THE FEDERAL ACQUISITION SYSTEM: VIEWED FROM THE OUTSIDE LOOKING IN

Examples of $400-hammers and $3,000-coffee pots have initiated numerous audits and investigations, editorials, and jokes on late-night talk shows. However, this is not a recent phenomenon. The fear of profiteering from the sale of goods and services to the government is as old as the nation itself. History cites examples at Valley Forge, during the Civil War, the war with Spain, and World Wars I and II. The American public has looked with a judicious eye at selling to the government for quite some time, especially in the defense industry, where the thought of anyone profiting from war is especially disturbing. U.S. National Survey: Public Attitudes in Defense Management, published in 1986 as part of the final report to the president by the Blue Ribbon Commission on Defense Management (Packard Commission) reported, “four in five Americans think that defense contractors should feel an obligation, when doing business with DoD, to observe ethical standards higher than those observed in their normal business practices.” The report concluded that “the lack of confidence in defense contractors may affect public support for important defense programs, and thus weaken our national security.”

Jacob Goodwin, in the Brotherhood of Arms: General Dynamics and the Business of Defending America, relates the story of Harry Truman, then a senator from Missouri and chairman of a Senate committee investigating the nation’s defense program, during a visit to the Consolidated plant in San Diego in the early 1940s. Senator Truman, getting tired of hearing about the virtues of Consolidated’s latest aircraft, interrupted the owner, Reuben Fleet, saying, “Dammit, I want to see your books, Fleet. I’m not interested in your rise from rags to riches story.”

Over the past 50 years, American industry has become divided into two segments, i.e., contractors who specialize in government contracts and those who do not. However, industry as a whole has become more and more reluctant to participate in the defense market. In 1988 Dr. David V. Lamm of the Naval Postgraduate School published the results of a study conducted to determine why companies refuse to participate in defense contracts. The conclusion, which was based on a response of 427 of the 1,300 firms surveyed (33 percent), was that almost 50 percent of the responding firms indicated they did not want defense contracts. The most prevalent reasons they gave were burdensome paperwork and bidding methods, inflexible policies, and more attractive commercial opportunities.