Is The World’s Best Military the Worst When It Comes to Poor Procurement?

A number of my friends and family have served in the military at various points in their careers. When you talk to people who have left the military or civilian defense roles and are now in the business world, it's almost inevitable that they did not come from an acquisition role (at least if they're in the professional company that most people in management ranks keep). I suspect that those in defense procurement tend to stay in defense procurement, because it must be a pretty easy gig compared with other defense roles let alone a job on the outside in the procurement and supply chain field. When you read articles such as this, suggesting that the DoD's acquisition force "lacks pricing skills", I'm not surprised. Yet the degree of Defense Department buying bumbling as a rule -- not the exception -- almost baffles the private sector Spend Management mind.

Consider the following examples from the above-linked story, citing "a recent investigation by the House Armed Services Committee found that the Navy had purchased a refrigeration system for $40,000, and 18 months later bought precisely the same piece of equipment for $37,000." Yet it appears that the DoD does not even know where to begin when it comes to bringing in a fresh crop of civilian (or officer/enlisted) workers to key procurement functions. In the same piece, the GAO's Director of Defense Capabilities and Management has testified in Washington that the Pentagon "is moving ahead with plans to hire thousands of acquisition workers, but has not specified what skills those employees will need...but the department has yet to assess the skills and competencies of its acquisition work force and identify the 'appropriate mix' of expertise areas needed in that work force."

Let's get this straight. The US military's budget is over $700 billion in 2011, of which $400+ billion is allocated to purchased goods and services. And that's the budget we know about -- not items that are ensnared in Beltway defense buying secrecy. As a level set in terms of what this means, the amount spent on military goods and services procurement is equal to roughly 10% of all Federal spending. It's also roughly the same as Walmart's entire corporate revenue (not their spending). And we have the GAO Director, an expert in the area, suggesting that the DoD has not yet assessed the skills and competencies of its acquisition force to improve the level of expertise it brings to its gigantic budget? Imagine Walmart executives saying the say thing about their procurement and operations ranks. It's inconceivable.

In terms of skills, what about starting with things like strategic sourcing, vendor compliance, supplier management, supplier development and supply chain risk management? And instead of forcing new hires to learn key elements of the FAR (Federal Acquisition Regulation), why not save on heating bills and burn the few dozen printed copies that are lying around most offices, buried under the desks of bureaucrats just a few years away from collecting that golden pension? Alas, the DoD is undoubtedly long on planning and conservatism and short on new buying ideas that could bring its procurement standards up to where the private sector was thirty years ago, let alone today.

Jason Busch

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