    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

                              [H.A.S.C. No. 114-2]

                          A CASE FOR REFORM: IMPROVING

          DOD'S ABILITY TO RESPOND TO THE PACE OF TECHNOLOGICAL CHANGE

                                   __________

                          COMMITTEE ON ARMED SERVICES

                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  HEARING HELD

                                JANUARY 28, 2015

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                                   __________

                      U.S. GOVERNMENT PUBLISHING OFFICE

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                          COMMITTEE ON ARMED SERVICES
                        One Hundred Fourteenth Congress

                 WILLIAM M. ``MAC'' THORNBERRY, Texas, Chairman

    WALTER B. JONES, North Carolina      ADAM SMITH, Washington
    J. RANDY FORBES, Virginia            LORETTA SANCHEZ, California
    JEFF MILLER, Florida                 ROBERT A. BRADY, Pennsylvania
    JOE WILSON, South Carolina           SUSAN A. DAVIS, California
    FRANK A. LoBIONDO, New Jersey        JAMES R. LANGEVIN, Rhode Island
    ROB BISHOP, Utah                     RICK LARSEN, Washington
    MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
    JOHN KLINE, Minnesota                MADELEINE Z. BORDALLO, Guam
    MIKE ROGERS, Alabama                 JOE COURTNEY, Connecticut
    TRENT FRANKS, Arizona                NIKI TSONGAS, Massachusetts
    BILL SHUSTER, Pennsylvania           JOHN GARAMENDI, California
    K. MICHAEL CONAWAY, Texas            HENRY C. ``HANK'' JOHNSON, Jr.,
    DOUG LAMBORN, Colorado                   Georgia
    ROBERT J. WITTMAN, Virginia          JACKIE SPEIER, California
    DUNCAN HUNTER, California            JOAQUIN CASTRO, Texas
    JOHN FLEMING, Louisiana              TAMMY DUCKWORTH, Illinois
    MIKE COFFMAN, Colorado               SCOTT H. PETERS, California
    CHRISTOPHER P. GIBSON, New York      MARC A. VEASEY, Texas
    VICKY HARTZLER, Missouri             TULSI GABBARD, Hawaii
    JOSEPH J. HECK, Nevada               TIMOTHY J. WALZ, Minnesota
    AUSTIN SCOTT, Georgia                BETO O'ROURKE, Texas
    STEVEN M. PALAZZO, Mississippi       DONALD NORCROSS, New Jersey
    MO BROOKS, Alabama                   RUBEN GALLEGO, Arizona
    RICHARD B. NUGENT, Florida           MARK TAKAI, Hawaii
    PAUL COOK, California                GWEN GRAHAM, Florida
    JIM BRIDENSTINE, Oklahoma            BRAD ASHFORD, Nebraska
    BRAD R. WENSTRUP, Ohio               SETH MOULTON, Massachusetts
    JACKIE WALORSKI, Indiana             PETE AGUILAR, California
    BRADLEY BYRNE, Alabama
    SAM GRAVES, Missouri
    RYAN K. ZINKE, Montana
    ELISE M. STEFANIK, New York
    MARTHA McSALLY, Arizona
    STEPHEN KNIGHT, California
    THOMAS MacARTHUR, New Jersey

                      Robert L. Simmons II, Staff Director
                     John Wason, Professional Staff Member
                      Doug Bush, Professional Staff Member
                               Aaron Falk, Clerk

                                C O N T E N T S

                                  ----------
                                                                       Page

                  STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

    Smith, Hon. Adam, a Representative from Washington, Ranking
      Member, Committee on Armed Services............................     4
    Thornberry, Hon. William M. ``Mac,'' a Representative from Texas,
      Chairman, Committee on Armed Services..........................     3

                                   WITNESSES

    Kendall, Hon. Frank, Under Secretary of Defense for Acquisition,
      Technology and Logistics, U.S. Department of Defense...........     4
    Ramsay, Lt Gen Mark F., USAF, Director, Force Structure,
      Resources and Assessment, J8, Joint Staff......................     6

                                    APPENDIX

    Prepared Statements:

        Kendall, Hon. Frank..........................................    45
        Ramsay, Lt Gen Mark F........................................    59
        Thornberry, Hon. William M. ``Mac''..........................    43

    Documents Submitted for the Record:

        [There were no Documents submitted.]

    Witness Responses to Questions Asked During the Hearing:

        Mr. Peters...................................................    69

    Questions Submitted by Members Post Hearing:

        Mr. Cook.....................................................    78
        Mr. Gibson...................................................    77
        Mr. Rogers...................................................    74
        Mr. Shuster..................................................    75
        Mr. Turner...................................................    73

     A CASE FOR REFORM: IMPROVING DOD'S ABILITY TO RESPOND TO THE PACE OF
                              TECHNOLOGICAL CHANGE

                                  ----------

                              House of Representatives,
                                   Committee on Armed Services,
                           Washington, DC, Wednesday, January 28, 2015.
        The committee met, pursuant to call, at 9:33 a.m., in Room
    2118, Rayburn House Office Building, Hon. William M. ``Mac''
    Thornberry (chairman of the committee) presiding.
        The Chairman. The committee will come to order. Let me
    welcome all the members, witnesses and guests to the first
    formal hearing of this committee in the 114th Congress.
        Before we turn to our witnesses and the topic of the day,
    Mr. Smith and I want to take a brief moment to welcome and to
    introduce the new members of the committee. The brevity of our
    introductions is no indication of the talent that the new
    members bring. It is simply a function of our time limitations.
    We are going to have votes here in a little bit, but I do want
    to take a moment to welcome our new folks.
        On the Republican side, there are six new members, starting
    with Sam Graves, who represents the Missouri's Sixth District
    and is joining us after completing his term as the chairman of
    the House Small Business Committee. He has worked with us on
    those issues before and will be a huge asset as we continue to
    work through a lot of the issues that we are going to be
    talking about today.
        Next is Ryan Zinke, who represents Montana's At-Large
    District, a 23-year-old veteran of the Navy and former Navy
    SEAL [Sea, Air, Land] commander with combat tours in Iraq. So
    he brings lots of experience, but I am told his most important
    role is that of a proud Navy dad, which we all understand.
        Elise Stefanik is representing New York's 21st District and
    Fort Drum, home of the 10th Mountain Division. The youngest
    woman ever elected to the House, she also knows her way around
    Washington, having served in the Bush White House and at the
    Foreign Policy Institute.
        Martha McSally represents the Second District of Arizona,
    home of Fort Huachuca and Davis Monthan Air Force Base. She is
    a retired Air Force colonel, a combat aviator, and the first
    woman to command an A-10 squadron, and flew multiple missions
    in Iraq.
        Steve Knight represents California's 25th Congressional
    District. Born in Edwards Air Force Base, he has served in the
    Army, also as a Los Angeles police officer and as a State
    senator. He has a wealth of knowledge on the rich aviation
    tradition of that district, which we will take advantage of.
        And finally, Tom MacArthur represents southern New Jersey's
    Third District, home of Joint Base McGuire-Dix. A former mayor
    of Randolph, New Jersey, Tom has over 30 years of business
    experience in the insurance industry. And we certainly look
    forward to putting those skills to work here at the Armed
    Services Committee.
        So let me welcome the six new members on our side and yield
    to the distinguished ranking member, Mr. Smith.
        Mr. Smith. Thank you, Mr. Chairman.
        We have actually nine new members on our side of the aisle.
    I want to welcome them. We have two who are veterans of the
    Congress joining the committee and then seven new members.
        Tim Walz is our first member from Minnesota. He is
    currently serving his fourth term representing Minnesota's
    First Congressional District. He enlisted in the Army National
    Guard at the age of 17 and retired 24 years later as a command
    sergeant major and has done a ton of work on veterans issues,
    served on that committee previously. And we have worked closely
    together.
        Beto O'Rourke is from Texas. He was elected to represent
    the people of the 16th District of Texas in November of 2012.
    Prior to his congressional service, Beto O'Rourke served two
    terms on the El Paso City Council and represents Fort Bliss in
    El Paso.
        Donald Norcross from New Jersey was sworn in to the 113th
    Congress to represent New Jersey's First Congressional
    District. He previously served in both the New Jersey General
    Assembly and State Senate, where he developed a reputation as
    an effective bipartisan reformer. Those are, you know, two
    words--``bipartisan'' and ``reformer''--that will fit well on
    this committee.
        So, welcome.
        I think some of our other Members are not here, but I will
    go ahead and introduce them in absentia anyway.
        Ruben Gallego of Arizona is the son of Hispanic immigrants,
    a veteran and a community leader. He was the first in his
    family to attend college and later joined the Marine Corps,
    serving in Iraq with the well-known combat unit Lima 3/25.
        Mark Takai of Hawaii was elected to Hawaii's First
    Congressional District, which was vacated when Colleen Hanabusa
    decided to run for the United States Senate. He serves in the
    Hawaii Army National Guard as a lieutenant colonel and took
    part in Operation Iraqi Freedom in 2009.
        Gwen Graham represents Florida's Second Congressional
    District. She is the daughter of Bob Graham, former United
    States Senator and Governor. She worked for her local school
    district and is also proud to represent Tyndall Air Force Base
    in the Second Congressional District.
        Brad Ashford of Nebraska represents Nebraska's Second
    District, and from 1987 to 1995, he was a judge in the Nebraska
    Court of Industrial Relations and then served in the State
    Senate until he was elected to Congress.
        Seth Moulton of Massachusetts represents Massachusetts'
    Sixth Congressional District; graduated from Harvard in 2001
    with a bachelor of science in physics. He joined the United
    States Marine Corps; served four tours in the Iraq War; and
    between those tours, earned his master's degrees in business
    and public administration in a dual program at Harvard
    University.
        And last is Pete Aguilar, who represents California's 31st
    District. And from 2010 to 2015, he served as the mayor of the
    city of Redlands. Prior to that, he was the youngest member
    ever to serve in the Redland City Council's 140-year history.
        So we have a lot of new members. Welcome to the committee.
    I look forward to working with all of you.
        And, with that, I yield back.

      OPENING STATEMENT OF HON. WILLIAM M. ``MAC'' THORNBERRY, A
        REPRESENTATIVE FROM TEXAS, CHAIRMAN, COMMITTEE ON ARMED
                                SERVICES

        The Chairman. I thank the gentleman.
        And I want to just say again how much I appreciate the
    talent, the experience and the dedication that all the new
    members on both sides of the aisle bring to this committee. We
    are going to be--I can already tell, you are going to enhance
    our deliberations and decisions, and I am really glad to have
    you all here.
        It is also true there were many more members who wanted to
    be on this committee than we had room for, but we definitely
    got the cream of the crop.
        Let's turn now to the subject of our hearing today. The
    subject is technological superiority, how the U.S. is doing and
    how we can ensure that we have the technological edge we need
    for the years to come.
        And I would ask unanimous consent that my full opening
    statement be made part of the record.
        Without objection, so ordered.
        I would just say the Constitution puts on the Congress the
    responsibility to provide and maintain, to raise and support
    military forces that can defend the country. And as we try to
    do that in this day and time, we have a number of challenges,
    one of which is that we face more different kind of challenges
    than maybe we ever have before. Another is that technology is
    moving incredibly quickly. And a third is that some potential
    adversaries or competitors are putting a lot of time, effort,
    and money into creating vulnerabilities for us.
        And then another challenge can be our own system. And so
    that is part of the reason I think it is important for us to
    look, as we have been this week, at what is happening in the
    world and then look at what we can do to improve things, and
    that is part of the reason defense reform is going to be a
    significant part of our agenda.
        So I really appreciate the witnesses we have today: Under
    Secretary of Defense Frank Kendall, who is leading the
    Department's efforts in a number of respects in this topic; and
    also General Ramsay, who is the Joint Staff Director for Force
    Structure, Resources and Assessment.
        It just seems to me the key question before us is: What
    should we in Congress do to ensure that America has the
    technological superiority we require so that we meet the
    Nation's needs and the demands of our time?
        I would yield to Mr. Smith.
        [The prepared statement of Mr. Thornberry can be found in
    the Appendix on page 43.]

    STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM WASHINGTON,
              RANKING MEMBER, COMMITTEE ON ARMED SERVICES

        Mr. Smith. Thank you, Mr. Chairman.
        I appreciate you holding this very important committee.
        I welcome Mr. Kendall and General Ramsay. And this is an
    incredibly important topic. Acquisition reform has always been
    a challenge at the Department of Defense [DOD]. We are always
    seeking ways to improve it, but I think it is particularly
    important in the environment that we find ourselves in, which
    combines two unfortunate elements. One, an expanding and very
    confusing threat environment: We cannot say that things are
    getting less threatening or we have fewer national security
    challenges in the world. It is going in the opposite direction,
    and at the same time, they are incredibly complex.
        And that is combined, of course, with a shrinking budget
    and the challenges of sequestration and the challenges of the
    reductions in the budget, and also, I might add, the challenges
    the government shutdown, the CR's [continuing resolutions].
    Basically from one month to the next, you have frequently, over
    the course of the last 4 years, not known how much money you
    were going to have to spend, or where. So, in that type of
    environment, the better we spend that money, the better off we
    are going to be.
        So I know this is something that has been a huge priority
    for Mr. Kendall since he joined the Department of Defense,
    figuring out ways to buy equipment more quickly, more
    efficiently, make sure we get more out of it, because we have a
    history over the last decade that is not pretty when it comes
    to a lot of money being spent in ways that did not turn out
    well, wasted money on a variety of different programs.
        I want to particularly thank Mr. Thornberry for his
    leadership on this issue. It is something he has worked on for
    a long time on the committee. I think he understands it better
    than anybody and is perfectly positioned to lead the effort to
    try to reform our acquisition process.
        And with that, I look forward to the witnesses' testimony,
    the questions and answers from the panel.
        I yield back.
        The Chairman. I thank the gentleman.
        Again, Mr. Kendall, thank you for being here. The floor is
    yours.

    STATEMENT OF HON. FRANK KENDALL, UNDER SECRETARY OF DEFENSE FOR
       ACQUISITION, TECHNOLOGY AND LOGISTICS, U.S. DEPARTMENT OF
                                DEFENSE

        Secretary Kendall. Thank you, Mr. Chairman.
        Chairman Thornberry, Ranking Member Smith, members of the
    committee, I would like to begin by thanking the committee for
    its willingness to work with the Defense Department on ways to
    improve the productivity and effectiveness of defense
    acquisition.
        I request that my written statement and the accompanying
    materials, which provide details on our acquisition improvement
    efforts, be admitted to the record.
        The Chairman. Without objection, so ordered.
        Secretary Kendall. The acquisition improvement initiatives
    that the Department undertook beginning in 2010, when Dr.
    Carter was Under Secretary for Acquisition, Technology and
    Logistics and I was his principal deputy, initiatives that we
    called Better Buying Power, have evolved as we have learned
    from our experience and gathered data on the effectiveness of
    our policies.
        We are currently close to issuing guidance implementing
    what we call Better Buying Power 3.0, released last year in
    draft; 3.0 builds upon core aspects of earlier versions that
    emphasize strong performance incentives, competition, and
    professionalism in our acquisition workforce, and close and
    continuous interaction with acquisition and requirements
    community, which is represented here today by General Ramsay,
    the J8 from the Joint Staff.
        Better Buying Power also emphasizes elimination of
    unproductive bureaucracy. The rules our program managers must
    follow are still too complicated and burdensome. I know the
    committee leadership shares this view, and I am happy to say
    that the administration will soon formally submit several
    legislative proposals designed to address this problem to both
    the House and the Senate Armed Services Committees. I am
    providing those proposals informally to the committee today.
    The Department looks forward to working with the committee on
    these proposals.
        Better Buying Power 3.0 continues the core aspects of
    earlier versions, which shifts our focus towards technical
    excellence and innovation. It is a response to the
    technological superiority concerns that the chairman mentioned.
    We have provided the members with a 1-page summary, which you
    should have in front of you.
        As I have testified to before this committee previously, I
    am very concerned about the increasing risk of loss of U.S.
    military technological superiority. I was also recently asked
    to provide an input to the Senate Homeland Security and
    Government Affairs Committee on areas in which the Congress
    could help the Department improve acquisition outcomes. I would
    like to summarize my submission for this committee.
        Number one, and number one by a very wide margin, end the
    threat of sequestration. As the leadership mentioned, this is a
    huge problem for the Department. The uncertainty associated
    with our ability to plan without knowing what our future
    budgets would be with any confidence and the inadequate
    resources that sequestration levels would provide are enormous
    problems for the Department.
        Number two, continue to support the Defense Acquisition
    Workforce Development Fund. This fund is a valuable tool for
    improving the professionalism of the acquisition workforce.
        Number three, work with the Department to simplify the
    rules we already have. Mr. Chairman, Ranking Member, and I have
    discussed previously, we can eliminate a great deal of
    unproductive overhead and confusion by simplifying the rules
    governing acquisition today. The recommendations we are
    providing to the committee go a long way in that direction, and
    hopefully, we will be able to implement those.
        Number four, avoid highly restrictive rules that limit
    Department freedom of action. The Department implements an
    almost infinitely varied set of business arrangements with
    industry, and we need the flexibility to tailor our contracts
    consistent with all the various types of situations that we
    face, which cover a very wide set of different options.
        Number five, reduce the counterproductive incentive to
    obligate funds on a fixed schedule. In any negotiation, time is
    a factor that works to one side's advantage. Rigid time-based
    obligation requirements automatically work against the
    Department in our negotiations.
        Number six, allow the Department to hold a management
    reserve to apply to programs that realize risks. Under current
    practice, programs that are performing well often have to be
    the sources of funds to repair poorly performing programs.
        Number seven--and I would use this as the other bookmark,
    if you will, to the set of inputs--help the Department improve
    the professionalism of the government workforce. I believe this
    area has the greatest potential over the long term of improving
    acquisition outcomes. I have worked on and led some well-led
    and some not-so-well-led programs in industry and in
    government. Leadership and professional skills honed over
    decades do matter, perhaps more than any other factor that we
    can influence.
        Again, I would like to thank the committee for its
    cooperation and support. Our warfighters and taxpayers deserve
    the best performance we can possibly achieve from the
    acquisition system. I know you are all equally committed to
    that goal. Thank you.
        [The prepared statement of Secretary Kendall can be found
    in the Appendix on page 45.]
        The Chairman. Thank you.
        General Ramsay, do you have an oral statement you would
    like to give or----
        General Ramsay. I do, Mr. Chairman. And if I could also
    request that my written statement be submitted for the record.
        The Chairman. Without objection.

       STATEMENT OF LT GEN MARK F. RAMSAY, USAF, DIRECTOR, FORCE
          STRUCTURE, RESOURCES AND ASSESSMENT, J8, JOINT STAFF

        General Ramsay. Chairman Thornberry, Ranking Member Smith,
    and distinguished members of the committee, I appreciate the
    opportunity to testify before you today. As the Director for
    Force Structure, Resources and Assessments, I provided insights
    in my written statement into the Joint Staff's role in
    requirements generation and capabilities development process,
    specifically highlighting the close interaction and linkages
    between requirements and other Department process to include
    the defense acquisition system that Mr. Kendall oversees.
        The Joint Requirements Oversight Council, the JROC, is
    charged to identify, assess, and prioritize military capability
    needs. And the Joint Capabilities Integration and Development
    System, or JCIDS, is the process that enables the JROC to meet
    our statutory responsibilities.
        I want to thank the work of this committee as well as the
    Senate Armed Services Committee for providing reforms in recent
    years that added emphasis on our analysis of risk, cost, and
    schedule very early in program development; established a
    deliberate, urgent, and emergent requirements lanes to better
    respond to our warfighter operational user needs; and to enable
    us to consolidate guidance documents, streamline our
    procedures, and mandate shorter document length and staffing
    timelines.
        These reforms also shaped the JROC into a lean
    decisionmaking body chaired by the Vice Chairman of the Joint
    Chiefs of Staff, with the service Vice Chiefs and Assistant
    Commandant of the Marine Corps serving as statutory members.
    The combatant commanders also participate based on interest in
    each program.
        Statutory advisors include Mr. Kendall as well as the Under
    Secretaries of Defense for Policy and the Comptroller, the
    Director of Operational Test and Evaluation, and the Director
    of Cost Assessment and Program Evaluation.
        In the execution of the JROC's duties, we work very closely
    with all stakeholders to manage an agile and responsive
    requirements process that is intertwined with other key
    decision processes across the Department of Defense.
        Our ultimate goal in the JCIDS process is to ensure that we
    remain agile and responsive and innovative so the Department
    can develop and deliver operationally and cost-effective
    capabilities to the joint force to help achieve our Nation's
    strategic and military objectives.
        Thank you, and I look forward to your questions.
        [The prepared statement of General Ramsay can be found in
    the Appendix on page 59.]
        The Chairman. Thank you.
        And let me just say, I very much appreciate the working
    relationship that we have had over the past year or so, Mr.
    Kendall, with you and your team.
        But also, Mr. Smith, this is--he has been integral to
    everything we have tried to work on. This has been completely
    bipartisan, as well as working with the Pentagon, as well as
    working with the Senate. And I think all of us recognize that
    it is going to take all of us collaborating, working together
    to improve this system because it very much is like changing an
    airplane engine while the engine is in flight. We still have to
    defend the country while we look to make improvements.
        And I particularly appreciate, Mr. Kendall, you sending up
    legislative proposals ahead of the budget. I think that is
    something that is unusual. I think it shows the seriousness
    with which at least you and the folks at the Pentagon take this
    issue. So, thank you. That helps us get a head start.
        The one question I want to pose to you is this: As you
    know, we have had some classified and unclassified sessions for
    members this week about, where are we? Technological
    superiority: Are we ahead? How much? Are we losing it? Just
    kind of the state of technology, especially versus near-peer-
    type competitors.
        We obviously can't talk specifics in an open session, but I
    am just wondering how you would characterize where we are and
    what concerns you for the American people. Kind of in layman's
    language, where do you think we are as far as the country's
    technological superiority and what concerns you?
        Mr. Kendall. Thank you, Mr. Chairman.
        We are at risk, and the situation is getting worse. I came
    back to the Pentagon in 2010, after being away for about 15
    years. And the intelligence estimates when I left in 1994 were
    that China was really not much of a problem for us, but in 10
    or 15 years, they possibly could be, based on their economic
    rate of growth at that time.
        I came back, and the intelligence estimates were correct.
    And I became, I think it is fair to say, alarmed as soon as I
    started seeing technical intelligence reports on China's
    modernization programs. And I can say the same of Russian's
    modernization programs as well.
        We came out of the Cold War with a very dominant military.
    We demonstrated that military conclusively in the First Gulf
    War, and we have used it very effectively against any
    conventional force in the period since. Since 2001, we have
    been involved in counterinsurgency and counterterrorism
    campaigns, which are very different kinds of threat.
        No one observed more carefully the dominance that we
    demonstrated in 1991 than the Chinese. And we demonstrated what
    Bob Work calls the ``second offset strategy,'' which is the
    capability of precision munitions, in particular, but also
    stealth, networked forces, and wide-area surveillance, and
    technologies, which in an integrated fashion, gave a very
    dominant capability to our forces.
        People have had a long time; that was long time ago. People
    have had quite a bit of time to think about and to do things
    about how to defeat that force. And what I am seeing in foreign
    modernizations, again, particularly China's, is a suite of
    capabilities that are intended clearly, to me at least, to
    defeat the American way of doing power projection, American way
    of warfare, when we fight in an expeditionary manner far from
    the United States. Our systems depend upon what I would call a
    few high-value assets, and I would start with space-based
    assets, satellites, which in relatively small numbers provide
    important functions for intelligence, targeting, and
    communications; and I would include aircraft carriers, which
    are the basis for our naval power projection, which we have a
    small number; and airfields, which are the basis by which the
    Air Force is able to project power, using mostly fighter
    aircraft.
        Those targets that those represent to an adversary are
    finite. They are there in limited numbers. And the precision
    munitions revolution that we demonstrated has been emulated by
    others. So if I were to worry about one aspect of the threat, I
    would start by talking about missiles, both ballistic and
    cruise missiles. They have attacked those high-value assets.
        I was an Army air defender years ago. And our best air
    defense systems could get maybe a 70 percent probability of
    kill; if you were good, maybe a 90 percent probability of kill
    against one incoming airplane or missile. It doesn't take much
    to do the math to figure out that if you send a large number of
    missiles against a single asset that you are going to get some
    through. And once those missiles become highly accurate and can
    kill the thing that you are trying to attack if they penetrate,
    then you have a problem. That is the change that has occurred.
    And we pioneered that change, but it has now been emulated by
    others.
        And, without saying too much about this, the Chinese, in
    particular--and, again, to a lesser extent, the Russians--are
    going beyond what we have done. They are making advances beyond
    what we currently have fielded, and it is designed to threaten
    largely those various high-value assets.
        Now, the Department is recognizing this. Dr. Carter, who is
    here and will be next week, I think, and I have talked about
    this briefly. He understands it. Bob Work understands it.
    Secretary Hagel understands it. So we have been doing some
    things to try to address this problem, but we also have global
    commitments, we also have readiness concerns, and we also have
    the threat of sequestration in front of us. So this is a
    serious problem for the country. And I gave testimony here last
    year where I talked about the U.S. being challenged in an
    unprecedented way. It is not just missiles. It is other things,
    such as electronic warfare capabilities; it is antisatellite
    capabilities, a spectrum of things to defeat our space systems.
    It is a number of things which I think are being developed very
    consciously to defeat the American way of projecting power, and
    we need to respond to that.
        The Chairman. Well, thank you. I just think it is important
    to emphasize the need to improve our acquisition process is not
    just about saving money; it is about this problem of change
    that is going faster and faster that we are having trouble
    keeping up with.
        Mr. Smith.
        Mr. Smith. Thank you, Mr. Chairman.
        Just one straightforward question on acquisition reform. A
    lot of it is what goes on within the Pentagon, the culture of
    the decisions that are made, you know, all kinds and
    restructure, but from a legislative standpoint, as we here get
    ready to try to put together an acquisition reform package,
    what authority don't you have that you would like to have? What
    changes in the law can we give you that would give you the
    flexibility to do some of the things that you and Mr.
    Thornberry just talked about?
        Secretary Kendall. Thank you, Ranking Member. Congressman,
    I generally have the authorities that I need.
        I don't think our problem is authorities. I think our
    problem has more to do with implementation of the things that
    we have. And that is why I emphasize professionalism in our
    workforce so much. We need to give our people the tools and the
    training, the experience they need to do their jobs well. And
    then we need to get out of their way a lot of things that make
    it harder for them to do their jobs.
        I spoke to Navy Admiral Dave Lewis a couple of years ago,
    he is a PEO, program executive officer, with the Navy. And he
    told me that he was most effective as program manager when he
    was running the DDG-51 Destroyer Program when he had a
    multiyear contract, because he could focus entirely on managing
    that contract and managing the performance of industry to do a
    better job of delivering product to the Navy. And what was
    different, of course, in the multiyear contract environment
    that he was in was he didn't have to come in for repeated staff
    reviews all the time that took up all of his time and
    distracted him from actually doing his job.
        I took that to heart, and I think we really need to work
    hard to relieve some of the burdens that we are imposing on our
    program managers and our acquisition workforce. They are well-
    intentioned. And a lot of the recommendations that we have
    prepared and brought over to the committee go along those
    lines. They relieve some of the burdens that are on our people.
        Developing the professionalism of the workforce is a task
    that takes time. And I want to compliment our workforce. We
    have, I think, an exceptionally capable and professional
    workforce, but it can be improved. We have a workforce where
    the demographics are a bit troubling. We have a lot of people
    close to retirement and a lot of young people who just came in,
    and kind of a bathtub in the middle. We have to manage our way
    through that. So we need tools to build up that workforce and
    make it more capable over time. And we would like the help of
    the committee on that in particular.
        Mr. Smith. Yeah, one of the complaints that we hear all the
    time from industry in terms of, you know, specifically going
    over budget on projects is the amount of overseers, regulators
    that they have to deal with on a day-in-and-day-out basis, that
    that drives a lot of their cost. I have talked to a lot of
    people about this in the think tank world, and they say, you
    know, true or not, live with it, because it is not changing.
    But it seems to me like if it is something that is that big a
    problem, we ought to focus on it. And their argument is they
    spend more time trying to justify every decision they are
    making than actually doing their work.
        Do you see this as a problem? Are there too many
    bureaucrats, you know, overseeing the making of our military
    equipment in a duplicative fashion that is not actually
    helping?
        Secretary Kendall. The short answer is, no, but I think we
    can improve in that regard. We have been working for the last
    few years with our Department's auditors, who don't report
    directly to me but have worked with me very closely on this.
    There is a very large backlog of audits that needs to be done.
    That basically is a problem for us.
        There is a problem with using statistical audits as opposed
    to complete audits and finding ways to be more effective on how
    we focus the resources that we have. The Defense Contract
    Management organization--that does report to me--supervises our
    contractors. And I think we have to strike a balance there. I
    don't think we are vastly off on that. I don't think that is a
    core problem for us. We recover quite a bit of money through
    our auditing process each year, much more than the auditing
    costs us. We do find quality problems, and you will read
    reports about those occasionally in the press. And so we do
    have to have some level of that.
        I don't think our balance is all that far off, but I do
    think we can improve.
        Mr. Smith. Okay.
        Thank you, Mr. Chairman. I yield back.
        The Chairman. Thank you.
        Mr. Wilson.
        Mr. Wilson. Thank you, Mr. Chairman.
        And thank both of you for being here today.
        General Ramsay, the acquisition workforce is actively
    managed, including providing a number of incentives and career
    path opportunities. How does that compare with the requirements
    workforce? Do you have any recommendations for improving the
    career management of the requirements workforce?
        General Ramsay. Thank you, Congressman Wilson.
        Thanks to the work of this committee about--about, I think
    it was 2007--there was statutory requirement, just as the
    acquisition workforce, for a requirements workforce that was
    more professional. So we now have a five-level certification
    program required for all the folks who touch requirements,
    whether they are military or civilian, to go through Defense
    Acquisition University. One of those programs is for senior
    leader requirements. I went through that program 2\1/2\ years
    ago when I took that job. So we think we have got a very robust
    program that goes back now. We implemented this starting in the
    beginning of fiscal year 2008, so the workforce we have in
    place is much--they are a professional workforce. They
    obviously rotate out probably more than the acquisition
    managers do because many of these folks are wearing uniform
    like I am. But the folks that come into this process have
    various certification process. So the short answer is I think
    we are right where we need to be, and we are getting better
    with time.
        Mr. Wilson. That is encouraging.
        And, Mr. Kendall, thank you for raising concerns about
    threats to our country. And, we are not just talking about
    money; we are talking about being technologically ahead to
    protect the American people, and thank you for raising that.
        Additionally, we do see that the Small Business Innovative
    Research program as an important tool of the Department to tap
    into vital innovative technologies from small businesses. What
    actions can the Department take to improve the utilization of
    the program, especially the use of Phase III's integrated into
    a larger acquisition program of record?
        Secretary Kendall. Good question, Congressman. We are
    looking at that program. It has been a very successful program.
    We get fairly good transition rates, but there are some issues
    with it. The amount of time it takes to get an award, and
    getting from one phase to the other, and then getting into
    where you are actually producing things has been a problem
    historically.
        We are looking at--if you look at the sheet of paper you
    have in front of you, under ``Better Buying Power 3.0,'' we are
    looking at all of the different categories of research and
    development spending that we have, and I have teams working
    those right now, including things like Small Business
    Innovative Research and Rapid Innovation Fund, for example, and
    our other areas of contract at R&D [research and development]
    as well as independent R&D that industry does. We need to try
    to get as much as we can out of each of those individual pots
    of money, if you will. So we are looking at that hard now, and
    we will be coming back with some recommendations in the next
    few months on that.
        Mr. Wilson. Well, good program, and however we can improve
    it, we appreciate that.
        In meeting with service acquisition executives earlier this
    week, they recommended spending more time at front end of a
    program, such as thorough market research, modeling, and
    simulation for trade space analysis, developmental planning,
    and technology maturation. They described a process where more
    time would be spent early in the process but which would save
    time overall.
        Do you support that recommendation? What recommendations do
    you have to make the process to do a better job?
        Secretary Kendall. I do agree with that. I think it is very
    important we take the time upfront to make sure we have got it
    right, particularly in a time of scarce resources, as we cannot
    afford new starts that are false starts. When we start a
    program, we should be reasonably confident that we are going to
    take it through to completion and field the capability. And
    doing the system engineering upfront, doing the requirements
    tradeoffs upfront, making sure the programs are affordable,
    these are all very, very important. Making sure the business
    strategies and risk mitigation plans are appropriate is
    incredibly important. So I agree with that comment. That is one
    of the things we are trying to do.
        Mr. Wilson. And you have already referenced this, but it is
    so important, on page 3 of your testimony, quote, ``Russia and
    others, such as Iran, are also fielding precision missiles and
    other capabilities that threaten our power projection
    capabilities,'' end of quote.
        And I think, again, if you could restate your concerns, the
    American people need to know this.
        Secretary Kendall. The concern is that we are dependent
    upon a very small number of what I call high-value assets to
    implement conventional military power, generally far from the
    shores of the United States. And as you get closer to someone
    else's homeland, their ability--they have certain advantages at
    that point. They have, obviously, land-basing for their
    systems. They can have mobile systems that are hard for us to
    target. We have a small number of assets which are carrying the
    bulk of our power projection capability forward. They are
    either Air Force bases that are already in the region, or they
    are carriers and carrier strike groups that are coming forward.
    And if you can target those and attack them with precision
    missiles, then you have a significant advantage. That is the
    situation we are increasingly facing.
        Mr. Wilson. Thank you very much.
        The Chairman. Thank you.
        Mr. Courtney.
        Mr. Courtney. Thank you, Mr. Chairman.
        And thank you to the witnesses.
        Last Saturday, one of the drumbeat of snowstorms up in New
    England, all of my events were cancelled, and I finally got a
    chance to sit down and watch the PBS special on Hyman Rickover,
    which, again, I would encourage all members to review because
    it really is squarely in the sweet spot of what we are talking
    about here today. And he, obviously, was an innovator and a
    maverick. That is almost an understatement. He, obviously--the
    movie--the documentary is more about almost his struggles with
    the bureaucracy than it was with the technology of building
    nuclear-powered aircraft carriers and submarines.
        And two of your initiatives are focused on innovation: One
    is the DARPA [Defense Advanced Research Projects Agency]
    initiative, and then is the acquisition reform. And I was
    trying to visualize reading that how Hyman Rickover, who I
    think has still provided us with undersea dominance based on
    what he did 60 years ago, you know, would function today and
    how you see that as sort of trying to nurture that kind of
    amazing creativity that will help us with this technological
    gap that we are facing.
        Secretary Kendall. Rickover established a lasting culture
    and tradition in the Navy, a nuclear power Navy, which I think
    everyone should admire. It is a terrific organization. He was
    also very much a person who is--a very strong engineering
    background, very strong leadership model. I think we could
    emulate a lot of that, and we should be. When I talk about
    developing professionals, he is the sort of person that I have
    in mind.
        Everybody can't be a maverick, obviously, but you do have
    to--I find myself constantly trying to beat back the
    bureaucracy, which has a tendency--if you have looked at any of
    the literature on bureaucracies and how they grow, there are
    certain rules where all bureaucracies sort of self-perpetuate
    and increase their size over time. And it is just a constant
    struggle to push back on that and to try to make sure that
    people focus on substance as opposed to form in the things that
    we do. It is one of the reasons we are asking for some of the
    legislative reforms that we are asking for, to try to get rid
    of some of those bureaucratic tools and replace them with
    things that are more substantive. So I generally agree with
    your point about that. It is consistent with my point about
    professionalism and the importance of leadership.
        Mr. Courtney. So can you talk about the DARPA piece of your
    proposal in terms of where that creates that space?
        Secretary Kendall. Yeah. I think you are referring to what
    we call the Aerospace Innovation Initiative. Yeah, this will be
    in our budget, and I have been authorized to talk about this a
    little bit even though the budget is not out yet.
        The Aerospace Innovation Initiative is consistent with one
    of the Better Buying Power 3.0 initiatives on prototyping and
    experimentation. And what it will be is a program that will be
    initially led by DARPA, but it will involve the Navy and the
    Air Force as well. And the intent is to develop prototypes for
    the next generation of air dominance platforms, X-Plane
    programs, if you will. To be competitive, the Navy and the Air
    Force will each have a variant that is focused on their mission
    requirements. There will be a technology period leading up to
    the development of the prototypes, and it will be consistent
    with what we talked about earlier. We will do the upfront work
    to make sure you are doing the right thing but then reduce the
    lead time to having the next-generation capabilities. So this
    is the--this will lead to the systems that will ultimately come
    after the F-35, essentially.
        Part of the program is an airframe oriented program with
    those X-Plane prototypes. Part of what we put under the
    Aerospace Innovation Initiative is a jet engine development
    program for the next generation, also competitive prototypes
    for the next-generation propulsion.
        Now those are going to be two core parts of getting to the
    next generation of air dominance. There are other elements of
    the Department's program that are laid out that get to other
    aspects, but that is what the Aerospace Innovation Initiative
    is.
        Thank you for asking about it. I think it is an important
    initiative. It falls under a broader Defense Innovation
    Initiative that Secretary Hagel announced last fall, which
    covers our business processes, operational concepts, the way we
    train people, and a number of other things, but it is
    consistent with that approach.
        Mr. Courtney. Thank you. Again, one sort of fun fact in
    that documentary was that it took 5 years from the moment we
    had an atomic-powered light bulb to the launching of the
    Nautilus as a nuclear-powered submarine, which is just--you
    know, it is hard to even imagine. The Navy was telling him it
    was going to take 50 to 60 years to develop a nuclear-powered
    submarine, and he did it in really less than 5 years. It is----
        Secretary Kendall. If I can respond to that. I have been
    asked by--not too long ago--by a reporter if I thought the
    Department was taking too much risk. I think we are not taking
    enough risk. And one of the things that Rickover did in that
    program was he did it in a managed, you know, professional way.
        But we can't expect our programs to execute perfectly. If
    we are going to be the number one country in the world
    militarily, we have to do things no one has ever done before,
    and that inherently involves risk. We can't--if we take the
    time to reduce every risk to zero, we will never get there. We
    have got to be willing to accept risk in our programs and then
    deal with the fact that, because of that, some of our
    development programs are going to have overruns and schedule
    slips. It is a part of the process. It is part of the
    development process. So expecting perfection is really the
    wrong way for us to be thinking about development.
        The Chairman. I appreciate that exchange. Risk and
    leadership, two keys to this whole thing. That was very, very
    interesting.
        Mr. Nugent.
        Mr. Nugent. Thank you, Mr. Chairman.
        And I want to thank our two panelists today. It is always
    great to hear from you. I think you usually do it in a way that
    we can understand, which is a good thing.
        This is really a two-part question, and it is for both Mr.
    Kendall and General Ramsay. What are the lessons learned from
    the Department's rapid acquisition program and what extent can
    those lessons be applied to accelerate other DOD acquisitions?
        And the second part of that question is, from a
    warfighter's perspective, are they connected well enough to
    allow to get the needs that they have to get actually an
    acquisition? And then when it gets to acquisition, a lot of
    times, you know, we are trying to get to a hundred percent
    perfect, I think you touched on it, when 80 percent or 90
    percent at least to get it out to the warfighter's hands would
    be appropriate. And as one of the things that we have seen with
    DOD acquisition is they do a really good job when you start
    building incrementally onto a program, and when you try to get
    to 100 percent, that just stalls programs, I think.
        And so it is really a two-part question. I would love to
    hear your answer.
        Secretary Kendall. I think, like a lot of other things, the
    secret is to have the right balance. The rapid acquisition
    programs, I think, have been very successful. I look at MRAP's
    [mine-resistant ambush protected vehicles], for example, as a
    classic example there. And what we have done there is focus on
    the essentials of what we are trying to provide to the
    warfighter and go for that and get that done as quickly as
    possible. So we have accepted risk in those programs. And we
    haven't done perfect programs, but we have done programs that
    worked and saved lives and were very effective on the
    battlefield.
        I chair a group now called the Warfighter Senior
    Integration Group, which is in very close touch with our people
    doing operations, our response to what we call urgent
    operational needs. And we use rapid acquisition approaches to
    address those needs. So where they are applicable, they work
    very well.
        I am going to--just to be--on the other hand, okay, there
    are programs where that isn't the right way to go about it.
        Mr. Nugent. Sure.
        Secretary Kendall. And I can think of some programs where
    we have done rapid acquisition type demonstrators, prototypes,
    and then try to take them to production and field them, without
    having done the things we need to do to make sure those are
    reliable and will really work in the environment over a period
    of time. So that is a little different than when you are trying
    to fight a warfighter and do something right now in one
    specific environment. So, again, the secret is balance, but the
    programs you cite I think have been very effective.
        And one of the things we are trying to do is preserve that
    capability. As our operations in Iraq and Afghanistan have
    drawn down, we have tried to find ways to institutionalize that
    rapid acquisition approach.
        I published just recently our DOD 5000.02 instruction,
    which is our guidebook for all defense acquisition, basically.
    It is kind of the Bible for defense acquisition. And we
    included a rapid acquisition model in there, and a couple of
    approaches where urgency is really what drives you, and there
    you cut corners, you take risks, you do things you wouldn't do
    otherwise, you cut away the nonessential requirements, focus on
    the essential ones to try to get the capability out as quickly
    as possible. So I appreciate your comment. That has been an
    effective program. And when it is appropriate, we want to
    continue to do it.
        General Ramsay. Congressman, I will just piggyback on Mr.
    Kendall's comments by saying from my 2\1/2\ years' experience,
    the authority and the guidance that this committee gave us back
    in NDAA [National Defense Authorization Act] 2011 has been
    absolutely wonderful to support the warfighter.
        I would offer kind of two vignettes to answer both of your
    questions. We are really good at adapting programs we have, and
    we are really good about delivering those things that truly are
    deliverable in a very short amount of time. So MRAP, Mr.
    Kendall used that example.
        Let me give you an example of both of those. Obviously, one
    of the biggest areas that we have been addressing for the past
    decade is the area of permissive ISR [intelligence,
    surveillance, and reconnaissance], so the MQ-1, MQ-9 platform,
    the Reaper being the MQ-9. One of the things we figured out was
    they are not an inexpensive aircraft. They are a phenomenal
    capability. And everybody wants them; the warfighters want
    them.
        So sometimes the solution is not more of the same;
    sometimes it is modify what you have. So one of the things we
    have done through the rapid acquisition process is adding
    extended-range kits to the MQ-9s we have. We continue to buy
    more of those. So eventually the fleet will be MQ-9, more
    capable platform, made even more capable through the joint--
    this rapid acquisition process.
        The second thing I will offer is when you take something
    that is developable in a short amount of time for the
    warfighter, we can do that very fast. So a great example just
    in the last few months has been with the Ebola crisis in West
    Africa, one of the things we were asked to do by the government
    was to come up with a way to transport our own people to
    isolate them the way you see a commercial company out of
    Atlanta. They do that now. We went from, ``I need something,''
    to funding it, finishing the requirements, developing it, and
    fielding it in about 3 months. And that is the transportable
    isolation system.
        So where it is doable and manageable in a very short amount
    of time, we can deliver that very fast through the process.
    And, as Mr. Kendall says, we can cut through a lot of red tape.
        Mr. Nugent. Well, I thank both of you for your answers.
        And I yield back.
        The Chairman. Mr. Peters.
        Mr. Peters. Thank you, Mr. Chairman, and thank you for
    having this hearing. It comes at an important time.
        As you have outlined, these threats are expanding. They are
    new, and they are essentially technological. And yet one of the
    biggest problems we have here in procurement is harnessing the
    powers of our own technology to get that into the--to get the
    innovation that is happening here in the United States into the
    military. And so this is not just an issue of management or
    budget, but it is an issue of security. And it is my
    observation that we really just can't have this friction among
    these moving parts anymore.
        I would offer some comments I have heard from industry, on
    which we rely to build and many cases develop these products,
    that they don't have a good relationship in terms of
    interaction and that they weren't involved necessarily in the
    Better Buying Power programs development as much as they would
    want. I just encourage you to be talking to those folks about
    what it is that we are missing--we are missing, you are
    missing--and how that program can be improved.
        Obviously, there are issues of culture at any bureaucracy.
    In the DOD, I think you have identified some of those. And with
    respect to Congress, I do agree with the recommendation that we
    repeal sequester, and if there is a vote on that, you would
    have my support and my vote.
        I wanted to ask a specific question in the context of IT
    [information technology], where there is a major transformation
    with the ever-growing cloud, mobile, social computing
    requirements and the acquisition of network equipment that has
    to fundamentally change if we are going to keep pace. And you--
    in August 2014, to your credit, your office released a set of
    competition guidelines; called out restrictive specifications
    as an impediment to competition; acquisition workforce
    complacency; lack of accountability; and the use of sole-source
    justifications; and cautionary language about vendor lock;
    offered general techniques and approaches to support
    competition; and a discussion on the benefits of employing an
    open systems architecture, all to your credit.
        I wanted to ask you two questions. One is, how would you
    characterize your implementation of those guidelines to date,
    specifically with respect to IT acquisition. And then what are
    some specific timelines and actions for implementing these good
    recommendations that you would like to propose to promote
    competition?
        Secretary Kendall. There are two different forms of IT, I
    think, that we have to talk about. One is IT infrastructure,
    which is basically all of the hardware and software that
    provides the networks that our applications run on. The other
    is the business systems that run on those networks, the
    applications, if you will.
        Working closely with the CIO [chief information officer] on
    the infrastructure, which is largely his responsibility, and we
    have some good modernization programs, I think, in effect
    there, which would be much more efficient.
        On the business systems side, we are trying to get a more
    flexible model. For a long time, the Department was applying a
    model which was somewhat rigid in terms of how we wanted to see
    programs structured. And we are trying to learn from commercial
    industry more about how to do that.
        Now, I can tell you from my own commercial experience that
    implementing new business systems is very, very difficult, even
    in the commercial side of the house. Trying to do business
    systems at a major defense contractor I found to be a very,
    very challenging task, and there are a lot of histories of
    people having problems with that. The Department has its own
    sordid history, I think, in business systems. And I think we
    have improved there. I think we have a long way to go.
        One of the things that I am trying to do is build up our
    body of professionalism in that area. It is a very specialized
    acquisition field. It is not the same as a weapons system. The
    transition from an old business system to a new business system
    is much more difficult than the transition from an old piece of
    hardware to a new piece of hardware.
        The way you manage industry in that, the way you set up
    incentives, the way you ensure you have open systems, so that
    you have flexibility and aren't in a vendor lock situation,
    they are all important in how we structure that.
        So I think we are making progress. It is hard to put out
    specific goals, because we tend to work on a program-by-program
    basis. I am trying to establish a center of excellence for
    business systems, which I think will be helpful to the
    Department, essentially an internal consulting organization of
    people who have had experience implementing business systems.
    And one of the hardest things is transitioning them into a
    field and replacing the things that are already there, getting
    the workforce trained and so on.
        Mr. Peters. When we----
        Secretary Kendall. Another thing is----
        Mr. Peters. When----
        Secretary Kendall [continuing]. Our requirements.
        Mr. Peters. I was just going to say about timelines--I am
    running out of time here myself--so I want to see if you can
    give me some sense of how quickly you saw some progress in this
    transition.
        Secretary Kendall. We are doing--well, one that I think we
    have really turned the corner on and are doing much better on,
    although I don't want to jinx it, is electronic healthcare
    records, which we have moved to a more commercial model on. We
    are in source selection for that now. I have got a top
    management team working that. I think we are going to do a
    pretty good job with this one, make it a good model for how to
    do this.
        Others, I think we have learned from our mistakes. Some of
    our ERP, our enterprise resource programs, I think, are coming
    along and doing better. We had a financial management system in
    the Army which struggled a little bit to be put in the field
    last year that is doing all right now.
        So I think what I would have to do is look at the specific
    things we are doing and where you would see evidence through
    those of progress.
        Mr. Peters. My time has expired, but maybe if you can get
    back to me specifically----
        Secretary Kendall. Sure.
        Mr. Peters [continuing]. On IT acquisition in writing, that
    would be helpful.
        Secretary Kendall. Happy to do that.
        [The information referred to can be found in the Appendix
    on page 69.]
        The Chairman. As you all know, they have just called
    votes--excuse me, two votes. My intention is to go, say,
    another 10 minutes or so and then recess to go vote.
        And then I am going to come back and continue the hearing,
    with the indulgence of our witnesses. You all can have a cup of
    coffee or something, if you don't mind, and then we will be
    back after that.
        Mr. Bridenstine.
        Mr. Bridenstine. Thank you, Mr. Chairman.
        And, Mr. Kendall, thank you for being here.
        And General Ramsay, thank you.
        My question was for you, Mr. Kendall. You mentioned three
    high-value assets specifically. You talked about Air Force
    bases. You talked about aircraft carriers. And you talked about
    space. And that these high-value assets represent a relatively
    limited number of targets that enable the enemies of our
    country ultimately to have an advantage when we are on the
    other side of the world, and certainly that is a concern of
    mine as well.
        What I would like to talk to you specifically about is
    space. When you think about architectures in space, we
    currently have in space from the commercial sector literally
    hundreds of satellites for communications. And if we were to
    leverage those satellites, we would in essence very quickly
    disaggregate the targeting solutions for our enemies and at the
    same time create more resiliency and redundancy in space.
        Additionally, when you look at current acquisitions of,
    say, WGS [Wideband Global SATCOM] satellites and the
    capabilities of these satellites, we are talking about the
    ability to transmit 7 gigabits per second compared to what the
    private sector is putting into space right now, which is, you
    know, 140 gigabits per second, and that is this year. Next year
    we are going to be multiple hundreds of gigabits per second
    that the private sector is developing and launching, and at the
    same time, we are going to continue launching into the future,
    owned and operated by the military, satellites that only can
    produce 7 gigabits per second.
        My question for you is when you look at disaggregation and
    resiliency, when you look at the capabilities of the private
    sector and you compare that to maybe even, you know, as DARPA
    was involved in generating or producing the Internet, it wasn't
    until the private sector ultimately got a hold of it and
    started taking advantage of it for commercial purposes that we
    actually leveraged it inside the military to where we could
    actually have an advantage. And if you look at satellite
    communication architecture, the systems exist in space now, and
    it seems to me that we are not taking advantage of it, and if
    we don't, our enemies possibly could.
        This, I think, represents a challenge that we have to face
    as it relates to the acquisition of access to a global
    communication architecture that already exists in space.
        My question for you is as we go forward, will we get
    proposals from the Department of Defense to take advantage and
    leverage these assets that already exist and, of course, the
    rapid advancements in technology that are happening right now?
        Secretary Kendall. You make some very good points, and I
    think the short answer is yes. Because of concerns about the
    survivability of our space assets, we are looking at a wide
    range of alternatives to the way we currently do business. We
    have a system called EHF [Extremely High Frequency], it sounds
    like you are familiar with these, which is a very secure
    communication satellite. And we have to have satellite systems
    that provide communications that are secure against jamming,
    secure against cyber attack, and provide encrypted
    communications for us, and some of those do things like support
    the strategic deterrent. We also need to have fairly high
    bandwidth in order to support current operations in certain
    places, and we have leveraged commercial satellites to some
    degree, but we are relooking now at our architectures because
    of the survivability problem that I talked about and you
    mentioned to see if disaggregated architectures of one type or
    another.
        And I think one of the things we do have to look at is
    whether we can effectively disaggregate by reliance on
    commercial systems. And we have to be sure that they are going
    to be available to us in wartime, that we will have the
    capacity that we need. So there are some questions that we have
    to answer there. And we have to look at their resiliency to
    various threats, not just to direct attack. But the short
    answer to your question is yes.
        And General Ramsay may want to comment on this, because it
    is largely a requirements question.
        General Ramsay. I will just piggyback on one word that Mr.
    Kendall mentioned, and it is a great issue to discuss further,
    and it is disaggregation. This has been a big topic in my 2\1/
    2\ years in this job has been how do we--how do we look at
    space as a domain, and disaggregation could be doing things
    that we currently do in space by not doing it in space anymore.
        So we are looking at the whole soup to nuts. And as Mr.
    Kendall touched on, the big issue is there are certain things
    we have to do that are very protected, very secure that may not
    have the bandwidth commercial satellites do, but we really are
    very much wedded to the commercial backbone, and I just see
    that increasing over time, but it is finding that right balance
    in the future.
        Mr. Bridenstine. I have about 20 seconds left. Just
    something to think about. Currently when I talk to folks in the
    Pentagon, they talk about buying megahertz, they are talking
    about buying spectrum. And with spot beams and all the
    technologies that are advancing today, we need to start talking
    about--for the taxpayer as well as for the warfighter, we need
    to start talking about, how do we purchase capacity, high
    throughput capacity, and putting it in terms of dollars per
    gigabits per second, if that makes sense.
        The Chairman. I thank the gentleman.
        Mr. Walz.
        Mr. Walz. Thank you, Chairman.
        And thank you for holding this hearing.
        Mr. Kendall and General Ramsay, thank you for your
    testimony both today and this week, very enlightening.
        I would just like to--two questions: One, are we making
    some improvements now, and I want to give the case study from
    an end user perspective on the Crusader project as that came
    forward, and it felt like to me that there was very little
    input from the end user side of things. The Crusader was 1995;
    the Howitzer piece that was approved, you got the prototype in
    1998. We went down, and we were starting to manufacture, and it
    was cut off in 2002 by the Secretary.
        Can that type of thing still happen today? I mean, does
    that happen in terms of the acquisition, because from a--both
    in preparation from the fielding of that and the training from
    the end user, artilleryman, that was out there with that
    expectation and all the changes that went into play when that
    was cancelled that far down the line--does that still happen?
        Secretary Kendall. It hasn't happened recently. I am very
    familiar with the Crusader history. It is one of a number of
    programs that was started, and we spent quite a bit of money on
    it and then cancelled it. Part of the legacy of the Crusader
    was that it was a Cold War-oriented system at the time it was
    started, and the idea was to have a very efficient artillery
    piece that could be used in Europe more than anywhere else
    against the Soviets at the time. As the Cold War ended, the
    Army stuck with the program for a while. There were some
    technical issues. There were some cost issues. It was really a
    stretch. It was really a high-risk system, if you will. And it
    got into problems in development. Then it got into problems in
    affordability. And the Army came to a point, after operations
    in Kosovo, where the importance of deploying rapidly to a
    contingency really became a dominant consideration in their
    requirements. And I think that had a lot to do----
        Mr. Walz. So the inability to move it----
        Secretary Kendall [continuing]. With the Crusader being
    cancelled as well. So I think if--things change. And sometimes
    the threat changes so much--or the situations, as you set the
    pace, change so much--that you really do need to revisit prior
    decisions, and in some cases, it is appropriate to stop a
    program like that.
        Mr. Walz. I think----
        Secretary Kendall [continuing]. But I think we need to be
    very careful----
        Mr. Walz. It takes courage, though, to do that, right?
        Secretary Kendall. It does take courage to do that.
        Mr. Walz. So they would--because I think it would--history
    shows out, it was probably the right thing.
        And my question is, and just quickly as you see this, at
    what point does the end user come into that? And I say that
    because I think you are absolutely right. That was a transition
    from Cold War to a new one. We have a wealth of knowledge
    amongst warfighters that have been on the ground. Are we using
    that--in terms of--is that fielding into the decisionmaking?
        Secretary Kendall. I think it is, but I think you have to
    be careful, because there is a tendency to think of the current
    fight or the most recent fight as the one you are always going
    to have to worry about, and I think at the current time it is
    probably the opposite of that in some ways. The
    counterinsurgencies we have been fighting are probably not the
    model we should be most concerned about going forward. It is
    very hard for people to anticipate the next war. We are almost
    always wrong about that.
        Mr. Walz. Yeah.
        Secretary Kendall. And it is important for a country like
    the United States to have general purpose forces that can do a
    lot of different things. And I mentioned earlier that right
    now, particularly with resources as tight as they are, that we
    really need to be very careful about our new starts and not
    start programs that aren't going to be the right program for us
    for some time to come.
        Mr. Walz. Very good.
        I yield back.
        Thank you both.
        The Chairman. Thank you.
        Ms. Walorski, there is, I think, 350 people who haven't
    voted yet. So if you would like to go ahead, I think we have
    got time.
        Mrs. Walorski. I think we have time.
        Thank you, Mr. Chairman.
        Thank you, gentleman, for being here.
        My question is twofold. One is--I co-chair the working
    group here on electronic warfare. And knowing the comments that
    you made on Wednesday and the comments [Admiral] Greenert has
    made before on the next large domain of our vulnerabilities, so
    my one question is: What can Congress do to help DOD streamline
    and bring attention and effectively address that electronic
    warfare problem?
        My second question quickly is: What about the issue of
    trust as we look at acquisition? You know, I represent the
    State of Indiana. I have a variety of different types of assets
    there.
        And the question I always get relative to this issue of
    acquisition reform is nobody trusts the Pentagon and the lack
    of trust--no relationships, lack of trust, nobody believes
    anything on the side of the private industry or newer people
    trying to get in.
        Could you just address those two issues?
        Secretary Kendall. It is probably easier to address
    electronic warfare.
        We do have some shortfalls in electronic warfare. And the
    Defense Science Board did a study on this area recently and
    made a number of recommendations. And some of those we were
    able to take into account as we prepared our budget. Others we
    need to do additional study on. So that is an area that is
    getting a lot of attention right now.
        When I talked about what Russia and China are doing in
    particular, electronic warfare is a fundamental concern and it
    is an area that, because of the types of threats we have been
    dealing with, we have not focused on nearly as much as we
    probably should have.
        As to trust, the military is still one of the most trusted
    institutions in the country. I am a little surprised to hear
    you say that. Industry--and I have to tell my government
    counterparts this often because I have worked in industry quite
    a bit--is we need to appreciate that industry doesn't
    necessarily trust us in how we do business and we need to be
    very transparent and clear in why we are doing things and how
    we are doing them.
        And I don't want to go into any examples, but I think we
    have to remind ourselves that trust can't be assumed. It has to
    be earned. And you do that by your behaviors, by being as
    transparent as you can about what you are doing and why you are
    doing it.
        Unfortunately, all of our source selection processes, which
    is where this often comes up as an issue, have to be protected
    because of the proprietary information involved and so on. So
    people get limited visibility into why someone was selected
    over someone else.
        I tell the story often that I don't think there has ever
    been a proposal manager who came back after he lost and told
    his boss that he lost because he wrote a bad proposal. They
    always come back and they say, ``I lost because they like this
    other guy'' or because of some--you know, something that is
    not, you know, self-deprecatory.
        Mrs. Walorski. Well, let me ask you this----
        Secretary Kendall. So I think you have to be careful about
    that, too.
        Mrs. Walorski. Yeah. I understand.
        But do you at least agree that there has to be--if we are
    really going to talk about how are we going to do this with
    this budget environment, with the vulnerabilities environment,
    like that, I mean, do you at least agree that that issue with
    relationships and trust--something has to happen there, I
    think, in order for--or I wouldn't be hearing it--and I am one
    of the younger members of the team here--so that at least has
    to be addressed and there has to be some kind of effort put
    forward where there is some kind of an atmosphere of trust?
        Secretary Kendall. Yeah. I agree.
        And we worked on our relationship with industry very hard.
    I was going to respond to the earlier question on that.
        We have reached out to industry. We take inputs from
    industry associations and from individual firms. I am very
    accessible to industry. My staff is very accessible. My
    manufacturing and industrial base lead is very open to
    industry.
        And we have solicited inputs from industry for all of the
    different versions of Better Buying Power. And we have taken
    them into account, and they have affected what we have done.
        We have listened to industry on issues like lowest price
    technically acceptable--there are concerns with that--
    commercial end items. So we are trying to respond to industry's
    concerns.
        At the end of the day, as somebody mentioned, there has to
    be an effective partnership with industry. We sit down. We try
    to negotiate the best business deals we can and protect the
    taxpayers' interest, but we also have to live in an environment
    where industry is motivated to come do work for us, where there
    is a reason for them to want to come work for the Department
    besides just patriotism.
        And we need to be able to attract non-traditional firms to
    work with us, firms that, you know, there are--for which there
    are some barriers to entry, if you will, into the marketplace
    for defense. So it gets a lot of attention, and we have to,
    again, strike the right balance.
        Mrs. Walorski. I appreciate it.
        And, Mr. Chairman, I yield back. Thank you.
        The Chairman. Thank you.
        It just seems to me that, in addition to transparency,
    simplicity of the process with accountability for decisions go
    hand in hand with that and can help build added trust, and I
    know that is part of our mutual goal here.
        I think we are going to take a break. And, again, we have
    two votes. Again, appreciate very much you all's indulgence
    while we go do that. And we will recess for the time being to
    reconvene after votes.
        [Recess.]
        The Chairman. The committee will come to order.
        Again, thank you all for your patience as we finish those
    votes.
        Ms. McSally, would you like to take time?
        Ms. McSally. Absolutely.
        The Chairman. The gentlelady is recognized for 5 minutes.
        Ms. McSally. Great. Thank you, Mr. Kendall.
        And thanks, General Ramsay. It is good to see you again.
        We were just reminiscing about, when I first met General
    Ramsay, I was a captain and he was a major.
        So it is great to see you continuing to serve in such a
    high capacity, and it is wonderful to be working with you.
        So I have got two questions. One is related to the
    development of follow-on aircraft. You know, as you may know, I
    flew the A-10 Warthog and there has been a lot of discussion
    about the future of the A-10.
        But under the assumption that the A-10 sticks around for a
    little while longer and if we could agree--maybe you won't
    agree with me--that the Joint Strike Fighter does not provide
    capabilities and we decided we wanted to develop an A-X at some
    point, like today. We decided we are going to develop an A-X
    today, it needs to be a light attack aircraft to be able to do
    the things to protect our men and women in harm's way, what are
    we talking about timeline-wise?
        I mean, just to--I want to just be able to frame the
    discussion, and I know it is hard because you don't know what
    the requirements are. But are we talking like 15 years, you
    know, to develop something where we haven't even identified it?
    And what could we do to speed that process up?
        And then the second question is related to--you mentioned
    the constraints of sequestration. But, also, when we are
    spending money based on the end of the fiscal year, use it or
    lose it, even though we have had deep cuts--and I have seen
    them, and I have seen them in the military--that is also a very
    inefficient way to do business. And even last year--I know
    friends still in uniform, and I know friends who are
    contractors now--they were still on a spending spree of sorts
    in the last week in September, you know, with the money.
        So what can we do to address that? Because, I mean, we are
    under very difficult financial, you know, resource limitations
    right now, but we are still on a spending spree at the end of
    the fiscal year. So what can we do to help fix that culture and
    that dynamic?
        Secretary Kendall. I am going to let General Ramsay address
    the next light attack aircraft that we are going to buy, which
    I don't think we have one of those in the budget at the moment.
        But the issue of use it or lose it is a real issue, and I--
    and it was what I was getting at earlier about not putting our
    people in a position where time is working against them and
    they have to spend money or they feel pressure to spend money.
        We have looked at that. And it tends to happen on the O&M
    [operations and maintenance] side of the house where money
    expires every year, and it also tends to happen where people
    are buying things like office products and so on where people
    will stock up at the end of the year.
        And I don't know--I don't have good data on the magnitude
    of that abuse--or I consider it abuse if we are buying things
    we don't need just to spend money.
        Ms. McSally. Yeah. Those are full-service contractor
    things----
        Secretary Kendall. And I tell the story about, when I was a
    lieutenant in the Army, we would fire ammo off at the end of
    the year so that we would get the same amount of ammo next
    year.
        I have had fighter pilots talk to me about going out and
    burning holes in the sky just to use up gas because they
    wouldn't get, you know, the O&M money for training next year,
    even though it wasn't a useful use of the resource. And I think
    that is a problem.
        And the Defense Business Board talked about how the Defense
    Department tends to be a culture of spending as opposed to a
    culture of cost control. That is one of the fundamental things
    we have been trying to get after in the whole set of Better
    Buying Power initiatives.
        We try to force our managers to address cost control as a
    fundamental mission and to track their costs, understand their
    costs, and try to beat them down and to free up resources for
    things we really need. So if we do have end-of-year money and
    we can repurpose it, it needs to go to things we really need
    and not just be spent because it is there to be spent.
        And I will let you address the next-generation.
        General Ramsay. Congresswoman McSally, boy, that sounds
    good when you go back to a press conference we talked about in
    1993. But it is great to see you again. And congratulations.
        Obviously, the A-10 subject has been discussed a lot with
    Congress, but also in the building. And I am not going to
    repeat all the things that my Air Force has said, but I will
    just say----
        Ms. McSally. Yeah. I just don't even want to get into that.
        General Ramsay. Yeah.
        Ms. McSally. It is just more if we are going----
        General Ramsay. If we are going to do it.
        Ms. McSally [continuing]. To develop something else, what
    does it look like?
        General Ramsay. Let me kind of tie it into the Aerospace
    Innovation issue that Mr. Kendall hit on earlier.
        We are looking at this--you know, one of the things that
    JCIDS does is--we are not looking at specific mission areas. We
    are looking at domains and how to--how are we going to fight
    the future fight. So part of the A-10 issue, besides the fact
    that it is an aging aircraft, is what is right for the high-end
    fight of the future.
        So as you well know, we are looking at this from a
    multitude of angles: the permissive environment, the huge
    dearth of weapon systems that this committee has supported us
    buying over the last 10 years that allow us to do some pretty
    remarkable things, and maintaining the technological edge to do
    that.
        The short answer to your questions is, if we started
    today--and I will really defer to Mr. Kendall on a timeline--we
    are probably talking about 15 years for a full developmental
    program. There are some low-end things out there that other
    nations are buying we could do much faster, but we don't think
    that is the right thing for us for the high-end fight of the
    future.
        Ms. McSally. Yeah. Thanks. That is really what I was
    getting at. I didn't want to get into the politics of it all.
        But start to finish, if we decided--and thanks so much
    for--15 years is a good--that is what I figured it would be,
    but I wanted to make sure that that was my understanding.
        So part of the dialogue we have for the future
    capabilities----
        Secretary Kendall. If we built a low-end light attack, we
    could do that very quickly. There are off-the-shelf
    possibilities----
        Ms. McSally. Okay.
        Secretary Kendall [continuing]. For that. I mean, Textron
    has done a system on their own money which could possibly
    fulfill that need. We have done a propeller-driven light attack
    we have given to the Afghanistans. And there are planes around
    the world we could look at modifying and using.
        If that were the only purpose for the aircraft, we could do
    it pretty quickly, I think. The problem is, if we want
    something that is going to give us air dominance for, you know,
    another generation----
        Ms. McSally. Right.
        Secretary Kendall [continuing]. That is a very, very
    different program. That is a 10-year program.
        Ms. McSally. Right. Thanks.
        And my time is expired. Thank you.
        The Chairman. Thank you.
        Mr. Scott.
        Mr. Scott. Thank you, Mr. Chairman.
        And I share the concerns about the loss of the A-10,
    especially as far out from the basing of the F-35s. That is, I
    think, my primary concern. I understand it is an aging system.
    I would sure feel better about standing the A-10 down if we
    were closer to the basing of the F-35.
        And as we talk about acquisition reform, one of the things
    that we haven't talked about yet is life-cycle costs and
    sustainment, and that ends up being about two-thirds of the
    cost of the system. And it kind of gets overlooked, if you
    will, in the press and other areas.
        But, I represent Robins Air Force Base, one of the three
    depots, and I would just like you, if you would, to speak to
    additional reforms in the acquisition process from the
    standpoint of sustainment planning, total life-cycle cost, and
    how our organic capabilities play into those areas as well as
    the ability to ramp up, if you will, when we need to.
        Secretary Kendall. I think we have probably got about the
    right balance of depot and contractor support, and it is
    something that I think has been stable for many, many years
    now. We are trying to improve the efficiency of both the depots
    and of contractor support.
        One of the Better Buying Power sets of initiatives that you
    have in front of you is an area of contracting services,
    including maintenance. And we are also trying to invoke
    performance-based logistics as a way to incentivize industry or
    depots, for that matter, to do a better job.
        It is a little harder in the government structure than it
    is with industry to do that sort of thing. But both have their
    role, and one of the important roles of the depots is their
    surge capability in case it is needed.
        And increasingly, as we have an aging force, the depots are
    needed for overhaul and upgrades of our system. So I think,
    again, we have got the balance about right.
        We are focused on sustainment. As you mentioned, it is
    something on the order of--50 to 70 percent of our life-cycle
    costs of our program are in the sustainment phase as opposed to
    the R&D [research and development] or the production phases,
    and we really have to go after that much more carefully than we
    have.
        The development phase overruns tend to get all the public
    attention, but that is not where the money is. We really need
    to look where the money is and try to drive costs out there.
        Mr. Scott. General.
        General Ramsay. Congressman, if I could just add very
    quickly, one of the things that this--that Congress has
    directed us to do, based on our request, is very, very, very
    early in the requirements process, as we begin to have a
    conversation about a gap with our acquisition professionals and
    look for resources, we do an analysis of alternatives that
    really gets at the life-cycle cost.
        So we are trying to find out the knee in the curve and what
    the life-cycle cost is going to be from the moment we start
    bending metal until something goes to the boneyard, if you
    will, and look at that, you know, from head to toe.
        Mr. Scott. Do you foresee Air Force depots competing for
    business from other branches in the future? Do you foresee us,
    if you will, allowing that work to transfer from Army to Air
    Force or move----
        Secretary Kendall. I would like to have the flexibility to
    do that sort of thing. And I am speaking totally off the cuff
    right now. But I would like to have, frankly, more public-
    private competition than we are allowed to have right now.
        Competition is terrific. It drives out costs more
    effectively than anything else. And I think having competition
    among the services, even for service organizations, to do work
    like that would probably be healthy for us. I am not sure that
    everybody would be happy about that, but I think it would be
    healthy in terms of driving our costs.
        Mr. Scott. Thank you.
        I yield the remainder of my time, Mr. Chairman.
        The Chairman. Thank the gentleman.
        Ms. Stefanik.
        Ms. Stefanik. Thank you so much, Mr. Chairman.
        Thank you, Mr. Kendall and General Ramsay, for your
    testimony today.
        My question relates to clarifying the chain of command in
    the acquisition decisionmaking process.
        What steps are you currently taking to clarify both
    authorities and improve the accountability of the
    decisionmakers within and throughout the chain of command?
        Secretary Kendall. The chain of command for acquisitions is
    pretty straightforward. For major programs, it runs from me,
    through the service acquisition executive, to the program
    executive officer, to the program manager. And I try to
    emphasize that it is one of the principles that we have pushed
    in all the Better Buying partnerships.
        We try to set up our--this is relatively new, but we try to
    set up our program managers' tenure so that they come into a
    program before you start a phase and then their responsibility,
    once they have gotten approval to do the--their plan for that
    phase, is to execute that plan. So success is about successful
    execution of a plan that you submitted as opposed to getting
    something approved.
        I try to hold our program managers and program executive
    officers accountable by recording their names on all of my
    decision documents as the people who brought the plan forward
    for approval that I am approving so that there is a permanent
    record of that.
        We occasionally have to remove someone who is not
    performing effectively, and we have done that. We don't usually
    do it with a lot of fanfare. These are often people who have
    had fairly successful careers working in the military. And we
    are not trying to embarrass them, but we are trying to replace
    them with somebody who is going to be more effective in that
    particular role.
        So I think we do do some things. I think what we have to
    work against, to some extent, is all of the stakeholders in our
    acquisitions programs who have a voice and often are senior in
    rank to the people involved in the actual management of the
    programs, and that can sometimes be a problem for us.
        Ms. Stefanik. Thank you.
        I yield back.
        The Chairman. Mr. Langevin.
        Mr. Langevin. Thank you, Mr. Chairman.
        And thank you to our witnesses for your testimony here
    today.
        Mr. Chairman, you and I have had a long history of working
    together on these important issues. I really appreciate this
    hearing and your continued attention to such an important
    national security matter.
        General Ramsay, if I could start with you, I would like to
    learn a little more about the interplay that drives the JCIDS
    process.
        And as you and your staff work through future battlespace
    scenarios and determine what is needed, how do you determine
    what technologies will be mature enough for inclusion in those
    discussions?
        And could you elaborate as to how you draw in the subject
    matter experts to staff the Functional Capabilities Board.
        And how do you ensure that they are able to have full
    visibility across the research and development enterprise with
    an appropriate appreciation for technological maturity levels?
        And, similarly, how do your discussions feed into the
    concept of operations discussions that are in many ways just as
    critical?
        I know I am throwing a lot at you there, but if you could
    help me by answering those questions.
        General Ramsay. Well, thank you, Congressman.
        And I got to spend a year in Rhode Island and loved every
    minute of it in Naval War College. So I will open my comments
    sort of as a naval term, as an Air Force officer----
        Mr. Langevin. Please come back and visit us again soon.
        General Ramsay. I will. And I know you are digging out from
    a big snowstorm from the last 2 days.
        It is an all-hands-on-deck, I guess is the best way I can
    talk about the process in a couple of the areas that you
    mention.
        The JCIDS process that we have statutorily and then, by our
    own volition, evolved to over the last 6 years, I mentioned
    earlier that we now have certified requirements professionals
    that work within it. If you want to be in the requirements
    business in the Department, you have to be certified by Defense
    Acquisition University just like our great Acquisition
    Professional Corps.
        The second piece of this is it is a completely transparent,
    collaborative, intertwined process. So when you look at the
    three big pillars of how we do the Department's business--
    resourcing, requirements, and acquisition--those bubbles all
    interact and everybody plays in the pool.
        So I am a key figure, for example, in all three areas. So
    is the Vice Chairman. So is Mr. Kendall, who runs the Defense
    Acquisition Board. And the Vice Chairman runs the Joint
    Requirements Oversight Council; he is the chair of that.
        As I said early on, we work with the acquisition community,
    with the intel community. Intel has the most play in developing
    the concept of operations, what is the future fight going to
    look like.
        Then we work with the warfighters, especially the combatant
    commanders, about how they would like us to look at addressing
    that. That leads us into the technological piece that you
    mention.
        And that is where acquisition professionals come in. That
    is where DARPA comes in. That is where things that Mr. Kendall
    is working to reach out to industry to find out, simply stated,
    what--what is the state of technological maturity across the
    board in the world today to bring that into defense. Some
    things we know about and some things we don't.
        So if I could use one word to kind of capture all this, it
    is ``intertwined.'' We are all linked at the hip from the very
    beginning of ``I have a problem'' to ``I need a solution,'' and
    we work this together as teams across resources, requirements,
    and acquisition.
        Mr. Langevin. So let me ask you this: How do concerns about
    industrial base and niche capabilities where we are relying
    heavily on industry R&D dollars, such as directed energy, fit
    into your decisionmaking?
        And, also, you briefly mentioned electronic warfare in your
    testimony, Mr. Kendall. How do we compare in that capability
    with our adversaries? And what would you need to be done to
    improve upon it?
        Secretary Kendall. I think the simple answer on electronic
    warfare is we have neglected that area for some time because we
    haven't been able to respond to some of the things the threats
    are doing.
        I think we are behind right now. We are playing catch-up to
    some degree on that. We have some programs underway, next-
    generation jammer, for example, in the Navy. I would like to
    see those things accelerated where we can.
        Again, we just had a good Defense Science Board study on
    this. It gives a lot of recommendations. Some of those have
    influenced our budget. Others are under further study and will
    probably influence next year's budget.
        So I think that is an area where I think we need to focus a
    lot more attention going forward than we have in the past.
        Mr. Langevin. Do you want to add anything, General?
        General Ramsay. Yes, sir.
        Just very quickly, one of the things that we--and you
    mentioned this, and that is the reason I want to touch upon it.
        One of the things that we are very cognizant of as we work
    through our concept of operations is just what is out there for
    us to be able to do. And the industrial base is certainly
    something we watch.
        But, really, Mr. Kendall and his team are the experts. And,
    obviously, as the budget has come down the last 5 years, we are
    very mindful of those industries out there that we cannot lose.
        And I would like kind of Mr. Kendall to piggyback on that,
    if he would.
        Secretary Kendall. We cut R&D spending from a peak of over
    $80 billion to about $65 billion, $63 billion. That is a pretty
    dramatic drawdown.
        And I think of that, frankly, as letting the engineers that
    are part of our force structure go--a lot of them go. And when
    those people leave defense industry, they are probably not
    coming back. And we consciously look at this every year as we
    go through the budget process.
        We have--the Deputy Secretary chairs a meeting where he
    looks at the health of industry consciously to make sure we are
    not doing anything there that is going to do irreparable harm.
        And we have, I think, over the last few years in each case
    made some adjustments in our budget because of industrial base
    concerns.
        That said, at the end of the day, the resources are what
    they are. And if you are going to cut your amount of funding in
    R&D by a large amount of money, then you are going to cut a
    large amount of your capacity to do that kind of work, and you
    have to rebuild that.
        I mentioned the Aerospace Innovation Initiative earlier.
    One of the reasons I am doing that--one of the reasons the
    Department is doing that is to preserve the design teams that
    can give us the next generation of capability in that area.
    Because once those design teams go away, we have lost them and
    it is very hard to get them back.
        In very specialized areas, like you mentioned electronic
    warfare, that is a very special skill set and you can't develop
    somebody who is an expert at that overnight. It takes time. And
    you get that expertise by working on programs, by developing
    new cutting-edge things.
        Mr. Langevin. And I know my time is expired.
        But I share that concern. And I have heard directly from
    industry that, given the significant drawdown in R&D, that they
    are struggling to survive in many fields and they are making
    business decisions right now that--they are--basically,
    anyways, may be forced to close their doors if the R&D funding
    isn't there to continue to keep the pipeline alive.
        So, thank you, Mr. Chairman. I yield back.
        I have some other questions for the record that I would
    like to submit. It would be helpful if you could provide some
    answers. Thank you.
        The Chairman. No, I appreciate the gentleman raising that
    issue.
        I think some of the most difficult challenges we face are
    to what extent we continue to fund, say, a supply line just to
    keep the industrial base engaged, even if we don't necessarily
    need at that moment what they produce.
        And you mentioned the R&D, losing the engineers. I think it
    is--together, those are some of the most difficult challenges
    we have before us.
        I want to get back, actually, to part of what Mr. Langevin
    was asking about at the beginning and then other members have
    asked about as well, General, on the requirements system. I
    mean, you have described, you know, the way it is supposed to
    work and all the interactions and so forth.
        And, yet, as was pointed out earlier, one of the
    suggestions we have heard from some of our conversations with
    acquisition people is we need to take the time up front to
    really investigate the technology, understand what we are
    dealing with.
        That helps procurements go quicker. One hears always that
    part of what happens with programs that don't perform well is
    requirements creep, that, you know, it changes over time and so
    forth.
        So my question is: Especially from the military standpoint,
    how do we have the discipline in the system to invest the extra
    time up front, to not have the requirements creep when, you
    know, there is the demands to get it there now?
        You know, I know there is the JROC. Lots of committees, you
    know, discuss this. But, really, when it boils down to how does
    this--where is the discipline in the system to do what has been
    suggested?
        General Ramsay. Chairman, those are both great questions,
    both great issues.
        The process that we have laid in place, again, thanks to
    your help in the last 4 years, I think really has put us on the
    path to getting at the discipline up front. More and more of
    our programs are really broken up, torn apart, and built back
    up long before we ever--as I said earlier, getting into the
    business of bending metal.
        In terms of requirement creep, I would offer there are sort
    of two ways--there is two different paths in that. One of them
    is there is requirements creep that is caused sometimes by the
    assessment of what the future war fights are going to be
    because it takes a while to get these weapon systems through
    the development process and into production and the world
    changes and we have critical intelligence breaches.
        So, in some cases, we have to evolve the requirement
    because we don't want to field a weapons system to fill a
    capability gap where the gap--the weapon system is not going to
    serve the needs of the future.
        But there is another side of that which, I would offer, we
    have had a lot of success at, again, thanks to your committee,
    which is we are asking program managers and sponsors, namely,
    the services and the combatant commands, that, when possible,
    if they find out that a weapon system needs to have its
    performance parameters reduced because we are way beyond the
    knee in the curve in the cost, in other words, we can deliver
    something that is a little bit less capable, but at much less
    cost, that still meets the warfighters' needs, we are getting
    really good at that.
        So, Admiral Winnefeld and Mr. Kendall sent a memo out about
    2 years ago which encouraged, for the first time, sponsors and
    programs managers to bring requirements back to the process.
        So we have descoped a lot of programs to get at that to
    find that knee in the curve in terms of life-cycle cost.
    Delivering things that actually the warfighters need today, we
    can get them there quicker and we can do it a lot cheaper. So
    we are kind of watching both sides of that.
        The intelligence piece I mentioned a minute ago is
    something rather new, and it gets back to the pace of
    technological change of some of our adversaries, that we have
    to take a step back and go, ``We need to rethink this and
    probably--we can call it requirements creep, but it is really
    about meeting the needs of the future.'' So we are looking at
    both sides of the coin, if you will.
        The Chairman. No. And I appreciate you raised that because
    that is a very fair point. If there are leaks, for example,
    that disclose key technologies, then we have got to deal with
    that situation. We can't stick our heads in the sand.
        But I will just say, you know, part of what I think this
    committee needs to do is to help provide some of that
    discipline, too. When the budget requests come before us, we
    need to ask those questions. And maybe we can reinforce some of
    the efforts that you are talking about over the last 3 or 4
    years.
        Mr. Kendall, another issue that people talk about quite a
    bit is--and you mentioned it earlier--prototyping and
    experimentation.
        And one way it has been described is you get into a Catch-
    22. If you don't have requirements for something, then there is
    really no place to go with it, even if you have got a great
    idea. And, yet, if you can't at least move a great idea some
    distance down the process, you can't ever do anything with it.
    It just kind of languishes there.
        Some people have even suggested maybe we need to look at a
    prototype experimentation fund--expanded fund that you would
    have and let the services compete for dollars or for ideas that
    they could flesh out.
        I guess, kind of in a general way, are there things that we
    could do together to help ideas or to learn from them to have
    an increased level of prototyping and experimentation?
        Secretary Kendall. We do do a degree of that now, and we
    are relatively free on the science and technology part of our
    activities to do that without formal requirements, which is a
    good way to do it.
        We have a program that isn't all that large now in the
    budget. It used to be larger. It is called Joint Capability
    Technology Demonstration programs, which has done a number of
    reasonably small programs and historically did larger ones, and
    we are kind of moving slowly back towards more significant
    demonstrations there.
        The Aerospace Innovation Initiative that I talked about is
    a fairly large-scale demonstration program. It is a prototyping
    program without a firm requirement. It is going to explore the
    possible, basically, and it will allow us to have people who
    set requirements make much better informed decisions as we go
    down the road and understand what the art of the possible
    really is.
        So we do have some things. We also have foreign comparative
    tests, which allow us to look at foreign systems and see how
    they might fit into our things on somewhat of an experimental
    basis.
        Be willing to have a dialogue with you about whether there
    is an adequate number of resources in that area or not. It is a
    hard area when budgets are tight to peel out resources from
    other things that are being shortchanged already to do things
    which aren't definitely going to lead to a fielded product, but
    it is an important thing for us to do at least to some degree.
        The Chairman. Okay.
        Secretary Kendall. If I could, Mr. Chairman, I wanted to
    mention something because I think it is important to call at
    least to your attention.
        I have left with the committee a report that was done by
    Institute for Defense Analyses, and it has to do with the
    subject of tight budgets and not tight budgets. It is one of
    the most, I think, profound pieces of work, important pieces of
    work, trying to analyze cause and effect and correlations in
    our acquisition system over decades.
        And what--this analysis, which was done by the former head
    of the CAIG--Cost Analysis Independent Group--and what is now
    CAPE [Cost Assessment and Program Evaluation], looked at major
    programs and the cost growth in those major programs over
    several decades and correlated that with two things. One was
    acquisition policy, and the other was whether budgets are tight
    or loose.
        There was no correlation to the acquisition policy changes.
    Nothing we did seemed to make any difference in the performance
    of programs. Tight budgets and loose budgets had a major
    impact, and the numbers are pretty shocking.
        In periods in which budgets are relatively loose and people
    can manage with some degree of cushion, if you will, in their
    planning, our overruns and production costs are on the order of
    10 percent. When budgets are tight, they are on the order of 30
    percent. It makes a huge difference.
        And I thought this was one of the more profound things I
    have seen. I wanted to call it to your attention. We are in a
    tight budget era now. And what this is telling me is that
    behaviors change in a way which leads to major cost overruns
    when we are in tight budgets.
        And we can talk about what those might be. One of them is
    trying to hang on to things we really can't afford with the
    budgets that we have and cram more into the budget than it will
    really support and pretend for whatever reason that costs are
    going to be lower than they are actually going to be. And,
    frankly, I have seen some evidence of that sort of thing.
        Industry is hungrier in times like this and it will talk
    itself into bidding more aggressively in order to win the
    business because it is all the business there is to compete
    for.
        So there are a number of things that may come together to
    cause this impact, but I wanted to point it out to the chairman
    because, as we have looked for ways to improve defense
    acquisition, this is not one of the things we have focused on.
        We looked at a lot of other things, but this has an impact
    that is far beyond any of the other things we have done. And I
    think it is important to note that.
        The Chairman. Well, I appreciate you mentioning that.
        I have not had a chance to read the study yet, although I
    did see a summary of it and, like you, I started thinking about
    ``Okay. What are the reasons for that? What are the
    behaviors?''
        And maybe one of them is just what we were talking about.
    There is--with tight budgets, there--it is harder to put the
    resources in up front to get the requirements and the
    prototyping done. So, in effect, it takes more money and more
    time because you don't put that initial investment into it.
        Secretary Kendall. Another impact is that we tend to
    stretch out programs. We stretch out the development program.
    And Crusader was mentioned. Comanche is another example of this
    where programs, because of resource constraints, were stretched
    out in development for years and years and years.
        And I am not quite sure exactly how that impacts unit cost.
    Part of it is the technologies are changing. So we have to
    redesign for them and you end up with more costly technologies.
        Another part is whether you can hold your design team
    together throughout or you end up making changes because of
    that, as people change on the design teams.
        I think there are a number of things here we have to look
    at more deeply, but I think it is a very important result,
    nevertheless.
        The Chairman. Okay. Good point. And we will join you in
    looking and trying to understand that result.
        I guess the last question I have is--I want to get back to
    the legislative proposals that you submitted.
        I am sure you have run into a lot of the same reactions
    that I have when talking about improving the acquisition
    system. It is a little bit of eye-rolling and ``Oh, I have
    heard that story before.'' And there is some skepticism,
    concern, that you all are just going to do something that looks
    like you are doing something, but it doesn't really matter.
        So my bottom-line question to you is--the legislative
    proposals that you have offered us, we are going to have to
    take time to look at them carefully. But if they were enacted,
    would it matter? Would it significantly help the current
    situation?
        Secretary Kendall. The answer is yes. And the reason that
    the answer is yes is that it would give our managers back their
    most precious--it would give our managers back their most
    precious asset, which is time.
        If we can remove bureaucratic burdens on our program
    managers so they can focus on the things that really matter,
    they will get better performance scores.
        And I think, in general--I use the term ``acquisition
    improvement'' as opposed to ``acquisition reform'' because, to
    me, ``reform'' implies that there is some big thing we could do
    which is going to make a huge difference. I don't think that is
    the case.
        I think what we have to do is attack our problems on many
    fronts and make incremental progress on many fronts, learn from
    our experience and then adopt new things as we understand the
    impact of the things we have done.
        And that is why we have emphasized a continuous process
    improvement approach in the Better Buying Power initiatives
    over the last several years. And I think that is the right
    approach.
        I think we will make incremental progress on a lot of
    fronts. In the aggregate, I think it is going to make a big
    difference. But you have to be willing to attack the details on
    a lot of different aspects of acquisition.
        At the end of the day, a great deal of it is about not
    putting rules in place that constrain people, but getting
    people in a position where they can make better decisions and
    do the right thing and then have the institutional support to
    execute the right thing and do it successfully.
        The Chairman. Okay. Well, I completely agree.
        There are no magic bullets here. It does require continuous
    effort. And so I will try to use the term ``acquisition
    improvement'' as well and follow your lead.
        Mr. Langevin.
        Mr. Langevin. Thank you, Mr. Chairman. I appreciate the
    extra time.
        So I just have a couple of subject areas I wanted to touch
    on. And in some ways you have touched on them already, but
    maybe to focus them a little more.
        With a technology like directed energy or a family of
    systems like unmanned undersea vehicles, there are so many
    variables that affect the demand signal for its development and
    deployment, things like amount and level of R&D funding, the
    CONOPS [concept of operations], platform availability, specific
    characteristics of the weapon systems and adversary systems,
    familiarity of the service with the capabilities in question,
    and the creation of a demand signal, affordability of various
    options, and so on.
        So could you walk us through a little further how those
    feedback loops work. And how does your staff make the decision
    to turn one dial versus another? And how does intelligence--and
    I know you have touched on that already, but how does
    intelligence about potential adversaries feed into that?
        Secretary Kendall. It is a great question. And I think at
    the heart of it is our ability to do something different when
    it is the right thing to do, or not.
        What we are good at, I think, in the Department is buying
    the next generation of the thing that we already have, the
    next-generation fighter plane, the next-generation armored
    vehicle, the next-generation surface combatant, whatever. What
    we are not so good at is recognizing when we have to
    fundamentally change direction.
        Now, if you look at the offset strategies that Secretary
    Work talks about, one is use of tactical nuclear weapons in the
    1950s, which was made available because of the fact that
    nuclear weapons had been developed.
        We were in a situation where we were looking at very large-
    scale forces on the Soviet side and we needed something to
    counter that, and it was sort of an obvious thing that we could
    do.
        The precision weapons offset strategy that started in 1970s
    and we really demonstrated in the 1990s was such an obvious
    improvement in efficiency on the battlefield that it was sort
    of an easy one to do.
        Directed energy is one that we have talked about forever,
    but we have never been able to get the technology quite to
    where it is kind of over that hurdle of being operationally
    useful enough.
        The Navy is doing a demonstration project right now with a
    laser on a ship, which is getting up closer to an operational
    capability, but is not really where you would quite like to be.
        So those are technologies that moved forward very
    incrementally over time, but haven't quite gotten to where we
    are ready.
        I think, in the case of directed energy, if the performance
    was there, the--the utility of that is so obvious, if you can
    really do it effectively, that it is easy to embrace that.
        Another one that is similar is railguns--electromagnetic
    launch railguns--which we have been working on for decades,
    also. And if you could get that technology, which has advanced
    quite a bit. One of the problems that I mentioned earlier was
    defensive air bases, for example, or defensive ships, high-
    value assets.
        If you can get to a one-shot-one-kill capability there
    through either of those two means, that is a huge improvement
    in capability. I think it is one that is fairly obvious to see.
        Others--the use of unmanned systems and undersea
    environment you talked about--I think we have to think more
    carefully about what the ops concept is and how we would use
    them and think about the operation end to end. So it is not as
    obvious what you would do or how we would use that technology
    if you got there.
        And we have an effort going on now at the Department called
    the ``Long Range Research and Development Planning Program,''
    which is being led by our chief system engineer. It mirrors a
    study that was done in the 1970s with a similar name that led
    to the investments that gave us the precision munitions and the
    other things that we use in the so-called second offset
    strategy.
        And one of the things that that team that is working now is
    trying to do is identify the things we should be investing in
    that would make a big difference on the battlefield of the
    future and perhaps identify a third offset strategy that we
    could work our way towards.
        It isn't quite--to me, at least, it isn't quite as clear a
    path as some of the earlier two--the earlier two that I
    mentioned were.
        And I would also point out that all offset strategies are
    not successful. The Germans did some kind of an offset strategy
    with submarines in World War II, which came close, but it
    didn't actually prevail at the time.
        Any real innovation in military operational capability
    tends to be some form of an offset strategy, and getting it
    right, once you embrace that, is important.
        Now, it is easier to do things where you can integrate the
    new capability into the way you already do business. So in the
    case of railguns or electromagnetic launch or directed energy,
    I already do air defense systems. So it is a different kind of
    an air defense system, if you will.
        Other capabilities, such as some of the disaggregated we
    talked about earlier, require you to completely stop what you
    are doing and do something different. Those are the hard
    decisions for the Department to make. I think they are hard for
    any military institution to make. And identifying them and
    having the courage to go forward I think is something that we
    are going to be challenged by.
        General Ramsay. I completely agree with Mr. Kendall's
    comments.
        I would just offer--I think one term that Mr. Kendall
    didn't use that we talk about a lot is we are looking at the--
    if you look at our budgets in the last 3 or 4 years, as they
    have gone down, frankly, we are struggling with this balance of
    the fight tonight and what is good enough for now versus
    investing in the future.
        And part of investing in the future is: Where are the game-
    changers? And that is this third technological offset strategy.
    That really has dominated our conversations across the
    Department, but especially in the resourcing and requirements
    and acquisition world, looking for those game-changers. That is
    part of what LRRDP [Long Range Research and Development Plan]
    does in the whole Innovation Initiative, and that is a, again,
    an all-hands-on-deck process right now.
        Mr. Langevin. Well, you know, I just hope that, when the
    game-changing technology does come on the scene and it is
    mature enough, that we don't have this, you know, institutional
    resistance to then being able to adopt it, wanting to hold on
    to legacy systems.
        Directed energy is a particular concern of mine, that, you
    know, when it is there, are we going to be able to adopt it
    quick enough. You know, Mr. Secretary, you are a bit, maybe,
    more optimistic than I would be when you talk about the utility
    of it is so obvious.
        But I also get concerned about the institutional resistance
    to adopting new technologies quickly when we are so used to,
    you know, the missiles or, you know, things like Phalanx that,
    you know, would be used as the kind of kinetic defenses that
    lasers could be much more effective at once we employ them. But
    I understand that the technology does have a little ways to go
    still.
        But the last thing I had is: Do you believe that the
    current procurement process is so long that the technology
    becomes obsolete by the time it reaches the warfighter?
        And how do we avoid these issues in areas such as cyber
    where procurement timelines are so mismatched with budget
    timelines?
        Secretary Kendall. We understand that--well, first of all,
    when we do a very complicated weapon system, it is going to
    take some time. It is going to take some time to do the design
    and then to do all the testing of all the features associated
    with that system.
        And during that time some technologies are going to move
    forward and the threats are going to move forward. So you have
    to build into your design, through what we call modular designs
    or through open systems architectures, the ability to do
    upgrades to that initial system as you go along and sometimes
    to make changes in progress if the threat dictates that.
        If you look at--I am going to use the F-35 as an example.
    We have gone through a series of technology insertions on the
    F-35 already in terms of processing capability. There are
    probably more of those in the future.
        We have asked for--and we had some difficulty with the
    Congress on this, but I think we have worked our way past
    that--funds to start the follow-on development for the
    electronic protection systems, for example, that we are going
    to need in the future after the initial fielding of the full
    capability.
        So you have to design in the flexibility and the process
    and then secure the funding in a phased way to improve your
    products over time and to take account for the fact that
    technologies and threats are both going to be changing as you
    are going through the product life cycle.
        Mr. Langevin. Very good.
        Well, thank you both for your testimony and your patience.
        And, Mr. Chairman, thank you for the extra time. And I
    yield back.
        The Chairman. No. I appreciate the gentleman's questions
    and the issues he raises.
        Thank you both for being here.
        Mr. Kendall, as we work our way through the proposals that
    you have made, as we discuss with you ideas that we have and
    from others, I hope we can keep this as a continuous process,
    as you describe, so another package maybe next year and another
    one the year after that and another one the year after that,
    because it is going to take that continued persistence to get
    at the many complex issues that you raise. That is certainly
    going to be a priority of this committee.
        And I appreciate the time and effort and the cooperation
    that you and your folks have put into it so far. So I look
    forward to that.
        Secretary Kendall. Thank you, sir. Same here.
        The Chairman. Yes. Again, thank you all for being here.
        And, with that, the hearing stands adjourned.
        [Whereupon, at 11:44 a.m., the committee was adjourned.]

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                                A P P E N D I X

                                January 28, 2015

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                  PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                                January 28, 2015

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    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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                  WITNESS RESPONSES TO QUESTIONS ASKED DURING

                                  THE HEARING

                                January 28, 2015

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                  RESPONSE TO QUESTION SUBMITTED BY MR. PETERS

        Secretary Kendall. The August 2014 Competition Guidelines and my
    associated memorandum provided a list of actions the Department is
    taking to promote competition consistent with the Better Buying Power
    (BBP) 2.0 Initiatives. The Guidelines were intended to complement and
    work in concert with the overarching principles identified in BBP 2.0,
    and to provoke thought about strategies useful for creating and
    maintaining a competitive environment throughout the life cycle of
    products and services, including IT acquisitions. The guidance and
    requirements are being incorporated in the Defense Federal Acquisition
    Regulation Supplement Procedures, Guidance, and Information in FY 2015.
        Additional guidance specific to IT acquisitions is in the
    Department's DoD Open Systems Architecture (OSA) Contract Guidebook for
    Program Managers. The Guidebook contains recommendations for writing a
    strong, OSA-based statement of work, guidance on special contract
    requirements, recommended contract line items, and guidance on
    obtaining intellectual property and data rights to support and enhance
    competition throughout the full life cycle.
        Last fall, as the chair of the Business-Senior Integration Group
    (B-SIG), I began focusing senior leader attention on competition
    measures to increase visibility and accountability. The B-SIG is
    addressing the Department's competitions results, tools, trends and
    guidance to increase competition. On a quarterly basis, the Acquisition
    Executives present their competition results and respective efforts to
    improve competition achievements.   [See page 18.]

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                  QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                                January 28, 2015

    =======================================================================

                       QUESTIONS SUBMITTED BY MR. TURNER

        Mr. Turner. In the 2013 Performance of the Defense Acquisition
    System Report, you noted that ``the time required to acquire next-
    generation capabilities is often longer than the strategic threat and
    technology cycles these capabilities are meant to address.''
    Additionally, you further concluded that ``while most cost growth
    measures are improving, median cost growth across the MDAP portfolio is
    not zero and will likely lead to near-term affordability challenges
    given flat or declining fiscal resources.'' Given the historic and
    continuing inability to deliver capabilities that are ahead of the
    threat, what can Congress and Industry do to help resolve this dilemma
    in view of declining resources?
        Secretary Kendall. Besides addressing the declining resources
    directly by eliminating sequestration, there are a number of additional
    things that can be done.
        Support for legislative reforms that reduce the statutory overhead
    and bureaucracy faced by Department of Defense (DOD) program managers
    and their teams is an area in which assistance from Congress and
    Industry is needed. This will allow program managers to be more agile,
    enabling them to spend their limited time more effectively addressing
    evolving threats, controlling cost, mitigating risk, and meeting
    schedule while expending less time on bureaucratic requirements that do
    not add value and that create unnecessary paperwork.
        Legislative assistance to efficiently deal with the inevitable
    technical challenges that most programs encounter in managing lengthy
    development efforts and keep agile in dealing with evolving threats
    would be extremely helpful.
        The Department needs industry to focus its Independent Research and
    Development on timely and cost-effective new capabilities in response
    to external threats and is working to improve Industry's access and
    understanding of intelligence on evolving threats. In turn, Industry
    needs to bring forward open systems that allow insertion of innovative
    solutions to address threat evolution. It is also necessary for
    companies that support DOD to help the Department better understand and
    tap the rapid innovation and technology development in the commercial
    sector.
        Finally, Industry information and bids must be realistic and offer
    timely, pragmatic solutions. What is often termed ``low-balling a
    proposal,'' failing to recognize and manage risks, or offering overly
    complicated weapon systems increases the likelihood for problems down
    the road and detracts from national security. It is crucial that the
    Department, Congress, and Industry work together to recognize and
    manage risks, be willing to cancel or fix failing efforts despite sunk
    costs or equities, and be more flexible in response to changing
    technologies and threats.
        Mr. Turner. Should broader and more profound use of industry
    innovations through rapid fielding and deployment be part of the
    solution?
        Secretary Kendall. I recently revised Department of Defense (DOD)
    Instruction 5000.02 to include an enclosure on rapid acquisition, which
    states ``DOD's highest priority is to provide Warfighters involved in
    conflict or preparing for imminent contingency operations with the
    capabilities urgently needed to overcome unforeseen threats, achieve
    mission success, and reduce risk of casualties, as described in DOD
    Directive 5000.71 (Reference (cc)). The objective is to deliver
    capability quickly, within days or months.''
        Rapid acquisition allows new and innovative capabilities, often
    derived from reapplication of technologies originally developed for
    non-military purposes, to be quickly placed in the hands of the
    warfighter for assessment and adoption. These rapid acquisition
    programs offer opportunity to generate insight and understanding that
    can help drive innovation into more deliberate programs of record.
        Mr. Turner. Does the Department have the budget and legal authority
    flexibility it needs to further exploit industry innovations through
    rapid fielding and deployment of leading edge technologies?
        Secretary Kendall. I believe the Department has sufficient legal
    authority and flexibility to execute rapid acquisition programs when
    operating under a normal and timely budget process. Our efforts over
    the last few years have been impacted by Continuing Resolution
    Authorities. This may impact and burden our efforts to execute rapid
    acquisition efforts in a timely manner.
        Mr. Turner. Does the Department view rapid fielding and deployment
    of industry innovations as either a method of spurring industry
    investment, by better assuring a competitive return, or solely as a
    method of getting technologies to the war-fighter, or both?
        Secretary Kendall. The Department recognizes that rapid fielding
    and deployment of industry innovations offers multiple benefits. I
    recently revised Department of Defense (DOD) Instruction 5000.02 to
    include an enclosure on rapid acquisition, which states ``DOD's highest
    priority is to provide Warfighters involved in conflict or preparing
    for imminent contingency operations with the capabilities urgently
    needed to overcome unforeseen threats, achieve mission success, and
    reduce risk of casualties, as described in DOD Directive 5000.71
    (Reference (cc)). The objective is to deliver capability quickly,
    within days or months.''
        The Department also recognizes that our rapid fielding programs
    provide a mechanism to provide timely feedback to industry on our
    utilization of their solutions to urgent military needs, which can
    facilitate aligning industry efforts with Warfighter needs.
        In Better Buying Power 3.0, I have a focused initiative on
    incentivizing innovation in industry and government.
                                     ______

                       QUESTIONS SUBMITTED BY MR. ROGERS
        Mr. Rogers. Mr Kendall, last year the Department provided Congress
    with a Satellite Communications Strategy Report. An important point was
    made in this report. The report stated that:
        ``Currently, funding for commercial SATCOM is decentralized and
    allocated to the Combatant Commands, Services, and DOD Agencies, with
    task orders based on individual component needs, and with limited
    regard for sharing opportunities between components. This decentralized
    approach impedes centralized, multi-year acquisition and hinders the
    DOD's ability to manage MILSATCOM and commercial SATCOM as a holistic
    capability to best support the warfighter.''
        What are your thoughts regarding centrally procuring SATCOM, to
    include multi-year acquisition of communications satellite
    communications? Considering we spend billions of dollars on satellite
    communications (both military and commercial), what other improvements
    do you think need to be made regarding better acquisition of this
    important capability?
        Secretary Kendall. The Department of Defense already centrally
    funds and procures MILSATCOM. The Defense Information Systems Agency
    centrally procures most (about 70% and increasing) commercial satellite
    communications (COMSATCOM) services. In my opinion, central funding has
    merit to satisfy predictable, enterprise-level COMSATCOM requirements.
    For example, in the FY 2012 President's Budget, DOD proposed a
    centrally-funded, multi-year capital lease of a commercial satellite to
    satisfy requirements in the United States Central Command area of
    responsibility. DOD estimated that under operational conditions at the
    time, this investment would have been recouped within 2-3 years by
    avoiding the cost of annual COMSATCOM task orders. Congress redirected
    funds to procure Wideband Global SATCOM #10 so the estimated return on
    this proposed COMSATCOM investment was never verified. In a series of
    small-scale ``pathfinder'' initiatives, we have begun to explore other
    improvements to better acquire and manage COMSATCOM. Acquisition
    pathfinders will examine multi-year service contracts, on-orbit and
    pre-launch purchases of COMSATCOM, and purchases of global portable
    bandwidth. Operational management pathfinders will examine utilization
    monitoring and enterprise-level sharing of COMSATCOM resources to
    increase effectiveness and efficiency. DOD will report its pathfinder
    plan to Congress in response to Section 1605 of the FY 2015 National
    Defense Authorization Act--Pilot Program for Acquisition of Commercial
    Satellite Communication Services. As evidence warrants, pathfinder
    concepts can be scaled to enterprise-wide solutions.
        Mr. Rogers. Related to acquisition of military satellites, I'd like
    to better understand your perspective on how to lower costs yet
    continue to increase capabilities of our space programs. I'm thinking
    about programs such as missile warning and protected communications
    satellites. Historically, has it been more cost-effective to
    incrementally upgrade existing capabilities or start new space
    programs?
        Secretary Kendall. Our past data and analyses demonstrate that it
    has historically been more cost effective to increase the capabilities
    of our space assets by incrementally upgrading our existing space
    programs. However, recent trends in space procurement may impact cost
    effectiveness and alter our strategy to meet requirements. For example,
    the rise of space commercialization and the emergence of standard
    satellite buses for dual commercial and military use have afforded the
    Department more flexibility in our space acquisition approaches.
    Additionally, as identified by last year's Space Strategic Portfolio
    Review, the mounting threat to our space capabilities may require
    dramatic change to the configuration of our satellites and overall
    architecture, potentially driving significant transformation rather
    than evolutionary improvement.
        For every program, we need to carefully review alternate
    acquisition approaches to find the most cost effective path for the
    particular needs of the Warfighter. Therefore, we are currently
    conducting Analyses of Alternatives (AoAs) for the missile warning and
    protected communications satellite programs to determine the best path
    forward for these two mission areas. The Space Based Infrared System
    and Advanced Extremely High Frequency satellite program have recently
    awarded new contracts for two satellites each to replenish existing on-
    orbit capabilities. Emerging threats coupled with an increasingly
    austere budget environment compel the Department to perform these AoAs
    and supporting analyses to inform the next set of acquisition
    decisions.
        Mr. Rogers. I'm concerned about space governance in the Department.
    Particularly when I see programs such as the Navy Mobile User Objective
    System (MUOS), with the first satellite launched about 3 years ago and
    the 3rd satellite recently launched, and only 10% of the capability of
    these three satellites able to be used because of delays in ground and
    user terminals. The Navy leads the space and ground components, while
    the Army leads the user terminals. There are many other examples of
    space programs that are not properly synchronized across the various
    segments. Is this lack of synchronization an acquisition problem, a
    leadership problem, a money problem? How do we fix this?
        Secretary Kendall. Better planning and acquisition oversight is
    needed to improve program synchronization issues in conjunction with
    improved metrics and more specific definitions.
        Based on a recently completed study briefed to the Defense Space
    Council in December 2014, the Department is implementing a standard
    assessment of integration/synchronization across the space portfolio
    more closely integrated with the budget formulation and deliberation
    process. As I indicated in my January 26, 2015, letter to the
    congressional defense committees, the Department will be submitting an
    initial exemplar report covering a single representative program (Space
    Based Infrared System) in June 2015, and a comprehensive initial annual
    report with submission of the FY 2017 President's Budget. While this
    initial report is overdue to Congress, the definitional and procedural
    framework needed to accomplish such an assessment in a consistent,
    repeatable manner was needed. Additionally, this approach can be
    applied for future programs being approved at Milestone B in order to
    fulfill the statutory requirements contained in the FY 2013 NDAA.
                                     ______

                       QUESTIONS SUBMITTED BY MR. SHUSTER

        Mr. Shuster. What must be done by both the services and Congress to
    facilitate greater use of open architecture, modularity, and defense-
    owned technologies/software/programming to reduce overall acquisition
    costs and timelines?
        Secretary Kendall. Department of Defense (DOD) acquisition policy
    holds program managers responsible for applying modular, open systems
    architectures in product designs where it is feasible and cost
    effective. I expect program managers to make maximum use of appropriate
    modular, open systems approaches to enable competition, facilitate
    reuse, and ease technology insertion. These approaches are documented
    and approved in our program acquisition strategies.
        DOD uses a broad array of approaches to managing and reusing the
    technology and software rights that we own, including use of
    enterprise-wide licenses, code repositories, and open source software,
    where appropriate. Under Better Buying Power 3.0, our initiatives on
    removing barriers to commercial technology utilization and emphasizing
    technology insertion and refresh in program planning are targeted at
    improving our ability to manage technologies and better leverage the
    rights we own and license.
        At this time, I do not believe the department requires any
    additional congressional action in this area.
        Mr. Shuster. What are the biggest threats to continued American
    dominance in the area of military technology?
        Secretary Kendall. We are concerned that other advanced states, in
    particular Russia and China, are pursuing modernization programs that
    are focused on defeating specific systems that provide the United
    States with the capabilities that enable us to project power globally.
    The scope and rate of global development in ``anti-access/area-denial''
    systems puts our technological superiority at risk.
        Details of particular threats to U.S. Military capabilities have
    been provided in recent classified briefings to Members. My staff and I
    are prepared to provide additional details on these areas if requested.
        One area of particular concern is the proliferation of advanced
    land attack and anti-ship cruise and ballistic missiles, with
    associated developments in technologies that improve accuracy and
    attempt to counter missile defenses, as these extend the ability and
    effectiveness of threat surface forces, surface ships, bombers, and
    submarines to hold U.S. forces, installations, and the capabilities of
    our allies and partners at risk at extended ranges. Another area
    concerns the proliferation of advanced missile and air defenses and the
    emergence of foreign 5th generation fighters with low observability,
    advanced weapons, and advanced sensors that offer challenges to future
    U.S. air dominance and strike capabilities. In addition, emerging
    capabilities in electronic warfare threaten sustained U.S. dominance of
    the electromagnetic spectrum, with implications across multiple
    warfighting domains. Areas where the United States has long held
    significant advantage, such as in the space and the undersea
    environments, are increasingly challenged by the number and
    sophistication of military systems being employed by other states.
        Mr. Shuster. Are there any specific military areas where the United
    States is falling critically behind in the area of technological
    development? How can we better streamline the research and development
    process to foster innovation?
        Secretary Kendall. The United States remains the predominant
    military power in the world. We are concerned that other advanced
    states, in particular Russia and China, are pursuing modernization
    programs that are focused on defeating specific technological
    capabilities that provide the United States with critical capabilities
    that enable us to project power globally. The scope and rate of global
    development in ``anti-access/area-denial'' (A2/AD) technologies puts
    our technological superiority at risk in the near future if we fail to
    respond to the altered strategic landscape.
        Details of particular threats to U.S. military capabilities have
    been provided in recent classified briefings to Members. My staff and I
    are prepared to provide additional details on these areas if requested.
        The Department's Better Buying Power 3.0 initiatives are intended
    to focus our acquisition and development communities on the need to
    focus on harnessing American innovation to insure continued technical
    dominance in the national security arena. These include initiatives
    focused on reassessing our internal and external research and
    development (R&D) efforts to maximize the return on every dollar
    invested, efforts to coordinate industry and government R&D more
    effectively, efforts to ensure that our development programs are
    informed by intelligence on emerging threats, efforts to ensure that
    programs plan for continuous technology refresh to insure that our
    capabilities keep up with globalized technologies, and efforts
    emphasizing the importance of appropriately aligning incentives for
    government and industry to ensure that we achieve innovative, cost-
    effective solutions in our acquisition programs.
        Mr. Shuster. How serious is requirements creep? Are requirements
    for new weapons programs adequately understood and current? Does our
    current system of assessing future requirements for new programs
    sufficiently assess the future needs of the warfighter and accurately
    project future technological changes?
        Secretary Kendall. Changing requirements are sometimes unavoidable
    and an ongoing challenge. Technology vectors, operational concepts, and
    resulting requirements for new weapon systems are reasonably well
    understood and current when we baseline programs, but the future always
    involves uncertainty. Technologies evolve. New technologies emerge.
    Threats change. Opportunities arise. Unknowable problems are discovered
    in development. This area is a focus of Better Buying Power 3.0, as we
    do believe our system needs to improve its ability to recognize and
    integrate changes to reflect the changing environment appropriately.
        Mr. Shuster. When and how do you best make the call that a program
    has reached the end of its lifespan and incremental upgrades are no
    longer worth the cost vs. the benefits gained?
        Secretary Kendall. The acquisition community works with the
    Services to determine the best way to acquire a system that satisfies
    requirements that have been validated by the Joint Requirements
    Oversight Council. This includes whether an upgrade to an existing
    system or a new design is the best approach and is affordable in
    meeting the capability needs. Analyses of Alternatives consider these
    trades in the early stages of programs; the Department also considers
    this important trade before any new increment of capability for a
    system is initiated. At some point, the cost-benefit of upgrading a
    system may no longer be affordable relative to starting a new program.
    At that point, the Department will no longer invest in upgrades for the
    existing system and will consider a new program instead. The existing
    platforms will remain in service for the remainder of the planned
    service life or until the new system is deployed.
        Mr. Shuster. Should we defer development of entirely new weapons
    systems until all of the technology exists to create it? Is it better
    to aim for more distant technology in a large package program with the
    hope that it will spur development? Or does it make more sense to
    design new programs around technology that is already proven?
        Secretary Kendall. Developing weapon systems requires careful
    judgment of technological, operational, and financial risks. Systems
    designers must balance the likelihood that a technology will mature as
    predicted, integrate as planned, and deliver capabilities as promised
    as they identify and refine solutions to Warfighter needs. Staying
    ahead of the threat often requires taking informed risks to make timely
    delivery of the necessary difference-making performance. In these
    cases, active risk management and identification of technology risk
    mitigation alternatives should form the basis of a program's
    development plan. Weapon system programs should plan for technology
    insertion and refresh, not only to reduce risk, but also to keep pace
    with threat and obsolescence. This can be accomplished through well-
    crafted acquisition and contract strategies and through system designs
    and architectures that enable technology insertion or upgrade.
        Mr. Shuster. Given the rapid pace of technological advancement,
    what is the best approach to keeping our weapons systems current?
    Should the focus be on developing and fielding entirely new systems or
    incremental upgrades of the units we already have?
        Secretary Kendall. Weapon system programs should plan for
    technology insertion and refresh, not only to keep pace with
    technological advancement, but ultimately to keep up with the latest
    threats. This can be accomplished through acquisition and contract
    strategies that plan for incremental capability delivery or system
    upgrades, as well as system designs, open architectures, and owning
    appropriate data rights that affordably and effectively enable
    modification and upgrade. Determining the appropriate acquisition and
    system design strategy involves careful assessment of opportunities,
    costs, and risks; and requires continuous dialogue between acquisition,
    requirements, and intelligence communities. The strategic decision on
    when to pursue a new system vs. upgrading existing systems must be
    informed by careful analysis of the cost and performance tradeoffs, the
    projected threats, and our operational and strategic approach to
    countering them. The impact on system life-cycle supportability is also
    a key consideration.
                                     ______

                       QUESTIONS SUBMITTED BY MR. GIBSON
        Mr. Gibson. In response to battlefield commanders' demands to field
    cutting edge radios that provide not only voice but data, imagery, and
    video, the Army--under your guidance--has moved to the concept of a
    radio market place with multiple vendors annually vying for delivery
    orders. Can you elaborate on why this model works for communications
    technology and how this strategy may be applied to other areas in DOD?
        Secretary Kendall. The model has significant potential because
    radio technology has shifted toward being software defined. The
    Department of Defense (DOD) has encouraged industry to adopt this
    modern approach through DOD's advance of the Software Communications
    Architecture (SCA) and open standard interfaces. The Department has
    also created a DOD Information Repository to provide vendors with
    software designed waveforms as government furnished equipment (GFE).
    These GFE waveforms can then be hosted on SCA compliant radios, thereby
    reducing the development time and cost and improving interoperability.
    The result is a current market place of more than 63 types of tactical
    radios that allow the flexibility to insert new features and
    capabilities as they become available. In order to capitalize on this
    new technological approach, a more agile and flexible testing
    environment must exist, allowing industry to rapidly bring their tested
    and proven capabilities to the user.
        Why more frequent delivery order competes?
        The shift in communications technology has allowed the Department
    to change its tactical radio acquisition strategy toward a non-
    developmental item (NDI) approach. The old acquisition strategy of
    developing new communications requirements and building a program of
    record to develop, test, field, and then maintain that single device
    over its life cycle does not align with the state of technology and
    rapid acquisition. Software Defined Radios (SDR) are designed to be
    modular, reprogrammable, and upgradeable. By adopting an NDI approach
    and spreading out delivery orders, the Army can add new industry
    developed capabilities (i.e. applications) to an existing radio, as
    well as capitalize on industry developed technology improvements such
    as faster processors, lower power consumption, longer battery life, and
    reduced weight.
        Could this strategy be applied to other areas in DOD?
        This is something that is being assessed. It works for tactical
    radios because industry has moved toward SDRs and embraced the SCA as
    an open systems architecture approach that facilitates the reuse of GFE
    furnished waveforms. For any DOD system that relies on software as its
    fundamental offering, NDI (software) approaches could mitigate lengthy
    and costly development.
        In summary, in adopting a NDI approach with GFE waveforms for
    radios and communications systems provides insight as to how other
    software heavy DOD systems could leverage NDI software approaches to
    speed delivery, accelerate modernization, and reduce overall costs.
                                     ______

                        QUESTIONS SUBMITTED BY MR. COOK
        Mr. Cook. Do you believe it's necessary that UAVs remain covered by
    the Missile Technology Control Regime if their primary use is for
    tactical military and intelligence surveillance missions?
        Secretary Kendall. The MTCR plays an important role in restricting
    the proliferation of missiles and delivery systems for Weapons of Mass
    Destruction (WMD), including equipment and technology. The MTCR
    decreases the risk of WMD delivery systems falling into the hands of
    terrorist groups and individuals and rogue states. Unmanned Aircraft
    Systems (UAS) that are capable of delivering a payload of 500 kg or
    more to a range of at least 300 km fall under MTCR Category I.
    Consistent with our MTCR commitments, these MTCR Category I UAS are
    subject to a strong presumption of denial, but have been approved for
    export on rare occasions that are well justified in terms of the
    nonproliferation and export control factors specified in the MTCR
    Guidelines.
        However, many UAS are not capable of delivering a payload of at
    least 500 kg to a range of at least 300 km, do not fall under MTCR
    Category I, and thus do not have a strong presumption of denial.
    Indeed, the United States has exported such UAS to a number of
    partners. U.S. export policy for military UAS balance the need to
    maintain the long-standing U.S. commitments under the MTCR while also
    providing a framework to ensure trusted partner nations have access to
    U.S. unmanned systems, thus relieving some of the burden on U.S. forces
    and enabling interoperability with our partners in coalition
    operations.
        Mr. Cook. How will this export restriction impact U.S. companies
    manufacturing UAVs from competing on the global market?
        Secretary Kendall. The United States has the most advanced Unmanned
    Aerial System (UAS) industry in the world, and I believe the recent
    changes in U.S. military UAS export policy will benefit the U.S.
    industrial base by advancing U.S. industry participation in the UAS
    world market. The new UAS export policy recognizes that an increasing
    number of nations are developing, acquiring, and employing UAS. Under
    the new policy, U.S. export authorities will examine potential UAS
    sales under the U.S. Conventional Arms Transfer Policy on a case-by-
    case basis and require receiving nations to agree to the following as a
    condition of sale: 1) sales and transfers of Missile Technology Control
    Regime (MTCR) Category I, armed, and other advanced UAS must take place
    through the government-to-government Foreign Military Sales program; 2)
    end-use assurances; 3) end-use monitoring; and 4) agreement to
    principles for proper use. The United States is committed to working
    with other countries to shape international standards for the sale,
    transfer, and use of military UAS. Fortunately, other current and
    likely exporters of MTCR Category I UAS systems are also members of, or
    have aligned their export policies with, the MTCR.
        Mr. Cook. Do you believe it would benefit interoperability with our
    allies if our nation had a level playing field in order to sell UAVs to
    our international partners and allies?
        Secretary Kendall. Not only do the international sales of U.S.
    Unmanned Aerial Systems (UAS) benefit the United States through
    relieving the burden on U.S.-owned assets during coalition operations,
    but sales of U.S. UASs increase the opportunities for interoperability
    with our allies as well. The NATO Alliance Ground Surveillance (AGS) is
    a good example of how the sale of Global Hawks under a cooperative
    program will enable interoperability through the potential sharing of
    Intelligence, Surveillance, and Reconnaissance (ISR) data in future
    NATO operations. NATO AGS is the backbone of NATO's Joint ISR
    initiative that will integrate information and data from NATO AGS and
    other national manned and unmanned ISR assets at the Main Operating
    Base in Sigonella, Italy.
        Mr. Cook. Does DOD plan to update the export controls on UAVs to
    control their export in a manner that improves interoperability with
    our allies and levels playing field on the competitive global market?
        Secretary Kendall. Not only do the international sales of U.S.
    Unmanned Aerial Systems (UAS) benefit the United States through
    relieving the burden on U.S.-owned assets during coalition operations,
    but sales of U.S. UASs increase the opportunities for interoperability
    with our allies as well. The NATO Alliance Ground Surveillance (AGS) is
    a good example of how the sale of Global Hawks under a cooperative
    program will enable interoperability through the potential sharing of
    Intelligence, Surveillance, and Reconnaissance (ISR) data in future
    NATO operations. NATO AGS is the backbone of NATO's Joint ISR
    initiative that will integrate information and data from NATO AGS and
    other national manned and unmanned ISR assets at the Main Operating
    Base in Sigonella, Italy.