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

                           [H.A.S.C. No. 114-60]

                    SHORTENING THE DEFENSE ACQUISITION CYCLE

                                   __________

                          COMMITTEE ON ARMED SERVICES

                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  HEARING HELD

                                OCTOBER 27, 2015

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                      ______

                             U.S. GOVERNMENT PUBLISHING OFFICE

    97-494                         WASHINGTON : 2016
    -----------------------------------------------------------------------
      For sale by the Superintendent of Documents, U.S. Government Publishing
      Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
             DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
                              Washington, DC 20402-0001g

                          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
    MO BROOKS, Alabama                   DONALD NORCROSS, New Jersey
    RICHARD B. NUGENT, Florida           RUBEN GALLEGO, Arizona
    PAUL COOK, California                MARK TAKAI, Hawaii
    JIM BRIDENSTINE, Oklahoma            GWEN GRAHAM, Florida
    BRAD R. WENSTRUP, Ohio               BRAD ASHFORD, Nebraska
    JACKIE WALORSKI, Indiana             SETH MOULTON, Massachusetts
    BRADLEY BYRNE, Alabama               PETE AGUILAR, California
    SAM GRAVES, Missouri
    RYAN K. ZINKE, Montana
    ELISE M. STEFANIK, New York
    MARTHA McSALLY, Arizona
    STEPHEN KNIGHT, California
    THOMAS MacARTHUR, New Jersey
    STEVE RUSSELL, Oklahoma

                      Robert L. Simmons II, Staff Director
                    Lynn Williams, Professional Staff Member
                            Spencer Johnson, Counsel
                              Abigail Gage, Clerk

                                C O N T E N T S

                                  ----------
                                                                       Page

                  STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

    Davis, Hon. Susan A., a Representative from California, Committee
      on Armed Services..............................................     2
    Thornberry, Hon. William M. ``Mac,'' a Representative from Texas,
      Chairman, Committee on Armed Services..........................     1

                                   WITNESSES

    Chu, David S.C., President, Institute for Defense Analyses.......     4
    Francis, Paul L., Managing Director, Acquisition and Sourcing
      Management, U.S. Government Accountability Office..............     7
    Hunter, Andrew, Director, Defense-Industrial Initiatives Group,
      Center for Strategic and International Studies.................     2
    Pasqua, Joe, Member, Business Executives for National Security...     6

                                    APPENDIX

    Prepared Statements:

        Chu, David S.C...............................................    60
        Francis, Paul L..............................................    79
        Hunter, Andrew...............................................    47
        Pasqua, Joe..................................................    71
        Smith, Hon. Adam, a Representative from Washington, Ranking
          Member, Committee on Armed Services........................    45

    Documents Submitted for the Record:

        ``Running the Pentagon Right: How to Get the Troops What They
          Need,'' by Ashton B. Carter, Foreign Affairs, December 6,
          2013.......................................................    95
        Enclosure 13, Rapid Fielding of Capabilities, from DODI
          5000.02, January 7, 2015...................................   104

    Witness Responses to Questions Asked During the Hearing:

        Ms. Speier...................................................   117

    Questions Submitted by Members Post Hearing:

        Mr. Thornberry...............................................   121

                    SHORTENING THE DEFENSE ACQUISITION CYCLE

                                  ----------

                              House of Representatives,
                                   Committee on Armed Services,
                             Washington, DC, Tuesday, October 27, 2015.
        The committee met, pursuant to call, at 10:00 a.m., in room
    2118, Rayburn House Office Building, Hon. William M. ``Mac''
    Thornberry (chairman of the committee) presiding.

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

        The Chairman. Committee will come to order. Appreciate our
    members, witnesses, and guests for joining us today on this
    hearing related to acquisition reform. As you can tell, there
    are party conferences still going on, and so members will be
    coming in as those conclude.
        Let me just say that a major priority for this committee
    has been, and will continue to be, improving our acquisition
    system. Partly, it is to help get more value for the taxpayer
    dollars. In my mind even more important, is to have a more
    agile system that can better respond to the myriad of complex
    national security challenges facing our country.
        And it is at least my belief that unless we improve our
    acquisition system, we cannot keep up with the many challenges
    that we face. At the same time, while we are trying to improve
    our acquisition system, the acquisition process has to work
    every day. You have got to get that rifle into the hands of
    that soldier in Afghanistan and do all the other things that
    are required of the system.
        And so, I believe we can't have a 2,000-page bill that
    fixes acquisition. We have to take it a step at a time. I think
    we made some good progress, good first steps in the fiscal year
    2016 National Defense Authorization Act, working on some of the
    basics when it becomes law.
        But there are more steps to go, and that is the reason for
    today's hearing, to benefit from the experience and wisdom of
    our distinguished witnesses on next steps, and direction for
    the acquisition reform efforts undertaken by this committee and
    the Senate committee, working with the Pentagon. One thing
    everybody agrees on is that we have got to do better, and so
    largely this has been a cooperative effort.
        Let me yield to the distinguished gentlelady from
    California for any comments she would like to make on behalf of
    the ranking member.

        STATEMENT OF HON. SUSAN A. DAVIS, A REPRESENTATIVE FROM
                CALIFORNIA, COMMITTEE ON ARMED SERVICES

        Mrs. Davis. Thank you, Mr. Chairman. I am delighted that
    you are all here today. We appreciate it very much.
        On behalf of the ranking chair, Mr. Smith, I wanted to
    submit his statement for the record and also acknowledge how
    difficult it is to find that appropriate balance between the
    acquisition cycle time, and risk. We know that needs to be
    done. And also, how do we nurture innovation and developmental
    testing within the acquisition cycle. That is also a big
    concern and something that he notes in this particular
    statement.
        Again, thank you very much for being here. We look forward
    to your testimony.
        The Chairman. Thank the gentlelady.
        [The prepared statement of Mr. Smith can be found in the
    Appendix on page 45.]
        The Chairman. We will now turn to our witnesses, Mr. Andrew
    Hunter, director of Defense-Industrial Initiatives Group at
    Center for Strategic and International Studies [CSIS]; Dr.
    David Chu, President of the Institute for Defense Analyses
    [IDA]; Mr. Joe Pasqua, member of the Business Executives for
    National Security [BENS]; and Mr. Paul Francis, managing
    director for acquisition and source management from the
    Government Accountability Office [GAO].
        Without objection, your full written statements will be
    made part of the record, and I would ask each of you to
    summarize them at this point before we go to questions.
        Mr. Hunter, I guess we are starting with you.

       STATEMENT OF ANDREW HUNTER, DIRECTOR, DEFENSE-INDUSTRIAL
       INITIATIVES GROUP, CENTER FOR STRATEGIC AND INTERNATIONAL
                                STUDIES

        Mr. Hunter. Well, thank you, Mr. Chairman. And it is really
    a pleasure to be back here at the committee where I spent so
    much time learning from members like yourself, some of whom are
    still here and some of whom have departed the Congress. But it
    is a pleasure to be back.
        And I commend the committee for its focus on acquisition
    reform, which is, I know, a focus of longstanding, but remains
    a very important focus, and obviously one that brings you into
    alignment, as you mentioned, with the leadership of the Senate
    Armed Services Committee and with the leadership of the
    Department of Defense.
        And I do believe there is a golden opportunity here with
    this meeting of the minds or alignment of focus to make some
    real progress. And certainly at CSIS this has been a focus for
    us as well, so it is something that we share.
        The focus today is on ``faster.'' I want to briefly mention
    the fact that acquisition is about balancing priorities. And so
    the old saw, ``Faster, better, cheaper: Pick any two,'' is
    something that I just want to start and mention that in picking
    ``faster'' you have to be willing to sacrifice at least one of
    the other two. And when I say ``sacrifice,'' I mean deemphasize
    or make a lower priority. And so if you are going ``faster,''
    then either ``better'' or ``cheaper'' has to sort of be willing
    to give a bit in order to achieve a significantly faster
    outcome.
        Now, of course, when I say ``sacrifice,'' when I mean
    ``better,'' better meaning not necessarily the highest end of
    capabilities. If you have a really old system, the new system
    you are buying is almost certainly going to be better than the
    one you are replacing, but it may not be the state of the art
    of the most latest technology. And these priorities shift over
    time.
        And in the Cold War, in most cases, ``better'' was often
    the priority. I use in my written testimony the example of the
    B-2, which was innovative in almost every way as it was built
    and conceived and constructed, and that meant that it was
    expensive. And there was a major schedule delay in that program
    particularly because they changed the requirements in the
    middle of the development. And that was a choice that was made
    because ``better'' was what mattered then.
        In the most recent time period, with the wars in Iraq and
    Afghanistan, ``faster'' has certainly been a priority. In my
    time at the Department of Defense, part of which was as
    director of the Joint Rapid Acquisition Cell, was really all
    about moving faster. And the Department achieved quite a bit of
    success in that, and I will get into that, because I think that
    is something that there are lessons learned that we need to
    take away from that.
        But I do want to mention that in the time that we are in
    today, ``faster'' is not the only priority. We have an erosion
    of U.S. technical superiority that has been taking place over a
    number of years for a number of reasons, and we explored what
    some of those reasons are, in a CSIS report released over the
    summer.
        And that is a case where we do need to be fielding at least
    some systems that are in the ``better'' category, where
    ``better'' is a priority so that we can maintain a
    technological advantage, which is part of our strategy. And
    also with the budget crisis that is currently being dealt with
    in the Congress, and maybe there is hopefully some progress
    being made there, ``cheaper'' has to be a priority for some
    systems. So your system has to be able to focus on different
    priorities for different systems at the same time.
        Within my time as director of the Joint Rapid Acquisition
    Cell, we tried to capture the lessons learned from rapid
    acquisition. This was something that really spun up at the
    Department of Defense in the 2005 timeframe. And I came in, in
    2013 as director of the Joint Rapid Acquisition Cell when we
    were trying to capture the lessons learned and trying to
    institutionalize those lessons. And Secretary Gates in his
    testimony last week made reference to the desire to
    institutionalize those lessons.
        And I would draw your attention to the article in Foreign
    Affairs Magazine that Dr. Carter published in 2013 which goes
    into the lessons that he took away and how he tried to
    institutionalize those. And I would ask, if you are willing,
    that that might be made part of the record for this hearing,
    that article.
        [The information referred to can be found in the Appendix
    on page 95.]
        Mr. Hunter. The keys that we identified at that time, the
    first is flexible funding. By and large, when you are working
    through the Department's regular budget process, it takes 2
    years to get money to start. So that is an immediate 2-year
    delay in the system. Now, there are certain ways around that,
    but they are cumbersome and they are difficult, and they make
    it hard to move fast.
        And the Congress was very generous during the war period of
    establishing flexible funds like the MRAP [Mine-Resistant
    Ambush Protected] Transfer Funds and the Joint IED [Improvised
    Explosive Device] Defeat Fund, but those funds are really going
    away. And so exploring how to extend flexible financial support
    for programs that need to move fast is definitely an area of
    focus.
        Second big area was getting the senior leadership of the
    Department involved and shortening the lines of authority, and
    that was really what was called the Warfighter Senior
    Integration Group that the Department did during the war years,
    and I think that is an excellent model for programs that matter
    to move fast. And that model is being somewhat echoed in the
    Long Range Strike Bomber program the Air Force is about to
    initiate with the way that they manage their Rapid Capabilities
    Office.
        And then the third priority is basically continuous
    communication between the acquisition community and the
    operational community about requirements, about testing, about
    what is acceptable, and about what the art of the possible is
    with technology, and whether that is acceptable to the
    warfighter. Those three lessons are very much applicable to
    rapid acquisition, but they are applicable more broadly.
        And the last thing I want to leave you with is the idea of
    adaptable systems. If we are always trying to figure everything
    out for the next 30 years today and plan that all in, that is a
    real challenge. That is slow. That is just an inherently slow
    process.
        And so focusing on adaptable systems that can evolve over
    time where you don't have to have the full answer right when
    you start is a good way. And I would use the Predator system as
    an example of how that has actually happened in practice. And
    that system has evolved in a revolutionary way over time, and
    that is, I think, an example to say.
        Thank you very much, Mr. Chairman.
        [The prepared statement of Mr. Hunter can be found in the
    Appendix on page 47.]
        The Chairman. Thank you.
        Dr. Chu, welcome back to the committee.

     STATEMENT OF DAVID S.C. CHU, PRESIDENT, INSTITUTE FOR DEFENSE
                                ANALYSES

        Dr. Chu. Thank you, Mr. Chairman. I appreciate the
    opportunity to be part of the panel this morning.
        Let me try to summarize my written statement under three
    headings: First, what do we know about cycle time defined as
    the time from the start of a program until initial operational
    capability is achieved; second, to the extent there are issues
    with cycle time, what are they; and third, what can we do about
    those issues.
        Looking at the Selected Acquisition Report data of the last
    25, 30 years, I do not see any trend in the cycle time. Cycle
    time has been relatively stable, 8 to 9 years over that period.
    Our impression is very different, perhaps because some very
    large programs have taken a long time: F-22, V-22, and F-35,
    which, of course, is not completely finished with its
    development program.
        To the extent that there is dissatisfaction with cycle
    time, I think a good deal of the source lies in the definition
    of the program at the start, what people like to call the
    requirements process, a term I actually would urge we drop.
    Because, in fact, we are always picking a point in the space of
    trades among the various features of the system concerned.
        And our real interest ought to be how well the system
    performs against the mission needs for those in the field who
    are going to get it. Too often, from a technical perspective,
    looking back at history, we pick a point in the trade space
    that is too tough to achieve from a technological perspective
    within the timeframe that we might desire.
        And that tendency is exacerbated, I would argue, by the
    incentives facing those responsible for the system, starting
    with the program manager. We reward program managers for
    getting programs to production, not for helping the system make
    a good decision, which in some cases, is to admit we have made
    a mistake and the program ought to end.
        The services, likewise eager to have as much content within
    the fiscal guidance as they can possibly achieve, tend to plan
    for more than can actually be financed. And the companies look
    to production for the source of their return on capital have
    every incentive to be optimistic about development time and
    development needs.
        If those are the sources of our dissatisfaction, what can
    we do about them? First and foremost, I think at the start we
    ought to take what some of my colleagues have called a physics-
    based approach to setting the technical parameters. What does
    the trade space look like? What point within that trade space
    do we want to select?
        Second, as Mr. Hunter suggested, as one of my colleagues
    has phrased a bit edgily, we should prepare to be wrong. We
    should build systems knowing--especially the major platforms--
    knowing that we are likely to want to change them to aim at
    block upgrades across their lifetime, that means allowing for
    extra space, weight, power, et cetera, in the original design.
        To be sure that we have picked the parameters thoughtfully,
    I think greater emphasis on development testing is essential.
    The Department System Acquisition Reform Act of 2009 called for
    that, and the fiscal year 2016 National Defense Authorization
    Act strengthens those provisions.
        And finally, I think we ought to rethink the incentives
    that face the program managers and the services as well as the
    companies that produce the articles to emphasize, much as Intel
    does, as I understand it, that really the rewards are to go to
    those who give good advice, and sometimes that advice is the
    program is not meritorious, that not every program started
    ought to go to a finish.
        Let me offer three observations very briefly in conclusion.
    First, I think the emphasis I would urge is less on whether or
    not we shorten the cycle time and more on understanding how do
    we pick the best cycle time for the need that we face. In some
    cases, we want an article urgently, we are willing to give up
    certain elements of performance in order to get that, or
    certain elements of long life that we would otherwise seek.
    MRAP is an excellent case in point. MRAP was achieved fairly
    rapidly, but was an article we decided not to retain, and we
    discarded approximately $40 billion worth of equipment. Some
    additional bias for flexibility will be helpful in shortening
    cycle times for those articles we want quickly.
        Second, I think it is essential to keep our focus on
    mission performance as the ultimate standard, not on the
    technical parameters per se. It is the mission needs that are
    crucial. That includes, of course, deployment deadlines when
    those are significant.
        And finally, as Secretary Gates' testimony, I would argue,
    last week at the Senate Armed Services Committee contended,
    perhaps the most important ingredient in success is the human
    capital, the quality of the people managing the system and the
    technical staff that support them, an issue, I think, that the
    National Defense Authorization Act for this fiscal year
    recognizes.
        Thank you, Mr. Chairman.
        [The prepared statement of Dr. Chu can be found in the
    Appendix on page 60.]
        The Chairman. Thank you.
        Mr. Pasqua.

       STATEMENT OF JOE PASQUA, MEMBER, BUSINESS EXECUTIVES FOR
                           NATIONAL SECURITY

        Mr. Pasqua. Chairman Thornberry, members of the committee,
    my name is Joe Pasqua, and I am honored to be here today as a
    private citizen to address you.
        Having been asked for ways to address shortening of the
    defense acquisition cycle, my statement today will focus on how
    the private sector has addressed similar challenges and
    increased their ability to adopt innovation quickly.
        My testimony is based on over three decades in the
    information technology, the IT industry, and also as a member
    of BENS, Business Executives for National Security, which is a
    nonprofit, nonpartisan organization that for over 30 years has
    been a conduit through which private sector leaders can help
    build a more secure America. Although the opinions I am going
    to express today are largely reflective of BENS's perspectives,
    the views I express are my own.
        I would first like to commend the committee's efforts at
    acquisition reform. I agree with Chairman Thornberry's approach
    to make incremental and achievable changes as a path to
    comprehensive reform. Because of the central role of IT in
    virtually all modern systems, the ability to efficiently
    specify, acquire, and adopt IT innovation has become a key
    success factor. Smaller, more agile companies are often the
    best sources of innovation; however, they can often be the most
    difficult to identify and engage with for large organizations.
        In the past, barriers for both the Department and these
    small companies have impeded building effective relationships.
    Traditionally smaller companies haven't viewed DOD [Department
    of Defense] as a viable customer because they lack the
    specialized knowledge and the time that is required for
    operating in this space. It is not that they don't want to
    engage with DOD; it is just that it is too high a risk for
    these still small businesses.
        So the question becomes, how are private sector companies
    addressing similar challenges? Over the last 5 to 7 years,
    there has been a fundamental change in the way that they
    specify and acquire IT. The rapid pace of innovation has made
    long, expensive requirements processes untenable. As a result,
    we are seeing less of what I referred to as ``big bang''
    acquisitions; instead, companies are starting small, conducting
    iterative evaluations in real time, and adjusting as needed.
    Advances in cloud computing, scale-out architectures, and other
    technologies have enabled companies to test concepts quickly
    and purchase IT hardware as they need it rather than buying
    everything upfront.
        This has been a challenge, quite frankly, for large
    organizations with high inertia and low risk thresholds. But
    even with these larger organizations, we are seeing that they
    are becoming more agile as a way to keep pace in a competitive
    marketplace. This shift has lessened the bias towards large,
    incumbent vendors and has given innovative new players a better
    opportunity to compete.
        This new approach also helps to remove risk by keeping the
    initial investments small. Traditional requirements processes
    attempt to mitigate risk by conducting long-term, expensive
    studies to ensure all options, every conceivable outcome can be
    reviewed in advance of a decision. In contrast, an agile
    approach allows companies to start small and scale up as
    appropriate, thereby reducing the need for protracted
    requirements processes.
        In fact, a traditional process has a different sort of
    risk, the risk that by the time a long acquisition process is
    complete, the solution that is chosen will no longer be
    appropriate. Nowhere is this more true in cyberspace where the
    threat landscape is changing on a continuous basis. In such a
    dynamic space, the requirements process needs to account for an
    organization's current needs and be able to adapt to the
    inevitable changes that will come. This is one reason why open
    architecture is so important. It provides increased
    interoperability, modularity, and the ability to incorporate
    new technologies without overhauling an entire system.
        In summary, I believe that these practices and
    understanding and implementing these approaches would help the
    Department to become more agile and responsive to innovation,
    allow a slightly different, yet still very good risk mitigation
    strategy, and encourage participation from a wider segment of
    industry.
        Thank you for the opportunity to speak today, and I am
    prepared to answer any questions you may have.
        [The prepared statement of Mr. Pasqua can be found in the
    Appendix on page 71.]
        The Chairman. Thank you.
        Mr. Francis.

     STATEMENT OF PAUL L. FRANCIS, MANAGING DIRECTOR, ACQUISITION
     AND SOURCING MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

        Mr. Francis. Good morning, Mr. Chairman, Mrs. Davis,
    members of the committee. I appreciate the opportunity to talk
    about weapons system acquisition this morning.
        I think we know the overall problems being, weapons systems
    cost more and they take longer than expected. They perform well
    but generally not quite as well as we thought. I believe some
    of the top-level consequences are understood, that is the
    warfighter is somewhat underserved by systems that come late
    and buying power is reduced.
        There are other consequences maybe that are less well
    understood; that is, when we pay more for a weapons system than
    we thought that we would in the beginning, we are making
    tradeoffs. We are deciding not to do other things because we
    are putting more money into this one system. And those
    opportunity costs I don't think are explicit or the tradeoffs
    are looked at, so we are not quite sure what we are giving up
    to put more money into system A.
        The other thing is, weapons systems typically take more to
    operate and support than we think. They are a little less
    reliable. Again, those costs are kind of hidden once the
    acquisition is done. So, some consequences not so clear.
        Our position is that the key to getting better acquisition
    outcomes, whether they are shorter cycle times, or as Dr. Chu
    mentioned, the right cycle times, is a better business case at
    milestone B. And I will talk about a business case in two
    parts: One is, what happens before milestone B. And that is
    when you are sending requirements and you really need your
    requirements to be--they need to be clear, flexible, but well
    informed by a couple of things: One is technology knowledge.
    How much technology is available to meet the requirement; and
    your engineering expertise. Do you understand the implications
    of the requirement for the design?
        So if you come to a milestone B and you are asking for
    technologies that aren't mature yet, or you don't quite
    understand the implications for the design, you are in trouble.
    If you do come to milestone B with a pretty well-informed,
    reasonable set of requirements then you are kind of ready for
    the second half. And the second half of that is, what is your
    game plan going forward.
        And we would say the second part of that business case then
    is a knowledge-based acquisition strategy that lays out a
    logical path for getting the design stable, building
    prototypes, testing, maturing the design, maturing production
    processes, and laying that out with the schedule and resources
    that allow that to be done nonconcurrently.
        So, you ask yourself, well, why aren't we getting these
    kind of business cases routinely? Which is the David Packard
    question. We all know what needs to be done; the question is,
    why don't we do it? And I would say what I just described is a
    sound business case, but a sound business case isn't the same
    as a successful business case. And a successful business case
    is one that wins money.
        And I still think predominantly in the Department, a
    successful business case is one that overstates or overpromises
    performance and understates cost and understates schedule. That
    is what still wins money today. And I would say the reason for
    that is there is still strong incentives, which we refer to as
    the acquisition culture in the Department, that put pressure on
    these kind of business cases.
        And I will give you a couple examples of what is kind of
    under the hood. First is the competition for funds in the
    Pentagon is pretty intense to start a new program, so that does
    create incentives to overpromise performance and understate the
    investment cost. Also, weapons systems are highly symbolic.
    They are more than just a piece of equipment at the right
    price. They involve policies, roles and missions, careers,
    jobs, budget shares, so they carry a lot of weight.
        If you look at the private sector, when the private sector
    does a product development, it is an expense. They are spending
    their own money to finance the development and they don't make
    any money until they get into production. So that creates real
    incentives to get the business case right, because if they are
    late, the customer walks. If you are Ford and you build a Ford
    Taurus that is 5 years late, it has a $50,000 sticker price and
    it gets bad gas mileage, your customer walks, and the
    investment is lost.
        And the Department of Defense, when you get a program
    started, it is a revenue stream. It is not an expense. So you
    get a bigger budget share. And those incentives then are quite
    different. And at the end, the customer isn't going to walk. So
    if it costs too much, it takes longer, it underperforms, the
    customer is still going to buy.
        So in the private sector, the point of sale is after
    development when you are in production. In the Department of
    Defense, the point of sale is at milestone B. In fact, I would
    say it is before milestone B when you first approve funding. So
    it is a completely different psychology.
        That is why things like--practices like cost estimating,
    everyone wants--or you would say policy says we should have
    good cost estimates. We all know how to do a good cost
    estimate. But they don't really help your business case. They
    are pretty inconvenient if they are high. Same is true for a
    fly-before-buy in testing. You would want early test results to
    see how good the system is, but they could be inconvenient as
    well.
        So I think the real kicker is, to the extent business cases
    like this win funding approval they are sanctioned, and those
    principles then become what policy is, not what is in best
    practices or DOD policy.
        So what to do, I would just say let's start thinking about
    the acquisition process as not something that is broken but
    something that is held in equilibrium by a set of incentives
    that are stronger than best practices. You know, moving forward
    there is a number of things we can do, we will probably talk
    about that more this morning, but it is going to take joint
    action on the part of the DOD and Congress.
        And I will just list a few things. One is we need to
    separate technology development from product development; we
    need to take risks in the right places, which I would say is
    early in programs; and if we have to take a risk on a program
    after milestone B, let's declare them and pay for them. Let's
    take the risk together and be honest about them.
        We have to do something about better aligning funding
    decisions with program decisions, because today you are having
    to make a funding decision 18 months in advance of a program
    decision. So once you put money on the table you can't take it
    off. We really need, as Dr. Chu mentioned, a really good
    investment in program managers and systems engineering staff.
        And then finally, I would say my hope, my appeal is to
    Congress to be the game changer in acquisition reform and that
    will be manifested by what you do in funding programs. So I
    would say for programs that don't measure up to good business
    cases, say no. I think a couple of good no's in the process
    from the Congress is going to send the right example as to what
    you expect.
        So that is my hope. I am looking for you to be the game
    changers. Thank you, Mr. Chairman.
        [The prepared statement of Mr. Francis can be found in the
    Appendix on page 79.]
        The Chairman. Thank you.
        I just want to ask each of you to comment, because each of
    you have touched on this in the comments that you have made so
    far. And one of the concerns that I have heard over and over
    is, especially for complex systems, we invent as we are in
    production. Dr. Chu said we reward programs for getting into
    production. Mr. Francis was just talking about this. So the
    incentive of the current system is to get that program past the
    milestone B, that is where you get the dedicated line of
    funding, and the incentive is to do that even if the technology
    has not been developed that you are going to rely upon.
        And so, part of what happens is you are inventing as you
    are producing, and that results in delays, cost overruns, and
    so forth. So the suggestion has been made to me that if you
    separate technology development from production and you don't
    take anything to production until the technology is established
    and proven, that maybe you could improve that situation with
    the adaptability that you all talked about so that as
    improvements in technology are developed, then you can plug it
    in.
        So Mr. Hunter, what is your reaction to that? I mean, part
    of what we are trying to do is get below the symptoms, the
    surface here, and dig down into deeper root causes that have
    caused people concern. Is this a root cause, and is that
    something that together we should explore with the Pentagon?
        Mr. Hunter. Well, I would say it can be a root cause and
    that does happen. And the example that jumped into my mind as
    you were laying that out is the example of the F-35 helmet,
    which I would say was not mature technology in the early 2000s
    when the program went through milestone B and the investment
    decision was made and the decision to take that approach was
    made, but which is now actually working.
        And so some 15 years later it is there but it probably
    wasn't there when we made the decision. So it does happen. It
    is a cause. It is not the only root cause but it is a cause.
    One note I would make about that and something they did there
    that actually was a good idea, although I think it was belated,
    is they had an off ramp and they had a second helmet that they
    could have gone with if the original helmet didn't work. And
    that, I think, is a good practice.
        There are times when you want to reach a little bit, as I
    mentioned when ``better'' is the priority. It is not clear that
    on F-35 that was really the intent, but where it is a priority
    you may want to reach. But what you can do is have off ramps,
    so that if you are not able to invent the thing you were trying
    to invent, you still have a workable system and it still meets
    your threshold requirements.
        And I also think, you know, as I mentioned this idea of
    adaptable systems to where you may be trying to invent
    something, but again, you don't put it in the baseline design.
    It is in a later block. It can be a way when you are trying to
    reach for new and innovative technology.
        The Chairman. Dr. Chu.
        Dr. Chu. I would add two thoughts to the general idea that
    you advanced. One, reinforcing, which is there in various
    congressional direction the last several years, and that is a
    greater emphasis on development testing. We don't do enough
    testing early on of the technology ideas to be sure that they
    are going to pay off in the way we think.
        Second, I think, again, back to deemphasizing the word
    ``requirements,'' too often we pick a technological point and
    we follow these attributes forgetting that in the end what
    counts is does it add to mission success or not. And there are
    a number of systems where we have picked points that actually
    don't have a lot to do with mission success but we keep
    pursuing them in the systems development even though they are
    not going to have a high payoff, and that often is the cause of
    serious difficulty.
        The Chairman. Okay. Mr. Pasqua, I want to come back to you
    in a second with the private sector.
        Mr. Francis, what do you think?
        Mr. Francis. I think it is definitely one of the big root
    causes. I think part of the solution lies in the fact that we
    have to enable those technologies, so we do have to take those
    risks to make those gains. So we are not arguing against that,
    but the burden needs to be borne more heavily in the science
    and technology community. And we typically aren't funding it to
    carry technologies that far.
        And the mechanisms we have to transition technologies to
    programs aren't very good. So programs are a better place, if
    you will, to fund the programs, which is not what we want. I
    also think when programs are doing their analysis of
    alternatives, there is incentives to advertise very high
    performance, which means you are counting on technologies that
    haven't been invented yet.
        So I think we can go forward, bring technologies to higher
    level before milestone B. If we still have to take risks, let's
    take the risks and pay for them upfront. Or, as I think Mr.
    Hunter was suggesting, go forward with the design that is
    flexible enough that you can bring in improvements in
    technologies during the course of development.
        The Chairman. Okay. Now, Mr. Pasqua, how does all this
    comport with your experience in the private sector? And is
    this, kind of what we have just been talking about, a path
    towards a more agile system, in your opinion?
        Mr. Pasqua. I think it translates very well to the private
    sector, particularly with technology. It is sort of well
    understood that the further on you get into a technology
    development cycle, the costs of changes and finding and fixing
    problems increases close to exponentially.
        So you want to make sure that you are doing as much cycle
    work as you can upfront to get your technology in place and in
    a mode where it is operable, it can be adapted and modularized,
    but you don't want to be making changes during the production
    cycle, you don't want to be redoing the architecture during the
    production cycle. That is the absolutely most expensive time to
    deal with those types of issues.
        So the idea of being more agile upfront, being able to test
    systems before they are in production, before you get into the
    most expensive phase for changes, is, I would say, an industry
    best practice.
        The Chairman. Thank you. Thank you, all.
        Mrs. Davis.
        Mrs. Davis. Thank you. Thank you, Mr. Chairman.
        And I appreciate all of your input here.
        I think one of my questions, and perhaps both in business
    and in the Department, the extent to which we rely on people
    who have done those things before, and with the idea that they
    will be able to move forward, you know, do you see in business
    particularly putting folks on the project who maybe haven't
    been there before? I mean, is there something to be said for we
    really do need in management to bring in--talk about different
    eyes on the issue. Do you see that happening in the business,
    that you are able to do that more than perhaps in the public
    sector?
        Mr. Pasqua. Well, I can't compare to the public sector
    because I can't speak with authority on how often that happens,
    but it is definitely the case that having a fresh perspective
    is always a good thing. But having people who have--are
    experienced with the process and know how the process works and
    can operate efficiently in it, I think, is very important.
        I think what we are seeing in industry is sort of a bridge
    being built between the people and the way processes had
    operated for many, many years, and a transition to the way they
    are operating now. And I think part of the way that is
    happening, particularly in large organizations, is they are
    looking at smaller organizations and wondering how these
    smaller organizations are so much more effective than they are,
    and trying to understand which sorts of processes can be
    adapted from those sort of more agile companies into a larger
    organization.
        It is not easy, frankly. The things that work in a smaller
    organization often don't translate directly to a larger
    organization. But as Dr. Chu was saying, I think that one of
    the critical things is always keeping in mind what the end goal
    is.
        So as organizations are focusing on not what's written in a
    document somewhere about, you know, specific sets of
    requirements but actually what they are trying to achieve in
    the marketplace or for their customers or for their patients or
    clients and being able to adjust based on that north star of
    what the actual goals of the projects are rather than
    specifically the detailed requirements is one thing that I
    think is changing industry in a positive way.
        Mrs. Davis. Uh-huh, yeah. I don't know, Dr. Chu or even Mr.
    Francis, does sometimes just the culture get in the way of
    that?
        Dr. Chu. I think there is an issue there with the human
    capital, and that is that as the number of new systems has
    declined over the last several decades in at least several
    platform areas, private aircraft being a principal example, it
    is less the case as was earlier true that the design engineers
    have prior experience with that design problem.
        And so we move from a situation where United States and
    let's say the 1950s, 1960s science engineers have frequent
    opportunities to try out new design ideas and experience with
    the ups and downs of that process to--they may do one or two
    designs in an entire career.
        And so that base of hard-won lessons from things that
    didn't go so well is not as frequently there, and I think that
    is one of the issues out there. I think that does lead to a
    different kind of technology separation production, which is
    perhaps more emphasis on prototypes and prototypes for their
    own sake, to try out technologies and to give the design teams
    more experience with the tough issue of how you actually make
    these trades work.
        Mrs. Davis. Thank you.
        Mr. Francis, is the reason that we tend to build on
    immature technologies that there hasn't been this sort of
    change in terms of looking at something, I guess, different
    from what they have done in the past? How would you solve that,
    I guess?
        Mr. Francis. Well, I think that is part of the problem. I
    think the issue with program managers is a real one. I think we
    are putting really outstanding people in those positions, but
    we are often handing them an impossible situation. So we hand
    them a business case that no one could execute.
        We are not really giving them the training and glide path
    to put them in a position and really have the business acumen
    to do business with their private sector counterparts. And then
    we are not giving them a really good career path. So we don't
    put program managers in a good position to succeed, so that is
    a remedy that we need.
        The other part, touching on your technology, is we are
    still short on systems engineers in the Department, and we
    particularly need that expertise before a milestone B decision
    so that you can work with those requirements and understand the
    preliminary design. So I think the work doesn't get done early,
    it falls on the shoulders of the PM [program manager], and the
    PM is not well equipped to handle it.
        Mrs. Davis. Thank you.
        Thank you, Mr. Chairman.
        The Chairman. Mr. Forbes.
        Mr. Forbes. Mr. Chairman, first of all, I want to thank you
    for your work in this area. You have done a lot to move this
    forward and this hearing is one of those things.
        And our committee is always--we spend some time in the
    weeds looking at the specificity of what we need to do and then
    we move up and get kind of an aerial view. There are times we
    need to do the aerial because it shows us the trajectory and
    the curve lines that we have.
        When Eisenhower left office in 1961, he warned of the
    influence of a permanent armaments industry of vast
    proportions. But in the years of the Cold War, we have seen the
    size of our industrial base shrink along with defense spending.
    1961 defense contractors comprised 15 of the top 100 companies
    in America and made 30 percent of those top 100 companies'
    total revenue. Today, there are only 4 defense contractors in
    the top 100 and they make 4 percent of the total revenue.
        Now, I know that is in part due to mergers and acquisitions
    and also tremendous growth in the commercial sector. But
    unfortunately for our national defense many of the commercial
    companies are hesitant to work with the DOD due to low profit
    margins, huge regulatory burdens, and demands that they turn
    over intellectual property.
        Could you guys give us your opinion of the curve lines that
    you see that worry you about the industrial base and the
    acquisition process in terms of the health of our industrial
    base and its ability to meet the needs of our military, and
    also the flexibility that we might have. You know, we all talk
    about often in World War II how we could shift our
    manufacturing and produce other things. What worries you today
    about those curve lines, and is there anything we can do as a
    Congress to impact the curve lines?
        Mr. Hunter, do you mind giving us your thoughts.
        Mr. Hunter. Yes. I would say if you step back and take the
    total aerial view, on the whole I would say the industrial base
    is actually still pretty healthy today. Where I get concerned
    is where that defense industrial base becomes very much
    divorced from the commercial side. And an example I would give
    is shipbuilding, right. The commercial shipbuilding industry in
    this country is gone essentially. There is a little sliver of
    it left out in California, but by and large it is gone.
        And so all of the shipbuilding, all of the expense, all of
    the overhead of what is an expensive industry is carried by the
    Department of Defense. And that is why the Navy works so
    assiduously to try and take care of that industrial base which
    is certainly an excellent thing that the Navy does. On the
    aviation side, it has been much more tightly integrated both in
    terms of airframes and engines.
        Now, that may also be starting to separate a bit, and so I
    do have some concerns that if the aviation side of the
    industrial base goes in the direction that shipbuilding has
    gone and we get this separation between the commercial aviation
    industrial base and the defense aviation industrial base, that
    could have real consequences. The decision by the United
    Technologies to sell Sikorsky does raise some concerns in that
    area. And that was not because the business was going away; it
    was more a decision about profitability. But that is a concern.
        Mr. Forbes. Anybody else have a thought?
        Dr. Chu. Sir, what I would worry about most is the lack of
    competition, the consolidation that you mentioned. You look at
    history of fighter aircraft since World War II in the early
    decades, I think the historians would argue the interesting
    innovations came from the firms that lost the last competition
    because they realized if they didn't come up with a new idea
    they would not be around much longer. That is no longer a
    threat to the major suppliers.
        Coupled with, as you hinted, and as Mr. Pasqua's testimony
    underscored, a set of Federal procurement rules make it very
    difficult for a truly commercial firm to do business with a
    fellow company. So what you have is basically a firm that
    specialized in defense procurement or subsets of firms, such as
    the Boeing division between military and civil aviation that
    specialize in defense procurement. And again that limits the
    degree of competition, most importantly competition about new
    ideas.
        Mr. Forbes. Okay. Any other thoughts?
        Mr. Francis. Mr. Forbes, I think obviously competition is a
    big issue. And so as there has been contraction, there has been
    less competition, and I think we have come through an era of
    really big platforms which made winners and losers out of
    industry. So if you didn't get on the next new platform, you
    were out of business. I think we are a little past that right
    now and so there is not as much big, new platforms coming. So I
    have some hope.
        I think the other thing is, there are barriers, I think,
    that can be reduced for the government to attract more
    innovative commercial firms to do business. That may be kind of
    limited. I think the government also has to instead adapt to
    the fact that the private sector is funding so much more
    research and development. So the government has got to learn to
    adapt to that.
        Mr. Forbes. And my time is up, but thank you, gentlemen.
        I would yield back, Mr. Chairman.
        The Chairman. Thank you.
        Mr. Walz.
        Mr. Walz. Thank you, Mr. Chairman. And I too want to echo
    my thanks for you grabbing onto this issue we all know is
    critically important in working in. Thank you all for being
    here.
        Just a couple questions, and I am interested amongst the
    different services and the performance amongst them because
    there appears to be a difference, if there is some lessons
    learned or if it is the nature of the service. This idea of
    breaches going through the cost ceiling's scheduled performance
    or whatever. I started looking at this.
        While this pains me to say as a former soldier, the Army
    leads in this area with a 38 percent breach. I am kind of
    curious, from your perspectives, is this cultural? Is it the
    nature of it? Or what is at work there that would set them
    apart from the Air Force and the Navy?
        Mr. Francis. That is a tough question. I think the Army,
    you know, after the Big Five programs of the late 1970s and the
    early 1980s, has had a difficult time finding traction with
    aviation and its ground combat vehicles and came through a very
    difficult phase with the Future Combat Systems, where it was
    coming up with a completely different concept for fighting. And
    I think that was doomed by relying on technologies that simply
    weren't there and they just couldn't execute that.
        I don't know that the Army is quite recovered from that.
    After the Future Combat Systems, which is predicated on
    fielding an array of 19-ton vehicles that could be airlifted,
    the next vehicle that the Army developed was the ground combat
    vehicle which was a 70-ton vehicle. So I think the Army has had
    some difficulty trying to identify just what it needs and how
    it wants to fight.
        And when it decides on something it has been moving out a
    little bit too aggressively, trying to get it fast and
    discovers during the process that it is not a good concept. So
    I have seen that more with the Army than the other services.
        Mr. Walz. Yes, sir.
        Mr. Hunter. I would agree with that largely. I think that--
    and the essential point that--with the Army not having
    recovered from Future Combat System [FCS], I think the issue is
    that they don't have a consensus vision within the Army of what
    the next Army should look like. You know, the 1980s, they had
    the Big Five and that was a pretty consensus vision. And
    because there were five of them and within that there were a
    number of subsystems, it essentially--every part of the Army
    was winning or was getting something out of that approach. And
    since the collapse of FCS, there has been no similar vision for
    how to move forward.
        Mr. Walz. That lack of vision, is that what led to like
    Crusader? I always look at that, is that the problem with the
    acquisition process, or did we actually see a glimmer of hope
    that it was actually killed after a while? I am kind of curious
    on that. Is that just part of this culture, they are searching
    for the weapon system that didn't fit the battle that was
    coming?
        Mr. Hunter. I would say Crusader is an example of a case
    where there was a vision but it was not an affordable vision.
    And so that is another obviously possible failure mode is you
    can have a great vision but it tends, you know----
        Mr. Walz. So this is a leadership issue then, is the way
    you see it amongst the Army or at least vision-wise. It leads
    me into my next question about we included the service chiefs
    having a say in this in the NDAA. And again, this might be the
    chip on my shoulder or whatever, is it important to add those
    senior-enlisted people? I would say they are closer to the end
    user type of thing. Does that start to straighten this mission
    out, or is that a whole different discussion?
        Mr. Hunter. Well, where I see the strength of having the
    service chiefs more involved is their ability to bring all the
    elements of the game together, budgets, requirements, and
    acquisition. And I think there is a lot of power in that. And
    they are at the top of those pyramids. And so I think that is
    the real strength that they have to offer. They by and large
    don't bring to the table a lot of technical expertise to
    address some of these technical issues because that is not
    their training. It is not expected that they should have that.
    So I think on terms of the enlisted side, to the extent that
    the senior leadership there can, again, help to bring the
    aspects of the system together, that is a good thing.
        Dr. Chu. If I may add, sir, I think on the end user front,
    the end users you may most want to encourage to say more are
    the combatant commanders. They are after all the one
    responsible forces--at whatever level, enlisted--officer. And
    they don't have too large a voice in the present system.
        Mr. Walz. Great. I appreciate that. And again thank you for
    helping us understand this. I think all of us here do recognize
    this is a critical issue. And at some point in time we are
    going to have to--and I think the chairman is right again on
    this: We would like to fix it all. That is not going to happen
    realistically, but these steps forward do make a difference. So
    thank you and I yield back.
        The Chairman. Mr. Rogers.
        Mr. Rogers. Thank you, Mr. Chairman.
        I will throw this out for whoever wants to swing at it. Do
    you believe there is a bias in DOD goods and services
    procurement against public/private partnerships? For example,
    does it make sense for OMB [Office of Management and Budget]
    and CBO [Congressional Budget Office] to require 1-year scoring
    of the entire liability of a public/private partnership but not
    the same treatment for traditional goods and services
    government to contractor procurement? Dr. Chu.
        Dr. Chu. This question of scoring multiyear buys,
    particularly if they have a lease-type structure, which is what
    you are describing, I think is one that has bedeviled the
    Department. Congress, to point to a positive example, offered a
    way out for privatized housing and special provisions.
        And so on the one hand, I understand the source of the
    constraint, which is to avoid signing long-term leases and
    dodging the fiscal limits; on the other hand, I think it has
    proven injurious to some arrangements that might indeed be
    interesting, and I would look to some provision, perhaps
    modeled on the privatized housing authority that allows
    meritorious multiyear deals to go through.
        Mr. Rogers. Mr. Hunter.
        Mr. Hunter. I would just say, my point about financial
    flexibility is exactly aimed at what you are talking about,
    which is the tendency within the system to shut down innovative
    financial approach because of scoring issues or legal issues or
    other impediments that have been brought in over the years,
    usually because of a bad case that happened somewhere in time
    and then we foreclosed an entire range of options. And
    multiyear funding is certainly an aspect of that, acquiring
    material through services is something that can be very
    powerful but is very hard to do in the current system.
        Mr. Rogers. Yeah, and housing was the example I was going
    to go to. It has been a stellar success. And you know, we are
    going to own it at the end of this 50-year lease/purchase
    agreement. It has been a win-win. But we run into these same
    problems with our satellite access. We would like to have
    multiyear deals where we could get a lower rate, and we are
    locked into the 1-year scoring, which is just a killer for us.
        And another area where I would like to see this done is I
    would like to take the same model that we use for housing to
    re-engine the B-52 bombers. We could pay for that, in my view,
    with the fuel savings, but we would get into the scoring issue
    again. So I am real interested in your thoughts about how to
    get around that.
        Let me ask this: There are going to be some areas where it
    doesn't make sense to treat goods and services as a commercial
    item where DOD can afford to rely on the market to influence
    positive private sector decisions. Is the space launch one of
    these?
        And as you know, we historically have a situation where
    Lockheed and Boeing were in the space launch business and
    couldn't make a profit, and decided to get out and we went, no,
    don't do that. You all get together and put together a
    partnership called ULA [United Launch Alliance], and we will
    feed you enough business to keep you alive. And now we are
    being attacked--or that model is being attacked, as you know.
        And I am just wondering, can we rely on commercial
    enterprises for essential national security access to space?
    Anybody want to take a swing at that?
        Mr. Francis. So Mr. Rogers, I know when ULA was formed it
    was formed on the basis of they thought there was going to be a
    big commercial market. So what they were going to do for the
    Department they thought they were going to be able to adapt to
    the commercial market and that market did not materialize. So
    they became more dependent on DOD.
        Now we have opened that up to commercial competition so we
    have commercial firms that are competing. We still have ULA, as
    one of the competitors now.
        Mr. Rogers. Well, we have got ULA for the moment.
        Mr. Francis. For the moment, right.
        Mr. Rogers. That may not be there by December 1. That is
    the whole point.
        Mr. Francis. Right. So I think it depends on how good these
    commercial offerings are. Can their rockets--right now at this
    point we are trying to see whether they can handle those
    payloads and be reliable. And will there be a commercial
    market. So if the government is the only customer, it is hard
    to imagine you can have all of these suppliers. So it is going
    to depend on, I think, largely on the commercial market, and
    the government is going to have to protect its interest going
    forward.
        Mr. Rogers. The last statement you made is the key: ``The
    government has to protect its interest.'' We have to, from a
    national security standpoint, have assured access to space,
    which by DOD definition means two sources. We are going to be
    doing good to keep one at the rate things are going.
        But let me ask you this: Mr. Francis, you have recommended
    that, quote, ``stronger and more uniform incentives are needed
    to encourage the development of technologies in the right
    environment to reduce the cost of later changes, and encourage
    the technology and acquisition in communities to work more
    closely together to deliver the right technologies at the right
    time,'' closed quote.
        You point out that there are organizational, budgetary, and
    process impediments which make it difficult to bring
    technologies from DOD science and technology enterprise into
    acquisition programs. What are the impediments and how can we
    change this?
        Mr. Francis. So one thing is the science and technology
    [S&T] budget is relatively fixed. I think if you look over the
    past 20 years, it is about 20 percent of the R&D [research and
    development] budget. I don't know if that is the right number,
    but again, it is a fixed level of funding. Seems to me, if we
    are going to get ready for a next generation of something that
    maybe that S&T budget needs to be built up.
        It is not big enough now to carry technologies far enough
    into maturity, so you end up having to hand them over to
    weapons system programs too early because they are the big bank
    for money. And there aren't really good mechanisms, at least
    consistent mechanisms right now, for science and technology
    managers to go into a transitional phase where they can work
    with program offices and successfully hand off technologies to
    those programs.
        So I think there is some structural issues. There is
    funding, organizational, and then the fact that really it is
    the acquisition programs that are more in control of transition
    than science and technology organizations, which is different
    from the private sector.
        Mr. Rogers. Thank you. I yield back.
        The Chairman. Mr. O'Rourke.
        Mr. O'Rourke. Mr. Francis, I was very interested by your
    comments about opportunity costs and that when we have cost and
    time overruns, it is not just money and time in an absolute
    sense; it is the loss of something else that we could have been
    focusing on, spending dollars on, spending time on. I know it
    is hard to quantify a negative, but do you have any examples of
    what some of those opportunity costs were, specific programs?
        Mr. Francis. There are some cases where the tradeoffs were
    explicit, so I remember, kind of using a reverse example, when
    the Comanche helicopter was cancelled, it freed up money which
    this committee, I think, took the lead on making sure that that
    money went into other Army aviation investments. So that is
    kind of using the negative to illustrate what should happen.
        I don't really have good examples for when a program
    overruns and you need more money to do it and where did that
    money come from? So programs like the F-22, the Joint Strike
    Fighter, the Ford-class aircraft carrier that have overrun, we
    have made decisions to put more money into those to buy what we
    thought we were already buying, but I am not aware of where we
    have listed the tradeoffs. What did we give up to provide that
    extra money? Now, I have to believe that exists in the
    Pentagon, but I don't know if that is a debate that the
    Congress is afforded.
        Mr. O'Rourke. You also talked about the fact that we
    unintentionally incentivized, overpromising on the outcomes and
    underestimating on the costs, and you suggested that this
    committee or Congress should send a signal by rejecting some of
    these programs or projects or systems. Do you have any specific
    examples?
        Mr. Francis. You know, I was thinking about that before I
    came in. I really can't think of examples where Congress said
    no. What Congress tends to do----
        Mr. O'Rourke. Could you think of some examples where
    Congress should have said no?
        Mr. Francis. Oh, yes. So Future Combat Systems. I give this
    committee a lot of credit for having all the early hearings on
    Future Combat Systems. It was simply not possible. It didn't
    measure up to any reasonable test of an executable program. It
    relied on 50 uninvented technologies, and it was a $200 billion
    program, and we were going to do it, I think it was 19 separate
    programs, and were going to run all 19 in 5 years, in less time
    than it takes to run one program. It just was not executable.
        What Congress tends to do and what it did in this case was
    it puts strings on the money. It will put a cap. It will put a
    condition that you can't go forward unless you report back. But
    it never said no to the program, so it took Robert Gates to say
    no to it. So Congress is reluctant to give a no. It will give
    an angry yes, but that is a yes nonetheless.
        Mr. O'Rourke. Let me ask you about another topic that you
    brought up, which is the need to take risks earlier in the
    cycle or in the process. Can you expand on that a little bit
    and talk about our role in doing that or in creating the
    incentives for that?
        Mr. Francis. Sure. And Dr. Chu, his statement covers that
    as well. We need to take risks. So we don't want a situation
    where we don't take any risks and we never have any failures.
    You have to take risks. We are not going to have perfection
    here. Perfection I think would be a bad thing, but we can do
    better. We need to take those risks in science and technology.
    That provides the environment where failure is okay.
        So the purpose of S&T is to discover. But once you get into
    product development, the purpose of product development is to
    deliver, and you can't invent on a schedule. So I would say we
    have to take those risks in science and technology and carry
    those risks further and resolve them. And if we can't, then we
    make an eyes-open decision that we are not going to take the
    risks in product development, and so we are going to take those
    out of the requirements; or we are going to take the risks but
    we are going to have to put the money up to take them.
        So too often we say we are going to take these risks, but
    we have a risk mitigation plan in place that is going to make
    it okay. But that risk mitigation plan generally lacks two
    things, time and money, which are the consequences most likely
    to attend risk.
        Mr. O'Rourke. Thank you. Mr. Chairman, I yield back.
        Mr. Hunter. Can I just add one thing to that? And I agree
    with what Paul has said, but there still needs to be path for
    that S&T to get into the arsenal. And that is where I would
    again mention this idea of adaptable systems, so when you do
    prove something out in the S&T or early stage R&D, you need a
    way to host it on a platform that the warfighter actually uses,
    so you have to make that connection.
        Mr. O'Rourke. Thanks.
        The Chairman. Mr. Wittman.
        Mr. Wittman. Thank you, Mr. Chairman. Gentlemen, thank you
    for joining us today. I want to talk about how things happen
    within the decisionmaking process on acquisition, and you
    pointed out some success models at the smaller scale where you
    can take a concept that comes from unit commanders. You develop
    that process of developing that idea with systems engineers,
    and you have program managers involved and contracting
    officers, and you end up with something that works and
    resembles what was needed at the very beginning. So that small-
    scale process you have shown works.
        Let me ask this. How do we take that and graduate it to the
    large scale? How do we take emerging technology, compress the
    time process, be able to make sure that we have great
    communications from the unit commanders, to the systems
    engineers, to the program managers, to the contracting
    professionals, and getting that done?
        It seems like to me today what we have is we have the unit
    commanders that are here, and then in a whole separate element
    there is the systems engineers that take that concept and
    develop it, and then in a separate place, in another area, are
    the folks that write the requirements, and then another group
    of folks that come up with the proposals and another group of
    folks that come up with the contracting process, so all of this
    is fragmented, and no wonder decision making goes awry,
    especially when it seems to be process-driven. People seem to
    be I got to check the box. And if I check the box, then I have
    done my job. Instead of saying, you know, let's focus on what
    the warfighter needs. Let's focus on getting that technology to
    them as quickly as we can. How do we do that?
        How do we put authority into the hands of those people at
    every point in the process? How do we bring the decision making
    together? And how do we make sure that we also have
    accountability there so we don't go awry, or if we do go awry,
    we can either get things back on track or stop things
    immediately? Give me your perspective on how we make those
    things happen.
        Mr. Hunter. I try to address this in my testimony. I talked
    about the importance of senior leadership and shortening the
    lines of authority for acquisition. And the model that I would
    offer is what we used for rapid acquisition was the Warfighter
    Senior Integration Group. And if you could picture it, a giant
    room, tons of people around a table. You have got the
    acquisition folks there. You have got the logistics and
    sustainment folks there. You have got the operators in theatre
    coming in through VTC [video teleconferencing] who are actually
    setting the requirements, are going to use the equipment.
        Everyone around the table, with the Deputy Secretary of
    Defense there, and the question is not a debate about should we
    or shouldn't we. We are going to do it. That is the bottom
    line. And everyone who has a role in the system is there, and a
    decision is made. The Deputy Secretary says, here is how we are
    going to do it. Everyone go out. These are the marching orders.
        Mr. Wittman. Mr. Hunter, I agree. That is a great concept,
    but that happens occasionally. How do we make that the rule?
    How do we make sure that that is how the acquisition process
    takes place, rather than saying here is a great example about
    how it works? To me it has to become a culture within the
    organization to make that happen. What needs to take place to
    make sure that that is the rule?
        Mr. Hunter. I would say for programs where faster is your
    priority, you can make that similar construct work. I believe
    that will be the case for the LRSB [Long Range Strike Bomber]
    program because you have this Rapid Capabilities Office in the
    Air Force that already works this way. It has a board of
    directors, very similar to what we had at the Warfighter Senior
    Integration Group.
        Where you have instead of 50 layers between the person in
    charge, Deputy Secretary of Defense or in this case Secretary
    of the Air Force and the Under Secretary for Acquisition, it is
    three or four layers or less. To me that is where the real
    power of that approach comes. And it can be done. Now can we do
    it for every acquisition program in the Department? Probably
    not.
        Mr. Wittman. Is this a directive that needs to come from
    the House Armed Services Committee? Is it something that needs
    to come through OSD [Office of the Secretary of Defense]? How
    do we operationalize this? Because we have got a lot of great
    ideas floating around about how to fix the acquisition process,
    but the ideas never seem to make their way to reality. Tell me
    where you believe the push needs to come from and the
    determination and concrete direction needs to come from to make
    this happen?
        Mr. Hunter. Well I would say Congress has done one thing in
    this most recent NDAA--the one that is still pending, I should
    say, after the veto--is to streamline the process. So, you
    know, there are a number of documentation, check-the-box kind
    of exercises that have been imposed over the years, a number of
    them by the Department but a number also by statute and kind of
    cleaning the books of a lot of these things can really help.
        And then, as I mentioned in my testimony, now that many of
    those statutes have been changed, making sure that the
    Department follows through to actually change the regulations
    because a lot of these things were required by statute. Now
    they are in the regs, and so you have to clean that stuff off
    the books. And following through to make sure that now that the
    statute has been streamlined, that the regulations are also
    streamlined is critical.
        Mr. Wittman. Thank you, Mr. Chairman. I yield back.
        The Chairman. Thank you. Mr. Moulton.
        Mr. Moulton. Thank you, Mr. Chairman. Gentlemen, thank you
    for being here. I just want to echo the chairman's comments
    that he began with, which were that I think that this is partly
    about conserving taxpayer dollars, which we know is incredibly
    important, especially in this budgetary environment, but even
    more importantly it is about responding to the next threats.
        And you know, companies used to succeed in the light bulb
    industry by trying to be most efficient at making the light
    bulb for the least cost, and now companies succeed in that
    industry by being the quickest to develop the newest type of
    light bulb, to be the quickest into LED [light-emitting diode]
    technology. I think in my long tenure of almost 11 months on
    the committee, I have been a strong advocate of cutting
    programs that we don't need and old systems and legacy systems
    so that we can invest that money in the new ones, which I think
    is incredibly important.
        One of the things that we need to do more of, as you have
    said, is be willing to accept the fact that technology
    development does not just occur in the Department of Defense
    anymore. It occurs outside. And there seems to be a conflict
    between the desire to get more commercial-off-the-shelf
    technology, and the MIL [military] standard requirements that
    this technology then has to meet.
        And I think about how much more effective I would have been
    as an infantry officer on the battlefield if I could have used
    an iPhone. Now, if I were to get killed because my iPhone
    didn't meet that 100 percent requirement and failed at some
    point, there would be a lot of grief. But on the other hand, if
    we don't allow the iPhone on the battlefield for years because
    it can't meet that 100 percent requirement, a lot of people are
    going to die. And you might not see the news stories about it,
    but it will be a loss as well. So how do you think about better
    managing that conflict?
        Mr. Pasqua. I think that is incredibly important, and to
    the earlier point about sort of what worries us in the larger
    curves, it worries me that some of the best minds of a
    generation in the tech world are focused on how to get you to
    click on more ads rather than technology that can be helping
    our Armed Forces. And I think one of the big reasons for that,
    as I mentioned in my opening statement, is it is just too hard.
    Companies don't know the terminology that is being used in this
    room. They don't know how to engage in government processes or
    DOD processes. They look at what it would take to learn, and
    unless they are making a technology that is specifically suited
    for that area, they are just not going to do it.
        Mr. Moulton. So what can we do to try to fix that? I
    visited a company in my district that is developing an iPhone-
    based application or mobile-phone based application. And just
    out of curiosity I asked them why they had switched from the
    iPhone to the Android phone. And they said, well, the problem
    is it is harder to access the software on an iPhone. And I said
    ironically that sounds like a really good thing if you are in
    the Department of Defense, but obviously DOD does not have a
    good relationship with Apple; so in this case it might be
    harder to hack into an iPhone, but we are going with Android,
    and it is nothing against Android, but if that is true based on
    what they implied, it seems like a better partnership with
    Silicon Valley would help. What can we do to facilitate that?
        Mr. Pasqua. I think there is a couple of things. I think
    one of the things that would be really helpful, and it has been
    happening. We are getting many more visits from different
    governmental organizations to the Valley to make companies more
    aware of what the opportunities are and how they might get more
    involved. But there needs to be, you know, short of changing
    all the acquisition processes, there needs to be some
    methodology, some help for these organizations to be able to
    sell into the Department without having to learn all of the
    processes that are involved because they are just not going to
    do it.
        So whether it is working with larger integrators who
    already know the ropes so to speak, or creating conduits by
    which some of these technologies can get embedded into other
    modular platforms, as we have been discussing, more easily, I
    think either of those approaches would do it.
        Mr. Moulton. I just have 30 seconds. Dr. Chu, did you have
    a comment?
        Dr. Chu. I think in terms of getting other firms to be
    willing to offer to the Department, what does need to be
    thought about is do we need to burden the contractors with as
    many special provisions, largely social goals, as current
    acquisition statutes require? It makes it very difficult for
    the commercial firm to want to offer to DOD. This is a high
    wall of expertise and requirements we are going to have to
    meet.
        Mr. Moulton. Thank you.
        Mr. Hunter. I just had one thought there. Other transaction
    authority, something that the pending NDAA would make
    permanent, is a way to do this to create a special, much
    stripped-down agreement with commercial companies. It is
    definitely a great tool, and it is something the Department
    needs to use more.
        Mr. Moulton. Thank you. Thank you, Mr. Chairman.
        The Chairman. Thank you. Mr. Scott.
        Mr. Scott. Thank you, Mr. Chairman. And I think the
    question of is perfection the enemy, is good enough to get the
    job done, is something that we all wrestle with. And I also
    wrestle with, for example, cancelling the F-22 line before
    another plane is ready to go. I don't think that General
    Electric or any manufacturer in the world would stop one line
    of refrigerators before they had another line that had proven
    that it was capable of doing so.
        I want to talk with you a little bit about the rapid
    acquisition process and the JSTARS [Joint Surveillance Target
    Attack Radar System], that E-8 platform flies out of Robbins
    Air Force Base. We have discussed for a long time the rapid
    acquisition process. And this is effectively a platform where
    the technology is ready to go. It is just a matter of getting
    the go-ahead if you will and the decision from the Department
    of Defense with regard to which platform they want to go with,
    and we are going to end up with an operational capability gap
    because of the depot maintenance that is going to be required
    on that platform, and there is not a battle management platform
    that can take its place going forward.
        So, just if you could speak to why is there the delay when
    the Air Force knows what it wants, when they know the rapid
    acquisition process would save money, they know they have to
    field a new fleet, and the delay is actually going to result in
    an operational capability gap of a couple of years before full
    operational capability comes back, what factors contribute to
    programs being lengthened, even when they have those high
    levels of technological readiness for the major systems and
    subsystems?
        Mr. Hunter. My perspective on the JSTAR's recap program is,
    it gets back to this question of vision. I think the Air
    Force's vision for that program as a battle management control
    asset is something that the broader Department is still waiting
    to embrace, maybe would be the way to put it. Other services
    have thought traditionally--I think the Army has thought
    traditionally--of JSTARs as more of an ISR-type [intelligence,
    surveillance and reconnaissance] asset, so these are slightly
    different missions that the services see coming from this
    platform.
        And if you think of it as an ISR asset, you say, well, we
    have got lots of ISR assets, and we have got unmanned ISR
    assets, and so why is a manned platform the right way to go?
    The Air Force sees JSTARs fundamentally as something bigger
    than or more than an ISR asset. And I think that is kind of the
    dialogue that has been going on. And they are making kind of
    that first step, and I mentioned in my testimony that Paul
    mentioned about the milestone B decision, which is a threshold
    decision of do we want to invest in this or not?
        And you want to be cautious making that decision, but once
    you have made it, and you have made a good decision hopefully,
    then I think the priority is to proceed with all speed into
    program execution. And that is where I think JSTAR's recap
    would be a good example of something that ought to be one of
    these adaptable programs that I mentioned, particularly given
    the pace of evolution of electronics technology, that you want
    to have a design for that system that you can upgrade
    continuously throughout its life cycle because you know the
    technology is going to be light years away in 30 years in ways
    that we could never imagine today.
        Mr. Scott. Well, we already have some of that. We have the
    ability to plug and play, if you will, with certain camera
    systems and other things, and with respect as far as the Army,
    you said waiting to embrace, that is not my understanding from
    the Army. That platform flies continuously and has for
    approximately 20 years. We have got a problem with corrosion
    now. I mean, these planes are old. These are 707s, I think,
    from the 1970s that we have updated and updated and updated;
    and to send these units through another major round of depot
    maintenance, it would make much more sense to spend the money
    on totally new systems.
        Mr. Hunter. And I agree with that, sir. I am not in any way
    suggesting we shouldn't move forward on the program. I think
    this dialogue that has been going on as they have gone to this
    investment decision has been more about the vision than it has
    been about the specifics of the program.
        Mr. Scott. What about just the example of shutting down,
    for example, the C-17 line without another lift capability
    ready to go? I am out of time. I apologize. I yield.
        The Chairman. Interesting questions. Mr. Castro.
        Mr. Castro. Thanks, Chairman. I know that we talked about
    the competitiveness of the process in contracting and how it
    has become dominated over the years by a smaller group of
    companies. Some of that is due to consolidation. We also talked
    about how hard it is for commercial enterprises to break into
    defense work.
        So I guess let me ask you, we also have in front of us
    information on the cost overruns and breaches for each of the
    divisions. Is there any penalty for a contractor who
    experiences a cost overrun on a contract? Or I should ask what
    is the penalty?
        Dr. Chu. Depends on the contract. If you have a cost-
    showing provision or if it is a fixed-price situation of some
    kind, the contractor will obviously earn a lower rate of
    return. I think the ultimate penalty for the contractor is
    something Mr. Francis touched on, which is, if the system
    proves more expensive, the Department may decide to buy fewer
    of those systems. And so the length of the production run or
    the volume of business the contractor enjoys is thereby
    diminished.
        In the worst case, the Department will decide, has
    occasionally done so, this is too much. We are going to stop
    and thereby lose the opportunity to further production. So any
    contractors have an incentive to try to keep, not necessarily
    to meet the guidelines that were pledged in the acquisition
    process--that is a whole different issue--but to keep the
    production price of the article still competitive with the
    mission need.
        The real issue in all these cases is, is this worth
    investing in to perform the mission we have in mind, or has it
    become too expensive relative to the return that it will yield?
        Mr. Castro. And is it fair to say that over the years
    particular contractors have again and again gone over on cost?
        Dr. Chu. Since we now have a small number, I don't think
    any of them has been exempt from that problem. I think it is
    important to keep the cost overrun issue in perspective. The
    large cost overruns are largely percentagewise on development
    contracts, not production contracts. Once we get to production
    beyond the first few lots, we generally have a fairly good idea
    what it is going to cost, and people stay within those
    parameters.
        The typical program doesn't actually overrun. That is not
    always true. That is the legend out there that they all
    overrun. That is not fair----
        Mr. Castro. Let me ask you this. We have been speaking
    about each contract individually. Is a contractor who
    consistently overruns penalized when they bid for a new
    contract? In other words, with consumers, for example, many of
    us are subject to credit scores; right? So if we demonstrate
    bad credit over a period of time, there is a penalty when you
    try to get credit next time. Does the same principle apply with
    contracting here?
        Mr. Hunter. Well, I would say it does to an extent. There
    is two ways in which it can apply. One is past performance.
    Rarely are major contractors ruled out because of past
    performance, so there I would say no. On the other hand----
        Mr. Castro. Are they not ruled out because there are simply
    not enough options that we have? In other words, is there such
    a limited number of these contractors that you just can't go
    anywhere else?
        Mr. Hunter. It could preclude competition if we ruled out a
    major competitor, but what they do often in the evaluation
    process is they will evaluate the contractor's price, not
    necessarily exactly at what they bid it, but at what the
    estimators inside the government think that that would really
    translate to. In other words, for example, with the tanker
    contract, the last version of that was fixed price, so it was
    evaluated at what was bid.
        But a previous version, they evaluated the price of the
    bidders higher because they thought, we don't really believe
    the costs that you are putting forward. And so depending again
    on the nature of the contract, they can evaluate a contractor
    at a higher price if there is a history that they have
    delivered at a higher price.
        Mr. Francis. If I may, it can get pretty complicated, so an
    overrun, you get into a debate as to whose fault it is. Did the
    contractor deliberately underbid and then overrun, or did the
    government underestimate and----
        Mr. Castro. Well, but is it safe to say, that the
    Department of Defense has the most overruns, and the cost is
    the highest of any of the agencies of the Federal Government?
    You are part of the GAO, so I assume----
        Mr. Francis. Right. Actually as much as we talk about the
    Department of Defense, they are probably the best in
    acquisition. If you go to the civilian agencies, they are much
    worse generally.
        Mr. Castro. So there are more overruns and more breaches?
        Mr. Francis. A much higher percent, yes. This is probably
    the subject of another hearing, but the government and the
    contractors don't share the same interests. I mean, they are
    working together on a program, but where the government may be
    thinking it has got a contract to get a product for a certain
    price, where the contractor maximizes its profit. The
    contractor is also interested in a longer business line,
    keeping its facilities amortized and so forth, so they may
    sacrifice profit to get a larger volume of business, so two
    different incentives here.
        Mr. Castro. Thanks. My time is up. I yield back, Mr.
    Chairman.
        The Chairman. Thank you. Ms. Stefanik.
        Ms. Stefanik. Thank you, Mr. Chairman. Over the course of
    the war in Afghanistan, we saw ground combat vehicles undergo a
    number of upgrades and additions because of new and increasing
    threats. But specifically in the Army, protecting the safety of
    our soldiers also added additional weight of combat vehicles,
    and, therefore, we had subsequent challenges to maneuverability
    and rapid deployability.
        I represent the Army's 10th Mountain Division, and
    lightweight weapons systems, body armor, and operational
    mobility are essential capabilities for the 10th Mountain. So
    the struggle as I see it is how do you balance the weight
    against the protection, against the budget? So for example,
    obviously a vehicle built out of titanium would address the
    weight challenges, but the cost would be much greater.
        So how can we as Congress help the DOD make those needed
    upgrades or obtain new and affordable materials which are able
    to stop emerging threats?
        Dr. Chu. I think your question goes exactly to the thought
    I offered, that a more physics-based approach at the early
    stage of the program, looking at these tradeoffs explicitly,
    would be very helpful. And if Congress were to ask for what the
    parameter space looks like, which it doesn't tend to do, in
    other words if we want more protection, what are we going to
    sacrifice either in carrying capacity of the vehicle, or cost
    in order to use a more advanced technology for protection, that
    would lead to a more informed debate about why did the
    Department pick the particular combination of ingredients it is
    recommending in the program that is going forward? That
    conversation at the legislative level typically does not happen
    now.
        Mr. Hunter. I would say, you bring up a point that I think
    starts to highlight some of the challenges that the Army has in
    moving forward with its acquisition programs and its vision.
    Because I know that the Army has looked at what can we do with
    combat vehicles.
        And one of the reasons why I would suggest and that I have
    heard from some in the Army acquisitions system is that they
    aren't moving forward on a new ground combat vehicle is because
    they don't think they can get one that is significantly lighter
    than the systems they have today. And there is some logic or
    some mode of thought that says why would I invest billions of
    dollars in a system that ultimately isn't going to meet the
    objective I want, which is a lighter, more maneuverable
    vehicle?
        This also relates to the point Dr. Chu made about the MRAPs
    and why the government didn't retain most of those. We did
    retain some, and actually many of the ones that were retained
    are the M-ATVs [MRAP All-Terrain Vehicles] that were maintained
    in Afghanistan which were more mobile and able to move around
    in more challenging terrain. But the heavier versions that we
    used in Iraq have largely been let go because they don't meet
    that priority.
        Mr. Pasqua. Just a quick comment. I agree with Dr. Chu's
    comment about understanding and explicitly choosing the point
    in the trade space early on in the process and understanding
    what the entire space looks like. I would just add that it is
    important also to get a feel for what it will take to make a
    move in that space. So we can understand where we can be at a
    given point in time, the tradeoffs that we are making to choose
    that point, and understand what it will take if we want to move
    in other directions, or at least have a feel of the scope of
    it.
        So that is to say that, you know, we talked about modular
    and adaptable systems, but they are not free. They are actually
    hard. It is hard to design a system that is adaptable in every
    conceivable way; and, in fact, you typically don't want to do
    that because it will introduce new limitations or costs. But it
    is important to understand, even when making the initial
    choice, what the costs will be to make moves to different areas
    in the trade space like lighter weight, what the costs would be
    associated with that, and in the upfront design decide whether
    it is appropriate to enable those moves in the trade space
    later. Because as I say, it will take costs to enable that
    modularity or flexibility.
        Dr. Chu. If I may add one thought, as one looks at the
    technical trades, I think it is always important to keep in
    mind what mission need are you trying to fulfill? And that may
    lead to you conclude that you don't need quite as
    technologically ambitious an article as you thought you did.
        An example comes to mind on position navigation precision,
    one of the technical programs I have had a chance to look at.
    When we were aiming at a very high degree of precision, when we
    showed operators, back a bit to what Mr. Hunter was
    emphasizing, what we could achieve, which was far south of that
    objective, they said, no, no, that is good enough. Don't keep
    going. We will take what you have already been able to achieve.
        Ms. Stefanik. Thank you. Mr. Francis, do you have anything
    to add?
        Mr. Francis. Yes. I think a good example of what you are
    describing is what Secretary Gates brought up, so when the Army
    was really putting all of its emphasis on the Future Combat
    Systems for the next war, Secretary Gates made the point that
    we are not really focusing on the war that we are engaged right
    now.
        And I think the issue becomes in some cases we are not
    anticipating well. So the science and technology community was
    not necessarily working on those up-armoring solutions. So,
    when the need arises, we have to react, and we have to react
    maybe suboptimally, so anticipation is important.
        Ms. Stefanik. Thank you, my time is expired. I yield back.
        The Chairman. Ms. Speier.
        Ms. Speier. Thank you, Mr. Chairman. Thank you to our
    experts who are here today. You know it has been said that we
    have the best weapons in the world, but our acquisition
    pipeline often gets us those weapons late and over budget.
        Mr. Francis, you have said that to describe our acquisition
    process as broken is an oversimplification because it implies
    that it can merely be fixed. Time and time again we have tried
    to overhaul this process. We come up with the same challenges,
    an ingrained culture, an inadequately trained workforce, an
    inexperienced set of program managers, and a dangerous
    revolving door to industry.
        In March of 2015, the GAO issued a report that 19 of the 38
    assessed programs reported they planned to begin production
    prior to completing software development needed for baseline
    capabilities. A perfect example is the F-35, where software for
    even basic capabilities necessary for testing and evaluation
    are running months behind. As weapons systems grow in
    complexity, this is a problem that will come up more often than
    before.
        How can we adjust our acquisitions process to better
    develop and test the software components of the hardware? And
    that question is open to any of you.
        Mr. Francis. So, Ms. Speier, I think one of the issues
    there is not fully understanding what the requirements require
    from the design. And that is something we have had
    conversations with the chiefs about. They think they understand
    the general requirements, but they don't understand the
    thousands of specifications that are necessary to meet those
    requirements. And a lot of that translates into software code.
        And I am trying to remember on the JSF [Joint Strike
    Fighter], and maybe one of of my colleagues here can help me,
    but I think it is like 80 percent of JSF's functionality comes
    from software. I don't know that that is known in the
    beginning. And that is what, when I talked earlier about we
    need to know what the design requires and what risks we are
    taking upfront and we can make decisions on that.
        Rather what tends to happen is we don't know enough when we
    start. These risks get played out later on, and we end up with
    what I call latent concurrencies, doing things at the same time
    that we didn't plan on doing at the same time. So if we are
    going to be concurrent, let's agree to it upfront and say we
    are taking that risk. If we don't want to be concurrent, then
    we have to understand the design better sooner.
        Ms. Speier. Mr. Francis, you were here almost exactly 2
    years ago on October 29, and I am sure you feel like a broken
    record, but on the theme of repeating yourself today, you
    mentioned the Ford-class aircraft carrier in your testimony.
    Saying that the GAO identified this program as lacking a good
    business case back in 2007. That makes the program's current
    struggles unfortunate but not at all unsurprising.
        What programs are currently in the pipeline that we should
    be looking at with greater scrutiny? What aren't we looking at
    today that you will be talking about in 2 years?
        Mr. Francis. So I will come back for the record with a
    list, but I think the Joint Light Tactical Vehicle, the Army
    program, is something that needs to be looked at. Long Range
    Strike, when that program comes up, that needs to be looked at.
    Ohio-class replacement is another big one coming. DDG-51 Flight
    III right off the top of my head are big ones that I would
    think about.
        And I think for Congress, where you really have to weigh in
    is, when money is being requested for these, so their milestone
    B decisions might be 2017 or so, but you have to ask those hard
    questions now when you are putting money on the table. So I
    will come back with another list, but perhaps some of my panel
    members here know about other new programs coming, or maybe
    not.
        [The information referred to can be found in the Appendix
    on page 117.]
        Mr. Hunter. There is a few others. We mentioned JSTAR's
    capitalization program which is right on the cusp of entering
    the process, and another one that has been a big focus has been
    U-class program.
        And I assume when Paul says take a look at them, that
    doesn't mean cancel all those programs. I am not, certainly,
    going to put myself in that position. But I do think the role
    of the Congress in examining that investment decision that the
    Department has made, to say ``Why is the cost of this worth it
    from a warfighting perspective?'' is absolutely the right
    question to ask.
        And asking it right around the time of milestone B, I would
    say ask it around the time of milestone B. Paul is saying ask
    it a little earlier than that even. You want to be on the front
    end. Once you get deep into the program, there are
    constituencies associated with it, and frankly, you are
    committed in a way that is just hard to get out of. And that is
    why those early milestones are so critical.
        Ms. Speier. Thank you. I yield back.
        The Chairman. Ranking member.
        Mr. Smith. Just following up on that, you talked about all
    those programs that have been to be, quote, ``looked at.''
    Obviously, they have to be looked at. They are going to cost us
    billions of dollars. You are planning on building them. Looked
    at, A, from the standpoint of do we even need it? Is that is
    what you are saying? I mean, if you could be specific because,
    I mean, you rattled off basically all of the major programs
    that we are planning on building over the course of the next
    decade or so.
        And you know, Ohio class, Long Range Strike, JLTV [Joint
    Light Tactical Vehicle], are there any of those that you would
    say from a warfighting standpoint, why are we building this? We
    don't really need it. That is one. And then two, are we making
    some of the same mistakes with those programs that we made with
    the F-35, basically constructing the plane as it is working its
    way down the runway? And those are my two questions.
        Mr. Francis. So, what I was suggesting was more on, are
    these programs executable? Whether they are needed, and what
    are the right solutions? You know, I have to think the
    Department really does consider that pretty heavily. You do
    have to ask those questions, and I would ask, I think it is
    hard to say these programs aren't needed.
        The real hard question is, do we need this program at the
    expense of this other one? What tradeoff are we making? Those
    are fair questions to ask. I don't have evidence to say these
    programs aren't needed. But I do think where you can really
    weigh in is, we have talked about things like technology
    maturity. Is the design understood? Do the requirements reflect
    reality, or are they too lost.
        Mr. Smith. And as you look at where we are at on those
    programs, can you point to a specific red flag? Because, I sort
    of get all that. That basically, you know, on these big-ticket
    programs now, you know, concurrency is--well, I can't say that
    word in a public hearing--but not a good idea.
        Basically figure it out, then build it. Not at the same
    time. Do you see us making that same--are we counting on that
    level of, okay, we will build it and then we will figure it out
    as we go? The Ohio-class is an enormously expensive program. I
    think it is probably the most expensive one of the bunch. Are
    we making that mistake in these early stages in your view?
        Mr. Francis. So we haven't yet looked at Ohio class, or
    JLTV, or Long Range Strike. We are looking at Long Range
    Strike, but that is classified so we can maybe give you some
    information on that. So I don't have anything specific to offer
    there. On DDG-51 Flight III that is moving very fast. That is
    really rapid acquisition. We do have----
        Mr. Smith. Is that a good thing?
        Mr. Francis. Pardon me?
        Mr. Smith. Is that a good thing?
        Mr. Francis. I think in this case it is going a little
    faster than it should. It has been bundled into the multiyear
    for the DDG-51 Flight IIA.
        Mr. Smith. But isn't the real issue here just the rapid
    pace of technology? You know, I mean, we can all just sort of
    logically say, as I facetiously said, don't build the airplane
    as it is working its way down the runway. You know, figure out
    what you are going to do, and then do it.
        But the problem is, while you are building these things,
    technology is just boom, boom, boom, boom, boom, moving. I
    mean, it is Moore's law. You know, how do you get around the
    problem that if you take the opposite approach and you say,
    look, we are going understand it, and then we are going to
    build it. And we are not going to change it.
        Because really what drives a lot of these costs, well, on
    the Ford, is change orders; is as we start building it we go,
    you know what, now we could do this. Let's do that. Let's add
    that to it. I mean, Huntington Ingalls will tell you that if
    they were building the same aircraft carrier that they were
    told to build when the contract was given to them, it would be
    on budget. But there has been so many changes.
        But I guess what I am asking is, part of those changes are
    driven by just the way the world works these days. Technology
    is updated. You can build a better thing. Would you say that we
    are better off to say, look, we know the technology is
    improved, but we are better off building good enough, than
    trying to adjust to that technological improvement that could
    make it better? Because isn't that what really traps us on
    these things, is the technology, you know, leaps ahead while we
    are in the process of building it?
        Mr. Francis. Well, two things, Mr. Smith. I think when you
    talk about enabling technologies, technologies that make that
    platform possible, so on the carriers it is the Electromagnetic
    Launch System; it is the Dual Band Radar, and it is the
    Advanced Arresting Gear.
        If these are enabling technologies, you have to have them
    matured before you go forward with the concept because they
    make the concept possible. Going forward from that, you want to
    have open systems architecture so you can then bring in modular
    improvements of that baseline.
        Mr. Smith. Upgrade.
        Mr. Francis. That is right. So what is going on with the
    Ford class is not so much technology refresh as we go, it is
    technology discovery as we go.
        Mr. Smith. Right.
        Mr. Francis. So you have to have a two-pronged approach, I
    believe.
        Mr. Smith. Yeah. I mean, to a certain extent aren't we--I'm
    sorry, go ahead, Mr. Hunter.
        Mr. Hunter. Well, I was going to add to that, we have been
    having a discussion about adaptable systems. And I think to
    your point, an example that I used in my testimony is the
    Predator system, you know, which has really evolved. It is
    almost unrecognizable now as a system from where it was when it
    started. And in incremental changes along the way, it has
    adapted to warfighter needs.
        And I think it is a classic example of how that can be
    done. You start with a relatively simple thing. It is an air
    truck. It happens to be an unmanned air truck, but other than
    that, it is basically an air truck. But it is a flexible enough
    design that as new sensors have come along, new weapons have
    come along, many, many changes, I probably shouldn't get into
    all of them that have been made----
        Mr. Smith. Right. In that case we were able to add it to
    the existing Predator. We weren't required to scrap the ones we
    had and build a whole bunch of new ones, is that correct? And I
    am sure, but----
        Mr. Hunter. Well, it is true in part, and untrue in part.
        Mr. Smith. Right.
        Mr. Hunter. So the design that we have today is
    significantly bigger than the original assets that were done.
    But it looks roughly the same. So the general design concept
    has been fairly constant, but it is a bigger airplane today
    than it was before.
        Mr. Smith. Yeah, but like on the Ohio class, I suspect that
    as we build that thing, there is going to be technological
    improvements that we are going to want to add to it. And I
    actually would suggest that we are better off not.
        We are better off saying, look, we cannot afford to drive
    these costs through the ceiling, and yes, maybe it won't be
    absolutely perfect or as good as it could be, but particularly
    from a competitive standpoint. I think the Ohio class would be
    able to serve its function without adding all the new stuff
    that is going to be discovered in the next decade.
        And I think that is a choice we need to make because it
    seems to me, we always make the other choice, which is, you
    know, this is my Austin Powers joke: All I want is sharks with
    frickin' laser beams attached to them. I use that joke
    frequently in acquisition, because, you know, it's like, we can
    do this. Let's try it. And we could, but the costs are
    prohibitive compared to the gain.
        And I think we need to start accepting good enough instead
    of, we could put the laser beams on the sharks, so let's go
    ahead and give it a shot. But, you know, those are individual
    decisions that have to be made program by program by the
    program managers and by the Pentagon. I just hope they will
    start making the more cautious decision to save us some money.
        Mr. Hunter. Ohio class is an interesting example, because
    actually, you probably need less than the existing system we
    have today. I am not suggesting we scrap them, but----
        Mr. Smith. I am sorry, which system?
        Mr. Hunter. To the existing system we have today----
        Mr. Smith. Right.
        Mr. Hunter [continuing]. In the sense that we are going to
    fire the same missile----
        Mr. Smith. Right.
        Mr. Hunter [continuing]. And we don't necessarily need as
    many tubes as we have today. Our requirement is not as robust
    as it was when the Ohio class was designed. So, of course, we
    are 30, 40 years on, and so there is going to be new
    technology. There has to be new technology in the system
    because you can't go backwards----
        Mr. Smith. Right.
        Mr. Hunter [continuing]. On many of these things. The one
    last thing I would say in terms of submarines, is the Navy
    really pioneered this adaptable systems approach with the
    combat system on attack submarines, their Acoustic-Rapid COTS
    [commercial-off-the-shelf] Insertion Program. And I think that
    is exactly what you are describing, is, you know, go into
    production with a design that you know works, and then have a
    system that allows you to update and upgrade that combat system
    as technology proves out.
        Mr. Smith. Okay, thank you very much. Thank you, Mr. Chair.
        The Chairman. Thank you. Ms. McSally.
        Ms. McSally. Thank you, Mr. Chairman. And thank the
    gentlemen. I spent 26 years in the Air Force, and I was lucky
    that I didn't get any assignments to the Pentagon. So my
    perspective comes from the warfighter end of that perspective.
        We had a hearing earlier this year and my first question is
    about development of aircraft, not Joint Strike Fighter-type
    aircraft, but say, follow-on to the EC130, or follow-on to the
    A-10 for a light-attack aircraft.
        In a hearing earlier this year, I asked the Pentagon
    official if we decided today that we wanted to develop a light-
    attack aircraft--again, this is not complicated technology. It
    is just all of the things that we have learned about what does
    permissive CAS [close air support] and does it well to follow
    on to the A-10, and we decided, today if we wanted to do it,
    how long would it take? And he said about 15 years, I think was
    his answer.
        I look at the EC130. We know the guts of the EC130 is
    working. It has got a great mission set. We know it needs a new
    platform, but, you know, we struggle to take forever in order
    to figure out how to adapt what we have and put it in a new
    platform.
        You know, what is it we can do specifically in like these
    types of things? We are not developing new stealth technology,
    fifth-generation fighter, but we are just learning from
    everything we have had, and we have just got to refresh and put
    it into maybe a different package. Like, why can't we do this
    faster? And what can we do to help especially in those two
    examples, you know, to be adaptive, to put these smart brains
    together, and develop something in 3 to 5 years that could be
    follow-ons to these type of platforms. Anybody want to jump in?
        Mr. Hunter. Well, I can't resist, having spent time doing
    rapid acquisition. We do do it faster. We have done it faster.
    This is something that I guess amazes me after my time in the
    Department that, you know, go to Iraq, go to Afghanistan----
        Ms. McSally. For an aircraft. Specifically for an aircraft.
        Mr. Hunter. Yeah. There are systems that are flying. Hosts
    that just simply didn't exist even 3 years ago.
        Ms. McSally. So why do they still say 15 years then? What
    are we missing?
        Mr. Hunter. So what that is an answer to is a fleet of
    aircraft that we are going to sustain for 50 years. It takes 15
    years, essentially to--if you are lucky, to have a program that
    is going to be a 50-year, large aircraft fleet type of a
    system.
        And there may be opportunities to accelerate that, but on
    the other hand if you think you are going to sustain something
    for 50 years, it probably makes sense to take a little extra
    time to get it exactly right. But we don't need to do that in
    all cases, and I think that is kind of the key.
        Ms. McSally. Yeah.
        Dr. Chu. I am not sure I want to defend the 15-year
    estimate as being meritorious.
        Ms. McSally. Yeah.
        Dr. Chu. Certainly, if you insist on starting every element
    of the new design over, you are going to add to the time scale.
    I think part of the genius, and it is hinted in the way you
    phrased the question, is can we take some existing designs--
    which might be foreign, by the way, not necessarily in the
    United States--and adapt those to whatever purpose we have
    mind. And I think a more--the approach that builds more on what
    we already know would allow you to field capabilities faster.
        Mr. Francis. So a couple thoughts. I have been around long
    enough to remember when the A-10 was being developed and the
    Air Force wasn't particularly in love with it either.
        Ms. McSally. Still isn't.
        Mr. Francis. So you have to want to do it. I think what Mr.
    Smith was saying is important. The 80 percent solution has to
    be okay.
        Ms. McSally. Right.
        Mr. Francis. And that is hard to sell because you have to
    show you can crush all the alternatives. So you need a 200
    percent solution. Eighty percent has to be okay. The other
    thing we haven't talked about is there are cases where you want
    to put a time constraint on the development. So if you put time
    in there as a constraining factor and say, I want to get
    through the development phase in 4 years, what can I do then?
    That has a way of affecting the requirements of the design.
        Ms. McSally. Yeah. Great. Thanks. You know, my other
    experience with this is, I have spent a lot of time in air
    operation centers, and joint operation centers, and spiral
    development is something that we worked on in JEFX [Joint
    Expeditionary Force Experiment] programs and time-sensitive
    targeting.
        And, boy, that seemed to work great, but as was mentioned
    earlier, that is not the norm. That is kind of a one-off where
    you have got the warfighter and the people who are developing
    the technology for command and control. Which is basically
    about collaboration, real-time decision quality information.
    This is not rocket science. I mean, this is just allowing the
    information to be collaborated for the exact type of mission
    that you are looking for and adapted, and that worked really
    well. But that is really not the norm.
        You know, just basic geospatial information we were trying
    to develop in the Joint Operations Center at AFRICOM [U.S.
    Africa Command] and had that vision, but it just seemed like we
    were dealing at the speed of bureaucracy instead of broadband.
    And when it comes to some of these other issues with command
    and control, collaboration, information sharing, there is some
    great stuff that is, obviously, way out in front of us in the
    civilian world, in the private sector.
        What do we need to do in order to very quickly bring that
    in to make sure that, you know, we are allowing our command and
    control system to not be bogged down? Because it was a quite
    painful experience that I went through in both the Air
    Operations Center, and the Joint Operations Center, just not
    being able to adapt quickly enough. And anybody want to jump
    in?
        Mr. Hunter. Well, I would say one thing is that there are
    real impediments in the system that make it very hard to do
    that. And we have talked a bit here about the agile approach to
    acquisition. And there is a real challenge to utilizing that
    approach, and I mentioned, I have talked about it as adaptable
    systems, which is the system is designed to say, give me a
    clear baseline, everything you are going to do, and then I will
    grade you as to whether you have met that baseline or not, or
    whether you have gone over. And if you have gone over, I am
    calling you for cost growth or schedule growth.
        And there is, now, and I have said a lot of things that I
    like that are in the pending NDAA [National Defense
    Authorization Act]. There is one that I don't like, which is
    the provision that says, we are going to penalize the services
    year after year after year, if they experience any growth above
    baseline. Well, if you have got a fragile system, or adaptable
    system, of course, you are going to grow the baseline. That is
    the whole idea. That is the point.
        But effectively, you know, this provision is going to make
    it so that the services, in order to do that, it is going to be
    like going over the salary cap for an NFL [National Football
    League] team or an NBA [National Basketball Association] team.
    They are going to have to pay a penalty every year because they
    are trying to do something to make the system better. And I
    think that there are many other barriers because it becomes
    very hard to baseline these programs where you know you are
    going to evolve them, but you don't know exactly how yet. So
    that is a real issue that we need to work through, and I talk
    in my testimony about we need to come up with a new paradigm,
    not for everything, but for some of these systems that we think
    we need to be highly adaptable.
        Ms. McSally. Yeah.
        Mr. Pasqua. There is an approach in industry called MVP,
    for minimum viable product, and the whole idea there is, don't
    build the be-all, end-all. Don't boil the ocean. Build what is
    actually needed to accomplish whatever it is you are trying to
    accomplish. And build the minimum thing that is needed.
    Because, in fact, you are not going to know all the details of
    how it is going to grow and how you are going to want to adapt
    to use it.
        So instead of trying to build the be-all, end-all, the goal
    is much more to build the smallest thing that meets the
    requirements with the adaptability to go in different
    directions that you don't necessarily know today. And that has
    two sort of beneficial outcomes.
        One is, it happens fast. It is small. It tends to focus you
    on what is really important rather than on contingencies that
    may be important some day. And it gets you to focus on the
    adaptability of the architecture that you are building, so that
    as you actually use it and find what is important, or your
    needs change, it is easier to actually take the system in the
    direction you want to go in a much more cost-effective way.
        Ms. McSally. Great. Thank you. Thank you, Mr. Chairman, I
    yield back.
        The Chairman. Thank you. Mr. Langevin.
        Mr. Langevin. Thank you, Mr. Chairman. I want to thank our
    witnesses for your testimony and appearance here today. It has
    been a very interesting discussion, obviously.
        So I serve as the ranking member on the Subcommittee on
    Emerging Threats and we oversee all of our R&D efforts, DARPA
    [Defense Advanced Research Projects Agency], and ONR [Office of
    Naval Research], and others. And just in S&T directly, you
    know, the basic nature of S&T development means that several
    failures often proceed as successful technology. DOD culture,
    and acquisition processes, and congressional oversight are
    often risk-averse at best, and punish failures at worst. How
    can this culture be changed or mitigated, or should it?
        Mr. Francis. Well, Mr. Langevin, I would say definitely
    making the investments in the science and technology community,
    and giving them the budgets to take things further, so I think
    you have to have a wide funnel in the front. I think you want
    to have a lot of failures early, and then as you are paying for
    more mature technologies and higher levels of demonstration,
    obviously, you have to be more discriminating there.
        But the S&T community, I think, should have the
    organization and the resources to take those technologies
    further up and be okay with having those failures early. Right
    now, I think it is not so much that we are afraid of failures,
    but we put things that haven't reached the point of failure
    yet, and we put them in an acquisition program, and then we
    discover what the failures are.
        So I don't have really a problem. We were talking earlier
    about the carrier. I don't have a problem with what those key
    technologies are going through. The problem I would have is,
    where they are going through them. It is right during
    construction of the ship. So those are the risks that we have
    to take earlier.
        Dr. Chu. Indeed. I would agree that it is not clear to me
    it is a risk-averse culture. In fact, we take the wrong set of
    risks, I think is what Mr. Francis is arguing. And we
    underinvest in technology development, without--or let me put
    it the other way around--that too often we see technology
    development as always needing to lead to a new system, and that
    is not always going to be true.
        I think more willingness to sort through the technological
    choices in an organized way and to reward people for giving
    good advice about which are the promising paths versus the ones
    that should be shut off. In the current incentive system,
    managers talk about the value. Everybody thinks he has to get
    his or her technology into production. That is the sign of
    success.
        Now, I would argue differently. Success is having a broad
    portfolio of choices to start with and narrowing down to the
    most promising ones. That does include, as Mr. Francis I think
    has emphasized to you, much more emphasis on developmental
    testing than has been true in the recent past.
        Mr. Hunter. One thing I would add in terms of risk is that
    we can do better at managing risk. So I would agree. I don't
    know that our system is unwilling to take risk, but it does
    struggle to manage risk. And in many cases, you know, you will
    see these risk charts, you know, and there is always one item
    that is either high yellow or red, and everything else is kind
    of green or in the mid-yellows, and they all look roughly the
    same. Because there, really, again, it is in some cases,
    unfortunately, more about selling the system than it is about
    managing the risk.
        And that requires real discipline, and this is where the
    quality of the workforce comes in. So that the government
    workforce really understands what the risk is, and what is the
    plan to manage it, to burn it down over time. And I think the
    biggest key there is leadership and then the human capital
    issues that Dr. Chu has referred to.
        Mr. Langevin. A follow-up question. What changes are needed
    to allow for a rapidly changing investment area such as
    cybersecurity, which I spend a lot of time on, where
    generations of technologies can pass within a single budget
    cycle, and to what extent do current budgeting processes impede
    the deployment or development of technologies?
        Mr. Pasqua. This was a particular frustration area for me.
    I ran the global research organization at Symantec, which is
    the largest cybersecurity firm in the industry. And one of the
    challenges that we had, given the rapid pace of change of the
    landscape, was that we develop new technologies in our research
    organization and want to get those out and into the hands of
    our government counterparts, but oftentimes the cycle of doing
    that, just being able to discuss it and go through the process,
    was so long that the window of opportunity for dealing with a
    threat had passed by the time that we were through it.
        And I always wished that there was a way for us to build a
    relationship that didn't start and stop; that provided a way
    for us on an opportunistic basis to say, hey, we have got an
    interesting technology for you that we think is of interest for
    you to get into service today or very soon. How can we make
    that happen quickly and not have to start, you know, a whole
    cycle of discussions to make that process happen that then made
    the technology irrelevant 9 months later.
        Mr. Langevin. I know my time is expired, but that was an
    interesting question and response. I appreciate your thoughts.
    I yield back, Mr. Chairman.
        The Chairman. I thank the gentleman. Mr. Cook.
        Mr. Cook. Thank you, Mr. Chairman. I apologize. I had to
    meet some constituents, so I probably missed some of the
    responses to maybe some of the questions that I am going to ask
    right now. And one of the problems I have is just the, and I am
    speaking as somebody that has been on the receiving end of some
    of these systems where they don't work, or they break down, or
    they just don't fit into the mission that you are supposed to
    have.
        And I don't have the complex rocket ships and everything
    like that. I am talking about the M-16 when it first came out
    in Vietnam where a lot of Marines died because you had a lot of
    things wrong with it. And I actually had an opportunity to
    change it by talking to a guy by the name of Omar Bradley who
    had to be about 86 at the time where they dragged certain
    people from the field. That, the Gama Goat, the M-203, which
    was 5 years that I knew it was on deadline, never even saw it
    fired. I can go on, and on, and on.
        And I don't know if we--and then I was just at a CODEL
    [congressional delegation] where somebody was asked a question
    about cybersecurity, and they said, we are just starting now.
    And in about 5 years, we are going to show it. We don't have 5
    years. No one knows how long we are going to have with what is
    going on in this world right now.
        So I think from somebody that is on the frontline, the
    troops, they want something right away, and something that fits
    their mission. And you can have a lot of different--but
    basically, it is to close with and destroy the enemy. And I am
    wondering if we launched that philosophy in World War II where
    we had certain systems that came out that didn't work, where
    almost within weeks, we had changed it. Unbelievable that we
    could do that.
        And you look at what happens with the Sherman tanks in
    Normandy, where it was a field expedient by a sergeant that
    changed the whole thing, turned it into a Rhinoceros tank,
    changed the whole battlefield almost overnight. What did it
    cost, $15? And then they did it to all the tanks.
        I can go on and on and on. But I think Congressman Walz had
    a good point. Sometimes I think the individual troops or what
    have you, the customer, the end recipient, the ones who have to
    live and die with this system--Iraq, when we had to upgrade our
    Humvees and the MRAP came down, great success, but in the
    interim X amount of people died or were wounded.
        And I am just saying, to me, I think we have got to
    expedite that, and make it cost efficient and we have to put
    certain deadlines. And if it doesn't work, there has to be
    consequences. That is the bottom line. And some of these
    systems we can do it.
        When we changed from the old bazooka to the 3.5 rocket
    launcher, sounds simple, but the bazooka was not able to
    penetrate the Russian tanks that were made; the 3.5 was. Now,
    3.5 is long gone. They replaced it with the LAW [Light Anti-
    Tank Weapon], which was another piece of crap because it didn't
    function in humid conditions, so we had all these things come
    out to the system and what happens. All that stuff then went on
    and on and on.
        So I think we almost need to incorporate that philosophy,
    what has happened in the past. And the best example I can give
    or hope that you would look at are the Israelis. The Israelis
    don't have time. You look at what they have done with their
    missile programs. You look at what they did in the Yom Kippur
    War that they almost lost and they changed certain things.
        You look at the battleground, 2006 against Hezbollah along
    the Lebanese border, where they changed their MPCs [military
    personnel carriers] and tanks because the threat was there. And
    they didn't have 5, 10, 15, 20 years. They had to do it or they
    were going to not exist as a country.
        And if you could comment very briefly, and I yak too much.
        Dr. Chu. You have named some of the notable failures over
    time. I do think part of the----
        Mr. Cook. I am old, so I named all the old systems.
        Dr. Chu. We did get better, actually, over time, I would
    argue.
        I think part of the solution is what others have advocated,
    which is often from the field perspective the 80 percent
    solution is good enough. And so one of the reasons for longer
    times to solve the problem than is meritorious is we aim too
    high. We ought to aim at, as I think your comments emphasize,
    what is most essential for accomplishing that mission. What
    does the troop really need in order to do a good job. If we get
    that done, we could then add to that success in a more
    evolutionary approach.
        Mr. Cook. Thank you.
        I yield back. Thank you.
        The Chairman. Well, actually, I think that is a good way to
    end, because DOD may be better than government agencies, but we
    have also got more at stake. And so that is part of the reason
    that I very much appreciate you all's input today.
        I know we will continue to engage with CSIS and IDA and
    BENS and GAO, but I want to encourage you all to continue to
    offer us your input. Don't wait for us to ask. This, as you
    know, is a complex subject with a lot riding on it, as we are
    going to be in an iterative process to try to improve it. And
    we need the assistance of people with valuable expertise and
    insights to help us do that.
        So I appreciate today, and I appreciate your contributions
    in the future.
        With that, the hearing stands adjourned.
        [Whereupon, at 12:03 p.m., the committee was adjourned.]

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

                                A P P E N D I X

                                October 27, 2015

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

                  PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                                October 27, 2015

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

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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

                       DOCUMENTS SUBMITTED FOR THE RECORD

                                October 27, 2015

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

                  WITNESS RESPONSES TO QUESTIONS ASKED DURING

                                  THE HEARING

                                October 27, 2015

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

                  RESPONSE TO QUESTION SUBMITTED BY MS. SPEIER

        Mr. Francis. The decision to start a new program is the most highly
    leveraged point in the product development process. Establishing a
    sound business case for individual programs depends on disciplined
    requirements and funding processes. Key enablers of a good business
    case include: firm, feasible requirements, mature technology,
    incremental, knowledge-based acquisition Strategy, and realistic cost
    estimates.
        Every year, there is what one could consider a ``freshman'' class
    of new acquisitions. This is where DOD and Congress must focus to
    ensure that programs embody the right principles and practices and make
    funding decisions accordingly. Congress will need to focus on oversight
    of programs in the President's Budget projected to begin Engineering
    and Manufacturing Development phase by holding a Milestone B decision.
    What that means, is, for example, for a program with a projected June
    2017 Milestone B, the funding for that program will be in the
    President's Budget presented in Feb 2016. Congress will need to have
    started its oversight of this investment before that budget comes in
    and must conclude before markup. This criterion would provide a list of
    programs that Congress can most influence. Based on that approach, as a
    starting point, congressional oversight could focus on ensuring sound
    acquisition strategies using knowledge-based acquisition principles are
    established for the following three programs projecting Milestone B's
    in fiscal year 2017: (1) Presidential Aircraft Recapitalization; (2)
    Unmanned Carrier-Launched Airborne Surveillance and Strike System; and
    (3) Joint Surveillance Target Attack Radar System Recapitalization.
        In addition, our March 2015 assessed ongoing programs against
    acquisition best practice criteria to identify specific acquisition
    risks. The risks we reported provide an opportunity for targeted
    congressional oversight of programs already underway. We will be
    publishing our next annual assessment of selected weapons programs
    later this spring which will include updated assessments.   [See page
    29.]

    ?

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

                  QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                                October 27, 2015

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

                     QUESTIONS SUBMITTED BY MR. THORNBERRY

        Mr. Thornberry. What can be done to encourage more incremental
    development and deployment of weapon systems?
        Mr. Hunter. Some of the concepts required for incremental
    development, such as planning and developing ``Blocks'' of capability
    that are separately or sequentially developed over time and programs to
    prototype new systems and subsystems, already exist. An example is in
    the F-35 program, in which the Department has been planning and
    developing Block 4 capabilities for F-35 even as it works to develop
    and deliver Block 2B capabilities that are being used by the United
    States Marine Corps and Block 3F capabilities that are being used by
    the United States Air Force in their initial operation of the F-35.
    Another example is the separate development of mission modules for the
    Littoral Combat Ship (LCS). However, the approach to blocks of
    capability that prevail in today's programs remains focused on
    developing and delivering full system sets of capability that are
    tightly integrated, and that as a result, take many years to plan,
    program and deliver. While this approach is faster and probably cheaper
    than having entirely separate acquisition programs, it still does not
    match up well with the pace of technology innovation. It is necessary
    to supplement the Block approach by decomposing system level
    requirements into smaller sub-increments or ``packages'' of capability
    that correspond to the subsystem design level. This would allow the
    incremental development of these packages of capability that can be
    designed, prototyped, tested, and relatively rapidly deployed, in
    months rather than years, allowing for the incremental development and
    deployment of technology at the subsystem level. A potential barrier to
    this approach is in the challenge it presents to ``baselining'' systems
    for purposes of budgeting, scheduling, testing, and tracking program
    execution. Congress should work with the Department to establish a more
    dynamic approach to baselining acquisition programs where incremental
    development and rapid deployment are identified as priorities.
        Mr. Thornberry. What must change in the DOD acquisition process and
    culture to better transition technology from the ``lab'' to a program
    of record?
        Mr. Hunter. The key gap in the current system for transitioning
    technology from the lab to programs of record and fielded system is the
    fact that while experts within the DOD enterprise have tremendous
    awareness and knowledge of technology developments (developments in the
    ``lab'') across the full spectrum of the in-house and industry-led
    technology sectors, this knowledge is not spread broadly across the
    enterprise, and in particular, it is frequently not the case that
    decision makers in the requirements and resourcing communities have
    knowledge of the latest technology developments. So there is a gap in
    turning expert knowledge into enterprise knowledge that can be acted on
    by DOD leadership. Similarly, the number of opportunities for
    technology insertion in programs of record and fielded systems are too
    far apart. In the worst case scenario, a program could go from
    Milestone B all the way to full rate production and Full Operational
    Capability (FOC), usually a period of roughly ten years, without
    significant consideration of technology insertion beyond the minimum
    needed to address issues of obsolescence. Many programs work to create
    some additional technology insertion points in between these major
    program phases, but they are essentially working against the system in
    doing so. In contrast, the pace of technology change suggests that
    technology insertion points need to occur no less frequently than every
    six months. The Department traditionally addresses this need to create
    additional opportunities for technology insertion by creating
    ``Blocks'' of capability that deliver incrementally over time. However,
    in most cases these blocks are themselves separated by several years of
    time. Creating additional opportunities for technology insertion
    requires allowing the requirements, budgeting, and acquisition
    processes to decompose system-level requirements into sub-increments,
    ``packages,'' such that these sub-increments could be swapped out or
    updated independently on a timeline of months rather than years.
        Mr. Thornberry. What is needed to achieve integration of the
    requirements and acquisition processes in the DOD to facilitate
    requirements tradeoffs prior to acquisition programs being initiated?
        Mr. Hunter. The requirements and acquisition communities need to be
    in continuous dialogue on trade-offs relating to acquisition programs
    before program initiation and during program execution. While this
    dialogue exists in many ways today, it can be hampered by the fact that
    both sides are not always speaking the same language (in a figurative
    sense). That is, the requirements community is talking in terms of
    capability gaps and key performance parameters (KPPs), concepts that
    are fairly absolute and unqualified, while the acquisition community is
    talking in terms of costs, risks, and timelines for development, things
    that before program initiation are estimates that are inherently
    uncertain and imprecise. For the dialogue to be productive, a bridge
    between these languages is need. In the world of rapid acquisition,
    this dialogue was bridged by the concreteness of short fielding
    timelines. Both sides could work backwards from an expected fielding
    date as a basis for understanding how to characterize bottom-line
    needs, in the case of the warfighter, and the art of the possible, in
    the case of the acquisition community. An interesting example of how
    this was done on a major defense acquisition program was with the
    Combat Rescue Helicopter program, where Under Secretary of Defense for
    Acquisition, Technology, and Logistics, Frank Kendall, asked the
    requirements community to put a dollar value on how much more they
    would be willing to pay to get a capability that met their objective
    requirement, rather than just the threshold requirement. The
    acquisition community was surprised that the requirements community
    indicated that they would willing to pay only about 10% more to obtain
    the increased capability of the objective requirement. When this value
    criterion was incorporated into the Request for Proposals for the
    program, it had a decisive effect on industry's evaluation of how to
    compare cost with capability. In the CRH example, the bridge in the
    conversation came from developing a concrete measure of value in the
    difference between the threshold and objective requirement.
        Mr. Thornberry. To what extent is government systems engineering
    expertise available and applied in the requirements-setting process? To
    what extent should it be available and applied?
        Mr. Hunter. Systems engineering is fundamental to the process of
    flowing down requirements in systems design. In this sense, it informs
    the ``requirements'' that flow down in the design process from the
    system level to the subsystem level and on down through the design
    process. However, systems engineering does not play a large role in the
    setting of KPPs in the systems-level requirements process as far as I
    am aware. I can think of one example in my direct experience, on an
    Army truck program, where the maintainability requirements were
    modified after initial review in the Defense Acquisition Board (DAB)
    when it was brought forward by the test and systems engineering
    communities that the maintainability requirements set for the program
    exceeded any previously demonstrated standard for similar Army
    equipment by an order of magnitude. In this way, the systems
    engineering work that is done in support of the DAB process can, and
    has on occasion, been used as an impetus to revisit the requirement,
    and in the case of the Army truck program, the Army requirements
    community revisited that requirement and established KPPs more in line
    with previous Army experience. If the requirements process is modified
    as suggested in my answers above to decompose requirements that allow
    for more incremental development at the subsystem level, systems
    engineering would have to play an increased role in the requirements
    process to ensure that system integrity is not compromised.
        Mr. Thornberry. What capabilities or efforts may be needed to
    streamline the DOD's requirements and acquisition review and approval
    processes to increase ``speed to market'' or getting the right weapon
    systems from concept to fielding?
        Mr. Hunter. In addition to turning expert knowledge about
    technology developments into enterprise knowledge that can drive
    action, and decomposing system-level requirements and adding additional
    technology insertion points to enable incremental development, review
    and approval processes should move from processes that focus on
    examining documents in sequential fashion for procedural compliance to
    processes with greater direct interaction and involvement of the
    various stakeholders focused on developing a common understanding of
    the strategy being pursued, the risks being taken, the plans for risk
    mitigation, and the benchmarks of success. The goal should be for the
    acquisition community to leave these sessions prepared to support the
    program manager in pursuing the program, rather than a situation where
    the larger acquisition community observes from the sidelines looking
    for stumbles.
        Mr. Thornberry. Are there lessons learned from the Department's
    rapid acquisition programs that can be applied to accelerate other DOD
    acquisition programs?
        Mr. Hunter. Absolutely. Chief among these is the need for
    continuous dialogue between the acquisition and requirements
    communities that updates and informs those setting requirements on the
    likely costs, timelines, and results of development efforts and that
    allows the requirements community to rapidly inform the acquisition
    community about emerging threats and to refine requirements as
    additional information about technology developments emerges. This
    ability for the two sides to meet regularly and exchange information
    regarding urgent operational needs was a powerful mechanism for
    accelerating action and it is applicable in many ways to other kinds of
    acquisition programs. Another key for rapid acquisition was the support
    of senior leadership to overcome obstacles by identifying and
    transferring funding ahead of the normal funding cycle, approving
    waivers or taking extraordinary action to acquire long-lead items when
    necessary, and alerting other offices throughout the Department to move
    rapid acquisition programs to the front of the queue whenever approvals
    were required. Because it is difficult for senior leadership to play
    this sort of role in a large number of cases, it was critical that the
    rapid acquisition process was associated with a discrete, definable
    universe of urgent operational needs with a proven and credible
    requirements approval process. Lastly, the availability of flexible
    funding was essentially to avoiding the long delays associated with
    obtaining funding for new start programs, a process that generally
    delays even the initiation of action on new efforts by at least two
    years.
        Mr. Thornberry. What can be done to encourage more incremental
    development and deployment of weapon systems?
        Dr. Chu. Incremental development and deployment, as the Committee
    appreciates, is a design and acquisition strategy. The decision to
    employ it must weigh its benefits, and their likely realization,
    against the costs, and the realism of those cost calculations. One
    benefit may be more rapid fielding, depending on the circumstances
    involved; another may be the ability to adjust the article's features
    in response to early field experience or evolving threats; yet another
    could be capitalizing promptly on research progress. One downside may
    be the additional complexity (and cost, e.g., for training) that
    deploying a variety of models could entail.
        Accepting the premise that benefits will at least sometimes
    outweigh costs (certainly true of several major system upgrades over
    the last two decades, which constitute one version of incremental
    development), it may be sufficient to ensure that this alternative
    strategy is one of the options considered by the Analysis of
    Alternatives that should precede any major investment decision. The
    evidence on benefits and costs should be sufficiently persuasive to
    make the case for selecting the strategy.
        Acknowledging that systems will change in response to early field
    experience will reinforce that case. Indeed, anticipating the need for
    changing configurations will reinforce the case for an incremental
    approach. But it does require that the design effort facilitate such
    changes (for example, by providing larger margins for weight growth, or
    space and power for additional features). Two of my colleagues make the
    case for just such an approach in their aptly titled paper, ``Prepare
    to Be Wrong''.\1\
    ---------------------------------------------------------------------------
        \1\ Patel, Prashant R. and Michael P. Fischerkeller, ``Prepare to
    Be Wrong: Assessing and Designing for Adaptability, Flexibility, and
    Responsiveness'', ISA P-5005, April 2013.
    ---------------------------------------------------------------------------
        As Patel and Fischerkeller argue, this approach advantages the
    adaptability of equipment as circumstances change. In its 2010 Summer
    Study, the Defense Science Board recommended that we tie program
    objectives to planned deployment dates, to buttress just such
    adaptability. Doing so also places a premium on constraining
    development objectives, in order to enhance the likelihood that the
    needed schedule will be honored.\2\
    ---------------------------------------------------------------------------
        \2\ See Report of the Defense Science Board 2010 Summer Study on
    Enhancing Adaptability of U.S. Military Forces: Part A: Main Report.
    Washington, DC: Under Secretary of Defense, Acquisition, Technology,
    and Logistics (USD[AT&L]), January 2011, p. viii-x.
    ---------------------------------------------------------------------------
        In short, three managerial tools may produce a greater use of
    incremental development: explicit consideration in AoAs, generous
    margins for changes, and using deployment dates as a disciplinary
    instrument.
        Mr. Thornberry. What must change in the DOD acquisition process and
    culture to better transition technology from the ``lab'' to a program
    of record?
        Dr. Chu. In my judgment, the fundamental problem lies in the
    current incentives facing the potential acquisition partners--
    government labs, the Military Services, the Defense Advanced Research
    Projects Agency, and private industry. While all generalizations are
    risky, the current incentives for government labs focus their efforts
    on improving existing equipment, supporting existing Service concepts
    of operation, not on generating new ideas per se. The Services, which
    control the ``requirements'' process, tend to focus on their views of
    operational needs, sometimes only vaguely informed by what might be
    technologically feasible. To the extent the Services consult the
    technical community, beyond their immediate staffs and those of their
    OSD overseers, the exchange centers on the dialogue with private
    industry via development contracts. It's well established that industry
    sees the development contract as an economic ``prize'', leading to the
    source of most profit in the American system--the production of
    finished articles.\3\ Provided the proposed development contract
    responds reasonably to ``requirements'', there is no particular
    incentive for private industry to work with the labs.
    ---------------------------------------------------------------------------
        \3\ See William P. Rogerson, ``Profit Regulation of Defense
    Contractors and Prizes for Innovation'', Journal of Political Economy,
    Vol. 97, No. 6, December 1989, pp. 1284-1305.
    ---------------------------------------------------------------------------
        Accepting these generalizations as broadly applicable, if there is
    a desire for government labs to play a larger role in the development
    process, incentives must be adjusted. A mechanism to reward the labs
    for generating successful ideas is required, as a necessary condition.
    In the private sector for civilian products, that mechanism is the
    return that accrues from intellectual property. A simplistic analogue
    for the government lab would be some financial return for
    ``successful'' ideas.
        But that alone would be insufficient, without a mechanism that
    encourages a dialogue between the government labs and the Military
    Services, and among the labs, the Military Services, and the producing
    contractors. Could some early development work be awarded the labs,
    presumably based on the potential excellence of their early ideas
    (which by itself might provide a needed financial incentive)? Would it
    be feasible to create partnerships between government labs and
    production firms that did not generate undesirable conflicts of
    interest? Might one form of partnership be development of operational
    prototypes embodying new technological approaches? Could that enhance a
    culture of experimentation, using experiments with prototypes to
    sharpen the appreciation of both real-world limits and the tradeoffs
    that must be confronted? Would that also help DARPA test its best
    ideas?
        If successful, such changes in incentives would change the routine
    behavior of the acquisition process participants. But it is also
    possible to over-ride current routine behavior using the Secretary's
    (or Congress') authority, nurturing promising technologies that the
    labs might develop until they take root. It might be argued that is how
    cruise missile technology became such an important part of the defense
    portfolio. In the best of all possible worlds such nurturing might
    bridge the transition to a better set of incentives, worked out through
    trials of the sorts of ideas sketched above, both to explore their
    feasibility and yield insights into the unintended consequences against
    which the Department must protect itself and the public interest.
        Mr. Thornberry. What is needed to achieve integration of the
    requirements and acquisition processes in the DOD to facilitate
    requirements tradeoffs prior to acquisition programs being initiated?
        Dr. Chu. ``Requirements'' cannot be separated from the ``physics''
    of the problem--that is, the trade space among potential attributes for
    a system that technology provides. The technology constraint (the
    ``frontier'') may not be a bright line, but rather more likely a fuzzy
    zone. As you approach it, and perhaps try to move toward its outer
    boundary (or beyond), costs and risks increase, arguably
    substantially--even in a nonlinear fashion.
        With a healthy respect for where that fuzzy zone begins, it's
    typically feasible to depict the tradeoff space among attributes of a
    potential system quantitatively. Approaches to do so are available.\4\
    They are not extensively utilized, but should be. Effective utilization
    will require appropriate ``human capital'' (perhaps capitalizing on
    what some of the Federally Funded Research and Development Centers can
    provide)--and a bureaucratic process sympathetic to their intent. The
    last will require significant leadership from the Department's seniors.
    ---------------------------------------------------------------------------
        \4\ See, for example, Patel, Prashant, et al, ``Defining
    Acquisition Trade Space Through `DERIVE' '', IDA Research Notes,
    Acquisition, Part 1: Starting Viable Programs, Fall 2013.
    ---------------------------------------------------------------------------
        A complementary approach is to re-invigorate the use of Analyses of
    Alternatives (which will also require leadership from the Department's
    seniors). The alternatives considered could include alternative bundles
    of the desired system attributes, thus illustrating the benefits, costs
    and risks of the tradeoffs involved. AoAs should respect the
    uncertainties of future operational environments, and of the fiscal
    limits under which the proposed system solution must be pursued,
    constraining the tradeoff choice to one that is realistic in the
    context of likely future budgets.\5\
    ---------------------------------------------------------------------------
        \5\ The Army's critical self-examination of its acquisition
    system's performance noted the ``weak'' use of AoAs. See Army Strong:
    Equipped, Trained and Ready: Final Report of the 2010 Army Acquisition
    Review, January 2011, p. x (sometimes known as the Decker-Wagner study,
    after its two co-chairmen, Gilbert F. Decker and Louis C. Wagner).
    ---------------------------------------------------------------------------
        A final promising ingredient is to encourage a series of
    ``feedback'' exchanges with those who will use the proposed system,
    requesting their vision(s) of how the system might be employed,
    recognizing the limitations of their abilities to foresee how that
    might actually develop. (The challenge is reflected in the allegation
    that had we asked cargo users what they wanted at the dawn of the
    automotive age, they might have replied ``a faster, stronger mule''!)
        Mr. Thornberry. To what extent is government systems engineering
    expertise available and applied in the requirements-setting process? To
    what extent should it be available and applied?
        Dr. Chu. The Weapons System Acquisition Reform Act of 2009
    appropriately mandated a resurrection of DOD developmental testing
    capacity, and improvements in systems engineering capacity, but the
    full realization of WSARA's vision will require yet more effort. These
    two capacities should be foundational elements in the early DOD
    Milestone deliberations--they should have proverbial ``seats at the
    table'', perhaps more elevated seats than they currently enjoy.
        How much capacity is needed will differ by warfare area. Some of
    the needed capacity may be provided by the Federally Funded Research
    and Development Centers. There is unlikely to be an easy generalization
    about overall needs.
        Applying these capacities energetically will require the commitment
    of the acquisition community leadership, accepting the tensions that
    competing perspectives can generate. All concerned must be willing to
    accept some of the ``hard truths'' that these communities so often
    provide--especially about competing or incompatible ``requirements''.
        Mr. Thornberry. What capabilities or efforts may be needed to
    streamline the DOD's requirements and acquisition review and approval
    processes to increase ``speed to market'' or getting the right weapon
    systems from concept to fielding?
        Dr. Chu. As I testified, cycle time (presumably the motivation for
    streamlining) may not be quite the issue we imagine. But as I also
    testified, many of the oversight and reporting burdens are symptoms of
    the problem we face, not the cause. Government decisions, especially
    the high-profile decisions associated with major weapon systems, are
    inherently political. Given the decided lack of sympathy for error, we
    should not be surprised that managers at every level demand
    significant, careful review before each step is taken. In my judgment,
    a greater political tolerance for ``mistakes''--an ``error budget'', so
    to speak--would eventually allow us to streamline the process.
        But we can also speed delivery by more frequently considering
    alternatives that update existing systems instead starting afresh.
    Modifying what we already have to aim at the desired performance (or
    cost) improvement should be a consistent option in Analyses of
    Alternatives. The relative success of the F/A-18 E/F program provides
    an example worth considering. It may also illustrate the limits of this
    approach.
        We can likewise start with articles developed outside the United
    States. The rapidity with which we could deploy the Mine Resistant
    Ambush Protected Vehicles illustrates the potential of this
    alternative--as well as its limitations.
        And perhaps most important, if we honor the limits of what's
    technically realistic in the design tradeoff selected, as I argue in
    response to Question 3, and if we are faithful to what's really needed
    in systems engineering and developmental testing (Question 4), we are
    much more likely to field articles expeditiously--articles that shine
    in their operational tests, and that live within the cost limits we
    need to impose. Indeed, as I speculate in response to Question 1, if we
    start with the desired fielding date as a key parameter driving program
    design, allowing adequate margin for incremental improvements, we may
    reach the result to which so many aspire--acknowledging that there are
    some technical developments that may require long periods of
    investment, notwithstanding the preference for quick results, as the
    history of the pure power geared turbofan aircraft engine
    demonstrates.\6\
    ---------------------------------------------------------------------------
        \6\ See Coy, Peter, ``The Little Engine that Could Reshape the Jet
    Engine,'' Bloomberg Businessweek, October 19-25 edition.
    ---------------------------------------------------------------------------
        Mr. Thornberry. What can be done to encourage more incremental
    development and deployment of weapon systems?
        Mr. Pasqua. Massive improvements in incremental development and
    deployment practices have been a major contributor to rapid growth in
    the Tech Industry over the past decade. There are several contributors
    to these improvements. First, there has been a move to the notion of
    ``minimum viable product'' or MVP. A MVP contains only those features
    which are required to meet key requirements while providing a basis on
    which new features may be added over time without re-engineering the
    entire platform. This allows products to get to market sooner, provide
    tangible customer value, garner feedback, and be enhanced to provide
    enhanced functionality that may not have been anticipated or
    prioritized before real usage. To make the MVP approach work, one must
    embrace a continuous deployment process. That is, it must be possible
    to enhance the deployed product rapidly without requiring major
    infrastructure changes or end-user retraining. Because this can be more
    difficult to do with hardware systems, more and more systems are
    ``software defined''. This allows the hardware to provide a flexible
    substrate that can be molded to meet new requirements with software.
    Incremental development can't work if the specs/requirements are
    overblown to begin with or if there is no way to practically deploy
    incremental improvements.
        Mr. Thornberry. What must change in the DOD acquisition process and
    culture to better transition technology from the ``lab'' to a program
    of record?
        Mr. Pasqua. Navigating a large bureaucracy can be difficult, but it
    can be achieved by finding a customer that demands a product. This
    takes the acquisition process out of the realm of the theoretical, and
    is achieved by strengthening the bond between the customer and the
    ``lab'' or the developer. There are two primary ways to achieve this.
    First, an organization can allow the lab to have greater access and
    contact to the end-users in the field. This may not be feasible,
    however, for a variety of reasons, including the risk of fielding
    unproven technology. Therefore, the second way is to bring the end-
    users into the lab. Often an end-user doesn't actually know what he
    requires until a prototype is developed. Building a stronger connection
    to the lab allows the customer to provide rapid feedback on prototypes
    as they are developed. One of the benefits is not only the real time
    test and evaluation, but also the dialogue on what is possible. The
    operational work force may not have the technical knowledge to
    articulate challenges to consider for technical solutions because they
    are not informed on what are the current outer limits of technical
    capability. Bringing the lab to the field reduces that knowledge gap by
    bringing the science and technology closer to the problem, educating
    the operational work force on the realistic bounds of current
    capabilities, and illuminating operational challenges for the science
    and technology work force to provide vectors for innovation. Thus,
    better transitioning technology from the lab to the customer can be
    achieved by strengthening the bond between the two; in essence:
    bringing the lab to the field, or vice versa.
        Mr. Thornberry. What is needed to achieve integration of the
    requirements and acquisition processes in the DOD to facilitate
    requirements tradeoffs prior to acquisition programs being initiated?
        Mr. Pasqua. In larger organizations, often requirements are set and
    given to the developers without the latter being included in the
    requirements process. A stronger and more responsive feedback loop
    between the requirement setter and the developer is necessary to
    identify and reconcile any tradeoffs before a product is engineered and
    acquired. Often, organizations conduct market research to inform their
    requirements for a product. However, while all of those requirements
    may be true, they may not all be essential. Yet, because the developers
    are left out of the requirements process, they will engineer according
    to the requirements they are given, regardless of need (i.e. perhaps a
    70% solution is sufficient) or cost (i.e. perhaps a 100% solution would
    double the cost of the program). Absent a strong link between need and
    cost, there is a risk of over-engineering a solution or spending too
    much. To avoid this challenge, there should be a responsive feedback
    loop between the requirements setter and the developer. It should be
    part of the developer's (or Research & Development team's)
    responsibility to meet with the customer and agree on the need and cost
    before embarking on the acquisition process. Often, the larger the
    organization is the more specialization there is. This specialization
    only creates more layers between the developer and the customer, and
    risks weakening the link between need and cost.
        Mr. Thornberry. To what extent is government systems engineering
    expertise available and applied in the requirements-setting process? To
    what extent should it be available and applied?
        Mr. Pasqua. Although I am not in a position to comment on the
    availability of systems engineering expertise available within the
    Department, I can say that in the private sector the importance of
    having the expertise available is growing. The rapid deployment and
    iterative development of products and systems requires this expertise.
    In industry, we struggle with the question of how to build more modular
    and adaptable platforms that allow us to incorporate innovation over
    time. This is a systems engineering issue. For example, open
    architecture is now part of the lingua franca of software development
    and implementation. The same can and should be said for major
    Acquisition Category (ACAT) I programs. My sense is that should systems
    engineering expertise been available and applied during the acquisition
    cycle for the now cancelled USMC Advanced Amphibious Assault Vehicle
    (AAAV) program, outcomes may have been very different. As requirements
    grew in the development phase to ultimately unsustainable levels, a
    system engineering perspective could have identified the technological
    and fiscal impracticality of proposed adjustments before they were
    articulated to the contracted developer.
        Mr. Thornberry. What capabilities or efforts may be needed to
    streamline the DOD's requirements and acquisition review and approval
    processes to increase ``speed to market'' or getting the right weapon
    systems from concept to fielding?
        Mr. Pasqua. Industry looks like it is moving quickly because we are
    seeing the aggregate progress made by an entire ecosystem of
    organizations. Individually, many projects within these organizations
    fail, but the overall effect is fast forward progress spurred on by
    competitive pressure. The DOD may benefit from an approach that allows
    more small scale experiments to occur quickly to ensure the feasibility
    of new approaches and their suitability to the requirements. There will
    be more small scale failures, but the ultimate result will be faster
    time to fielding of capabilities that are best suited to the needs. In
    some cases a ``minimum viable product'' approach should be employed
    that allows a capability to be fielded sooner and improved later.
        Mr. Thornberry. What additional steps are needed to ensure industry
    understands what the Department's capability needs are for the future?
        Mr. Pasqua. Beyond Defense Contractors and specialized commercial
    organizations, there is very little understanding of the Department's
    capability needs, how to learn them, and how to navigate the
    procurement process. Unless the last item is addressed, industry won't
    feel a strong need to overcome the first two items. Having said that,
    outreach events including both academia and industry can be quite
    helpful. Establishing a network of individuals and organizations from
    industry who are co-sponsors of these events can help to attract the
    right attendees. For example, the Venture Capital community can be
    leveraged to bring new innovative companies from their portfolios to
    sessions to learn more about the Department's needs. Organizations like
    BENS also have members with broad networks who could also help attract
    key participants. In addition to understanding the Department's
    capability needs, I believe it would be valuable for industry to
    understand more about the missions to which these capabilities are in
    service. I find that once people understand the importance of the
    mission, they are more motivated to find a way that their organizations
    can contribute.
        Mr. Thornberry. What can be done to encourage more incremental
    development and deployment of weapon systems?
        Mr. Francis. Greater discipline by DOD when setting requirements
    and when establishing business cases, as well as reinforcement through
    congressional oversight will be needed to encourage more incremental
    development and deployment of weapon systems.
        DOD will need to better integrate the requirements development and
    acquisition processes so that trade-offs informed by systems
    engineering take place before programs start. This will require a
    recognition by DOD officials that requirements cannot be truly set and
    a sound, incremental business case established until the requirements
    technical feasibility and affordability can be fully determined. Our
    recent work shows that DOD officials appear to recognize the need to
    take additional steps. We reported in June 2015 that ``Several service
    chiefs noted that more integration, collaboration, and communication
    during the requirements and acquisition processes needs to take place
    to ensure that trade-offs between desired capabilities and expected
    costs are made and that requirements are essential, technically
    feasible, and affordable before programs get underway''.
        In addition, every year, there is what one could consider a
    ``freshman'' class of new acquisitions. DOD and Congress must ensure
    that these programs embody the right principles and practices, such as
    incremental acquisition strategies, and make funding decisions
    accordingly. Through our reports and testimonies we have determined
    that a key enabler to getting better acquisition outcomes is
    establishing an incremental, knowledge-based acquisition strategy.
    However, there are strong incentives within the acquisition culture to
    overpromise a prospective weapon's performance while understating its
    likely cost and schedule demands. Encouraging more incremental
    development and deployment of weapon systems will take the joint
    efforts of Congress and DOD. As I recently testified, the principles
    and practices programs embrace are determined not by policy, but by
    decisions. These decisions involve more than the program at hand: they
    send signals on what is acceptable. Programs that present well-informed
    acquisition strategies with reasonable and incremental requirements and
    reasonable assumptions about available funds should be given credit for
    a good business case and funded. Similarly, a few healthy ``No's'' by
    DOD decision makers and Congress to programs that request to begin
    without a sound foundation, including incremental approaches, would go
    a long way toward shaping the expectations of programs and contractors
    as to what is acceptable.
        Mr. Thornberry. What must change in the DOD acquisition process and
    culture to better transition technology from the ``lab'' to a program
    of record?
        Mr. Francis. DOD has long noted the existence of a chasm between
    its science and technology community and its acquisition community that
    impedes technology transition from consistently occurring. This chasm,
    often referred to by department insiders as ``the valley of death,''
    exists because the acquisition community often requires a higher level
    of technology maturity than the science and technology community is
    willing to fund and develop. We have reported extensively on shortfalls
    across DOD's technology management enterprise in transitioning
    technologies from development to acquisition and fielding. In June
    2005, we found that DOD technology transition programs faced challenges
    selecting, managing, and overseeing projects, and assessing outcomes.
    In September 2006, we found that DOD lacked the key planning,
    processes, and metrics used by leading commercial companies to
    successfully develop and transition technologies. In March 2013, we
    found that the vast majority of DOD technology transition programs
    provide technologies to military users, but tracking of project
    outcomes and other benefits derived after transition remained limited.
    More recently in November 2015, we found that programs progress through
    Defense Advanced Research Projects Agency (DARPA) without the agency
    head fully assessing whether transition strategies make sense. Such
    assessments, if measured against key transition factors, could improve
    a program's potential for transition success. Transition
    responsibilities then fall almost exclusively on individual program
    managers, who are often not sufficiently trained to achieve the
    favorable transition outcomes they seek. Further, when the program
    manager's tenure expires, the primary advocate for transitioning the
    program's technology is also lost. This turnover increases the need for
    technical gains to be appropriately documented and disseminated so that
    user communities have visibility into potential solutions available to
    meet their emerging needs. An important part of this process is the
    tracking of transition outcomes, as we recommended DOD undertake for
    its technology transition programs in March 2013, and which we have
    also found lacking at DARPA. Our recent November 2015 review of
    technology transitions at DARPA offers a place to start. While there
    are a number of factors that determine whether a technology effort
    successfully transitions to a program of record, we found that science
    and technology development organizations should regularly assess
    technology transition strategies, improve transition training for
    Science and Technology program managers, and increase sharing of
    technical data on completed programs. Among the most significant
    factors that contribute to transition success are whether there is
    military or commercial demand for the planned technology, linkage to a
    research area of sustained interest by DARPA, active collaboration with
    potential transition partners and achievement of clearly defined
    technical goals. Finally, there is the issue of money. Technologies and
    concepts that are taken to a higher level of demonstration are more
    likely to transition to programs successfully. This is key to success
    in the private sector. But taking technologies to higher levels of
    demonstration is expensive. It is often difficult for DOD labs to
    afford such demonstrations. Conversely, programs of record have much
    higher levels of funding available, which creates incentives to
    transition technologies sooner than in the commercial world. This can
    have negative consequences for transition. For example, a program may
    be less willing to accept a technology that a lab has not been able to
    fund to higher levels of demonstration. Also, technologies that do
    transition early may cause problems for programs of record because they
    will still be going through the discovery process associated with
    higher levels of demonstration, with attendant discovery of problems
    and complications. While normal for technology demonstration, this is
    disruptive for a program of record that is operating within a formal
    cost and schedule baseline.
        Mr. Thornberry. What is needed to achieve integration of the
    requirements and acquisition processes in the DOD to facilitate
    requirements tradeoffs prior to acquisition programs being initiated?
        Mr. Francis. This year's NDAA took several steps to increase the
    role and formal authority of the service chiefs and ensure they are
    consistently involved in program decisions. In addition, as I testified
    to in 2013, DOD's better buying power initiatives are also having a
    positive effect including making early trade-offs among cost, schedule
    and technical performance requirements. However, more can be done. Most
    current and former military service chiefs and vice chiefs GAO
    interviewed from the Army, Air Force, Navy, and Marine Corps in our
    June 2015 report collectively expressed dissatisfaction with
    acquisition program outcomes and believed that the Department of
    Defense's (DOD) requirements development and acquisition processes need
    to be better integrated. Several service chiefs noted that trade-offs
    informed by systems engineering must take place before programs start
    so that requirements are better defined and more realistic cost,
    schedule, and performance commitments can be made. GAO recommended that
    DOD ensure sufficient systems engineering is conducted to better define
    requirements and assess resource trade-offs before a program starts.
    DOD concurred with the recommendations, citing recent policy changes.
    To the extent that service chiefs will be taking an increased role in
    program decisions, additional consideration should be given to whether
    they have received sufficient training and experience in acquisition as
    well as whether they have appropriate staff support to successfully
    execute these additional duties. Finally, DOD will need to ensure that
    it has sufficient workforce expertise to provide support during the
    requirements setting phase. In 2015 we reported that ``. . . in areas
    such as cost estimating and systems engineering, our work found that
    DOD may not have adequate resources to fully implement recent weapon
    system reform initiatives.''
        Mr. Thornberry. To what extent is government systems engineering
    expertise available and applied in the requirements-setting process? To
    what extent should it be available and applied?
        Mr. Francis. DOD often does not perform sufficient up-front
    requirements analysis via systems engineering on programs to determine
    whether the requirements are feasible and whether there is a sound
    business case to move forward. Programs continue to be proposed with
    unachievable requirements and overly optimistic cost and schedule
    estimates and, usually, participants on both the requirements side and
    the acquisition side are loathe to trade away performance. Almost all
    of the service chiefs we interviewed in June 2015 stated that there is
    a need to further enhance expertise within the government, and several
    specified expertise in systems engineering. Several service chiefs
    indicated that systems engineering capabilities are generally lacking
    in the requirements development process, and do not become available
    until after requirements are validated and an expensive and risky
    system development program is underway. Some service chiefs advocated
    that having systems engineering capabilities available to the military
    services during requirements development could help to ensure earlier
    assessment of requirements feasibility. The service chiefs' views on
    the importance of systems engineering is consistent with our prior
    acquisition work. We recommended that DOD ensure sufficient systems
    engineering is conducted to better define requirements and assess
    resource trade-offs before a program starts. DOD concurred with the
    recommendations.
        Mr. Thornberry. What capabilities or efforts may be needed to
    streamline the DOD's requirements and acquisition review and approval
    processes to increase ``speed to market'' or getting the right weapon
    systems from concept to fielding?
        Mr. Francis. The process used to manage the acquisition of weapon
    systems is inefficient, cumbersome, and bureaucratic. A contributing
    factor to this inefficient process is the significant time and effort
    required to complete information requirements before an acquisition
    program can proceed through a milestone to the next phase in the weapon
    system acquisition process. DOD leadership has acknowledged that too
    much time is invested in preparing for key milestones, including the
    documentation and oversight of information required by statutes and
    policy, which takes time away from conducting day-to-day core program
    management tasks such as contractor oversight, engineering, and risk
    management.
        We surveyed 24 programs in February 2015 and found that it took DOD
    over 2 years on average to complete the entire set of documents
    required for review and approval at key decision points. In the end,
    program officials felt almost half of these information requirements
    were not of high value. The challenge is to find the right balance
    between having an effective oversight process and the competing demands
    such a process places on program management. If information
    requirements and reviews are not clearly linked with the elements of a
    sound business case and/or the key issues facing acquisitions today,
    then they can be streamlined or even eliminated. If they are linked,
    but are not working well, then they warrant re-thinking. These
    requirements, as well as ones that take a year or more to complete,
    could serve as a starting point for discussions on what documentation
    is really needed for weapon acquisition programs and how to streamline
    the review process. If DOD does not eliminate levels of review, but
    only makes the existing process more automated, inefficiencies are
    likely to continue.
        We recommended that, in the near term, DOD identify and potentially
    eliminate (1) reviews associated with information requirements, with a
    specific focus on reducing review levels that do not add value, and (2)
    information requirements that do not add value and are no longer
    needed. We also recommended that, as a longer-term effort, select
    several current or new major defense acquisition programs to pilot, on
    a broader scale, different approaches for streamlining the entire
    milestone decision process, with the results evaluated and reported for
    potential wider use. DOD concurred with both recommendations. A place
    for the committee to start would be to monitor DOD's progress
    implementing these recommendations.
        Users may well be willing to live with a less ambitious set of
    technical outcomes than those at which the technical community is
    aiming. Or they may want something more, reflecting changes in the
    operating environment since designs were originally considered, sending
    us back to the trade space drawing board.

                                      [all]