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Air Force Presses Acquisition Changes; Incentives Offered On Combat Rescue Helo

(Breaking Defense; by Colin Clark) If Sikorsky reaches the next Combat Rescue Helicopter milestone early, the Air Force will reward the Lockheed Martin subsidiary and “immediately go ahead to” production.

“We’ll see how this goes,” Lt. Gen. Arnold Bunch, the military deputy for Air Force acquisition, said this morning, saying the effort is an experiment the service was watching. Sikorksky is offering the HH-60W, a new version of the Blackhawk. In May, Lockheed issued a press release noting the program had met “several milestones on or ahead of schedule.”
“We’ll see if there are ways we can apply it in a broader sense,” he said at an Air Force Association breakfast.

Bunch also told several hundred Air Force aficionados that the service is pressing ahead with efforts to speed and simplify its acquisition system, taking its Rapid Capabilities Office as a model. He first unveiled this effort in an exclusive interview with my colleague Valerie Insinna the day after the AUSA conference ended.

Today, he said he’s taking the RCO charter and trying “to inculcate that culture across the acquisition enterprise.” The idea is to have fast-moving programs like the B-21 bomber move to production as quickly as is reasonable. Small teams will run programs. The new RCO-like structures will each be headed by a board of directors comprising the Air Force Secretary, Chief of Staff, and the head of acquisition. If the Office of Secretary of Defense manages the program , the undersecretary of defense for acquisition, technology and logistics will also be on the board.
This is all part of the broader push across the Pentagon, largely driven by Sen. John McCain‘s acquisition reform legislation, to bolster the services’ roles in managing much of the military’s weapons systems.

Bunch also signaled major changes to the ways the Air Force buys and manages major software programs. While he admitted the service will probably never get to the levels of speed and flexibility that commercial industry boasts, he did say the service is trying hard to approach it.

“Many have asked if we are going to go exactly to where industry goes in this area. I believe we are going to get closer,” Bunch said. In some areas, such as nuclear weapons and command and control, they may not get nearly as close as they might with less sensitive software. Air Force PEO and CEO roundtables met last week and discussed “agile software development” and resiliency and “the importance of protecting your intellectual property from software threats.”

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Big Impact with Small Changes to Defense Acquisitions

by Dan Helfrich; September 29, 2017 

A study in the New England Journal of Medicine revealed how a set of small changes a group of hospitals made—such as everyone in the operating room introducing themselves and their role in the surgery improved patient care. These study results made me think of what small changes the federal government could make in how it buys goods and services that could bring greater innovation and boost mission outcomes.

Here are three small changes to federal procurement that could lead to big impacts for the government:

Procurement Toward People Not Resumes

Some contracts continue to have the same experience and education requirements year over year. But some of the talent you need may be younger, more skilled at digital or mobile tech. These long-standing, narrow evaluation methods requirement may mean your agency is missing out on innovative, critical talent.

Take Facebook Chairman and CEO Mark Zuckerberg, for example. He has less than 13 years of formal work experience and no college degree. He has, however, been doing computer programming for more than 20 years, developing programs and using machine learning since high school.

Obviously, Zuckerberg is a bit of an extreme example, but my point is there are a lot of young, digitally savvy people—like the 17-year-old who won the most bounties at the recent Hack the Air Force event—who have the tech chops but maybe not the formal career history or education. But that doesn’t mean they aren’t what you may need.

How can you tweak those requirements to get the talent and skills your agency needs? Are there specific skills needed to achieve the project’s objective? Is experience at a tech company or a private sector cyber firm that could be of equal or greater value?

Don’t lose out to top talent who have the chops to solve your problems, but don’t have a traditional background. Your future contract professionals may be at Teach for America or at the Peace Corps right now or coding the next big app in their high school computer class—value those experiences and start thinking differently.

Embrace Outcome-based Contracts

The world of professional services is rapidly changing—starting with how contracts are set up. More than 50 percent of the work we do with private-sector clients has some sort of a value-based or share-in-savings component to it. For example, we agree to only get paid “x” if “y” goal is met. Industry then has skin in the game. The risk is on us to deliver on the outcome.

For the government agency, the key aspect to value-based contracting is having decent baseline measurements. Classic incentives are also another way to encourage greater outcomes. If your agency has that decent baseline data, contracts can be structured so that you are not paying out as much to your contractor but instead your contractor earns a percentage of the savings.

One recent government procurement that includes some share-in-savings language is the Human Capital and Training Solutions (HCaTS) program that is partnership between Office of Personnel Management and General Services Administration. HCaTs is looking for the “best value customized solutions for human capital management and training requirements.” Including a share-in-savings approach will help them get there.

The kinds of people you want to take on your most complicated problems are going to be willing to put skin in the game. One way to find those kinds of people is before your next procurement, ask industry participants to give you some ideas on what types of share-in-savings arrangements they’d be willing to do. See who is willing to put some skin in the game and is here to make great outcomes happen for you.

Allow Agencies to Earn Small Business Credits for All Contract Types

Small companies do work for the government regularly. Sometimes as the prime, sometimes as the sub. In many cases, the work small businesses do as a subcontractor is just as important as a prime. However, agencies only get credit when the small business is the prime.

If we want more collaboration, more innovation, the government can encourage industry to bring in small businesses more often. One change would be to allow agencies to take small business credit, toward their 23 percent goals, for at least their first-tier subcontractors.

For many small businesses, their ability to scale is highly dependent on working with a partner with deep domain and customer knowledge and expertise. Large and small businesses should consider coming together to deliver the work in the best way that serves the client and brings value—and not focus on forcing percentages to meet a set requirement.

There are more ways for service providers—large, medium and small—to work together based on the agency’s desired outcomes and the corresponding deliverables and innovation needed. For example, Medallia is a customer experience software platform that many leading brands use. We’re working closely with them on their first government project. Yet, our client doesn’t get any “credit” for working with them.

More can be done to encourage this type of company—innovative, new-to-government market—to do business with the federal government. One option is to incent the current industry base to bring new and innovative companies into the mix through a type of a protégé program, which could bring greater innovation into government.

What small changes could your agency make in the way it considers the people it hires or contracts with? How could it better incent innovation in industry? There’s a lot of opportunity for small changes that can make a big impact for your agency’s mission.

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Congress, Let Defense Innovators “Breathe Free”

The article below is written by Army Col Richard Hough, who is a senior strategic study fellow in the Army Future Studies Group, gives an in-depth analysis on what’s wrong with the defense acquisition system and how to improve it. I agree with all the conclusion the Col makes in his article, particularly with the need for more rapid decision making. I still believe the fundamental problem with the acquisition community is that Sr. Leadership lack a basic understanding the process. If you don’t understand the basic fundamentals of the process, you can never lead the acquisition community and reform the process. They believe the process is the problem, not them.

(Breaking Defense) America’s defense industry is struggling to boost its innovative entrepreneurs, who need freedom and resources to come up with creative ideas.

Unlike other industries, defense innovators do not benefit from capital incentives to encourage research and development investment. Instead, innovative defense concepts have traditionally been nurtured in an environment combined of countercultural activity, legislative prompting, necessity (often fear), re-orientation and re-organization; which are rarely effective when implemented in isolation. Outlined below is a summary of the current state of the defense acquisitions system and how Congress must help us overcome the status quo.

During the interwar period, George Orwell noted “We have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men.” In that vein, let’s look at defense acquisitions and congressional oversight. It is obvious that:

  • Decades of tweaking the system based on the limited findings of panels and oversight committees has resulted in no perceptible cultural change.
  • We do not use our broader cultural strengths and corporate traditions to inform acquisition policy.
  • We have lost sight of long-term and emergent threats while becoming overly focused on current contingencies.
  • Appropriations and regulatory requirements have created a consensus-based decision-making environment that is risk-averse.
  • The acquisition workforce understands that excessive layers of bureaucratic review provides protection from direct accountability.

What is less obvious is whether or not Congress understands its contributions to defense acquisition shortcomings and the resulting dilution of authority and accountability.

No Perceptible Cultural Change 
The 2017 National Defense Authorization Act told the Pentagon to split the undersecretary of acquisition, technology and logistics into two separate jobs: undersecretary for acquisition and sustainment; and a new undersecretary for research and engineering (R&E). The new offices, particularly the R&E, are intended to increase innovation and “change the culture.”

James O’Bryon, former deputy director of Operational Test and Evaluation, questioned whether this was the best approach, essentially taking us back 40 years ago when the Pentagon had essentially the same setup: “I’m not sure, however, that returning to where we were in 1986 is the total answer.” O’Bryon ponders, “So what are we possibly missing in this process as it grinds away?” I would answer that what is missing is honest self-reflection within Congress on its contribution to sustained cultural influences within the acquisition system.

Our Broader Cultural Strengths 
Congressional testimony and defense reports have noted that government constraints on profit margins have compromised acquisitions because, “culturally, we have evolved to a point where the system would rather pay $1 billion and 5% profit for a defense good, than $500 million and 20% profit” from a more innovative supplier.

Overhauling the Code of Federal Acquisitions Regulations (FAR) is overdue. The FAR seeks to promote an accountable system that protects U.S. taxpayers, but it has become the epitome of a bureaucratic risk-averse culture that undermines innovation, partnerships, accountability, and fiscal responsibility.

Congress expects the services to improve relationships with existing and potential defense industry partners, but corporate and government regulators must translate “up to 186,000 pages with over 2,000 pages” added annually by various federal departments.

As a result, current defense firms have traditionally focused their innovation delivery models simply on meeting what the government wants. But what if what the government wants isn’t what it needs?

According to John Kenkel and Andrew Jesmain, of PA Consulting Group, this creates problems:

First, industry has not been incentivized to create new ideas and must deliver solutions defined by the customer, who often lacks awareness or understanding of the array of solutions industry is capable of providing. The result of this paradox is a laundry list of programs and solutions that have been over budget, delayed or canceled outright. Second, this reality creates a sharp contrast in approaches to research and development that differentiates defense firms from their commercial counterparts.

For the Army, these “failures” have cost tax payers billions and are the most obvious reason why oversight is overly centralized. Since 2011 alone, the Army has ended 20 programs, delayed 125 and restructured 124 others.
Figure 1: Major Army Defense Acquisition Programs Cancelled

While acquisition decision-making must improve, sequestration and the focus on present operational requirements hasn’t encouraged bold decision-making on new program initiation either. Plagued by bureaucracy, budget cuts, and canceled programs, mounting legacy equipment costs, and the lack of a major operational concept for over a decade, the Army just doesn’t know what to ask for.

Until the service explores the art of the possible with Congress, industry, and academia, requirements will “have — far too often — proven too ambitious, too expensive or too inimical to innovation.”

Meanwhile, the Pentagon has used various non-traditional acquisition approaches — Section 804 Middle Tier Programs — to avoid establishing new long-term acquisition programs. However, Congress is concerned with the near-term productivity and value of such programs. Unfortunately, where their scrutiny should lie is on the impacts on basic research and how such programs sustain long-term overmatch capabilities.

Losing sight of long-term threats
The good news is Army executives are embracing change. Thomas Russell, deputy assistant secretary for research and technology, says he’s seeking “innovations from industry and other partners wherever possible” to guarantee success of the “most important” acquisition programs. Acting Army Secretary of the Army Ryan McCarthy says that, “the Army must also focus efforts on modernizing today to be ready to fight tomorrow, against increasingly capable adversaries and near-peer competitors”. But any attempt to channel near-term innovation delivery into a disciplined long-term strategy is shortsighted.


At this juncture, when 25 percent of Army acquisition spending is invested in pre-1991 programs and 55 percent in 1991-2001 programs, near-term program changes cannot overcome the lack of a long-term strategy. The “most important” thing the Army can do is to work with Congress to fund a long-term strategy.

Over the last 15 years, the Army has prioritized near-term readiness and equipment needs to combat non-state actors. This has limited its ability to modernize so it can engage in high-end  combat against near-peer challenges.

Meanwhile, the Army is facing increased sustainment costs and reduced funding for concept development and new programs. In turn, major program failures have undermined the Army’s ability to: encourage innovation by major defense partners; solidify a strategic concept; and, formulate consensus on a long-term procurement strategy. If the Army maintains this “demand pull” approach, over an extended period of time, the “likelihood of generating disruptive capabilities” will decline and lend itself to fear-based decision-making in the future.

A Risk-Averse System
In the 2016 NDAA, Congress established the Section 809 Panel whose initial findings include identified influences that Congress must reflect on if real progress is to be achieved.

As an independent panel with credible qualifications, Section 809 Panel has described in their initial report that those operating within the system respond to Congress in ways that Congress fails to recognize or appreciate. Overly complex laws and regulations result in suboptimal risk-averse decision-making. Excessive hearings on non-traditional acquisition pathways have undermined prototyping of new systems; buying commercial off-the-shelf items; and created cultural barriers that undermine technology companies from working with the DoD. And, the “acquisition workforce understands congressional intent thru bureaucratic reviews, budget cuts, hiring freezes, salary freezes, furloughs, continuing resolutions, sequestration, hearings, and statements that it must change.”

While Section 809 Panel has found several other shortcomings and conclusions unrelated to Congress, its final report, due early next year, can highlight that cultural change must start at the top.

Bureaucratic Review Shields Failures From Direct Accountability
Within the acquisition enterprise decision-makers have multiple layers of bureaucracy and accountability. A single Army decision may cross four multi-star organizational boundaries and be subject to 10 flag officer reviews. The requirement is generated by one TRADOC organization, ranked by another, and then transmitted by a third, before senior Army officials review it during three committees.

Why? The obvious answer is a lack of trust and misplaced values imposed at the top of the acquisitions enterprise – authorizations and appropriations.

Overly Prescriptive Laws Undermine Trust
In an effort to highlight how present legal constraints undermine the miltiary’s ability to leverage corporate advantages or to seek disruptive technologies, let us review Section 219 of the 2017 NDAA.

DoD lab directors are permitted to use not less than 2 percent but not more than 4 percent of all funding available to the lab for “off-roadmap”, or disruptive, technologies, according to Section 219, . While the authorities may be helpful, those funds are rarely used because they are only a fraction of those required for bold initiatives without having to seek outside funding — often from PMs — where other priorities and funded near-term concepts trump untested concepts.

Various studies have recommended increasing lab directors’ flexibility and Congress improved a previous 3 percent cap to 4 percent. But we will fall further behind civilian researchers and potential competitors unless we think more creatively.

Congress must clarify the long-term concepts and acquisitions strategies governing DoD weapons buying. Once they are better defined, congressional oversight can then lend itself to overcoming sustainment engineering of existing legacy systems and the risk-averse culture that maintains it.

Additionally, Congress should implement “succeed-fast” and “fail-fast” policies regardless of a system or subsystems Technology Readiness Levels (TRLs). A principle reason why Section 804 innovation initiatives remain relevant is that they are one of the few means available for maturing technologies along such lines. If “fast-fail” policies had been applied to long-term programs the Army might have avoided the numerous failures of major acquisition programs over the last two decades.

Also, Congress should

  • Identify and eliminate internal influences affecting DoD’s risk-aversion culture.
  • Eliminate line item acquisition funding. Retract or cut FAR, eliminate statutes, and reform NDAA development processes.
  • Incentivize corporate and defense decision-making to drive modernization concepts and capabilities development.
  • Increasing lab director authorities to fund disruptive programs.
  • Return acquisition funding to historical norms, and, program for multiple years. Expand limits imposed on acquisition funding authorities across the board.

As we move forward into the twenty-first century, we must put twentieth century bureaucratic practices behind us. In a more complex world trust is the only means of establishing an acquisition and defense strategy capable of avoiding the “we aren’t fearful enough” drumbeat for defense innovation. Like other industries, defense acquisition innovation must recognize that “inspiration flows best when individuals ‘can breathe free,’ thinking creatively without limits of fear.”

Army Col. Richard Hough is a senior strategic study fellow in the Army Future Studies Group. The opinions, conclusions and recommendations are those of the author and do not reflect the views of any entity of the U.S. government.

Senate Ask Pentagon for List of Damage from Continuing Resolution

(The Hill) Senate Armed Services Committee leadership want fellow lawmakers to be very aware of the affects an incomplete fiscal 2018 budget will have on the military.

Sens. John McCain (R-Ariz.) and Jack Reed (D-R.I.), the committee’s chairman and ranking member, on Tuesday asked Defense Secretary James Mattis to prepare a list of the damage a three- and a six-month continuing resolution would have on the Pentagon.

A continuing resolution, which freezes current funding levels and prevents any new programs from starting, “will result in billion of dollars in cuts to the defense budget from last year’s level — cuts that the Department of Defense can ill afford at a time of diminished readiness, strained modernization, and increasing operations,” the senators wrote in a letter released Wednesday.
McCain and Reed want the list by Sept. 8, saying “we believe it would be prudent to have a concrete understanding” of a continuing resolution’s impact on military branches, defensewide agencies and combatant commands.

Lawmakers return from August recess next week to tackle the fiscal 2018 National Defense Authorization Act (NDAA) before the 2017 budget expires on Sept. 30.

The Senate is expected to consider the NDAA shortly after it returns.
“Given the limited remaining work period for both the House and Senate prior to October 1st, and the difficulties of negotiating and enacting a major bipartisan budget agreement, it is very likely that the federal government will begin the fiscal year on a continuing resolution yet again,” the two wrote.
Mattis has said that passing a continuing resolution is “about as unwise as can be,” because frozen spending levels affect military readiness.

Top 10 Acquisition Trends of FY17

(Federal Times) As the final push for fiscal 2017 contract obligations comes to an end, it’s helpful to take a step back and assess the contracting environmental trends that have emerged over the past year. Each trend lends itself to further study, so here’s a high-level look at the top 10.

1. Federal sector spending has bottomed out, with anticipated growth.

Following years of declining spending, it is beginning to appear like this decline has bottomed out, with a growth in federal spending on the horizon. While there is considerable talk, firm steps are in motion for increased contract spending, particularly in defense, with reduced civilian agency spending. Clearly, a reevaluation is occurring from the dramatic budget cuts proposed for many civilian agencies, while the Department of Defense will reap increases in the short term. 

2. Incumbent “win” rates are down.

This is due to a variety of factors, but primarily because government customers are looking for financial savings and simply do not see the “best value,” as compared to the past, in the long-term relationships and historical knowledge that have been traditionally offered by incumbent contractors.

3. More and more, government contractors are branching out ― away from government.

Some firms are successfully branching into alternative commercial or state or local government sectors, as opposed to focusing their business solely on federal government contracting. From a business standpoint, it makes sense that firms would attempt to diversify their portfolios when one significant part of their business is in decline, which the federal sector has experienced for more than five years.

4. The job market is improving, but filling these positions is becoming more difficult.

Today, there is an improved acquisition job climate, but organizations are having difficulty obtaining talent. Companies are hiring — particularly for highly skilled positions in cyber, technology and acquisition; that is if they can find talent to fill them.

5. The use of OTAs is on the rise.

The DoD’s Defense Innovation Unit Experimental has rediscovered other transaction authority agreements, and the use of OTAs as an alternative to traditional contracting is increasing. However, whether long-term cultural changes, along with significant time or money savings, are the result of the increased use of OTAs over traditional Federal Acquisition Regulation–based contracts is not completely clear.

6. Category management continues in the form of contract vehicle consolidation.

The impetus provided by the last administration for category management continues. One need only look at how governmentwide acquisition contracts and the Federal Supply Schedules are used against new, standalone awards to see how this is taking shape. However, this begs the question: How many contracts is “enough,” particularly under a shared services model?

7. Reliance on cloud-based services is increasing.

There is now an increased reliance on cloud-based services, with a corresponding decrease in reliance on centrally owned and operated computer hardware. Bottom line: Agencies don’t want to own and maintain IT equipment that takes too long to acquire, grows out of date too quickly and continues to drop in price. The uniqueness of agency needs and their security requirements as important considerations appear to be losing ground as these services can be further commoditized.

8. There is a wider prevalence of technology tools from requirements to acquisition.

Wherever we look, new tools and products are coming to market, intended to make our lives easier. This certainly impacts the nature of the requirements being developed, as well as the process in which their acquisition is conducted. From analysis, reporting and meeting overall needs, technology is becoming evermore the “disruptive” factor for all of us today.

9. Some form of further “acquisition reform” is inevitable.

Everyone from the hallways of Congress to the Section 809 Panel (and other panels) to those who implement both in government and industry acknowledge things must change. However, everyone “owns” this problem, and as such it will take the entire community to address it. From the practitioners to the legislators, all will need to make compromises, or the conversation will simply continue for years to come.

10. Acquisition skill sets are merging.

As the complexities of the process and the technology available to meet them increase, today’s contract managers wear many hats. They are increasingly performing the duties of project, supply chain, cost, proposal and subcontract managers. Operating within the environment of an entire acquisition team raises existing skill needs but simultaneously creates efficiencies. The new Contract Management Body of Knowledge is reflective of this reality.

It has been a tumultuous year. In many ways, acquisition has been on pause, as priorities of the new administration and controversy take center stage. When federal leadership eventually gets back around to acquisition, this list may change. In an outsourced government, nothing is more important than to deliver services to citizens effectively.
Michael Fischetti is the executive director of the National Contract Management Association.

By: Michael Fischetti

Dated: 8/25/2017

Less Acquisition Reform: Focus On Fundamentals

(Breaking Defense) Once again, America faces the prospect of a budget showdown come September. Defense companies are getting ready for the possible disruptions that attend. And, of course, Pentagon budgeteers, led by new Deputy Defense Secretary Patrick Shanahan, are rebuilding the fiscal 2018 request and preparing for disruption to the last of the 2017 spending. One of the canniest acquisition experts around, Terry Marlow, penned this piece for us trying to look beyond today’s budget disruptions and addressing that wonderful old chestnut, acquisition reform. Does reform matter as much as realistic budgeting? Marlow was senior advisor to former Air Force Secretary Michael Donley; before that he handled acquisition policy for the powerful Aerospace Industries Association. What’s his argument?

When corporate CEOs talk about concentrating on improving “blocking and tackling,” they are referring to getting business fundamentals right. They have found that if their companies can’t perform the fundamentals well, there is little else that can be done to ensure success. The same is true in the federal government. Any organization seeking better performance must first concentrate on getting the “blocking and tackling” right.

Terry Marlow
DoD just doesn’t seem capable of focusing on acquisition “blocking and tackling.” After decades in the works, defense acquisition reform long ago reached the stage of diminishing returns. Each new round results in the acquisition process becoming more complex, cumbersome and inflexible. There has been no corresponding long-term improvement in cost, schedule and technical performance. DoD needs to go back to square one and get the fundamentals right.

Continuous review and adjustment of the acquisition process has become a cottage industry that produces tinkering, but little discernible progress toward “better, faster, cheaper.”  This tinkering should be throttled back and the existing process given a chance to work undisturbed while renewed focus is placed on a few fundamentals.

Having trained and experienced experts in acquisition leadership positions is the most important fundamental to successful military acquisition programs. We’ve made progress, but continued emphasis is needed to ensure successful recruiting and retention of world-class experts.

Just as fundamental is realistic budgeting that must be accompanied by long-term budget stability. However, budget realism has been a well-recognized failure in defense acquisition since the early days of the modern acquisition reform movement. In the early 1980s, former Defense Secretary Frank Carlucci referred to this problem as a failure to “budget to most likely cost.”  At the time, many believed cost growth was the result of inaccurate cost estimating and poor program management. However, what was perceived as cost growth was usually the result of deliberate underfunding in an effort to squeeze more programs into the limited budget. Later, when the budget was inevitably exceeded, the illusion of poor management and cost growth was created.

Experience has demonstrated that seeking to force down budgets and accept increased cost risk to enable the funding of additional programs is a flawed strategy that should not be tolerated.  When program managers are handed inadequate budgets, the result is usually increased technical problems, increased schedule slips, and increased costs as they try to manage programs within the constraints of inadequate budgets. Unfortunately, by the time the true costs become apparent, the decision-makers have moved on and their successors are left to deal with the “cost growth.” That usually means increasing the budgets to more realistic levels.

Underfunding of programs and the resulting budget overruns go beyond damaging individual programs. The associated publicity undermines public confidence in the entire defense acquisition process, and, I believe, it can also foster public doubt in the military’s ability to carry out its broader responsibility – its warfighting mission.
The United States is about to enter another cycle of tough debates over military budgets as demand for federal funding for non-defense programs grows and rising interest rates take a bigger bite from the annual budget top line to pay the costs of the national debt. It is a problem that is likely to worsen as the nation faces increasing demands for re-capitalization and modernization of military hardware necessary to fend off military threats after 15 years of war.
Competition for federal funds will once again bring decision-makers face to face with the pressure to lower budgets for individual military programs. The Pentagon must focus on sound “blocking and tackling,” and resist the pressure to underfund these programs. Business as usual will jeopardize the success of acquisition reforms and endanger U.S. national security.

By Terry Marlow

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When Amazon Meets Defense Acquisition

(Government Executive) Unanswered questions persist about a House provision to allow Pentagon buyers to use proprietary online sales platforms.

Imagine simply flipping open your laptop, firing up your desktop computer or popping open an app on your mobile phone to order office supplies, equipment, or even contract services Amazon-style, two-day delivery included.

That day may not be too far off if a provision in the House version of the annual National Defense Authorization Act makes it into law.

The prospects for commercial online marketplaces in government got a lift in mid-July, when Alan Thomas, the Trump administration’s new chief of the General Services Administration’s Federal Acquisition Service, gave an enthusiastic thumbs-up to the proposal that his agency engage online marketplaces for all agencies to use.

The idea is ensconced in the House-passed version of the 2018 NDAA, which contains policy and suggested budget toplines for the Pentagon. The Senate Armed Services Committee’s version of the bill does not include the online marketplace provision, and it awaits a full Senate vote in September, after the August congressional recess.

The marketplace provision leads Section 801 of the House NDAA and originally was introduced as separate legislationby House Armed Services Committee Chairman Mac Thornberry, R-Texas. His version was Defense-only, but, in committee that vision was enlarged to encompass all of government with GSA as the lead. GSA has been working closely with Thornberry on the bill, according to a report from Federal News Radio.

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by Tim Cook

Light Attack Competition: Air Force, McCain Tout Acquisition Experiment

(Breaking Defense) HOLLOMAN AFB: It may be hard to believe but the future of the Air Force may depend on three turboprop planes and a $20 million spec-built attack jet.

They are the entries in what the service calls the Light Attack Experiment, a back-to-the-future attempt to rekindle the sort of innovation and fast cycle times that used to mark the development of Air Force fighters and bombers, before the current age when it takes 15 to 20 years to design and buy a new aircraft.

You know it’s important because Air Force Secretary Heather Wilson gave a speech to about 100 top Air Force officials, foreign air force representatives and the media this morning here. Chief of Staff Gen. David Goldfein put on a flight suit and personally flew first an AT-6 up in the morning and then an A-29 in the afternoon.

“This is going to be a great day,” Wilson told the assembly.

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By Colin Clark

Kim Jong-un Has Much To Teach Pentagon About Speed: Gen. Hyten

(Breaking Defense) HUNTSVILLE, ALA.: The morning the news broke that North Korea could tip its ICBMs with nuclear warheads, the US general in charge of strategic deterrence said we could a learn a lot from Kim Jong-un. America prides itself on innovation, but today, said Gen. John Hyten, in matters military, our adversaries are innovating faster because they’re less afraid to fail.

“Right now, we are being outpaced by our adversaries,” said Gen. Hyten, head of US Strategic Command. “We’ve lost the ability to go fast and test and fail. Watch what our adversaries are doing,” Hyten told the Space & Missile Defense Symposium here. “Look at Kim Jong Un. What he’s doing is testing, failing, testing, failing, testing, failing, testing and succeeding. He’s learned how to go fast.”

Likewise, in Russia, China, and Iran, “they are going fast, they are testing in a very similar way,” Hyten continued, although Russia is still hindered by residual Soviet-era bureaucracy.
But it’s the Pentagon that is truly the world’s last centrally planned economy. “We tie the hands of our engineers and our acquisition folks because we expect every test to work and if it doesn’t, it’s on the front page of the newspapers. Just Google it,” Hyten said. “But I know what Hyman Rickover would say about it: ‘Success teaches us nothing; only failure teaches.’”

Adm. Rickover is the father of the nuclear navy, famous for taking nuclear-powered submarines from an idea on paper to a reality in the water within five years. That feat required shrinking nuclear reactors from the size of city blocks to just 28 feet wide. Rickover’s Air Force contemporary, Hyten noted, was German-born Gen. Bernard Schriever, who pushed the Discovery spy-satellite program to success after 13 successive failures in testing and who developed the Minuteman ICBM – still used today – for $17 billion (in today’s money) in less than five years.

By contrast, the program to replace the Minuteman, the Ground-Based Strategic Deterrent, will take up to $85 billion over two decades. Much of that time will be taken up in exhaustive, laborious testing.

“We are so risk-averse that sometimes, in some programs, we test about every 18 months because we are so afraid of failure….How did we get to the point where every test has to work?” Hyten asked. “I want it to work at the end, because when you deploy a weapons system, it has to work each and every time, (but)when you’re going through the test program, you want to push the envelope.” So what went wrong?

Some restrictions are enforced by Congress, which tends to legislate a new band-aid over every problem that pops up until the patient can’t move for all the bandages. But much of the problem is self-inflicted by the Defense Department’s culture, Hyten said.

When he became head of Air Force space acquisition a few years ago, Hyten actually sat down and read the regulations – the government-wide Federal Acquisition Regulation (FAR) and the Defense Department-specific DoD 5000. What he found is that every regulation contains an escape clause, a way to bypass the bureaucracy and move fast – if senior leaders are willing to take the risk. They haven’t been.

“We also have an unhealthy relationship with failure,” Hyten said. “I’m as much to blame as anybody else…. Because I guarantee you that every time that Adm. Syring, now Gen. Greaves (at the Missile Defense Agency) would conduct a missile defense test, I’m calling him up going, ‘Did it work? Did it work? Did it work?’”

“I should be calling and saying, ‘did you have a good test?’” Hyten said, one which gathered good data on what went right, what went wrong, and how to fix it next time.

“We’ve got to look at this business in a different way,” Hyten said. “We’ve got to look at this business in a different way.”

“When I say that I everybody just goes to, I’m criticizing the acquisition community,” Hyten added. “I’m not. The acquisition community does exactly what they’re allowed and told to do….It’s the budget process, it’s the Congress, it’s the Administration, it’s the Pentagon, it’s the field, it’s everybody.”

“If you want to go fast you have to empower people with the authority and responsibility to execute,” Hyten said. “This is the United States of America…. We have motivated people that love this country every day when they come to work. All we have to do is leverage that talent.”

By Sydney J. Freedberg Jr

Former Pentagon Acquisitions Chief Belittles Reorg Plan

(Government Executive) Just days after the Pentagon delivered a congressionally mandated plan for reorganizing its acquisitions management, the ex-undersecretary whose job the plan would disassemble gave the reform a thumbs-down.

Frank Kendall, until January the Obama administration-appointed Defense undersecretary for acquisition, technology and logistics, went on the WJLA “Government Matters” Sunday TV show to say the plan is “not a step forward.”

As required under the 2017 National Defense Authorization Act, planners on Aug. 1 sent Congress a report proposing that the Pentagon improve innovation and exploitation of technology by breaking up the job of the undersecretary for acquisition, technology, and logistics into two positions: one undersecretary for research and engineering and another for acquisition and sustainment.

The plan also would weave into the org chart a chief management officer newly empowered to address business processes. And it would revamp obligations for previously independent offices to report, for example, to the new undersecretary for research and engineering. These offices included  the Strategic Capabilities Office, the Missile Defense Agency, the Defense Advanced Research Projects Agency and the Defense Innovation Unit-Experimental.

The changes would require the approval of Congress, which has also tasked the Pentagon with cutting 25 percent of its headquarters staff. If approved, they would be implemented by Feb. 1, 2018.
The reorganization “provides a once in a generation opportunity to improve how the department is organized and operates,” the report said. The problem the Pentagon hopes to solve is that “in the course of its existence, USD(AT&L) has grown in size and complexity, largely as a result of the accrual of additional responsibilities, the impacts of additional legislation, the increase in complexity of major weapon systems, and the assumption of increased oversight responsibilities over the services.”

Long urged by Senate Armed Services Committee Chairman John McCain, R-Ariz., and House counterpart Rep. Mac Thornberry, R-Texas, “This new organization refocuses the Office of the Secretary of Defense’s principal role from program oversight to that of directing major department investments to ensure integrated, technically superior capability that consistently outpaces the threat.”

But Kendall, now on the board of Leidos Holdings Inc., said the plan “in its essence breaks up an office I think was functioning very well and recreates a situation we had before 1986,”  a reference to the Goldwater-Nichols reforms that streamlined the chain of command to bring the individual military services under the Joint Chiefs. “I was in the Defense Department at that time,” he noted. “The Packard Commission recommended going to a single head to oversee acquisitions. Leadership always matters, but organizations do matter as well,” Kendall continued. This new plan means “going back to an organization that demonstrably failed at that time.”

Kendall faulted the plan for “breaking up the unity of command and breaking up the centrality of effort for acquisition across the department.” The subsequent relationships between the new chief management officer, the two new undersecretaries and the services are unclear, he added, jabbing the services for being too “optimistic” in the past about acquisitions coming in within budget. The new authorities will be “partly on the basis of personalities, and partly on the basis of the organization. I don’t want to see the services getting conflicting directions from different undersecretaries, but it’s almost inevitable,” he said. “They will find the route of least resistance and do whatever it is they prefer.”

A chief concern, Kendall added, is “breaking up the life cycle of our products between different authorities so the technology and risk reduction at the earlier phases are under a different person than is responsible for putting them into production.”

Still, Kendall said, the Trump administration will have open options for making the arrangement work, adding, “You can overcome bad organization with good leaders.”

McCain on Aug. 2 released a statement calling the report “an important step toward improving the defense acquisition system and implementing the significant reforms that Congress has enacted in the past two years. For too many years, the defense acquisition system has taken too long, cost too much, and produced too little, while America’s military technological advantage continues to erode. Congress has shown that we will not tolerate business as usual, with tens of billions of dollars wasted on weapons that deliver too late, or never deliver at all.”

He commended newly arrived Deputy Defense Secretary Patrick Shanahan, who, meeting with reporters just as the report was released, said meeting Congress’ deadline for the report was his top priority.

David Berteau, president and CEO of the 400-contractor Professional Services Council, who once worked for Kendall at the Pentagon, said, “Nothing is doomed to failure, but some things are harder than others.”

The plan’s prospects for new efficiencies and innovation will depend on three questions, he told Government Executive: “Will it actually enhance the performance of the contract process at the front end of designing and developing major systems that cost less on a better schedule?  Will it actually increase the speed and depth of research and bring new technology? And will management sustain the technology to get things done?” which is what affects contractors the most.

If any one of those three demonstrated progress, the plan might prove to have been worth it, Berteau said. “The real problem in acquiring weapons systems and information technology is that we spend twice as much on sustainment and operation as we do on getting them in the first place. There’s little incentive up-front to reduce legacy system costs, and this new structure could increase visibility and attention being paid to those issues.”

by Charles Clark

Government Executive Magazine

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