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Senate Approves Bill to Overhaul Defense Procurement

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By Shailagh Murray and R. Jeffrey Smith
Washington Post Staff Writers
Friday, May 8, 2009

The Senate unanimously approved legislation yesterday to overhaul Pentagon procurement practices in an effort to prevent billions of dollars in cost overruns and block misspending on weapons that do not meet pressing military needs.

The 93 to 0 vote was a rare show of unity among lawmakers, provoked partly by voter worries about deficit spending and by a compromise between lawmakers and Obama administration officials on some parts of the legislation.

"Our cost overruns . . . are draining our defense dollars and taking them away from other needed purposes," said Senate Armed Services Committee Chairman Carl M. Levin (D-Mich.). "And so, on a bipartisan basis, we were able to adopt this major reform bill."

Sen. John McCain (Ariz.), the committee's senior Republican, noted after the Senate vote that "this is really a situation of near-crisis proportions. . . . We just cannot have the kinds of cost overruns that are associated . . . with one or two exceptions, literally every new weapon system that the Department of Defense acquires."

The House version of the legislation, which is moving at a slower pace, is somewhat different. In particular, it would not place a Pentagon cost-analysis office under a new presidentially appointed director of independent cost assessment, as the Senate bill would. The Obama administration has resisted the Senate provision, arguing that the office should remain under the control of the Defense Department's program analysis and evaluation office.

Improper cost estimating lies at the heart of many weapons procurement troubles, according to the Government Accountability Office, which has repeatedly accused defense officials and the military services of understating likely expenses when they authorize production and sign contracts for major new systems.

Defense Secretary Robert M. Gates championed procurement reform this year, and President Obama met with sponsors of the House and Senate legislation in the Oval Office on April 30 to emphasize his commitment to the issue.

But in March, Deputy Defense Secretary William J. Lynn sent Congress a seven-page list of concerns about the original version of the bill, arguing that some provisions were not necessary or needlessly hampered the department's flexibility.

One provision, which Lynn had called premature, would have barred any defense contractor or affiliate hired to provide an independent assessment of a weapons system for the Pentagon from participating in any way in the production or development of the same system. It was modified to allow some waivers and to create an exemption for entities of the same corporation that are geographically and structurally separate.

Some government watchdog groups complained that the Senate measure -- as amended to meet the Pentagon's concerns -- fell short of what was needed, but a final round of floor amendments, accepted by voice vote, further tightened oversight and reporting requirements. An amendment offered by Sen. Claire McCaskill (D-Mo.) would give combat commanders a more prominent role in procurement decision-making, for example.

Levin conceded that not all parties are happy with the outcome. "We took some suggestions, of course, from the [Defense Department], but not all of them, including the one that we not have this independent cost-assessment director. The department wanted us to drop that," he said. "Many in the contracting community wanted us to drop the conflict-of-interest provisions. We did not do that. We resisted those efforts on the part of some contractors and came up with a tough bill."

One of the bill's selling points is its potential for job creation. The Pentagon expects to hire 9,000 new employees and transfer 11,000 more positions from contractors to the federal workforce through fiscal 2015 to help manage the new contracting procedures. Democratic leaders said they see no obstacles to meeting a Memorial Day deadline for delivering the legislation to Obama.


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