Key U.S. House lawmakers unveil Pentagon reform bill

WASHINGTON, April 23 (Reuters) - Leaders of the House Armed Services Committee on Thursday unveiled legislation to reform massive waste in the Pentagon's biggest weapons programs, joining a rising chorus of voices calling for change.

Representative Ike Skelton, chairman of the committee, said he looked forward to working with the Senate Armed Services Committee, whose leaders Senators Carl Levin and John McCain have introduced their own defense acquisition reform bill.

He said the collective drive to fix Pentagon procurement, an effort also supported strongly by President Barack Obama and Defense Secretary Robert Gates, could result in the most meaningful military reforms since the 1986 Goldwater-Nichols law that required the military services to work together more.

Skelton said the committee hoped to take the stand-alone legislation to the House of Representatives for a vote as soon as possible, rather than tying it to the annual bill that authorizes defense programs.

He said the legislation was based on years of experience, and sought to learn from past mistakes to "inject greater efficiency into the weapons acquisition system and truly ensure that we get the most bang for our taxpayer buck."

He said the bill tackled major weapons programs, which account for about 20 percent of Pentagon acquisitions, but the committee was also working on broader reforms to be introduced next year that would touch on services and other areas.

"This is just a first bite out of what we all recognize is a very wormy apple," said Representative John McHugh, the top Republican on the committee and a co-sponsor of the bill.

Congressional reform efforts are being closely watched by the Pentagon's top contractors, Lockheed Martin Corp (LMT.N), Boeing Co (BA.N), Northrop Grumman Corp (NOC.N), General Dynamics Corp (GD.N) and Britain's BAE Systems (BAES.L).

McHugh said the bill focused heavily on increasing oversight of programs in the critical initial stage, when most cost overruns were created. It also ensured "intensive care" of programs once they did run into trouble, Skelton said.

Representative Rob Andrews, who heads a special defense acquisition panel created by the committee last month, said the amount of waste in Pentagon programs was astonishing.

The nonpartisan Government Accountability Office estimated last month that cost overruns alone on major weapons programs amounted to nearly $300 billion, enough to pay the salaries of all military service members for 2-1/2 years, Andrews said.

He said there was "tremendous critical mass" behind the reform efforts in both houses of Congress, the White House and the Pentagon, which should help ensure its success.

Skelton said one-quarter of the provisions in the House bill were identical to those in the Senate measure, about half were similar, with the remaining 25 percent being different.

The House bill would require the defense secretary to designate an official to oversee the way costs are estimated for new weapons, how systems engineering is done and how a program's performance is assessed.

The bill also elevates the importance of competition throughout a program's lifecycle, independent cost estimates, and seeks to strengthen the existing Nunn-McCurdy law that kicks in once programs' costs exceed a certain level.

The House bill requires more information about what caused the cost overruns in the first place, and kicks the program back to its previous milestone for more review.

The bill also requires the Pentagon comptroller to review current mechanisms for weighing trade-offs among cost, schedule and performance in the acquisition of big weapons programs and submit recommendations for improving that process.

Unlike the Senate bill, the House legislation gives the defense secretary more leeway in determining how to structure the new oversight offices, and seeks to avoid adding more layers of bureaucracy, lawmakers said.

"We get more people with more resources and more authority involved in the process all along," said one committee aide. (Reporting by Andrea Shalal-Esa; editing by Carol Bishopric)