William Lynn told the Senate Armed Services Committee that as the department increases personnel, it also will move toward more fixed-price contracts, scrutinize programs more closely and link incentive payments to contractors' performance.
The changes are part of a broad effort to bring under control an acquisition process that has been plagued with huge cost overruns, lengthy delays and a sharp decline in competition among a shrinking number of contractors.
At the heart of the problem, Lynn said, is a military looking for the latest high-tech aircraft and weapons systems.
"We seek exotic and unproven solutions to war fighting needs. Sometimes these can lead to breakthrough developments that can revolutionize warfare," said Lynn. "But far more often the result is disappointing initial performance followed by cost and schedule overruns to correct those performance failures."
He said the revamp would add more than 9,000 contracting, cost estimating, pricing and contract oversight positions at the Defense Contract Audit Agency and Defense Contract Management Agency. Another 11,000 would come from the conversion of contractor positions to federal civilian jobs. The jobs would be added between 2010 and 2015.
As a result, he said the Pentagon would be better able to know what it is buying, and that it is getting what it is paying for.
Both the House of Representatives and the Senate are considering legislation that would increase acquisition oversight.
House Armed Services Committee Chairman Ike Skelton, a Democrat, said his panel will be discussing legislation Thursday that would require the Pentagon to designate an expert to assess program performance, create a system that would give problematic programs greater scrutiny and require a new system to track the cost increases and scheduling delays.