3:32 PM EDT

Michael N. Castle, R-DE

Mr. CASTLE. Mr. Chairman, let me just start by thanking the gentleman from Florida and the gentleman from Pennsylvania and their staffs for their exemplary work on what is not easy legislation. What I am about to discuss is something that has been brought more to light this spring than it had been brought heretofore, but I think it is documented enough that we should try to add it to this bill. It is a simple but, in my judgment, much-needed amendment to the legislation before us today.

Currently the Department of Defense spends over $200 billion annually to acquire products and services from defense contractors, including everything from spare parts to major weapons systems. In an effort to encourage contractors to perform at the highest level possible, the Department often gives its contractors the opportunity to collectively earn billions of dollars through monetary incentives known as award fees. [Page: H4272]

Unfortunately, while there is no doubt that U.S. weapons programs continue to be the best in the world, the Department's acquisition process has at times run into problems such as dramatic cost increases, late deliveries, and significant performance shortfalls, wasting billions of dollars in critical funding.

In response to these setbacks, Congress recently asked the General Accountability Office, known as GAO, to study the Department's use of incentives and the role they play in the acquisition system. On April 5, the GAO reported that the Pentagon's current incentive practices often do not hold contractors accountable for achieving desired outcomes and routinely undermine efforts to motivate contractor performance.

Specifically, the GAO noted that the Department regularly provides these bonuses to contractors, often giving them second, third and fourth chances, despite the fact that the contractor's work does not fulfill the Department's expectations.

As part of its report, the GAO issued detailed recommendations for how the Department could improve its strategy for using incentives to motivate exceptional performance. The Pentagon has concurred with the majority of GAO's suggestions, and during consideration of the fiscal year 2007 defense authorization bill in May, I successfully included an amendment by voice vote that would implement these reforms.

While the language included in the authorization bill is a crucial step forward, the effectiveness of these changes will ultimately be determined by how well GAO's recommendations are executed.

The Pentagon recently identified significant cost overruns in 36 of its major weapons systems. With such costs rapidly increasing, my amendment ensures that none of the funds provided in this bill will be used to continue the wasteful incentive practices identified by GAO.

As the Department moves forward in complying with GAO's findings, this amendment will provide an additional safeguard, to make certain that these funds are not wasted in violation of the new incentive guidelines.

Mr. Chairman, cost increases and business management weaknesses damage our government's ability to provide our men and women in the military with the resources to keep us safe. While we obviously have a lot of work ahead of us to improve the efficiency of military spending, I believe this amendment is a simple way to work with the Department to make certain that incentives are being used to maximize its return on investment and provide soldiers with needed capabilities at the best value for the

taxpayer.