Taking a step in the right direction, news was just released recently that the U.S. Government is passing legislation to crack down on weapon spending, overruns and delays. The report that prompted this legislation found that the Pentagon's 96 largest acquisition projects had overrun costs approaching $300 billion and were on average 22 months behind schedule.

President Obama is expected to pass the legislation by Memorial Day (which Senate and the House have already put through). Nancy Pelosi released this statement after the House unanimously passed the proposed legislation: "By substantially beefing up oversight of the Pentagon's system of acquiring weapons, promoting greater use of competition in weapons acquisition and requiring the Defense Department to take steps to prevent conflicts of interests in the acquisition process, we can save taxpayers tens of billions of dollars and ensure that our tax dollars are focused on ensuring that our troops in the field are the best equipped fighting force in the world, rather than wasted on cost overruns."

The main focus of the bill requires major defense acquisition programs that experience critical cost growth beyond original estimates, 25% from the current baseline or 50% from the original baseline, be terminated unless the Secretary certifies that the program is essential to national security and can the program can be modified to become more cost effective.

While I applaud the Government for finally taking some more small steps to crack down on spending, the heart of this legislation does more to make taxpayers feel good than it does to actually curb the spending.

To put this legislation in perspective, assume you were asked to head the implementation of SAP for your organization. Your budget is $6 million. If your business played by these rules, you would not even have to answer to your CFO until you spent $9 million, and then at that point, all you would need is a signature from him/her to continue spending because it is important to your business. Or, possibly worse, your CFO cans the project and you just lost a full $9 million.

To compound the problem, it does not appear that there is anything in the legislation discussing how a project budget is formed to begin with, it only deals with the budget of the project after the project starts. So, suppliers of the government can simply be expected to inflate their bids at the start of the engagement so that they never go over the 50% excess limit.

Again, I am happy to see our government taking any steps in the right direction to curb spending, however this particular legislation, which is being heralded as a huge bipartisan success, is still completely off the mark compared to even the worst "best-practices" in the private sector.
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William Dorn

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