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Pentagon: Acquisition Reform Key to Strategic Choices Review


Improving the acquisition of weapons systems and platforms through cost-conscious strategies and more effective prototyping is a key part of the Defense Department's ongoing Strategic Choices Review, Pentagon leaders told an audience May 23 at the Center for Strategic and International Studies (CSIS), Washington, D.C.

“Secretary Hagel asked me, working with Chairman Dempsey, to conduct a strategic choices and management review, to examine the choices that underlie our defense strategy, posture and investments, including all past assumptions and systems,” Deputy Defense Secretary Ashton Carter told the audience. “Everything's on the table: roles and missions, war planning, business practices, force structure, personnel and compensation, acquisition and modernization investment, how we operate, how we measure and maintain readiness.”

Carter mentioned the ongoing review, designed to assess Pentagon strategy in light of recent developments within the Pentagon’s Better Buying Power program -- an acquisition-focused effort unveiled in 2010 to save money,  improve efficiency, incentivize industry, increase competition, and maximize productivity.

“We directed 23 principal actions in five major areas:  first, to target affordability and cost growth in our programs; second, to incentivize productivity and innovation in industry through profit and partnership; third, to promote real competition wherever we could; fourth, to improve our tradecraft in the acquisition of services, as opposed to goods; and fifth, to reduce nonproductive processes and bureaucracy in the government, as well as in industry,” Carter told the audience.

Better Buying Power was started in 2010 by Carter and Frank Kendall, current Under Secretary of Defense – Acquisition, Technology and Logistics (ATL).

“Competition is an effective way to reduce costs. We want people to think of creative ways to create a competitive environment for industry, so that there is a reason for people to work harder to keep the business that they have. We’re not trying to take out profits to cut costs but we do want to tie profits to performance,” Kendall explained.

Rapid prototyping of next-generation and developmental programs is designed to minimize risk and “hedge against an uncertain future,” Kendall added.

Kendall spoke about prototyping and the importance of properly framing technological readiness in the context of a discussion about Better Buying Power 2.0, a follow-on initiative to the original 2010 Pentagon effort.  BBP 2.0 builds upon the main tenets of BBP 1.0 by extending a new set of principles such as increasing the successes of the acquisition workforce.

“It takes professionals when it comes to getting those little decisions right, getting the acquisition strategy right. It is important to really understand the technology maturity of your program and really understanding what makes industry perform better,” Kendall said.

For instance, Kendall talked about the important of assessing technological readiness of a prototype or demonstrator system, saying it is important that the design being assessed be similar to the one planned for further development and production.

“We want demonstrations of technology that actually reduce the risk of the program,” he explained.

Kendall also talked about establishing criteria regarding a concept for government-industry partnerships originating in the 60’s, called “Skunk” works, where small teams and units collaborated on acquisition programs.

“The idea is you have very small professional teams and that team is empowered. You are focused on the substance of what’s being done. Both sides, government and industry, will have a very professional team that will understand the nature of the work. Both sides will know what needs to be done, the nuts and bolts of the design,” Kendall explained.

A few other techniques mentioned by Kendall include the use of term called “Lowest Price Technically Available (LPTA),” which is essentially a plan to ensure a path foward which finds the least-expensive way of accomplishing a significant acquisition or developmental goal.

“My guidance to the workforce is, if you don’t use LPTA, you can’t define an objective standard to measure performance,” Kendall said.

Another key cost-saving technique expressed by Kendall is the “Should Cost” effort, a method by which program managers and acquisition professionals are encouraged to find enterprising or innovative ways to lower anticipated costs of a given acquisition effort.

Overall, Kendall talked about BBP 2.0 in terms of an ongoing process wherein leaders and workers in tandem gather metrics and view things with a critical eye, ever-mindful of improving upon past performance.

“The way to improve it is with continuous effort to understand the results you are getting, why you are getting them and where you can make improvements on the margin. That is what this is all about. The range of the problems is so diverse that each problem needs to be assessed in its own right,” Kendall said.

As far as identifying goals for BBP 1.0 and 2.0, Kendall explained that while much progress has been made thus far – one idea is to reduce the percentage of cost over-runs for major ACAT 1 programs.

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