[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


                                     
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                      COMMITTEE ON ARMED SERVICES
                    One Hundred Fourteenth Congress

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

WALTER B. JONES, North Carolina      ADAM SMITH, Washington
J. RANDY FORBES, Virginia            LORETTA SANCHEZ, California
JEFF MILLER, Florida                 ROBERT A. BRADY, Pennsylvania
JOE WILSON, South Carolina           SUSAN A. DAVIS, California
FRANK A. LoBIONDO, New Jersey        JAMES R. LANGEVIN, Rhode Island
ROB BISHOP, Utah                     RICK LARSEN, Washington
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN KLINE, Minnesota                MADELEINE Z. BORDALLO, Guam
MIKE ROGERS, Alabama                 JOE COURTNEY, Connecticut
TRENT FRANKS, Arizona                NIKI TSONGAS, Massachusetts
BILL SHUSTER, Pennsylvania           JOHN GARAMENDI, California
K. MICHAEL CONAWAY, Texas            HENRY C. ``HANK'' JOHNSON, Jr., 
DOUG LAMBORN, Colorado                   Georgia
ROBERT J. WITTMAN, Virginia          JACKIE SPEIER, California
DUNCAN HUNTER, California            JOAQUIN CASTRO, Texas
JOHN FLEMING, Louisiana              TAMMY DUCKWORTH, Illinois
MIKE COFFMAN, Colorado               SCOTT H. PETERS, California
CHRISTOPHER P. GIBSON, New York      MARC A. VEASEY, Texas
VICKY HARTZLER, Missouri             TULSI GABBARD, Hawaii
JOSEPH J. HECK, Nevada               TIMOTHY J. WALZ, Minnesota
AUSTIN SCOTT, Georgia                BETO O'ROURKE, Texas
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

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                                                                   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.]



      
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                            A P P E N D I X

                            October 27, 2015
    
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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                            October 27, 2015

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 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]     

    
      
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                   DOCUMENTS SUBMITTED FOR THE RECORD

                            October 27, 2015
     
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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                            October 27, 2015

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              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.]

?

      
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              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                            October 27, 2015

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                 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.

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