type

9. Improve System Support and Readiness

10. Reduce Administrative Costs and Time

11. Budget for Technological Risk

12. Provide Front-End Funding for Test Hardware

13. Reduce Governmental Legislation Related to Acquisition

14. Reduce Number of DOD Directives

15. Enhance Funding Flexibility

16. Provide Contractor Incentives to Improve Reliability and Support

17. Decrease DSARC Briefing and Data Requirements

18. Budget for Inflation

19. Forecast Business Base Conditions

20. Improve Source Selection Process

21. Develop and Use Standard Operation and Support Systems

22. Provide More Appropriate Design-to-Cost Goals

23. Implement Acquisition Process Decisions

24. Reduce DSARC Milestones

25. Submit MENS with Service POM

26. Revise DSARC Membership

27. Retain USDRE as Defense Acquisition Executive

28. Raise Dollar Thresholds for DSARC Review

29. Integrate DSARC and PPBS Process

30. Increase PM Visibility of Support Resources

31. Improve Reliability and Support

32. Increase Competition

Appendix D

RAND CORPORATION STUDY OF SIXTY-THREE

ACQUISITION REFORM INITIATIVES, 2002 

(in Chronological Order)

Date Issued Acquisition Reform Initiatives

March 1966 Competitive Sourcing 

1989 DoD Purchase Card

September 1991 Performance-Based Service Acquisition

1993 Prime Vendor Delivery

January 1993 Improved Pre-Solicitation Phase 

Communication 

1994 Advanced Concept Technology Demonstration

1994 Electronic Data Interchange

February 1994 Elimination of Mil Specs and Mil Standards

February 1994 Elimination of Non-Value-Added Receiving/

In-Process/Final Inspection and Testing 

February 1994 Elimination of Non-Value-Added Reporting 

Requirements/CDRLs 

February 1994 Integrated Product and Process Development 

February 1994 Program Stability

February 1994 Multi-Year Contracting

February 1994 Rights in Technical Data and Computer 

Software 

March 1994 Contractor-Maintained Design Configuration

June 1994 Single Process Initiative

October 1994 Risk-Based Approach to DCAA Oversight

November 1994 Concurrent Developmental/Operational 

Testing

November 1994 Open Systems Approach
232 DEFENSE ACQUISITION REFORM, 1960–2009

Date Issued Acquisition Reform Initiatives

November 1994 Rapid Prototyping for Software Development

January 1995 Streamlined Defense Industrial Security 

Program Requirements

February 1995 Commercial Engineering Drawing Practices 

February 1995 Streamlined ECP Review/Approval

March 1995 RFP Streamlining

March 1995 Streamlined Documentation/Resolution of 

Nonconforming Material Issues 

March 1995 Streamlined Government Property 

Management Requirements

April 1995 Elimination of Redundant Oversight (PMO/

Services/DCMC)

April 1995 Past Performance Data

June 1995 Commercial Sourcing: FAR Part 12 

Procurements

June 1995 Reduction/Elimination of Contractor 

Purchasing System Reviews 

June 1995 Survivability/Lethality Below End-Item Level

July 1995 Streamlined Contract Close-Out Process

August 1995 Parametric Cost Estimating

September 1995 Better Post-Award Debriefing

September 1995 Commercial Warranties and Other Product 

Liability Issues

September 1995 Performance-Based Progress Payments

September 1995 Reduced Number of TINA Sweeps

October 1995 Commercial Data and Other Exemptions for 

Cost or Pricing Data

October 1995 Cost Accounting Standards Exemptions

October 1995 Joint Government/Industry IPTs

October 1995 Reduction of Multiple Software Capability 

Evaluations

October 1995 Revised Thresholds for Certified Cost and 

Pricing
APPENDIX D 233

Date Issued Acquisition Reform Initiatives

December 1995 CAIV (Cost as an Independent Variable)

March 1996 Best-Value Contracting: Consideration of 

Cost/Performance Tradeoffs 

March 1996 Simulation-Based Acquisition

May 1996 Direct Submission of Cost Vouchers to DFAS 

(or other disbursing office)

June 1996 Alternative Dispute Resolution

June 1996 Tailored Negotiation of Forward Pricing Rates

June 1996 Evolutionary Acquisition

October 1996 Commercial Quality Standards (e.g., ISO 

9000)

October 1996 Elimination of Non-Value-Added Packaging 

Requirements

December 1996 Other Transaction Authority

1997 Modernization Through Spares 

March 1997 Cost-Schedule Reporting Standards Tailored 

to Industry Guidelines 

October 1997 Alpha Contracting

1998 Logistics Transformation

1998 Contractor Total System Performance 

Responsibility 

April 1998 Reduction in Total Ownership Cost

June 1998 Enterprise Software Initiative

1999 Oral Presentations

November 1999 Virtual Prime Vendor 

November 2000 Price-Based Acquisition 

May 2001 Contractor Cost Sharing 

Abbreviations and

Acronyms

ACAT Acquisition category

ACO Administrative contracting officer

AFLC Air Force Logistics Command

AFSC Air Force Systems Command

AIP Acquisition Improvement Program

AIS Automated information system

AMRAAM Advanced Medium-Range Air-to-Air Missile

AoA Analysis of Alternatives

AR Acquisition reform

ARPA Advanced Research Projects Agency

ASA (ALT) Assistant secretary of the Army 

 for acquisition, logistics, and technology

ASA (RD&A) Assistant secretary of the Army 

 for research, development, and acquisition

ASAF (A&L) Assistant secretary of the Air Force for 

 acquisition and logistics

ASD (A&L) Assistant secretary of defense for acquisition 

 and logistics

ASD (D&S) Assistant secretary of defense for development 

 and support

ASD (ES) Assistant secretary of defense for 

 economic security

ASD (I&L) Assistant secretary of defense for installations 

 and logistics

ASD (MI&L) Assistant secretary of defense for manpower, 

 installations, and logistics

ASPR Armed Services Procurement Regulation

B&P Bid and proposal

BENS Business Executives for National Security

C/SCSC Cost and Schedule Control System Criteria

C3 Command, Control, and Communications

C3I Command, Control, Communications, 

 and Intelligence

CAE Component acquisition executive

CAIG Cost Analysis Improvement Group

CAIV Cost as an Independent Variable

CDD Capability Development Document

CDRL Contract Data Requirements List
236 DEFENSE ACQUISITION REFORM, 1960–2009

CIA Central Intelligence Agency

CINC Commander in chief

CITE Contractor independent technical effort

CJCS Chairman of the Joint Chiefs of Staff

CRS Congressional Research Service

CSDR Cost and Software Data Reporting

CTE Critical technology element

DAB Defense Acquisition Board

DAE Defense acquisition executive

DAHP Defense Acquisition History Project

DARCOM Department of the Army Readiness Command

DARPA Defense Advanced Research Projects Agency

DAU Defense Acquisition University

DCAA Defense Contract Audit Agency

DCAPE Director, Cost Assessment and Program 

 Evaluation

DCAS Defense Contract Administration Service

DCMA Defense Contract Management Agency

DCMC Defense Contract Management Command

DCP Development Concept Paper

DCS (RD&A) Deputy chief of staff for research, development, 

 and acquisition

DDR&E Director of defense research and engineering

DFARS Defense Federal Acquisition Regulation 

 Supplement

DoD Department of Defense

DOT&E Director of operational test and evaluation

DRB Defense Resources Board

DSARC Defense Systems Acquisition Review Council

DSB Defense Science Board

DSMC Defense Systems Management College

DT&E Development testing and evaluation

DUSD (AR) Deputy under secretary of defense for acquisition 

 reform

EMD Engineering and Manufacturing Development

EVMS Earned Value Management System

FACNET Federal Acquisition Network

FAIA Federal Acquisition Improvement Act

FAR Federal Acquisition Regulation

FARA Federal Acquisition Reform Act

FASA Federal Acquisition Streamlining Act
ABBREVIATIONS AND ACRONYMS 237

FCRC Federal contract research center

FCS Future Combat Systems

FFRDC Federally funded research and development center

FY Fiscal year

GAO Government Accountability Office, formerly 

 General Accounting Office

GDP Gross domestic product

GNP Gross national product

GPRA Government Performance and Results Act

GSA General Services Administration

HASC House Armed Services Committee

HP Hewlett-Packard Company

HumRRO Human Resources Research Organization

IAC Industry Advisory Council

ICBM Intercontinental ballistic missile

IDA Institute for Defense Analyses

IPD Integrated product development

IPPD Integrated product and process development

IPT Integrated product team

IR&D Independent research and development

ITMRA Information Technology Management Reform Act

IWSM Integrated Weapon System Management

JCIDS Joint Capabilities Integration and Development 

 System

JCS Joint Chiefs of Staff

JDAM Joint Direct Attack Munition

JPATS Joint Primary Aircraft Training System

JRMB Joint Requirements Management Board

JROC Joint Requirements Oversight Council

LRIP Low-Rate Initial Production

MAIS Major Automated Information System

MAISRC MAIS Review Council

MDA Milestone Decision Authority

MDAP Major Defense Acquisition Program

MIPS Modified Integrated Program Summary

NASA National Aeronautics and Space Administration

NATO North Atlantic Treaty Organization
238 DEFENSE ACQUISITION REFORM, 1960–2009

NAVMAT Navy Material Command

NPOESS National Polar-Orbiting Operational 

 Environmental Satellite System

NSDD National Security Decision Directive

OASD (PA) Office of the Assistant Secretary of Defense for 

 Public Affairs

ODUSD (AR) Office of the Deputy Under Secretary of Defense for 

 Acquisition Reform

OIPT Overarching Integrated Product Team

OJCS Office of the Joint Chief of Staff

OMB Office of Management and Budget

OSD Office of the Secretary of Defense

OTA Other Transaction Authority

OUSD (A&T) Office of the Under Secretary of Defense for 

 Acquisition and Technology

OUSD (A) Office of the Under Secretary of Defense 

 for Acquisition

P3I Preplanned product improvement

PAT Process action team

PDR Preliminary design review

PDUSD (A&T) Principal deputy under secretary of defense for 

 acquisition and technology

PEO Program executive officer

PERT Program Evaluation and Review Technique

PM Program manager

PPBES Planning, Programming, Budgeting, and 

 Execution System

PPBS Planning, Programming, and Budgeting System

R&D Research and development

RDT&E Research, development, test, and evaluation

RFP Request for proposal

RG Record Group

SAE Service acquisition executive

SALT Strategic Arms Limitation Treaty

SAMSO Space and Missile Systems Organization

SLBM Submarine-launched ballistic missile

SPI Single Process Initiative

SSA Source selection authority

SSAC Source Selection Advisory Council

SSEB Source Selection Evaluation Board
ABBREVIATIONS AND ACRONYMS 239

TDS Technology Development Strategy

TPM Technical Performance Measurement

TPP Total Package Procurement

TQM Total Quality Management

USAF United States Air Force

USD (A&T) Under secretary of defense for acquisition 

 and technology

USD (A) Under secretary of defense for acquisition

USD (AT&L) Under secretary of defense for acquisition, 

 technology, and logistics

USD (R&E) Under secretary of defense for research 

 and engineering

WBS Work breakdown structure 

WIPT Working integrated product team

WNRC Washington National Records Center

ZBB Zero-based budgeting

Selected Bibliography

Government Publications, Correspondence, and Congressional

Hearings and Testimony

Assistant Secretary of Defense (Comptroller). Memo for Assistant 

Secretary of Defense for Installation and Logistics (ASD [I&L]), 

19 May 1969. Major Weapon System Acquisition. Comptroller 

Subject Decimal File, 1969 (75–0089), Box 54, 400.13 (May 

1969), Record Group (RG) 330, Washington National Records 

Center (WNRC), Suitland, Maryland. 

Assistant Secretary of Defense (I&L). Memo for Melvin Laird and 

David Packard, 9 October 1969. Industry Advisory Council, 

10–11 October 1969. Comptroller Subject Decimal File, 1969 

(75–0089), Box 43, 334 Industry Advisory Council (July 1969), 

RG 330, WNRC.

Augustine, Norman. U.S. Senate testimony of president of Martin 

Marietta and former under secretary of the Army, hearing 

before the Committee on Governmental Affairs, Acquisition 

Process in the Department of Defense, 21–27 October and 5 

November 1981.

Carlucci, Frank C. Memo for Distribution List, 13 February 1981. 

WNRC, Series 330–83–0102, Box 26/48, Folder: “100.5 (JanuaryApril 1981).”

———. Letter to D. A. Stockman, 22 April 1981, WNRC, Series 330–

83–0102, Box 26/48, Folder: “100.5 (January-April 1981).” 

Claytor, W. Graham Jr. Memo for Undersecretaries and Assistant 

Secretaries of Defense, 4 December 1980, Office of the Secretary 

of Defense Historical Office, Box 561, Folder: “OSD/DoD 1980-

81, Transition to Reagan Era.”

CNA Independent Assessment: Air Force Acquisition. Commissioned 

by the Secretary of the Air Force and directed by the Assistant 

Secretary of the Air Force for Acquisition, February 2009. 

Conahan, Frank C., Assistant Comptroller General (National 

Security and International Affairs Division, Government 

Accounting Office). Statement before the Congressional 

Military Reform Caucus, “Defense Management: Streamlining 

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Acquisition: Overview, Issues, and Options for Congress.” 

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of the Committee on Armed Services, House of Representatives, 

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1982. 

Defense Acquisition Performance Assessment Report. Washington, D.C.: 

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1984.

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sess., 22 February 1972. 

Department of Defense Directive 5000.1, “The Defense Acquisition 

System.” Office of the Secretary of Defense, 4 January 2001.

Department of Defense Directive 5000.1, “Acquisition of Major Defense 

Systems.” Office of the Secretary of Defense, 13 July 1971.

Department of Defense Directive 7045.14, “The Planning, Programming, 

and Budgeting System,” 22 May 1984.

Department of Defense Instruction 7045.7, “Implementation of the 

Planning, Programming, and Budgeting System,” 23 May 1984.

Department of Defense Instruction 5000.2 Change 1, “Operation of the 

Defense Acquisition System,” 4 January 2001. 

Department of Defense Manual 4245.7-M. Transition from Development to

Production, Assistant Secretary of Defense (A&L), September 1985.

Department of Defense Regulation 5000.2-R Change 1, “Mandatory 

Procedures for Major Defense Programs (MDAPS) and Major 

Automated Information System (MAIS) Acquisition Programs,”

10 June 2001. 

Deputy Secretary of Defense. Statement to the Press, 9 June 1970. 

Appendix to “Policy Changes in Weapon System Procurement,” 

House Committee on Government Operations, 91st Cong., 2d 

sess., 22 September 1970.

Federal Acquisition Regulation (FAR) System, July 2009, and U.S. 

Department of Defense, Defense Federal Acquisition Regulation 
SELECTED BIBLIOGRAPHY 243

Supplement (DFARS). Washington, D.C.: U.S. Government 

Printing Office, 21 July 2009. 

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Hearings U.S. Senate, Committee on Governmental Affairs and 

Committee on Armed Services, 103d Cong., 2d sess., S. Hearing 

103–849. Washington, D.C.: U.S. Government Printing Office, 

1994.

Foster, John S. Memo for David Packard, 7 July 1969. Management of 

Weapons Systems Acquisition. Comptroller Subject Decimal File, 

1969 (75–0089), Box 54, 400.13 (June 1969), RG 330, WNRC.

———. Memo for Listed Recipients, 29 July 1970. Application of New 

Policy Guidance to Major Weapon Systems. Appendix to “Policy 

Changes in Weapon System Procurement,” House Committee 

on Government Operations, 91st Cong., 2d sess., 22 September 

1970.

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Interviews

Defense Acquisition History Project (DAHP) Interviews

•	Foster, John S., 19 February 2003.

•	Laird, Melvin R., 18 November 2004.

•	Schlesinger, James R., 7 February 1991.

•	Shillito, Barry, 6, 8 June 2005.

Office of the Secretary of Defense (OSD) Historical Office Interviews

•	Laird, Melvin R., 2 September 1986.

•	Packard, David, 9 and 28 November 1987.

•	Rumsfeld, Donald H. (Alfred Goldberg and Roger R. Trask, interviewers), 12 July and 2 August 1994.

•	Schlesinger, James R. (Alfred Goldberg and Maurice Matloff, 

interviewers), 12 July 1990.

Unpublished Manuscripts

Moody, Walton S., and David G. Allen. “Department of Defense Acquisi- tion History, Volume III: 1969–1980.”

Lassman, Thomas C., and Andrew J. Butrica. “Department of Defense 

Acquisition History, Volume IV: 1981–1990.”

Shiman, Philip L. “Department of Defense Acquisition History, Volume 

V: 1991–2000.”
A–12 aircraft, 191

Abrams M–1 battle tank, 101, 114

ACATs (acquisition categories), 17–18, 

134, 180

Acker, David D., 9

Acquisition. See entries at Defense 

acquisition.

Acquisition categories (ACATs), 17–18, 

134, 180

Acquisition Improvement Program 

(AIP, or Carlucci initiatives)

background to, 106–08

development of, 108–14

DSARC reform, 108, 111–14, 118

implementation and execution of, 

114–20

Packard Commission and, 130, 133

purpose of, 99–100

resistance of military services to, 

109, 114–17, 122

Acquisition Reform Benchmarking 

Initiative, 162

Acquisition Reform Day and Week, 

164–65

Acquisition Reform Now bulletins, 164

Acquisition Review Quarterly, founding 

of, 164

Active manager view, 198, 199, 200–201

Adams, Gordon, 119

Advanced Medium-Range Air-to-Air 

Missile (AMRAAM), 114, 193

Advanced Research Projects Agency 

(ARPA), 73

Adversarial relationships

between OSD and military services, 

102, 118, 133

between program managers and 

contractors, 195–96

Aerospace Corporation, 88, 92

AFLC (Air Force Logistics Command), 

107

AFSC (Air Force Systems Command), 

107

AIP. See Acquisition Improvement 

Program.

Air Force

budget authority, share of, 3

FCRCs, 88

IPD (Integrated Product Development) in, 178

Packard reforms, resistance to, 55–56

program managers in, 33, 77–78

reorganization of internal acquisition 

functions by, 137

See also Military services.

Air Force Logistics Command (AFLC), 

107

Air Force Systems Command (AFSC), 

107

Aldridge, Edward “Pete,” 143–44, 146

Alpha Contracting, 185

Alternative Dispute Resolution, 185

AMRAAM (Advanced Medium-Range 

Air-to-Air Missile), 114, 193

Analysis of Alternatives (AoA), 25, 28

Annual or single-year appropriations, 

19

AoA (Analysis of Alternatives), 25, 28

Appropriations process, 19–20

Armed Services Procurement Act, 84

Armed Services Procurement 

Regulation (ASPR), 14, 90–91

Army

budget authority, share of, 3

DARCOM (formerly Army Materiel 

Command), 107, 137

FCRCs, 88–89

Packard reforms, resistance to, 55

program managers in, 33, 78, 184–85

reforms of 1990–2000, Rand study of, 

183–88

reorganization of internal acquisition 

functions by, 136–37

See also Military services.

ARPA (Advanced Research Projects 

Agency), 73

Art, Robert J., 13

ASD (A&L) (assistant secretary 

of defense for acquisition and 

logistics), 121–24, 134

INDEX
256 DEFENSE ACQUISITION REFORM, 1960–2009

ASD (D&S) (assistant secretary of 

defense for development and 

support), 123

ASD (MI&L) (assistant secretary of 

defense for manpower, installations, 

and logistics), 122, 132

Aspin, Leslie “Les,” 125, 142, 151, 153, 

154, 158

ASPR (Armed Services Procurement 

Regulation), 14, 90–91

Assistant secretary of defense for 

acquisition and logistics (ASD 

[A&L]), 121–24, 134

Assistant secretary of defense for 

development and support (ASD 

[D&S]), 123

Assistant secretary of defense for 

manpower, installations, and 

logistics (ASD [MI&L]), 122, 132

Atomic Energy Commission, 80, 83

AV–8B Harrier, 192

B–1 bomber, 101, 105n17

B–1B bomber, 191

B–2 bomber, 191

B–52 bomber, 101

B&P (bid and proposal) work, 89–91

Bechtel Group, 139–40

Benson, Robert, 40

Bid and proposal (B&P) work, 89–91

“Big A” acquisition, 5

Block change agreements, 173–74

Blue Ribbon Commission on Defense 

(1985–1989). See Packard 

Commission.

Blue Ribbon Defense Panel (Fitzhugh 

Commission, 1969–1970), 41, 45–

47, 57, 62–69, 71–73, 77, 82, 83

Blueprint for Change (1994), 171–72

Boeing Company, 124

Brookings Institution, 141

Brown, Harold, 52, 95, 99, 140n99

Budget Act of 1974, 93–94

Budget authority, 1, 3

Budget fluctuations, program instability 

due to, 98–99, 102, 109, 115–16

Business environment of defense 

acquisition, 12–13, 32–33, 98, 

193–94

Buy American Act, 87

C–5A cargo transport, 37, 45, 55, 57

CAIG (Cost Analysis Improvement 

Group), 78

CAIV (Cost as an Independent 

Variable), 187

Career paths and training for program 

managers, 33, 39–40, 54–55, 66, 

131, 194–204

Carlucci, Frank C., 99, 102–06, 115–17, 

120, 146–47

Carlucci initiatives. See Acquisition 

Improvement Program.

Carter, Jimmy, and administration, 95, 

96, 97, 101, 102

CDRLs (Contract Data Requirements 

Lists), 185

Center for Naval Analyses, 88, 188

Centralization/decentralization 

approaches

OSD, centralization of decision-making 

authority under, 36, 38–39, 98, 104

Packard on, 39–40, 47, 68, 72, 74, 95

political system in United States, 

decentralized nature of, 98–99, 150

program manager understanding of, 

201

under Weinberger, 99–100, 104, 106, 

113

Charles, Robert, Jr., 40

Chiles, Lawton M., 83, 87, 91

Chrysler Corporation, 114

CINC (commander in chief) 

participation in PPBS reform, 

105n17

Circular A–76, OMB, 85, 94–95

Circular A–109, OMB, 95, 107

CITE (contractor independent technical 

effort), 89–91

Clark, John Russell, 83, 91

Claytor, W. Graham, 102

Clean Air Act, 87

Clements, William P., Jr., 80–81, 93

Clinger-Cohen Act, 170

Clinton, William J. “Bill,” and 

administration, 151, 163. See also

Defense acquisition reform, 1990 

to 2000.
INDEX 257

Cohen, William, 167, 168, 170

Cold War, 98, 101

Commander in chief (CINC) 

participation in PPBS reform, 

105n17

Commercial operation versus defense 

acquisition, 12–13, 32–33, 98, 

193–94

Commission on Procurement. See

Congressional Commission on 

Government Procurement.

Communications program to engage 

workforce, 163–65

Competition in Contracting Act (1983), 

154–55, 169

Conahan, Frank C., 145–46

Concurrent engineering, 178

Configuration management, 14, 38

Congress

AIP and, 109

authorization and appropriation by, 

16–17

changes in program funding and, 17, 

20, 31

on cost estimates, 6

increased defense spending in 1980s 

and, 100, 118

legislative reforms

of 1960s and 1970s, 93–95

of 1980s, 128–29, 132, 133, 141

1990 to 2000, 165–70

Packard reform proposals promoted 

to, 69–73

as participant in defense acquisition 

process, 14–15, 16–17, 100, 109n24

production rate constraints, 32

USD (A), establishment of, 132, 133, 

141–42

Congressional Budget Office, 15, 94

Congressional Commission on 

Government Procurement 

(McGuire-Holifield Commission), 

41, 82–95

legislative reform following, 93–95

Office of Federal Procurement Policy 

and, 84–88

organization of, 82–84

report, presentation and implementation of, 92–93

on research and development procurement, 88–91

on systems acquisition reform, 91–93

Congressional Research Service, 15

Continuity, problem of lack of, 201, 

206–07

Contract Data Requirements Lists 

(CDRLs), 185

Contracting

Blue Ribbon Panel report (1969–

1970) on, 65

Congressional Commission on, 86–87

cost efficiency incentives for contractors, 11, 31–32, 204–06

development and production overlap, 

27

DoD Directive 5000.1 on, 75

economics of defense acquisition and, 

12–13, 32–33, 98, 193–94

historical background (before 1960), 

7–9

Logistics Management Institute 

report on, 41–42

McNamara reforms, 36–37

multiyear appropriations and, 19

Packard on, 79

profits of contractor, basis for, 31–32

proposals to reduce oversight of, 176, 

177

relationships between government 

and contractors, 193–98

role in defense acquisition, 1

selection of contractor, 29–30

social objectives and, 32

stages in acquisition process, involvement in, 21, 27

timely payment of contractors, 86, 

93–94

for weapon systems, 11

Contractor Funds Status Reporting, 37

Contractor independent technical effort 

(CITE), 89–91

Conyers, John, Jr., 165

Cost Analysis Improvement Group 

(CAIG), 78

Cost and Schedule Control System 

Criteria (C/SCSC), 37

Cost and Software Data Reporting 

(CSDR) Plan(s), 26
258 DEFENSE ACQUISITION REFORM, 1960–2009

Cost as an Independent Variable 

(CAIV), 187

Cost efficiency

incentives for contractors, 11, 31–32, 

204–06

as major problem, 6, 192

multiyear appropriations and, 19

nature of relationship between government and contractors affecting, 

193–98

scheduling and, 29, 35

systemic issues affecting, 30–31

timing and length of acquisition 

process affecting, 29

uniform cost accounting standards, 

Congressional Commission on, 86

Cost estimates

Blue Ribbon Panel (1969–1970) on, 

67

inadequate methodology for, 6, 35

parametric cost estimating, 36

reforms of 1960s–1970s and, 40

tendency of programs to exceed, 

30–31

Cost Information Reports, 37

Cost-plus-fixed-fee contracts, 9, 36

Cost-reimbursement contracts, 9, 60, 

89, 90–91, 196

Costello, Robert, 143, 146–47, 178

Critical technology elements (CTEs), 25

C/SCSC (Cost and Schedule Control 

System Criteria), 37

CSDR (Cost and Software Data 

Reporting) Plan(s), 26

CTEs (critical technology elements), 25

Currie, Malcolm R., 81

DAB (Defense Acquisition Board), 

134–35, 175–77

DAE (defense acquisition executive), 

17, 107, 112, 121, 124, 130

DARCOM (Department of the Army 

Readiness Command, formerly 

Army Materiel Command), 107, 

137

DARPA (Defense Advanced Research 

Projects Agency), 131

DAU (Defense Acquisition University), 

6, 55, 156, 185, 202

Davis-Bacon Act, 168–69

DCAPE (director, cost assessment and 

program evaluation), 23

DCAS (Defense Contract 

Administration Service), 37, 86–87, 

94–95

DCMC (Defense Contract Management 

Command), 176, 177

DCP. See Development Concept Paper.

DDR&E. See Director of defense 

research and engineering.

De Poix, V. Adm. Vincent, 70–71, 74

Deadeye program, 143, 144

Decentralization. See Centralization/

decentralization approaches.

Defense acquisition, 1–33, 189–207

ACATs (acquisition categories), 17–18

budgeting authorities and defense 

establishment, 1–4

changes in funding, schedules, and 

technical performance requirements, 15–16, 31

congressional authorization and appropriation, 19–20

as consensus-building exercise, 16

continuing problems associated with, 

189–92

continuing study of problems associated with, 188

continuity problems in, 201, 206–07

contracting. See Contracting.

cost efficiency in. See Cost efficiency.

differing perceptions of current state 

of, 200

economics of, 12–13, 32–33, 98, 193–94

federal deficit and, 207

historical background (before 1960), 

7–11

implementation and follow-up of 

reform recommendations, 205–07

incentives inherent in, 11, 32–33, 

191, 203–05

media and public scrutiny of, 100, 

120–21, 125–28

participants in process, 14–17

production, limited rates of, 32–33

program management. See Program 

management offices and program 

managers.
INDEX 259

quick fixes to reduce budgets, problem of, 201

regulations and directives applicable 

to. See Regulations and directives.

stages in acquisition process, 20–27, 

95

timing and length of acquisition 

process, 27, 29, 192

transition between stages, 28–29

weapon systems. See Weapon systems.

Defense Acquisition Board (DAB), 

134–35, 175–77

Defense Acquisition Deskbook, 164, 179

Defense acquisition executive (DAE), 

17, 107, 112, 121, 124, 130

Defense Acquisition Improvement Act 

of 1986, 135

Defense Acquisition Pilot Programs, 

158–60

Defense Acquisition Policy 

Subcommittee, 127

Defense Acquisition Process (“little a” 

acquisition), 5

Defense acquisition reform, 1960s and 

1970s, 35–96

Blue Ribbon Defense Panel (Fitzhugh 

Commission), 41, 45–47, 57, 62–69, 

71–73, 77, 82, 83

centralization of decision-making 

authority under OSD, 36, 38–39

Congressional Commission on. See

Congressional Commission on 

Government Procurement.

Defense Resource Board study, 96

DoD Directive 5000.1, 74–78

DSARC, creation of, 47–49

IAC, 50–53

under Laird, 40–48, 63, 68, 71–74, 

78–80

legislative reforms, 93–95

McNamara innovations, 35–40, 45, 48

Office of Federal Procurement Policy, 

84–88, 93–95

OMB Circular A—109, 95

Packard and. See Packard, David.

post-Laird/Packard changes of appointees, 79–82

PPBS, 36, 38, 96

Defense acquisition reform, 1980s, 

97–150

Blue Ribbon Commission on Defense 

(1985–1989). See Packard Commission.

Carlucci initiatives. See Acquisition 

Improvement Program.

expansion of military services and 

defense spending, 97, 100–01

fraud, waste, and mismanagement 

charges, 120–21, 125–27

legacy of, 146–50

OSD leadership reorganization, 

120–25

PPBS, 101–06

program instability due to budget fluctuations, 98–99, 102, 109, 115–16

Reagan’s mandate for change and, 

97–100

USD (A). See Under secretary of 

defense for acquisition.

Weinberger and. See Weinberger, 

Caspar W.

Defense acquisition reform, 1990 to 

2000, 151–88

acquisitions process, changing, 

175–80

advantages and disadvantages, 

185–87

broad-based nature of, 166, 170

communications program to engage 

workforce, 163–65

Defense Acquisition Pilot Programs, 

158–60

legislative reform, 165–70

metrics development, 160–63

milspec reform, 171–75

organization of reform process, 

154–58

Perry and. See Perry, William J.

Rand study of, 180–88

white paper “The Mandate for 

Change” (1994), 153–54, 170

Defense Acquisition University (DAU), 

6, 55, 156, 185, 202

Defense Acquisition Workforce 

Improvement Act, 155

Defense Advanced Research Projects 

Agency (DARPA), 131
260 DEFENSE ACQUISITION REFORM, 1960–2009

Defense Authorization Act of 1986, 131

Defense budget, 1–4

Defense Contract Administration 

Service (DCAS), 37, 86–87, 95

Defense Contract Audit Agency 

(DCAA), 37, 82, 86, 94

Defense Contract Management Agency, 

1

Defense Contract Management 

Command (DCMC), 176, 177

Defense Department. See Department 

of Defense.

Defense Enterprise Programs, 158–59

Defense Federal Acquisition Regulation 

Supplement (DFARS), 13–14, 159

Defense Logistics Agency, 122

Defense Procurement Act of 1984, 155

Defense Procurement Improvement 

Acts of 1985 and 1986, 155

Defense Resources Board, 96, 105, 116, 

133

Defense Science Board (DSB), 163, 178, 

188

Defense Standards Improvement 

Council, 162

Defense Supply Agency, 37, 87

Defense Systems Acquisition Review 

Council (DSARC)

in 1960s and 1970s, 56, 61, 70, 71–72

AIP reform of, 108, 111–14, 118

creation of, 47–49, 108, 134

DoD Directive 5000.1, 74, 75, 76

JRMB modeled on, 1342

membership, 108n22

Defense Weapons Systems 

Management Center (later Defense 

Systems Management School/

College), 52, 54–55, 156

Definition of the Requirement, 20–22

DeLauer, Richard D., 112, 114, 122–24

Department of Defense (DoD), 1–3

Blue Ribbon Panel report (1969–

1970) proposing reorganization of, 

63–64, 68, 72–73

on cost estimates, 6

historical background (before 1960), 

9–11

as participant in defense acquisition 

process, 15

profits of contractor, basis for, 31–32

Reagan, expansion under, 97–98

Department of Defense Reorganization 

Act of 1958, 35

Department of Justice, 15

Department of the Army Readiness 

Command (DARCOM, formerly 

Army Materiel Command), 107, 

137

Deputy under secretary for acquisition 

reform, 154–58

Deutch, John M., 152, 155

Development Concept Paper (DCP)

Laird-Packard reforms and, 49, 56, 

66, 71–73, 75, 76

McNamara reforms and, 37

Development testing and evaluation 

(DT&E), 89–90

DFARS (Defense Federal Acquisition 

Regulation Supplement), 13–14, 

159

Dickinson, William, 142

Director, cost assessment and program 

evaluation (DCAPE), 23

Director of defense research and 

engineering (DDR&E)

in 1960s and 1970s, 44, 52, 53, 56–57, 

61, 64, 73, 75, 90

re-creation of, 140

USD (R&E), upgraded to, 107, 

140n99

Director of operational test and 

evaluation, 26, 169

DoD. See Department of Defense.

DoD Directive 5000.01, 22

DoD Directive 5000.1, 14, 74–78, 107, 

179

DoD Directive 5134.1, 135–36

DoD Directive 8120.1, 180

DoD Instruction 5000.01, 17

DoD Instruction 5000.2, 14, 17, 107, 

179

DoD Instruction 8120.2, 180

DoD Manual 5000.2-M, 179

DoD Manual 7920.2-M, 180

DoD Regulation 5000.2-R, 175, 179

Douglas Aircraft Corporation, 88

DSARC. See Defense Systems 

Acquisition Review Council.
INDEX 261

DSB (Defense Science Board), 163, 178, 

188

DT&E (development testing and 

evaluation), 89–90

Earned Value Management System 

(EVMS), 37

Economics of defense acquisition, 12–

13, 32–33, 98, 193–94

Engineering and Manufacturing 

Development (EMD), 22, 24, 26

Enthoven, Alain C., 44–45

EVMS (Earned Value Management 

System), 37

Evolutionary acquisition, 23, 28n57, 111

F–14A Tomcat fighter aircraft, 37

F–15 aircraft, 7, 56

F–15E tactical fighter, 105n17

F–22 aircraft, 7, 191

F–52G strategic bomber, 105n17

F–111 fighter-bomber, 37, 55

FACNET (Federal Acquisition 

Network), 168

FAIA (Federal Acquisition 

Improvement Act), 165–66

FAR (Federal Acquisition Regulation), 

13–14, 159

FAR supplements, component-unique, 

13

FARA (Federal Acquisition Reform 

Act), 170

FASA (Federal Acquisition 

Streamlining Act), 160, 166–70

“Faster, better, cheaper,” 154

FCRCs (federal contract research 

centers), 88–89

FCS (Future Combat Systems), 185

Federal Acquisition Improvement Act 

(FAIA), 165–66

Federal Acquisition Network 

(FACNET), 168

Federal Acquisition Reform Act 

(FARA), 170

Federal Acquisition Regulation (FAR), 

13–14, 159

Federal Acquisition Streamlining Act 

(FASA), 160, 166–70

Federal contract research centers 

(FCRCs), 88–89

Federal Property and Administrative 

Services Act, 84–85

Federally funded research and 

development centers (FFRDCs), 

88–89

Fitzgerald, Arthur E., 204

Fitzhugh Commission (Blue Ribbon 

Defense Panel, 1969–1970), 41, 

45–47, 57, 62–69, 71–73, 77, 82, 83

Fitzhugh, Gilbert W., 46, 47, 63, 67, 73

Fixed-price contracts, 36, 37, 38, 75, 89, 

90, 110, 119, 196, 200

Fly-before-buy, 78, 131, 135, 191

Ford, Gerald P., and administration, 

81–82, 96

Forrestal, James V., 10

Foster, John S., 44, 50, 52–54, 62, 64, 81

Francis, Paul L., 189

Fubini, Eugene G., 52

Future Combat Systems (FCS), 185

Galbraith, John Kenneth, 85

GDP (gross domestic product), 1, 2

General Dynamics Corporation, 114, 

120

General Services Board of Contract 

Appeals, 170

Germany, defense acquisition in, 12

GDP (gross domestic product), 1, 2,

GNP (gross national product), U.S. 

defense share of, 12

Godwin, Richard P., 139–44, 146, 148

Goldwater, Barry M., 45, 125, 139–40

Goldwater-Nichols Department of 

Defense Reorganization Act (1986), 

132, 135–37, 146, 169

Gore, Al, 167

Government Accountability Office 

(GAO, formerly General 

Accounting Office)

on AIP, 117–20

on cost estimates, 6, 31, 40

as participant in defense acquisition 

process, 15

profits of contractor, basis for, 31

on proposal to consolidated DCAS 

and DCAA, 87

on USD (A), 145–46

on weapon systems, 6, 188, 189–90
262 DEFENSE ACQUISITION REFORM, 1960–2009

Government regulations. See

Regulations and directives.

Governmental Affairs Committee, 168

Grace Commission (Private Sector 

Survey on Cost Control, 1982), 126

Gramm, William Philip “Phil,” 139

Grassley, Charles E., 125, 147, 167–68

Gross domestic product (GDP), 1, 2

Gross national product (GNP), U.S. 

defense share of, 12

Gurney, Edward J., 83

Harry Diamond Laboratory, 88

Hart, Gary, 126, 145

Harvard University study of defense 

acquisition (1962), 30, 35

HASC (House Armed Services 

Committee), 125, 151–55, 166

Hewlett-Packard (HP), 43–44, 47, 78, 

138, 149

Hicks, Donald, 124–25, 139–40, 141, 

144

Holifield, Chet E., 83, 87, 91

Horton, Frank, 83, 91

House. See Congress.

House Armed Services Committee 

(HASC), 125, 151–55, 166

HP (Hewlett-Packard), 43–44, 47, 78, 

138, 149

Hughes Aircraft, 114

Human Resources Research 

Organization (HumRRO), 88

ICBMs (intercontinental ballistic 

missiles), 10, 14, 98, 101, 105n17

IDA (Institute for Defense Analyses), 

88, 178

Impediments to Reducing the Costs of 

Weapon Systems (GAO, 1979), 31

Incentives

acquisition culture, problems inherent in, 11, 31–32, 189, 191, 204–05

for contractors, 11, 31–32, 204–06

for program managers, 203–04

Independent research and development 

(IR&D), 89–91, 95

Information Technology Management 

Reform Act (ITMRA), 170

Initial Capabilities Document, 23

Institute for Defense Analyses (IDA), 

88, 178

Integrated Priority Lists (IPLs), 105n17

Integrated product and process 

development (IPPD), 160, 177–78

Integrated product teams (IPTs), 

176–77

Integrated Weapon System 

Management (IWSM), 178

Intercontinental ballistic missiles 

(ICBMs), 10, 14, 98, 101, 105n17

Iowa-class battleships, 101

IPLs (Integrated Priority Lists), 

105n17

IPPD (integrated product and process 

development), 160, 177–78

IPTs (integrated product teams), 

176–77

IR&D (independent research and 

development), 89–91, 95

ITMRA (Information Technology 

Management Reform Act), 170

IWSM (Integrated Weapon System 

Management), 178

Jackson, Henry M., 83

Japan, defense acquisition in, 12

JCIDS (Joint Capabilities Integration 

and Development System), 5, 28

JDAM (Joint Direct Attack Munition), 

160

Johns Hopkins University Applied 

Physics Laboratory, 88

Johnson, Lyndon B., and 

administration, 36

Joint Capabilities Integration and 

Development System (JCIDS), 5, 

28

Joint Chiefs of Staff

in 1960s and 1970s, 45, 46, 62, 63n70

in 1980s, 102–06, 129, 132–35

Joint Direct Attack Munition (JDAM), 

160

Joint Primary Aircraft Training System 

(JPATS), 160

Joint Requirements Management 

Board (JRMB), 134, 135

Joint Requirements Oversight Council 

(JROC), 23, 134
INDEX 263

JPATS (Joint Primary Aircraft 

Training System), 160

JRMB (Joint Requirements 

Management Board), 134, 135

JROC (Joint Requirements Oversight 

Council), 23, 134

Justice Department, 15

Kaminski, Paul, 163, 164–65, 174–75, 

176–77, 178, 180n93

Kelman, Steven, 169

Kennedy, John F., and administration, 

36

Kissinger, Henry A., 81

Kleindienst, Richard G., 80

Korb, Lawrence J., 115, 122

Korean War, 10

Kunzig, Robert L., 83

Laird, Melvin, 40–48, 63, 68, 71–74, 

78–80

Lawrence Berkeley National 

Laboratory, 124

Lehman, John F., 101, 141, 143–44, 146

Length and timing of acquisition 

process, 27, 29, 192

Liaison manager view, 197–98, 200

Lincoln Laboratory, 88

“Little a” acquisition (Defense 

Acquisition Process), 5

Lockheed, 37, 57

Logistics Management Institute, 31, 

41–42, 88

Low-Rate Initial Production (LRIP) 

quantity, 26–27

LTV Aerospace Corporation, 83, 91

M–1 battle tank, 101, 114

MAIS Review Council (MAISRC), 180

Major Automated Information Systems 

(MAISs), 17, 27, 180

Major Defense Acquisition Programs 

(MDAPs), 17, 22

Major weapon systems. See Weapon 

systems.

Management by objectives, 47, 48, 61, 74

Management of programs. See Program 

management offices and program 

managers.

“The Mandate for Change” (Perry, 

1994), 153–54, 170

Marine Corps AV–8B Harrier and V–22 

Osprey programs, funding for, 192. 

See also Military services.

Marsh, John, 144

Materiel Development Decision, 22, 23

Materiel Solution Analysis, 22, 23, 24, 28

Maverick missile, 115

McClary, Terence E., 81

McCurdy, Dave, 120

McGuire-Holifield Commission. See

Congressional Commission on 

Government Procurement.

McGuire, Perkins, 83

McLucas, John L., 81

McNamara, Robert S., 5, 35–40, 45, 58, 

100, 104

McNaugher, Thomas L., 141

MDA (Milestone Decision Authority), 

18, 22, 23, 25, 26

MDAPs (Major Defense Acquisition 

Programs), 17, 22

Media scrutiny of defense acquisition 

process, 100, 120–21, 125–28

Mendolia, Arthur L., 81

Metrics development, 160–63

Milestone Decision Authority (MDA), 

18, 22, 23, 25, 26

Military Reform Caucus, 126–27, 

145–46, 148

Military Retirement Reform Act of 

1986, 132, 135

Military services

AIP, resistance to, 109, 114–17, 122

competition between, 98

directives supplementing government regulations, 14

government regulations applicable to 

acquisition by, 13

historical background (before 1960) 

to acquisition programs in, 10–11

organization of reform process under 

Clinton, 158

OSD, adversarial relationship with, 

102, 118, 133

Packard Commission’s proposal to 

reform command structure for 

acquisitions purposes, 133–34
264 DEFENSE ACQUISITION REFORM, 1960–2009

Military services—Continued

Packard reforms, resistance to, 53–57

as participants in defense acquisition 

process, 14–15

production rate constraints, 32

Reagan, expansion under, 97, 

100–101

reorganization of internal acquisition 

functions by, 136–37

USD (A), resistance to, 132–33, 139, 

141–46, 148

See also Air Force; Army; Marine 

Corps; Navy.

Military specifications and standards 

(milspecs), 170–74, 185

Minuteman missile system, 101

Modified Integrated Program Summary 

(MIPS), 185

Mondale, Walter, 120

Moot, Robert C., 44, 48

Multiyear appropriations and 

contracting, 19, 99, 108, 110

MX (Peacekeeper) ICBM, 105n17

National Defense Authorization Act for 

Fiscal Year 1987, 135

National Performance Review, 166

National Polar-Orbiting Operational 

Environmental Satellite System 

(NPOESS), 120

National policies, use of procurement to 

implement, 87

National Security Decision Directive 

(NSDD) 219, 134–35, 138

NATO (North Atlantic Treaty 

Organization), 32, 81

Naval Weapons Center, 88

NAVMAT (Navy Material Command), 

108

Navy

A–12 development program information, withholding of, 192

budget authority, share of, 3

DSARC review process and, 114

expansion program for submarine 

and surface fleets, 101, 143

FCRCs, 88

Packard reforms, resistance to, 55

program managers in, 33, 78

reorganization of internal acquisition 

functions by, 136–37

Navy Material Command (NAVMAT), 

108

Nixon, Richard M., and administration, 

41, 42, 46, 79–81, 82, 83, 93, 96. See

also Defense acquisition reform, 

1960s and 1970s.

No-year appropriations, 19

Non-defense versus defense outlays, 

3, 4

North Atlantic Treaty Organization 

(NATO), 32, 81

Northrop Corporation, 124

NPOESS (National Polar-Orbiting 

Operational Environmental 

Satellite System), 120

NSDD (National Security Decision 

Directive) 219, 134–35, 138

Nuclear weapons, 42, 83, 98, 100, 101, 

120

Nunn-McCurdy Amendment to Defense 

Authorization Act of 1982, 119–20

Nunn, Sam, 119, 125, 142, 169

Office of Federal Procurement Policy, 

87, 93–95

Office of Management and Budget 

(OMB)

Circular A–76, 85, 94–95

Circular A–109, 95, 107

on cost estimates, 6

Defense Acquisition Pilot Programs 

submitted to, 158

as participant in defense acquisition 

process, 14, 15

production rate constraints, 33

Office of Systems Analysis, 36, 44

Office of Technology Assessment, 15

Office of the Secretary of Defense (OSD)

AIP and, 110, 117–18, 120

centralization of decision-making 

authority under, 36, 38–39, 98, 104

directives supplementing government regulations, 14

DoD Reorganization Act of 1958 

expanding role of, 35

military services, adversarial relationship with, 102, 118, 133
INDEX 265

as participant in defense acquisition 

process, 14

production rate constraints, 32

responsibility for defense acquisition, 

development of, 10

Test and Evaluation Oversight List, 

26

Weinberger reorganization of executive leadership, 120

Office of the Service Secretary, 14

OMB. See Office of Management and 

Budget.

Open systems approach, 174–75

Open Systems Joint Task Force, 174

Operational test and evaluation 

(OT&E), 28

Operations and Support, 22, 24, 27

Oscar, Kenneth, 183–84

OSD. See Office of the Secretary of 

Defense.

Other Transaction Authority (OTA), 185

P3I (preplanned product improvement), 

111

Packard Commission (Blue Ribbon 

Commission on Defense, 1985–

1989), 125–32

Defense Enterprise Programs, 

158–59

fraud, waste, and mismanagement 

charges, in response to, 120, 

125–26

legacy of, 148, 149

legislation implementing, 134–35

Perry on, 151–52

on USD (A), 124, 127, 129, 131–32, 

142

Packard, David

on Blue Ribbon Commission on Defense (1985–1989), 120, 138–39

on centralization versus decentralization of acquisitions process, 

39–40, 47, 68, 72, 74, 95

Congressional Commission report 

and, 87, 90, 92

as deputy secretary of defense

appointment as, 43–45

Blue Ribbon Panel report (1969–

1970) and, 57, 63, 64, 67–69

broad policy memorandum of 1970, 

57–62, 75–76

Congress, promotion of proposed 

changes to, 69–73

departure from DoD, 78–79

DoD Directive 5000.1 and, 74–78

DSARC, creation of, 47–49, 108, 134

IAC and, 50–53

internal push by, 45

services resistance to reforms of, 

53–57

systems acquisition process under, 

54, 58

HP (Hewlett-Packard) and, 43–44, 

47, 78, 138, 149

legacy of, 148–49

Perry and, 152

“Panel A,” IAC, 50–52

Parametric cost estimating, 36

Participatory management, concept of, 

101, 103

Partnership relationships between 

program managers and 

contractors, 196–97

PATs (process action teams), 157–58, 

162, 171–72, 175–78

PDR (preliminary design review), 22

Peacekeeper (MX) ICBM, 105n17

Peck, Merton J., 35

PEOs (program executive officers), 129, 

130, 137, 186–87

Perry, William J.

acquisitions process, changing, 175, 

178

Clinton acquisition reforms, as driving force of, 151–53

Defense Acquisition Pilot Programs 

and, 159, 160

metrics development and, 162

on milspec reform, 171–74

white paper “The Mandate for 

Change” (1994), 153–54, 170

PERT (Program Evaluation and 

Review Technique), 37

Planning, Programming, Budgeting, 

and Execution System (PPBES, 

formerly PPBS), 5

in 1960s and 1970s, 36, 38, 96

in 1980s, 101–06
266 DEFENSE ACQUISITION REFORM, 1960–2009

PPBES/PPBS. See Planning, 

Programming, Budgeting, and 

Execution System.

Prediction and performance, gap 

between, 11

Preliminary design review (PDR), 22

Preplanned product improvement 

(P3I), 111

Preston, Colleen A., 153–56, 158–65, 

167, 171

Private Sector Survey on Cost Control 

(Grace Commission, 1982), 126

Process action teams (PATs), 157–58, 

162, 171–72, 175–78

Production and Deployment, 22, 24, 

26–27

Production, limited rates of, 32–33

Program Evaluation and Review 

Technique (PERT), 37

Program executive officers (PEOs), 129, 

130, 137, 186–87

Program instability due to budget 

fluctuations, 98–99, 102, 109, 

115–16

Program management offices and 

program managers, 10–11

Blue Ribbon Panel (1969–1970) on, 

66–67

DoD Directive 5000.1 and, 74, 

77–78

fundamental flaws in current approach, 198–200

incentives for program managers, 

203–04

limitations of, 33

McNamara reforms, 37, 39–40

Packard Commission on, 131

Packard-Laird reforms, 49, 50–53, 

54–55, 59, 70

as participants in defense acquisition 

process, 14

Rand study of views on reform efforts, 180–82, 184–87

relationships between government 

and contractors, 194–98

short tenure of program managers, 

192, 202–03

stages of acquisition process, involvement in, 22, 26, 27

training and career paths for program managers, 33, 39–40, 54–55, 

66, 131, 194–204

Project on Military Procurement, 127

Proxmire, William, 45, 80–81

Public scrutiny of defense acquisition 

process, 100, 120–21, 125–28

Purchasing power, concept of, 12

Puritano, Vincent, 102, 103, 108, 110–

13, 115, 120

Qualified government personnel

Harvard Study on lack of, 35

program managers, training limitations of, 33

training and career paths for program managers, 33, 39–40, 54–55, 

66, 131, 194–204

Quayle, James Danforth “Dan,” 127, 

139–40

Rand Corporation, 9, 36, 80, 88, 170, 

180–88

Rasor, Dina, 127

RDT&E (research, development, test, 

and evaluation), 5, 17–19, 107, 

113

Reagan, Ronald W., and administration, 

96–101, 120, 124, 125, 126, 127, 

134–35, 138–39, 146–48. See also

Defense acquisition reform, 1980s.

Reform activities. See entries at

Defense acquisition reform.

Regulations and directives, 13–14

Congressional Commission on Government Procurement report on, 

82–85

Defense Acquisition Pilot Programs 

required to follow, 159

Defense Enterprise Programs required to follow, 158

review of 5000-series regulations and 

instructions (2002), 180–83

revisions of 5000-series regulations 

and instructions, 175–76, 178–79, 

180n93, 181

See also specific DoD Directives and 

Instructions.

Requests for proposals (RFPs), 21, 29
INDEX 267

Research and development 

procurement, Congressional 

Commission on, 88–91

Research, development, test, and 

evaluation (RDT&E), 5, 17–19, 107, 

113

Resor, Stanley R., 55

RFPs (requests for proposals), 21, 29

Richardson, Elliot L., 79–80, 81

Rickover, Admiral Hyman G., 59

Rivers, L. Mendel, 44–45

Roth, William V., Jr., 167–68

Rumsfeld, Donald R., 81, 82

Rush, Kenneth, 79–80

SAE (service acquisition executive), 29, 

129

SALT (Strategic Arms Limitation 

Treaty), 81

Sampson, Arthur F., 83, 91

SAMSO (Space and Missile Systems 

Organization), 88

Sanders, Frank P., 83, 91

Scheduling

delays and slippage, problem of, 29, 

35, 188, 189, 191

length and timing of acquisition 

process, 27, 29, 192

McNamara reforms addressing, 37

Scherer, Frederic M., 35

Schlesinger, James R., 80–81

Schriever, Brig. Gen. Bernard A., 10

Schultze, Charles L., 12

Seamans, Robert C., Jr., 81

Second World War, 8, 14, 98

Selin, Ivan, 45

Senate. See Congress.

Senate Armed Services Committee, 57, 

101, 116, 127, 140, 169

Service acquisition executive (SAE), 

29, 129

Shillito, Barry, 44, 48, 52–53, 63

Shultz, George P., 59, 139

Simpson, Alan, 121

Single Process Initiative (SPI), 173–74, 

185

Single-year or annual appropriations, 19

SLBM (submarine-launched ballistic 

missile), 101

Small businesses, interests of, 86, 87, 

94, 167

Small ICBM, 15

Social objectives and contracting, 32

Source Selection Advisory Council 

(SSAC), 29

Source selection authority (SSA), 29–30

Source Selection Evaluation Board 

(SSEB), 29–30

Soviet Union, 42, 82, 101

Space and Missile Systems 

Organization (SAMSO), 88

SPI (Single Process Initiative), 173–74, 

185

SSA (source selection authority), 29–30

SSAC (Source Selection Advisory 

Council), 29

SSEB (Source Selection Evaluation 

Board), 29–30

Staats, Elmer B., 83, 87, 91

Stennis, John C., 71, 72

Stockman, David A., 103n12

Strategic Arms Limitation Treaty 

(SALT), 81

Submarine-launched ballistic missile 

(SLBM), 101

Sullivan, Leonard, 81

Systems acquisition. See entries at

Defense acquisition.

Taft, William H., IV, 121, 123–25, 143–44

Taxation to cover defense acquisition, 

12–13

TDS (Technology Development 

Strategy), 25, 28

Technical leveling, 30

Technical performance issues, 40, 190, 

194

Technical Performance Measurement 

(TPM), 37

Technology Development, 22, 24, 25–26

Technology Development Strategy 

(TDS), 25, 28

Texas Instruments, 120–21, 173

Threat analysis, 21

Thurman, William W., 136, 137, 144–45

Tiger Team on Metrics, 162

Timing and length of acquisition 

process, 27, 29, 192
268 DEFENSE ACQUISITION REFORM, 1960–2009

Tomahawk missiles, 114

Total obligational authority, 1

Total Package Procurement (TPP), 

37–38, 41

Total Quality Management (TQM), 154, 

178

TPM (Technical Performance 

Measurement), 37

TPP (Total Package Procurement), 

37–38, 41

TQM (Total Quality Management), 154, 

178

Training and career paths for program 

managers, 33, 39–40, 54–55, 66, 

131, 194–204

Trimble, Robert, 114

Tucker, Gardiner, 45, 81

Under secretary of defense for 

acquisition (USD [A]), 132–42

ASD (A&L), downgrading of, 124–25

business model proposed for, 138–39

constraints on, 147

establishment of, 132–36

Godwin’s tenure as, 139–44, 146, 148

military services’ resistance to, 

132–33, 139, 141–46, 148

Packard Commission on, 124, 127, 

129, 131–32, 142

Under secretary of defense for 

acquisition technology and logistics 

(USD [AT&L]), 17, 130, 134

Under secretary of defense for research 

and engineering (USD [R&E]), 107, 

122, 123, 124, 132, 139, 140

U.S. Department of Defense. See

Department of Defense.

U.S. Department of Justice, 15

U.S. military services. See Military 

services, and also Air Force, Army, 

Marine Corps, and Navy.

USD (A). See Under secretary of 

defense for acquisition.

USD (AT&L) (under secretary of 

defense for acquisition technology 

and logistics), 17, 130, 134

USD (R&E) (under secretary of defense 

for research and engineering), 107, 

122, 123, 124, 132, 139, 140

V–22 Osprey, 191, 192

Vietnam War, 42–43, 79

Wade, James P., Jr., 123–25, 140, 141

Walsh-Healey Act, 168

Warner, John W., 55, 142

Watergate, 80

Weapon systems, 5–7

contracting process, 11

cost estimates for, 6

defined, 5–6

GAO assessment of selected programs, 6, 188, 189–90

nuclear weapons, 42, 83, 98, 100, 101, 

120

Weapons acquisition. See entries at

Defense acquisition.

The Weapons Acquisition Process: An 

Economic Analysis (Peck and 

Scherer, 1962), 35

The Weapons Acquisition Process: 

Economic Incentives (Scherer, 

1964), 35

Webb, James E., 83, 87, 91

Weinberger, Caspar W.

AIP under, 99–100, 110, 112, 

115

centralization/decentralization patterns under, 99–100

fraud, waste, and mismanagement 

charges, 120, 125–26

legacy of, 147–48

on military expansion and increase 

in defense spending, 101

OSD leadership, reorganization of, 

120–25, 132

Packard Commission recommendations, initial opposition to, 132

PPBS reform and, 104

USD (A) and, 139, 141–42, 144,

146

Wilson, Pete, 139–40

WIPTs (working IPTs), 176

Witt, Hugh E., 94

Woolsey, R. James, 142

Working IPTs (WIPTs), 176

World War II, 8, 14, 98

Zero-based budgeting (ZBB), 101, 103