the DoD Reorganization Act of 1958 to centralize the resource allocation process in OSD. This action had a direct impact on defense acquisition management. Secretary McNamara introduced the concept of systems analysis as an integral part of the Planning, Programming, and Budgeting System (PPBS). An OSD office was given responsibility for conducting cost-effectiveness analysis of the different means to accomplish specific defense objectives. The results of these analyses were used in the selection of weapon systems for development and production. While the effectiveness of the resulting decisions was difficult to assess due to the absence of a quantifiable "right answer," systems analysis did provide an organized method to allocate limited resources.

Concern for greater efficiency in defense procurement led to the consolidation of most defense contract administration functions under the Defense Contract Administration Services in 1963. OSD also began issuing major policy directives emphasizing cost reduction in defense acquisition. The number of cost-plus-fixed-fee contracts was reduced in favor of incentive and fixed-price contracts. Life-cycle cost -the total cost of acquisition and ownership -was made a principal consideration in the selection of systems and contractors.

The desire to introduce an aspect of accountability into PPBS and to respond to industry concerns about the proliferation of resource management systems and reporting requirements led Assistant Secretary of Defense (Comptroller), Dr. Robert Anthony, to issue a series of DoD Directives beginning in 1966. These directives set up more rational resource reporting and management systems, including the Selected Acquisition Reports (SAR's), for major defense programs. The systems were designed to reduce the reporting burden on contractors while providing more pertinent information to the program manager and information required by the Office of Management and Budget, the Treasury Department, and the Congress.

6. Secretary Laird's Tenure

At the end of the 1960's, the major concerns with the defense acquisition process were the inadequate ability to estimate and control costs and the lack of flexibility in the acquisition process. The Congress had also begun to reduce the defense budget to fund domestic programs. In response, the new Secretary of Defense, Melvin Laird, and his Deputy, David Packard, took a number of actions to improve the defense acquisition process.

Secretary Packard established the Defense Systems Acquisition Review Council (DSARC) within OSD to advise him of the status and readiness of each major defense system to proceed from one program phase to the next in its life cycle. Membership on the DSARC has included most of the senior managers within the Department of Defense, the composition of the individual boards depending on the specific program. The DSARC was intended to provide a mechanism for careful deliberation and evaluation before a decision to proceed to the next phase of the acquisition process. The Cost Analysis Improvement Group (CAIG) was formed in 1972 to provide independent cost estimates on programs before the DSARC and to set uniform DoD cost estimating standards.

In May 1970, Secretary Packard returned to the Services the responsibility for identifying needs and defining, developing, and producing the systems to satisfy those needs. OSD was to maintain responsibility for acquisition policy, to ensure fulfillment of mission needs, and to monitor the progress of major programs through the DSARC process. This shift was intended to improve the defense acquisition process by decentralizing authority and responsibility to the Services and the individual program managers.

Throughout the decade of the 1970's, further steps were taken to improve efficiency in defense acquisition. As a result of the recommendations made by the Commission on Government Procurement in 1972, DoD initiated a policy of focusing greater attention to alternative concepts at the "front end" of a program in order to reduce costs in later phases of the program. Then, in 1973, the senior military commanders responsible for acquisition issued a memorandum of agreement on joint program management among the Services as a means of reducing costs through standardization. 7. Secretary Weinberger's Tenure

In April 1981, Secretary of Defense Caspar Weinberger and his Deputy, Frank Carlucci, issued 32 initiatives to improve the defense acquisition process. The major focus of these initiatives was cost reduction through greater program stability, more accurate cost estimating, and economic production rates. Also included in the 32 initiatives was the decision to try to strengthen the DSARC process by reducing the number of programs to be reviewed as well as the number of the phases in each program requiring review by the Secretary of Defense.

C. CURRENT ORGANIZATION AND PROCEDURES FOR ACQUISITION

The acquisition process for the Department of Defense is extremely complex. Numerous elements of the Military Departments and OSD are involved in the process. This section briefly describes the major organizations and procedures involved in the DoD acquisition process.

1. The Buying Commands of the Military Departments

The major responsibility for acquisition, maintenance, and support of weapon systems lies with the so-called "buying" commands. of the Military Departments. These are the Army Materiel Command, Air Force Systems Command, Air Force Logistics Command, and the five systems commands of the Navy. The Navy systems commands were, until 1985, collected under the Naval Material Command. That command was disestablished, and the systems commands (Naval Sea Systems Command, Naval Air Systems Command, Space and Naval Warfare Systems Command, Naval Facilities Engineering Command, and Naval Supply Systems Command) now exist as independent organizations. The Marine Corps does not have a buying command comparable to that of the other Services. It is involved in operations of the Navy systems commands, however, and generally relies on buying commands of other Services to conduct its procurement.

The buying commands generally execute their acquisition responsibility for major weapon systems through program management offices. These offices consist of a program manager and other personnel assigned to the program manager. The program management office is responsible for the overall supervision of the program. The office has a contracting officer assigned to it, or a contracting officer from another organization within the buying command may be designated to support the program office.

The buying commands typically include a number of activities in addition to those committed to program management. For example, the Air Force Logistics Command operates five air logistics centers, which perform maintenance on Air Force systems. The Naval Sea Systems Command operates a number of naval shipyards, and the Naval Air Systems Command operates naval air rework facilities. Each buying command operates a series of laboratories as well as numerous test ranges and other facilities.

2. Acquisition Oversight in the Secretariats of the Military Departments

The Secretariat of each Military Department includes an office to provide oversight of that Department's acquisition activities. The Department of the Army has an Assistant Secretary for Research, Development, and Acquisition; the Department of the Navy has an Assistant Secretary for Shipbuilding and Logistics; and the Department of the Air Force has an Assistant Secretary for Research, Development, and Acquisition. Each of these officials, together with their staffs, represent the interests of their Service Secretary on acquisition issues.

3. Acquisition Oversight in the Service Military Headquarters Staffs

The Chief of Staff of the Army, the Chief of Naval Operations, the Commandant of the Marine Corps, and the Chief of Staff of the Air Force each have reasonably large staffs to oversee the acquisition activities of the Service. For example, there is a Deputy Chief of Staff of the Army for Research, Development, and Acquisition; a Deputy Chief of Staff of the Air Force with the same title; Deputy Chiefs of Naval Operations for Surface Warfare, Submarine Warfare, and Air Warfare, and a Director of Research, Development, Test and Evaluation; and a Deputy Chief of Staff for the Marine Corps for Research, Development, and Studies.

These military officers are involved in both the process that generates requirements and in monitoring acquisition activities for the Service Chiefs. In the Navy, the Deputy Chiefs of Naval Operations are primarily formulators of requirements. In the Army and Air Force, the formulation of military requirements is conducted primarily by commands in the field but ultimately is reviewed and coordinated for the Service Chief by the appropriate Deputy Chiefs of Staff. All of these offices are responsible for monitoring the activities of the buying commands on behalf of the Service Chiefs.

4. Defense Agencies

Certain Defense Agencies are also involved in the acquisition process. For example, the Defense Logistics Agency (DLA) is responsible for the centralized purchasing of a number of items

which the Services use. In many cases, DLA purchases items that are not related to the maintenance of weapon systems. Since weapon system acquisition is the primary focus of this discussion, the role of DLA in the purchase of more general types of items is not given substantial attention. Subsequent portions of this chapter do, however, discuss the contract administration services performed by a part of DLA, the Defense Contract Administration Services (DCAS).

A Defense Agency which has an important role in the acquisition process is the Defense Contract Audit Agency (DCAA). DCAA is the centralized auditor for DoD. The agency is responsible for the auditing of all defense contracts. The Director of DCAA reports to the Assistant Secretary of Defense (Comptroller), but audit policy for the Department is now provided by the DoD Inspector General. 5. The Office of the Secretary of Defense

As OSD is presently organized, two key OSD officials have essential responsibilities for defense procurement: the Under Secretary of Defense for Research and Engineering (USDR&E) and the Assistant Secretary of Defense (Acquisition and Logistics). The second position was created as a result of a reorganization in 1985 by Secretary Weinberger. The reorganization resulted in a readjustment of some of the responsibilities of the USDR&E, who previously had been the DoD Acquisition Executive and who had been responsible for acquisition policy as well as all research and development.

Under the new organization, USDR&E continues to serve as the chief scientific technical advisor to the Secretary on military requirements. He is also responsible for the conduct of the DSARC process at Milestones I and II (demonstration and validation and full-scale development), and his staff is structured to provide the Secretary with an ability to comment on particular military requirements and materiel programs of the Services.

The Assistant Secretary (Acquisition and Logistics) is responsible for the conduct of the DSARC process at Milestone III (full-scale production). He also has responsibility for logistics and installations. The new position was created for several reasons. First, it brings the acquisition elements of logistics (such as spare parts procurement) together with the acquisition of major weapon systems. Second, it permits a senior DoD official to focus on all acquisition program and policy questions, while not having a substantial part of his attention diverted to the development of military requirements and to scientific and technical issues related to such requirements.

Reporting to the Assistant Secretary (Acquisition and Logistics) are three Deputy Assistant Secretaries for Procurement, Production Support, and Spares. These three individuals reflect the acquisition responsibilities of the new Assistant Secretary. (There are also Deputy Assistant Secretaries for Logistics and Installations.) Thus, the Assistant Secretary is charged with establishing procurement policy on a department-wide basis, and policies established in his office are to be observed by the buying commands of the Services.

Neither of these OSD officials, however, has line management responsibility for acquisition, maintenance, and support of weapon

systems. The Military Departments have this responsibility. Thus, for example, the Commander of the Air Force Systems Command would report to the Chief of Staff of the Air Force who, in turn, would report to the Secretary of the Air Force.

6. The Acquisition Process

The acquisition process begins with the conduct of a threat analysis which evolves into the establishment of an operational requirement. For example, if the Marine Corps determines that it requires a landing craft which would have access to a larger percentage of the world's beaches than existing landing craft and which would have a higher speed than existing craft, a military requirement for such a landing craft would be established. If the Navy determines that it needs an anti-submarine warfare helicopter with certain capabilities, then that operational requirement would be established. Both requirements would reflect the capabilities of potential adversaries.

Once the military requirement is established, the acquisition process proceeds through the stages of concept exploration, demonstration and validation, full-scale development, and into production until initial operational capability of the system is reached. The approval to advance to each stage of this process is provided through the DSARC process.

The DSARC process was established in 1969 pursuant to DoD Directive 5000.1 and DoD Instruction 5000.2. The Secretary of Defense must approve the initial Justification of Major System New Start (JMSNS) to begin the process. The next major milestone, Milestone I, occurs prior to the demonstration and validation stage. Milestone II involves the decision to enter full-scale development, and may involve approval for limited production. The full production decision occurs at Milestone III. The length of time between new start approval and Milestone III is today approximately 8 to 12 years.

The principal DSARC members and advisors include the Under Secretary of Defense (Research and Engineering); the Under Secretary of Defense (Policy); the Assistant Secretary of Defense (Acquisition and Logistics); the Assistant Secretary of Defense (Comptroller); the Director, Program Analysis and Evaluation; the Chairman, Joint Chiefs of Staff; the Secretary of the Military Department concerned; appropriate Deputy Under Secretaries; the Director, Defense Intelligence Agency; the Director, Operational Test and Evaluation; the Director, Defense Test and Evaluation; and the Chairman, Cost Analysis Improvement Group.

The DSARC is typically concerned with issues such as the transition from development to production, affordability, cost growth, test results, inventory objective, joint Service program coordination, efficient production rates, and acquisition strategy.

D. PROBLEM AREAS AND CAUSES

This section discusses four problem areas that have been identified within the acquisition process and presents analyses of their contributing causes. First, there is an insufficient assured connection between national military strategy and the formulation of military requirements. The second problem area is failure to