27 Aug '08 -- Future Trends in Defense Acquisition DAU Webinar

Editor's Notes

• #2: The future is a tenuous thing to predict. Just 20 years ago, how many would have predicted our nation’s current state—the collapse of the former Soviet Union, the emergence of global terrorism as our nation’s gravest threat, or a lean expeditionary military force? To research these and other questions, and develop a rational vision for the future direction of Defense Acquisition, I consulted individuals who are on the pulse of the changing acquisition arena. I sought opinions from a cadre of government and industry experts My gratitude is extended to all the project participants with special thanks to my research assistant, Captain Renae Barnes, USAF. Without their knowledge, insight and input, this presentation would not have been possible. The DoD acquisition enterprise is managed by a professional workforce made up of several functional career fields, but for the purposes of this chapter it will relate directly to the project management professional.
• #5: Future threats to the United States drive DoD’s acquisition process, but we do not do a good job of predicting the next threat, as is evidenced by our history, which shows that DoD prepares for the war just fought. Seventeen years ago, the United States was celebrating the end of the Cold War and the nation’s military posture was based on a known threat—the Soviet Union. The United States had a defensive policy to deter communist expansion. Conversely, today’s threat is the Global War on Terrorism. The United States must quickly respond and then project a threat posture anywhere in the world. Another significant threat to the United States that is seldom mentioned is a weakened economy. The health of the U.S. economy is joined to the health of other countries’ economies by globalization. The need for the United States to maintain a strong economy is vital to third world countries since a recession in the United States could destabilize less developed regions. The defense budget and the U.S. economy are inextricably linked. Defense spending is related to a robust economy and a strong gross national product. The Soviet Union’s collapse was an economic collapse, not a military confrontation. A strong economy enables our strength and perhaps is our best means of defense. In 2007, Gates stated, “We also need to be thinking about how to integrate our government’s capabilities in these areas, and then how to integrate government capabilities with those in the private sector, in universities, in other non-government organizations, with the capabilities of our allies and friends—and with the nascent capabilities of those we are trying to help.” This, in essence, will drive the acquisition process, pending its transformation in the political arena. Friday, 1 Aug 2008 USA Today, “The most important thing the military can do is prepare friends and allied nations to defend and govern themselves.” 2008 National Defense Strategy approved by Gates and released 31 July 08 by the Pentagon.
• #6: The Sergeant York was the last straw. It was a tracked antiaircraft weapon system that cost the taxpayers $1.8 billion, but never successfully completed testing and was ultimately cancelled (Biddle, 1996). Congress had enough of inter-Service rivalry and poor performing weapon systems. They passed the Goldwater-Nichols Department of Defense Reorganization Act of 1986, making the most sweeping changes to the Department of Defense (DoD) since its creation in 1947 by the National Security Act (NDU, 2008). The Goldwater-Nichols Act restructured the procurement process for the Services into a joint procurement process with joint implementation requirements. Just seven years later at “the last supper” held by then Secretary of Defense Les Aspin, former Deputy Secretary of Defense William Perry told leaders of industry the Cold War was a success. The United States had won and the peace dividend would mean a reduction in DoD procurement. The DoD could no longer support the diverse Defense Industrial Base. This led to the industrial downsizing of the 1990s, causing significant personnel losses across both government and industry, and a massive consolidation effort on the part of industry. The results of these two major events over the last two decades have led to the Defense Acquisition process we have today. With each new administration, national security priorities and policies are re-prioritized based on national security threats pertaining to economic, political or social events. National security decision making among policy makers determines the budget Congress authorizes for the Department of Defense. Currently, pressure to reduce the defense budget and defense programs continues seemingly unabated as entitlement programs and national debt expenditures consume more of the federal budget. Over the long run, this will undoubtedly affect the Department of Defense and its weapon systems of the future. Congressional legislation has direct control over the costs for defense weapon systems. Former Under Secretary of Defense for Acquisition, Technology and Logistics Dr. Jacques Gansler stated at an Industrial College of the Armed Forces symposium, “There’s a trade-off between regulations [of the industrial base] and market forces [that shape our industries], and we walk a narrow line between the two. I’m worried that perhaps we’re going too far now in the direction of regulation as a result of the reactions [to scandals, concerns about the integrity of the system]. The pendulum swings between these two positions on a cycle, if you consider the history of the industrial base” (ICAF, 2005). Missile Defense Agency Deputy for Acquisition Management Katrina Wahl reflected this same sentiment when she said, “Change is a constant struggle, but the process may not change into something better. We need to target opportunities that require Congressional relief.”* Both Gansler and Wahl are addressing the need to find a solution between the two extremes—deregulation and excessive regulation. The DoD will have legislative oversight; the question is to find the “sweet spot”—the right amount of legislation, focusing on the right areas of concern that can only be balanced by Congress. 3 June 2008, Secretary Young—The Defense Department needs to work with Congress on appropriate changes which can help DOD retain a highly capable acquisition team, recruit talented individuals from all levels of industry, and give the acquisition team greater flexibility to deliver technology and products to protect our Nation’s security. 30 May 2008 – The Air Force will award as many as three companies lucrative prime contract rights for A-10 integration work in response to a new policy dictated in the FY 2008 DAA. The law is aimed at promoting greater competition on indefinite delivery/indefinite quantity-type requirements where the Air Force cannot adequately describe the effort in advance. While it won’t eliminate all contracts with a single prime, it certainly pushes the agency away from adding additional work in a sole-source environment, but not necessarily for major weapon systems.
• #7: Future threats to the United States and the evolving political environment determine the type of weapon systems the Department of Defense develops. With a constrained defense budget, DoD can ill afford to invest in the research and development of aging technology. The Department of Defense needs to focus on a future military strategy based on information dominance. This is a shift from past single-use platform weapon systems, such as ships, planes, tanks or missiles to a system-of-systems approach (ICAF, 2005). With the system-of-systems approach, the DoD will purchase fewer highly sophisticated systems. Rex Reagan, a senior acquisition manager at BearingPoint, Inc., commented that with the system-of-systems approach, there will be improvements in commonality and inter-Service capability. “Multiple Services must be able to employ a weapon, system, material, or any service provided without pronounced adjustments or modifications.”* Gansler concurs that the DoD is transitioning from a platform-based approach to a system-of-systems approach, but he is concerned that budgeting is still done by platforms or mission area needs.* This disconnect needs to be addressed and solved.
• #8: Former Deputy Secretary of Defense Dr. John J. Hamre, wrote, “There is a deep bias in our budgeting system favoring current expenditures against long-term expenditures. This bias is toward operations and against investment. Money that would have been set aside for research and development is going towards personnel and operations supporting the war in Iraq and Afghanistan.”* Wahl further elaborated that the DoD is eating its seed corn—its long lead seed corn—and if the DoD continues this engagement, it could potentially limit government and industry’s pursuit of new technological advancements.* The DoD, once the driver of technology, has become a receiver of technology. Commercial sector developments have outpaced military development, forcing the military to work with industry to capture and use commercial developments, either as whole entities or components of larger systems. These commercial products pose security concerns because they have dual usage and were developed using open systems architectures. Lieutenant General Ted Bowlds, USAF, Commander, Electronic Systems Center, provided the micro-processor as an example. A platform’s mission computer will have its lineage traceable to a commercial processor, such as the Intel dual-core found in commercial laptops.* Unless Congress and DoD increase R&D funding for long-term expenditures, the weapon systems of tomorrow will become dependent on commercial, dual-use products, which are equally available to our adversaries. Los Angeles Times, 21 Jul 08 – Maj Gen Charles J. Dunlap Jr, USAF – A conflict against a technologically advanced power may be in the distant future. But, Dunlap argues that cutbacks in high-tech conventional weapon systems might embolden other countries to challenge the United States.
• #11: The acquisition community has an adequate process in place. However, certain aspects of the process prevent it from working properly. One major disconnect illustrated by Deputy Under Secretary of the Air Force for Space Programs Gary E. Payton relates to the three distinct DoD acquisition areas, commonly referred to by acquisition practitioners as the “Big A.” The first element is the requirements generation and validation piece, which is designed to validate a requirement independent of cost and schedule. The second area is the actual acquisition of the weapon system. The last area is budgeting.* The DoD needs to redesign the “Big A” process to create a fully integrated and well-functioning system. Lieutenant General Lawrence P. Farrell, Jr., USAF (Ret.), President and CEO of the National Defense Industrial Association, believes one person should be held accountable for the acquisition process.* The Government Accountability Office (GAO) Report on Best Practices recommended that, “DoD establish a single point of accountability at the Department level, with the responsibility, authority and accountability for ensuring that portfolio management for weapon system investments is effectively implemented across the Department” (Sullivan, 2007).
• #12: Within the requirements process are two components. The first is the DoD’s overall requirements generation and validation element addressed under “Big A.” The DoD is approving more new programs than fiscal resources can support. This problem is compounded by the highly complex and interdependent programs that are commanding larger budgets than past programs (GAO, 2007). 3 June 08, GAO—DOD’s portfolio of weapon system programs has grown at a pace that far exceeds available resources. From 1992-2007, the estimated acquisition costs remaining for major weapons programs increased almost 120%, while the annual funding provided for these programs only increased 57%. Current programs are experiencing, on average, a 21-month delay in delivering initial capability to the warfighter—often forcing DOD to spend additional funds on maintaining legacy systems. …. DOD must begin making better choices that reflect joint capability needs and match requirements with resources or the department will continue to experience poor acquisition outcomes.
• #13: The second component—the need for stable requirements—relates more directly to the acquisition process or “Little A.” Unless the DoD can get control of the requirements process, it will be difficult, if not impossible, to deliver affordable and effective weapon systems.
• #14: “ Additions or modification of requirements almost always lead to cost and schedule growth” (Meier, 2008). An example of a program suffering from uncontrolled requirements growth is the Space-Based Infrared System High (SBIRS-High). The SBIRS-High program was originally estimated at $3.2 billion in 1996, and then underfunded in 1997 with $2.6 billion. In March of 2002, the program escalated to $6.2 billion, which was primarily attributed to inadequately defining requirements up front and not controlling additional requirements (DoD, 2003). A current cost estimate for the program is now $10.64 billion (Smith, 2005). Rear Admiral William Hunter Hilarides, USN, Program Executive Officer for Submarines, provided a very simple mathematical example when he illustrated requirement changes during the different phases of development. He stated that the cost starts at $1 on the shop floor, it increases to $3 once the ship is completed but still on the shop floor, and escalates to $8 once the ship is in the water.* To limit cost growth, the DoD should establish an early program baseline and maintain it throughout the acquisition process (Meier, 2008). This means accepting less capability delivered more rapidly, as opposed to the 100 percent solution. Additionally, the government will have to get better at cancelling non-performing programs early on in the process. Configuration Steering Boards (CSBs) I have directed the Military Departments to establish CSBs. My intent is to provide the program manager a forum for socializing changes that improve affordability and executability. Boards will be in place for every current and future ACAT 1 program and will review all proposed requirement changes, and any proposed significant technical configuration changes which potentially could result in cost and schedule changes. Boards are empowered to reject any changes, and are expected to only approve those where the change is deemed critical, funds are identified, and schedule impacts are truly mitigated. For example: The Navy decided to terminate the Extended Range Munition (ERM) contract after the CSB review because the effort on the ERM contract was not meeting the performance needs of the Department. The Department is now looking at other alternatives to satisfy the requirement. I require every acquisition team member to fully engage the Planning, Programming, Budgeting, and Execution (PPBE) process thus creating an avenue for program mangers to ensure they are funded to execute their responsibilities or alternatively descope their programs to match reduced budget levels.
• #15: Another longstanding problem with the acquisition process is programs beginning development with immature technologies. The GAO reported that of the programs assessed, only 15 percent entered development with demonstrated high levels of technology maturity, causing many programs to experience significant growth in development cost. “ In the case of the Army’s Future Combat System, nearly 2 years after program launch and with $4.6 billion invested, only 1 out of the more than 50 critical technologies is considered mature, and the research and development cost estimate has grown by 48 percent” (Schinasi, 2005). Representative Heather A. Wilson (R-NM) advised, “Aim for only one miracle per program” (Taubman, 2007). Many technology issues are traced to attempts to push state-of-the-art technology into the acquisition process before it is mature. This results in cost and schedule growth as well as program cancellation (Meier, 2008). DoD should focus more on incremental development. The acquisition process needs more evolutionary steps versus quantum leaps in technology capability. An evolutionary product development process defines the individual increments on the basis of mature technologies and incorporates them into feasible designs that are matched with firm requirements. June 2, 2008 Young…This Nation had the chance to lead other Nation’s on some technology efforts because there was available funding to pursue innovative, cutting edge ideas – technology push in many cases. Our current budget processes and timelines seriously limit our ability to pace most nation-states and offer no prospect of pacing aggressive terrorist organizations.
• #16: “I have issued policy requiring competitive, technically mature prototyping. My intent is to rectify problems of inadequate technology maturity and lack of understanding of the critical program development path. Prototyping employed at any level—component, subsystem, system—wherever provides the best value to the taxpayer.” For example, the Joint Light Tactical Vehicle (JLTV) is currently using competitive prototyping. The JLTV program will eventually provide our soldiers and Marines with a truck that combines the off-road mobility of a High Mobility Multipurpose Wheeled Vehicle (HMMWV) with protection approaching that of a Mine Resistance Ambush Protected (MRAP) vehicle. To do this, the Joint Program Office is having three separate teams of contractors compete to make multiple prototypes which will be rigorously tested. At the end of this competition, the best of these prototypes will proceed on to Systems Demonstration and Development having already proven that they have the technical maturity to satisfy the requirements in a timely and cost effective manner. Defense Support Teams (DSTs) To address the challenges of acquisition execution and assist both industry and DOD program managers, I have expanded the use of these teams who are made up of outside world-class technical experts to address our toughest program technical issues. I expect the teams to resolve emergent problems and help the Department successfully execute tough programs before problems develop. For example, the Net Enabled Command Capability (NECC) program benefitted from a DST that clarified the critical coordination points necessary to bring the Defense Information Support Agency, the Service acquisition authorities, and operational sponsors into a coherent approach balancing military needs, technology solutions, and funding requirements. A refocused NECC team demonstrated significant progress on developing actionable military need definitions and establishing a collaborative environment for design and testing of software application modules enabling elements of a joint command and control tool set.
• #17: When there are problems with oversight, requirements or technology maturity, cost growth is a natural occurrence. For a program to be successful, it must have stable funding. Unfortunately, as former Acting Director, Defense Contract Management Agency Keith Ernst described, DoD pays for poorly performing programs by expropriating funds from other programs. This type of action destabilizes the other programs and reduces the overall buying power of the defense dollar. This forces the military services to reduce planned quantities or capabilities in order to stay within a new, reduced budget. An example is the reduced number of the F-22A Raptors . * According to the GAO, “As costs escalated in the program, the number of aircraft the Air Force planned to buy was drastically reduced from 648 to 183” (Sullivan, 2007). Additionally, Nicholas W. “Nick” Kuzemka, Vice President, Program Management Corporate Operating Excellence & Program Management, Lockheed Martin Corporation, said funding instability on complex weapon systems causes renegotiation and re-baselining of the plans, schedule and integration. This has a ripple effect through the supply chain.*
• #18: J. David Patterson, principal deputy under secretary of defense (comptroller). House Oversight and Government Reform and National Security and Foreign Affairs Subcommittee. Hearing on “oversight of Defense Department Acquisitions: April 29, 2008 The Capital Funding Pilot Program is an example of ways the Defense Department (DOD) is working to establish a more stable budget environment. He spoke on a March GAO report that found 95 major weapons acquisition programs are nearly $300 Billion over original budget and 21 months late on average. Under the Capital Funding Pilot Program, the DOD guarantees a program a prescribed level of funding for a fixed period—from Milestone B, or system development and demonstration (SDD), through to initial operating capability (IOC). Funding is held at a guaranteed level by avoiding up and down adjustments until the project is delivered. When industry and program managers know what annual program funding will be provided at a predictable level, and that other aspects of the program—such as unfunded performance or requirement changes—are not allowed, there is an increasing probability that the program will be delivered on schedule and within budget. This capital funding concept will be applied to the Air Force’s Combat Search and Rescue replacement helicopter (after the effort under competition is established as a program of record), the Navy and Army’s Joint High Speed Vessel program, and the Army’s General Funds Enterprise Business System effort. Because these system are within the Defense Department’s current authorities, they can be implemented in the near team. To qualify for capital funding, programs must meet several criteria: each have a Technology Readiness Level of at least 6 at Milestone B; have “well understood funding profiles” from milestone B to IOC; not be used as a “Bill Payer” by the Services or DOD; and be “time-definite” programs. In addition, officials with the qualifying programs must provide bi-annual reports to Congress on cost and schedule and performance progress. Capital Funding programs will be cancelled “if they fail to meet established cost, schedule, and performance objectives three reviews in a row. This Capital Funding Pilot Program is co-sponsored by the under secretary of acquisition, technology, and logistics and the comptroller. He pointed out numerous studies found that the key elements of successful programs are program stability and funding predictability. Instability drives cost growth, schedule slippages, and in some cases, failure of the weapon system to perform as anticipated.
• #19: To counter this ripple effect, there is a need for strong procedural oversight within the acquisition process. The GAO concluded that DoD policy provides for a series of early reviews focused on the acquisition process. Unfortunately, these reviews are often skipped or are not fully implemented (Sullivan, 2007). The GAO also reported that successful product developers ensure that a high level of knowledge is achieved at key junctures in development so resources and needs match, product design is stable, and the production processes are mature (Schinasi, 2005). The GAO concluded in its High-Risk Series, “DoD has written into policy an approach that emphasizes attaining a certain level of knowledge at critical junctures before managers agree to invest more money in the next phase of weapon system development. This knowledge-based approach results in evolutionary—that is incremental, manageable, predictable—development and inserts several controls to help managers gauge progress in meeting cost, schedule and performance goals” (GAO, 2007). GAO concluded that “DoD has not been employing the knowledge-based approach, discipline has been lacking, and business cases have not measured up” (GAO, 2007). There should be a more structured review of programs both prior to program approval and after program initiation that emphasizes fact-based decision making.* 3 June 08 testimony, I also require technical maturity of programs before program initiation (Milestone B). As you know, statue requires that Milestone Decision Authorities (MDA) certify that the technology in an MDAP is demonstrated in a relevant environment for Milestone B (or Key Decision Point B for space programs). I must also certify that the program demonstrates a high likelihood of accomplishing its intended mission. These are two of the ten criteria I certify. The Congress direction that the Defense Department ensure appropriate technical maturity at MS B was very helpful. I think the additional nine criteria add time and paperwork, and these criteria can conflict with making needed progress on developing tools for our warfighters. I have certified four MDAPs for MS B decisions and one MDAP for a KDP-B decision. The four programs receiving MSB decisions were the KC-X Tanker Replacement Program, the Joint Tactical radio—airborne & Maritime/Fixed Station Program, the Mission Planning System (MPDS) Increment IV program, and the Broad Area Maritime Surveillance (BAMS) program. The KDP B certified was for Global Positioning System IIIA.
• #20: 6 Jun 2008 AT&L Note: I would restate what I have said in earlier notes. First, hope is not a strategy. Second, you are not victims of the process. Take control of the processes to ensure you have an executable, funded, and manageable program. Be prepared to be held accountable for execution of your program. 18 April 2008 AT&L Note: There are appropriate standards – we should meet them, not whine about them. Don’t let bureaucracy run your life and program. Only you have control of your principles/ethics and only you are responsible for your work. As I say at DAU, you are not a victim—be an empowered leader. GAO report---None of the weapon programs assessed this year had proceeded through system development meeting the best practices standards for mature technologies, stable design, and mature production processes---all prerequisites for achieving planned cost, schedule, and performance outcomes. In addition, only a small percentage of programs used two key systems engineering tools—preliminary design reviews and prototypes to demonstrate the maturity of the product’s design by critical junctures. This lack of disciplined systems engineering affects DOD’s ability to develop sound, executable business cases for programs. Our work shows that acquisition problems will likely persist until DOD provides a better foundation for buying the right thing, the right way. This involves making tough decisions as to which programs should be pursued, and more importantly, not pursued; making sure programs are executable; locking in requirements before programs are ever started; and making it clear who is responsible for what and holding people accountable when responsibilities are not fulfilled. Moreover, the environment and incentives that lead DOD and the military services to overpromise on capability and underestimate costs in order to sell new programs and capture funding will need to change. Based in part on GAO recommendations and congressional direction, DOD has begun several initiatives that, if adopted and implemented properly, could provide a foundation for establishing sound, knowledge-based business cases for individual acquisition programs and improving outcomes.
• #21: A review of the acquisition process indicates that it is the people that make all programs work. However, the last decade has brought significant changes within the acquisition workforce. To ensure a continued robust and vital workforce on into 2025, these changes need to be addressed. Workforce Mix The first area to address is the acquisition workforce mix. DoD currently has a mix of military, government civilians and contractors. The trick is to get the right mix of the three. Over the last decade, the acquisition workforce converted many military positions to government civilian positions, effectively severing the connection between the acquisition process and the end user. The military understands the use of a system and the requirements, so our military personnel must have operational as well as acquisition experience. The government civilian workforce provides stability, knowledge management and a technology base. We then need to balance our government workforce with that of the contractor workforce, using the contractors as shock absorbers with the ability to expand and contract to meet DoD’s needs. According to Acting Director, Air Force Acquisition Center of Excellence Ralph J. DiCicco, Jr., a prevailing concern among acquisition leaders is that the downsizing of the government workforce over the last decade has given contractors increased program management responsibilities along with inherently governmental functions. Unfortunately, the contractor has many of the same issues as the government relating to retaining experienced personnel.* Gansler summed it up best when he said the government needs to maintain the role of the manager and the contractor needs to maintain the role of the doer. * Former Comptroller General of the United States David M. Walker is also worried about the high percentage of contractors performing government-related work. He stated that, “Agencies need to consider developing a total workforce strategy to meet current and future human capital needs, and address the extent of contractor use and the appropriate mix of contractor and civilian and military personnel. I have also noted that identifying and distinguishing the responsibilities of contractors, civilians and military personnel are critical to ensure the contractor roles are appropriate” (Walker, 2008).
• #22: June 3 rd , 2008 Secretary Young—Current caps on management headquarters and past focused efforts on “shoppers” have seriously harmed the defense acquisition workforce. As government employees lived through these times, some of the most capable personnel left the government for the lucrative opportunities presented by industry. As the Defense Department’s procurement and research and development budgets have grown significantly since 2001, there has been no linkage to the personnel process or corresponding ability to hire government personnel. Indeed, several programs which I have recently reviewed that experienced cost and schedule problems cited a shortage of program office personnel as one of the contributing factors. I have recently asked the AT& team to consider the use of personnel plans in conjunction with new major acquisition programs. However, these efforts will still face the constraints of management headquarters caps. The situation has driven the Defense Department to greater use of contractor personnel, a solution which has several deficiencies. However, it is necessary to have trained people to manage major acquisition programs spending significant tax dollars. It is unfair to expect flawless execution without adequate manpower.
• #23: Each Service has its own acquisition process, resulting in duplication and inefficiency. The DoD may need to look at a type of joint “purple” workforce in acquisition, as opposed to each Service having its own acquisition workforce competing for DoD funding. This consolidation will be driven by a smaller workforce and a reduced DoD budget. According to Kuzemka, the current joint programs are not able to streamline the requirements process across the Services. For example, the Joint Strike Fighter Program Office has a Requirements Board where the different Services convene. However, after a joint decision has been made at this board, each of the Services is still required to go through their individual approval channels. He believes the acquisition process should shift towards a more integrated activity that will be more effective than today’s joint programs. The solution is to merge the approval channels for each Service, thereby developing one approval channel for all Services.* 3 Jun 08, GAO – DOD investment decisions continue to be dictated by the services who propose programs that overpromise capabilities and underestimate costs to capture the funding needed to start and sustain development programs. The transitory nature of leadership further undermines successful reform. To better ensure warfighter capabilities are delivered when needed and as promised, incentives must encourage a disciplined, knowledge-based approach, and a true partnership with shared goals must be developed among the department, the military services, the Congress and the defense industry.
• #24: 18 April 08 AT&L note: We must help our people succeed through training and experience. For me, the bottom line is that you have to love your work and want to achieve the best results. I believe this exists in the acquisition team. We all get to develop world class technology, provide it to the warfighters who are prepared to risk their lives, and make a tangible contribution to the freedom and security that America enjoys. Take full advantage of the unique role and the incredible opportunities we all have to help this Nation. A major challenge to government as well as industry is attracting, training and maintaining intellectual capital. The downsizing of the 1990s resulted in the loss of an entire generation of program managers. This is true for the government program offices as well as the contractor. It will take at least 10 years to redevelop the workforce. To cultivate an experienced cadre of acquisition professionals, we must challenge and invest in program managers.
• #25: Farrell stressed that program management is a profession just like any other profession, and it must have upward visibility and mobility. The Department must re-professionalize the program management career field by providing personnel with formal education and practical experience.* The best way to gain experience is to challenge the workforce by moving them from program to program and giving them growth opportunities to gain a broad experience base from a wide range of programs with increasing levels of responsibility. The greatest challenge to developing experienced program managers is the decrease in DoD weapon system procurement. One solution to this shortage is to rotate DoD program managers with program managers in other U.S. government agencies and industry and vice versa.
• #26: DoD and Industry must capture their corporate knowledge and include it in their standard business practices. According to William “Bill” Kaplan, Chief Knowledge Officer, Acquisition Solutions, 20 percent of the knowledge in an organization is information you can search for in books, regulations or manuals. The remaining 80 percent of the knowledge resides in experience, insight and lessons learned. This corporate knowledge is the why and how to do things, knowing what works and what doesn’t work. The cost associated with failing to capture and use our corporate knowledge is the expense of additional training and loss in productivity and competitive advantage. * To enhance knowledge transfer, a strong mentorship program should be implemented.
• #27: Allison Stiller, Deputy Assistant Secretary of the Navy, Research, Development, and Acquisition, Ship Programs, noted that the government needs to capture the knowledge in each program office and establish a partnership with industry to enhance and encourage knowledge sharing. There needs to be knowledge-sharing among the various Services and with industry to capitalize on lessons learned. This type of government-industry forum could initiate the joint or “purple” perspective.* 3 June 2008, Secretary Young, As part of our “knowledge sharing” initiatives, we are participating in the National Defense Industrial Association’s Committee on Program Management (ICPM). Under the auspices of the ICPM, we are teaming with industry to develop and expand the use of Program Startup Workshops to improve communication and clarify expectations up front. Within the Department, we have held Program Manager Forums that allow me and my senior staff to interact directly with program managers and to get their feedback on issues important to them. We have initiatives led by DAU to ensure our program managers have access to an array of tools and templates.
• #28: 3 June 2008, Secretary Young, -- Additionally, in accordance with the Fiscal Year (FY) 2007 National Defense Authorization Act (NDAA), we are instituting a requirements manager certification course developed in conjunction with the Joint Staff and Defense Acquisition University (DAU) to ensure that requirements are written with a better understanding of and appreciation for the needs of the acquisition process….excessive requirements are almost always a factor in the high cost and long timeliness for DOD development programs. Core Plus The Core Plus construct was designed to advance the DoD AT&L competency management model by providing a “roadmap” for the development of acquisition workforce members beyond the minimum certification standards required for their position. Core Plus Attributes Core Plus helps identify the right learning for the right development. It does this by connecting workforce members not only to their career field and level but also to their particular job assignment needs. Core Plus also identifies targeted training that relates to specific tasks in a given assignment type. As Core Plus matures, you can expect: • “ scrap learning,” i.e., wasted or irrelevant course content, to be minimized; • repetitive course content to be minimized; • the development of more well-rounded acquisition core coursework; • shorter functional courses required for certification; • an increase in modular course content; • an increase in courses targeted to workforce job assignments; and • more flexibility, focus, and guidance in the construction of Individual Development Plans (IDPs). To ensure a steady stream of qualified personnel and increase collaboration among industry, educators and training institutes, the DoD should accept certification and credentialing by professional societies, such as Project Management Institute (PMI), National Contract Management Association (NCMA), and others as DoD equivalents. Accepting internationally established and recognized organizations and processes will reduce parochialism and duplication in the current system.
• #29: Tools To maximize the capabilities of a shrinking acquisition workforce, tools such as design software and office automation must be leveraged and increasingly emphasized. According to Payton, the workforce of today is more capable than the workforce of 30 years ago because of the tools employed in the work environment to make them more productive. He further commented that Air Force Academy cadets of today are more advanced as compared to when he was at the Academy pursuing the same degree. Cadets of today can build, launch and control satellites, and they will enter the workforce with these skills. The workforce will only continue to improve and become more productive over time.* With fewer highly skilled workers, DoD must tear down bureaucracy and build up efficiencies in its processes through the use of tools. Muellner stated that risk-management and systems engineering tools, along with networked communications, should enhance transparency of the acquisition process. This will provide a better understanding of intended and unintended consequences of resource and requirements changes. These tools allow full transparency and real-time reassessment of the risk profile.* Hilarides elaborated on his belief that modular designs are less people-intensive and result in rapid insertion of technology. By using three-dimensional design tools, the government can essentially operate weapon systems in virtual reality and verify that the design meets all the specification requirements prior to building.* The development of highly sophisticated simulations and wargaming will reduce costs and allow our weapon systems to be tested as a system-of-systems versus individual platforms. Hudson said we must get better at arranging and executing high-fidelity complex netted simulation scenarios, such as F-15s with AWACS, space assets and bombers. This allows the practice of scenarios that are difficult to arrange and expensive to conduct in a test environment.
• #30: Acting Deputy Under Secretary of Defense for Industrial Policy Gary A. Powell said in a letter he sent to the U.S.–China Economic and Security Review Commission: DoD research, development, and acquisition, and associated policies and program decisions play the major role in guiding and influencing industry transformation by focusing market demand across a broad spectrum of industry segments to meet emerging and projected DOD requirements. First, the Department’s weapon system acquisition policies and decisions shape the technological and programmatic focus of industry. Second, decisions made on mergers and acquisitions involving defense firms continue to shape the financial and competitive structure of the industry. Third, DOD evaluations and assessments of sectors or specific industry issues help identify future budgetary and programmatic requirements. Finally, the Department incorporates industrial base policies into its acquisition regulation and strategies on an ongoing basis to promote competition and innovation (Powell, 2005). Industry is reshaping itself to respond to significant changes in military missions, acquisition processes and workforce. As illustrated by Kuzemka, three pillars of the acquisition process lead to flawless execution: funding stability, requirements stability and contractor/industry performance. Industry does not have control over funding or requirements stability. It only has control over the contractor/industry performance pillar of the acquisition process. If DoD can create a more stable environment, then industry can improve.*
• #31: Industry and government need to work hand in hand to define what the defense industrial base will be in 2025 and how they will work together. The relationship between the government and industry should shift from an adversarial relationship to a teaming partnership. It is imperative for government and industry to understand each other’s business models and have more open dialogue to exchange information. Industry must focus on the implementation of team strategy. The government will continue to rely on industry, both as the producer of sophisticated weapon systems and as a provider of services. With the shrinking defense budget and the reduction of new weapon systems, industry will have fewer weapon systems to design, develop and manufacture. “ The biggest challenge will be the degree of integration necessary within each system and among the systems. This will demand the government and industry to work together ensuring the systems are seamlessly integrated because the warfighters will need this degree of integration in the battlefield. If we fail to do this in the acquisition community, it will force warfighters to do it.”
• #32: The industrial base will reshape, consolidate and take on new entrants. Two factors are driving the changes—reduction in programs and fewer available defense dollars. On slide -- Steve Goo, Vice President of International Operations for Boeing Integrated Defense Systems, said domestic mergers will start to decline as compared to the last two decades, but international mergers and acquisitions will increase.* This contraction will create more effective programs by eliminating duplication, and enhancing commonality and interoperability. This will mean less duplication, with fewer opportunities placing a downward constraint on the number of companies that can economically survive in the military procurement sector. Those companies that survive will make key strategic acquisitions. The companies able to respond to specific needs will be identified and targeted for mergers and acquisitions. Many companies will form teaming arrangements. The potential is real that the industrial base will have single suppliers for components. On slide -- Bowlds said this will lead to the introduction of many non-traditional suppliers, who have not previously been associated with defense work. “This will come about because of the increased use of commercial products and the reduction in resources for the development of unique military solutions.”* To ensure competition, the government may have to scrutinize future consolidation, teaming and partnership efforts to enhance innovation and prevent a single defense contractor situation.
• #33: Prime and sub-prime contractors will need to have seamless integration. Kuzemka commented that in order for the prime/sub-prime team to collaborate and communicate more effectively, common systems must be used. Currently, Northrop Grumman and Lockheed Martin have a tremendous amount of business with subcontractors, but each sub-vendor has its own system of tools and processes. The trend will be for the prime contractor’s systems and processes to be adopted by the sub-prime. However, when a prime contractor has key partners that are also prime contractors or large sub-prime contractors, it may be difficult to force those partners to adopt the prime contractor’s tools and processes, thus leading to interface issues. These issues cause a problem with timeliness, meshing of requirements data, configuration control, risk resolution, flow down of requirement changes, labor hours and overall performance. Over the next 15-20 years, the industry will move to greater integration of contractors, partially caused by consolidation of industry and more joint ventures.* The challenge with consolidation and joint partnerships is for the government to have visibility into sub-contractors’ performance. Missile Defense Agency Executive Director Dr. Patricia Sanders provided the following example: Lockheed Martin, Raytheon and BAE are all developing a different type of missile. However, they are all buying the same internal part from Honeywell. Honeywell is essentially providing a component that performs the same fit, form and function. The only difference is the magnitude of cost. Additionally, if an issue arises with the component, it may not be transparent to all the companies. This highlights that the prime contractors may be diverse; however, sub-vendors typically are not. Few primes are building those components for which they were originally contracted. Greater supply chain transparency is a prerequisite to understanding industrial base vulnerability.* There must be a balancing act for the DoD on how many primes and sub-primes can consolidate and partner to ensure there is not a compression of the vendor sub-tier base, narrowing the playing field and subsequent competition. Technology is created and innovation is achieved in the sub-prime and sub-tier vendor base.
• #34: “ Industry supporting defense is reshaping itself to respond to significant changes in military missions. Major defense firms are responding by reducing excess capacity, streamlining processes, and revamping supplier relationships.” —Acting Deputy Under Secretary of Defense for Industrial Policy Gary A. Powell--Letter to U.S.–China Economic and Security Review Commission, August 2005 According to Muellner, “Industry will respond to the market-driven environment. The days when a major company would “bet the farm” on a new design or major technology shift are gone. Wall Street rewards and punishes very rapidly, and long-term investment profiles are not highly rewarded. Industry is not likely to make significant long-term investments given the instability and return on investments offered by defense programs. Emerging technologies offer opportunities, but they will be matured in a risk-sharing environment across Industry, focusing more on near-term projects.”* Muellner further elaborated, “One area that should be addressed is the impact of emergent systems engineering tools that provide more transparency of risk profiles and risk-mitigation activities. These tools facilitate a more holistic approach to program management that includes the entire value-stream from the Requirer to the Acquirer to Industry to the Tester. All of these players must be involved with the activity from start to finish.”* Hudson added that industry’s use of modeling and simulation will improve their ability to produce products in the predicted time with the predicted performance. A benefit of this will be a reduction in the amount of hours the government must conduct operational testing and evaluation. The key is to develop a way to identify which tests can be replaced by modeling and simulation and which ones require an operational assessment. Kuzemka identified that the technical paradigms will evolve, leading to industry’s improved responsiveness and advancement along the curve of flawless execution. Industry will develop leading parametric indicators designed to highlight deficiencies and incorporate earned value management principles. This product will be superior to the current lagging indicator of the earned value system of today. All of this will enhance industry’s ability to deliver to government expectations.*
• #35: The industrial base will continue to shrink, and concern that the supplier base may dwindle to a sole-source scenario is real and troubling. Globalization of the defense industrial base will apply the competitive force needed to ensure companies continue to innovate and strive for price reduction. Caponecchi said “The Department must be prepared for more global involvement in the manufacturing of the components going into weapon systems. This will require a major cultural shift in thinking about how to produce military hardware [coupled with] National Security concerns regarding the dependence on foreign suppliers for critical military components. However, this is the direction lean commercial manufacturing is taking us.” * The government must balance globalization with security and fair business practices. A fine line must separate legislative protectionism from globalization. There should be no barriers for overseas competitors who comply with U.S. laws, thus allowing for an open and fair playing field for all companies agreeing to procurement integrity, International Traffic and Arms Regulations (ITAR) and security requirements. Defense components are a relatively small portion of sales for U.S. defense contractors. Payton said the government comprises 7 percent of industry’s space business revenue and many of the subtiers are divesting from government contracts towards more profitable markets. The subtier components are bound by legislation such as ITAR that increases the cost of domestically manufactured products and disadvantages the U.S. supplier.* To remain competitive, U.S. firms must be allowed to expand and compete in the global marketplace. The United States must monitor export legislation that is detrimental to defense firms while ensuring security.
• #36: The Goldwater-Nichols Act (1986) was developed at a time when there were 20 prime contractors competing yearly for multiple new programs. There were large production runs of aircraft (585), combat vehicles (2,031), ships (24) and missiles (32,714). The threat was well known and DoD had stable strategic planning (DoD, 2006). Then in 1993, the famous “last supper” occurred and the defense industrial base that defeated the Soviet Union was reduced to six prime contractors competing for fewer and fewer programs each year. A reduction in the number of production runs for aircraft (188), combat vehicles (190), ships (8), and missiles (5,072) occurred. Now, the threat is unpredictable and world dynamics have changed due to globalization (DoD, 2006). We must resolve the obvious problems of a smaller and less experienced acquisition workforce, the deficiencies of the acquisition process, and adapt to a declining budget. Recognition of these problems is the first step to their solution; incorporating recommendations is the second. According to Lyles, the acquisition process can go one of two ways. It can get more bureaucratic and stringent or it can embrace solutions from various studies to improve the whole process. After listening to all the participants in this project, I believe the initiative, talent and adaptability of our government and industry team will succeed in providing an acquisition process that meets the demanding requirements of our ever-changing world.