The GAO Recommends DOD Increase Oversight of Acquisition Reforms

Published: July 17, 2019

Federal Market AnalysisAcquisition ReformUSAFARMYContracting TrendsDEFENSEGAOInformation TechnologyNational Defense Authorization ActNAVY

DOD’s oversight of OTAs needs improvement.

Back in June, the Government Accountability Office (GAO) took a look at the Department of Defense’s progress implementing acquisition reforms that could help it keep pace with rapid technological change. The GAO’s investigation took place in compliance with provisions in several recent National Defense Authorization Acts that are intended to streamline acquisition oversight and help the DOD field capabilities faster.

What the GAO found was that the DOD’s response to the legislation has been mixed. For example, according to the GAO, “the (DOD) has made progress implementing reforms to restructure the oversight of major defense acquisition programs (MDAPs) [by shifting] decision-making authority for many programs … from the Office of the Secretary of Defense to the military departments.” Pushing decision-making authority down to the program level has been a key element of increasing oversight as program managers are more closely in tune with the status of their efforts and what is necessary to keep their programs on track. The GAO noted in this regard that whereas in FY 2014 the military departments themselves administered 40 MDAPs by March FY 2019 that number had doubled to 80 programs. The number of MDAPs administered by the Office of the Secretary of Defense, meanwhile, has dropped to just 10.

On the other hand, the GAO found that “no programs have been required to have cost and fielding goals set under DOD’s new process and DOD has formed a working group to determine when to delegate risk assessments to the military departments,” meaning the reform effort is still a work in progress. As the GAO notes, “without consistent oversight, DOD is not well positioned to ensure that these programs—some of which are multibillion dollar acquisitions—are likely to meet expectations for delivering prototypes or capability to the warfighter quickly.”

The GAO recommended in response that the DOD “identify the types of information needed to select and oversee middle-tier acquisition programs consistently, and clarify the roles and responsibilities of the Office of the Secretary of Defense and the military departments for acquisition oversight.”

None of these difficulties has stopped the different parts of DOD from pushing ahead with the use of Other Transaction Authority (OTA) for prototype capabilities. From FY 2016 to 2018, the DOD awarded OTA contracts valued at $52B. Spending against these contracts has proceeded much more slowly, totaling only $8.5B over the same time period.

The FY 2016 to 2018 trend in awarding OTA contracts for specifically for IT follows a similar pattern, with DOD spending over $500M on OTA contracts for IT requirements.

Spending on OTAs also varies across the DOD. For example, the Army and Defense Agencies are awarding far more OTAs than the Air Force and Navy, but the Air Force is spending more. In other words, contractors winning Air Force OTAs earn a higher percentage of available contract dollars than OTA winners anywhere else in DOD.

Returning to the GAO, Defense authorities concurred with the need to exercise greater oversight over OTA contracts for all types of prototype requirements. Whether this translates into greater transparency of OTA use trends remains to be seen.