A PRELIMINARY PERSPECTIVE ON REGULATORY ACTIVITIES AND EFFECTS IN WEAPONS ACQUISITION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90M00005R000200080003-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 174
• Document Creation Date: December 23, 2016
• Document Release Date: August 16, 2012
• Sequence Number: 3
• Publication Date: May 25, 1988
• Content Type: LETTER

STAT
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
R
Next 2 Page(s) In Document Denied
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/277./.031si-er
CIA-RDP90M00005R000200080003-4
i/e9J
A Preliminary Perspective on
Regulatory Activities and
Effects in Weapons
Acquisition
G. K. Smith, J. A. Drezner, W. C. Martel,
J. J. Milanese, W. Mooz, E. C. River
408-1988
eCtrei
RAND
1 NATIONAL DEFENSE
RESEARCH INSTITUTE
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
The research described in this report was sponsored by the Office
of the Under Secretary of Defense for Acquisition under a
Federally Funded Research and Development Center relationship
with the Office of the Secretary of Defense, Contract No.
MDA903-85-C-0030.
Library of Congress Cataloging in Publication Data
A preliminary perspective on regulatory activities and effects in
weapons acquisition / G. K. Smith ... [et al.].
p. cm.
"Prepared for the Office of the Under Secretary of Defense for Acquisition."
"March 1988."
"R-3578-ACQ."
ISBN 0-8330-0821-8
1. Munitions?Law and legislation?United States. 2. United
States?Armed Forces?Weapons systems. 3. United States?Armed
Forces?Procurement. I. Smith, Giles K., 1928- . II. RAND
Corporation. III. United States. Office of the Under Secretary of
Defense, Acquisition.
UF533.P74 1988
355.8'2?dc19 87-28683
CIP
The RAND Publication Series: The Report is the principal
publication documenting and transmitting RAND's major
research fmdings and final research results. The RAND Note
reports other outputs of sponsored research for general
distribution. Publications of The RAND Corporation do not
necessarily reflect the opinions or policies of the sponsors of
RAND research.
Published by The RAND Corporation
1700 Main Street, P.O. Box 2138, Santa Monica, CA 90406-2138
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
R-3578-ACQ
A Preliminary Perspective on
Regulatory Activities and
Effects in Weapons
Acquisition
G. K. Smith, J. A. Drezner, W. C. Martel,
J. J. Milanese, W. Mooz, E. C. River
March 1988
Prepared for the
Office of the Under Secretary of Defense
for Acquisition
4ettre
ei
1948-1988
RAND
I Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
PREFACE
Many managers and executives responsible for conducting weapons
acquisition programs, both in industry and the Department of Defense,
argue that the process is now overregulated. More specifically, they
argue that rigorous enforcement of an expanding body of regulations is
seriously inhibiting the timely and economical development of weapon
systems. There is, however, little unambiguous and systematically
documented evidence of the penalties claimed to result from this regu-
latory environment. Anecdotes and assertions abound, but hard, quan-
titative evidence is surprisingly sparse.
In the spring of 1986, RAND was invited to undertake a study to
identify the extent of growth in the regulatory structure controlling
weapons acquisition, and the effects of those regulations. Emphasis
was placed on the search for quantitative information, however limited
in scope, that might contribute to a better understanding of the issues.
In July 1986, the Institute for Defense Analyses (IDA) was asked to
complement the RAND effort by extending the scope of research to
include areas of cost and economic analysis and to contribute reviews
of additional industry sectors. Results of the IDA work were included
in the final briefing and are incorporated in this report. Appendix E
was prepared by IDA.
Results of this research, presented in briefing form to Dr. Donald
Hicks, then Under Secretary of Defense for Research and Engineering,1
and members of his staff in September 1986, constitute only a start on
addressing a large and complex issue. More work is needed to ade-
quately understand the range of effects of current controls on weapons
acquisition processes, and to continue this preliminary exploration into
the myriad of institutions that actively contribute to weapon acquisi-
tion.
This study was sponsored by the Office of the Under Secretary of
Defense for Acquisition; it was carried out in the Applied Science and
Technology Program of the National Defense Research Institute,
RAND's OSD-supported Federally Funded Research and Development
Center.
11n the DoD reorganization, this position was replaced by that of Under Secretary of
Defense for Acquisition.
in
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
SUMMARY
Many managers and executives responsible for conducting weapons
acquisition programs, both in industry and the Department of Defense,
argue that the process is now overregulated. More specifically, they
argue that a growing tendency toward rigid and undiscriminating
enforcement of an expanding body of legislation and regulations
governing weapons acquisition is seriously inhibiting the timely and
economical development of weapon systems. Such overregulation is,
they claim, constraining our national defense capabilities in adverse
and perhaps unforeseen ways.
These regulatory controls take many forms and serve many objec-
tives. They include the formal Federal Acquisition Regulations and the
various supplements and extensions found in the Defense Federal
Acquisition Regulations, as well as the whole body of procedures rang-
ing from management review (incremental reporting, decision layering)
and financial auditing (prevention of "waste, fraud, and abuse") to
detailed legislative oversight (sometimes referred to as "micromanage-
ment") that have accumulated over the past several decades. In this
study we treat that entire body of controls as "regulations" and "regu-
latory activities" even though some of the controls might appear as
directives, administrative policy statements and instructions, special
language in budget appropriations, and so forth.'
Despite widespread assertions, there is little unambiguous, docu-
mented evidence that the current regulatory environment has the
claimed debilitating effect on acquisition programs. Anecdotes and
assertions abound, but hard, quantitative evidence is surprisingly
sparse, and the claims of a crisis?either existing or impending?are
not fully convincing. Furthermore, despite widespread and long-
standing recognition of the inherent difficulty of seeking the optimal
balance between accountability and innovation, there has been little
formal analysis of this issue in the area of defense procurement. The
costs, as well as benefits, to society of other forms of regulatory activity
have been explored, but little information on the relationship between
the costs and benefits of regulation for the defense sector is available.
This study was designed to provide some quantitative insights into
the effects of regulations and controls on management practices and
'One important and persistent problem in weapons acquisition is specifically not
included under our heading of regulatory controls: the issue of year-to-year budget fluc-
tuations. Whereas such instability clearly affects the efficiency of weapons acquisition, it
is distinct from the broad problem of "regulatory" controls.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
IDeclassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
vi
overall outcomes of weapons acquisition projects. There were two pri-
mary objectives to the research:
First: To measure the effects of regulations on the acquisition
process. A broad series of questions immediately comes to
mind: Is innovation really being stifled? Are acquisition pro-
grams being delayed, or otherwise affected, through the need
to comply with the regulatory process?
Second: To measure the changes in the acquisition process over
time. Has there been an increase in the body of legislation
and regulations (which we call "acquisition process controls")
over the past one or two decades? If so, how great, and in
which kinds of regulations? Has the nature of regulation
enforcement changed? If so, in what ways?
The intent of this study was to emphasize quantification: to produce
data that would transcend many of the generalizations that seem to
abound in acquisition research. There is clearly an abundance of anec-
dotes and assertions; in this study we wanted to provide facts, however
limited in scope, that might contribute to a better understanding of the
issues and perhaps might help to find solutions.
EFFECTS OF REGULATION
In the first phase of this research, we attempted to determine the
effects of regulatory activity on major weapons acquisition programs by
interviewing a number of program managers in both industry and the
Services, contract officers, and government officials involved in various
levels of the acquisition management and review process, together with
senior acquisition officials in the Services and in the Office of the
Secretary of Defense. In each visit we sought information that would
help us to understand how regulations had affected the outcome of pro-
grams, measured in terms of overall program cost and schedule and,
wherever possible, in terms of system performance. We also inter-
viewed selected managers and administrators of technology base pro-
grams. Here we sought information primarily on possible schedule
delays, because we were interested in the issue of the timely and effec-
tive advancement of technology from the laboratory stage to the field-
ing of weapon systems.
One finding of this research was the dominant and persistent theme,
expressed by those who work in acquisition, that an increasingly trou-
blesome set of administrative obstacles prevents them from accom-
plishing their program objectives in a timely and efficient manner.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
vii
However, we found almost no evidence that regulatory activity had
affected the performance or "quality" of the final product, either
favorably or adversely. There is some evidence that the length of the
acquisition cycle has experienced a marginal level of growth, particu-
larly in the post-1960 time period. There are, of course, several factors
that could account for such a trend, including the growing technical
complexity of weapon systems. A more definitive analysis of this issue
seems desirable but remained beyond the scope of the present study.
Finally, there was persuasive evidence that the imposition of the
Competition in Contracting Act (CICA) on technology base projects
had delayed the start of many such projects. However, during the
course of this study the Congress clarified its intent when it specifically
exempted both Research and Exploratory Development projects from
CICA, thereby eliminating some of the regulatory problems that
impeded technology base projects.
PRELIMINARY RESEARCH ON
ACQUISITION INDICATORS
The second phase of the research was a preliminary investigation
into a wide range of acquisition indicators: growth in the staff size of
regulatory offices, number of audits conducted, number of new regula-
tions issued, and so forth. Supporting information was collected on
several aspects of management and oversight, including the functions,
staff sizes, and activities of various organizations. The motivation to
collect this basic data was stimulated in part by the paucity of data on
the institutions that participate in weapon acquisition. This led us to
the conclusion that basic research into these institutional factors will
increase the general understanding of weapon acquisition.
Our examination of the structure and activity of regulatory institu-
tions yielded a somewhat mixed picture. There are instances of
increasing levels of activity in certain institutions. For example, there
has been an increase in the number of Congressional staff who work on
procurement issues; the Congress introduces more restrictions in
defense authorization and appropriation bills each year; and the
number of procurement-related documents published for the Congress
by the Government Accounting Office has increased. Conversely, there
are other instances in which the structure and activity of the organiza-
tions have not changed substantially over time. For example, the staffs
of some relevant government agencies have been essentially constant
over that same time period. In general, we found no consistent pattern
in the data. Thus, our data provide little support for the assertion that
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
viii
weapon acquisition is subject to increasingly burdensome levels of regu-
latory controls.
FINDINGS AND OBSERVATIONS
This research had two distinct approaches. One approach was based
on selective interviews with individuals involved in the acquisition pro-
cess and had as its goal the quantification of effects of process controls
on program outcomes. The second approach was based on collection of
selective data on trends in regulatory activity by various organizations
involved in acquisition of weapon systems. The two approaches offered
differences in perspective on trends and effects, yet were highly com-
plementary. The ultimate result of both approaches is essentially the
same; we cannot draw definitive conclusions regarding the growth of
regulatory activity and its effect on program outcomes.
The absence of quantitative evidence supporting the hypothesis that
weapon acquisition is afflicted by excessive regulation does not neces-
sarily refute the hypothesis. We acknowledge the widespread frustra-
tion of project level personnel who believe they could do their job more
rapidly and at less cost with fewer controls. We also acknowledge that
important methodological problems are involved in a study of this
kind. Most importantly, it is not possible at this time to correlate
regulatory activity and program outcomes?no cause and effect rela-
tionships can be inferred.
We hope that future researchers can build on the limited base pro-
vided here and contribute additional information to help understand
the extent of regulations on weapon acquisition and thereby assess the
proper balance between controls and progress. Based on our experi-
ence and the observations derived from this study, we recommend two
broad guidelines for future study. First, careful distinctions should be
made among three kinds of regulations and controls:
1. The burden of reporting, support for audits, and the like.
Such controls seem likely to incur certain dollar costs, but not
to cause serious delays or to affect major program decisions.
Furthermore, experience has shown that laxity in financial
reporting and auditing sometimes leads to outcomes that are
embarrassing for all concerned. We suspect that this is the
least important class of controls.
2. The imposition of shall/shall not constraints. Requirements
for full competitive bidding, purchase of warranty coverage,
distribution of business to small firms, etc. make up the bulk
of such regulations. In addition to certain dollar costs needed
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
ix
to administer the programs, these requirements begin to erode
the program manager's authority and, in at least some cases,
his ability to conduct the program in the most efficient and
effective way. We believe this class of regulations warrants
further analysis.
3. Decision review process ("micromanagement"). A few detailed
case studies should be performed to investigate the possible
effects of this class of management controls.
Second, we recommend that the regulations, controls, and review
procedures, which are created and implemented by the military services
themselves, should be investigated much more thoroughly than was
possible in the present study.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
CONTENTS
PREFACE iii
SUMMARY
FIGURES xiii
TABLES xv
Section
I. INTRODUCTION 1
Background 2
Analysis Framework 5
Study Scope, Objectives, and Approach 10
II. EFFECTS OF REGULATORY ACTIVITY ON
PROGRAM OUTCOMES 13
Research Approach 13
Regulatory Effects on Major Weapon System
Programs 15
Regulatory Effects on Technology Base Programs 20
III. INDICATORS OF REGULATORY ACTIVITY 23
Approach 23
The Congress 26
Department of Defense Agencies 35
Other Government Agencies 40
IV. SUMMARY AND OBSERVATIONS 45
Effects of Regulations 45
Indicators of Regulatory Activity 46
Conclusions 47
Appendix
A. INDICATORS OF REGULATORY ACTIVITY 49
B. GOVERNMENT AGENCIES RELATING TO
DEFENSE CONTRACTING 66
C. RESTRICTIONS AND EARMARKINGS IN
AUTHORIZATION ACTS 79
D. RESTRICTIONS AND EARMARKINGS IN
APPROPRIATIONS ACTS 138
E. FEATURES OF DEFENSE INDUSTRY
REGULATION 151
xi
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
.";IA-RDP90M00005R000200080003-4
FIGURES
1. Actors and Interactions
2. Time from Program Start to First Delivery, with
Exponential Fit Line: All Systems 19
3. DoD Obligation Authority 25
4. Professional Staff on Appropriations, Armed Services, and
Budget Committees 27
5. Committees Requesting DoD Testimony 28
6. Indicators of Activity in Armed Services Committees 30
7. Congressional Requests for Information from the DoD . . . 31
8. Defense Authorization Acts: Number of Congressional
Actions on Specific Weapon Systems 34
9. Defense Appropriations Acts: Number of Congressional
Actions 35
10. DoD Directives and Instructions 36
11. Defense Contract Audit Agencies Staff and Activities 38
12. Agency Staffs 39
13. GAO Procurement Documents 41
B.1. Location of Policy Actors for Federal Acquisition 68
B.2. Examples of Contract Management 70
B.3. Examples of Program Management 73
B.4. Elements of Oversight 76
B.5. Overall View of DoD Contracting 78
E.1. A Taxonomy of Defense Regulations 153
E.2. Relative Level of Regulatory Effort 156
E.3. Types of Costs of Regulation: CICA 160
xiii
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
TABLES
A.1 DoD Obligation Authority 49
A.2 Armed Services, Appropriations, and Budget Committees
Staff 50
A.3 House and Senate Appropriations Committees:
Membership and Staff 52
A.4 House and Senate Armed Services Committees:
Membership and Staff 53
A.5 House and Senate Budget Committees: Membership and
Staff 54
A.6 Number of Congressional Committees 55
A.7 Chronology of Requirements for DoD Annual
Authorization 56
A.8 Armed Services Committees Activity 56
A.9 Size of Committee Reports (Number of Pages) 57
A.10 Congressional Information Requests from DoD 58
A.11 Number of DoD Directives and Instructions 59
A.12 DCAA Appropriations and Staff 60
A.13 DoDIG Appropriations and Staff 61
A.14 GAO Appropriations and Staff 62
A.15 GAO Procurement-Related Documents 63
A.16 CBO Appropriations and Staff 64
A.17 OMB Appropriations and Staff 64
A.18 OFPP Budget and Staff 65
C.1 Restrictions in Authorization Acts 83
D.1 Restrictions in Appropriations Acts 138
XV
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
I. INTRODUCTION
Many managers and executives responsible for conducting weapons
acquisition programs, both in industry and the Department of Defense,
argue that the process has become overregulated. More specifically,
they argue that a growing tendency toward rigid and undiscriminating
enforcement of an expanding body of legislation and regulations
governing the weapons acquisition process is seriously inhibiting the
timely and economical development of weapon systems and, conse-
quently, is adversely constraining our national defense capabilities.
The basic assumption underlying these claims is that the goals of
economic efficiency, equitable treatment of all firms and employees,
precise accountability of public expenditures, and achievement of broad
social goals are being zealously pursued with excessive focus on nar-
rowly defined, short-term effects and without adequate consideration of
broader, long-term consequences stemming from delays and lost oppor-
tunities in weapons development and procurement.
These are serious challenges, not to be casually dismissed. But
efforts to shift the balance, to provide an environment that reformers
claim would be more congenial to innovative and timely weapons
acquisition, seem to founder on two issues. First, there is little docu-
mented evidence that the current environment has the claimed debili-
tating effect on acquisition programs. Anecdotes and assertions
abound, but hard evidence is surprisingly sparse, and the claims of a
crisis?either existing or impending?have not been unambiguously
supported.
A second and equally important problem is that many of the
"reforms" that have been suggested would permit the Services and the
defense industry to manage programs as they deem appropriate to the
circumstances rather than having to conform to procedural and
accountability processes, many of which are related to the prevention
of fraud, waste, and mismanagement?the watchwords of government
procurement reform for a century. Thus, even if the assertions are
credited with a degree of plausibility, appropriate and realistic remedies
are far from obvious. It is not clear whether a "hands off" approach to
defense acquisition is politically feasible or even desirable in a democ-
racy that values a wide range of social goals in addition to national
defense.
This study is a preliminary and partial attempt to address the bal-
ance between strict accountability and extensive oversight on the one
1
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
z
hand, and greater freedom for local management on the other hand.
Here we look at only one side of this balance sheet: the effects of regu-
lations on the cost, schedule, and performance outcomes of weapon sys-
tem programs, and the alleged growth in the extent of acquisition pro-
cess controls.
BACKGROUND
The process of developing and procuring major weapon systems has
been studied, criticized, and "reformed" for more than a century. This
is not surprising, because weapons acquisition represents an
exceedingly challenging management task. Those challenges stem pri-
marily from two broad factors.
First, most major acquisition programs involving modern weapons
and new designs are beset by numerous uncertainties. Attempts are
made to employ the latest technology advances, so that the developer is
typically trying to design and build an item affected by a multitude of
technical risks that include technological complexity and the task of
integrating those technologies into mature, reliable weapon systems.
The buyer, typically one of the military services, faces equally large
uncertainties in predicting the need for a particular kind of item some
ten to fifteen years in the future, and the level of financial support that
will, or should be, provided to that system throughout its acquisition
lifetime.
Under these conditions of uncertainty it generally is impossible to
predict the cost, schedule, performance, or production quantity of the
final product with enough precision to permit the buyer and seller to
write a firm contract covering the entire process. Instead, the two par-
ties establish an uneasy alliance, sharing risks and management
responsibilities, under the aegis of a contract that at times is little
more than a baseline for negotiations over numerous changes in the
program. The process is further complicated by the fact that there is
turnover in the management personnel for both buyer and seller, which
may change several times during the life of a major acquisition pro-
gram.
The second major factor affecting the process is that classic market
forces are largely absent in major weapons acquisition. Conventional
business arrangements, involving multiple buyers and multiple sellers
who enter into fixed contracts for production and acceptance of
rigorously defined goods, simply do not apply to most weapons acquisi-
tion projects. In major weapons programs, only a few firms are capable
of developing and producing the item, and generally one U.S. military
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
3
service is the only buyer. At the beginning of a program, design com-
petition frequently is intense because the program up for bids may
represent a company's only near-term opportunity to stay in the
defense business. That kind of market force often encourages unrealis-
tically low bids and probably leads to optimistic judgments about the
difficulty of developing and integrating new technologies. But after a
contractor has been selected to develop a new system, that contractor
is frequently the only source technically capable of production, leaving
the government with the options of negotiating with a sole source, or
adopting a strategy of paying another firm to develop a production
capability for the system. The result is a distorted market arrange-
ment that does not resemble in any systematic sense the idealized com-
petitive market structure.
The government strategy for dealing with this complex set of issues
has undergone major changes over the past four decades. During the
first ten to fifteen years after the Second World War, the individual
military services had considerable freedom to initiate and to terminate
weapon development programs and to use business strategies that
would be deemed remarkably informal by contemporary standards.
Major projects were undertaken on the basis of letter contracts, which
were little more than authorizations to proceed, in the expectation that
a formal contract would be negotiated later. Many contracts, especially
for development activities, simply required the government to reim-
burse the contractor for costs incurred, together with a profit that was
determined as a percent of cost. Whereas such arrangements might
appear to place inadequate emphasis on cost control, they had the
advantage of providing both the contractor and the sponsoring Service
with great flexibility in responding to problems and opportunities as
they arose.
That period was a time of exceptionally rapid evolution in both
technology and military strategy. Guided missiles of several kinds,
ranging from small air-to-air missiles up to intercontinental ballistic
missiles, were developed; helicopters evolved from technical curiosities
into useful military vehicles; supersonic, jet-propelled aircraft were
introduced, and nuclear propulsion for naval vessels became common-
place. In most cases, those challenging technical projects were under-
taken in a climate of great urgency, driven in large part by changes in
the perceived threat. Often several parallel design efforts would be
started, with one or more cancelled as the less successful "starts" were
weeded out of the competition. Flexible business tactics seemed
appropriate to the task of moving forward rapidly on a broad range of
challenging projects. The emphasis was on getting the job done
without too much attention to the niceties of business administration.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
4
By 1960 a number of important changes began to occur that would
change radically the nature and administration of weapons acquisition
policy. The Defense Reorganization Act of 1958 was a watershed event
because it strengthened the office of the Secretary of Defense.
Throughout the 1960s Secretary of Defense Robert McNamara insti-
tuted a number of controls over acquisition that, among other things,
emphasized more thorough planning before starting a new development
program, attempted to avoid high-risk acquisitions, and imposed more
stringent contractual controls on both the buyer and seller. Innovative
attempts were made to control acquisition costs, including (for
instance) the total package procurement concept wherein a single
firm-fixed-price contract covered the development and initial produc-
tion of a new system. While reasonably successful in a few cases, the
difficulties of using such a rigid approach were illustrated by the C-5
transport aircraft project.' Despite such innovations in management
policy and procedures, problems with cost overruns, schedule slips, and
performance that was less than promised continued to plague the
acquisition of major weapon systems. One major theme in the continu-
ing search for acquisition reform has been the goal to make weapons
acquisition more like a traditional business "purchasing activity" in the
apparent belief that such an approach would improve overall discipline
and accountability.
But, as noted above, the process of developing and procuring major
weapon systems does not fit into the classic "free market" economic
model. Instead, acquisition management reforms have generally led to
a steady expansion of accountability controls and authority for over-
sight and review by organizations outside the Services themselves. The
overseers mostly operate within the Office of the Secretary of Defense
and its several agencies (notably the Defense Contract Audit Agency
(DCAA) and the DoD Inspector General (IG)) and the Congress. In
consequence, some defense managers in the Services and in industry
express the view that the Department of Defense and the Congress are
inhibiting the freedom of both government and industry program
managers alike to move quickly in response to problems and opportuni-
ties.
The tension between the project managers, who are motivated to
develop and produce a weapon system, and the many officials and
legislators who are concerned with public accountability, represents a
classic issue in government administration. Frederick Mosher stated
the issue concisely during a seminar in 1981:
1The C-5 aircraft program encountered severe difficulties when the contractor was
unable to complete the project under the original contract. The ensuing criticism led to
official renunciation of the total package procurement concept, although elements of that
concept are being reincorporated in recent acquisitions.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
5
Accountability is not commonly associated with invention or novelty
or serendipity, but rather with carrying out assignments which are
more or less specifically defined, honestly, efficiently, effectively, and
at minimal cost. Thus at the very outset, there is a conflict between
the value associated with accountability and the values of originality,
experimentation, inventiveness, and risk taking. New ideas may be
wrong or may be judged wrong by superiors or others called upon to
judge them; experiments may fail. A person who is held strictly
accountable and is punished for a poor idea or a failed experiment is
not likely to have much incentive to create or broach new ideas or
launch experiments in the future.'
Nor is the claim that defense acquisition suffers from "overregulation"
a new one. In 1962 a committee of industry officials, serving as advi-
sors to the Director, Bureau of the Budget, stated:
[In] the considered opinion of experienced contractors, the present
system [of regulations] has frustrated maximum effectiveness and
added substantially to costs.'
Despite widespread and long-standing recognition of the inherent
difficulty of seeking the optimal balance between accountability and
progress, there has been little formal analysis of this issue in the con-
text of defense procurement. The consequent costs, as well as benefits,
to society of other forms of regulatory activity have been explored,4 but
little information on the relationship between the costs and benefits of
regulation for the defense sector are available.
ANALYSIS FRAMEWORK
The overall process by which the government manages the acquisi-
tion of major weapon systems has evolved into an extremely complex
set of laws, regulations, policies, and procedures. Any analysis of this
overall management process inevitably will be limited in scope and
objectives, primarily because the analysis procedure used will vary
depending on the particular focus of the study. With that caveat in
mind, it is useful first to outline the key elements of the acquisition
process and the relevant organizations.
2Comment by Frederick Mosher on a paper by Harvey Mansfield, in Improving the
Accountability and Performance of Government, The Brookings Institution, 1981.
3Report to the Director of the Bureau of the Budget on operation and management of
research and development facilities and programs, analytical and advisory services, and
technical supervision of weapons systems and other programs for the government in-
house and by contract, April 17, 1962.
4See, for example, Murray L. Weidenbaum, The Future of Business Regulation:
Private Action and Public Demand, American Management Association, 1979.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
6
The government is a large and complex organization, and the several
components of government involved in weapons acquisition frequently
have differing motivations, goals, and functions. Thus, it is important
to take an institutional perspective when analyzing the effects of
management controls and oversight activities on the outcomes of
weapon system programs. In highly general terms, there are two basic
actors involved in weapons acquisition on the government side: The
Congress and the Department of Defense. Figure 1 provides a simpli-
fied view of how these two organizations interact with the industrial
firm (the seller).5
Congress has policy and oversight functions, as well as the more
generally well-known legislative, budgeting, authorization, and
appropriation roles. Legislation affecting defense is exemplified by the
Competition in Contracting Act (CICA) and the Defense Reorganiza-
tion Act, as well as the annual appropriation and authorization bills.
To understand how Congress operates, it is important to consider the
goals and motivations of individual members, as well as their function
of protecting the interests of their constituents. Congress also is com-
posed of subsets of actors (the committees), who have different goals,
motivations, and functions.
The committees have an important influence on acquisition, closely
scrutinizing authorization and appropriation bills, gathering informa-
tion, or conducting investigative hearings. More specifically, some
committees have oversight functions (e.g., Governmental Affairs),
whereas others set national policy for defense (e.g., Armed Services),
and still others appropriate funds to carry out missions (e.g., Appropri-
ations). But there is another set of Congressional actors: the
research-oriented agencies, such as the General Accounting Office
(GAO), the Congressional Budget Office, and the Congressional
Research Service. The reports of these agencies often influence the
decisions of the legislators. In addition, the Comptroller General of
GAO has authority to mediate certain disputes related to acquisition
such as, for instance, source selection protests under CICA.
The Department of Defense, composed of the Office of the Secretary
of Defense (OSD) and defense agencies as well as the Services, is the
other major institutional actor. Although DoD sometimes seems to act
as a monolithic entity, more often it is the various components of DoD
which determine the behavior of the system. OSD, for example, has
policy and planning functions, with the more general goal of coordinat-
ing defense policy. Yet, there are some defense agencies, like the
5See App. B for a more detailed review of some elements of the government organiza-
tions that participate in the management and oversight of weapons acquisition.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
The Congress
Committees and
subcommittees
Research and
investigative
agencies
Department
of
L _ _
Defense
r
II II
I I
I I
L
Defense
Industry
Office of the
Secretary
Military
services
Prime
contractors
Subcontractors
and suppliers
Fig. 1?Actors and interactions
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
8
Defense Contract Audit Agency or the Inspector General, which essen-
tially have oversight roles. The Services, seeking for instance to pro-
cure a weapon which they believe will be effective against a specified
threat, have program management and contract administration roles.
The conflicts in goals and functions can often be severe, as for instance
when OSD officials are required to make decisions trading off one
weapon system for another.
The defense industry often is the focal point for acquisition-related
regulations. There is a tendency to view the defense industry as a
homogeneous, monolithic entity when, for example, considering the
role of the defense industry associations in lobbying for increased total
DoD budgets. However, there are distinct sectors within the defense
industry with different goals and problems.6 This is true whether one is
comparing aerospace and shipbuilding firms, or prime contractors with
subcontractors and parts suppliers. Controls on the acquisition process
tend to affect subsets of the defense industry differently, depending on
the specific group addressed. For example, CICA is likely to affect
technology base contractors working on advanced research and
development problems quite differently than it will affect a major pro-
ducer of aircraft.
When the government acts as a buyer of products and services it
inevitably performs differently from a typical commercial firm. All
organizations, whether commercial or governmental, that buy quanti-
ties of products from other commercial firms have clearly established
policies and procedures for conducting those transactions. Further-
more, all such transactions are governed and controlled by a body of
laws dealing with contracts and general commerce. In this context, it
will be referred to here as commercial contract law, though it may have
other names in different contexts. Both government agencies and com-
mercial firms are subject to commercial contract law, and the regula-
tory provisions to which defense contractors are subject apply because
they are written into government development and procurement con-
tracts. Some of these provisions would be seen in agreements between
private buyers and sellers.
However, there is an additional set of factors peculiar to doing busi-
ness with the government. This is particularly important with respect
to DoD, which accounted for 59 percent of all federal contracts and 71
percent of all contract dollars in the first quarter of Fiscal Year 1986.7
All government vendors must deal with the Federal Acquisition
6See Jacques S. Gansler, The Defense Industry, MIT Press, Cambridge, Mas-
sachusetts, 1981, p. 162.
7Federal Procurement Data System: Standard Report, Federal Procurement Data
Center, Fiscal Year 1986, 1st Quarter, p. 6.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
9
Regulation (FAR), which was intended to be the uniform set of policies
and procedures governing the procurement of goods and services by
any federal government agency. It includes social regulation, special
government policies for ensuring uniform and equitable treatment of
all parties, and special "public interest" policies, such as the encourage-
ment of competition and the use of small business.
In addition to the FAR, there are acquisition rules, policies, and pro-
cedures promulgated by the executive agencies that in the case of
defense procurement includes both OSD and the Services. In some
cases these activities are implementation procedures for the FAR that
apply to a specific Service or defense agency, while in other cases they
are supplements to the FAR.
Congress also plays a strong and visible role in government transac-
tions, particularly defense acquisitions, due in part to the amount of
money involved. In addition to overall budgeting and general legisla-
tion, Congressional actions frequently include specific restrictions on
individual weapon projects, usually in the form of clauses incorporated
in the DoD Authorization and Appropriation Acts. Examples of gen-
eral legislation include the CICA, the Defense Reorganization Act of
1986, and legislation dealing with warranties and technical data rights,
among others.
One must also consider the consequences when multiple agencies of
the buyer (Office of Federal Procurement Policy (OFPP), DCAA, DoD
IG, Under Secretary of Defense for Acquisition (USD(A)), Service con-
tract administrators) are following different objectives and rules in
what often is characterized as the absence of any apparent coordina-
tion. Obviously, conflicts between DoD components send conflicting
messages to government contractors and other actors in the acquisition
process.
How issues are enforced also differs between governmental and com-
mercial transactions. The government has the ability to cloak any
acquisition policy or procedure with the force of law. In case of
disputes, the government tends to have different resolution criteria
than commercial firms. For example, a commercial firm, when
wronged, is frequently willing to settle for a financial penalty, whereas
the government might be more interested in filing a criminal complaint
as a way of gaining redress and broadly guarding the rights of the pub-
lic.
This report addresses only a small portion of the many interactions
between the actors implied by Fig. 1. This study is concerned with the
links between Congress and its components, the DoD, and prime con-
tractors. This set of actors provides a framework for considering some
of the important interactions among participants in weapons
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
10
acquisition, including the implementation of legislation, the mutual
influence of Congress and industry on each other, and DoD initiatives.
This study does not address the lower tier of defense industry firms
and only addresses the Services as a target of acquisition management
activity.
STUDY SCOPE, OBJECTIVES, AND APPROACH
This study was designed to provide initial, quantitative insights into
the effects of regulations and controls on the managerial procedures
and the overall outcomes in the weapons acquisition process. The total
set of controls on the defense acquisition process that have accumu-
lated over the past three decades has taken many forms and serve
many objectives. They include public law, the formal Federal Acquisi-
tion Regulations and the various supplements and extensions found in
the Defense Federal Acquisition Regulations, as well as a wide range of
procedures extending from management review (incremental reporting,
decision layering) and financial auditing (prevention of "waste, fraud,
and abuse") to detailed Congressional oversight (referred to as
"micromanagement" by its opponents). It is important to note that we
will refer to that entire body of controls as "regulations" and "regula-
tory activities" even though some of the controls might appear as direc-
tives, administrative policy statements and instructions, special
language in budget appropriations, and so forth. Thus, we use the
terms "acquisition process controls," "regulation," and "regulatory
activity" interchangeably in a broad sense.8
This study had two primary objectives:
First: To measure the effects of regulatory activity on the
acquisition process, specifically on program outcomes.
Is innovation really being stifled? Are acquisition programs
being delayed, or otherwise affected, by the need to comply
with the regulatory process? Are costs being increased? We
focused on the effects directly observable in a particular pro-
gram.
Second: To measure the changes in acquisition process con-
trols over time. Has there been an increase in regulatory
activity, especially during the past one or two decades? If so,
how great, and what kind of activity? Has the nature of
enforcement changed? If so, in what ways? We attempted to
8See App. E for a preliminary comparison of defense management regulations with
the more typical government regulation of other commercial activities.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
I
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
11
include the full range of acquisition process controls, but inev-
itably the more recent changes and reforms received the most
attention.
This study emphasizes quantification. Despite the abundance of anec-
dotes and assertions, we sought here to provide facts, however prelim-
inary or limited in scope, that might contribute to a better understand-
ing of the issues.
The first issue is an attempt to determine the extent of the effect of
regulations on acquisition programs. Our main approach was to visit a
number of program managers in both industry and the Services, and
senior acquisition officials in the Services and in OSD. In each visit
we sought information that would help us to understand how changes
in acquisition activity have affected the outcome of programs, mea-
sured in terms of overall program cost and schedule and, wherever pos-
sible, in terms of system performance. We also interviewed selected
managers and administrators of technology base programs. Here we
sought information on possible schedule delays, because it is more diffi-
cult to measure the other outcomes (cost and performance) in technol-
ogy base projects in a consistent fashion. Results appear in Sec. II.
The second issue, based on some understanding of the nature of the
concerns that are dominant in acquisition today, is to address the
extent to which acquisition process controls have evolved. We studied
the organizations and procedures that affect the various actors in
acquisition, and attempted to measure the growth of regulations and
regulatory activity by an inquiry into a wide range of indicators:
growth of staff and budget size in various government agencies, number
of audits conducted, number of new regulations issued, restrictions
enacted into law, and so forth.9 Results are summarized in Sec. III,
with additional details presented in Apps. A, C, and D.
For the reader unfamiliar with the government organizations
involved in weapons acquisition, App. B provides an introductory
tutorial.
Finally, we were surprised to find as we began this study that there
is little discussion in the economics and management sciences litera-
ture of the defense acquisition process from a formal regulatory per-
spective. It has been virtually ignored by individuals whose specialty is
regulation. Preliminary attempts were made in this study to search for
90ne important and persistent problem of weapons acquisition is not addressed in this
study: the issue of year-to-year budget fluctuations. Although such instability clearly
affects the efficiency of weapons acquisition, it is distinct from the problem of specific
controls (e.g., earmarking and restrictions) placed on specific weapon system programs in
the DoD Authorization and Appropriation Acts.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
12
parallels between defense regulation and traditional regulation of other
industries, in the expectation of drawing valuable lessons from those
comparisons. Results are described in App. E. However, the topic far
exceeded the resources of the present study, and a comparison of the
regulation of the defense industry with that of other industries remains
an interesting issue for future research.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
II. EFFECTS OF REGULATORY ACTIVITY
ON PROGRAM OUTCOMES
One objective of this study was to measure at least some of the
effects of the changing regulatory environment. Based on a prelim-
inary reading of the literature, and on conversations with senior
acquisition executives, we elected to concentrate on two classes of
activity: major weapon systems and technology base programs. We
did not review regulatory effects on smaller acquisition programs and
on the large group of subcontractors and vendors that support the
major acquisition programs.
RESEARCH APPROACH
We conducted extensive interviews with both industry and Service
program managers (or their immediate deputies) for roughly a dozen
major acquisition projects and technology base programs. Those dis-
cussions almost always included the senior contracting officer for the
project, so that both line management and contracting functions were
represented. We also interviewed several dozen officials in the con-
tracting organizations above the project level because many of the
regulatory controls seemed to affect the contracting process. We chose
this approach, rather than a more broad-ranging but individually less
intensive survey, because we suspected that many of the effects of
regulatory activity we were searching for might be hard to separate
from other factors affecting program outcomes, and we wanted to
explore such interpretations with individual program officials.
In each of the interviews we sought information on specific
instances where compliance with regulations, or some other aspect of
the regulatory institutions or processes, had affected program outcomes
in terms of cost, schedule, or product performance. For example, we
asked if the program schedule had been affected by delays in the con-
tracting process, by design reviews, or by any number of other mile-
stone decisions. Had costs been increased by additional staff needed
for regulation compliance? Had the design process been unreasonably
inhibited by excessive reviews outside the immediate project manage-
ment, by the need to comply with inappropriate military specifications
(MILSPECs), or by other aspects of regulation? Broadly defined, our
emphasis was on identifying how regulations affected program
13
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
14
outcomes, as distinct from documenting their effects on the processes
that led to those outcomes.
This approach has several obvious limitations. First, it might not be
to the program manager's advantage to reveal problems or to blame
them on regulatory activity.' Without detailed knowledge of a
program's structure and history, it is impossible to assess the extent to
which the reticence of managers to expose shortcomings in their pro-
grams may influence the survey results. However, in only two
instances was that problem specifically raised. In one case, an industry
official acknowledged the existence of certain unspecified problems
caused by regulatory activities, but declined to identify them on the
grounds that publication of such "accusations" would cause him future
problems in dealing with regulatory officials. No further information
was obtained in that case. In the other case, a military official made a
similar statement, but agreed to provide information on the condition
that published results not reveal the program in question. In all other
cases, the managers interviewed expressed willingness to cooperate
fully in the survey.
The second problem poses more difficult methodological issues. In
many cases, compliance with regulations has become an accepted part
of doing business and has become so integrated with normal organiza-
tions and procedures that it is difficult at best, and perhaps impossible,
to identify the separate effects of regulation on acquisition activities.
At the very least, full identification of regulatory consequences would
require a searching examination of the organizations and operating
procedures employed by both government and industry, and construc-
tion of a hypothetical counterpart that might be imagined to exist in
the absence of at least some regulations. To the best of our knowledge
such a heroic study has never been attempted, so we are left with the
more practical approach of trying to define the marginal effects of
recent changes in regulations.2 A commonly cited example is the effect
of the Competition in Contracting Act (CICA), which clearly calls for
procedural steps that might not have been taken before, and whose
consequences can be identified with some confidence simply because
they represent a new demand on resources. It is the marginal changes
imposed by discrete regulations, rather than the broader effects of
regulation, that are discussed in this report.
lOne methodological point which we cannot dismiss is that program managers might
have exaggerated the effects of regulations. It is difficult to estimate the extent to which
this happens.
2The lone exception, a recent study by Honeywell, is discussed in the section on cost
effects.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
15
REGULATORY EFFECTS ON MAJOR WEAPON
SYSTEM PROGRAMS
Major weapon systems are by far the most visible product of the
defense acquisition process, and are the primary focus of much of the
regulatory process, as well as of this report. Results of our interviews
with major system managers were quite uniform, and can be summar-
ized under three headings: (1) administrative and contracting processes,
(2) cost effects, and (3) schedule and performance effects.
Administrative and Contracting Processes
As we attempted to identify regulatory effects on aggregate program
outcomes, we were often drawn into discussions of the day-to-day prob-
lems of coping with the regulatory process. Those conversations are
briefly summarized here to provide additional context for the subse-
quent discussions on outcome effects.
Without exception, every manager and contracting officer cited
numerous examples of additional workload imposed by regulations. The
program managers dwelled mostly on the extensive review network
they had to support, and the management resources consumed in such
reviews. This is, in part, a reflection of the "layering" problem com-
monly cited in studies of defense acquisition: the fact that military
program managers are frequently separated from the senior OSD-level
acquisition executive by five or six administrative layers.3 Each layer
demands a right to review all progress reports and major program
change proposals. Not so apparent from the literature is that some of
those layers have an extensive horizontal structure, so that the views of
several different offices must be accommodated in order to pass
through a particular layer or "gate." Military program managers and
their immediate staffs typically devote a lot of time to such reviews.
Contracting officers cited a substantial increase in the administra-
tive workload spawned by recent changes in regulations and their
administration. An example of new legislation includes the Competi-
tion in Contracting Act (CICA) and its associated requirements to
advertise (synopsize) in the Commerce Business Daily, and to conduct
extensively structured and documented source selection activities.
Additional problems stem from the steady flow of new FAR clauses
and interpretations. But perhaps the most interesting theme from the
discussions was the frustration and additional workload caused by the
30ne of the major recommendations of the President's Blue Ribbon Commission on
Defense Management (the "Packard Commission") was to streamline the acquisition
management structure so as to reduce such layering and the consequent review process.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
16
increasingly strict interpretation and enforcement of procurement regu-
lations, and the consequent reduction in the discretion that managers
in each administrative level felt able to exercise in adapting the regula-
tions to the situation at hand.
An extension of this theme is the frequently cited assertion that the
increasing administrative burden, together with the fact that contract-
ing officers in both government and industry can be subjected to severe
criminal penalties for wrongdoing, is leading to more accent on
"style"?the meticulous working to rules to ensure compliance. There
is less flexibility to work around administrative and contracting prob-
lems in order to get programs started and keep them going on schedule.
However, it was generally acknowledged that the consequences of
strict enforcement were felt mostly in terms of an additional contract-
ing workload and, occasionally, delays in contracting procedures, but
almost never in terms of the quality or performance of the product.
The delays are attributed, in part, to the fact that contracting staffs
have not been increased to match the increasing workload, and that
increasing turnover rates are tending to reduce the experience level of
available personnel.
Cost Effects
The incremental costs of recent regulations are perhaps the most
visible aspect of regulatory burden. Despite that fact, reliable data are
remarkably sparse. We found only one study in which a contractor
had systematically examined the cost consequences of various regula-
tory elements.4 In that study, a combination of factors including pro-
curement practices, formal laws, and regulations were judged to have
increased costs by roughly five percent over what might be possible
under a more "sensible" arrangement, with technical specifications
adding another four percent to costs. No other such comprehensive
analysis was found, but the estimates of cost effects that were provided
by various project offices and industry sources on individual aspects of
regulation were generally consistent with those cited in the Honeywell
report. Indeed, it is interesting that disparate individuals' notions of
the theoretical costs of regulation were so uniform.
Acquisition managers typically cited three sources of cost increase:
"excessive" reporting requirements (i.e., any number greater than the
organizational level generating the reports considered necessary); com-
pliance with CICA; and compliance with MILSTD 1567A (dealing with
4Defense Acquisition Improvement Study, Final Report, Honeywell Aerospace and
Defense, Minneapolis, Minnesota, June 1986.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
17
work measurement standards).5 Values for individual programs gen-
erally fell into the range of one to two percent of total program cost,
for a total of roughly three to five percent from all three sources.
These estimates reflect primarily the incremental costs of recent
changes in acquisition regulations. Other reporting and administrative
control procedures that have been in effect for many years have
become institutionalized and are difficult to identify or quantify. If
one were to establish a base line in a much earlier time frame, perhaps
10 to 15 years ago, the incremental change might be substantially
larger. Furthermore, these estimates reflect only costs incurred by con-
tractors, and do not include administrative costs on the government
side.
We conclude, on the basis of the sparse data available, that the sum
of all incremental costs which can reasonably be charged to regulatory
controls probably amounts to between five and ten percent of total pro-
gram costs,6 depending on what activities are counted as regulatory in
nature. That is a considerable sum, equivalent to several billion dollars
per year when applied to the entire defense budget for weapons
development and procurement.
Two additional caveats: An important aspect of obtaining good cost
data is that many of the costs of regulation and administrative practice
typically are found in overhead or indirect costs that are not directly
chargeable to one contract. Because these costs are spread over the
entire business base at a plant, an extremely detailed study?with
extensive contractor assistance?would be required just to obtain valid
cost data, and even then it is uncertain how valid the data would be.
Overhead costs are likely to be much more important than direct costs
in understanding the regulatory and administrative burden. Yet, it
remains conceivable that the total cost of compliance may be unknow-
able, or at least unknowable with confidence.
Also, there are almost certainly offsetting benefits that are rarely
cited. For example, some managers observed that the information
flowing from the MILSTD 1567A reports would be useful in subse-
quent negotiations for procurement contracts, thereby possibly reduc-
ing the contract price. Such offsetting benefits have not, however,
been systematically examined and are not quantifiable at this time.
Another aspect of cost-related regulations is that both industry and
government officials noted the apparent contradiction of being
6MILSTD 1567A, clearly an influential regulation, was generated internally by the
Department of Defense.
6We recognize that the cost consequences of regulations and controls might vary sub-
stantially from one program to another, but our small sample size and the aggregate
nature of the estimates prevented identification of such variations.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
I
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
18
simultaneously subjected to increased regulation and increased com-
petition. Some industry officials argue that such a combination of poli-
cies will eventually result in less company investment in research and
advanced technology, although there is no evidence to demonstrate
that this is in fact true.
Schedule and Performance Effects
Have the added regulations, and more strict enforcement procedures,
had a noticeable effect in terms of delaying program milestones or
reducing product quality? At one level, the answer to these questions
is relatively straightforward: with respect to the original program plan,
our survey revealed almost no evidence of major delays or performance
reductions that could be attributed directly to regulatory procedures.
Some elaboration is required if we are to interpret properly that
rather surprising outcome. First, when dealing with program schedule,
we are talking about major program milestones in major weapon sys-
tems. Such milestones represent the aggregate outcomes of many
subordinate schedule events, at least some of which we can hypothesize
were affected adversely by regulatory compliance. However, in every
case we inspected, those subordinate schedule events apparently were
not on the critical path of the overall project, or the regulatory delays
were masked by delays from other causes. Furthermore, at times
potential delays were avoided when the contractor proceeded, with its
own corporate funds, with critical work while awaiting formal comple-
tion of contract negotiations and the subsequent release of government
funds.
It also should be emphasized that the lack of demonstrable schedule
slips should not be interpreted as meaning that contracting events
proceed smoothly. In one major program, which appeared to be typical
in most respects, negotiated changes to a sole source production con-
tract took anywhere from a minimum of seven or eight months up to a
maximum of nearly two years, if we count from the date the project
office and the contractor informally agreed that a change was needed
to the time a contract was signed. Since a major program can typically
involve several, and perhaps tens, of such changes every year, it is easy
to understand the cumulative effect imposed on managers by contract
cycles that extend over years. The fact that serious consequences from
such contracting cycles are so infrequent can be considered a tribute to
the skill of the managers in government and industry.
One obvious problem with the result stated above is that the refer-
ence point against which schedule was measured is the original pro-
gram plan, which almost certainly was affected by knowledge of the
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
19
regulatory process and its influence on program schedule. Can we
measure those first-order effects of regulatory process on the original
plan? One approach is to observe long-term trends in the length of the
overall acquisition cycle. An example of such a survey is shown in Fig.
2. Here we show, for a sample of flight vehicles (aircraft, helicopters,
and missiles), the time required to proceed from Milestone I (as
defined in DoD Directive 5000.1) to the initial delivery of an opera-
tional item.7 It can be seen that every decade has experienced a wide
range of acquisition cycle durations, with little apparent pattern to the
data. A line fit to these data does show an upward slope, with an
apparent growth in acquisition time of about 15 percent per decade.
Although the conclusion of increasing acquisition time is significant at
the five percent level, the R-squared statistic is only 12 percent, sug-
gesting that calendar time alone is a weak explanatory variable. A
180
160
140
120
60
40
20
? ?
? ?
MD
? ? MO
F ?
?
? A
A
?
0-
1945 1950 1955 1960 1965 1970
Year of program start
?
?
?
? Aircraft
A Helicopters
? Missiles
1975 1980
Fig. 2?Time from program start to first delivery, with
exponential fit line: all systems
7These data are drawn from M. B. Rothman, Weapon System Acquisition Milestones:
A Data Base, The RAND Corporation, N-2599-ACQ (forthcoming).
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
20
more definitive analysis of this issue seems desirable but was beyond
the scope of the present study.
A similar caveat is also justified regarding the apparent lack of
effects caused by regulatory controls on product design and perfor-
mance. The problem is that no reference case?a product designed in a
less severe environment of regulatory controls?is available for com-
parison. At the level of design engineering, it is common to hear com-
plaints about the stifling of innovation because of the need to comply
with obsolete or inappropriate MILSPECs. However, program
managers generally expressed satisfaction with the process of MIL-
SPEC selection. Again, clear evidence of substantial problems was not
found.
An underlying difficulty in examining many of these issues is our
inability to identify the consequences of things not done. Managers
frequently argue that they have to spend too much time coping with
regulations rather than solving the "real" problems in their program.
However, we are unable to properly evaluate that claim because we can
observe only the actual output of the project, not what it might have
been with a different allocation of management resources.
REGULATORY EFFECTS ON TECHNOLOGY
BASE PROGRAMS
Technology base programs are defined as projects geared to refining
and demonstrating a particular improvement or refinement of technol-
ogy, rather than incorporating those advances into the design of an
operational system. In the parlance of DoD budgeting, such projects
are funded from RDT&E Program 6.1 (Research), 6.2 (Exploratory
Development), and 6.3A (a portion of Advanced Development). Proj-
ects funded under these budget programs are different from major
weapon systems in several ways that are essential to the issues central
to this study:
1. Such projects are smaller and more numerous, so that each
individual project does not command the attention of manage-
ment or the expertise that often is lavished on the major
weapon programs.
2. They are shorter in duration, typically lasting a few years, in
comparison with the 10 to 15 years that typically are devoted
to the development and production of major systems.
3. They involve much higher levels of technical uncertainty
because they are essentially research activities, rather than the
engineering and production activities that are typical of major
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
21
weapon projects. Many are conducted under level-of-effort
contracts that do not define a deliverable in terms of a specific
design or hardware item.
4. They are more frequently performed by relatively small firms
which do not have the financial resources to proceed with
work, or perhaps to even survive, while waiting many months
for a contract to be completed.
The main consequence of these characteristics, for the present study, is
that the effects of regulatory activities are even harder to measure than
would normally be the case for major weapon systems.
The end product of most technology base programs is knowledge
that advances the state of art. Therefore, a primary metric for evaluat-
ing the effects of regulatory activity on a technology base program
should be the rate of technological advance. Unfortunately, the mea-
surement of technology levels, or even the rate of technological
advance, is not a refined art form. We therefore had to identify a rea-
sonable proxy for rate of technological advance.
From preliminary discussions with managers of technology programs
in the Services, we were led to examine the aspect of possible delays in
starting new technology base projects. The broad consensus was that
regulatory effects were most pronounced in that area, and that once
projects were under way, regulatory effects were not so important or
troublesome.
That line of inquiry led directly to two interacting issues: CICA and
the annual appropriation and authorization process. The new factor
here is CICA. Historically, technology base projects have been con-
ducted under sole source negotiated contracts. In many cases that
approach was justified because the research topic was highly special-
ized, based on ideas flowing from one small group of people who
seemed uniquely qualified to conduct the research. Furthermore,
unsolicited proposals based on truly new and novel ideas have a
proprietary character that has traditionally been used to further justify
sole source contracting. Such contracts could, if the client deemed it
justified, be negotiated and signed in a matter of weeks, allowing the
sponsoring agency considerable flexibility in shaping the research pro-
gram to respond to evolving needs and opportunities.
CICA changed all of that by making it much harder to use sole
source contracts, and by introducing noticeable delays into the con-
tracting process. It is frequently asserted that one consequence is that
the sponsoring agency's project managers have less discretion to select
the contractor they deem best qualified, and instead have to be respon-
sive to a formal list of source selection criteria and procedures.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
22
Although every manager can cite instances in which non-optimal
source selection was asserted to have occurred, the evidence is subjec-
tive at best. That line of analysis was not pursued in the present
study.
It is possible to demonstrate the effect of contracting delays. Start-
ing with publication of a "sources sought" synopsis in the Commerce
Business Daily, it typically takes about a year to get through the subse-
quent process of issuing a Request for Proposal (RFP), conducting a
source selection, and negotiating a final contract for a technology base
project. It seems evident that such a time schedule is not appropriate
for projects that typically take only two or three years to conduct, and
that frequently result in ideas that require starting a new project.
The problems of administering a technology development program
with that kind of contracting schedule are compounded by the annual
budget cycle. Unexpected delays in processing a contract sometimes
make it impossible to obligate funds from the fiscal year appropriation
that had been earmarked for that project, thereby bumping it into the
next fiscal year where it is in competition with a new set of alterna-
tives and subject to additional delays. The combination of such factors
has reduced the authority of a sponsoring agency's managers to allocate
funds in what they consider to be an optimal manner. However, we
have not found a way to measure the consequences of losing that flexi-
bility, or even to assess its importance.
Fortunately, the effects of CICA on technology base programs
became largely moot by a letter8 sent from the Congress to Secretary of
Defense Weinberger, stating that it was not the intent of the Congress
to apply the CICA to research, including work done under RDT&E
program 6.2. The Department of Defense had always exempted pro-
gram 6.1 work from CICA because the act specifically exempted
"research." Because program 6.2 is titled "exploratory development,"
the Department of Defense had judged it subject to CICA. It is
expected that removing exploratory development from CICA coverage
will eliminate that regulatory problem from the technology base pro-
gram.9
8Letter dated April 15, 1986, addressed to Secretary Weinberger and signed by the
chairmen and, in some cases, the ranking minority members of the House Government
Operations Committee, the House Science and Technology Committee, the House Armed
Services Committee, and the Senate Armed Services Committee.
8This particular interaction between the Congress and the Department of Defense is
illustrative of a persistent observation from our survey. In a general environment of
mutual distrust, DoD components are behaving in increasingly risk-averse ways.
Because Congressional intent was unclear, DoD implemented CICA "by the book."
"Exploratory development" was not labeled as "research," so the Department of Defense
did not exclude it from CICA coverage.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
III. INDICATORS OF REGULATORY ACTIVITY
The basic hypothesis leading to this study was that regulatory
activity in defense acquisition has been growing and that its growth
during the last decade or so has contributed to inefficiencies in the
acquisition process. If true, this hypothesis could explain some of the
perceived flaws in weapon acquisition. Evidence for the purported
growth is, however, inconclusive. Have regulatory mechanisms
increased, and if so, how much and in what directions?
We investigated a wide range of acquisition process indicators:
growth in the staff size for regulatory offices, number of audits con-
ducted, and number of new regulations issued, among others. Support-
ing information was collected on several aspects of management and
oversight, including the functions, staff sizes, and activities of various
organizations. This second phase of the research was motivated in
part by the fact that there is remarkably little data on the institutions
that participate in weapon acquisition, and in part by the desire to
further the "class knowledge" of acquisition. We concluded that basic
research into these institutional factors will increase the general under-
standing of weapon acquisition.
This section provides a partial catalog of indirect indicators of regu-
latory activity in acquisition. The indicators do not necessarily reflect
actual regulatory activity, and they certainly do not yield direct mea-
surement of the effects of regulatory activity. Not all sources of regula-
tion are explored, and no cause and effect relationships between these
indicators of regulatory activity and program outcomes can be inferred.
However, they do provide useful contextual information that should
contribute to the overall assessment of trends in acquisition regulations
and controls.
A summary overview of the available data is presented here, mostly
in graphical form to highlight trends. Appendix A gives the same data
in tabular form, together with additional details and descriptions of
sources and derivation methods.
APPROACH
The several organizations controlling the defense acquisition process
can each be examined on three levels. First, there is the structure of
the organization: how it is organized, what are its constituent parts,
and how those parts interact. Second, there are the activities of the
23
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
24
organization: what the institution does, how it performs its functions,
and how its activities might be categorized. Third, there is the set of
products from each institution. These three levels are in principle dis-
tinct but in practice they may overlap and not always be immediately
distinguishable.
We next will examine some of the organizations involved in the
acquisition process at each of the three levels, although not always in
an equally thorough manner. This initial survey is inevitably limited
by the usual constraints of time and resources, and much remains to be
done before a reasonably complete picture of regulatory activities will
emerge.
Institutions Studied
We addressed three categories of institutions. The first is the
Congress, which influences the acquisition system through its authori-
zation, appropriation, oversight, and acquisition policy roles. The
structure of the Congress (portrayed by the size of the committees and
staffs), some of its activities (measured by the magnitude of hearings
and testimony), and a very limited set of products (the system-specific
directives written into the budget bills) will be examined here.
The second set of institutions includes the Department of Defense
and its constituent agencies, such as the Defense Contract Audit
Agency (DCAA). Our intent is to determine whether the structure and
activities of these DoD institutions have changed over time.
The third group of institutions includes the government agencies
that participate in acquisition at the behest of either the Congress or
the executive branch of government. Those examined here include the
Office of Management and Budget (OMB), the Office of Federal Pro-
curement Policy (OFPP), the Congressional Budget Office (CBO), and
the General Accounting Office (GAO).
Although the individual Services themselves are part of the overall
regulatory structure, this research addresses only those agencies and
organizations outside the Services (e.g., OSD agencies and the
Congress). This limitation was due to a somewhat arbitrary allocation
of study resources, and should not be construed as implying that regu-
latory controls within the Services are less extensive or important than
those imposed from outside.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Billions of 1987 dollars
25
Correlation of Regulatory Activity with Defense Expenditures
The concept of "regulating" defense acquisition often is taken to
mean that external institutions, such as the Congress, are exercising
increasing control over defense. Some measures of regulatory activity
described later in this section appear to support the concept of increas-
ing levels of such activity. Such data need to be interpreted in the con-
text of other changes: one prominent change is the growth in the
acquisition budget.
Figure 3 shows the trend in total obligational authority (TOA) for
defense from 1960 to 1986, adjusted for inflation. The pattern has
been neither steady nor unidirectional, but has been marked by definite
periods of growth and decline. Most noticeable is the growth of nearly
70 percent over the last decade. It seems plausible that this rapid
growth in obligation authority is at least a partial source of the
increase in oversight and other regulatory activity over the same time
period. Attempts to test that hypothesis by examining statistical corre-
lations between budget levels and regulatory activities were generally
320
300
280
260 -
240 -
220 -
200 -
180
160 -
140 -
120 -
100
80
60
40
20
0
1960 1970
Year
Fig. 3?DoD obligation authority
1980
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
26
unsatisfactory, in part because of the sparse data available on many of
the regulatory activities. Nevertheless, the reader is urged to keep the
budget trends in mind while examining and interpreting the following
discussions of regulatory organizations and their activities.
THE CONGRESS
The Congress exercises a major influence on weapons acquisition
policy through its authorization, appropriation, and oversight roles.'
Funding of acquisition programs is controlled through the authoriza-
tion and appropriation processes. Oversight of government agencies is
less easily measured but is possibly as important as funding. Oversight
usually is carried out by subcommittees for specific functional areas,
and is related in part to the authorization process. For example, both
the House and Senate Intelligence Committees oversee executive
branch intelligence operations.2
Structural Indicators
One indicator of Congressional activity in weapons acquisition is the
size of the staffs supporting the committees with major roles in defense
acquisition budget and oversight activities. Recent trends in the size of
professional staffs for three key committees are shown in Fig. 4.3
The Armed Services Committee staffs are devoted entirely to
national defense matters, but only partly to weapons acquisition.
Staffs of the other committees deal with all government matters,
including weapons acquisition. It would have been desirable to identify
only the defense-related subcommittees of these committees, but that
was not possible from the available data.4
While the picture is not completely consistent (little change in
Budget Committee staff size), two of the committees do show increas-
ing size over the past decade and a half. Taken in the aggregate, those
1We recognize that the term Congressional acquisition policy is extremely broad, and
that Congressional "policy" on acquisition (or any subject within its purview) is a prod-
uct of its authorization and appropriation roles.
2For a brief overview of the specific committees and subcommittees having acquisition
responsibilities, see Charles W. Cruit, "Congressional Committees and Subcommittees
Involved in the Defense Acquisition Process," November 25, 1985, in Defense Acquisition
Background Papers, Vol. II, Logistics Management Institute, June 1986.
3Staff sizes shown in Fig. 4 include only professional personnel assigned full time to
the respective committees. In practice, those staffs are frequently augmented by people
from the personal staffs of the committee members.
4We attempted to estimate the staff size of defense-related subcommittees, as
described in App. A, but the results were not satisfactory.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Appropriations Committee
10
0
1972 1976 1980 1984
Year
40
It
8
It
2 30
o.
Number professional staff
Armed Services Committee
10 -------
House
Senate
0
1972 1976 1980
Year
40
30
20
10
1984
Budget Committee
0
1972
???
1976
1980
Year
1984
27
Fig. 4?Professional staff on Appropriations,
Armed Services, and Budget Committees
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
28
staffs appear to have roughly doubled. There is the clear suggestion
that the staff level available to the committees for oversight of defense
acquisition has increased, but this information alone tells us little
about how that staff effort has been allocated.
Measures of Congressional Activity
We can begin to get some clues about Congressional activities by
examining their interactions with the Department of Defense.
Requests for Testimony. Figure 5 shows the number of Congres-
sional committees requesting hearings with DoD witnesses. The data
include committees and subcommittees for both the House and Sen-
Number of committees
110
100
90
80
70
60
50
ao
30
20
10
1965
1970
1975
Year
1980
Fig. 5?Committees requesting DoD testimony
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
1985
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
.01A-RDP90M00005R000200080003-4
29
ate.5 Beginning in 1975, there was a noticeable jump in the number of
committees requesting hearings, which can be explained in part by the
passage of the Budget and Impoundment Control Act of 1974. Not
only did this Act give Congress greater responsibility for oversight of
the Department of Defense, but it also led to a broader interpretation
in Congress of when it is necessary to call hearings.
The committees and subcommittees counted in Fig. 5 deal with all
DoD matters, not just weapons acquisition. However, if we assume
that the distribution of attention among topics remained roughly con-
stant across that time period, we can infer that the number of hearings
dealing with acquisition topics increased by a factor of three or four
from the early 1970s to the present time.
Authorization and Appropriation Process. A partial explana-
tion of the perceived growth in Congressional oversight of defense
acquisition is the increased level of detail incorporated in the Congres-
sional budgeting, authorization, and appropriation processes.6 A brief
discussion of the overall budget process will place the Authorization
and Appropriations Acts in perspective.
The President submits a Current Services Budget for analysis by the
Congressional Budget Office (CBO). The President's budget and the
CBO analysis are then used by the budget committees, the authoriza-
tion committees (for defense, the Armed Services Committees), and the
appropriation committees to prepare tentative estimates of the budget.
These are expressed in the form of Congressional appropriations.7
Both the House and Senate Armed Services Committees have
increased the amount of authorization activity for the DoD budget
request.5 As shown in Fig. 6, the pages of testimony received by the
two committees have increased from 1400 in 1960 to over 11,000 in
1986, and the size of the committee reports has increased substantially
over the same time period.
Information Requests. Another indicator of Congressional
involvement in defense matters is the type and quantity of information
5Each committee (or subcommittee) was counted only once for each year.
6Robert J. Art, "Congress and the Defense Budget: New Procedures and Old Reali-
ties," in Barry M. Blechman and William S. Lind, Toward a More Effective Defense,
Report of the Defense Organization Project, 1985.
7The original intent of the authorization acts was to provide substantive guidance and
an overall philosophical sense of direction to individual military programs. It was under-
stood that the authorization acts would not contain restrictions of any kind on the
specific amounts to be spent on individual programs. In recent years, however, the oppo-
site has been the case, as the authorization acts contain increasingly detailed restrictions
on specific programs both as to conditions on expenditure and the maximum amount to
be spent.
5D. C. Morrison, "Chaos on Capitol Hill," National Journal, September 27, 1986.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
30
Number of pages (thousands)
1.2
1.1
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
1960
1970
Year
1980
Fig. 6?Indicators of activity in Armed Services Committees
obtained from DoD by the Congress. As shown in Fig. 7, the number
of reports and studies requested has increased. Otherwise, there seems
to be little pattern. With the exception of occasional upward spikes in
the number of hearings called and the number of telephone requests for
information (some of which may be errors in the data), there is no
indication that such information flows have increased over the past
couple of decades. In fact, the number of hours of testimony presented
by DoD witnesses appears to have decreased over the time period.
Despite the lack of trends, the absolute magnitude of such informa-
tion flows should be noted. Over four hundred hearings a year, involv-
ing over a thousand hours of testimony, represent a substantial load
imposed on senior DoD management personnel. Likewise, response to
roughly 100,000 written inquiries and 500,000 telephone inquiries each
year, and the generation of hundreds of reports and studies, requires
many man-years of time from DoD staff and officials. We have no way
of comparing the costs and benefits of this information flow and asso-
ciated investment of management resources.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
DIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
31
100
90
so
70
60
so
40
30
20
10
o
100
90
ao
70
60
50
40
30
20
10
0
100
90
ao
70
60
50
40
30
20
10
o
Reports and
studies (x 10)
1965
1970
1975
Year
1980
1985
1965
1970
1975
Year
1980
1985
-
Phone inquines (x 10000)
--).
1965
1970
1975
Year
1980
1985
Fig. 7?Congressional requests for information from the DoD
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
32
Results and Outcomes of Congressional Activity
A major product of Congressional activity affecting defense acquisi-
tion is, of course, the annual budget. Information on the overall alloca-
tion of funds to the various weapons programs is widely available and
much analyzed. In addition, however, the authorization and appropria-
tion bills reflect a more detailed form of Congressional control over
individual weapon systems. Such controls take two forms:
? Restrictions on individual weapon system programs, and
? Designations (earmarking) of funding for programs that either
were not requested by the Department of Defense or were
requested at lower funding levels.
Information on these two kinds of Congressional "managerial"
actions is much less widely published, nor is it usually incorporated in
analyses of acquisition management. We therefore offer a summary of
such restrictions and designations enacted into law during the past
twenty years.
We consider only those instances in which the restriction or ear-
marking affects a single program, e.g., the M-1 tank. There is no
attempt here to evaluate generic restrictions or regulations related to a
specific Service or applicable to all programs equally. In general, only
items in the Procurement, Research, Development, Test and Evalua-
tion, and General Provisions sections are included in this review. This
means that specific language in sections relating to Military Personnel,
Operation and Maintenance, Special Foreign Currency Programs,
Revolving and Management Funds, and Related Agencies usually are
not considered.
Specific Program Restrictions. Several types of restrictions are
included in the acts, and some had widely varying effects on procure-
ment schedules. The final taxonomy suggested here has the following
categories of restrictions:
? Funding
? Quantity
? Competition
? Planning
? Certification
? Technical
? Other
Most of the restrictions are of the nature of "thou shalt not" prohi-
bitions of spending, rather than mandates to spend. A more complete
defuiltion of each type, together with illustrations, may be found in
Apps. C and D.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
33
Earmarking. The earmarking of funds is the reverse of restriction.
Whereas a restriction seeks to limit spending, earmarking directs the
Department of Defense to obligate or expend funds for specific pro-
grams. Such language typically states "of which $$$ shall only be
available for" or "not less than $$$ shall be expended for. . . A typical
example is:
. .. of which $15,000,000 shall be available only for integration
(including qualification) of the Hellfire missile on the UH-60 helicop-
ter to remain available for obligation until September 30, 1985.9
There are several reasons for this type of Congressional action.
First, it ensures that specific projects of interest to the Congress are
funded, and second, it precludes reallocation of funds by the Depart-
ment of Defense.1?
Authorization Acts. In the period between 1966 and 1986 the
Congress increased the number of restrictions and earmarking imposed
on the Department of Defense in the Authorization Acts. This is illus-
trated in Fig. 8, which shows a slight increasing trend for both restric-
tions and earmarkings from 1966 to 1982, and sharp increases from
1982 to 1986.
Certification has become the major instrument of Congressional
restriction in Authorization Acts.11 The total number of certification
restrictions is far greater than all other types of restrictions during this
20-year period, with most of them occurring in the 1983-1986 period.
Earmarking is the designation of funds for a particular program.
Significant activity occurred from 1967 to 1969, during 1975, and from
1983 to 1986.
One can speculate on reasons for the sharp upswing in certifications
and earmarkings that occurred during the 1980s, but we found no
record of discussions on this topic by members of the Congress or their
9Public Law 98-212, Department of Defense Appropriation Act, 1984, December 8,
1983, Title V, Research, Development, Test and Evaluation, Army.
19The President and his delegate, the Secretary of Defense, normally have discretion
by law to reallocate funds within the Department of Defense budget from one account to
another. This process is called either reprogramming or the transfer of funds. There is a
considerable difference between reprogramming and transfer. The authority to transfer
is explicitly stated in statutes, whereas reprogramming, which is nonstatutory, is viewed
as more of a gentlemen's agreement and often not a matter of public record.
11A certification is a clause requiring a senior DoD or Service official to certify, or
guarantee, that costs or other program goals will be achieved, as a condition to expending
specified funds.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
.01A-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
34
40
30
g 2?
10
0
66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86
Fiscal year
Fig. 8?Defense Authorization Acts: number of Congressional
actions on specific weapon systems
staffs.12 The full text of each restriction and earmarking included in
the FY1986 Authorization Act is given in App. C.
Appropriation Acts. Appropriation Acts contain both restrictions
and earmarking. The total number of actions during the 1966-1986
time period is shown in Fig. 9. The trends are similar for both restric-
tions and earmarking, showing very little increase until the 1982-1986
period.
As was the case for restrictions in the Authorization Acts, the larg-
est category of restrictions in the Appropriations Acts is in the certifi-
cation category, which increased between 1981 and 1986, peaking in
1984.
120ne explanation is that sharp upswings in regulatory activity occur during times of
political division over defense policy?notably when the Congress is controlled by Demo-
crats and the White House is Republican. Thus, regulatory activity may reflect substan-
tive controversy over defense policy, not efforts to intervene in the acquisition process.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
40
30
10
0
35
1,1
Earmarkings
Restrictions
no Ensiti na I. mil I
66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86
Fiscal year
Fig. 9?Defense Appropriations Acts: number of Congressional actions
The trend in earmarking designations in the Appropriations Acts is
also illustrated in Fig. 9. By definition, earmarking concerns funding.
A single additional quantity restriction was taken in conjunction with
the funding of the KC-135 in 1984.13
The full text of all restrictions and earmarkings in the FY1986
Appropriations Act is given in App. D.
DEPARTMENT OF DEFENSE AGENCIES
In addition to OSD and the individual military services (which we
do not address here), several DoD agencies influence acquisition in
important ways. After reviewing the evolution of DoD directives and
instructions that govern acquisition policy, we examine two key DoD
agencies: the Defense Contract Audit Agency (DCAA) and the DoD
Inspector General.
13Referred to as B.707 in the legislative text.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
.7,1A-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
.7,1A-RDP90M00005R000200080003-4
_o
36
DoD Instructions and Directives
The Department of Defense, through the Office of the Secretary of
Defense, issues directives and instructions which affect defense acquisi-
tion. They constitute one measure of trends in management controls.
We looked at the change in the number of directives and instructions
over time by comparing several cumulative quarterly indices.
A key factor in this effort was identifying those directives and
instructions that were relevant to defense contracting or acquisition.
The criterion used here is that any directive or instruction which
altered the way that a contractor would do business in comparison with
its commercial counterpart would count as acquisition-related.
Figure 10 illustrates the changes in total number of both directives
and instructions, and in those related to acquisition, over the past eight
years. It is seen that the total number of instructions and directives
has increased during that time period, as has the number of those
affecting acquisition. However, in each case the change has been
slight.
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
200
100
0
_ En Total
MI Acquisition related
June 1978 December 1978 September 1985 June 1986
Year
Fig. 10?DoD directives and instructions
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27 :
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
37
A number of caveats accompany these data. In the selection of
those instructions and directives affecting the acquisition process, the
broadest criteria were used, and were subjective. On the one hand, this
means that the number counted is likely to be a maximum. On the
other hand, the list certainly includes instructions and directives with
only a minor or a peripheral effect. Second, the numbers do not tell
the whole story. If a directive having a minor effect is dropped, and
another directive having a major effect is adopted, the number of direc-
tives will be unchanged but the consequences on the acquisition pro-
cess will be different. There was no way to include such effects in this
analysis.
Defense Contract Audit Agency
The Defense Contract Audit Agency (DCAA) was established in July
1965 as a separate agency of the Department of Defense. It was
thought that DoD contract auditing activities would be more efficient if
a single agency had responsibility, rather than having each DoD com-
ponent perform its own audit. Although organizationally independent
of contract officials, the DCAA performs audit functions for all DoD
procurement and contract administration agencies. Operating under
the Assistant Secretary of Defense (Comptroller), the DCAA's major
role in the acquisition system is financial oversight.
DCAA also provides contract audit services for other (non-DoD)
government agencies?generally for contracts where the Department of
Defense represents the dominant government interest, but other agen-
cies are involved.
DCAA staff has grown a modest 21 percent over the life of the
agency, as shown in Fig. 11. After some growth in the first few years,
there was a fairly steady decline to a low point in 1977. From 1978 to
1982 staff size increased at a moderate rate, followed by a rapid
increase after 1982. There are no apparent changes in the scope of
DCAA responsibilities that could account for the observed pattern.
Figure 11 also shows two indicators of DCAA activity. One of the
DCAA's primary activities is proposal evaluation, which involves audit-
ing a contractor's proposal against the contractor's records of current
or past production costs, and examining the basis for costs included in
the proposal. The number of proposal evaluations conducted by DCAA
trend generally upward, peaking in FY1981 with over 34,000 evalua-
tions. DCAA performed half again as many evaluations in FY1985 as
in FY1966.
Another major activity of the DCAA is to audit the incurred costs of
contractors (the amount actually billed to the government). Figure 11
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
38
5000
4000
3000
2000
1000
Staff
.
$ value of audits (x 10), in 1972 dollars /*
../.. ? .*
\ I
\
I
*
..% *
4%. .4,,..?
../
..., ,....?"""..... .../ ..... ...? ? ..?, .....
Number of evaluations (x 10)
NONNI
?????
1970 1975 1980 1985
Year
Fig. 11?Defense Contract Audit Agencies
staff and activities
shows the dollar value of such audits. That activity shows a slight
decrease during the 1969-1975 time period, with no change since then
until a small upturn in 1985 (the last year for which information is
available).
Department of Defense Inspector General
The Fiscal Year 1983 Defense Authorization Act established a
Department of Defense Inspector General (DoDIG), superseding the
creation of the Assistant to the Secretary of Defense for Review and
Oversight in 1981. The Congress mandated that there be an Inspector
General for the Department of Defense, just as there have been IGs for
virtually all other government agencies since 1977, to alleviate concerns
about the independence of the Assistant Secretary in matters relating
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
39
to waste, fraud, and abuse.14 The DoDIG is organized into three basic
groups for auditing, investigations, and inspections, each group headed by
an Assistant Inspector General. Although the DoDIG is supervised by
the Secretary of Defense, it has the right to audit, investigate, or inspect
any programs it desires. The Secretary of Defense, however, can super-
vise DoDIG activities in selected instances that involve operational, intel-
ligence, counterintelligence, or "other matters ... which would constitute
a serious threat to national security."15
Figure 12 plots the staff size for the new IG office for 1983-1986.
Since the DoDIG was formally established in 1983, staff size has grown
steadily.
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
200
100
1975
? ,??????
MM.
OMB
CBO
OFPP
? ? ? ? ? ? ? ? ". ? ? ?i? ? ? ? r" ? ? ? "''? ? r" ? ? '1*????? ? ? ????? ? ? ??? ? ?
1980
Year
Fig. 12?Agency staffs
1985
14See Joseph H. Sherrick, The DoD Inspector General: Evaluating Defense Manage-
ment, Defense/83, December 1983, pp. 24-25.
15Sherrick, pp. 22-24.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
40
OTHER GOVERNMENT AGENCIES
Just as the Congress and various DoD agencies participate actively
in weapons acquisition, so do several other institutions. In some
senses it might be tempting to think of the Department of Defense as
an "insider" in the process, and the Congress and agencies as "outsid-
ers." However, some of the agencies clearly exert a major influence on
acquisition. Some, such as the CBO and GAO?perhaps more than
others?provide a link between the Congress and the Department of
Defense, Services, and the defense contractors. At times, their role is
as a "watchdog" over the actions of the organizations that procure and
build weapons. In other instances, their role is to transmit to the
Congress their evaluation of the state of affairs in acquisition.
There are other institutions, however, that report to the executive
branch of government. The OMB and OFPP (which is controlled to
some extent by the OMB), because they provide information to the
executive branch, do not have the same role as guardians as do the
agencies that report to the legislature. The structure and activities of
four institutions (GAO, CBO, OMB, and OFPP) are examined below.
General Accounting Office
The General Accounting Office was established by the Budget and
Accounting Act of 1921 (the same Act that created the Bureau of the
Budget, predecessor to today's OMB). The original charter of the GAO
was quite broad. The Comptroller General has the authority to con-
duct investigations that are ordered by the Congress on issues related
to revenue, appropriations, or expenditures.
Because the express purpose of the GAO is to serve the Congress, it
is part of the legislative branch of government. As such, the GAO pro-
vides special assistance to the Congress as well as its committees. For
instance, the GAO may respond to Congressional legislation to study a
specific matter. It may provide "studies mandated by statute; audits
and evaluation . . . requested by committees and members; testimony
at hearings; advice at hearings; and accounting, auditing, and advisory
services for House and Senate financial and administrative opera-
tions."16 The GAO was created to balance the activities of the OMB,
which is responsible for the budget function in the executive branch.
The relationship between the GAO and the OMB is troubled by the
fact that the functions of the two organizations overlap to some extent.
16Robert L. Sperry et al., GAO 1966-1981: An Administrative History, U.S. General
Accounting Office, Washington, D.C., 1981, p. 16.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
41
The overall staff size of the GAO has remained relatively constant
at about 5000 people for at least the past decade, fluctuating within a
range of only a few percent. Assuming that the fraction of GAO
resources allocated to defense acquisition issues has remained constant,
it would appear that there has been little change in acquisition-related
activity.
GAO Procurement-Related Documents. One measure of the
activities of the GAO is the number of procurement-related documents
published each year. Trends for two such classes of documents are
shown in Fig. 13. The number of "decision" documents has increased
substantially, indicating that GAO has been drawn into a growing
number of disputes.17 The output of research reports, letters, and tes-
timony has, however, remained constant.18
800
700
600
500
it
.ra
g 400
Z
300
200
100
0
1980
Year
Fig. 13?GAO procurement documents
1985
17Decision documents report on rulings from the Comptroller General on a variety of
procurement issues.
180ne hypothesis is that GAO documents motivate the DoD to produce internal regu-
lations, both to prevent past abuses from recurring and in anticipation of future prob-
lems.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
42
Congressional Budget Office
Established in 1974 by the Congressional Budget Act, the Congres-
sional Budget Office (CBO) provides independent assessments and
analyses of budget matters to the Congress. Just as the OMB exists to
advise the Executive Office of the President on budgetary and fiscal
issues, the CBO advises the Congress so that it can relate the level of
spending and taxation to the budget. In essence, the CBO helps the
Congress to formulate a federal budget in the context of how national
economic resources are to be allocated among competing demands.
The responsibilities of the CBO can be divided into five areas:19
economic forecasting and fiscal policy analysis; "scorekeeping" to moni-
tor the effect of Congressional resolutions on the ceilings set for total
expenditures; cost projections for public bills or resolutions for a five-
year period; annual reports on the budget; and special studies as
requested by the Congress.
Although the "jurisdictions," so to speak, of the CBO and the OMB
are entirely different?the OMB advises the President, whereas the
CBO advises the Congress?in many senses the two organizations func-
tion in a similar fashion. Each provides budget forecasts, which in
turn allow the executive and legislative branches to make budget deci-
sions with some understanding of tradeoffs among conflicting demands.
A record of CBO staff size is shown in Fig. 12. It is apparent that
little change has occurred in recent history.
Office of Management and Budget
In the 1970 Reorganization Plan, the Office of Management and
Budget (OMB) was created in the Executive Office of the President.
However, the OMB today is a descendent of the Bureau of the Budget
(BoB), which was established by the Budget and Accounting Act of
1921. Two years after the 1937 President's Committee on Administra-
tive Management (the Browlow Committee) issued its report, the Exec-
utive Reorganization Act made the BoB the central figure in the Exec-
utive Office of the President. Initially, the OMB reflected a roughly
equal mix of management and budget responsibilities, although eventu-
ally the OMB became a dominant figure in the regulatory process. The
OFPP was established in the OMB for the explicit purpose of issuing
regulations on procurement, although the authority of the OFPP later
was diminished so that it could issue directives only with the con-
currence of the Director of OMB.
19The United States Government Manual, 1986187, Office of the Federal Register,
National Archives and Records Administration, U.S. Government Printing Office, Wash-
ington, D.C., 1986, pp. 56-57.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
43
As mandated by the 1977 Reorganization Act, the OMB is charged
with several functions. Perhaps the most important one is to prepare
the President's budget and to supervise the administration of the
budget. The OMB also assists the President by "reviewing the organi-
zational structure and management procedures of the executive branch
to ensure that they produce the intended results."2? Moreover, the
OMB plays a major role in the coordination of government activities,
especially interagency cooperation.
In recent years the OMB has been expected to participate in reform
of the federal procurement system. It was for this reason that the
OFPP was created in the OMB.
A history of OMB staff size is shown in Fig. 12. Since 1978 there
appears to have been almost no change.
Office of Federal Procurement Policy
In 1972 the Commission on Government Procurement recommended
the formation of the Office of Federal Procurement Policy (OFPP). In
1974 Public Law 93-400 created the OFPP in the Office of Manage-
ment and Budget to establish the overall direction of procurement pol-
icy, and to recommend policies and standardized regulations for all of
the agencies involved in procurement. OFPP was charged with the
responsibility for "improving the economy, efficiency, and effectiveness
of the procurement of property and services by executive agencies."21
In 1979 Congress reauthorized the OFPP for an additional four years.
At that time the Congress reaffirmed the original objectives of the
OFPP. However, it limited the OFPP's future authority by removing
its ability to produce regulations on procurement. The rationale for
this amendment of OFPP's charter was that procurement regulations
can be issued by the existing procurement agencies (e.g., Department of
Defense, General Services Administration, and so forth). OFPP
retains the authority to issue internal directives on procurement-
related matters.
The specific functions of the OFPP are, among others, to develop
and implement a uniform procurement system; to review the recom-
mendations of the Commission on Government; and to develop
20The United States Government Manual, 1986/87, p. 84.
21.Fteport to the Congress: Activities of the Office of Federal Procurement Policy,
October 1980 ? December 1982," in Reauthorization of the Office of Federal Procurement
Polity, Hearing Before Subcommittee on Oversight of Government Management, Commit-
tee on Governmental Affairs, U.S. Senate, 98th Congress, First Session, April 27, 1983,
U.S. Government Printing Office, Washington, D.C., 1983, p. 147.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
44
simplified procurement policies.22 The OFPP also is charged with
authority for issuing directives on procurement policy, provided that
those directives are issued with the concurrence of the Director of
OMB. OFPP is responsible for establishing interagency committees to
develop new or revised policies. Finally, the government procurement
agencies are required by law to issue regulations for the implementa-
tion of OFPP policy directives.23
A history of OFPP staff size for the years 1975 to 1985, as well as
staff estimates for FY1986-1987, is shown in Fig. 12. As in the case of
the other government agencies (with the exception of the DoDIG),
there appears to have been little change in recent years. By these
measures, however crude, OFPP's participation in acquisition would
seem to be constant, if not on the wane. Such a view is buttressed in
part by Congress' decision in 1979 to curtail OFPP's authority to issue
regulations on procurement.
22Ibid., pp. 147-148. The document contains a more detailed list of OFPP functions
than is given here.
23Ibid., p. 148.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
IV. SUMMARY AND OBSERVATIONS
The preceding two sections documented the results of two distinct
yet complementary approaches. The approaches are related to each
other at both the lowest and highest levels?objectives and results.
However, each takes its own particular perspective in addressing the
issues of regulatory activity and effects on weapon system programs.
EFFECTS OF REGULATIONS
One approach was to interview selected acquisition managers at
various levels in both the Department of Defense and industry. The
survey had as its goal the identification and quantification of effects on
weapon system programs stemming from the purported recent increase
in regulatory activity. Because of the small sample size, and because
individuals are often biased in their views depending on where they are
in the process, the results are likely to be biased in one way or another.
One finding of this research was the dominant and persistent theme,
expressed by those who work in acquisition, that an increasingly trou-
blesome set of administrative obstacles prevents them from accom-
plishing their program objectives in a timely and efficient manner.
Part of that perception may concern the relationship between the vari-
ous institutions. If we hypothesize that the direct involvement of the
Congress and other government agencies has grown at a rate that
equals or perhaps even exceeds that of other participants, this conflu-
ence of participants could be perceived as an additional burden by
those who manage acquisition. It also is conceivable that if acquisition
management has been operating near its maximum work capacity, then
even small, incremental increases in regulation could perturb the sys-
tem more than one would expect from the size of the incremental
increases alone. Another possible explanation lies in the fact that
some measures of regulatory activity appear to have increased at an
unusually high rate in the past few years, possibly exceeding the capac-
ity of acquisition managers to absorb them. Unfortunately, we were
unable to test any of these hypotheses with the data at hand.
It is not at all obvious how we can relate the perception that the
effect of regulations (broadly defined) on acquisition is burdensome to
the argument that in some instances this change in regulatory activity
has had an effect on weapon acquisition. It is clear (or at least intu-
itive) that some incremental costs can be attributed to regulatory
45
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
46
compliance, possibly as much as five to ten percent of the total cost of
a program. However, to sustain an interpretation that all, or even
most, of these costs are "wasted" money would require demonstrating
that no benefits derive from the reporting and oversight activities that
account for the bulk of the cost. The Congress and the regulatory
agencies would disagree with this assertion. Unfortunately, there is lit-
tle hard information on which to judge the validity of those conflicting
interpretations.
Surprisingly, we found almost no evidence that regulatory activity
had affected the performance or "quality" of the final product, either
favorably or adversely. There is some evidence that the length of the
acquisition cycle has experienced a marginal level of growth, particu-
larly in the post-1960 time period. There are, of course, several factors
that could account for such a trend, including the growing technical
complexity of weapon systems. A more definitive analysis of this issue
seems desirable but remained beyond the scope of the present study.
Finally, there was persuasive evidence that the imposition of the
Competition in Contracting Act (CICA) on technology base projects
had delayed the start of many such projects. However, during the
course of this study the Congress clarified its intent when it specifically
exempted both research and exploratory development projects from
CICA, thereby eliminating some of the regulatory problems that
impeded technology base projects.
INDICATORS OF REGULATORY ACTIVITY
The second phase of our research was a preliminary investigation
into a wide range of acquisition indicators?growth in the staff size of
regulatory offices, number of audits conducted, number of new regula-
tions issued, and so forth. Supporting information was collected on
several aspects of management and oversight, including the functions,
staff sizes, and activities of various organizations. Our motivation to
collect this basic data was stimulated by the paucity of data on the
institutions that participate in weapons acquisition. As we learn more
about these institutional factors we will increase the general under-
standing of weapons acquisition.
The picture that emerges from this review is mixed. For instance,
there has been an increase in the number of Congressional staff who
work on procurement issues; the Congress has introduced more restric-
tions in defense authorization and appropriation bills since 1980 than
ever before; and there has been a rise in the number of procurement-
related documents published by the GAO. Conversely, there are
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
47
numerous instances in which acquisition-related activity has not
changed radically over time. For example, the staff size of some
government agencies has remained constant. Finally, we must
remember that the acquisition budget has increased over the same time
period, and that alone might provide a plausible explanation for at
least some of the increases in regulatory activity that we do observe.
We found no consistent theme from this limited sample of indicators
of regulatory activity. Yet those who work in acquisition nearly unani-
mously agree that the effort required to comply with regulations,
management reviews, audits, etc. is much greater today than in the
past. There are several ways one might account for the apparent
disparity. For example, if the acquisition management process is rela-
tively saturated, then even small, incremental increases in regulation
could perturb the system more than one would expect the incremental
increases alone to cause. One also could argue that certain regulations
cause most of this activity. We were unable to test any such
hypotheses with the data at hand.
The measurement of trends in regulatory activity tells us only that
something is changing. By itself, it tells us neither what the conse-
quences of such activity are nor defines how regulation in general
affects the defense acquisition process. Those who are mandating the
increasing regulatory activity certainly believe that their actions will
have a beneficial effect. They perceive that some of the problems in
the existing organizations and processes can be corrected by tighter
controls. Acquisition managers, on the other hand, often see such con-
trols as hindrances. The truth that may lie somewhere between these
extremes is not apparent from the available literature, which is largely
qualitative and nonsystematic.
CONCLUSIONS
The absence of quantitative evidence supporting the hypothesis that
weapons acquisition is afflicted by excessive regulation does not neces-
sarily refute the hypothesis. We acknowledge the widespread frustra-
tion of project-level personnel who believe they could do their job more
rapidly and at less cost with fewer controls. We also acknowledge that
important methodological problems are involved in a study of this
kind. Nevertheless, we hope that future researchers can build on the
limited base provided here and contribute additional information to
help understand the extent of regulations in weapons acquisition and
thereby assess the proper balance between controls and progress.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
48
We recommend two broad guidelines for future study. First, careful
distinctions should be made among three kinds of regulations and con-
trols:
1. The burden of reporting, support for audits, and the like.
Such controls seem likely to incur certain dollar costs, but not
to cause serious delays nor to affect major program decisions.
Furthermore, experience has shown that laxity in financial
reporting and auditing sometimes leads to outcomes that are
embarrassing for all concerned. We suspect that this is the
least important class of controls.
2. The imposition of shall/shall not constraints. Requirements
for full competitive bidding, purchase of warranty coverage,
distribution of business to small firms, and so forth make up
the bulk of such regulations. In addition to certain dollar
costs needed to administer such programs, these requirements
begin to erode the program manager's authority and, in at
least some cases, his ability to conduct the program in the
most efficient and effective way. We believe this class of
regulations warrants further analysis.
3. Decision review process ("micromanagement"). A few detailed
case studies should be performed to investigate the possible
effects of this class of management controls.
Second, we recommend that those regulations, controls, and review
procedures which are created and implemented by the military services
themselves should be investigated in depth.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Appendix A
INDICATORS OF REGULATORY ACTIVITY
This appendix provides tabular data supporting the graphical
displays presented in Sec. III of the report, together with additional
information on regulatory activity indicators, methods of analysis, and
source references.
BUDGET
Table A.1 shows DoD total obligation authority, in both current year
and constant year (1987) dollars.
Table A.1
DOD OBLIGATION AUTHORITY
(Billions of dollars)
Fiscal
Year
Current
Year $
1987
Dollars
Fiscal
Year
Current
Year $
1987
Dollars
1960
40
187
1974
82
190
1961
45
204
1975
86
183
1962
48
219
1976
96
190
1963
49
220
1977
108
198
1964
50
212
1978
116
197
1965
50
205
1979
125
195
1966
65
249
1980
142
199
1967
72
266
1981
176
222
1968
75
267
1982
211
249
1969
78
264
1983
239
271
1970
76
269
1984
258
285
1971
73
216
1985a
280
299
1972
77
209
1986a
296
307
1973
79
199
SOURCE: United States Air Force Summary,
Report HAF-ACC(A)7203, 1986.
aEstimate.
49
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
OU
THE CONGRESS
Committee Staff
Table A.2 shows the staffs associated with three key committees.' It
should be noted that the growth of the Armed Services and Appropria-
tions Committees is roughly equivalent to that of other committees in
the Congress over the same time period.
The committees shown in Table A.2 have responsibilities other than
DoD oversight. For instance, the Defense Subcommittee of the House
Appropriations Committee has only four staff members assigned specif-
ically to procurement, and the Defense Subcommittee of the Senate
Appropriations Committee has only one such staff member.2 We there-
fore attempted to determine what fraction of the staffs represented in
Table A.2 could properly be associated with defense acquisition. Many
different sets of numbers for such staffs can be found in the literature,
and they often conflict?generally as to who is to be included in the
count. The following tables attempt to partially resolve that conflict
Table A.2
ARMED SERVICES, APPROPRIATIONS, AND BUDGET COMMITTEES STAFF
Committee 1947 1960 1970 1975 1979 1981 1983
Armed Services
House 10 15 37 38 48 49 56
Senate 10 23 19 30 31 36 41
Appropriations
House 29 59 71 98 129 127 160
Senate 23 31 42 72 80 79 82
Budget
House ? ? ? 67 86 93 97
Senate ? ? ? 90 91 82 79
SOURCE: N. J. Ornstein et al., Vital Statistics on Congress, 1984-1985 Edition,
American Enterprise Institute for Public Policy Research, 1984, pp. 125, 126.
1Here, total staff includes all categories of personnel: professional, assistant, counsel,
administration, clerical, and secretarial. For the Appropriations Committees, associate
staff (committee members' personal staff assigned to work on committee matters) has
also been included.
2Federal Executive Directory, September/October, 1986.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
51
by applying a simple set of counting protocols to one source of informa-
tion.3
The counting protocols used to construct Tables A.3, A.4, and A.5
are as follows:
? "Total Professional Staff" includes only professional staff
members listed in the main office and subcommittee listings.
Administrative personnel, clerks, secretaries, research assis-
tants, and others were excluded. Since the Armed Services
Committees (ASC) list only "staff assistants," these were used
as a proxy. In the Budget Committees, only designated
"analysts" or others who obviously are researchers were
counted.
? "Defense Related" includes only professional staffers with
defense oversight responsibilities who are listed in the subcom-
mittees. The listing of personnel in the main office was.
excluded.
? "Procurement Related" includes staffers listed in Defense or
Procurement subcommittees in the Appropriations and Armed
Services Committees, respectively. In the Budget Committees,
only defense analysts were counted.
By counting in this manner a consistent set of rules was applied across
committees and across time, thus enabling better comparisons. But
even with these counting protocols, a considerable amount of discretion
is involved, which means that the actual numbers must be viewed with
caution. In general, the most valid or objective data probably are for
total professional staff. Confidence in the precision of the values
decreases with each successive column to the right of total staff
because of the increasing number of interpretations that had to be
applied to the source material.
Table A.3 shows staffs of the Appropriations Committees for both
houses, while Tables A.4 and A.5 show similar information for the
other two committees. Subcommittee staffs for the House ASC were
not listed, so it was impossible to determine the fraction of total staff
related to defense and procurement matters, but the number of such
staff in the Senate ASC is relatively small and essentially unchanged
over the time period shown.4
3Congressional Staff Directory, 1972-1986.
4The staff listed in all Senate Armed Services Subcommittees was counted to generate
the "Defense Related" data. Only specific procurement subcommittees were counted for
the category "Procurement Related" staff.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
1
-
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
b2
Table A.3
HOUSE AND SENATE APPROPRIATIONS COMMITTEES: MEMBERSHIP AND STAFF
Year
Number of
Members
Total
Professional
Staff
Defense
Related
Procurement
Related
House
Senate
House
Senate
House
Senate
House
Senate
1972
55
24
26
19
9
?
4
1973
55
26
31
20
9
?
4
-
1974
55
26
38
30
10
?
5
-
1975
55
26
35
33
29
?
6
-
1976
55
26
44
45
10
?
7
?
1977
55
25
43
42
11
3
8
1
1978
37
25
46
40
12
3
8
1
1979
54
28
36
49
16
4
8
1
1980
54
28
46
33
19
11
10
6
1981
55
29
47
40
19
12
11
5
1982
55
29
51
38
19
12
11
5
1983
57
29
49
48
20
13
11
6
1984
57
29
52
40
21
13
12
6
1985
57
29
50
49
20
15
11
7
1986
57
29
53
47
22
15
14
7
SOURCE: Congressional Staff Directory.
Number of Congressional Committees
The generally upward trend in the size of committee staffs can be
contrasted with the trend in the number of standing committees
(including subcommittees), which has increased by roughly 50 percent
between 1955 and 1975, as shown in Table A.6.
Measures of Congressional Activity
In principle, the authorization process occurs before appropriation.5
The annual Defense Authorization Act continues to support the
Department of Defense and provides authority for the obligation or
5However, for FY1987, the Defense Authorization Act was passed after the Continu-
ing Resolution making appropriations for FY1987. This may have some interesting
consequences, if the two acts differ. As a matter of law, the latest act is "controlling" (in
the case of a conflict between the Appropriation and Authorization Acts, the latest pre-
vails), although only money appropriated can actually be spent.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Table A.4
HOUSE AND SENATE ARMED SERVICES COMMITTEES: MEMBERSHIP AND STAFF
Year
Number of
Members
Total
Professional
Staff
Defense
Related
Procurement
Related
House
Senate
House
Senate
House Senate
House Senate
1972
41
16
4
10
? 9
? 3
1973
43
15
5
10
? 6
? 3
1974
44
15
4
10
? 4
? 2
1975
40
16
8
11
? 6
? ?
1976
40
16
11
12
7
? ?
1977
40
18
13
10
? 6
? 2
1978
40
18
14
12
? 6
? 2
1979
45
17
15
13
? 9
? 3
1980
45
17
14
13
? 9
? 3
1981
45
17
17
15
? 10
?
1982
45
17
18
14
? 7
? ?
1983
45
18
19
13
9
? ?
1984
45
18
18
17
11
? ?
1985
47
19
29
19
? 10
? 1
1986
47
19
31
20
? 10
? 2
SOURCE: Congressional Staff Directory.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
54
Table A.5
HOUSE AND SENATE BUDGET COMMITTEES: MEMBERSHIP AND STAFF
Year
Number of
Members
Total
Professional
Staff
Defense
Related
Procurement
Related
House
Senate
House
Senate
House
Senate
House
Senate
1975
23
16
19
23
4
?
2
?
1976
23
14
30
41
6
?
2
1977
25
16
26
37
6
?
2
?
1978
25
16
26
41
?
?
?
?
1979
25
20
27
41
2
?
?
1980
25
20
25
37
5
?
?
?
1981
30
22
25
36
4
?
?
?
1982
30
22
25
32
4
2
3
2
1983
30
22
23
32
4
2
3
2
1984
30
22
23
33
4
2
3
2
1985
33
22
23
32
4
2
?
2
1986
33
22
25
27
4
2
?
2
SOURCE: Congressional Staff Directory.
expenditure of funds for groups of programs or specific programs
within a designated time.
In this country there is a long-standing tradition of keeping the mili-
tary authorization and appropriation acts separate:
The original legislators clearly saw the need for separating the
authorizing (then called "legislating") function from the appropriat-
ing function. In 1789, Congress first established the new Department
of War, specifying its offices and responsibilities. Subsequently it
passed an appropriation for the Department. This separation of sub-
stantive legislation from appropriations existed informally through
the early years of the Republic. However, in 1837 the House of
Representatives, responding to the growing disregard for the informal
rules separating authorizations from appropriations, explicitly
adopted a rule carried on to this day (currently as Rule XXI, Clause
2) prohibiting consideration of appropriations bills unless preceded
by legislation authorizing the expenditure. The Senate followed suit
in 1850, adopting the antecedent of current Rule XVI. Both the
House and Senate reinforced this procedural separation by referring
the two types of legislation to different committees.'
6Staff Report to the Committee on Armed Services, United States Senate, Defense
Organization: The Need for Change, S. Report 99-86, October 16, 1985, p. 574.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
55
However, in 1959 the ways in which the legislature formalized the
authorization procedure began to change:
Prior to 1959, the Armed Services Committees authorized an activity
or program on a permanent basis, and let the Appropriations Com-
mittees fund it annually. This changed in 1959 with the adoption of
the requirement for annual authorizations for procurement of air-
craft, missiles, and naval vessels.
The requirement for prior authorization continued apace until virtually
all items in the defense budget were included, as illustrated in Table
A.7.
The lines between authorization and appropriation have become
increasingly blurred. In the original framework, the former was con-
cerned with policy, whereas the latter was concerned with expenditure.
But there has been a crossing of the two purposes, as policy legislation
has crept into the Appropriation Acts, and expenditure limitations and
earmarking appear frequently in the Authorization Acts.
The combined number of hearings and the combined number of
pages of testimony published from these hearings is shown in Table
A.8.
Another way to measure Congressional activity is the length of the
reports that come out of the various committees, as shown in Table
A.9.
Information Requests. The information available on Congres-
sional oversight of DoD activities varies in both detail and validity.
Although there are considerable number of qualitative complaints,
often from OSD or Service officials, about the perceived burden placed
on DoD due to "micromanagement," we found few valid quantitative
data. Some relevant information is shown in Table A.10. These data,
which concern all DoD activities, not just acquisition, provide an
interesting overview of the pattern of information requests during the
last 20 years.
Table A.6
NUMBER OF CONGRESSIONAL COMMITTEES
1955-56 1967-68 1971-72 1975-76 1979-80 1981-82 1983-84
House
130
185
175
204
193
174
172
Senate
133
155
181
205
130
136
137
SOURCE: N. J. Ornstein et al., Vital Statistics on Congress, 1984-1985
Edition, American Enterprise Institute for Public Policy Research, 1984, p.
108.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
56
Table A.7
CHRONOLOGY OF REQUIREMENTS FOR DOD
ANNUAL AUTHORIZATION
Requirement for Authorization of
Year Public Law Appropriations for:
1962 87-436 Research, Test and Evaluation associated
with aircraft, missiles, and naval vessels
1963 88-174 Procurement of tracked vehicles
1967 90-168 Personnel strengths of each of the
Selected Reserves
1969 91-121 Procurement of other weapons
1970 91-441 Procurement of torpedoes, related
support equipment, and active duty personnel
strengths of each component of the armed
forces
1973 92-436 Average military training student loads of
each component of the armed forces
1973 93-155 Civilian end strengths
1975 94-106 Military construction of ammunition
facilities
1977 95-91 National defense programs of Department
of Energy
1980 96-342 Operations and Maintenance of the Department
of Defense and all its components
1982 97-86 Procurement of ammunition and so-called
"other" procurement
1983 98-94 Working capital funds
Table A.8
ARMED SERVICES COMMITTEES ACTIVITY
Activity
1963 1986
Number of hearings
27 80
Pages of testimony 1400 11246
SOURCE: D. C. Morrison, "Chaos on Capitol
Hill," National Journal, September 27, 1986, p.
2302.
NOTE: Figures include both the House and
Senate Armed Services Committees.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
57
Table A.9
SIZE OF COMMITTEE REPORTS
(Number of pages)
Fiscal Year
Appropriations
Armed Services
House
Senate
House
Senate
1960
1961
1962
1963
1964
83
74
?
?
70
31
47
?
?
69
?
?
?
?
?
?
?
?
?
?
1965
51
52
63
17
1966
?
?
?
?
1967
?
?
?
?
1968
67
71
?
?
1969
68
56
91
31
1970
102
141
176
70
1971
119
221
95
121
1972
139
210
107
140
1973
256
204
115
177
1974
239
173
150
205
1975
171
207
132
190
1976
358
302
185
191
1977
226
277
169
204
1978
387
295
160
163
1979
446
217
163
158
1980
493
219
186
166
1981
398
227
171
242
1982
315
137
228
197
1983
259
157
233
222
1984
298
205
332
526
SOURCE: Robert J. Art, "Congress and
the Defense Budget: New Procedures and Old
Realities," in Barry M. Blechman and Wil-
liam S. Lind (eds.), Toward a More Effective
Defense, Report of the Defense Reorganiza-
tion Project, 1985, pp. 136-137.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
58
Table A.10
CONGRESSIONAL INFORMATION REQUESTS FROM DOD
Year
Number of
Hearings
Number of
Witnesses
Hours of
Testimony
Written
Inquiries
Telephone
Inquiries
1964
260
630
650
?
?
1965
341
632
?
?
?
1966
369
753
?
140000
375000
1967
411
805
3800
155649
360771
1968
330
688
3660
174238
471996
1969
840
3361
2671
178000
759000
1970
448
2567
1274
206000
752000
1971
394
1045
?
179218
583310
1972
370
960
2376
?
?
1973
432
927
?
130000
774000
1974
402
870
2582
152000
855000
1975
389
1165
3538
175000
900000
1976
404
1721
1425
126762
112539
1977
?
1789
1427
112136
229089
1978
465
1429
1590
91815
532818
1979
556
2268
1459
90872
406100
1980
466
1491
1296
85916
?
1981
497
1372
1378
87096
586200
1982
425
1266
1453
84148
592150
1983
461
1288
1415
110844
595300
1984
441
1297
1434
123130
599000
1985
412
?
?
?
?
SOURCE: Legislative Oversight: Congressional Requests for
Information on Defense Activities, GAO/NSIAD-86-65BR,
February 1986, pp. 9-10.
DEPARTMENT OF DEFENSE AGENCIES
DoD Instructions and Directives
Table A.11 shows the changes in DoD directives and instructions
from June 1978 through June 1986. Although the directives and
instructions can directly or indirectly affect a contractor, we addressed
the only question of how the number of directives and instructions
changes over time. We compared several cumulative quarterly indices.
After first reviewing one index and coding each directive or instruc-
tion as to whether it affected defense acquisition, we screened other
cumulative indices to locate and code additional directives and instruc-
tions. Finally, the directives and instructions were summed according
to category. Seven quarterly indices were reviewed, and detailed results
were prepared for four of these since they adequately illustrate the
trends.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
59
Table A.11 shows that the largest absolute number of directives and
instructions are in the categories of Planning and Readiness, Logistics
and Resource Management, and Health and Medical. The largest
changes are also found in these categories.
Two important caveats accompany these data. In the selection of
those instructions and directives that affect the acquisition process, the
broadest criteria were used, and were subjective. On the one hand, the
number counted is likely to be a maximum. On the other hand, the list
certainly includes instructions and directives with only a minor or
peripheral effect. Second, the numbers do not tell the whole story. If
a directive having a minor effect is dropped, and another directive hav-
ing a major effect is adopted, the number of directives will be
unchanged but the consequences on the acquisition process will be dif-
ferent. There was no way to include this effect in this analysis.
Table A.11
NUMBER OF DOD DIRECTIVES AND INSTRUCTIONS
Total Number
Acquisition Related
Category
6/78
12/78
9/85
6/86
6/78
12/78
9/85
6/86
1000-1999
235
250
241
242
5
5
2
2
(Manpower, Personnel
and Reserve)
2000-2999
32
32
34
34
5
5
9
9
(International Programs)
3000-3999
39
40
57
58
6
6
6
6
(Planning and Readiness)
4000-4999
187
182
205
204
74
68
75
73
(Logistics and Resource
Management)
5000-5999
383
383
371
377
69
66
72
73
(General Administration)
6000-6999
40
41
69
68
0
0
0
0
(Health and Medical)
7000-7999
127
129
124
123
36
35
49
48
(Comptrollership)
Subtotal
1043
1056
1101
1106
195
185
213
211
SOURCE: DoD Directives System Quarterly Index, various dates.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
IA-RDP90M00005R000200080003-4
60
Defense Contract Audit Agency
DCAA budget and staff, together with additional indicators of
DCAA activity, are shown in Table A.12.
Department of Defense Inspector General
Table A.13 summarizes the DoDIG appropriations for 1985-1987
and staff for 1983-1986. Since the DoDIG was established in 1983,
both the appropriations and staff have grown steadily. The most
noticeable feature is the growth in the personnel ceiling in 1986.
Although the IG still is adding personnel, the ceiling represents an
almost one-half increase in the number of personnel. By comparison,
growth in the appropriation for the IG seems considerably smaller,
averaging under 15 percent per year since 1985.
Table A.12
DCAA APPROPRIATIONS AND STAFF
Fiscal
Year
Staff Size
Budget
(1972 $M)
Number
of Proposal
Evaluations
Value (1972 $M)
Evaluations
Audits
1966
3798
29.0
20,000
52,994
27,083
1967
4063
58.0
21,734
65,500
28,033
1968
4136
59.5
21,590
61,000
28,958
1969
3971
60.5
21,880
71,911
30,394
1970
3925
66.4
20,456
91,249
27,209
1971
3807
64.5
19,370
48,019
23,830
1972
3568
64.6
21,021
50,822
21,910
1973
3663
63.4
20,098
50,273
19,934
1974
3630
61.2
19,455
47,197
18,886
1975
3431
60.1
22,973
57,953
19,622
1976
3441
60.2
22,957
55,105
19,427
1977
3354
61.9
24,875
68,849
20,042
1978
3470
62.8
26,876
59,320
20,523
1979
3542
62.0
28,985
59,798
20,534
1980
3575
61.4
31,380
62,823
20,171
1981
3520
62.1
34,359
104,589
19,956
1982
3520
63.4
30,672
84,501
21,056
1983
3748
65.6
28,313
109,109
21,417
1984
4147
70.6
28,266
121,989
21,019
1985
4632
78.3
31,100
110,117
23,629
SOURCE: The Defense Contract Audit Agency: A Report on
Activities, March 1986.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
61
Table A.13
DODIG APPROPRIATIONS AND STAFF
1983
1984
1985
1986
1987a
Appropriationb
59.2
67.9
77.3
Staff
968
1023
1100
1505c
?
SOURCE: Budget of the United States,
FY1987; Personnel Office at DoDIG.
aEstimated, for appropriations only.
bIn millions of dollars.
cThe current ceiling of 1505 personnel is still
being filled. In addition, there are 38 military per-
sonnel in the DoDIG.
GOVERNMENT AGENCIES
General Accounting Office
Table A.14 provides a summary of the appropriations and staff size
of the GAO from FY1975 to FY1985, and estimates for FY1986 and
FY1987.
One measure of the activities of the GAO is the number of
procurement-related documents published each year. The compilation
in Table A.15 includes formal reports, decisions, letters, testimony, and
"other" miscellaneous documents (such as studies, speeches, and so
forth). The data are organized into one category for the Department of
Defense that is exclusive of the three military services, and into three
separate categories for the Services. The six-year period from 1979 to
1985 (with the exception of 1982) is shown.
There are several noteworthy patterns that emerge. The first is that
the increase in the number of GAO "documents" during this six-year
period is substantial?considering that we are looking only at
procurement-related documents. Overall, the GAO during this period
issued annually more than five times (from 146 to 816) more docu-
ments in 1985 than it did in 1979. There was a two-fold jump from
1981 to 1983 alone. The second interesting observation concerns the
distribution of reports among the Services. Of the more than 2600
Service-related documents (excluding the 400+ DoD documents) pub-
lished during this period, roughly 44 percent concerned Army pro-
grams. Documents that were related to Navy and Air Force procure-
ment activities accounted for 31 percent and 25 percent, respectively.
It is difficult to extrapolate beyond the magnitude of the numbers
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Table A.14
GAO APPROPRIATIONS AND STAFF
(Appropriations in $M)
75
76
77
78
79
80
81
82
83
84
85
86
87a
Appropriation
125
.135
157
175
185
204
220
236
252
271
299
301
349
Procurement,
7.5
7.6
8.1
Logistics, Readiness
Mission Analysis,
5.3
5.4
5.9
Systems Acquisition
National Security/
22.4
23.4
24.5
26.9
International Affairs
Staff
5451
5126
5332
5257
5225
5352
5262
5123
5051
5095
5055
5150
5250
SOURCE: Budget of the United States, various editions.
aEstimated.
bPermanent staff positions for the entire GAO.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Table A.15
GAO PROCUREMENT-RELATED DOCUMENTS
Category
1979
1980
1981
1983
1984
1985
DoD
Decisions
8
17
17
75
91
85
Reports
14
22
21
29
19
17
Letters
3
2
1
7
1
3
Testimony
2
1
4
9
5
4
Other
3
1
8
3
Total
30
43
44
128
119
109
Air Force
Decisions
21
41
83
130
133
168
Reports
12
9
9
21
11
7
Letters
1
2
3
5
Testimony
1
1
3
Total
34
50
93
154
147
183
Army
Decisions
27
88
127
274
276
262
Reports
6
9
12
20
13
12
Letters
1
3
4
5
5
16
Testimony
1
3
2
Other
1
Total
34
100
144
302
297
290
Navy
Decisions
35
54
87
175
184
222
Reports
9
7
18
19
11
6
Letters
1
1
3
2
4
Testimony
3
2
Total
48
62
108
194
197
234
Grand Total
146
255
389
778
760
816
SOURCE: Indexes to GAO documents.
NOTES: Definitions of the document categories are
as follows:
Decisions: "Rulings from the Comptroller General on
a variety of government matters including personnel and
procurement issues."
Reports: "Audit of government agencies and other
organizations?their programs and activities."
Letters: "Correspondence addressed to Congressional
committees or members, federal agencies, or other reci-
pients."
Testimony: "Presentations to Congressional commit-
tees or state and other governmental bodies."
Other: "Miscellaneous documents" such as studies,
speeches, symposia, and guidelines.
63
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
about the nature of the procurement processes within the Services.
One factor, however, that accounts in part for such a large number of
documents on Army procurement programs is that this period coincides
with the period of troubled Army acquisition projects.
Congressional Budget Office
Table A.16 summarizes annual appropriations and staff size for the
CBO for the fiscal years 1976 to 1985, and estimates for FY1986-1987.
Office of Management and Budget
Table A.17 summarizes the appropriations and staff of the OMB
from FY1975 to 1985, and estimates for FY1986 and 1987.
Table A.16
CBO APPROPRIATIONS AND STAFF
(Appropriations in $M)
Fiscal Year
76
77
78
79
80
81
82
83
84
85
86a
87a
Appropriation
4.8
9.6
10.4
11.4
12.4
12.5
13.2
15.1
16.7
17.5
16.9
18.5
Staff')
193
208
208
218
218
218
218
211
210
211
222
224
SOURCE: Budget of the United States, various editions.
aEstimated.
bPermanent staff positions.
Table A.17
OMB APPROPRIATIONS AND STAFF
(Appropriations in $M)
Fiscal Year
75 76 77 78 79 80 81 82 83 84 85 86a 87a
Appropriation
21.2
24.2
27.5
27.5
29.0
33.4
33.5
33.5
35.0
37.3
38.8
37.3
39.7
Staffb
661
679
682
556
551
571
580
604
604
604
594
594
580
SOURCE: Budget of the United States, various editions.
aEstimated.
bPermanent staff positions for the entire OMB.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
65
Office of Federal Procurement Policy
Table A.18 summarizes the OFPP budget and staff for the years 1975
to 1985, as well as budgetary and staff estimates for FY1986-1987.
Table A.18
OFPP BUDGET AND STAFF
Fiscal Year
75
76
77
78
79
80
81
82
83
84
85
86a
87a
Appropriationb
0.2
0.9
1.5
1.6
2.6
2.9
2.6
2.4
2.5
2.7
1.6
1.6
1.6
Staff
4
20
27
28
45
45
42
41
41
41
25
25
25
SOURCE: "Report to the Congress: Activities of the Office of Federal Pro-
curement Policy, October 1980 - December 1982," in Reauthorization of the Office
of Federal Procurement Policy, Hearing Before Subcommittee on Oversight of
Government Management, Committee on Governmental Affairs, U.S. Senate, 98th
Congress, First Session, April 27, 1983, U.S. Government Printing Office, Wash-
ington, D.C., 1983.
aEstimated.
bThe figures are rounded to the nearest decimal. For reference, the figures for
1985-1987 are 1.63 million, 1.611 million, and 1.66 million dollars, respectively.
Tull time, permanent.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
ICIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Appendix B
GOVERNMENT AGENCIES RELATING TO
DEFENSE CONTRACTING'
A defense contract for goods, equipment, or services is subject to
several governmental systems that are designed to ensure the success-
ful completion of the contract. An understanding of these organiza-
tions, the functions they perform, and how they interact, is essential to
an understanding of the regulatory process. This appendix summarizes
some key elements of acquisition policy, with emphasis on the origins
of defense contracting policy and the actors who develop and update
policy. We then discuss contract management, project management,
and governmental oversight.
POLICY
The Congress has passed legislation granting authority to the execu-
tive agencies to promulgate regulations controlling acquisition policy.
In the past, there were specific regulations for defense. First, there
were the Armed Services Procurement Regulations (ASPR), which
were followed by Defense Acquisition Regulations (DAR). Most
recently, Federal Acquisition Regulations (FAR) were created to super-
sede earlier regulations. The important difference is that the FAR
apply to all federal government procurement, which means that they
are the basic policy instrument governing defense contracting.
The FAR are administered by the Executive Office of the President,
through the Office of Management and Budget (OMB). Each govern-
mental department, in turn, has a designated office concerned with the
administration of the FAR; in the case of the Defense Department it is
the Assistant Secretary of Defense for Acquisition and Logistics
(ASD (A&L)).
Because the FAR deal with government acquisition by all of the
executive departments, they are a general set of regulations that must
be tailored to the specific needs of the user. As a result, supplements
'This appendix does not incorporate recent changes stemming from recommendations
made by the Packard Commission. Those changes, when fully implemented, will affect
the structure and interactions of many government agencies relating to defense contract-
ing.
66
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
67
to the FAR are issued for each defense agency, Service, and Service
command. There is a FAR council that is chaired by OMB, which has
members designated to represent the users. The presumption is that
this council produces the supplements that are necessary for specific
users, while keeping the supplements in conformance with the FAR
itself.
ASD(A&L) develops DoD supplements to the FAR. Each Service
then develops regulations oriented specifically to its own needs, based
on the FAR. Throughout each layer of the bureaucracy the regulations
move closer to practical implementation. Ultimately, the commands
within each Service develop rules for implementing the regulations.
ASD(A&L) delegates FAR administration to each of the Services
and to each defense agency. In the Services, administration is at the
Assistant Secretary level, which (for example) in the Air Force involves
the Assistant Secretaries for Acquisition and for Logistics. In the
defense agencies, administration is at the Assistant Director level.
The policy relevant offices are shown in Fig. B.1.
CONTRACT MANAGEMENT
The acquisition of goods and services by the government, and the
signing and management of governmental contracts, are activities
reserved for a special category of government employees known as con-
tracting officers. Contracting officers have the power to commit the
government to purchase virtually any kind of product, within the fund-
ing appropriations provided by the Congress. This power is reserved to
them alone, a fact which will become important later in understanding
program management and oversight.
There are generally two types of contracting officers: the Procure-
ment Contracting Officer (PCO) and the Administrative Contracting
Officer (ACO). The PCO usually works in the organization which
wants the goods or services. In the Air Force, for example, the PCOs
for major weapon systems acquisition are located in the technical divi-
sions of the Air Force Systems Command (AFSC), such as the
Aeronautical Systems Division (ASD), the Electronic Systems Division
(ESD), or the Space Systems Division (SSD). The PCOs for major
purchases of spare parts for weapon systems and for other logistical
supplies are located in the Acquisition Logistics Center (AFALC) of
the Air Force Logistics Command. In the Defense Logistics Agency
(DLA), the PCOs are located in major supply centers, such as the
Defense Fuel Supply Center (DFSC) or the Defense General Supply
Center (DGSC). They are found in many other places as well. For
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Office of Management
and Budget
Department
of Defense
(Administers FAR)
Other Executive
Departments
Services
Dept. of the
Air Force
Dept. of the
Army
Dept. of the
Navy
OSD
ASD(A&L)
Agencies
Defense Logistics
Agency
H Defense Advanced Research
Projects Agency
Defense Contract
Audit Agency
Defense Communications
Agency
Other Agencies
Assistant Secretary Level Assistant Director Level
Fig. B.1?Location of policy actors for federal acquisition
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
69
example, every military base must be able to contract for and purchase
items locally, and consequently PCOs can be found at every base, no
matter how small, or for what purpose it exists.
Once a PCO has signed a contract, the execution of the contract is
delegated to the ACO, who monitors the contractor performance,
inspects and accepts the finished product or service, and approves pay-
ment to the contractor. The PCO and the ACO become the team for
contract management and administration, in which no other organiza-
tions participate. The relationship is shown in Fig. B.2.
The ACO usually is physically distant from the PCO, and in many
instances may not know, or have ever been in prior contact with the
PCO. Once the ACO receives the contract, he has the responsibility to
administer it according to its terms and conditions in the best interests
of the government. For instance, the PCOs for Air Force major
weapon systems are in the responsible technical division of AFSC.
Typically, the ACOs would be located near, or at, the location where
work under the contract is being performed, such as at Boeing in Seat-
tle, or General Dynamics in Fort Worth, or Northrop in Los Angeles.
When the ACO is located at a contractor's facility, the office in which
he is located is called a Plant Representative Office (PRO). It has
become traditional to preface the PRO acronym with the affiliation of
the ACO. Thus, there are AFPROs for the Air Force and NAVPROs
for the Navy, Contracting Officer's Representatives (CORs) for the
Army, and for the Defense Logistics Agency major supply center con-
tracts, there are DCASPROS, where DCAS is the Defense Contract
Administration Service, which is the parent organization for all DLA
ACOs. Just as all AFPROs are part of the Contract Management Divi-
sion (CMD) of the Air Force Systems Command, NAVPROs are part
of NAVSEA and NAVAIR, and CORs are part of the Army Materiel
Command.
The responsibilities of the PCO and ACO are more important rather
than their affiliation. It is the PCO who signs the contract, whereas it
is the ACO who sees that it is carried out satisfactorily and according
to the terms and conditions of the contract. The PCO always is part
of the Service or agency that is making the purchase or contract.
Thus, it would always be a Navy PCO who contracted for submarines,
or an Air Force PCO who contracted for bombers. Prior to the 1960s,
the ACO always was affiliated with the same Service or agency as the
PCO, with a confusing and inefficient result when a defense contractor
had contracts with several Services or agencies, because there would be
several PROs and ACOs on the premises. This situation was rectified
by the issuance of DoD Instruction 4105.59, which allows only one
PRO at a contractor's facility, and consequently only one ACO. Now
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
AFSC
AFLC
NAVSEA
DGSC
Army Materiel
George Air
ASD
AFALC
Command (AMC)
Force Base
PCO
PCO
PCO
PCO
PCO
PCO
?
AFPRO
AFPRO
NAVPRO
DCASPRO
ARMPRO
DCASPRO
ACO
ACO
ACO
ACO
ACO
ACO
The important system elements are:
Procurement Contracting
Officer (PCO)
Administrative Contracting
Officer (ACO)
NOTE: Examples of PCO-ACO combinations. In addition, any ACO may administer a
contract for any PCO.
Fig. B.2?Examples of contract management
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
71
when a defense contractor has contracts with several Services or agen-
cies, they are all administered by the same ACO. This ACO, in turn,
may be working for several PC0s, each of whom may be in different
Services or agencies, or in different branches of the same Service or
agency. Again, the important feature of the system is the PCO-ACO
relationship, and specifically what each is responsible for doing.
With this type of arrangement, one might wonder about the organi-
zational affiliation of the ACO. DoD Instruction 4105.59 takes care of
this neatly. Basically, the PRO at any contractor facility is attached to
the Service or agency with which the contractor has the largest con-
tract volume. Thus, large airframe manufacturers have AFPROs, sub-
marine makers have NAVPROs, fuel suppliers have DCASPROs, etc.
And if a large Air Force contractor should also be under a smaller con-
tract to the Navy, the AFPRO ACO would administer the Navy con-
tract for the Navy PCO. Similarly, if an airframe manufacturer was
under one contract to make fighters, and under another to make spare
parts for these fighters, the AFPRO ACO would administer both con-
tracts, one for a PCO at CMD, and the other for a PCO at AFALC.
This DoD Instruction also provides that if the balance of a defense
contractor's business should shift from one Service to another, the
PRO affiliation changes accordingly. Consequently, an AFPRO could
change to a NAVPRO, for example. When this happens, personnel are
not necessarily moved, but their organizational affiliation is changed.
PROGRAM MANAGEMENT
This system of contract management is basically straightforward
when the contract is for simple items, such as fuel, food, towels, bul-
lets, or the like. But the emergence of highly complex weapons and
other defense equipment has transcended the requirements for pure
contract management, especially when the contract is for development
or research. For these specialized types of contracts, the program
manager (PM) is an important part of the process. In theory, the pro-
gram manager has the technical responsibility for developing and pro-
ducing a successful weapon system (or project) within a specified
budget, and according to a predetermined time schedule. On many
complex or developmental projects, the PM must work closely with the
contractor to resolve technical problems or to make decisions that will
result in the production of a satisfactory end-product.
The program manager usually is affiliated with a product division of
the Service. This could be, for example, the Army Tank Automotive
Command, the Surface Ships Division of the Naval Sea Systems
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
72
Command, or the Air Force Electronic Systems Division of the Air
Force Systems Command. Typically, the program manager and staff
would be located at the Division Headquarters. The office containing
the program manager is known as a Program Management Office or
System Program Office (SPO). The organization is shown in Fig. B.3.
The program manager is located in the product division, but there
may be representatives of his office at the location where the contrac-
tor is performing the work. The SPO representatives are on hand to
work with the contractor and to handle technical problems as they
arise and require resolution. Not surprisingly, this arrangement closely
parallels the PCO-ACO situation.
Even though the program manager and his representatives at the
contractor location are in physically different locations, they are both
part of the same organization and thus are always part of the Service
for which the contract is being performed. This condition is in marked
contrast to contract management, in which the ACO and PCO may
belong to different organizations.
In situations where the contract deals with a complex project and
there is a program manager, the government has two managerial sys-
tems working in parallel with the contractor. One is program manage-
ment, and the other is contract management. Each of these systems
has different responsibilities, and with two complementary systems it
requires careful coordination to minimize confusion. This coordination
usually takes place between the PCO and the PM. The program
manager is concerned with the technical aspects of the weapon system
being developed or produced, and when technical changes are required,
he works with the PCO to bring about the appropriate contract modifi-
cations. These, in turn, are sent to the ACO, who in turn ensures that
the contractor complies.
The relationship between the PM and the PCO is of great impor-
tance to the success of a major contract. As noted above, the PCO can
be located almost anywhere in any organization. Because major con-
tracts sometimes have a dedicated PCO who is physically resident in
the program manager's organization, it may give the impression that
the PCO works for the program manager, which to a limited degree is
correct. However, the PCO must comply with regulations that have
the force of law, and the program manager cannot require the PCO to
act contrary to those regulations. Thus, while the key person in a
weapons system contract is the program manager, the program
manager must deal with the PCO regardless of the PCO's organiza-
tional location.
This system usually works fairly well because both management
organizations have much the same objectives. There are, however,
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Air Force Systems Command
Naval Sea Systems Command
Technical Divisions
I
Technical Divisions
I
_1_ _1_ _i___,
Aeronautical
Electronic
Space
Other
Surface
Submarines
Surface Ship
Other
Systems
Systems
Systems
Divisions
Ships
Logistics
Divisions
Division
Division
Division
Management
(ASD)
(ESD)
(SSD)
PM
PM
PM
PM
PM
PM
PM
PM
Army Materiel Command
I
Technical Divisions
I
,--I- _____
Tank and
Automotive
Division
PM
Other
Divisions
PM
Fig. B.3?Examples of program management
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
74
occasional instances in which the system leads to differences that can
confuse the contractor. Because of the close working relationship
between the program manager's staff and the contractor, there are
apparently times when the program manager's staff asks the contractor
to take some action which requires a contract change without going
"through channels" with the contracting officer. This can confuse the
contractor and cause friction between the program manager and the
contracting officer. But we have found no evidence that such occasions
are frequent or cause serious problems.
OVERSIGHT
In the world of competitive business activity, oversight is exercised
regularly. For example, every public corporation has an independent
auditor who is elected by the shareholders and who is not under the
control of corporate management. This auditor examines the financial
dealings and books of the company and certifies to the shareholders
(company owners) that everything is in order.
The situation is no different in the United States government, where
established practice is to have defense contractors routinely subjected
to independent audit. This routine audit is performed by the Defense
Contract Audit Agency (DCAA), which has an auditor on the premises
of every major defense contractor. DCAA reports directly to the Office
of the Secretary of Defense through the Assistant Secretary of
Defense?Comptroller (ASD(C)). This direct reporting bypasses the
Services or other defense agencies, which means that the DCAA can
perform a truly independent audit.
DCAA performs other functions in addition to that of independent
audits. Because of DCAA's expertise on matters of cost and account-
ing, the PCO or ACO on a contract may request that DCAA analyze
the cost aspects of a proposed contract or may ask for DCAA's opinion
on cost models. This is not a DCAA oversight function, but rather a
contracting officer function performed by DCAA in a nonoversight
role. DCAA often makes suggestions to the contractor as a result of
examining the books, records, and procedures. But since DCAA is not
in the contract management loop, there is no direct way to implement
these without going through the contract officer. Apparently, in the
past some contracting officers took exception to DCAA recommenda-
tions, creating a conflict between the contract management and over-
sight functions. The problem was solved by DoD Directive 7640.2
dated December 29, 1982, which requires that the contracting officer
justify deviations from DCAA recommendations. In effect this action
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
75
moves DCAA into contract management in addition to its oversight
role. The arrangement probably would work more smoothly if DCAA
had the same general objectives as the contracting officer, but this is
not always the case. As discussed above, the program manager and the
contracting officer have the same broad objectives with regard to the
completion of the contract, but the DCAA's objectives are more nar-
rowly focused, dealing with financial and cost information and its
treatment. Consequently, the intrusion of a DCAA recommendation
into the management system may be beneficial to the government as a
whole, but it also may create disagreements and delays within specific
programs.
There are organizations other than DCAA involved in oversight that
can affect how the contractor operates. The most visible of these orga-
nizations is the GAO, which at the request of the Congress can conduct
investigations and issue reports on virtually any aspect of any contract.
GAO personnel who visit a contractor's facility must be provided all of
the information and data they request. GAO reports or recommenda-
tions must be put into effect through the contracting officer, if they are
to be implemented, and consequently any such action probably origi-
nates with the Secretary of Defense, to whom Congress would direct
the study results.
The OSD Inspector General (IG) may also look into the way that
government organizations are functioning. The IG does not become
involved with the contractor, although it can suggest changes in the
organization or procedures used by the contracting officer, the program
manager, or the DCAA auditor.
Two other DoD organizations may also be concerned with oversight.
The Defense Criminal Investigative Service (DCIS) can be involved in
fraud investigations, either at the request of DCAA or on its own, and
the Defense Investigative Service (DIS) is responsible for facility secu-
rity clearances. Figure 8.4 illustrates the oversight system.
It is easy to form the idea that important problems could arise from
oversight activities. Anecdotal evidence supports this, together with
the observation that while the program manager and the contracting
officer occasionally have disputes, they have the same general objec-
tives and thus usually can resolve their differences quickly in the
interests of completing the contract. In contrast, the objectives of
oversight organizations may be totally different, and consequently can
divert project management personnel in other directions.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Secretary of Defense
OSD
ASD(C)
Defense Contract
Audit Agency
(DCAA)
DCAA
Plant
Representative
USD(P)
Defense
Investigative
Service (DIS)
Inspector
General (IG)
Defense Criminal
Investigative
Service (DCIS)
IG
Fig. B.4?Elements of oversight
Congress
Committees
GAO
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
77
SUMMARY
The various elements of government contracting are put into con-
text in Fig. B.5. Because of the complexity of the illustration, the
PCO-ACO combinations shown are of the simplest type. However, as
shown in Fig. B.2, any ACO can administer a contract for any PCO.
Oversight, while shown diagrammatically separate from contract
management and program management, can impinge directly on these
functions. The DCAA auditor, who resides at the contractor's plant, is
likely to be involved on a regular basis with the people in the PRO, as
well as with program manager representatives and the contractor him-
self. The Defense Investigative Service is responsible for security
clearances and the monitoring of classified information and documents,
and thus is often in close contact with the contractor. And, in those
instances when either the DoD Inspector General or the GAO want to
look into some matter, their presence must be added to the total of
individuals who are concerned with oversight.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
POLICY AND
ADMINISTRATION
Office of Management
and Budget
OVERSIGHT
Other Executive
Departments
ASD(A&L)
Agencies
Assistant Director
Level
IG
Dept of the
Air Force
Dept of the
Army
Dept of the
Navy
Air Force Systems Other Army Material Other
Command commands Command commands
?1?
Other
divisions
Aero Systems Contract Other Tank and Auto
Division Mgmt Div divisions Division
I
NAVSEA Systems Other
Command commands
Surface Snips
Ships
DiViSi011
Other defense
ailenCies
Defense General
Supply Center
Other defense
centers
SPO
PM
..
Program management
? Contract management
SPO
PM
SPO
PM
Fig. B.5?Overall view of DoD contracting
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Appendix C
RESTRICTIONS AND EARMARKINGS
IN AUTHORIZATION ACTS
The Congress sometimes inserts into Authorization Acts certain
language dealing with specific weapon systems. These special clauses
take two forms:
? Restrictions on individual weapon system programs, and
? Designations (earmarking) of funding for programs that either
were not requested by the Department of Defense or that had
been requested at lower funding levels.
RESTRICTIONS
Several types of restrictions are included in the acts, and some have
had widely varying effects on the procurement schedule for an individ-
ual program. The final taxonomy used here proposes the following
categories of restrictions:
? Funding
? Quantity
? Competition
? Planning
? Certification
? Technical
? Other
Most of the restrictions are of the nature of "thou shalt not" prohi-
bitions on spending, rather than mandates to spend. The seven
categories are described below and are illustrated by specific examples.'
Funding restrictions, which appear in both the Authorization and
Appropriation Acts, place a ceiling or limit on the amounts to be obli-
gated or expended for a particular program. The language of a funding
restricticn typically includes phrases such as "not to exceed" or "no
more than." Very rarely, a total prohibition is specified by the phrase
1The language in the acts may refer to several categories simultaneously. In the
analysis that follows, those instances have been counted twice because each such refer-
ence does in fact count as a reference to a specific weapon system.
79
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
so
"no part of the funds." An example of the funding restriction is as fol-
lows:
Provided, that no funds provided in this act shall be available for the
procurement of F-111B aircraft, but this proviso shall not apply to
advance procurement of equipment the total cost of which shall not
exceed 87,800,000.2
Congressional staff members frequently suggest that such actions
can result from overall budget limits, or that they represent a warning
that Congress considers a program flawed in terms of its performance,
timeliness, or cost control. Funding restrictions also can be used to
preclude (or ensure) spending for programs which the Congress decides
are undesirable (or desirable).
Quantity restrictions in both the Authorization and Appropriations
Acts include phrases such as "not more than." It is typically used only
for major program buys, such as the MX or B-1B, when the Congress
intends to require conformity with existing treaty commitments or pol-
icies that have an overriding geopolitical objective, such as arms con-
trol. A typical example is:
Not more than 12 MX missiles may be procured with funds appropri-
ated or otherwise made available in an appropriation law for fiscal
year 1986 for the procurement of missiles for the Air Force.3
The competition restriction prohibits multisource procurement. If
the noncompetitive requirement of the procurement is not met, the
expenditure of funds is prohibited. The language is usually in the form
"none of the funds." An example of this category of restriction is:
None of the funds in this act may be obligated for procurement of
120mm mortars or 120mm mortar ammunition manufactured outside
the United States.4
Competitive restrictions have been justified on the grounds that the
prevention of unfair and predatory competition is necessary to main-
tain the U.S. industrial base. In other instances, competitive restric-
tions are in response to purely local economic pressures.
The planning restriction generally prohibits multiyear contracting,
procurement, or obligation of funds. The language is usually of the
2Public Law 89-687, Department of Defense Appropriation Act, 1967, October 15,
1966, Title III, Procurement, Procurement of Aircraft and Missiles, Navy.
3Public Law 99-145, Department of Defense Authorization Act, 1986, Title I, Pro-
curement, Part D: Air Force Program Limitations; Sec. 141, MX Missile Program, Sec.
(a) (1).
4Public Law 99-190, Department of Defense Appropriation Act, 1986, Title VII, Gen-
eral Provisions, Section 8095.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
81
form "multiyear contracting is not authorized for" or "the Secretary
may not contract for multiyear procurement of." Congressional
staffers often indicate that such restrictions reflect the view of the
Congress that the particular program is in difficulty, and that it wishes
to ensure that the program is evaluated in the next fiscal year. A typi-
cal example of this category of restriction is:
Provided that multiyear contracting authority provided in Public Law
98-212 for the Armored Combat Earthmover is rescinded.'
The certification restriction includes actions which must be taken by
the President or appropriate cabinet secretary before funds can be
expended. This may be a requirement to certify that allies have been
consulted as to the system's future deployment; a particular weapon
system works according to specification; the action is in response to an
actual threat; such an action is not in violation of a treaty; or an
overall technical or strategic plan has been prepared.
The restriction may be worded so that funds may not be expended
until some time after the certification is made, to give time for
Congressional review. This is an increasingly popular strategy because
it allows Congress to express reservations about specific programs.
Congress also may wish to make a designated official take personal
(public) responsibility for the potential failure of a program. A typical
example is:
Provided, that none of the funds appropriated by this Act for the new
design attack submarine may be obligated or expended until the
Secretary of the Navy provides to the Committees on Appropriations
and Armed Services of the Senate and House of Representatives that,
based on current national intelligence estimates approved by the
Director of Central Intelligence, the new design attack submarine shall
be capable under operational conditions of engaging the known Soviet
submarine threat.'
Technical restrictions are quite rare. They can reflect the reserva-
tions of a single member of Congress or committee staff. An example
of this restriction is:
None of the funds appropriated pursuant to the authorization of
appropriation in subsection (c) for the DDG-51 guided missile
destroyer program may be obligated or expended until the Secretary of
the Navy certifies to the Committee on Armed Services and on
Appropriations of the Senate and the House of Representatives that
5Public Law 98-473, Department of Defense Appropriation Act, 1985, Title III, Pro-
curement.
6Public Law 98-473, Department of Defense Appropriation Act, 1985, Title IV,
Research, Development, Test and Evaluation, Navy.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
.01A-RDP90M00005R000200080003-4
o
the lead ship in that program is capable of being equipped with a
Rankine-Cycle Energy Recovery (RACER) system without rearrange-
ment of ship spaces and equipment or other major modifications to
the ship.'
The category of other includes restrictions which do not fit else-
where. An example is:
The Secretary of the Air Force may not make a contract for the pro-
curement of aircraft engines unless the amount under the contract for
any warranty required by Section 797 of the Department of Defense
Appropriation Act, 1983 (as contained in Section 101(c) of Public Law
97-377), Section 794 of the Department of Defense Appropriations
Act, 1984 (Public Law 98-212) or Section 2403 of Title 10, United
States Code (as added by Section 1234), does not exceed 10 percent of
the total contract price.8
The number of each kind of restriction imposed by the Congress on
the Department of Defense in the Authorization Acts during the period
from 1966 to 1986 is shown in Table C.1.9
EARMARKING
The earmarking of funds is the reverse of restriction. Whereas a
restriction seeks to limit spending, earmarking directs the Department
of Defense to obligate or expend funds for specific programs. Such
language typically states "of which $$$ shall only be available for" or
"not less than $$$ shall be expended for. . . ". A typical example is:
. . . of which $15,000,000 shall be available only for integration
(including qualification) of the Hellfire missile on the UH-60 helicop-
ter to remain available for obligation until September 30, 1985."
For example, there might be a designation to enforce a minimum
spending level for a particular program:
7Public 98-525, Department of Defense Authorization Act, 1985, Title I, Procure-
ment, Authorization of Appropriations, Navy and Marine Corps, Sec. 102 (h).
8Public Law 98-525, Department of Defense Authorization Act, 1985, Title I, Pro-
curement, Authorization of Appropriations, Air Force, Sec. 103(b).
Note that Fig. 7 in Sec. II of the report shows the number of weapon systems
affected by restrictions, whereas Table A.1 shows the number of categories of restric-
tions. Since one weapon system can be subjected to more than one category of restric-
tion, the totals on Table A.1 for any year can be greater than the number of systems
shown in Fig. 7 for that year.
Ir./Public Law 98-212, Department of Defense Appropriation Act, 1984, December 8,
1983, Title V, Research, Development, Test and Evaluation, Army.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
83
fr
Table C.1
RESTRICTIONS IN AUTHORIZATION ACTS
Type of Restriction
Year Funding Quantity Competition Planning Certification Technical Other Total
1966
1967
1968
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
1969
1
0
0
0
0
0
0
1
1970
3
0
0
0
1
0
0
4
1971
3
0
0
0
4
0
0
7
1972
3
1
0
0
0
0
3
7
1973
2
1
0
0
1
0
1
5
1974
2
0
0
0
0
0
1
3
1975
0
0
0
0
1
0
0
1
1976
3
0
0
0
1
0
0
4
1977
2
0
0
0
4
0
0
6
1978
5
0
0
0
4
0
1
10
1979
0
0
0
0
2
0
0
2
1980
0
0
0
0
2
0
0
2
1981
4
2
0
0
3
1
0
10
1982
2
0
0
0
0
0
0
2
1983
3
0
1
0
12
0
1
17
1984
6
3
1
6
8
1
2
27
1985
5
2
1
0
8
2
5
23
1986
4
4
3
3
19
2
7
42
Total
48
13
6
9
70
6
21
173
. . . of which not less than $72,953,000 shall be available only for the
Mark 92 fire control system which includes the phased array pro-
gram, ...11
These types of Congressional action (1) insure that specific projects
of interest to the Congress are funded, and (2) preclude reallocation of
funds by the Department of Defense. It should be noted that the
President and his delegate, the Secretary of Defense, have discretion by
law to reallocate funds within the Department of Defense budget from
'Public Law 98-212, Department of Defense Appropriation Act, 1984, December 8,
1983, Title V, Research, Development, Test and Evaluation, Navy.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
I
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
one account to another. The process is called reprogramming or the
transfer of funds.12
The full text of each restriction in the FY1986 Authorization Act is
shown below.
12There is a considerable difference between reprogramming and transfer. The
authority to transfer is explicitly stated in statutes, whereas reprogramming, which is
nonstatutory, is viewed as more of a gentlemen's agreement and often not a matter of
public record.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
85
Act: Authorization Action: Restriction
Effect: Planning
Title: I - Procurement
Part A - Funding Authorization
Section: 101 c 2
Service: Army
System ID: Armored Combat Earthmover
Amount: Other Amount: Quantity:
(2) The Secretary of the Army may not enter into a multiyear con-
tract for procurement of the Armored Combat Earthmover.
Act: Authorization
Effect: Planning
Title: I - Procurement
Part A Funding Authorization
Section: 102 f 2
Service: Navy
System ID: P-3C (Orion)
Amount:
Action: Restriction
Other Amount: Quantity:
(2) Secretary of the Navy may not enter into a multiyear contract
for the procurement of the P-3C Orion antisubmarine warfare patrol
aircraft.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
as
Act: Authorization
Effect: Certification
Title: I - Procurement
Part A - Funding Authorization
Section: 106 a 2
Service: NATO
System ID: Point air defense
Amount: 75,000,000
Action: Restriction
Other Amount: Quantity:
(2) None of the amounts appropriated pursuant to the authoriza-
tions in paragraph (1) may be obligated?
(A) for implementation of a cooperative program until the
Secretary of Defense submits to the Committees on Armed Ser-
vices of the Senate and House of Representatives a copy of each
government-to-government agreement relating to that program;
or
(B) for acquisitions in connection with a NATO cooperative
defense program in which the financial obligations of the United
States exceed the collective financial obligations of European
countries in connection with such program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
L
Act: Authorization
Effect: Certification
Title: I - Procurement
Action: Restriction
Part B - Army Program Limitations
Section: 121 a, b
Service: Army
System ID: DIVAD (Division Air Defense System - Sergeant York)
Amount:
87
Other Amount: Quantity:
(a) LIMITATION ON FURTHER PROCUREMENT.?The Secretary of
the Army may not obligate funds to execute option III of the production con-
tract for procurement of fire units of the Sergeant York Division Air Defense
(DIVAD) Gun system or to enter into a new contract for production and
assembly of that system until?
(1) the initial production testing and the follow-on evaluation I are
completed and the results of the testing and evaluation demonstrate
that the Sergeant York System meets or exceeds the pass/fail criteria
of the tests established jointly by the Secretary of the Army and the
Secretary of Defense;
(2) the Director of Operational Test and Evaluation of the Depart-
ment of Defense submits to the Secretary of Defense and Committees
on Armed Services of the Senate and House of Representatives a report
giving the Director's evaluation of the results of such testing and
evaluation;
(3) the Secretary of Defense reports to those committees on the
results of such testing and evaluation and certifies that such testing
reliably demonstrates that the operational capabilities of the Sergeant
York system meet or exceed the performance specifications of the con-
tract;
(4) the Secretary of the Army submits to those committees a report
describing a contractor guarantee of the performance of the system
described in subsection (b)(1).
(b) PERFORMANCE GUARANTEE.?The guarantee of the contractor
under subsection (a)(4) shall provide that each fire unit of the system shall
operate in accordance with the performance specifications of the contract for
the system for the maximum feasible duration and in any event for not less
than one year.
(2) The terms of a guarantee under this subsection shall be in addi-
tion to terms of any previous guarantee or warranty of the system by
the contractor required under section 2403 of title 10, United States
Code, or any predecessor provision.
(3) A guarantee under this subsection shall apply to contracts for
fiscal years after fiscal year 1985.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
es
Act: Authorization Action: Restriction
Effect: Competition, Other
Title: I - Procurement
Part B - Army Program Limitations
Section: 122 a, b, c, d
Service: Army
System ID: M2-IFV (Infantry Fighting Vehicle)
Amount:
Other Amount: Quantity:
(a) REQUIREMENT FOR REPORTS ON TESTING.?The Secretary of
Defense shall submit to the Committees on Armed Services of the Senate and
House of Representatives two reports with respect to the Bradley Fighting
Vehicle. The reports shall describe the results of the first and second phases,
respectively, of the live-fire survivability testing program being carried out with
respect to such vehicle. The reports shall be submitted in both classified and
unclassified versions.
(b) REQUIRED ELEMENTS OF TESTING PROGRAM.?In phase 1 of
the testing program referred to in subsection (a), at least 10 live-fire tests using
antiarmor weapons of the Soviet Union shall be conducted against such vehicle
in its current configuration. In phase 2 of the testing program, similar tests
shall be conducted against such vehicle in a configuration with enhanced sur-
vivability features.
(c) CONTENT OF REPORTS.?The reports required by this section shall
include the following:
(1) A complete analysis of the results of the testing program referred
to in subsection (a), including an accounting of all the test shots which
were fired at the test vehicle, the distances from which the shots were
fired, and the effects of such shots.
(2) A description and justification for the measures of merit and the
pass/fail criterion used in the testing program.
(3) A justification for exempting from the testing program any over-
match or undermatch weapon which would likely be encountered in
combat conditions.
(4) Potential problems that were revealed by the tests and a pro-
posed design modification for remedying such problems.
(5) The estimated unit cost of each proposed survivability modifica-
tion and the overall program costs for the modifications.
(6) A comparison of the estimated unit cost of the Bradley Fighting
Vehicle in both the configuration used in phase 1 of the testing pro-
gram and the configuration in phase 2 of the testing program.
(d) DATE FOR SUBMISSION OF REPORTS.?The reports required by
this section shall be submitted as follows:
(1) The report regarding the results of phase 1 of the testing
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
89
program shall be submitted by December 1, 1985.
(2) The report regarding the results of phase 2 of the testing pro-
gram shall be submitted by June 1, 1986.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
90
Act: Authorization Action: Restriction
Effect: Certification, Technical
Title: I - Procurement
Part B - Army Program Limitations
Section: 125 a 1, 2, 3
Service: Army
System ID: 5-ton truck engines
Amount:
Other Amount: Quantity:
(a) TESTING OF COMPETING ENGINES BEFORE CONTRACT
AWARD.?
(1) Except as provided in subsection (b), the Secretary of the Army
may not enter into a new contract for the procurement of 5-ton trucks
for the Army until the Secretary certifies to the Committees of Armed
Services of the Senate and House of Representatives that each truck
engine described in paragraph (2) has been tested as provided in para-
graph (3).
(2) The truck engines referred to in paragraph (1) are engines that?
(A) meet the specifications of the Army for engines for 5-ton
trucks; and
(B) are commercially available from sources competing for
the award of a contract for the supply of engines to the Army
for the 5-ton trucks that are to be procured under a multiyear
contract that is to succeed the multiyear contract referred to in
subsection (b).
(3) The testing referred to in paragraph (1) shall be carried out in
5-ton trucks configured in the M939 validated technical data package of
the Army and shall include tests to determine?
(A) whether the engine is durable after testing in a mission
profile for at least 20,000 miles; and
(B) whether the performance reliability of the engine for high
ambient temperature cooling, cold starting, deep water fording,
grade climbing, and noise is acceptable.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization Action: Restriction
Effect: Planning
Title: I - Procurement
Part B - Army Program Limitations
Section: 125 c 2
Service: Army
System ID: 5-ton truck engines
Amount:
91
Other Amount: Quantity:
(2) A contract under paragraph (1) may not be entered into unless
the anticipated cost over the period of the contract is no more than 90
percent of the anticipated cost of carrying out the same program
through annual contracts.
Act: Authorization Action: Restriction
Effect: Funding, Certification
Title: I - Procurement
Part B - Army Program Limitations
Section: 126 a
Service: Army
System ID: Copperhead Missile
Amount: 200,000,000
Other Amount: Quantity:
(a) Not more than $200,000,000 may be obligated or expended for that pro-
jectile from funds appropriated or otherwise made available to the Army for
fiscal year 1986, after the date of the enactment of this Act, until the Secretary
of Defense submits to Congress a written plan to establish a second production
source for the Copperhead projectile.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
92
Act: Authorization
Effect: Competition
Title: I - Procurement
Part B - Army Program Limitations
Section: 126 b 2
Action: Restriction
Service: Army
System ID: Pershing II
Amount:
Other Amount: Quantity:
(2) The Secretary shall not obligate any funds for the safety modifi-
cations authorized by paragraph (1) until the Secretary submits to the
Committees on Armed Services of the Senate and House of Represen-
tatives a report providing a detailed plan for the purchase of such
safety modifications.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
.7,1A-RDP90M00005R000200080003-4
Act: Authorization Action: Restriction
Effect: Competition, Other
Title: I - Procurement
Part B - Army Program Limitations
Section: 126 c
Service: Army
System ID: AH-64 helicopter (Apache)
Amount:
93
Other Amount: Quantity:
(c) AH-64 APACHE HELICOPTERS.?The Secretary of the Army may
not obligate funds appropriated or otherwise made available for a fiscal year
after fiscal year 1985 for procurement of AH-64 Apache attack helicopters until
the Director of the Defense Contract Audit Agency reports to the Secretary
that the contractor for such helicopters has demonstrated to the satisfaction of
the Director?
(1) that the contractor has implemented an effective and reliable
system of internal accounting controls; and
(2) that the contractor has accumulated documentation (including
journals, vouchers, invoices, and expense data) to support the
contractor's final submission for settlement of indirect expenses for
calendar years 1979 through 1983 and that such documentation is
available to the Director.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27 :
C1A-RDP90M00005R000200080003-4
1
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
94
Act: Authorization Action: Restriction
Effect: Funding, Other
Title: I - Procurement
Part C - Navy Procurement Limitations
Section: 1 b
Service: Navy
System ID: A-6 aircraft (Intruder)
Amount: 240,000,000
Other Amount: Quantity:
(a) AUTHORIZED PROGRAM.?The Secretary of the Navy is authorized
to carry out a program to replace the wings of the A6 aircraft.The amount obli-
gated to carry out such program during fiscal year 1985 may not exceed
$240,000,000.
(b) REQUIRED WARRANTY.?Funds may be obligated for the program
authorized by subsection (a) only under a firm fixed-price contract which
includes a warranty guaranteeing a wing fatigue life of at least 8,800 hours.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization Action: Restriction
Effect: Certification
Title: I - Procurement
Part C - Navy Program Limitations
Section: 132 1
Service: Navy
System ID: A-6E aircraft (Intruder)
Amount:
95
Other Amount: Quantity:
(1) may not be obligated for procurement of A6E aircraft until the
Secretary of the Navy certifies to the Committees on Armed Services of
the Senate and House of Representatives that the wing for the A6E
aircraft to be procured is warranted for at least a 4,000-hour test-
equivalent fatigue life.
Act: Authorization Action: Restriction
Effect: Technical
Title: I - Procurement
Part C - Navy Program Limitations
Section: 132 2
Service: Navy
System ID: F-14 aircraft (Tomcat)
Amount:
Other Amount: Quantity:
(2) may be obligated for procurement of F14 aircraft only for air-
craft that are configured so as to incorporate the F110 engine.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
96
Act: Authorization Action: Restriction
Effect: Quantity
Title: I - Procurement
Part D - Air Force Procurement Limitations
Section: 141 a 1
Service: Air Force
System ID: MX ICBM (Peacekeeper)
Amount:
Other Amount: Quantity: 12
(a) LIMITATIONS ON FY86 MX PROGRAM.?(1) Not more than 12 MX
missiles may be procured with funds appropriated or otherwise made available
in an appropriation law for fiscal year 1986 for the procurement of missiles for
the Air Force.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
IA-RDP90M00005R000200080003-4
Act: Authorization Action: Restriction
Effect: Quantity
Title: I - Procurement
Part D - Air Force Procurement Limitations
Section: 141 b, c
Service: Air Force
System ID: MX ICBM (Peacekeeper)
Amount:
97
Other Amount: Quantity: 50
(b) LIMITATIONS ON DEPLOYMENT AND BASING OF MX
MISSILES.?
(1) The number of MX missiles deployed at any time in existing
Minuteman silos may not exceed 50.
(2) Funds appropriated pursuant to this or any other Act may not be
used?
(A) to modify, or prepare for modification, more than 50
existing Minuteman silos for the deployment of MX missiles;
(B) to acquire basing sets to modify more than 50 existing
Minuteman silos for the deployment of MX missiles; or
(C) to procure long-lead items for the deployment of more
than 50 MX missiles.
(c) ADDITIONAL LIMITATIONS ON THE DEPLOYMENT AND BAS-
ING OF MX MISSILES.?Unless a basing mode for the MX missile other
than existing Minuteman silos is specifically authorized by legislation enacted
after the date of the enactment of this Act, after procurement of 50 MX mis-
siles for deployment in existing Minuteman silos?
(1) further procurement of MX missiles shall be limited to those
missiles necessary to. support the operational test program and for the
MX missile reliability testing program; and
(2) during the fiscal year 1987, depending upon the most efficient
production rate, from 12 to 21 MX missiles should be procured for such
purposes.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
.7,1A-RDP90M00005R000200080003-4
Act: Authorization Action: Restriction
Effect: Certification
Title: I - Procurement
Part D - Air Force Program Limitations
Section: 143 a, b
Service: Air Force
System ID: Stealth Bomber (Advanced Technology Bomber)
Amount:
Other Amount: Quantity:
(a) REPORT ON TOTAL PROGRAM COST.?Not later than February 1,
1986, the Secretary of Defense shall transmit to Congress a report setting forth
the total program cost for the advanced technology bomber program. The
Secretary shall include in the report the Secretary's evaluation of the reliability
of the cost estimates for the program.
(b) LIMITATION ON EXPENDITURE OF PROCUREMENT FUNDS.?
No funds appropriated pursuant to the authorizations of appropriations in this
title may be obligated or expended for the advanced technology bomber pro-
gram until the report required by subsection (a) is transmitted to Congress.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27 :
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
IA-RDP90M00005R000200080003-4
Act: Authorization
Effect: Certification
Action: Restriction
Title: I - Procurement
Part D - Air Force Program Limitations
Section: 144 a, b
Service: Air Force
System ID: HH-53 (PAVE LOW)
Amount:
99
Other Amount: Quantity:
(a) AIR FORCE AIRCRAFT FUNDS.?Of the amount authorized in sec-
tion 103(a) for procurement of aircraft for the Air Force, $50,000,000 is avail-
able only for modification of HH-53 helicopters to the PAVE LOW mission
configuration.
(b) CERTIFICATION REQUIREMENT.?None of the amount described
in subsection (a) may be obligated or expended until the Secretary of the Air
Force certifies that sufficient funds have been budgeted in the fiscal year 1987
five-year defense plan to meet, at the earliest practicable date, and sustain the
highest readiness level prescribed for all PAVE LOW HH-53 helicopters in the
Joint Chiefs of Staff Unit Status Report System.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
.01A-RDP90M00005R000200080003-4
100
Act: Authorization
Effect: Other
Title: I - Procurement
Part E - Other Limitations
Section: 151
Service: Air Force
System ID: C-12 aircraft
Amount:
Action: Restriction
Other Amount: Quantity:
(151) None of the funds appropriated pursuant to authorizations in this title
may be obligated or expended for procurement of C-12 aircraft unless such air-
craft are procured through competitive procedures (as defined in section
2302(2) of title 10, United States Code), which shall be restricted to turboprop
aircraft.
Act: Authorization
Effect: Certification
Title: I - Procurement
Part E - Other Limitations
Section: 152
Service: Other
System ID: Special operations aircraft
Amount:
Action: Restriction
Other Amount: Quantity:
(152) . . . None of the funds appropriated pursuant to authorizations in this
title may be obligated or expended for the procurement of MC-130 aircraft or
the modification of HH-53 or CH-47 helicopters until the Secretary of
Defense?
(1) submits, in consultation with the Chairman of the Joint Chiefs,
to the Committees on Armed Services of the Senate and House of
Representatives a plan for meeting the immediate airlift requirements
of the Joint Special Operations Command and a second plan for meet-
ing, by 1991, the airlift requirements of the Joint Special Operations
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
101
Command and the special operations forces of unified commanders-in-
chief; and
(2) certifies that the plans required by paragraph (1) are funded in
the Fiscal Year 1987 Five-Year Defense Plan.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
102
Act: Authorization Action: Restriction
Effect: Other
Title: II - Research, Development, Test and Evaluation
Part A - Authorization of Appropriations and Program Limitations
Section: 205 c 1, 2, 3, 4
Service: Navy
System ID: SUBACS (Submarine Advanced Combat System)
Amount:
Other Amount: Quantity:
(1) None of such amount may be obligated or expended for the Sub-
marine Advanced Combat System (SUBACS) program unless the
Secretary of the Navy submits to the Committees on Armed Services of
the Senate and House of Representatives written certification that?
(A) the Secretary has initiated action to negotiate and sign
prior to February 1, 1986, a modification to the full-scale
engineering development contract which would provide for?
(i) a cost ceiling for such development with no liability of
the United States for cost growth above such ceiling; and
(ii) penalties for late delivery of equipment and failure to
meet performance criteria;
(B) before completion of full-scale engineering development
for the SUBACS Basic system under such program, such con-
tractor will provide to the United States a complete technical
data package?
(i) at no additional cost to the Government;
(ii) containing no manufacturing or proprietary data
rights;
(iii) of such quality as to allow production of such system
by a second source;
(C) the Secretary has begun action to provide, to the max-
imum extent possible, competition for procurement of com-
ponents for production of the SUBACS Basic system; and
(D) the Secretary has begun action to establish competition
in development and production of the follow-on systems to the
SUBACS Basic system.
(2) During the period of any negotiations for a contract modification
referred to in paragraph (1)(A), the monthly rate of expenditure for the
SUBACS program may not exceed the rate of expenditure for such pro-
gram.
(3) The Secretary shall also provide, within the amount of funds
provided for the SSN-21 Combat System Advanced Engineering Pro-
gram, that one or more firms that are potential competitors for the
attack submarine combat system for fiscal year 1989 be established as
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
103
associate contractors for the SUBACS Basic program with full access
to all SUBACS development information.
(4) If the Secretary determines that it is not possible to make a cer-
tification under paragraph (1), the Secretary may obligate and expend
funds necessary to develop an advanced combat system (other than
SUBACS) for the SSN-21 submarine and other applicable platforms.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
104
Act: Authorization
Effect: Certification
Action: Restriction
Title: II - Research, Development, Test and Evaluation
Part A - Authorization of Appropriations and
Program Limitations
Section: 205 d
Service: Navy
System ID: Rolling Airframe Missile program
Amount:
Other Amount: Quantity:
(d) ROLLING AIRFRAME MISSILE PROGRAM.?Funds appropriated
for fiscal year 1986 for research, development, test and evaluation for the Navy
may not be obligated for the Rolling Airframe Missile program or the NATO
Sea Sparrow program unless the Secretary of the Navy certifies to the Com-
mittees on Armed Services of the Senate and House of Representatives that?
(1) the Secretary has entered into a firm fixed-price production con-
tract for the Rolling Airframe Missile program;
(2) that such contract includes options of the United States for pro-
curement under such program for fiscal years after fiscal year 1986
with maximum prices established for such options; and
(3) the contractor for such contract has provided a complete data
package to the Navy?
(A) at no additional cost to the United States; and
(B) containing no manufacturing or proprietary data rights of
the contractor.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
105
Act: Authorization Action: Restriction
Effect: Other
Title: II - Research, Development, Test and Evaluation
Part A - Authorization of Appropriations and Program
Limitations
Section: 205 e
Service: Navy
System ID: LAMPS Mark I
Anti-submarine warfare shipboard training system
Amount: Other Amount: Quantity:
(e) ACQUISITION OF ANTI-SUBMARINE WARFARE TRAINING
SYSTEMS.?The Secretary of the Navy shall initiate a competitive procure-
ment of three service test models of the LAMPS Mark I anti-submarine war-
fare shipboard training system for the Naval Reserve during fiscal year 1986.
Of the funds appropriated pursuant to the authorizations of appropriations in
section 201(a)(2), $6,800,000 may not be obligated before such test models are
procured.
Act: Authorization
Effect: Certification
Action: Restriction
Title: II - Research, Development, Test and Evaluation
Part A - Authorization of Appropriations and Program
Limitations
Section: 207 b
Service: Other
System ID: JTIDS (Joint Tactical Information Distribution System)
Amount:
Other Amount: Quantity:
(b) None of such amount may be obligated or expended until the Secretary
of Defense selects a single JTIDS program to meet the operational
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
106
requirements of both the Navy and the Air Force. If the Secretary of Defense
determines that such a selection is not feasible or is not practicable, the Secre-
tary shall submit to the Committees on Armed Services of the Senate and
House of Representatives a report in writing setting forth the specific reasons
for not proceeding with a common JTIDS program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization
Effect: Certification
Action: Restriction
Title: II - Research, Development, Test and Evaluation
Part A - Authorization of Appropriations and Program
Limitations
Section: 208 a, b
Service: Air Force
System ID: MHV (Miniature Homing Vehicle for F-15)
Amount:
107
Other Amount: Quantity:
(a) REQUIREMENT REGARDING THE USE OF FUNDS.?None of the
funds appropriated pursuant to an authorization in this or any other Act may
be obligated or expended to test against an object in space the miniature hom-
ing vehicle (MHV) anti-satellite warhead launched from an F-15 aircraft unless
the President has made a determination and a certification to the Congress as
provided in section 8100 of the Department of Defense Appropriations Act,
1985 (as contained in section 101(h) of Public Law 98-473 (98 Stat. 1941)).
(b) LIMITATION ON NUMBER OF TESTS.?Not more than three tests
described in subsection (a) may be conducted before October 1, 1986.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
rDeclassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
108
Act: Authorization
Effect: Certification
Action: Restriction
Title: II - Research, Development, Test and Evaluation
Part A - Authorization of Appropriations and Program
Limitations
Section: 209 c 1, 2, 3, 4
Service: Air Force
System ID: Small ICBM
Amount:
Other Amount: Quantity:
(c) PROCEDURES REQUIRED BEFORE DECISIONS ON FULL-SCALE
DEVELOPMENT AND BASING SITE SELECTION FOR SMALL ICBM.?
(1) Before any decision may be made by the President or the Secre-
tary of Defense with regard to the full-scale development of a small
intercontinental ballistic missile or the selection of basing areas for the
deployment of such missile, the Secretary of the Air Force shall prepare
and submit to the appropriate committees of Congress a legislative
environmental impact statement with respect to such development and
such selection. In making any such decision, the President and the
Secretary of Defense shall take into consideration the findings and con-
clusions contained in any such report.
(2) The legislative environmental impact statement required by
paragraph (1) shall be prepared in accordance with the requirements
applicable to such statements prepared under section 1506.8 of title 40
of the Code of Federal Regulations (as in effect on May 16, 1985).
(3) A legislative environmental impact statement prepared and sub-
mitted to the appropriate committees pursuant to paragraph (1) shall
be deemed to meet all the requirements of the National Environmental
Policy Act of 1969 (42 U.S.C. 4321 et seq.) with respect to all aspects of
the full-scale development of a small intercontinental ballistic missile
and the selection of basing areas for the deployment of such missile.
(4) Preparation of a legislative environmental impact statement pur-
suant to paragraph (1) shall not relieve the Secretary of Defense from
any obligation for the subsequent preparation of administrative
environmental impact statements with respect to the environmental
impact on specifically selected sites within the chosen areas for the
deployment and peacetime operation of small intercontinental ballistic
missiles.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
109
Act: Authorization Action: Restriction
Effect: Certification
Title: II - Research, Development, Test and Evaluation
Part A - Authorization of Appropriations and Program
Limitations
Section: 210 a, b, c (2)
Service: Air Force
System ID: AMRAAM missile (Advanced Medium-Range Air-to-Air Missile)
Amount: 556,580,480 Other Amount: 5,200,000,000 Quantity: 17000
(2) Of the amount appropriated pursuant to the authorization in sec-
tion 201 for the Air Force, $54,382,000 may not be obligated or
expended until the Secretary of Defense submits to the Committees on
Armed Services of the Senate and House of Representatives a certifica-
tion as described in subsection (b).
(b) CERTIFICATION.?A certification under subsection (a) shall be in
writing and shall include confirmation by the Secretary of the following:
(1) That (A) the design of the AMRAAM system has been com-
pleted, (B) system performance has not been degraded from the original
development specification (DS 32050-000, as amended by the draft
Development Concept Paper (DCP) of June 14, 1985), and (C) the
flight test program has been revised to incorporate the maximum prac-
ticable number of selected changes in the design of the AMRAAM sys-
tem that reduce the costs of the system and that are qualified and
flight tested before production.
(2) That a fixed-price type contract for an amount not more than
$556,580,480 has been entered into with the development contractor for
research, development, test, and evaluation for such program.
(3) That the total production cost for the program, for a minimum
of 17,000 missiles, will not exceed $5,200,000,000 (in fiscal year 1984
dollars) and that the missiles procured will perform in accordance with
the development specification referred to in paragraph (1).
(c) NONCERTIFICATION.?If the Secretary of Defense cannot make a
certification under subsection (a) by March 1, 1986, the AMRAAM program
shall be terminated as of that date with no subsequent Government liability.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
no
Act: Authorization Action: Restriction
Effect: Funding, Certification
Title: II - Research, Development, Test and Evaluation
Part A - Authorization of Appropriations and Program
Limitations
Section: 211 a, c, d, e
Service: Navy
System ID: HARM (High Speed Anti-Radiation Missile)
Amount: 100,000,000 Other Amount:
Quantity:
(a) LIMITATION ON NAVY FUNDING.?Of the amount appropriated
pursuant to the authorization in section 201 for the Navy (including the
Marine Corps), $100,000,000 may not be obligated or expended until the Secre-
tary of the Navy submits to Congress a certification as described in subsection
(c) or a report as described in subsection (d).
(c) CERTIFICATION.?A certification under subsection (a) or (b) shall be
in writing and shall include a certification by the Secretary concerned of the
following:
(1) That the test and evaluation of the High-Speed Anti-Radiation
Missile (HARM) shows conclusively that the missile system meets all
performance specifications and objectives delineated in the HARM
weapon system specification?AS 3400 Revision A, dated August 6,
1982.
(2) That a current production missile has been disassembled and
that there is complete correlation with such missile and the current
technical-data package (including the engineering drawings and
software) and that HARM production missiles are being constructed to
these drawings.
(3) That the HARM missile system is capable of engaging the
intended threat as approved by the Director of Central Intelligence.
(4) That the program to develop the HARM low-cost seeker is struc-
tured to meet an intended Initial Operational Capability (IOC) date
during 1991.
(d) REPORT ON DEFICIENCIES.?
(1) If the Secretary of the Navy cannot make a certification under
subsection (c) because of deficiencies in the HARM system, then the
Secretary may obligate and expend funds without regard to the limita-
tion in subsection (a) after submitting to Congress a written report
described in paragraph (3).
(2) If the Secretary of the Air Force cannot make a certification
under subsection (c) because of deficiencies in the HARM system, then
the Secretary may obligate and expend funds without regard to the lim-
itation in subsection (b) after submitting to Congress a written report
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
111
described in paragraph (3).
(3) A report under paragraph (1) or 2) shall include?
(A) a detailed list of the deficiencies in the HARM system;
and
(B) a plan to correct such deficiencies, including milestones
and required levels of funding, and a request to Congress to
reprogram funds for the purpose of correcting such deficiencies.
(e) PROHIBITION ON EXPENDITURES TO CORRECT SPECIFIED
DEFICIENCIES.?The Secretary of the Navy and the Secretary of the Air
Force may not obligate or expend any funds to correct deficiencies in the
HARM system in order to meet the weapons system performance specification
described in subsection (c)(1).
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
112
Act: Authorization Action: Restriction
Effect: Funding, Certification
Title: II - Research, Development, Test and Evaluation
Part A - Authorization of Appropriations and Program
Limitations
Section: 211 b, c, d, e
Service: Air Force
System ID: HARM (High Speed Anti-Radiation Missile)
Amount: 50,000,000
Other Amount: Quantity:
(b) LIMITATION OF AIR FORCE FUNDING.?Of the amount appropri-
ated pursuant to the authorization in section 301 for the Air Force, $50,000,000
may not be obligated or expended until the Secretary of the Air Force submits
to Congress a certification as described in subsection (c) or a report as
described in subsection (d).
(c) CERTIFICATION.?A certification under subsection (a) or (b) shall be
in writing and shall include a certification by the Secretary concerned of the
following:
(1) That the test and evaluation of the High-Speed Anti-Radiation
Missile (HARM) shows conclusively that the missile system meets all
performance specifications and objectives delineated in the HARM
weapon system specification?AS 3400 Revision A, dated August 6,
1982.
(2) That a current production missile has been disassembled and
that there is complete correlation with such missile and the current
technical-data package (including the engineering drawings and
software) and that HARM production missiles are being constructed to
these drawings.
(3) That the HARM missile system is capable of engaging the
intended threat as approved by the Director of Central Intelligence.
(4) That the program to develop the HARM low-cost seeker is struc-
tured to meet an intended Initial Operational Capability (IOC) date
during 1991.
(d) REPORT ON DEFICIENCIES.?
(1) If the Secretary of the Navy cannot make a certification under
subsection (c) because of deficiencies in the HARM system, then the
Secretary may obligate and expend funds without regard to the limita-
tion in subsection (a) after submitting to Congress a written report
described in paragraph (3).
(2) If the Secretary of the Air Force cannot make a certification
under subsection (c) because of deficiencies in the HARM system, then
the Secretary may obligate and expend funds without regard to the lim-
itation in subsection (b) after submitting to Congress a written report
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
113
described in paragraph (3).
(3) A report under paragraph (1) or 2) shall include?
(A) a detailed list of the deficiencies in the HARM system;
and
(B) a plan to correct such deficiencies, including milestones
and required levels of funding, and a request to Congress to
reprogram funds for the purpose of correcting such deficiencies.
(e) PROHIBITION ON EXPENDITURES TO CORRECT SPECIFIED
DEFICIENCIES.?The Secretary of the Navy and the Secretary of the Air
Force may not obligate or expend any funds to correct deficiencies in the
HARM system in order to meet the weapons system performance specification
described in subsection (c)(1).
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
114
Act: Authorization Action: Restriction
Effect: Certification
Title: II - Research, Development, Test and Evaluation
Part B - Strategic Defense Initiative
Section: 222
Service: Other
System ID: SDI (Strategic Defense Initiative)
Amount:
Other Amount: Quantity:
(222) A strategic defense system developed as a consequence of research,
development, test and evaluation conducted on the Strategic Defense Initiative
program may not be deployed in whole or in part unless?
(1) the President determines and certifies to Congress in writing
that?
(A) the system is survivable (that is, the system is able to
maintain a sufficient degree of effectiveness to fulfill its mission,
even in the face of determined attacks against it); and
(B) the system is cost effective at the margin to the extent
that the system is able to maintain its effectiveness against the
offense at less cost than it would take to develop offensive coun-
termeasures and proliferate the ballistic missiles necessary to
overcome it; and
(2) funding for the deployment of such system has been specifically
authorized by legislation enacted after the date on which the President
makes the certification to Congress.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization Action: Restriction
Effect: Certification, Other
Title: XIV - General Provisions
Part B - Chemical Weapons
Section: 1411 a, b, c
Service: ?
System ID: Chemical weapons
Amount:
115
Other Amount: Quantity:
(a) LIMITATION ON FY86 FUNDS.?Funds appropriated pursuant to
authorizations of appropriations in title I may not be used?
(1) for procurement or assembly of binary chemical munitions (or
components of such munitions); or
(2) for establishment of production facilities necessary for procure-
ment or assembly of binary chemical munitions (or components of such
munitions), except in accordance with subsections (b) and (c).
(b) NATO CONSULTATION.?Subject to subsection (c), funds referred to
in subsection (a) may be used for procurement or assembly of binary chemical
munitions or for the establishment of production facilities necessary for the
procurement or assembly of binary chemical munitions (or components of such
munitions) if the President certifies to Congress that the United States?
(1) has developed a plan under which United States binary chemical
munitions can be deployed under appropriate contingency plans to
deter chemical weapons attacks against the United States and its allies;
and
(2) has consulted with other member nations of the North Atlantic
Treaty Organization (NATO) on that plan. A plan under clause (1)
shall be developed in cooperation with the Supreme Allied Commander,
Europe.
(c) CONDITION FOR FINAL ASSEMBLY.?Funds referred to in subsec-
tion (a) may not be used for the fmal assembly of complete binary chemical
munitions before October 1, 1987, and may only be used for such purpose on or
after that date if?
(1) a mutually verifiable international agreement concerning binary
and other similar chemical munitions has not been entered into by the
United States by that date;
(2) the President, after that date, transmits to Congress a certifica-
tion that?
(A) final assembly of such complete munitions is necessitated
by national security interests of the United States and the
interests of other NATO member nations;
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
(B) performance specifications and handling and storage
safety specifications established by the Department of Defense
with respect to such munitions will be met or exceeded;
(C) applicable Federal safety requirements will be met or
exceeded in the handling, storage, and other use of such muni-
tions; and
(D) the plan of the Secretary of Defense for destruction of
existing United States chemical warfare stocks developed pur-
suant to section 1412 (which shall, if not sooner transmitted to
Congress, accompany such certification) is ready to be imple-
mented;
(3) final assembly is carried out only after the end of the 60-day
period beginning on the date such certification is received by the
Congress;
(4) the plan of the Secretary of Defense for land-based storage of
such munitions within the United States during peacetime provides
that the two components that constitute a binary chemical munition
are to be stored in separate States; and
(5) the plan of the Secretary of Defense for the transportation of
such munitions within the United States during peacetime provides
that the two components that constitute a binary munition are trans-
ported separately.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization
Effect: Quantity
Action: Restriction
Title: XIV - General Provisions
Part C - Drug Interdiction, Law Enforcement, and Other
Specific Programs
Section: 1425 c,d
Service: Air Force
System ID: B-1B bomber
Amount:
117
Other Amount: Quantity: 100
(c) SENSE OF CONGRESS ON B-1B BOMBER PROGRAM.?It is the
sense of Congress that, consistent with the stated policy of the Department of
Defense, the B-1B bomber aircraft procurement program should be terminated
after acquisition under such program of 100 aircraft.
(d) LIMITATION ON NUMBER OF B-1B AIRCRAFT TO BE
PROCURED.?None of the funds appropriated pursuant to an authorization
contained in this Act may be obligated or expended for the conduct of research,
design, demonstration, development, or procurement of more than 100 B-1B
aircraft (including any derivative or modified version of such aircraft).
Act: Authorization
Effect: Quantity
Action: Restriction
Title: XIV - General Provisions
Part C - Drug Interdiction, Law Enforcement, and Other
Specific Programs
Section: 1426 a
Service: Air Force
System ID: W-87 (Warhead for MX missile)
Amount:
Other Amount: Quantity: All
(a) RESTRICTION ON FUNDING FOR MX MISSILE WARHEAD.?
None of the funds appropriated pursuant to an authorization provided in this
or any other Act may be obligated or expended for the production of W-87
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
118
warheads for the MX missile program in excess of the numbers of warheads
required to arm the number of such missiles authorized by the Congress to be
deployed and determined by the President to be necessary for quality
assurance and reliability testing.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization
Effect: Certification
Action: Restriction
Title: XIV - General Provisions
Part C - Drug Interdiction, Law Enforcement, and Other
Specific Programs
Section: 1426 b
Service: Navy
System ID: SM-2(A) (Standard missile)
Amount:
119
Other Amount: Quantity:
(b) EMPLOYMENT OF THE STANDARD MISSILE (SM-2(N)).?Except
for the studies and report required by this section, none of the funds autho-
rized to be appropriated by this Act may be expended for research, develop-
ment, test, or procurement associated with a nuclear variant of the Standard
Missile (SM-2(N)) or any associated nuclear warhead until 30 calendar days
after the Secretary of the Navy submits to the Committees on Armed Services
of the Senate and House of Representatives a report which includes the follow-
ing information:
(1) A description of the circumstances under which the SM-2(N)
would be used and an assessment of likely enemy response (including
countermeasures).
(2) A description of the release procedures and circumstances under
which release would be authorized for employment of the SM-2(N).
(3) An analysis of conventional alternatives to the SM-2(N), includ-
ing any necessary modification to the SM-2 or alternative to the Stan-
dard Missile or warhead, and the associated costs of those alternatives.
(4) A summary of all studies previously conducted analyzing the
impact of the use of nuclear naval surface-to-air missiles on our own
vessels and electronics.
(5) A list of all United States ships which may receive the SM-2(N).
(6) The number of additional conventional armed missiles which
could be carried by United States ships if the SM-2(N) were not
deployed and the impact on fleet air defense from that reduced conven-
tional load.
(7) Any plans or programs for the development of a nuclear naval
surface-to-air or air-to-air missile for fleet defense other than the SM-
2 (N) .
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
120
Act: Authorization Action: Restriction
Effect: Certification
Title: XIV - General Provision
Part D - Miscellaneous Reporting Requirements
Section: 1433
Service: Navy
System ID: SSN-21
Amount:
Other Amount: Quantity:
(1433) Not more than one-half of the funds appropriated pursuant to
authorizations of appropriations in this Act for the design or construction of
nuclear reactor components for the SSN-21 class submarine may be obligated
until the Secretary of the Navy submits to the Committees on Armed Services
of the Senate and House of Representatives a report on the industrial base for
the design and construction of nuclear components for the SSN-21 class sub-
marine. The report shall evaluate the cost effectiveness of increasing the
number of firms actively employed in the design of nuclear reactor components
and the construction of nuclear reactor components.
Act: Authorization
Effect: Funding
Title: I - Procurement
Navy and Marine Corps
Section: 102 d B, 2, A
Service: Navy
System ID: Ship Support Equipment
Amount: 935,000,000
Action: Earmarking
Other Amount: Quantity:
(A) $935,000,000 is available only for the ship support equip-
ment program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization
Effect: Funding
Title: I - Procurement
Navy and Marine Corps
Section: 102 d B, 2, B
Service: Navy
System ID: Communications and electronics
Amount: 2,134,500,000
121
Action: Earmarking
Other Amount: Quantity:
(B) $2,134,500,000 is available only for the communications
and electronics equipment program.
Act: Authorization
Effect: Funding
Title: I - Procurement
Navy and Marine Corps
Section: 102 d B, 2, C
Service: Navy
System ID: Aviation Support Equipment
Amount: 1,206,800,000
Action: Earmarking
Other Amount: Quantity:
(C) $1,206,800,000 is available only for aviation support
equipment.
' Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
122
Act: Authorization
Effect: Funding
Title: I - Procurement
Navy and Marine Corps
Section: 102 d B, 2, D
Service: Navy
System ID: Ordnance Support Equipment
Amount: 1,396,500,000
Action: Earmarking
Other Amount: Quantity:
(D) $1,396,500,000 is available only for ordnance support
equipment program.
Act: Authorization Action: Earmarking
Effect: Funding, Quantity
Title: I - Procurement
Part D - Air Force Program Limitations
Section: 141 a 2, A
Service: Air Force
System ID: MX ICBM (Peacekeeper)
Amount: 1,746,000,0000
Other Amount: Quantity: 12
(A) $1,746,000,000 shall be available only for the procurement
of 12 MX missiles and related weapons system and support
costs.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization Action: Earmarking
Effect: Funding
Title: I - Procurement
Part D - Air Force Program Limitations
Section: 141 a 2,B
Service: Air Force
System ID: MX spares
Amount: 105,000,000
123
Other Amount: Quantity:
(B) $105,000,000 shall be available only for the procurement
of initial spares for the MX missile program.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Army
Section: 204 a 1
Service: Army
System ID: Missile/Rocket Components program
Amount: 52,836,000
Other Amount: Quantity:
(1) $52,836,000 is available only for the Missile/Rocket Components
program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
124
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Army
Section: 204 a 1 A
Service: Army
System ID: Fiber Optics Guided Missile
Amount: 10,000,000
Other Amount: Quantity:
(A) $10,000,000 is available only for the development of the
Fiber Optics Guided Missile.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Army
Section: 204 a 1 B
Service: Army
System ID: Hypervelocity Missile
Amount: 10,000,000
Other Amount: Quantity:
(B) $10,000,000 is available only for development of the
Hypervelocity Missile.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Army
Section: 204 a 2
Service: Army
System ID: Stinger Missile
Amount: 23,583,000
125
Other Amount: Quantity:
(2) $23,583,000 is available only for the Stinger Missile Program.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Army
Section: 204 a 3
Service: Army
System ID: AGT-1500 Tank Engine (for M1)
Amount: 15,000,000
Other Amount: Quantity:
(3) $15,000,000 is available only for a fuel-efficient modification for
the AGT-1500 tank engine.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
126
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Army
Section: 204 a 3
Service: Army
System ID: Ml-E1 Tank Development (Abrams tank)
Amount: 18,898,000
Other Amount: Quantity:
(3) $18,898,000 is available only for the Ml-E1 Tank Development
program.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Army
Section: 204 a 4
Service: Army
System ID: Hellfire/UH-60 (Hellfire/Blackhawk)
Amount: 20,000,000
Other Amount: Quantity:
(4) $20,000,000 is available only for the development, test, integra-
tion, and evaluation of the Hellfire Missile for the Blackhawk helicop-
ter.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Army
Section: 204 a 5
Service: Army
System ID: STARS (Software Initiative program)
Amount: 42,000,000
127
Other Amount: Quantity:
(5) $42,000,000 is available only for the Software Initiative (STARS)
program.
Act: Authorization
Effect: Funding
Action: Earmarking
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Navy (Including the
Marine Corps)
Section: 205 a 1
Service: Navy
System ID: Low-Cost Anti-Radiation Seeker
Amount: 17,500,000
Other Amount: Quantity:
(1) $17,500,000 is available only for the Low-Cost Anti-Radiation
Seeker program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
128
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Navy (Including the
Marine Corps)
Section: 205 a 2
Service: Navy
System ID: Advanced Mine Development Program
Amount: 4,464,000
Other Amount: Quantity:
(2) $4,464,000 is available only for the Advanced Mine Development
program.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Navy (Including the
Marine Corps)
Section: 205 a 3
Service: Navy
System ID: Naval Oceanography Program
Amount: 5,900,000
Other Amount: Quantity:
(3) $5,900,000 is available only for the Naval Oceanography pro-
gram.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Navy (Including the
Marine Corps)
Section: 205 a 4
Service: Navy
System ID: Battlegroup Quick Reaction Surveillance System
Amount: 12,000,000
129
Other Amount: Quantity:
(4) $12,000,000 is available only for the Battlegroup Quick Reaction
Surveillance System program.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Navy (Including the
Marine Corps)
Section: 205 a 5
Service: Navy
System ID: Wallops Island Test Range activity
Amount: 4,000,000
Other Amount: Quantity:
(5) $4,000,000 is available only for unique Wallops Island Test
Range activity.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
1:5U
Act: Authorization
Effect: Funding
Action: Earmarking
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Navy (Including the
Marine Corps)
Section: 205 a 6
Service: Navy
System ID: Skipper/Practice Bomb
Amount: 10,000,000
Other Amount: Quantity:
(6) $10,000,000 is available only for the Skipper/Practice Bomb pro-
gram.
Act: Authorization
Effect: Funding
Action: Earmarking
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Navy (Including the
Marine Corps)
Section: 205 a 7
Service: Navy
System ID: Classified sensor program
Amount: 1,500,000
Other Amount: Quantity:
(7) $1,500,000 is available only for a classified sensor development
program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization Action: Earmarking
Effect: Funding
Title: II ? Research, Development, Test and Evaluation
Limitations on Funds for the Navy (Including the
Marine Corps)
Section: 205 a 8
Service: Navy
System ID: Guided projectile system (5-in./155mm)
Amount: 2,500,000
131
Other Amount: Quantity:
(8) $2,500,000 is available only to establish a second source for the
competitive procurement of the Navy Five-Inch and Army 155-
Millimeter Guided Projectile systems.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Navy (Including the
Marine Corps)
Section: 205 c 1
Service: Navy
System ID: SSN-21 Combat System Advanced & Engineering Program
Amount: 200,000,000
Other Amount: Quantity:
(1) Of the amount authorized in section 201 for the Navy,
$200,000,000 is available only for the SSN-21 Combat System
Advanced and Engineering program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
132
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Air Force
Section: 206 1
Service: Air Force
System ID: INEWS/ICNIA
Amount: 60,000,000
Other Amount: Quantity:
(1) $60,000,000 is available only for reserch, development, test, and
evaluation for Integrated Electronic Warfare Systems (INEWS) and
the Integrated Communication, Navigation, Identification Avionics
(ICNIA) system.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Air Force
Section: 206 2
Service: Air Force
System ID: F-4 aircraft air defense role
Amount: 22,000,000
Other Amount: Quantity:
(2) $22,000,000 is available only for the research, development, test
and evaluation to modify the F-4 aircraft to satisfy the Air Force air
defense mission.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Air Force
Section: 206 3
Service: Air Force
System ID: Classified reconnaissance system
Amount: 19,570,000
133
Other Amount: Quantity:
(3) $19,570,000 is available only for a classified reconnaissance sys-
tem.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Air Force
Section: 206 4
Service: Air Force
System ID: VHSIC (Very High Speed Integrated Circuit Program)
Amount: 211,276,000
Other Amount: Quantity:
(4) $211,276,000 is available only for the Very High Speed
Integrated Circuits (VHSIC) program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
134
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Air Force
Section: 206 5
Service: Air Force
System ID: Pave Tiger
Amount: 15,000,000
Other Amount: Quantity:
(5) $15,000,000 is available only for the Pave Tiger system.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Defense Agencies
Section: 207 a 1
Service: Other
System ID: Joint Advanced Systems program
Amount: 300,000,000
Other Amount: Quantity:
(1) $300,000,000 is available only for the Joint Advanced Systems
program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Defense Agencies
Section: 207 a 5
Service: Other
System ID: Strategic Computing Initiative
Amount: 142,000,000
135
Other Amount: Quantity:
(5) $142,000,000 is available only for the Strategic Computing Initia-
tive.
Act: Authorization
Effect: Funding
Action: Earmarking
Title: II - Research, Development, Test and Evaluation
Limitations on Funds for the Defense Agencies
Section: 207 b
Service: Other
System ID: JTIDS (Joint Tactical Information Distribution System)
Amount: 200,000,000
Other Amount: Quantity:
(b) $200,000,000 is available only for research and development of a com-
mon Joint Tactical Information Distribution System (JTIDS) program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
rDeclassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
136
Act: Authorization
Effect: Funding
Action: Earmarking
Title: II - Research, Development, Test and Evaluation
Testing of Anti-Satellite Weapons and Space
Survivability Programs
Section: 208 c
Service: Air Force
System ID: Space Survivability Program
Amount: 15,000,000
Other Amount: Quantity:
(c) $15,000,000 is available only for the satellite survivability project of the
Air Force Space Survivability Program.
Act: Authorization Action: Earmarking
Effect: Funding
Title: II - Research, Development, Test and Evaluation
Small Intercontinental Ballistic Missile Program
Section: 209 a
Service: Air Force
System ID: Small Mobile Intercontinental Ballistic Missile
Amount: 724,500,000
Other Amount: Quantity:
(a) $724,500,000 is available only for research, development, test and evalua-
tion carried out with respect to the small mobile intercontinental ballistic mis-
sile within the intercontinental ballistic missile modernization program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
137
Act: Authorization
Effect: Funding
Action: Earmarking
Title: XIV - General Provisions
Part C - Drug Interdiction, Law Enforcement, and Other
Specific Programs
Section: 1425 b
Service: Air Force
System ID: ATB/ACM (Advanced Technology Bomber/Advanced Cruise Missile)
Amount: All
Other Amount: Quantity:
(b) PROHIBITION ON USE OF FUNDS FOR ATB AND ACM FOR
ANY OTHER PURPOSE.?None of the funds appropriated pursuant to an
authorization of appropriations in this Act to carry out the Advanced Technol-
ogy Bomber program or the Advanced Cruise Missile program may be used for
any other purpose.
Act: Authorization Action: Earmarking
Effect: Funding
Title: Matters Relating to NATO
NATO Cooperative Research and Development
Section: 1103 c 1
Service: Other
System ID: NATO Cooperative Research and Development
Amount: 200,000,000
Other Amount: Quantity:
(1) Of the funds appropriated pursuant to the authorizations in sec-
tion 201(a), $200,000,000 shall be available, in equal amounts, to the
Army, Navy, Air Force, and Defense Agencies only for NATO coopera-
tive research and development projects as provided in this section.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Appendix D
RESTRICTIONS AND EARMARKINGS IN
APPROPRIATIONS ACTS
Restrictions and earmarkings were defined and categorized in Sec.
III and App. C. This appendix addresses the extent of restrictions and
earmarkings that have appeared in the Appropriations Acts.
The data on restrictions in Appropriations Acts are given in Table
D.1. Only certification shows a marked increase over the past two
decades. All other categories remain relatively constant.
Table D.1
RESTRICTIONS IN APPROPRIATIONS ACTS
Type of Restriction
Year
Funding
Quantity
Competition
Planning
Certification
Technical
Other
Total
1966
0
0
1
0
0
0
0
1
1967
1
0
1
0
0
0
1
3
1968
0
0
1
0
0
0
0
1
1969
0
0
1
0
0
0
0
1
1970
0
0
1
0
0
0
0
1
1971
0
0
2
0
0
0
0
2
1972
0
0
1
0
0
0
0
1
1973
0
0
1
0
0
0
0
1
1974
0
0
1
0
0
0
0
1
1975
0
0
1
0
0
0
0
1
1976
1
0
1
0
2
0
0
4
1977
1
0
1
0
0
0
0
2
1978
?
?
?
?
?
?
?
?
1979
0
0
1
0
0
0
0
1
1980
2
0
1
0
2
0
1
6
1981
1
0
1
0
0
0
0
2
1982
1
1
1
0
3
0
0
6
1983
1
0
3
0
5
1
1
11
1984
2
0
1
1
6
0
1
11
1985
2
2
1
1
4
1
0
11
1986
3
0
2
0
4
0
2
11
Total
15
3
24
2
26
2
6
78
138
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
139
Funding restrictions were infrequent from 1980 to 1986, ranging
from only one to three occurrences per year. There were rare instances
of funding restrictions in 1967, 1976, and 1977.
Only three quality restrictions were enacted during the period of
1966 to 1986: one in 1982 and two in 1985. However, these affected
major programs?B1 bomber, MX missile, and F-15 fighter aircraft.
The number of competition restrictions has been fairly constant.
This picture is biased somewhat, however, by the annual restriction
which prevents building of ships in foreign shipyards. Excluding this
restriction, only four other competition restrictions have been enacted.
Two planning restrictions have been enacted in the Appropriations
Acts: the Defense Satellite Communication System in 1982 and the
Armored Combat Earthmover in 1985.
The most significant increase in Congressional restrictions in the
Appropriations Acts is in the certification category, which increased
between 1981 and to 1986, peaking in 1984. The two remaining
restriction categories, technical and other, have not shown much
Congressional activity.
The full text of all restrictions and earmarkings in the FY1986
Appropriations Act is shown below.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
140
Act: Appropriation
Effect: Other
Action: Restriction
Title: III - Procurement
Shipbuilding and Conversion - Navy
Section:
Service: Navy
System ID: CG-47/DDG-51 components
Amount:
Other Amount: Quantity:
DDG-51 destroyer program, $74,000,000: Provided, that the Secretary of
the Navy shall select a second source, by the most expeditious means available,
for the CG-47 and DDG-51 SPY-1 radar; AEGIS production test center, ship-
yard and shipboard combat system integration; AEGIS color graphic display
systems; solid state frequency converters; and propellers in order to begin com-
petition between the current contractors and the second source contractors in
fiscal year 1988: Provided further, that any such selection shall not adversely
affect the CG-47 and DDG-51 shipbuilding program schedule and costs.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Appropriation Action: Restriction
Effect: Competition
Title: III - Procurement
Shipbuilding and Conversion - Navy
Section:
Service: Navy
System ID: Ships
Amount:
141
Other Amount: Quantity:
Provided further, that none of the funds herein provided for the construc-
tion or conversion of any naval vessel to be constructed in shipyards in the
United States shall be expended in foreign shipyards for the construction of
major components of the hull or superstructure of such vessel: Provided
further, that none of the funds herein provided shall be used for the construc-
tion of any naval vessel in foreign shipyards.
Act: Appropriation
Effect: Funding
Title: III - Procurement
Aircraft Procurement - Air Force
Section:
Service: Air Force
System ID: B-1B bomber
Action: Restriction
Amount: 20,500,000,000 Other Amount: Quantity:
Provided further, that none of the funds in this Act may be obligated on B-
1B bomber production contracts if such contracts would cause the production
portion of the Air Force's $20,500,000,000 estimate for the B-1B bomber base-
line costs expressed in fiscal year 1981 constant dollars to be exceeded.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
142
Act: Appropriation
Effect: Certification
Title: III - Procurement
Other Procurement - Air Force
Section:
Service: Air Force
System ID: 30-mm ammunition
Amount:
Action: Restriction
Other Amount: Quantity:
Provided further, that no obligation may be incurred for the procurement of
30mm armor piercing ammunition unless there is component breakout for the
depleted uranium penetrator.
Act: Appropriation Action: Restriction
Effect: Funding
Title: VIII - General Provisions
Section: 8082
Service: Other
System ID: JTACMS (Joint Tactical Missile System)
Amount: Other Amount: Quantity:
Sec. 8082. Notwithstanding any other provision of this Act, no funds
appropriated by this Act shall be expended for the research, development, test
evaluation or procurement for integration of a nuclear warhead into the Joint
Tactical Missile System (JTACMS).
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
143
Act: Appropriation Action: Restriction
Effect: Certification
Title: VIII - General Provisions
Section: 8093
Service: Army
System ID: Binary Chemical Munitions
Amount: Other Amount: Quantity:
Section 1411 of the Department of Defense Authorization Act, 1986, (Public
Law 99-145) is amended to read as follows:
SEC. 1411. CONDITIONS ON SPENDING FUNDS FOR BINARY
CHEMICAL MUNITIONS
(a) LIMITATIONS ON FISCAL YEAR 1986 FUNDS.?Funds appropri-
ated pursuant to authorizations of appropriations in title I may not be used?
(1) for procurement or assembly of binary chemical munitions (or
components of such munitions); or
(2) for establishment of production facilities necessary for procure-
ment or assembly of binary chemical munitions (or components of such
munitions), except in accordance with subsections (b), (c), (d), and (e).
(b) NATO CONSULTATION.?Subject to subsections (c), (d), and (e),
funds referred to in subsection (a) may be used for procurement or assembly of
binary chemical munitions or for the establishment of production facilities
necessary for the procurement or assembly of binary chemical munitions (or
components of such munitions) if the President certifies to Congress that the
United States?
(1) has submitted to the North Atlantic Treaty Organization, a force
goal stating the requirement for modernization of the United States
proportional share of the NATO chemical deterrent with binary muni-
tions and said force goal has been formally adopted by the North
Atlantic Council;
(2) has developed in coordination with the Supreme Allied Com-
mander, Europe, a plan under which United States binary chemical
munitions can be deployed under appropriate contingency plans to
deter chemical weapons attacks against the United States and its allies;
and
(3) has consulted with other member nations of the North Atlantic
Treaty Organization (NATO) on that plan.
(c) CONDITIONS FOR FINAL ASSEMBLY.?Funds referred to in subsec-
tion (a) may not be used for the final assembly of complete binary chemical
munitions before October 1, 1987, and, subject to subsections (d) and (e), may
only be used for such purpose on or after that date if?
(1) a mutually verifiable international agreement concerning binary
and other similar chemical munitions has not been entered into by the
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
144
United States by that date;
(2) the President, after that date, transmits to Congress a certifica-
tion that?
(A) final assembly of such complete munitions is necessitated
by national security interests of the United States and the
interests of other NATO member nations;
(B) handling and storage safety specifications established by
the Department of Defense with respect to such munitions will
be met or exceeded;
(C) applicable Federal safety requirements will be met or
exceeded in the handling, storage, and other use of such muni-
tions; and
(D) the plan of the Secretary of Defense for destruction of
existing United States chemical warfare stocks developed pur-
suant to section 1412 (which shall, if not sooner transmitted to
Congress, accompany such certification) is ready to be imple-
mented;
(3) final assembly is carried out only after the end of the 60-day
period beginning on the date such certification is received by the
Congress;
(4) the plan of the Secretary of Defense for land-based storage of
such munitions within the United States during peacetime provides
that the two components that constitute a binary chemical munition
are to be stored in separate States; and
(5) the plan of the Secretary of Defense for the transportation of
such munitions within the United States during peacetime provides
that the two components that constitute a binary munition are trans-
ported separately.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Appropriation
Effect: Certification
Title: VIII - General Provisions
Section: 8093 d 1, 2, 3
Action: Restriction
Service: Air Force
System ID: BIGEYE (Chemical Warfare Weapon)
Amount:
145
Other Amount: Quantity:
(d) RESTRICTIONS ON PRODUCTION OF THE BIGEYE BOMB.?
Except as provided below, none of the funds appropriated pursuant to authori-
zations of appropriations in title I may be used for procurement or assembly of
the BIGEYE binary chemical bomb or for procurement of components for the
BIGEYE bomb until 60 days after the Secretary of Defense has submitted a
report describing?
(1) the specific operational requirements which must be achieved by
the BIGEYE system; and
(2) the actual performance of the system during operational testing
with respect to each of the operational test criteria; and
(3) any exceptions to the operational criteria deemed acceptable by
the Department of Defense.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
14b
Act: Appropriation Action: Restriction
Effect: Funding
Title: VIII - General Provisions
Section: 8093 e
Service: Army
System ID: GB-2 artillery projectile
Amount: Other Amount: Quantity:
(e) RESTRICTION ON PRODUCTION OF THE GB-2 ARTILLERY
PROJECTILE.?None of the funds appropriated pursuant to authorizations in
title I for procurement or assembly of the GB-2 artillery projectile may be obli-
gated or expended before October 1, 1986.
Act: Appropriation Action: Restriction
Effect: Other
Title: VIII - General Provisions
Section: 8094
Service: Air Force
System ID: C-12 aircraft
Amount: Other Amount: Quantity:
Sec. 8094. None of the funds appropriated in this Act may be obligated or
expended for procurement of C-12 aircraft unless such aircraft are procured
through competitive procedures (as defined in section 2302(2) of title 10,
United States Code), which shall be restricted to turboprop aircraft.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Appropriation
Effect: Competition
Title: VIII - General Provisions
Section: 8095
Service: Army
System ID: 120mm mortar ammunition
Amount:
147
Action: Restriction
Other Amount: Quantity:
Sec. 8095. None of the funds in this Act may be obligated for procurement
of 120mm mortars or 120mm mortar ammunition manufactured outside of the
United States: Provided, that this limitation shall not apply to procurement of
such mortars or ammunition required for testing, evaluation, type classification
or equipping the Army's Ninth Infantry Division (Motorized).
Act: Appropriation
Effect: Certification
Title: VIII - General Provisions
Section: 8097
Service: Army, Air Force
System ID: Space Defense System
Amount:
Action: Restriction
Other Amount: Quantity:
Sec. 8097. None of the funds appropriated by this Act or any other Act may
be obligated or expended to carry out a test of the Space Defense System
(anti-satellite weapon) against an object in space until the President certifies to
Congress that the Soviet Union has conducted, after October 3, 1985, a test
against an object in space of a dedicated anti-satellite weapon.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
145
Act: Appropriation
Effect: Funding
Title: III - Procurement
Aircraft Procurement - Navy
Section:
Service: Navy
System ID: P-3C (Orion)
Amount: 322,871,000
Action: Earmarking
Other Amount: Quantity: 9
Provided, that $322,871,000 shall be available only for the procurement of
nine new PC-3 anti-submarine warfare aircraft.
Act: Appropriation
Effect: Funding
Title: III - Procurement
Aircraft Procurement - Air Force
Section:
Service: Air Force
System ID: Air defense aircraft competition
Amount: 200,000,000
Action: Earmarking
Other Amount: Quantity:
of which $200,000,000 shall be available only to initiate the air defense air-
craft competition authorized by law.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Act: Appropriation
Effect: Funding
Action: Earmarking
Title: IV - Research, Development, Test and Evaluation
Limitation on Funds for the Army
Section:
Service: Army
System ID: Hellfire/UH-60
Amount: 17,000,000
149
Other Amount: Quantity:
of which $17,000,000 is available only for completing development, transi-
tioning into low-rate initial production, and initial procurement of shipsets
required to arm UH-60 Blackhawk helicopters with Hellfire missiles, to remain
available for obligation until September 30, 1987.
Act: Appropriation Action: Earmarking
Effect: Funding
Title: IV - Research, Development, Test and Evaluation
Limitation on Funds for the Navy
Section:
Service: Navy
System ID: Low Cost Anti-Radiation Seeker
Amount: 17,523,000
Other Amount: Quantity:
of which $17,523,000 is available only for the Low Cost Anti-Radiation
Seeker Program.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
150
Act: Appropriation Action: Earmarking
Effect: Funding
Title: IV - Research, Development, Test and Evaluation
Limitation on Funds for the Navy
Section:
Service: Navy
System ID: Laser Articulating Robotic System
Amount: 5,500,000
Other Amount: Quantity:
$5,500,000 is available only for the Laser Articulating Robotic System.
Act: Appropriation
Effect: Funding
Action: Earmarking
Title: Research, Development, Test and Evaluation
Limitation on Funds for Defense Agencies
Section:
Service: Other
System ID: Conventional Munitions Technology Development
Amount: 8,287,000
Other Amount: Quantity:
$8,287,000 shall be available only for the joint Department of Defense-
Department of Energy Conventional Munitions Technology Development Pro-
gram.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Appendix E
FEATURES OF DEFENSE
INDUSTRY REGULATION'
Despite widespread and long-standing recognition of the inherent
difficulty of seeking the optimal balance between accountability and
the freedom to pursue technological opportunities in defense acquisi-
tion, there has been little formal analysis of regulation in area of
defense procurement. The consequent social costs, as well as benefits,
of other forms of regulatory activity have been assessed,2 but there is
little information?either theoretical or applied?on the relationship
between the costs and benefits of regulation for the defense sector. We
found virtually no discussion in the economics and management sci-
ences literature of the defense acquisition process from a regulatory
perspective. Not only has this domain been virtually ignored by indi-
viduals whose speciality is regulation,3 but the deregulation movement,
which touched several industrial sectors in the 1970s, has bypassed
defense.
This brief introductory discussion of the regulation and administra-
tion of defense acquisition will cover three topics: first, a taxonomy of
the regulatory process; second, an examination of how defense regula-
tion differs from other regulatory processes; and third, a classification
of how regulation affects the acquisition process.
A TAXONOMY OF DEFENSE REGULATIONS
The term "regulation" covers a wide variety of instruments and poli-
cies of government. Broadly defined, regulation covers the whole range
of government requirements directed toward private industry. Some
regulations involve working conditions and social objectives; others
delve s into what are fundamentally commercial decisions, such as what
to produce and how to produce it. A taxonomy of the different types of
'This appendix was prepared by K. W. Tyson and J. R. Nelson at the Institute for
Defense Analyses.
'See, for example, Murray L. Weidenbaum, The Future of Business Regulation:
Private Action and Public Demand, American Management Association, 1979.
3The classic work, Alfred Kahn, The Economics of Regulation: Principles and Institu-
tions (John Wiley and Sons, New York, 1970) mentions defense procurement only in two
footnotes. Within the defense sector, many studies have addressed issues of acquisition
policy or individual regulations, from which we have drawn for background.
151
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
152
regulations is useful to help organize and bound the area for subse-
quent analysis. The following discussion is summarized in Fig. E.1.
Objectives of Regulations
Regulations can have either social or industrial objectives. Social
regulations are generated to benefit society. The objective may be
creating an equitable or fair society, providing for clean air and water,
or ensuring a safe workplace. Industrial regulations are designed to
encourage efficiency and effectiveness and generally focus on pricing
policies and development and production processes.
Many industries are subject to social regulations. The Environmen-
tal Protection Agency and Occupational Safety and Health Administra-
tion regulations, for example, affect virtually all industrial concerns.
Government contractors, including defense, must comply with addi-
tional social regulations, such as the Davis-Bacon Act4 and fair
employment legislation.
Industrial regulations usually involve a single industry and are put
in place because the free market fails to achieve efficiency, effective-
ness, or product availability to the degree society wants. Industrial
regulations deal with fundamental decisions usually made by individual
companies: what to produce, entering or leaving the marketplace, the
quality of the product, and the price of the product. In this study, we
are concerned almost exclusively with industrial regulations as applied
to the defense industry.
Sources of Regulation
Many institutions are involved in the regulation and administration
of weapons acquisition, including the Congress and its related agencies,
the Office of the Secretary of Defense, the individual Armed Services,
other defense agencies, and related Executive agencies. In the tradi-
tionally regulated industries, there are agencies which specialize in the
administration of regulations. For example, the Interstate Commerce
Commission's primary function is the regulation of transportation.
However, in the weapons acquisition process the nature and roles of
the institutions differ. In some instances defense acquisition institu-
tions have both regulatory and administrative functions (such as the
DCAA), in other cases the processes of regulation and administration
are fulfilled by individuals, such as the procurement contracting officer
(PCO), the administrative contracting officer (ACO), and the program
4The Davis-Bacon Act ensures that union wage rates are used on most federal con-
struction projects.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Safety and health FAA airworthiness standards
OSHA chemical exposure standards
HObjectives
Social
Industrial
Congress
Institutions ? Executive
Instruments
Independent agencies .?
Judicial
Laws
Contracts
Regulations
Directives
Oversight
Enforcement
mechanisms H
Formal
Informal
Environment
Equity
Effectiveness
Efficiency
EPA air quality standards
State/local waste disposal limitations
- Equal employment opportunity requirements
Small business set-aside program
Military specifications
Testing requirements
Allowable cost rules
Weighted profit guidelines
Legislation: Competition in Contracting Act
Requirements attached to authorization/appropriations bills
GAO studies
f OSD: 10 activity
DCAA auditing
DoD Services: Contract management
OMB. Federal acquisition regulations
Other Executive OSHA(DOL): Workplace safety and health regulations
EPA: Clean Air Act, Clean Water Act
EEOC: Equal employment opportunity enforcement
Interpretation of Congressional legislation
Appeals process
Fig. E.1?A taxonomy of defense regulations
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
rDeclassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
154
manager (PM). Such officials are "dual hatted" in the sense that they
are both buyers of products and regulators of the firms that produce
the products they procure, but they typically have little or no influence
on the creation of regulations. This is but one of the unique features
of the DoD regulatory process.
Instruments of Regulation
The instruments of regulation are diverse. Legislation plays an
important role, but that is frequently expanded by items written into
individual contracts issued by government agencies. Furthermore, the
Department of Defense and its various agencies issue many regulations
and directives of their own. Finally, the body of effective regulation
tends to grow over time through an accumulation of the audit and
oversight procedures that are instituted by the various agencies. Thus,
the body of "regulations" controlling defense acquisition comprises all
the laws and directives written to date, with the exception only of
those that have been explicitly cancelled or superseded.
Enforcement Mechanisms
Formal penalties include termination of the contract, debarment
(inability to get a government contract for a period of time), or crimi-
nal penalties against the officers of the company. Informal penalties
also include additional regulation and public scrutiny. By comparison,
in the free-market the typical private buyer does not have the power to
exact criminal penalties.
Defense Industry Regulation Compared
With Other Types of Regulation
All industries are subject to at least some regulation. To get an idea
of how defense industries rank in comparison with other industries, a
relative level of regulatory effort (low, medium, or high) was applied for
each element in the taxonomy shown in Fig. E.1 to four industry
groupings. For this preliminary discussion, contract provisions are
included in the general category of "defense regulation."
1. All industry (the universe of commercial industry);
2. Regulated industries (such as electric and gas utilities which
are subject to a regulatory board that sets prices and quality
standards);
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
155
3. Government contractors (companies selling goods or services
to the government);
4. Defense contractors (in this sample, mainly large prime con-
tractors for major weapon systems)
Results are shown in Fig. E.2.
The criteria included judgments about and, where possible, rough
measures of the following four conditions: (1) the amount of legisla-
tion and other regulation to which each industry grouping is subject;
(2) the proportion of total industry transactions covered by regulation;
(3) the extent to which regulation constrains routine business deci-
sions; and (4) government spending on monitoring relative to industry
sales. It is, of course, true that individual judgments about items in the
matrix are open to debate, but the broad trend seems to be that in
comparison with industry in general, defense contractors face a higher
level of regulation from a wider variety of sources.
Many private industries must operate under a high degree of regula-
tion that influences what they produce and how it is priced; for exam-
ple, electric utilities face regulation of prices, quality and conditions of
service, and an obligation to provide service. While utility commis-
sions have the power to regulate both price and quality of service, in
practice they have devoted much more attention to price than to qual-
ity.5 By contrast, the government monitors both price and quality of
weapon systems. Moreover, there is a perception that the defense
industry is subject to a higher level of social regulation by virtue of the
dominance of the government contracting process, which by most stan-
dards is considered quite restrictive compared with the contractual con-
straints that are placed upon firms doing business in the nongovern-
ment world.6 Therefore, it seems plausible to observe that, on the basis
of this preliminary research, the level of effort devoted to the regula-
tion of the defense industry is greater than that of private firms which
are engaged in selling products to nongovernmental entities. Whether
the defense industry is more regulated than, say, the public utilities
cannot be resolved with any fidelity at this stage.
Government contractors are subject to more regulations that have
equity objectives (such as Davis-Bacon, Buy American, and EEO
6Alfred A. Kahn, The Economics of Regulation: Principles and Institutions, John
Wiley and Sons, New York, 1970.
6See Barry L. Shillito, "How to Implement Our Sound Weapons Acquisition Policies,"
Defense Management Journal, Fall 1971, who compared the few pages of public utility
guidelines he found with the several hundred pounds of defense regulations and con-
cluded: "The reality is that there are infinitely more controls in the so-called free enter-
prise environment of the major weapons systems contractor than there are in the con-
trolled environment of the public utility."
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
156
All
Industry
Regulated
Industries
Government
Contractors
Defense
Contractors
Objectives
Revenue
H
H
H
H
Social
Health and safety
M
M
M
H
Environment
L
M
M
M
Equity
L
M
H
H
Industrial
Effectiveness
?
H
H
H
Efficiency
?
H
H
H
Institutional sources
Congress
M
M
H
H
Judiciary
L
M
H
H
Executive
L
H
H
H
Instruments
Laws
M
M
H
H
Contracts
L-M
L-M
H
H
Warranties
L-M
L-M
M
H
Regulations
L
M
M
H
Directives
L
M
M
H
Inspections
L
M
M-H
H
Investigations
L
M
M-H
H
Administrative practices
L
M-H
M-H
H
Enforcement mechanisms
Formal
L
M
H
H
Informal
M
M
M
H
NOTE: L = low, M = medium, H = high.
Fig. E.2?Relative level of regulatory effort
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
157
regulations) than either private industry in general or public utilities.
It also should be noted that within the overall group of government
contractors, defense contractors have the additional requirement of
dealing with Federal Acquisition Regulations (FAR), the Defense FAR
supplement, and the whole range of military specifications and stan-
dards.
From this discussion, we could say that to some extent defense con-
tractors are subject to a higher degree of regulation than private firms.
But this says little about whether such regulations are appropriate or
for that matter inevitable. The regulatory provisions to which defense
contractors are subject apply because they are written into government
development and procurement contracts. Some of these provisions
might be seen in agreements between private buyers and sellers, but
any company can escape much of the burden by choosing not to sell to
the government.
Since defense contractors face a high degree of regulation for all
objectives except perhaps for environmental concerns, there is more
opportunity for regulatory objectives to be in conflict. For the Depart-
ment of Defense, charged with the task of enforcing these regulations,
opportunities for confusion abound.
There are also distinctive features of the defense regulatory process
that are not noted in Fig. E.2. First, in a traditional regulated indus-
try, a single agency typically administers the regulatory process. For
example, until airline deregulation, the Civil Aeronautics Board con-
trolled commercial airline routings and fares, whereas Congress paid
relatively little attention to how the airlines functioned. Congress is,
however, involved in regulation of defense contractors in considerable
detail, setting specific rules and procedures.
Second, since the traditional regulatory process involves fewer
actors, in theory the principal regulatory agency can attempt to pursue
a coherent strategy, which might involve for instance, trading off
higher prices for higher quality service. Because the defense regulatory
process is so fragmented, regulations are diffuse and sometimes con-
tradictory. For example, while DoD is encouraged to "Buy American,"
it also sometimes buys parts or development expertise from foreign
countries as part of the foreign offset sales program. Regulations are
often imposed without consideration of how they will interact with
other regulations and without provisions for evaluation or "sunset"
rules.
Third, in traditional regulation, different products?airline transpor-
tation, trucking, electric power, and banking services?are regulated
separately. Each of these industries responds to different regulatory
agencies which take into account the distinctive features of the
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
168
industry. In defense regulation, however, the only regulations tailored
to the product are performance specifications. Allowable cost regula-
tions and many other regulations are uniform regardless of what is
being acquired and regardless of the characteristics of the industry pro-
ducing it.
EFFECTS OF REGULATION ON WEAPONS ACQUISITION
The effects of weapon system acquisition regulation and administra-
tion may be examined on three broad categories of the potential costs
of regulation.7 We wish only to identify these classes of regulatory
costs and to leave any detailed consideration of their effect on defense
acquisition to future studies.
Government Administrative Costs include what one could call
"direct" costs, such as the costs of the audit and investigation agencies
in the Department of Defense and the military services. These costs
probably represent the smallest portion of the total costs and are the
easiest to measure.
Industry Compliance Costs are larger and more difficult to mea-
sure. For social regulations, there is a substantial literature on mea-
surement of these costs for commercial industry, which might be used
to develop methods for measuring such costs in the defense industry.
The compliance cost for industrial regulations is harder to measure,
and there has been less methodological work done. We found little
information on this type of costs in the available literature.
Incentive Structure Effects are the most difficult to quantify.
Yet it is important to understand that the body of acquisition regula-
tions as well as each incremental change in regulations or administra-
tion alters the incentive structure of the defense industry. For exam-
ple, in a cost-based environment, there is no particular incentive to use
the lowest-cost modes of production. Moreover, when profits are con-
strained, there may be less incentive to take risks and use innovative
approaches. Thus, regulations may have long-term effects on the cost
and pace of programs, the availability of innovative new technologies,
and the overall structure of the defense industry.
Who pays these costs? It seems reasonable to speculate that most
of the costs are paid for by the government?this is certainly true for
administrative costs and perhaps for other costs to the extent that they
can be charged to the government as part of a contract (known as
allowable costs). As an example of how these types of effects can be
7This discussion follows the organizing scheme in Murray L. Weidenbaum, "The
High Cost of Government Regulation," Challenge, November/December 1979.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27 :
-2,1A-RDP90M00005R000200080003-4
159
embodied in a particular regulation, Fig. E.3 classifies some (but by no
means all) of the potential effects of the new Competition in Contract-
ing Act (CICA). From the Services' point of view, this legislation has
resulted in considerable administrative burden. Despite its purpose of
creating more competition (and simultaneously it was hoped to reduce
regulation), the general perception among government administrators
and program managers is that CICA is "just another regulation." From
the program manager's point of view, the procedures required for,
among other things, a determination of the availability of multiple
sources or the justification for using noncompetitive procurements, are
seen as yet another set of obstacles to getting the program going.
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Government
Administration
Implementation
problems
(temporary)
Longer lead time
for contracts
Competition
advocacy costs
Industry
Compliance
Many costs not
yet visible
Higher proposal
costs
Incentive
Structure
Shifted risk
Data rights
Disruption of
planning
Opportunity for
new companies, but
more reporting
burden
Fig. E.3?Types of costs of regulation: CICA
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27: CIA-RDP90M00005R000200080003-4
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4 RAND/R-3578-AC
Declassified in Part - Sanitized Copy Approved for Release 2014/02/27:
CIA-RDP90M00005R000200080003-4