GAO finds DOD Middle-Tier Acquisition Pathway Needs More Oversight

Congress has long had concerns that Department of Defense procurements did not act fast enough to get innovations in the hands of our nation’s warfighters. Section 804 of the 2016 National Defense Authorization Act addressed this concern by requesting the creation of procurement pathways for rapid prototyping and rapid fielding. To achieve this aim, a “middle-tier” DOD procurement pathway was created. The roll-out of this middle-tier pathway has been complicated and GAO recently decided to look at why.

GAO was asked to examine DOD procurement process and conduct a performance audit of DOD procurements from March 2018 through June 2019. GAO’s findings were released on June 5. While GAO discusses the oversight of DOD procurements in general, one especially important portion of the report was focused on the implementation of the “middle-tier” acquisition process.

The goal of the middle-tier acquisition program is to have a DOD acquisition pathway that will not be as restrictive as other DOD acquisitions and focuses on contracts or programs that will only take two to five years to complete. The pathway should focus on “rapid prototyping” and “rapid fielding.” Additionally, the middle-tier acquisition pathway simplifies the acquisition process by allowing “programs to be exempted from the acquisition and requirements processes defined by DOD Directive 5000.01 and the Manual for the Operation of the Joint Capabilities Integration and Development System.” In theory this middle-tier pathway should allow much needed products and innovations to get into the hands of soldiers in an amount of time that would not render the innovations outdated, while also providing a streamlined acquisition process for contractors.

It is important to note that the most recent draft NDAA would amend section 804 of the 2016 NDAA to insert a dollar threshold requirement for middle-tier pathway programs of $300 million for total expenditure on research, development, test and evaluation, or $1.8 billion in eventual total expenditure for procurement including all planned increments or spirals. Anything above those thresholds would likely fit the “major defense acquisition program” definition which is not the type of program the middle-tier was created for. The amendment would also allow the Secretary of Defense to waive the expenditure requirement or five-year cap for programs in the middle-tier pathway.

In March 2019, military departments began to utilize the middle-tier acquisition pathways. According to GAO’s report, there are currently thirty-five unclassified middle-tier programs in progress, and presumably more on the way.

Despite the middle-tier pathway being used by various military departments, DOD has yet to determine certain critical aspects of the middle-tier program’s oversight.

The 2016 Fiscal Year NDAA directed the Under Secretary of Defense for Acquisition, Technology, and Logistics (Under Secretary) to establish DOD-wide guidance, within 180 days, for what would eventually become the middle-tier procurement pathway. In the process of attempting to create those initial guidelines, DOD found that reaching any agreement between the different military departments was difficult. The varying military departments themselves worried the proposed guidance was too burdensome and could not agree on a single set of guidelines.

Consequently, the first initial guidance documents were not released until April of 2018, and they were only broad guidelines instead of the final guidelines requested by the NDAA. The decision was made to have each military department come up with middle-tier acquisition policies and procedures individually until a final guidance document was created. Subsequent broad guidelines were sent out by the Under Secretary, but no overarching final guidelines. At the time of GAO’s report, each military department continues to generally use its own middle-tier acquisition guidelines.

Without the Under Secretary’s official guidance for the program, GAO found a stark lack of consistency in its recent review. GAO reported that “DOD is not well positioned to ensure that approved middle-tier acquisition programs represent sound investments and are likely to meet the objective of delivering prototypes or capability to the warfighter within 5 years,” which is the core objective of the entire middle-tier pathway.

GAO does recognize that for the ease of contractors everywhere and to meet the government’s aims, the middle-tier acquisition pathway must continue to have streamlined processes outside of normal DOD acquisitions processes. GAO warns that until the Under Secretary releases clear final guidance—as was requested by the fiscal year 2016 NDAA—DOD risks not understanding how the programs in the middle-tier pathway are performing, thus undermining the goals of the pathway.

GAO recommended that the Under Secretary address these issues in an upcoming final guidance, and issue universal metrics for all departments to use. It appears DOD does plan to take action by releasing metrics by the end of 2019.

Updated guidance from DOD could result in changes to compliance, how performance is judged, and deadlines. Although this may alter how the middle-tier pathway currently functions, it does not mean the entire pathway will be turned upside down. GAO made it clear that any actions taken by the Under Secretary should continue to focus on keeping the middle-tier pathway as a separate, more streamlined acquisition pathway as compared to typical DOD acquisitions.