Every ten to fifteen years or so the DoD refocuses for four to five years to improve acquisition. This was relayed by Navy’s head of acquisition last year at a Strategic Institute conference. At that time, he said he believed we were about halfway through this period of acquisition reform. If this is true and indeed cyclical, that means we are nearing the end of this period and soon other things will receive attention. Perhaps now is an appropriate time to step back and see what has been accomplished. Have efforts been successful? Has this period of acquisition reform and improvement set up the next generation and Nation for success and stand us in good stead into the 2030’s? Will the system be able to keep up with near-peer competitors, potential adversaries, and foster and facilitate the innovation needed to solve the myriad of complex critical challenges we now face? Do insiders feel good about the system? Does it perform and deliver optimally? After decades of time, money, study and focus, has a masterpiece in human intellectual achievement been created? If not, why?
“It takes 16.5 years on average to deliver a new capability… it takes China only three,” said Mike Griffin, Undersecretary for R/E during a Congressional testimony in 2017. Soon thereafter, the 809 Panel, a multi-year evaluation by a blue-ribbon commission, concluded that the defense acquisition system continues to get worse. Research this year shows that the defense industrial base continues to shrink at an alarming pace; a top acquisition official suggested there may be a need to nationalize industry segments. None-the-less there is devotion and faith, despite decades of evidence saying otherwise, that the highly regulated purchasing system (FAR combined with additional arcane rules for major systems) will produce reasonably good results if the right go-betweens, hacks, and incremental changes are instituted.
“The DoD violates pretty much every rule in modern product development.” – Eric Schmidt, fmr. CEO, Google; Chair, Defense Innovation Board
Congress really stepped up to the plate in a big way during this time by bolstering Other Transactions and related authorities to create the core of an alternative acquisition system specifically designed for the flexible and collaborative relationships needed in R&D and delivering new capabilities. General Ostrowski said they are a “gift”. Congress directed the DoD to make these authorities the go-to ‘preference’ for R&D and prototyping, and to ensure workforce training. Unfortunately, the gift has not been particularly appreciated and little training has been offered. Think about it… An alternative specific for the work of solving complex critical challenges and delivering new capability is now on the table, but instead the DoD has pigeon-holed the authorities and conceptually burdened them with old think. Developing commercial-like flexible business approaches in the pursuit of advancement in science and technology behooves the government and national interests but remains antithetical to dominate thinking. Other Transactions and the flexible, collaborative arrangements they allow remain largely misunderstood. Spending through Other Transactions Agreements is up, yet they remain tethered and narrowly focused on a single model; the DOTC-style consortia model. The vast terrain of how to structure advanced, goal-oriented business arrangements has not been explored. No doubt these authorities threaten the status-quo and therefore receive the requisite push-back despite a track record of success. If we are nearing the end of this acquisition reform period, then not exploring or bothering to understand Other Transactions is the most pronounced and profound missed opportunity. While OTs mean freedom of contract, they also mean freedom to think, and that may be the greatest hurdle of all.
“OTs make you think, they don’t make you smart.” – Strategic Institute
There have been achievements during this period. Notably, reorganizations, priority shifts, new programs and teams, heightened public relations and outreach, and some needed rethinking of existing under-performing programs has occurred. The reality is, it is hard to know what will stand the test of time as smart initiatives routinely fall by the wayside after the early-stage enthusiasm and advocates are gone, or for a variety of other reasons. Defense Innovation Unit is a bright spot. This organization understands that freedom of contract exponentially increases the ways in which advanced R&D business can be accomplished to best achieve mission goals. Unfortunately, many innovation cells/teams are still having trouble conceptualizing business and development pathways to field new capability while choosing to stay constrained by the traditional system. They say things publicly like “the contracting mechanism does not matter.” I wonder if one has to do with the other. Related, the now common term “Innovation Theater” has come to describe highly publicized, glitzy events and/or programs that create notoriety but little in terms of new capabilities for the force and fleet. There is serious potential in many of these programs if new ways of thinking are adopted, they need not be just a phase or attempt, but there is major vision deficits hampered by old think. Few have conceptualized the variety of potential pathways and how to make them work, starting with real problem-solving (not just devising requirements as in FAR) through R&D, prototyping, new capability, and all the way through sustainment. This type of thinking should be common, as it is thoughtful and goal-oriented, but is rare.
If acquisition reform is indeed a cyclical occurrence and the window of opportunity is drawing to a close, we might ask did the community and leaders do enough to ensure the current and next workforce generation is set up for success? Can leadership guarantee the next major program will be delivered in a timely fashion, on budget, fully functional, and be the best solution for the problem? The incremental changes usually opted for do not correct or keep up with the failings and entropy of an old highly regulated purchasing system that cannot keep up with 21st century innovation. It is important to remember OTs are not only an alternative but specifically created to prototype, better solve problems, advance the state-of-the-art, and deliver capability more efficiently.
written by Christian Dunn, Managing Partner at Strategic Institute (serial entrepreneur and defense industry outsider who has looked behind curtain)