[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
[H.A.S.C. No. 114-76]
ACQUISITION REFORM: EXPERIMENTATION AND AGILITY
__________
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
JANUARY 7, 2016
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
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COMMITTEE ON ARMED SERVICES
One Hundred Fourteenth Congress
WILLIAM M. ``MAC'' THORNBERRY, Texas, Chairman
WALTER B. JONES, North Carolina ADAM SMITH, Washington
J. RANDY FORBES, Virginia LORETTA SANCHEZ, California
JEFF MILLER, Florida ROBERT A. BRADY, Pennsylvania
JOE WILSON, South Carolina SUSAN A. DAVIS, California
FRANK A. LoBIONDO, New Jersey JAMES R. LANGEVIN, Rhode Island
ROB BISHOP, Utah RICK LARSEN, Washington
MICHAEL R. TURNER, Ohio JIM COOPER, Tennessee
JOHN KLINE, Minnesota MADELEINE Z. BORDALLO, Guam
MIKE ROGERS, Alabama JOE COURTNEY, Connecticut
TRENT FRANKS, Arizona NIKI TSONGAS, Massachusetts
BILL SHUSTER, Pennsylvania JOHN GARAMENDI, California
K. MICHAEL CONAWAY, Texas HENRY C. ``HANK'' JOHNSON, Jr.,
DOUG LAMBORN, Colorado Georgia
ROBERT J. WITTMAN, Virginia JACKIE SPEIER, California
DUNCAN HUNTER, California JOAQUIN CASTRO, Texas
JOHN FLEMING, Louisiana TAMMY DUCKWORTH, Illinois
MIKE COFFMAN, Colorado SCOTT H. PETERS, California
CHRISTOPHER P. GIBSON, New York MARC A. VEASEY, Texas
VICKY HARTZLER, Missouri TULSI GABBARD, Hawaii
JOSEPH J. HECK, Nevada TIMOTHY J. WALZ, Minnesota
AUSTIN SCOTT, Georgia BETO O'ROURKE, Texas
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
Robert Daigle, Professional Staff Member
William S. Johnson, Counsel
Abigail Gage, Clerk
C O N T E N T S
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Page
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Smith, Hon. Adam, a Representative from Washington, Ranking
Member, Committee on Armed Services............................ 2
Thornberry, Hon. William M. ``Mac,'' a Representative from Texas,
Chairman, Committee on Armed Services.......................... 1
WITNESSES
Lombardi, Richard W., Acting Assistant Secretary of the Air Force
(Acquisition), U.S. Air Force.................................. 7
Stackley, Hon. Sean J., Assistant Secretary of the Navy
(Research, Development, and Acquisition), U.S. Navy............ 4
Williamson, LTG Michael E., USA, Principal Military Deputy to the
Assistant Secretary of the Army for Acquisition, Logistics, and
Technology, U.S. Army.......................................... 3
APPENDIX
Prepared Statements:
Lombardi, Richard W.......................................... 67
Smith, Hon. Adam............................................. 48
Stackley, Hon. Sean J........................................ 58
Thornberry, Hon. William M. ``Mac''.......................... 47
Williamson, LTG Michael E.................................... 49
Documents Submitted for the Record:
[There were no Documents submitted.]
Witness Responses to Questions Asked During the Hearing:
Dr. Fleming.................................................. 85
Mr. Turner................................................... 85
Mr. Wilson................................................... 85
Questions Submitted by Members Post Hearing:
Mr. Coffman.................................................. 97
Mr. Shuster.................................................. 92
Mr. Thornberry............................................... 89
ACQUISITION REFORM: EXPERIMENTATION AND AGILITY
----------
House of Representatives,
Committee on Armed Services,
Washington, DC, Thursday, January 7, 2016.
The committee met, pursuant to call, at 10:02 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. The committee will come to order.
The committee begins 2016 continuing to focus our attention
on defense reform to help ensure that the U.S. military is
agile enough to meet the extraordinary demands of a complex,
dangerous, rapidly changing world. Last year's NDAA [National
Defense Authorization Act] included important first steps in
our long-term effort to reform the way the Pentagon buys goods
and services. In 2016, we will build on those efforts.
Technology and threats are both evolving very rapidly. Our
own acquisition system too often undermines our ability to get
the warfighter what he or she needs to meet and counter those
threats. Generating and validating requirements, budgeting for
funds, and contracting can each take two or more years, even
before major acquisition programs are initiated. After major
acquisition programs begin, it takes 8 to 9 years on average
before systems are developed and deployed to warfighters. We
cannot have an agile system if it takes us years to figure out
what we want, how to fund it, who to hire even before
development begins.
Today's hearing is intended to examine a number of
questions and topics but especially focusing on whether
experimentation and prototyping new capabilities offers a means
of improving agility, and what successes the military has had
with experimentation as well as what obstacles the Pentagon has
encountered.
And it seems to me that as one examines periods of the past
where there was significant innovation in military,
experimentation was a key element, in some ways maybe even the
heart of that innovation. And it is, I think, a very critical
component of where the United States needs to go.
Mr. Smith.
[The prepared statement of Mr. Thornberry can be found in
the Appendix on page 47.]
STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM WASHINGTON,
RANKING MEMBER, COMMITTEE ON ARMED SERVICES
Mr. Smith. Thank you, Mr. Chairman. I thank you for both
having this hearing and for your leadership on acquisition
reform. As you mentioned, in last year's bill a number of
changes were made in the area of acquisition, and I think you
correctly state the need.
We have, well, more equipment that we need to buy than we
have money to buy it. The next decade is going to be a major
challenge for the Pentagon no matter what with major systems
that need to be replaced or upgraded and a budget that is less
than we had hoped it would be and may even be less still. So if
we can buy that more efficiently, more quickly, at a lower
cost, that is better.
But the challenges, you know, are in some cases, I think,
difficult to overcome. And we can all sort of give the basic
acquisition reform speech, which is, you know, we need to buy
it more quickly; it needs to be upgradeable; we need to make
decisions more quickly.
But let's look at the reasons why we don't. You know,
certainly part of it is the bureaucracy, and we can look at
working on that. But part of it also is just the rapidly
changing nature of technology.
If you decide, okay, boom, right now, we are going to get
this in 2 years, and in the middle of that process, there is
some significant upgrade in a critical technology to the piece
of equipment you are building, are you better to simply build
what you did, accept good enough, or to try to incorporate in
those new technologies that make it and improve it?
That is not an easy decision to make. It is the nature of
the world we live in, and I don't think any acquisition reform
process is necessarily going to change that. What I am most
interested in is how we can more empower the individuals at the
Pentagon to make those decisions with fewer layers of
bureaucracy because one thing that does slow down the process
is the number of people that have to approve a program. And it
becomes sort of a, you know, vicious cycle. The programs take
so long that you have more and different people in charge or a
part of them, and everyone has got a slightly different way of
looking at it when they become in charge, so it changes more
and more as you go forward.
So what I would hope to do is to be able to empower
individuals, program managers, to make quicker decisions to
move forward. But if we are going to do that--is the last thing
I will say--we also have to allow them to make mistakes.
And I think that is one of the biggest reasons that we have
the acquisition nightmare that we have, is if a program is
purchased and it doesn't work out and it becomes too costly,
everybody is outraged. And there are all kinds of exposes. And
what do we do? We say, well, we have got to have more
oversight. You know, we have got to make sure we don't make
these mistakes again. And what more oversight means is more
people, more time, and a slower process. So we really have to
make the choice and say that--you know, Silicon Valley loves to
say that one of their great things is they tolerate failure
because they know that is part of the experimentation process.
We need to learn how to do that a little bit at the
Pentagon, empower people, make decisions, understanding they
will make mistakes, but putting six layers of bureaucracy over
the top of them isn't going to eliminate the mistakes and is
only going to make the process more costly and more lengthy as
well.
So it is a difficult challenge, one that I am aware we will
not be able to legislate a magic fix for, but we want to figure
out what we can do to help. So I look forward to your comments
today that will help guide us in that process.
[The prepared statement of Mr. Smith can be found in the
Appendix on page 48.]
The Chairman. We are fortunate to be joined today by
General Michael E. Williamson, the Principal Military Deputy to
the Assistant Secretary of the Army for Acquisition, Logistics,
and Technology; the Honorable Sean Stackley, Assistant
Secretary of the Navy for Research, Development, and
Acquisition; and Mr. Richard W. Lombardi, acting Assistant
Secretary of the Air Force for Acquisition.
Again, thank you all for being here. Without objection,
your full written statements will be made part of the record,
and each of you will be recognized to summarize your comments.
General, please proceed.
STATEMENT OF LTG MICHAEL E. WILLIAMSON, USA, PRINCIPAL MILITARY
DEPUTY TO THE ASSISTANT SECRETARY OF THE ARMY FOR ACQUISITION,
LOGISTICS, AND TECHNOLOGY, U.S. ARMY
General Williamson. Chairman Thornberry, Ranking Member
Smith, and distinguished members of the Armed Services
Committee, in the interest of time, I will just make a few
comments. But I would like to start by first thanking you for
your continuing engagement with the Army on acquisition reform.
This is really about, how do we get capability to our soldiers
quickly, really, the right equipment at the right time.
I also want to thank you for the legislation that supports
attracting, training, and retaining quality acquisition
professionals. At the end of the day, program success is tied
to having qualified people managing and running those programs.
I respectfully request that my written statement be made a
part of the record. In it, I discuss a couple of key areas:
First, modular open systems architecture; the Army's ongoing
evaluation and experimentation programs and initiatives; and,
really, our efforts to build a technologically superior force.
That can only be accomplished by having an acquisition system
that is responsive and agile.
I think Mr. Smith's comment is really important:
technologies will continue to change. So one of the things that
I have been following this week is the Consumer Electronics
Show out in Las Vegas, and what concerns me about that is the
tremendous amount of technology that our potential adversaries
now have access to. And so having an agile acquisition system,
one that allows us to not just meet the current set of
capabilities but also find technologies that give us a
competitive advantage, overmatch capability becomes critical.
Mr. Chairman, distinguished members of the committee, let
me take this opportunity to thank you again for your steadfast
and strong support to the outstanding men and women of the
United States Army, our Army civilians, and our families. This
concludes my opening remarks, and I look forward to your
questions.
[The prepared statement of General Williamson can be found
in the Appendix on page 49.]
The Chairman. Mr. Stackley.
STATEMENT OF HON. SEAN J. STACKLEY, ASSISTANT SECRETARY OF THE
NAVY (RESEARCH, DEVELOPMENT, AND ACQUISITION), U.S. NAVY
Secretary Stackley. Chairman Thornberry, Ranking Member
Smith, distinguished members of the Armed Services Committee,
thank you for the opportunity to appear before you today to
discuss Department of the Navy, Marine Corps acquisition, and
our efforts to improve agility and experimentation.
Your Navy and Marine Corps have a rich history of pushing
the boundaries of science and technology to ensure our sailors
and marines are equipped with the capabilities that they
require to perform the full range of military operations that
they are required.
Our ability to maintain our maritime dominance has become
increasingly difficult, however, as the complexity, risk, cost,
and time to develop our weapons system has steadily increased
with each new generation of technology. In fact, our
technological advantage is eroding. It is being chipped away
at, as other militaries leverage access to the rapid global
advancements in commercial and military science, technology,
and manufacturing.
The Department of Defense [DOD] has been on a campaign
commonly referred to as Better Buying Power, which is focused
on and making critical inroads to address these trends. As
well, we appreciate the work of your committee to understand
the issues and to enact the measures that will support us in
meeting our collective objectives to improve upon the cost and
time required to develop and deliver these leading-edge
warfighting capabilities.
At the bottom line, maintaining our technological
superiority requires greater innovation and agility to more
than offset our adversaries' growing capabilities. Really,
prototyping and experimentation are an essential element of our
strategy. These efforts jump-start the development process and
inform critical decisions on operational utility, technical
feasibility, producibility, cost, and risk in order to expedite
the ultimate fielding of advanced warfighting capability.
Now, what do innovation and agility look like today? In
response to the proliferation of ballistic missile threat and
turning to the proven capability of the Aegis weapon system,
the President announced 6 years ago that we would install Aegis
at a remote location in Romania to provide missile defense for
our allies in the region.
In the ensuing years, involving sites at Huntsville,
Alabama, and at the Aegis land base test site in Morristown,
New Jersey, the Naval Warfare Center in Dahlgren, Virginia, and
Wallops Island, Virginia, and the Pacific Missile Range
facility in Hawaii, the Navy and the Missile Defense Agency
completed the design, development, and test of the most complex
to date Aegis BMD [ballistic missile defense] baseline to
perform the mission and separately designed the facility, and
built, assembled, integrated, and tested the total system at
Morristown; then disassembled, shipped, reassembled,
integrated, and the tested that facility on the ground in an
austere location in Romania; all leading to turnover of the
Aegis Ashore site to sailors of the 6th Fleet about a week ago.
In the interim, the Navy had provided ballistic missile
defense by forward deploying four BMD-capable Aegis destroyers
to the Mediterranean. Subsequent to their arrival, a new cruise
missile threat emerged. In response, the Naval Research Lab,
working with Naval Warfare Center at Crane, Indiana, went to
work breaking down the characteristics of the threat and,
within a deployment cycle, assembled, shipped overseas, and
installed onboard the destroyers a transportable electronic
warfare system that would effectively counter it.
In parallel, the Naval Sea Systems Command went to work
designing and installing on the destroyers an adjunct system
known as C-RAM that combines the radar, the Navy's close-in
weapon system with the rolling airframe missile to provide
defense in-depth against the threat. And all the while, the
newest Aegis baseline and the Navy Surface Electronic Warfare
Improvement Program are being updated with these capabilities
to provide the permanent capability.
Meanwhile, in the 5th Fleet, a torpedo threat emerged that
triggered a demand for a torpedo defense for our carriers
deployed in that region. And what was called the ``Push to the
Bush,'' the Naval Undersea Warfare Center in New London,
Connecticut, working with Penn State Applied Research Lab
developed and integrated a series of underwater sensors, an
alert system, and an antitorpedo torpedo that was installed on
the USS George H.W. Bush prior to her deployment to provide the
first-ever surface ship torpedo defense system. And we are now
further improving upon that capability as we transition to a
program of record.
Separately, in response to a combatant commander's demand,
within a 12-month timeline, the Navy converted the retiring USS
Ponce to perform the mission of an afloat forward staging base
for the 5th Fleet. And Ponce proved to be the perfect
opportunity to put to sea the first ever laser weapon system.
The Navy is leveraging this experiment to further our
development of directed-energy weapons.
And, meanwhile, on the other side of the globe, in the 7th
Fleet, demonstration by China of a long-range antiship cruise
missile, a long-range antiship ballistic missile, spurred rapid
development of capabilities to counter these threats. And
within about a year's timeframe, Naval Air Warfare Center at
China Lake demonstrated the ability to employ the Tomahawk
missile against maritime targets through a synthetic guidance,
and we are exploring further systems with new seekers for that
weapon.
Similarly, we are developing the antiship version of the
air-launched missile known as JASSM-ER [Joint Air-to-Surface
Standoff Missile-Extended Range] and will explore further steps
to develop a surface-launched version of this missile. And
while the details regarding the defense against antiship
ballistic missiles are classified, we are employing the same
basic skills of integrating mature technologies into proven
systems to rapidly provide the capability necessary to defeat
the threat.
Now, there are several key elements that are common to
these examples of rapid prototyping and experimentation. First
and foremost is a highly skilled and experienced acquisition
workforce. And we are fortunate to have warfare centers, system
centers, and laboratories equipped with world-class scientists
and engineers uniquely qualified to develop technical solutions
to complex warfighting problems, and they are positioned to
leverage FFRDCs [Federally Funded Research and Development
Centers], academia, small businesses, and the greater defense
industry to execute our rapid prototype efforts.
The Department, with strong support from Congress, is
taking measures to strengthen this workforce, and we look to
further those efforts with you this year.
The second key enablers, the integration of these technical
experts with our fleet forces, the collective wisdom of our
operational forces combined with our technical community's
understanding of complex science, technology, and engineering
challenges facing naval warfare, provide an incredible
opportunity to change the calculus of future naval warfare.
The third key enabler is designing our major weapons
systems for rapid insertion of technology through the use of
modular open systems standards. The success of the Navy
submarine force's Acoustic Rapid COTS [Commercial Off-the-
Shelf] Insertion program, which provided a common open system
designed for submarine combat systems and enabled the near-
continuous upgrade to the systems paced by available technology
and a response to the threat, has spurred a sea change in naval
systems design.
Navy and Marine Corps systems have since instituted modular
open system design standards in the development of virtually
all of our future platforms and major weapons systems.
The fourth key enabler is a work in process, and that is
agility on the business side of the equation, primarily
budgeting and contracting to match the agility we expect and
demand on the technical and operational side. The cycle time of
the budget process alone is arguably greater than the cycle
time of the technologies we need to leverage and, in certain
cases, the cycle time of the threat we need to defeat.
If we are to improve upon the speed at which we deliver
capability to the fleet, we must improve upon the time required
to go from the identification of a threat or a critical
technology and touching the hardware and software required to
defeat the threat.
I am confident we have the ability to collapse this
timeline while yet maintaining the necessary judicious
oversight required by Congress on the use of taxpayer dollars.
We have demonstrated the ability to accelerate capability and
response to urgent needs, and we are bringing a similar sense
of urgency to major program acquisition to deliver capability
at much-needed speed of technology.
The Navy looks forward to working closely with your
committee again this year as we continue to tackle these
challenges, and I look forward to your questions.
[The prepared statement of Secretary Stackley can be found
in the Appendix on page 58.]
The Chairman. Thank you.
Mr. Lombardi.
STATEMENT OF RICHARD W. LOMBARDI, ACTING ASSISTANT SECRETARY OF
THE AIR FORCE (ACQUISITION), U.S. AIR FORCE
Mr. Lombardi. Chairman Thornberry, Ranking Member Smith,
members of the committee and staff, thank you for today's
opportunity to discuss acquisition reform and particularly
experimentation and agility. It is my pleasure to do so.
First, let me say that Dr. Bill LaPlante set our
acquisition community on a brilliant course during his tenure,
and I----
The Chairman. Mr. Lombardi, would you get that mike right
in front of your mouth, please. Thank you.
Mr. Lombardi. Okay. Sorry about that.
First, let me say that Dr. Bill LaPlante set our
acquisition community on a brilliant course during his tenure,
and I look forward to build on that foundation. Through his
focused efforts over the last few years, the data has shown
that we have improved our acquisition performance. Our costs
are trending down. We are meeting key performance parameters on
our major programs greater than 90 percent. And we have
garnered over $6 billion in cost savings, using these savings
to secure greater capabilities and additional weapons in the
hands of our warfighters.
In this endeavor, we are supported by the leadership of
Frank Kendall, the Under Secretary of Defense for Acquisition,
Technology, and Logistics. Our Air Force efforts are aligned to
his Better Buying Power 3.0 initiatives, as well Secretary
James' Bending the Cost Curve efforts, all which are designed
to strengthen our ability to innovate, achieve technical
excellence, and field dominant military capabilities.
In today's complex environment, rapid change is truly the
norm. We believe incorporating strategic agility into the Air
Force's acquisition enterprise will be the way to capitalize on
this dynamic environment. In order to make most of these
potential opportunities, we are focusing the Air Force's
efforts in three key areas: First, strategic planning,
prototyping, and experimentation; second, science and
technology; and, finally, modular and open systems
architecture.
Over the past 2 years, the Air Force has made great strides
to improve the strategic planning process as evidenced by the
release of the visionary 30-year strategy. We are also
reinvigorating the use of prototype and experimentation with
the purpose of providing warfighters with the opportunity to
explore novel operational concepts, incentivize innovation in
industry and government, and reduce risk and lead times to
develop and field advanced weapon systems.
Our Air Force S&T [Science and Technology] Program plays an
integral role in technology development, often fielding
temporary operational prototypes to meet urgent warfighter
needs. However, they are not the final solution but a stepping-
stone to further develop a long-term solution that addresses
aspects of producibility, reliability, and sustainability.
The Air Force also has more programs than ever implementing
modular and open systems architecture approaches. Best
practices to achieve this are, of course, the use of modular
and open architecture designs, but also to include the use of
standard interfaces and the use of block upgrade approaches to
fielding. These methods should help shorten developmental
timelines.
Such systems are designed to later upgrade, which can allow
us to better manage our risk and schedule. We identified the
advanced pilot trainer and the Joint STARS [Surveillance Target
Attack Radar System] recap programs as strategic agility pilots
that will utilize these approaches, much like the Long Range
Strike Bomber is already doing.
To address the business-related challenges, we are
prototyping a new acquisition approach called Open System
Acquisition. It will enable aggressive competition toward rapid
prototyping and utilize other transaction authority to create a
consortium specifically focused on reaching nontraditional
defense companies.
We tested this new process last year as a pilot initiative
for the Air Force Distributed Common Ground System. Nineteen
companies participated. We ultimately awarded it to two teams,
both including nontraditional defense contractors who offer
their products at approximately 80 percent of the original
government cost estimate. Our efforts are now focused on
formalizing this process and applying it to a broader sample of
programs.
I firmly believe that the Air Force acquisition enterprise
has and is building an even stronger engineering and program
management culture that values the strategic agility as a core
capability. We look to capitalize on the complex and dynamic
environment of today and tomorrow to ensure our airmen have
what they need to meet any challenge or any threat anywhere in
the world.
In conclusion, I would like to take this opportunity to
thank you for the authorities outlined in section 804 and 815
of the National Defense Authorization Act of 2016 as they
support the direction that the Air Force and the Department are
heading. And I thank you as well for your service to the United
States and for your continued support to the military and
civilian men and women who serve our great Nation.
Thank you, and looking forward to your questions.
[The prepared statement of Mr. Lombardi can be found in the
Appendix on page 67.]
The Chairman. Thank you.
I think Mr. Smith--I tend to agree with Mr. Smith. Two key
things are that we need to thin out the bureaucracy so
decisions can be made faster; and, secondly, we have got to
allow people to make mistakes. One way to help with that is to
be able to experiment in prototypes so that you see if
something is going to work before you buy a bunch of them. That
is the purpose, I think, of what we are talking here.
So let me ask each of you if you could just outline very
briefly the three top things that could be done to improve your
service's ability to experiment and take advantage of
prototypes.
General.
General Williamson. Yes, sir.
So I want to start with this discussion about flexibility,
and I would like to finish with an observation on risk. So this
notion of flexibility applies in a couple of areas within the
program, starting with early research. One of the challenges
that we have is in the making sure that you lock down the
requirements for whatever system. And so when you look at
prototyping--and I don't intend to make this a primer--but it
is really important to understand what type of prototyping we
are talking about.
So if I were [to] describe three, it would really be there
is concept; there is developmental; and then there is
operational prototyping. So in some cases, we have an idea for
a program or for a capability that is needed, and these
capabilities come in two areas. So, one, you want to address
kind of a known threat, how can I quickly react to a known
threat; and the second is, there is a technology opportunity
for us to integrate into one of our systems.
And so as we look at those three types of prototyping, it
is, how can we do that early enough in the process? How do we
have the leverage and the flexibility to bring those into
programs? And I want to highlight something that Mr. Smith
said, and that is the risk piece.
The challenge that we have had in the past, sir, is that
you want to have a direct tie to an investment that is made on
the science and technology, on the prototyping and the
experimentation, and you want to have a direct trace to a
program of record, and you want to make sure that that
technology is mature enough so that there is less risk in
implementation.
But the reality is, is that in many cases, as I look at
whether it is a subsystem or whether it is an end item, in some
cases, it may be difficult to integrate; it may not be mature
enough; and you may have to walk away from it.
And so the notion of risk, sir, becomes very important,
because what I am finding--and I have watched this in our
business for a while--is that unless that technology is mature
enough to plug in, we are not willing to make the investment.
And if it is not at the point where you have a great
confidence, it is often hard to defend the funding associated,
not only internally within the service but also at the
Department and also to the American taxpayer----
The Chairman. Okay. So if I could summarize that, an
improvement you think could be made is the ability to prototype
early in technology development, even when it may not be
connected to a program of record, or to experiment with
technologies.
And then a different kind of experimentation in prototype
is with more mature technology as you are approaching a larger
acquisition. So there are kind of two kinds, and you need more
ability to do the early, more experimental stuff without
necessarily having it attached to a program of record.
General Williamson. Yes, sir, that is absolutely correct.
And just as an example, so for soldiers, for a dismounted
soldier, the load that a soldier carries is really important.
And so as we have more and more electronics on a soldier, one
of the investments that we have to make is in batteries, in
just purely power.
And so the investment that we make in efficient battery
systems I may not be able to trace to every specific program
that will use it, but there will be a number of programs that
will leverage the efficiencies that are discovered. I need the
capability to be able to experiment in those areas and then, as
I get more definition, be able to apply it directly to a
program.
The Chairman. Okay. That makes sense to me.
Mr. Stackley.
Secretary Stackley. Yes, sir. Let me first state what I
tried to touch on in my opening remarks. We are at prototyping
and experimentation in a big way today. What we are doing
though is fairly--I will call it--episodic. It is being driven
by a compelling threat that gets top leadership's attention,
and we make mountains move to address the threat. What we need
to do is take that model and incorporate it into a way we do
business every day. And so that is the journey that we are on
today.
Much of what we need we are already working on. It is the
skill set that I described, and I cannot overstate how critical
section 219 funding has been to this effort. Section 219
funding is lifeblood to our warfare centers, our science and
technical community, and so everything that you all have done
to support that is paying off huge dividends, and it is
underpinning our efforts in terms of prototyping and
experimentation.
You touched on requirements and definition. The
requirements and definition process is long and laborious, so
if we are going to make serious inroads, we have to go ahead
and march forward with prototyping and experimentation on the
front end of the requirements definition process and not wait
for requirements to be defined and then initiate an experiment.
The prototyping and experimentation help to inform and help
to better define the requirements. We want the ability to take
the risk in that phase before we have invested large dollars
and committed ourselves to a particular system solution. We
want to go ahead and take those risks, experiment with what is
possible, better define the requirements, narrow the solution
set, get a better understanding of what the cost will
ultimately be before we launch into the program of record.
Prioritization is important. What we are doing today is we
are taking our technical community, and merging it with our
fleets, and sitting down with--inside of the fleet, they have
warfare development centers--and sitting down with the warfare
development centers and asking them, what are your top issues?
We can't launch a thousand projects today. What we want to do
is ensure that, at least on the front end, our efforts are
focused on the top priorities. So we are getting those
priorities from the fleet to address the--before requirements
definition process--the experimentation that will help us all
out and then move into execution.
So let me talk about the things that we need to help out.
One is money, and I am not coming here asking for money, but
what I am describing is that the budget process, if we have an
emerging issue today, we have missed the train for PB
[President's budget] 2017. In fact, we have already submitted
the POM [program objective memorandum] issue sheets for PB
2018. So an emerging issue today may or may not make the 2018
budget request.
So we are sitting here in early 2016 without dollars that
are available to address an emerging issue or a critical
technology that creates an opportunity unless we have something
like the entire Department aligned to reprogram and to do the
acts that go outside of the normal budget cycle.
So what we are grappling with is, how do we make dollars
available to either address emerging threats or to respond to
available technologies that will give us the capabilities that
we need?
The second issue is simply intel [intelligence]. The better
we are aligned with our intel community, the less technical and
operational surprise there is and better informs us in terms of
our efforts earlier on. So, quite often, we are responding to
the threat. The earlier start we get on that through access and
alignment between our technical community, the intel community,
and the operators, the better start that we will get.
And the third item I would mention is access to commercial
technology. And you see and hear of initiatives that are going
on today, DIUx [Defense Innovation Unit-Experimental] that the
Secretary of Defense has announced.
But the bottom line is, there is much more technology
available to help us solve our issues than we have direct
access to today, and this in part is due to a reluctance in
certain sectors of technology to plug into the large
government, the large Department of Defense, because of fear of
the bureaucracy that you referred to and what that might mean
in terms of things like data rights, things like layers of
oversight, what is referred to as the burden associated with
doing business with the government. We are going at that. We
are trying to pierce that. But that is not going to be a quick
turnaround.
The Chairman. Okay. Thank you.
Mr. Lombardi.
Mr. Lombardi. Yes, sir. Let me piggyback on both General
Williamson's and Secretary Stackley's comments.
From the Air Force perspective, what we are looking at is
it is all about a team support and it is all about a team
support getting together earlier. There was the discussion
about the requirements. And what we need to do is make sure--
and as we are doing in our developmental planning type of
activities, is bringing the operator and the requirements
generator and the technologist and the acquisition community
together early on so that we can take a look at where the S&T
investments are right now, where the gaps actually are, where
are the needs that the customer actually has, and start early
on looking across the whole spectrum because it may not
necessarily be a material solution. There may be that
technology there that could rapidly go out into the field, but
we need to understand how that technology would be operated.
And then we need to take a look and make sure that we are
developing the requirements set properly.
If you don't do the early prototyping and experimentation
early on, what tends to happen is we tend to recreate the
requirements set that was from the previous system that this is
replacing. And that is the wrong answer. What we need to be
doing is really looking forward to, what is this new technology
going to enable us to do, and how can we employ it in a better
fashion?
And so that is a key area where we have to be able to get
the teams together early on. And we are working that within the
Air Force in our enterprise collaboration teams and by virtue
of bringing people together on very specific areas at first,
and then we will take a look across the board.
But we are looking at, for example, our Air Superiority
2030 activities, which will allow us then to look at what might
be the technology that is required later on and then how do we
develop the CONOPS [concept of operations] associated with
executing that, and then that rolls into the actual developing
of the requirements that we can go and build to.
Piggybacking on Secretary Stackley's comments on funding,
the funding needs to be much more flexible. As was stated, we
are already building our 2018 budget before the 2017 is even
hitting the street here.
And in there, if we are really going to be able to look at
that, our budget documentation, because this is in the R-docs
[requirements documentation], we tend to have to write to very
specific areas. And as a result of that, we don't know 2 years
out what specific areas that we are really going to want to
attack. And as a result of that, then we end up having to come
back in for reprogrammings or getting approval for new starts.
And so if there is more flexibility in the language in the
documentation that will allow us to start activities with less
specific details, that would be very helpful for us. And then,
again, as bringing in the use of nontraditional players, we
have had some very--some good experiences with that.
I mentioned in my opening statement the Air Force DCGS
[Distributed Common Ground System]. You know, what we have done
is been able to do--by virtue of having open systems of
architecture--be able to bring in nontraditional players that
we typically don't see in our trade space. And so that is an
important area for us to reach out to that community, and our
DCGS office is actually reaching out to DIUx to understand
where there are people who could actually--companies who could
actually support them in developing new capabilities, agile
capabilities to bring new capability to the DCGS.
Thank you.
The Chairman. Thank you.
I just mentioned on the flexible funding, I think, for me,
I am interested in working with you all to figure out ways to
do it, especially going back to early prototyping. We have to
make sure there is the oversight mechanisms for the use of
those funds because that is obviously our responsibility. But
surely to goodness, we can find a way to meet your need and
also our responsibilities at the same time.
Mr. Smith.
Mr. Smith. Thank you.
I want to talk just a little bit about the program of
record, which has come up a little bit here. And I view, based
on a lot of historical examples, the program of record as being
essentially evil. I realize there is a necessity for it.
But I just want to do a little thought experiment and see
if there is some way that we can reduce that, and I will use
just one example: the expeditionary fighting vehicle [EFV]. We
all know that the original idea didn't work out. I won't get
into that. That has a lot to do, I think, with what the
chairman says about prototyping and understanding what you can
and can't do before you spend $8 billion.
But once that was done, the Marine Corps still had to get a
new amphibious assault vehicle, and there already exists--I
think it is four different companies that make four different
types of amphibious assault vehicles. And the Marine Corps was
able to go out and look at them and say: Yeah, I think these
will meet our needs.
Now, the world that I would like to live in is a world
where they go: That is the one we want, or we want these two;
give us 10,000 of that and 10,000 of that. Now, the world we
actually live in is even though these things already existed,
even though the Marine Corps looked at them to make the
decision, they had to go back and write an RFP [request for
proposal] out to these four companies. And they are down-
selecting and moving through it. And I am sure somewhere along
the way, someone is going to say: That is great, yeah, but can
you make it lighter, or can you make it heavier, or could you
put a gun here?
And by the time we are done with it, this thing is going to
wind up costing a heck of a lot more than if the Marine Corps
could have simply said, like I said: Give us 10,000 of those.
That is great. Let's go.
So what is wrong with my scenario that I just described?
Why can't we do that? And getting out of that scenario, is
there any way we can reduce the number of purchases that are
made by the Pentagon that require a program of record and
simply allow for more buying, if you will? This isn't really
commercial-off-the-shelf because we are talking about a piece
of defense equipment. You can't go out and buy your own
amphibious assault vehicle.
But it is, nonetheless, you know, commercial-off-the-shelf,
or if there is an existing piece of technology and you want to
buy it, is there a way to reduce our reliance on having a
program of record and all of the costs that come with that? Is
there something we could do legislatively to help make that
possible?
Secretary Stackley. Sir, let me take that question. I have
a lot of history on this particular program. You correctly
summarized the expeditionary fighting vehicle in terms of that
vehicle prototype was in the late 1980s, and the program was
canceled in 2009. It was difficult. There is a difficult
history that went behind that.
The shift to what is referred to as the amphibious combat
vehicle, which is the competition that is currently ongoing--
and, in fact, we have an award that was done a few weeks ago--
--
Mr. Smith. Yeah.
Secretary Stackley [continuing]. There were, in fact, four
competitors, and we have gone to a down-select.
Now, let me offer--you made a reference to cost. It would
be cheaper to just go off the shelf than to go ahead and
solicit proposals. I would refute that. Now, what we are doing
is we are leveraging competition to drive cost down for the
vehicle that the Marine Corps requires. And, in fact, the cost
that we have received in the proposals are extremely affordable
relative to--much more so than what was the EFV and relative to
estimated cost based on the four contractors outside of
competition.
Mr. Smith. We don't have it yet, so I wouldn't celebrate
that it-costs-less thing until we actually have the piece of
equipment, is the one thing I would say, but----
Secretary Stackley. Yes, sir. Now up a couple things to go
with that. One, the structure of the contract, okay, our
confidence, it is effectively getting us into a fixed-price
arena because we are leveraging extremely mature technologies,
as you described.
Mr. Smith. Right.
Secretary Stackley. We are leveraging mature technologies
not just to have high-cost confidence but inside of the
contract to give us what effectively is going to perform like a
fixed-price type contract.
Second piece is, we are going after this capability in an
incremental fashion, which reduces risks, and we are going
after it in two separate increments. The first increment will
give us capability that we will be able to put to work early
on, but ultimately we want Increment 2.
What we have been able to do through the competition in
identifying what Increment 2 capabilities will be is we have
been able to drive the competitive field to offer vehicles that
come as close as possible to an Increment 2. And, in fact, the
potential is there that this initial vehicle that we award will
be able to take us from Increment 1 to Increment 2 without any
further follow-on development effort.
So the entire approach here was to leverage mature
technologies, take the industrial base that is out there today
producing combat vehicles, lay in the requirements that are
unique to the Marine Corps, do it in such a fashion that it is
incremental but make it clear where we ultimately need to go
and to let competition drive cost down and drive the
competitive field to deliver those capabilities as early as
possible.
We think we are exactly where we should be. And the only
thing we regret is that the first go-around, going back to EFV,
didn't take a similar type of approach.
Mr. Smith. That is a good explanation. I remain skeptical,
and we will talk in 3 or 4 years when we see how all of what
you just described plays out. But I still think, you know,
shifting toward--and obviously this is a rather significant
piece of equipment that I referenced. There are smaller things,
and one of the things I would like to emphasize is buying more
commercial-off-the-shelf. If there is a product out there that
will do the job, let's just buy it and do the job because you
can have competition in that environment too. I mean, even in
this case, if there are four vehicles out there, there is
competition right up front. I don't see why you have to have an
RFP and a program of record to get those companies to compete.
But I take your broader points, and we will see how it plays
out.
Secretary Stackley. Sure.
Mr. Smith. Thank you, Mr. Chairman.
The Chairman. Thank you.
Mr. Forbes.
Mr. Forbes. Thank you, Mr. Chairman.
And we need to first acknowledge the effort that you and
the ranking member have put in this whole area of acquisition
reform. Thank you for that.
Gentlemen, thank you for being here. All three of you are
incredibly qualified, talented individuals, and we just
appreciate your service to the country and being here.
Let me tell you one of my most frustrating points when we
are talking about acquisition reform, especially when you look
at emerging technologies, capabilities, and threats. People
come in here, and they give us the scenario. They say: In a
best world, we have a year at the Pentagon to prepare a budget.
Then it takes a year over here in Congress. And then we start
trying to utilize that funding, and some of the stuff we are
looking at has a shelf life of 3 years.
But when I watch speeches outside of this committee room
and try to listen to the changes they want, here is what I
normally hear: A restating of the problem; secondly, I hear
people say something needs to be done; then they say we are
studying it; then they say we need a stable budget; then they
will give some examples. But, oftentimes, we don't get the
specificity we need.
Mr. Stackley, you have had incredibly good work. You have
been there 7-plus years, I guess, now. Based on your personal
opinion and from the study you have had and what you have done,
does the Navy need to establish something similar to the Air
Force's Rapid Capabilities Office?
Secretary Stackley. Let me describe it this way, sir: The
Navy is going about that. And the way I would describe it, the
Air Force's Rapid Capabilities Office [RCO] emerged about a
little bit more than a decade ago and specifically focused on
ISR [intelligence, surveillance, and reconnaissance] missions
and special aircraft. And so it has a unique focus.
We are looking much more broadly than that, although there
will be something that will closely mirror the Air Force RCO
going forward for unique missions, particularly in the black
world.
But much more broadly, we do have a very strong technical
base that we need to better leverage, and we need to marry it
up more tightly with the fleet and the Marine Corps to short-
circuit that longer process that goes through the requirements
definition, the budgeting process, to ultimately get into a
program of record.
Mr. Forbes. So it would be your opinion that we need
something that may not look exactly like the Air Force's Rapid
Capabilities Office, but we need something similar to that in
the Navy?
Secretary Stackley. Yes, sir. And we actually do that
today. However, we do it almost in an ad hoc fashion. And so
what we are doing, and that is my organization alongside CNO
[Chief of Naval Operations] and the Commandant, what we are
doing is we are aligning our teams, and it is going to be one
team, to bring the best technology and technical experts that
we have to bear against the highest priority requirements that
are being defined by the fleet today.
And then let's launch now into experimentation and
prototyping on how to deal with either that threat or that
critical technology while in parallel the machinery starts up
for requirements definition and budgeting so that by the time
we get into that cycle, we have a firm understanding of the
technical, and we have a much greater understanding of the
cost, and we have started to shape and point our industrial
base towards the solution. So we will both make progress in the
interim and then reduce the amount of time it takes on the back
end to ultimately field the longer term solution.
Mr. Forbes. So it would be fair for the committee to expect
that we would perhaps be seeing something in a more formalized
structure like that Rapid Capabilities Office in the coming
months?
Secretary Stackley. Yes, sir. I think you can expect that
Secretary, CNO, and Commandant will do a more formal rollout of
this construct.
Mr. Forbes. You also mentioned in your prepared testimony
that one key enabler of innovation is funding expressly for
rapid prototyping, experimentation, and demonstration. Will we
be seeing any of that in the 2017 budget, and if so, where
shall we be looking for that?
Secretary Stackley. It would be preemptive of me to be
discussing what is in the 2017 budget. However, most of these
efforts are in an account called 6.4. It is in the R&D
[research and development] account 6.4. Right now, our 6.1
through 6.3 funding, which is sponsored by the Office of Naval
Research, is a very mature budget process, and I think you all
are very well familiar with it.
When you get beyond 6.3 and get into 6.4 and beyond, now
you are into programs of record, what we want to do is carve
out the ability to increase our prototyping experimentation
inside of that 6.4 account, and we will discuss it in greater
detail when the budget comes across.
Mr. Forbes. Thank you, all.
Thank you, Mr. Chairman.
The Chairman. Mrs. Davis.
Mrs. Davis. Thank you, Mr. Chairman.
And, really, just following up with everything that has
been said previously, can you pinpoint to some extent--and I
want to applaud you because you have the answer basically. I
mean, you know what needs to be done. What is really getting in
the way of doing that?
How much responsibility does Congress bear? What can we
obviously do better? And you have cited the 6.4 accounts. I
don't know whether in terms of other research and development,
you know, be it DARPA [Defense Advanced Research Projects
Agency], people are aware of what is done there. What else--
where else can you drive this?
Secretary Stackley. Yes, ma'am. If doing that is associated
with the discussion we just had on funding, the issue is budget
exhibits require that we define exactly how we are going to use
the taxpayer dollars so that you all can authorize and
appropriate and conduct the oversight.
The nature of the beast, whether it is emerging threats or
available critical technologies have become available, is that
it is hard today as we put together our POM 2018 issue sheets.
We cannot predict what that threat will be in 2018 so that when
we are in execution we have dollars available to go directly to
the threat.
And so we are looking for, as General Williamson described,
a degree of flexibility. And we are not talking large dollars,
frankly, because we are talking prime-the-pump levels of
funding that let us get the technical machinery moving aside
the fleet to address these early experimentation efforts as
soon as we see a technology or a threat that we want to
address. Not large dollars, but defining it so that you all
have confidence in terms of being able to authorize and
appropriate to those dollars has been a challenge in the past.
Mrs. Davis. General, did you want to speak to that?
General Williamson. Ma'am, I just want to talk a little bit
about the flexibility, and I am going to use an example, of
which hopefully it is not overly simplistic, but I just want to
give you this example.
So this is not kinetic. So this is not about buying a new
gun. But as I am progressing with a combat vehicle or even a
tactical truck, and if I discover through some of the applied
research or industry comes up with a better transmission, I am
on the path where I am building a system. But a year into that,
someone says: There is a great capability out there, a new
transmission that will reduce fuel requirements by 50 percent.
Because of the way we earmark--that is the wrong word for you.
I apologize.
Mrs. Davis. Don't want to use that word here.
General Williamson. I apologize. But the way we identify
how funding is going to be used, it will be a year before I can
flex within my budget for that program to start doing
integration work with that new engine.
Mrs. Davis. Yeah.
General Williamson. And so if I have some leverage, if I
have some flexibility, say, great technology, because of things
like modular systems architecture, I can start doing the work
to plug that in now. I don't have to wait.
Mrs. Davis. I would hope that everybody sees that as very
commonsensical, to be able to shift when you see a need and be
flexible. And I think what would be helpful--and I think you
are already working with that, Mr. Secretary--is how then you
define that perhaps in a budget process so that you have that
ability to do that.
And I guess what I am looking for is, where are still the
obstacles to doing that? You know, we have been in the
situation now for quite a number of years, and I think, just as
Mr. Forbes mentioned, we kind of keep hearing the same thing.
You know, we have got a problem. We need to fix it. We need to
redefine it. We need flexibility. And how can we unstick this a
little bit more so that you have what you need or without even
waiting until the next NDAA?
Secretary Stackley. Yes, ma'am. Well, let me commit to you
that when the budget comes over, we are going to be coming over
with the budget and sitting down with the authorization and the
appropriation committees to lay out an approach and a process
that will give you all the confidence and the insight and the
oversight in terms of how we would execute funding to increase
the degree of experimentation and prototyping that we are
describing here today.
Mrs. Davis. And you don't feel you can do that with
existing legislative authority?
Secretary Stackley. Well, actually, I think we can. What we
need to do is convince the Congress that it has the degree of
oversight and insight that it needs to do its job.
Mrs. Davis. Okay. Thank you, sir.
The Chairman. Chairman Davis--Chairman Miller, sorry. I was
thinking about Mrs. Davis' comments. Chairman Miller.
Mr. Miller. Thank you very much.
I am wondering why you feel like the need for flexibility--
and I understand for rapid acquisitions. In fact, Mr. Lombardi,
you talked about flexible funding, and then, Mr. Stackley and
General Williamson, you both have referred to it. There
probably was a reason at some point that Congress kind of
stovepiped the money in the way it comes to you. Any idea what
that reason was?
Secretary Stackley. Sir, I can just give you one example,
and this goes back probably 20 to 25 years ago. We had a thing
called the M account. And the M account was a management
account to--it had a degree of flexibility in it as a
management reserve effectively for the Department.
And Congress determined that it effectively did not
appreciate the way the Department was managing the M account.
And separately, as pressing needs emerged, the choices were
between having dollars parked into an M account or having those
dollars go toward specific budget line items. And so the M
account eventually went away. That was a large account in terms
of providing management reserve.
Since then, there has been a reluctance to put any dollars
into the budget that don't meet very well-defined, disciplined
definitions of how the dollars will be used. And I think we can
get past that. I think we can get past that. And I am looking
forward to when the budget comes over, sitting down and talking
with the committees and your staffs to work through this.
Mr. Lombardi. I would like to just add on this. And I
think, dating back to about 20 years ago, I think there was a
concern with respect to coming out of accounts like this where
we were actually starting program of records.
And so I think, as Secretary Stackley says, I think it is
very easy for us to come back together with a plan that would
allow for all of us to have the flexibility that we need and
the proper oversight for both the appropriation and the
authorization committees to make sure that we are executing the
funds in a logical and a very meaningful manner.
But I think that a lot of what has been happening in the
past was based upon a fear of us actually launching off on
program of record based upon doing a certain type of
prototyping early on.
General Williamson. Sir, just to comment, I completely
support the comments made by the other services. I do want to
go back to something that was said earlier though, and that has
to go to the culture in terms of risk tolerance and the culture
of risk.
So we all sit around and talk about the various successes
that come out of Silicon Valley, but what we don't often do is
talk about the number of failures that occur. And so one of the
things that has to happen is we have to not only come with the
plan that has been described and the appropriate due diligence
to support that plan, but we also have to be willing to, if we
want to push the envelope, if we want to have a capability that
is not the current state of the art that our adversaries have
or have access to, but if we are willing to push the envelope,
there has to be some acknowledgment that there is risk
associated with some of these experiments.
And that culture, not just here, sir, but within our own
service, within the Department, it has to be something that we
are able to kind of quantify that risk but also appreciate that
if you are going to push the envelope, there will be times
where it doesn't come to fruition.
Mr. Miller. I think most of us recognize that there is a
need to take the risk, and I think we are willing to do that. I
think the issue is between risk and waste, and that is where
the biggest problem, I think--but is it that difficult to go
through the reprogramming process here in Congress, or is it
difficult at DOD to go through the reprogramming?
Secretary Stackley. I would say it is difficult, both
sides. It is difficult inside the Department of Defense because
it starts with you identify a need, then you have to identify
an offset. We don't send over reprogramming requests on the
Aegis typically, and so it is a fairly long cycle within a
cycle and it is a tough process.
And then when it comes over here, it gets the appropriate
scrutiny. So it is an element of time, sir. And relative to the
annual budgeting process, which, as we have described is about
2 years from the identification of a need when you actually get
funding, it is probably half of that. But it is also funding
that you cannot rely upon in terms of building a plan around to
go ahead and get started executing. And so it is a degree of
uncertainty that comes with the process.
The Chairman. Mr. Courtney.
Mr. Courtney. Thank you, Mr. Chairman.
And thank you to the witnesses for the hearing today.
In the last defense authorization bill, we actually moved
forward on a series of reforms. And, again, I salute the
chairman and ranking member for their hard work in terms of
some of these streamlinings of the acquisition process.
Another thing to build in was to revisit the National Sea-
Based Deterrence Fund to expand the range of acquisition tools
available to the Navy as they prepare to move to the next
critical stage of recapitalization of our ballistic submarine
fleet, which, again, has been consistently identified as one of
the top priorities of our national defense. It is also one of
the highest cost programs that we are facing.
In the 2016 NDAA, we expanded the fund to include
authorization of incremental funding authority, economic order
quantity contract authority, and advance construction
authority. And, as Mr. Forbes knows, last month, the Seapower
Subcommittee held a hearing on acquisition efficiency in Navy
shipbuilding, and CBO [Congressional Budget Office] and CRS
[Congressional Research Service] testified. Among their
findings, both experts testified that using the fund with these
new authorities would generate up to a 10 percent reduction in
program costs. So we are talking about $100 billion program; 10
percent is real money. That is almost the equivalent of getting
12 boats for the price of 11, according to their math.
So, Mr. Stackley, I just wanted to ask you if you have
considered the benefits outlined by CBO and CRS in the use of
the fund as it exists today with the new authorities that were
enacted in the NDAA 2016 bill.
Secretary Stackley. Absolutely, sir. First, the Department
of the Navy greatly appreciates the way this committee has
worked with us in terms of identifying the challenges
associated with the Ohio Replacement Program [ORP] and helping
to put tools in the toolbox to address those challenges. As we
have discussed in the recent past, the Navy is working closely
with industry, both Electric Boat and Newport News, in
structuring an approach to attack the affordability side of the
equation.
The authorities that you have put in place, they will be
extremely helpful. What we need to do is come back with a
comprehensive approach, a more comprehensive approach, that
explains to Congress how we are going to use these authorities,
what the benefit we all receive from that, and how this is
going to ultimately drive down the costs to recapitalize that
critical asset. This will be an important part of our dialogue
in the 2017 budget cycle.
Mr. Courtney. So in terms of the ORP acquisition strategy
and budget outlook, the authorities that we enacted last year--
or in the 2016 bill--they are something that your office is
definitely looking at in terms of that plan that you are
talking about working with us on?
Secretary Stackley. Absolutely. The nature of the beast is
we are still in the design and development phase, and the
authorities that we are talking about really apply to the
procurement phase, and so we have lead time in terms of
structuring. So, for example, when we talk about EOQ [economic
order quantity], we are all in in terms of EOQ. It is going to
be a 12-boat procurement. There are certain things, like
missile tubes, that we are going to stand up an industrial base
that is going to make 12 boats worth of missile tubes, and then
it is going to stand down. So if we stretch that out over a 15-
year period, the only thing we know for sure is that will be
the most costly way to procure missile tubes. So we want to
look at how do we leverage EOQ type of authorities and then
batch build the missile tubes in such a fashion that we will be
buying them potentially ahead of need, but we will be buying
them in the most affordable manner and with the least impact on
the industrial base.
Mr. Courtney. Good. So, again, because that was one of the
components that we wrote into the law last year, that is
encouraging to hear that the Pentagon is embracing this. And
the only observation I would make is that the fund has been
sort of critiqued in some quarters as sort of a gadget that
doesn't by itself generate savings, that the authorities are
really where the money is. But what I would just note is that
what we were able to do in this committee was to sort of
package those authorities under the umbrella of the fund, which
I think really made the legislative process, which has also got
its own sort of cumbersome challenges, move smoother. So I
think unpacking them and trying to do it sort of in a one-by-
one process in terms of these authorities is going to
potentially undermine our ability to keep this moving forward,
again, in the most intelligent, cost-effective manner possible.
So, again, thank you for your comments this morning, and we
look forward in the next coming months to making sure that we
give you those tools in the tool box, to make sure that this
program, which is going to be a huge fiscal challenge, gets
done in the most efficient and cost-effective way possible.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Mr. Wilson.
Mr. Wilson. I want to thank Chairman Mac Thornberry for his
promotion of acquisition reform, experimentation and agility. I
believe he is really making a difference and with your help.
In particular, Secretary Stackley, what lessons can you
draw from the experience of building a prototype laser weapon
system on the ship Ponce that might illustrate the value of
prototyping as well as the limitations?
Secretary Stackley. Yes, sir. Thanks for the question. The
laser weapon system on board the Ponce, size-wise it is what we
would refer to as a 30-kilowatt [kW] system, so it is probably
at the lower limit of lethality. But what we are able to do by
experimenting with IT is to understand, how does the laser
perform in a maritime environment, which has always been a risk
with this type of technology? We are learning, what do we need
to do to scale up from 30 kilowatts up to notionally 150 kW,
which is a more lethal size weapon system? What does that mean
in terms of shipboard, space, weight, power, and cooling
requirements? What is the performance of the system against
moving targets, both fast-moving surface targets, as well as
aerial targets? And then what is the ship system and, most
importantly, the operator perspective in terms of utilizing
this and coupling it with other self-defense capabilities on a
ship?
Our next step is today we are taking the lessons learned
from the Ponce, and we are evaluating and exploring a 150-
kilowatt system to go onboard a DDG-51 class [guided missile
destroyer] for experimentation and prototyping to determine, is
that the right size, shape for a system that will provide the
degree of lethality that we are looking for out of this
directed-energy system?
Mr. Wilson. And speaking of systems, the success of a
nuclear Navy, with submarines, with aircraft carriers, other
ships, with the reactors that are located, what research is
being done to promote small modular reactors [SMRs] that can be
used at military facilities around the world to make them
independent of electrical grids?
Secretary Stackley. Sir, I know there are studies that have
been done on this. I would have to get back to you with a more
thorough response to give you the results of those studies.
[The information referred to can be found in the Appendix
on page 85.]
Mr. Wilson. The success, again, of the Navy for decades
should be replicated with SMRs, and I wish you well.
For each of you, General, thank you.
Mr. Lombardi, thank you for being here.
What challenges or limitations do you see from the
acquisition community in pulling good technologies developed by
science and technology, S&T, investments into the acquisitions
programs of record?
General Williamson. Sir, I would say that is consistent
with some of the discussion that we have had today in that how
do I, one, have more awareness of those programs? So the work
that is being done out in Silicon Valley in terms of exposing
some innovative companies to our requirements I think is a
great start. The problem for us is, because I am not completely
sure, how do I create head room within programs so that I can
bring those in as I discover them and plan for them? I think
that is the biggest challenge for us right now, is
identification and then the ability to have enough agility to
fund them as we discover them into a program.
Mr. Wilson. I am glad you mentioned Silicon Valley. I am
very grateful for the efforts of Secretary Carter working with
Silicon Valley to address the challenges of cyber warfare and
conflict.
Secretary.
Mr. Lombardi. Yes, sir. I think, as we have talked before,
is the importance of being able to bring together the
technologists and the operator early on to really kind of
understand where the real investments need to be in S&T to take
care of near-term needs, but also look at where the long-term
gaps are and where we need to be investing our S&T dollars. So
I think by virtue of us being able to start more
collaboratively bringing in the operator and the S&T with the
acquisition community, we can start being able to bridge that
gap.
But there is still, as we tend to call it, the ``valley of
death'' going from S&T to a program of record. And by virtue of
bringing the teams earlier together--because, as I said
earlier, development and planning to us is a team sport, and
you have got to be able to work together to determine whether
the emerging technology can actually take care of the given
need; are there CONOPS that can be done, or do we actually need
to do increased investment? And that in turn helps them on the
development of their requirements for us to be able to turn
that technology and bring it forward into the program of
record.
Mr. Wilson. Thank you.
The Chairman. Ms. Tsongas.
Ms. Tsongas. Thank you, Mr. Chairman, and thank you to all
of our witnesses today. And in particular, I would like to
welcome you, Mr. Lombardi. As we know, I came to know you in
your work at Hanscom Air Force Base, and it is great to see you
here in this new capacity. I appreciated very much the work we
were able to do then, and I know coming from the Massachusetts
environment, you do recognize the opportunities presented by
working with the academic communities as well as the private
sector and the federally funded research facilities and the
opportunities that that creates given the rapid-change
environment we live in.
I wanted to revisit some of your testimony and what you
talked about the Air Force's efforts to contract with companies
that have not traditionally worked with the services. I know
this was a pilot project that actually took place at Hanscom. I
am just curious as to what your experience was with this type
of outreach, and what are some of the best practices and
lessons learned that came as a result? Given the universe of
companies that are out there, I am also curious as to how you
identified and solicited those companies to become part of this
effort.
Mr. Lombardi. Yes, ma'am. As I mentioned--and you are
correct that this was all done as part of the team up at
Hanscom, the PEO [program executive officer] up there, Steve
Wert, as you are well aware. The DCGS program, what really
helped us in being able to reach out to nontraditional
companies was actually the fact that we had gone in and opened
up the architecture with respect to the DCGS system. And by
virtue of doing that, that opens up the capabilities of really
going out to the nontraditional players because oftentimes, the
nontraditional players are the ones who are going to provide
you near-term really relevant applications or smaller
components or anything. And so in the case of the DCGS, what
was really interesting on this was that we were able to take a
process that was actually--our DCGS is actually a system that
takes in the intelligence and disseminates it out. It is
disseminated out to not only our U.S. forces, but also
coalition forces, and so the security levels are different. So
what was happening was is this was a manual thing that was done
over a half hour to an hour to be able to essentially take out
elements of the reports to make sure it met each of the
different players, different partners, and so by virtue of
doing this application, we were able to get that work done in a
matter of 30 seconds.
Ms. Tsongas. But how did you identify the people you
brought into this effort? How did you reach out to them?
Mr. Lombardi. By virtue of going out and doing this as
``other transaction authority,'' we were able to reach out to
and build a consortium, and of that, the consortiums were all
playing together, and the consortium was built with traditional
and nontraditional players. And by virtue of that, then they
started teaming together, knowing where the real capability of
each were, and it came together into--as I said, there were
originally 19 different companies, but they then went into
about 13 teams. And, ultimately, we have got us down to
awarding of two. So it was really the use of the other
transaction authority that allowed us to reach out to
consortiums that were building upon themselves in this matter.
Ms. Tsongas. And this was an experiment, so you weren't
really wrestling with the companies' concerns that Mr. Stackley
referenced about nontraditional defense companies that don't
know how to wrestle with the data rights issues or are
concerned about them or the oversight issues. It was really
more an experiment that sort of put those things aside?
Mr. Lombardi. It was an experiment from that standpoint,
but I think there is an opportunity here and particularly as we
look at more and more of our systems having this open
architecture approach, where we will be able to reach out and
get to people who are really more of the nontraditional players
because, in that case, we are going to actually own the
standards. We are going to own the interfaces. We are going to
own how everything is integrated in together. So by virtue of
doing that, we can reach out to a better population of players
to be able to support us.
Ms. Tsongas. And you are taking this into account as you
formalize this process and broaden it?
Mr. Lombardi. Yes, ma'am.
Ms. Tsongas. Thank you.
I yield back.
The Chairman. Mr. Turner.
Mr. Turner. Thank you, Mr. Chairman.
Mr. Lombardi, now the focus of this hearing is on
experimentation, agility, and ultimately delivering combat
capability to our men and women in the field. With that in mind
and for over six decades, the Air Force's Big Safari program
has been an extraordinarily successful, agile organization, and
it has in the past been a go-to organization when capability
was needed in a short amount of time.
Yet it appears over the last few years that that sort of
agility has come under some stress, and Big Safari is operating
more like the mainstream organizations rather than trying to
leverage and replicate that agility into those organizations.
As one example, we understand that the contracting function has
been moved out from under their organization, just as it has
been across the rest of the Air Force. It would seem to many
that aligning all elements of program execution under a single
entity would make more sense.
Looking back on what made this program successful, isn't
the Big Safari program a model for some of the acquisition
reform that we clearly need and are looking for now, and is
this an acquisition culture model that we need to fully protect
and to foster?
Mr. Lombardi.
Mr. Lombardi. Yes, sir. Big Safari has and continues to
provide great capability for our Air Force and our warfighters.
And you are right; the model has been one that has been very
agile to be able to provide capability out to the warfighters
in a very rapid pace. It is a model that we should continue to
foster. I will have to get back with you, sir, with respect to
the taking of the contracting element out of the Big Safari
area, if you don't mind, because I would like to be able to
study that a little bit further and understand what were the
reasons associated with that.
Mr. Turner. I would appreciate that because, obviously, if
you look at its success, we don't want to diminish that success
as we might look to it as a model.
Mr. Lombardi. Yes, sir. Let me look to that, and I will get
back to you.
[The information referred to can be found in the Appendix
on page 85.]
Mr. Turner. Thank you.
The Chairman. Mr. O'Rourke.
Mr. O'Rourke. Thank you, Mr. Chairman, and I also want to
join my colleagues in thanking you for your leadership on this
issue. It is a very difficult one and one on which the Congress
has worked for a long time, and I hope that with your
leadership and that of the ranking member, we will continue to
make some progress this year. There were a number of obstacles
listed by both the chairman and the ranking member as to why
acquisition reform has proven so difficult.
One that was omitted, I believe, was the influence of the
defense contractors themselves. We know that in 2014, which is
the last year for which we have full data, they spent $70
million to influence the decisions that lawmakers make, and I
think that is a factor. I don't know how large a factor. We can
measure what they spent. I don't know what its effect is on the
ultimate decisions, but it is a factor, and I think that needs
to be included in the calculus for reform. And I would link
campaign finance reform to military acquisition reform. I think
those two things are important, and I would welcome any
comments on that.
However, I would like to ask a question about a different
area, and it gets back to another issue that has been raised in
today's hearing so far, and that is allowing the military the
freedom to experiment and the freedom to fail in order to
better guarantee innovation and success down the road long
term.
General Williamson, I would like you to talk a little about
the Network Integration Evaluation, or NIE, and the Army
Warfighting Assessment, or the AWA--one which looks at programs
that are programs of record and the other that allows the Army
to experiment with programs that are not programs of record--
and how those two work together to satisfy the concern that
many of us have raised and you have pointed to. I think I heard
you say that we are looking for early, more experimental stuff,
not necessarily connected to programs of record, not
necessarily connected to identified gaps, but those kind of
things that may appear in the future unbeknownst to us now.
General Williamson. Sir, thank you for the question. This
is one that I think as an Army we are very, very proud of in
terms of the development of both the network integration
exercises and the new warfighting assessments. So what we
discovered in 2011 is that, as we were deploying capability in
the theater, we found that even though we were finding the best
of breed, whether it was a radio or a system, the integration
was happening in the field in combat, and what we really needed
was a venue to make sure that all of the pieces worked
together. So the start of the NIE really was focused on
integration. But at the same time we were doing that, sir, we
really discovered that we did not have a good operational venue
to look at new capabilities, get the warfighter to touch them
early on and influence the requirements process and to make
changes, refinements, in the requirements.
So the network integration exercises quickly evolved from
pure integration to also looking at, what is the effect of
introducing this new technology? Because here is what I would
offer to you, is that in some cases, it is not a new thing; it
could be a new use for an existing technology. And how you do
tactics, techniques, and procedures, how you organize your
unit, all of those things have an effect on, am I increasing
warfighting or the power of that unit?
So as we discovered that, the NIEs really were technically
focused, and we discovered that we needed to also spend more
time reaching out and looking deeper, further out. What
capability do we need 5 years, 10 years, 20 years from now, and
the warfighting assessments that we are now implementing give
us that capability.
And, sir, to your point, this is really what is so
important about what we are doing, is that that information
comes back, and it influences not only current systems, but it
also sets the conditions for the requirements documents that
are more realistic in terms of what is really needed. I think
this is something that did not exist. We did small pockets, but
the center of gravity for us is a brigade. And even though this
is resource heavy, we dedicated an entire brigade to have these
experiments and to do these integration exercises. We are very
proud of what they have accomplished.
Mr. O'Rourke. Thank you.
I yield back.
The Chairman. Chairman Kline.
Mr. Kline. Thank you, Mr. Chairman.
Thank you, gentlemen, for being here. I heard a couple of
you, I think Secretary Stackley and Lombardi, saying that they
were confident that we could reduce some acquisition time, and
you were on the right track for making changes. And that is
good, but I am probably pretty skeptical. I certainly hope we
can reduce the time and be more flexible and be more agile. The
history just doesn't show that. Everybody in this room--and
even Frank Kendall, who is not in this room--everybody kind of
knows what you have to do to speed this up and understands it
is going to be very difficult to get there because we can't do
every program with the Skunk Works. We just can't do it.
So we are looking for ways that we can speed up the
process, streamline it. The ranking member talked about the
levels of review and oversight within the Pentagon, and then we
add on top of that. And, of course, we bear some culpability
for sure here in Congress because if a system is being
manufactured in our district or an office is in our district,
it clearly is a key national security interest, and if it is in
somebody else's district, it is a bill payer. So we understand
that we are part of the problem, and we need to work on that
ourselves. I have been pleased to see that you all, the
Pentagon, and industry has been smarter and smarter in making
sure that some major component is built in everybody's
district, so that makes it a little bit easier because whatever
that component is, is a key national security interest, and
therefore, we are going to do our part to protect it. That is
the way our job is because we are looking to protect jobs in
our district.
I want to go back for just a minute to the ever-name-
changing Marine Corps expeditionary fighting vehicle. I
remember very well because I put it there in POM 1990 in an
earlier life. We could not afford that vehicle, which was
called the Triple A back then, so it was always in the last
year of the POM. When people, my successors came, it kept
coming, and it kept going the last year of POM, and we couldn't
afford it. It took every nickel of procurement Marine Corps to
buy that one item, and yet it stayed in the POM year after year
after year, until finally reality caught up, finally.
So part of this is, we need to live a little bit more, in
my judgment, in the world of the possible, in a reality. If you
can't afford it, you know you can't afford it, then why are you
expending all of that energy? And I am raising my hand; I was
guilty. I put it right in there because I was told how
important this was. We need to do a better job--we
collectively--we here and certainly those of you sitting at the
table. When you are living, as we are now, in an uncertain
budget time--I would argue we are always in an uncertain budget
time--let's don't put our energy into doing something that we
cannot afford and are not going to be able to afford. My
argument to you is that is where that Triple A, which then
became the expeditionary fighting vehicle and something else
now, you couldn't buy it. If you took every procurement dollar,
every procurement Marine Corps dollar--that is what it took--
you couldn't buy another thing. You couldn't buy a single
rifle, nothing.
I think that is part of this process. We all know that the
JROC [Joint Requirements Oversight Council], the whole
requirements process is cumbersome, and I have heard you use
today words like ``long cycles'' and ``long cycles within
cycles.'' It seems to me that is what we are trying to get at
here. We are trying to find ways to make those cycles not so
long cycles and make them not so cumbersome and get rid of some
of the layers of bureaucracy that go here.
I can never fix the fact that Mr. Turner is going to worry
about some office or some production in his district. I guess I
could worry about it, but I can't change it. But these
processes, these bureaucratic processes--processes--we need to
be getting at, and I know we want to do everything we can to
clean that up as much as we can. And we have just got to stop
doing business the same old way. And I know you know that, and
you are trying, and if there is something in statute that needs
to be changed, that is what we want to hear from you because we
want to help you.
I yield back.
The Chairman. Mr. Langevin.
Mr. Langevin. Thank you, Mr. Chairman.
I want to thank our witnesses, Secretary Stackley and
General Williamson and Mr. Lombardi. Thank you for your
testimony and for the time and attention you are putting into
this area.
Obviously, we all consider acquisition reform critical if
we are going to continue to maintain our technological edge
going forward, as well as make better use of taxpayer dollars.
We have often heard it repeated that the U.S. risks losing
military technological superiority across a variety of domains
if reforms are not made to improve the DOD's acquisition
process. So do you believe that the current acquisition process
does take so long that the technology actually becomes obsolete
by the time it reaches the warfighter? On balance, is that what
is happening today given----
Secretary Stackley. Let me describe it this way, sir, is
that the pace of technology is it is outpacing our current,
recent history of acquiring capability. You pointed out the
acquisition process. When I think about the acquisition
process, I think about everything from the start of defining a
requirement to the back end of fielding the capability and
supporting it in service, as opposed to that thing in the
middle that sometimes people refer to that is associated with
contracting actions.
It is a long and lengthy process, and much of the theme of
this hearing, talking about how do we jump-start this, how do
we accelerate it, much of the theme of this hearing is about
taking risk upfront to try to accelerate that requirement's
definition, the understanding of the requirement, and the
maturing of the technologies. Let's take that risk upfront to
try to collapse down some of that timeline. And then when we
shift over to a more traditional development and production
phase, then we are starting at a much more mature level, much
better understanding of what we have to build and can, in fact,
accelerate that at the same time.
Mr. Lombardi. Sir, I would also add to that and, again, I
think one of the key attributes that will allow us to speed up
in some areas will be, again, use of modular open systems
architecture, which will allow us then to build in the
opportunities that as emerging technology becomes available,
that we will be able to integrate it more easily into the
systems that we have already developed.
Mr. Langevin. I think it is obviously critically important
in areas in particular where procurement timelines often don't
align with budget timelines, such as cyber, which moves pretty
rapidly. Let me turn to, can you discuss the effectiveness of
the DIUx initiative and In-Q-Tel initiatives improving access
to industry and overcoming transition challenges? I know you
have touched on those topics this morning, but I would like to
get an update on how they are working at this point.
General Williamson. So, sir, I would like to start. I
should be dancing on the table in regards to the kind of access
and exposure that we are starting to see from both DIUx, but
also the engagement with In-Q-Tel. I just recently spent
recently an afternoon with the folks at In-Q-Tel and just the
introduction to the innovative companies that, quite frankly, I
had no situational awareness on and their interest now in
coming into the defense space I think is going to pay
tremendous dividends.
But I really discovered, though, from the DIUx side is
this, I would call it a gap, quite frankly, between the
companies out there who have not operated in the defense space,
the normal defense space, and their understanding of the types
of products, the wide range of products that we build. So we
have this perception of social networking and software only,
but I would tell you that their engineering talent is
sufficient--it is significant, rather. So I think that we have
just started to break ground, and part of this effort is to
continue to expose them to the types of requirements we have.
If there is a challenge, it is one that was stated earlier, and
that is, so historically we have not been great customers.
Their cycle times, their business processes work much faster,
and as a result, it is difficult for them to understand the
time it takes for us to get to yes and start building
something. So it starts with exposure, and I think what we have
to do on our side is make sure that we are tightening up some
of the lengthy processes that we have.
Mr. Langevin. Thank you.
The Chairman. Thank you.
Mr. Rogers.
Mr. Rogers. Thank you, Mr. Chairman.
Mr. Lombardi, I would like to talk to you about the Defense
Meteorological Satellite number 20, which the Air Force
affectionately refers to as DMSP [Defense Meteorological
Satellite Program] 20. Back in 1997, the Air Force paid
industry to build this DMSP 20. Then they promptly put it in a
storage facility for so long that the Air Force ultimately had
to pay industry to upgrade it because it was antiquated. All
the while, you paid millions of dollars a year to keep this
satellite in storage. In all, the Air Force spent well over a
half a billion dollars of taxpayer money on this satellite,
$518 million to be specific. Then, in 2014, the Air Force told
Congress that it no longer wanted the satellite and wanted to
scrap it. Then they came back last year in 2015 and said: No,
we have become too dependent on Russia and China for this
meteorological information; we need to launch the satellite.
Well, unfortunately, Congress had lost confidence in the
Air Force's ability to manage this program.
Mr. Lombardi, we spent $500 million that could have been
used to support national security. Instead it is going in the
trash. I presume it is going to be made into razor blades. We
could have saved the Air Force and the Congress a lot of
aggravation if we had 18 years ago put a half a billion dollars
in a parking lot in a pile and just burned it.
So my question is, why should we have any confidence that
the Air Force can manage space programs when we look at this
example, and what did we learn from this situation?
Mr. Lombardi. Sir, I would tell you that the Air Force
truly does understand the space business and understands how we
need to operate in space. The DMSP 20 example that you put out
is an unfortunate one in which you are absolutely correct, is
that we have at a point where we are not able to be able to
execute that satellite. But I would tell you that the Air Force
has a tremendous understanding of the entire space business,
and we are dedicated to be able to continue to provide that
capability for our Nation.
Mr. Rogers. You haven't convinced us, and this is a perfect
example.
In these times of austerity, when we are just struggling
trying to keep the Pentagon funded--and this committee fights
with the Congress constantly, trying to get adequate defense
spending--this kind of example kills us. This is just an
inexcusable waste.
But now moving on. And this is to any of the witnesses. We
have seen a number of cases where innovative acquisition
approaches have led to quick, very effective procurement of
desperately needed capabilities. One of the best examples is
the public-private partnerships allowed to build military
family housing with minimal upfront investment from the
taxpayer. We have also seen energy savings performance
contracts that have allowed us to build modern buildings and
leverage long-term energy savings with minimal upfront taxpayer
dollars. How can we extend these types of innovative
arrangements? Are there new types of innovation you believe are
needed, and most specifically, what statutory authority do you
need to ensure these type of arrangements receive fair
consideration?
Secretary Stackley. Let me start. I think we referred to
DIUx as an example of how we are trying to explore greater
access to innovation, where we are trying to engage with a
sector of our commercial technology, nontraditional for
defense. We get a better understanding of what makes them
successful, better understanding of what leading-edge
technologies are in their hands that could provide great
military utility, and perhaps more importantly is establish a
longer-term relationship with this sector.
Now in doing that, we have got to overcome some challenges
in-house. When we take commercial technologies and then try to
convert them to a weapons system, we have different standards.
That is really underlying much of the challenge that we deal
with today when we talk about innovation. There are very few
instances where we can just take a commercial technology and
carry it into war. But on the other hand, we have to take a
hard look at the standards that we apply for our weapons
systems to ensure that we are not placing excessive technical
burden that would preclude----
Mr. Rogers. You are missing my point. I am talking about
taking creative approaches to financing program procurement.
One of the things that I am hearing is that--CBO as well as the
OMB [Office of Management and Budget]--is the problem in
scoring, that we had to statutorily change the law so that the
military housing could be built by private money and paid for
over time. I guess I am looking for do you think we need
statutory change to try to approach procurement with financing
over a long period of time instead of paying for it in 1 year?
Do you need some legislative authority to do that? My time is
up. If you could respond in writing, I would appreciate that.
Secretary Stackley. I would just very shortly say that I
don't think there is a broad brush, but I think what we need to
do is have a discussion about the specifics of examples or
initiatives that we want to attempt because there are very
clear cases where scoring does stand as an impediment, and we
would like to bring the case.
Mr. Rogers. Thank you very much.
The Chairman. Ms. Sanchez.
Ms. Sanchez. Thank you, Mr. Chairman.
And thank you, gentlemen, for being before us. In reading
through your statements and listening to some of what you have
said, I am gathering that you are asking for more leeway. You
are asking for more money. You are asking for less--not
oversight--but less restrictions or requirements on how you
spend the money. I am probably one of the few members here that
gets to take a look at a lot of our classified programs where
we spend, for lack of being able to talk about it in open
session, billions and billions of dollars, where you have an
incredible amount of leeway, lots of money, of ability to make
prototypes, where it is okay to fail on our programs because we
are investing for the future. We are trying new technologies.
We are making new technologies. So if we would do that with
more of our budget, if we would have more ability to fail, have
less restrictions on the money, I think that I would see that
as the American public seeing a lot more big failures from both
our Pentagon and our military-industrial complex, which I think
would undermine the confidence that Americans have in what we
are doing with respect to defense.
And I have only to note, Mr. Chairman, the F-35 program,
which was a very open program where we tried new things, like
concurrently doing the development at the same time that we
were producing the product, which led to $700 billion overrun
and 7 years late, and we still have a lot of problems with it.
So I am trying to understand why you want more leeway. I
think we need to have actually more oversight. I think we have
to have a real audit of the Defense Department. I believe we
really need to tighten down in a tough budgetary environment
and make real choices. Choices aren't necessarily yours. They
are what we do in the Congress. That is what we are supposed to
do, but I would like you to speak to why advocate for more
relaxation of requirements and regulation on how we ask you to
spend this money?
Secretary Stackley. Let me start, ma'am. First, we are not
asking for more money.
Second, it is not that we are asking for more leeway and
fewer restrictions. What we want to be able to do is increase
the degree of prototyping and experimentation that we can do
and to shorten the timeline for developing our major weapons
systems. And we want to use this limited amount of prototyping
and experimentation to determine if we are on the right track
for a technology or a specific technical solution to our
warfighters' problem before we launch into major investment of
dollars.
So we are not proposing to invest large--first off, to
raise the top line, invest large dollars, and put great dollars
at risk. We are talking about a limited amount of funding to
determine before we invest the large dollars, before we come to
the Congress and ask you all to authorize and appropriate those
dollars, to see if we are on the right track.
And we are absolutely committed to doing this in broad
daylight with the Congress so you have full insight and
oversight to our efforts.
Ms. Sanchez. So, therefore, you would agree that doing
something like we did with the F-35, where we were concurrently
developing it and at the same time producing it, is not the way
to go, to stop going toward a major system until we do a little
prototype of it? Is this what you are suggesting, sir?
Secretary Stackley. I am absolutely not suggesting that we
should be increasing the amount of concurrence that we do in
terms of development and production at the same time. What we
want to do is reduce the risk, mature the technologies before
we get into that environment, make sure we are on the right
track.
We are, in fact, doing this today in limited cases. What we
want to do is make this a greater part of our practice. The
limited cases where we do it, we find success, and we simply
want to make that a greater part of our practice.
Ms. Sanchez. Well, I will have to think about that because
when I look at the classified arena, we, as you know, have a
lot of failures in going forward with some of those prototypes.
So I don't know that we would want to do that----
Secretary Stackley. Yes, ma'am. What I would be happy to do
is come back and walk through some examples of the prototyping
that we have done that has proven successful and how we move
from that to the next step, what that means in terms of
dollars, what that means in terms of the process that we use
and why it makes good sense. And how can we the Department
working with the Congress ensure that we are achieving our
mutual objectives in terms of time, in terms of money, in terms
of delivering capability, insight, and oversight.
Ms. Sanchez. Chairman, I thank you, first of all, for the
time. I think this is a very important issue for our committee
to really take a look at if this is what we are become asked to
do, and I think it would be very important also to get that
briefing from a classified perspective to see the paths we have
gone and have failed on because I think that is also a good
indicator.
The Chairman. There is good, bad, and ugly examples in the
classified arena, just as in the open arena.
Ms. Sanchez. Thank you, Mr. Chairman.
The Chairman. Mr. Wittman.
Mr. Wittman. Thank you, Mr. Chairman.
Gentlemen, thank you so much for joining us, and thanks for
your service to our Nation. I want to begin by laying out what
I think the landscape is today in acquisition in the United
States military. We look at our adversaries, and we look at how
they can deliver systems, how they can deliver innovation and
creation through new technology, and they start out with a
blank sheet of paper, with no impediments. When we start out,
we have a bureaucratic structure that starts out with a paper
full of noes. No, you can't do this. No, you can't do that. You
can do it this way, but you can't do it that way. And when we
end up in that environment, things become risk-averse. No
failure is accepted. And that is a fault not only within DOD
but also here on the congressional side, and we stifle the
innovation and creation that we need in order to keep up with
our adversaries because they don't have those impediments.
We operate in a structure today where the nirvana is to
become a program of record. Instead of saying no, the nirvana
needs to be to get technology to the warfighter as quickly as
possible. So we are lacking innovation and creation and getting
it there in a timely manner. The question then becomes, is how
do we make that happen? We have all talked a lot about process
here, and process is important, but let's not forget the
purveyors of process. That is people. How do we empower people
to make decisions, to not be so risk-averse that they say,
``Listen, it is better for me not to make a decision than it is
to make a decision where there is a risk or where there is a
mistake that is made'' and we quickly correct that mistake? How
do we empower people to make sure that they are on both ends
accountable and we give them the authority to say either say,
``No, this isn't working, let's take a different direction,''
or, ``Yes, this is working,'' or we see something out there off
the shelf that we can immediately put in the hands of the
warfighter to make them more successful? I would love to get
your perspective on, how do we go through that empowerment
process to create accountability and authority in the hands of
those people that are making things happen?
Secretary Stackley. Let me start. I think we are on that
journey. I think we have been on that journey for 40 years or
longer. It is a constant challenge. I am a former program
manager, and I understand what the limitations are. I
understand what the pressures are. I understand what the
authorities are in the hands of our program manager, and he is
really at the nexus. Nobody above him understands the details
as well as he does--he or she does--and nobody below him or her
understands the broader picture associated with our
requirements, budgeting, and procurement processes. So how do
you empower them? First and foremost, make sure they are
qualified. Make sure we have got the best people assigned to
those positions. In fact, one of the things that we have done
is we are double pumping some of our program managers. I am
taking a program manager, the Virginia-class submarine program
manager, who served for 4 good years in that job. He is
rewarded by becoming the Ohio Replacement program manager
because that is our number one priority, and, by God, that is
not a training ground. I want somebody that has been proven
successful. So he is in place there, and you know what he has
overseeing him, he has got me and the CNO. And we sit down
regularly with him to understand the path that he is on to
ensure that he has, one, our full support and the weight of our
positions behind him so that the organization is responsive to
him and, two, to make sure that he is on the right path.
So empowerment means first and foremost having qualified
people in the positions, and we are working on that across the
board. And, two, it is ensuring that the authorities, that
accountability, that the line of accountability is clear and
unambiguous, from the program manager [PM], PEO, the
acquisition executive, service chief, and the DAE [defense
acquisition executive], so that the weight of those offices and
not the staff surrounding them, is supporting the PM as opposed
to impeding the PM.
General Williamson. Sir, I would just like to add a couple
of comments to what the Secretary said. Again, you start with
making sure that you have a person who has been developed. But
there is also this notion--I keep coming back to this notion of
risk in the culture. So I am one of those people that actually
managed a program that some would consider to have been a
failure, but what we did, what I did was applied the due
diligence, followed the process where appropriate, and
challenged, also where it was appropriate. The difference is
that I am sitting here today. So at the end of the day, you
can't hatchet someone who has done the right thing, and as an
organization, as an enterprise, we have to make sure that that
is conveyed to our folks, that you have to be willing to take
risk, but it has to be measured risk. I don't want people
rolling the dice. I want people to collect data, be able to
support that data, and then execute to the best of their
abilities, and so that culture has to become a part of what we
do.
Mr. Wittman. Thank you, Mr. Chairman.
I yield back.
The Chairman. Thank you.
Ms. Duckworth.
Ms. Duckworth. Thank you, Mr. Chairman.
Gentlemen, thank you for being here. Headquartered in my
district is Northrop Grumman's electronics systems division,
and every time I visit the facility to see what they are
working on, I am always impressed by how well they have
leveraged the open architecture concept in what they are doing
from everything that they build from cockpit upgrades for Black
Hawks, to an array of surveillance systems, targeting pods,
electronic countermeasures. Everyone's testimony today has laid
out the importance and the value of employing open architecture
systems and how it is currently being used.
But beyond that, Mr. Lombardi, perhaps you could start
because in your testimony you say that despite all the great
work the Air Force has underway to enable modular open systems
architecture within our systems, to capture the full value of
an open architecture system, we must look at new approaches.
Could you share with us what these approaches are and how this
committee could be helpful in enabling this approach? And then
I would also like to hear from the other witnesses too on what
needs to change within the acquisition system to better enable
this open architecture approach?
Mr. Lombardi. Thank you, ma'am. In my statement, what I was
really referring to was with respect to more of our systems
that are more application-centric systems that have an open
architecture associated with that, and so really it was
changing the dynamic of using other transaction authorities to
be able to reach out and build a consortium where we could
actually reach out and get people who traditionally don't play
in our business, and so that was really what I was referring to
with respect to we need to look at--it is another approach. It
won't work for everything, and we know that, but there are
certain conditions in which having OTA [other transaction
authority] type of acquisitions will work because it will allow
us to broaden out where we are able to look for the right kind
of vendors to be able to provide us the right kind of
capabilities.
Ms. Duckworth. Okay.
General Williamson, perhaps you can address more directly
what you think we can do to make open systems use a priority
where appropriate in the design of weapons systems, and what
are the impediments?
General Williamson. Yes, ma'am. I am going to give you two
words. The first one is communications. That is the
communications with industry, and that is the communications
internally within your service for all of your programs. You
have to make sure you are communicating what those standards
are. As important as that word is, the real one is discipline.
So just declaring that you have standards is insufficient. So
everyone today, so it is very interesting, everyone today talks
about open systems architecture. I don't think there is a
requirement for anyone to tell us to use open architecture. You
really have to do that. If you want to do things so that you
have a growth potential, if you want to have competition in the
future to bring in components very quickly, you have to start
with an open architecture. Where I find difficulties is when we
talk open systems architecture, but then we will find a
component or a thing that we really like that is proprietary,
and then we adjust for that. And so you have to have the
discipline.
And the example I would use is something like Google. So
what is very interesting is when you look at all those apps
that are out there, there are hundreds of thousands of
applications that are built every single day, every year, but
there is a standard. If you want to build an app and you want
that app to work in that environment, you follow those
standards, or you don't get to play. We have to have that
discipline within our own organizations, not just for the
current systems but for future systems. And industry has to
believe that we are going to stay with those standards.
Ms. Duckworth. Good point.
Mr. Stackley, do you have anything to add?
Secretary Stackley. Yes, ma'am. I described in my opening
remarks the Acoustic Rapid COTS Insertion program that the Navy
launched into. Because we could not afford to upgrade our
submarine combat systems and the threat was outpacing us, we
had to break that model. So we took an incumbent that had a
sole source on our combat systems, and we broke it up. Now,
that was tough because the software is the key. It is not just
a hardware issue; it is a software issue. It took time to break
up the software, open it, and then make it accessible to third
parties to be able to compete and bring the technologies that
we needed to advance our capabilities to where they are today
and need to be. That model became the model for all of our
systems. And so today our standard is, in fact, we have an open
systems architecture standard that we drive into all of our
programs. We have been on this path for about a decade. The
challenge is the legacy systems. And those we upgrade by--we
convert to open standards through the upgrade path. When we
upgrade our existing systems, we look to open up at least that
portion of the system so that future upgrades and third-party
access to bring capabilities is made possible.
Ms. Duckworth. Thank you.
I yield back, Mr. Chairman.
The Chairman. Thank you.
Dr. Fleming.
Dr. Fleming. Thank you, Mr. Chairman.
Mr. Lombardi, I have a question for you, sir. I was
interested to learn about the example you gave in your
testimony regarding the communications and situational
awareness systems developed by Air Force's S&T Program at the
request of 20th Air Force and Global Strike Command. Could you
please describe that particular effort and what was learned
from it?
Mr. Lombardi. Yes, sir. Well, what that was, was again, as
we were going out to--having the capability to monitor out into
our missile fields, and so what this was able to do was provide
a network between the UH-1 helicopters, the ground teams in the
vehicles, and also at the sites themselves, to be able to
communicate in a better fashion, in one in which a network that
was a very capable network that we would be able to keep people
informed of any incidents that were happening along any of the
routes. And so it was something that our S&T folks put together
in a very rapid instance and everything. And so as what we have
learned from that is that, again, we can put out those self-
generating types of networks on a regular basis and do it
relatively easy. The issue long term we have to do is to make
sure that as we do that, how do we develop out the
sustainability and the support structures for those? And so
that is the learning that we have to do is our S&T community
does a great job in being able to provide rapid capability in
certain instances, but then we have to figure out, how do we
make this into a long-term, sustainable type of a system? And
it causes all the ``ilities'' that you have to have with
respect to that--the supply chain, all the sustainability and
so forth. Those are the things we learn as we deploy those
types of things. And then we test that, so it was something
that we could use to continue to refine that capability, and so
the lessons from that go back into the laboratory for them to
then look at a next generation as we look to move forward into
the future.
Dr. Fleming. So this situational awareness technology would
be the ability to talk and to text----
Mr. Lombardi. Right.
Dr. Fleming [continuing]. Ground to air--air to ground and
throughout the battle sphere, and it would seem that a lot of
that is off the shelf. It may have to be adapted. Would that be
the case?
Mr. Lombardi. A lot of it is, but a lot of it is, as a lot
of the things that we do, there are a lot of things that are
off the shelf. The issue is the integration associated with
that, and that is where a lot of times the real magic occurs,
is, how do we integrate these types of capabilities together to
form a system? And so while there is a lot of things that we
can do to take off the shelf, it is still a lot of the hard
part is the actual integration to make them into a true system.
Dr. Fleming. Right. How long was the prototyping process,
and is there anything in your view that would have helped speed
up that process?
Mr. Lombardi. Sir, if I could, I would like to take that
for the record and get back with you on the exact timeline in
which we did and if there is something we learned associated
with that, if you don't mind.
[The information referred to can be found in the Appendix
on page 85.]
Dr. Fleming. Okay. Thank you.
I yield back, Mr. Chairman.
The Chairman. Dr. Wenstrup.
Dr. Wenstrup. Thank you, Mr. Chairman.
I appreciate you all being here today. I think it has been
very informative. I want to ask the general a question about
the defense acquisition workforce, and I give it high marks,
and I am pleased to see that because it does make a lot of
sense to me to go in that direction and to have a trained
workforce.
And one of the other comments I heard today was concern
about our access to commercial technology because of the
bureaucracy. Do you think it would be wise to work within that
group, that trained workforce, for them to make recommendations
to, as you called it, a tightening up of the process? I am
familiar with the process. It is a good set of checks and
balances, but very time-consuming and there may be steps that
can be expedited or skipped. Would they be a good source to
recommend changes there?
General Williamson. Sir, that is a great observation. You
know we always want to reach out to the workforce. There are
two areas that I think they provide a lot of insight. As you
know, part of what drives the process, part of what drives the
system, are really two areas: Fairness, how am I making sure
that this process is fair, meets regulations? And then how am I
reducing risk throughout this process? So just like on
production lines out in industry, you should go to the folks
who are actually doing the work and take recommendations from
them.
Now, we do have some feedback mechanisms to do that, but I
think to your point, that is something that we need to go back
out. So I think the language that we received in this most
recent NDAA gives us a lot of opportunities to improve the
acquisition system. What we have to do is leverage that, go
back out to the communities and see how we can improve within
our own selves before we come back and ask for something else.
Dr. Wenstrup. And I think what is attractive amongst that
group is there is so much of a crossover of uniformed and
civilian employees, and maybe some came from the private
sector, right. And I am asking more than saying. But it seems
to me that that would be a good mix of people in cooperation
with the private sector folks. How can we change this system to
make it still very effective, still reducing risk, but get the
job done sooner?
General Williamson. Yes, sir. So I think you are right. In
terms of the best practices, so your point is a good one that I
need to make sure I take away. And that it is not just from the
government civilians that we have as well as the uniformed, but
we also have defense contractors and other folks who have a set
of best practices. We always take a look at how we incorporate
those, but we also have to make sure that we are looking beyond
our own borders to see whether there are improvements that we
could make.
Dr. Wenstrup. Currently, do they have an opportunity to
weigh in with us, the outside components?
General Williamson. I get lots of feedback from my industry
partners.
Dr. Wenstrup. I am sure you do in one way or the other, but
I mean in a constructive way.
General Williamson. I think I would offer that it is
probably not as formal as I think you are leaning toward. There
is always a tremendous amount of interaction between program
managers and their industry counterparts and then across all of
the functions within a program office. I think what I would
look at is, how is that done structurally in a more formal
manner?
Dr. Wenstrup. Okay. Well, I thank you very much.
I do have another question for you, Mr. Stackley. I have
become aware that our only source of domestic enriched uranium
and tritium, which you know you need to acquire for our nuclear
subs, the DOE [Department of Energy] is going to shut that
down, and we will not have a domestic source. Does that concern
you from an acquisition standpoint?
Secretary Stackley. Sir, I am actually not aware of that.
Dr. Wenstrup. I will follow up with you.
Secretary Stackley. Yes, sir. You might be referring to a
company called USEC.
Dr. Wenstrup. Formerly called.
Secretary Stackley. Formerly called USEC. If that is the
case, that is a separate issue which I would be happy to
discuss with you in detail offline.
Dr. Wenstrup. Okay. We will pick another time. Thank you,
sir.
And I yield back.
The Chairman. Mr. Coffman.
Mr. Coffman. Thank you, Mr. Chairman.
Mr. Lombardi, from an acquisition perspective, the past
efforts of the C-130 modernization program seem to have been
problematic. For example, DOD's fiscal year 2016 budget
justification reflects an acquisition cost of approximately
$4.6 million per plane for the installation of the air traffic
management upgrade that has already been done for commercial
and other government variants of the C-130 for under $800,000.
Can you explain why the government solution is over five
times the cost, and could this be a good opportunity to look at
experimentation with existing commercial solutions?
Mr. Lombardi. Yes, sir, it is an area where we could look
at experimentation with commercial solutions. And, in fact, I
believe we are. And what I would like to do, if I could, is we
would like to come back with you with our plan on how we are
actually going to upgrade and provide that capability into the
C-130s.
We have been out on the Hill discussing with certain
Members with respect to how we need to modernize and provide
that capability, and we would like to be able to provide that
information to you as well.
Mr. Coffman. Thank you. I look forward to seeing that.
And then for any of you, for all of you, the protection of
intellectual property [IP] rights appears to be a significant
issue in terms of successful adaptation or adoption of the open
system architecture. How would you suggest a balance be
reestablished between a DOD structuring of competition and
industry's business models, including IP rights to recover
investment in commercial and privately funded technologies?
Who wants to start with that? Mr. Stackley.
Secretary Stackley. I will start with that, yes, sir.
First, when you go to open systems, it is a business model
and it is a technical model. And the business model brings into
question the data rights associated. Our view is that if the
government has paid for the development of software, the
government should acquire the data rights with that software.
If somebody is bringing in software to a system that they
developed, then, frankly, that is a discussion with that
element of industry in terms of whether or not we, the
government, feel like we need the data rights to that software,
and then how would we go about acquiring that with industry.
So it is a business model. If we pay for the software
development, we should be acquiring the data rights as we pay
for that development. If we have failed to do so, for whatever
reason, and downstream now we need to upgrade or add
capability, then we are reopening a contractual discussion with
that contractor in terms of data rights on the software.
So we have to be very careful that we are not chasing away
industry when it comes to data rights and intellectual
property, so we have to do a better job of having that dialogue
and communication. But if we have paid for it, in fact, we
should be acquiring the data rights with it.
Mr. Coffman. General.
General Williamson. Sir, if I could just add, I just wanted
to add to what the Secretary said. So what I have discovered is
that in many cases this gets to the communications piece. I
have discovered there is a lot of urban legend about what the
government owns and when you deal with them.
And so when I talked about this exposure and these
communications that we are having with nontraditional defense
contractors, we are finding that there is this myth that they
are going to lose their IP. And case by case, you have to have
that discussion. We have to do a better job of communicating.
And there are some cases where there have been specific
algorithms, a specific technology that you are bringing that
you should protect. And if we want it, we should pay for it.
But you have to get rid of the myth first and understand the
specifics of what we are talking about.
Mr. Coffman. Mr. Lombardi.
Mr. Lombardi. Yes, sir. I think what both of the panel
members have said is absolutely correct, is that there is a lot
of dialogue that has to occur to understand really where the
myths are because we have seen that in the past where people
will just say that we own the data rights. And as we peel back
the onion on it, we find out whether we have or have not paid
for those.
And so it is really something that we need to continue to
explore, but it is a real good communication to have with the
program office and the contractor to be able to really get to
the meat of where the real ownership of the data really is.
Mr. Coffman. Okay.
Secretary Stackley. I will add one thing, and that is, we
have become much smarter about data rights, and we are having
that dialogue much earlier in the procurement process so that
we are not downstreaming while hung up.
Mr. Coffman. Thank you, Mr. Chairman.
I yield back.
The Chairman. I will just add, if it is all a myth, you all
really do have work to do, and not just on software, because
the perception in industry--and this comes from some of the
announcements that Mr. Kendall has made--is that DOD is going
to suck up all the intellectual property, and they are going to
own it forever. And it is a real issue. And I appreciate the
gentleman bringing it up.
Mr. Bridenstine.
Mr. Bridenstine. Thank you, Mr. Chairman.
Mr. Lombardi, according to your testimony, the Air Force
views experiments as campaigns of activities rather than one-
off events and focused on specific missions such as close air
support and air superiority rather than specific programs of
record. In most cases, if experiments are not directly tied to
programs of record, my question is, how are they funded?
And as an example, how are you funding the close air
support experimentation campaign?
Mr. Lombardi. Yes, sir. In my statement, what I was really
referring to was our process on developmental planning. And so,
as I have mentioned before, developmental planning is really
kind of a team sport where you have the requirements, the user,
the S&T community, and the acquisition community coming
together before we even know that there is going to be a
material solution.
So, therefore, we are not even sure that there is going to
be a need for a program of record. What we are really trying to
do is understand, what is the user's need, and what are the
best ways to be able to approach that? It may be continuing to
invest in some areas of S&T. It is starting to do some
prototyping. It may be that it is just simply a CONOPS change
on some technology that is already available.
And so therefore----
Mr. Bridenstine. Can you help me understand, where does the
funding come from?
Mr. Lombardi. The funding is really in our 6.4 line then,
and it is what--we have a line that talks about technology
transfer. And so, therefore, it is not necessarily tied
specifically to a program of record yet, but it is an area
where we continue to do our working to determine whether we do
need a material solution or not.
Mr. Bridenstine. Okay. That is good.
I want to talk specifically about one particular
experimentation that has been going on as it relates to space.
And that is the Joint Interagency Combined Space Operations
Center [JICSpOC], which, of course, was stood up with General
Hyten and Doug Loverro. And, of course, you know, Deputy
Secretary Work, it was his brain child.
And I think what is happening there is critically important
for our country. The idea that we can fuse all of these
different sensors from the DOD to commercial industry to
combined from our joint and coalition partners and other
sources--the intelligence community, for example--getting all
this information into one area and then experimenting to
determine, you know, what are the threats that we face? How do
we attribute those threats? How do we ultimately combat those
threats?
Could you share with this committee as far as the JICSpOC
goes, how important are those experiments, and maybe not
exactly what you have learned, but how important is it that we
continue doing that?
Mr. Lombardi. I think it is greatly important. Again, I
think, as you characterized it, sir, is that both the DOD and
the intel community recognize a need to have to work together
to be able to share important information across the national
security space enterprise.
And so by virtue of bringing the right players together, we
are actually doing this experimentation, as you mentioned, that
began this past October and is, I believe, going to be
completing in the May timeframe. And so at least that is the
first phase of it.
And from that, then General Hyten and also USSTRATCOM [U.S.
Strategic Command] all will come together to kind of take a
look and see, what have we learned from this? But the initial
phase has really been to try and understand how the
interrelationships would be and how they are moving forward.
And so as we move forward with this, I know this is an area
of interest for you, is as we get to a point where we have good
information to be able to come forward, I think it would be
very helpful to come see you and be able to provide you an
insight on where we are at.
Mr. Bridenstine. Great. The transition from what we learn
in these experiments--and we need to understand kind of what
comes out of those experiments, learning from that and then
transitioning to an operational capability, which, of course,
in many cases is going to require funding that we are going to
have to advocate for; I mean, that is critically important.
I have got about 31 seconds left. I want to emphasize that
I would like to see the JICSpOC in the President's budget
request. I don't know if you can help with that, but those
kinds of activities in there would be good.
Finally--I have got 18 seconds left--the DMSP 20, which we
heard Chairman Rogers talk about, it is a big challenge. Would
you be open to, for military weather purchases, purchasing data
from commercial industry rather than purchasing $500 million
satellites that ultimately sometimes end up being destroyed?
Mr. Lombardi. I think, as we have looked at things in the
past, we have used both civil and our international partners to
be able to gather information with respect to weather
information, so forth. And so we will continue to look at all
aspects with respect to how we can provide capability to our
Nation with respect to these areas.
Mr. Bridenstine. Thank you, Chairman.
The Chairman. Thank you.
I appreciate you all. I think we have touched on a number
of important topics today. I look forward to seeing the
President's budget request, but as you can tell, the committee
is not going to be content just seeing what comes over. We want
to continue to work with each of you on a number of ideas and
initiatives that we have to help push the whole system toward
more agility.
So, with that, we, again, appreciate you all being here,
and the hearing stands adjourned.
[Whereupon, at 12:15 p.m., the committee was adjourned.]
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A P P E N D I X
January 7, 2016
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PREPARED STATEMENTS SUBMITTED FOR THE RECORD
January 7, 2016
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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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WITNESS RESPONSES TO QUESTIONS ASKED DURING
THE HEARING
January 7, 2016
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RESPONSE TO QUESTION SUBMITTED BY MR. WILSON
Secretary Stackley. In the past, DOD has funded studies on the
practicality of SMR technologies for military installations which found
that safety, certification, and licensing of SMR technologies take
considerable lead times before deployment. In response to FY14 NDAA
guidance, OSD chartered a Defense Science Board study to examine the
``feasibility of deployable, cost-effective, regulated, and secure SMRs
with a modest outpost of electrical power.'' The OSD study is expected
to review SMR deployment challenges on security, siting requirements
and timelines, regulation, long term solutions for spent fuel storage,
and cost. Navy Secretariat, OPNAV, and Navy Reactors subject matter
experts have been actively participating in this effort. We look
forward to seeing the results and recommendations coming out of this
Defense Science Board study.
There are a number of licensing and operational issues that will
need to be resolved before small nuclear power plants could be
available for use by DOD. Recognizing this, DOD is also following
advancements in SMR technologies which DOE is pursuing and will
continue to collaborate with DOE as this technology advances.
As an example, DOE and the Nuclear Regulatory Commission (NRC)
created a SMR Licensing Technical Support program to promote the
accelerate deployment of SMRs through cooperative agreements with
industry partners. The first agreement in this program was awarded to
the mPower America team of Babcock & Wilcox in November 2012, and the
second round of funding was awarded to NuScale Power in December 2013.
NuScale expects to submit the application for design certification in
the second half of 2016 and anticipates their project to be operational
by 2023-2024. B&W scaled back funding for their program in April 2014
and plans to continue low-level R&D on mPower technology. DON stands
ready to support the DOE and NRC as may be required. [See page 21.]
______
RESPONSE TO QUESTION SUBMITTED BY MR. TURNER
Mr. Lombardi. The contracting function of BIG SAFARI remains within
the 645th Aeronautical Systems Group, Wright-Patterson AFB, Ohio (645
AESG, WPAFB), the organization that oversees the BIG SAFARI portfolio
of programs. The 645 AESG Commander is appointed the System Program
Manager for BIG SAFARI programs, and the contracting professionals for
BIG SAFARI support the portfolio within the 645 AESG at WPAFB.
The leadership within the Air Force Life Cycle Management Center
and 645 AESG are not aware of, nor are pursuing, any movement of the
BIG SAFARI contracting support out of the 645 AESG at WPAFB. The
current contracting function is a key ingredient in enabling BIG SAFARI
to meet a multitude of users demanding mission needs in an extremely
timely manner. [See page 24.]
______
RESPONSE TO QUESTION SUBMITTED BY DR. FLEMING
Mr. Lombardi. The prototype delivered to 20th Air Force and Air
Force Global Strike Command was developed through the Air Force
Research Laboratory (AFRL) Rapid Innovation Process, within the Air
Force S&T program. After receiving authority to prototype a specific
design concept from the AFRL Commander, the prototype was delivered to
20th Air Force and Global Strike Command in six months. Prior to
receiving authority to proceed, the AFRL Rapid Innovation Team worked
closely with the user to analyze the needs, gaps and shortfalls in
order to define solution options.
In this case, the process was on target to meet the user needs.
Because the user problem was framed correctly. Framing a problem
correctly involves several areas, including needs decomposition, and
identification of operational objectives, constraints, environment and
standards. Prioritizing these efforts ensures an operationally suitable
solution is identified that has a clear impact on operational
effectiveness and efficiency.
User involvement in needs analysis, solution conceptualization, and
prototype development enables delivery of a suitable prototype with all
the right attributes to satisfy the user need. Furthermore, a rapid
spiral development process that incorporates experimentation and
prototyping allows the design to evolve quickly based on lessons
learned during operations.
The Air Force has a successful history of developing rapid
innovations to respond to senior leader-identified urgent needs. We
continue to diligently refine our processes based on lessons learned
over nearly a decade of such projects, and continue to carefully
optimize the processes to rapidly produce cost-effective and
operationally suitable prototypes. [See page 36.]
?
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QUESTIONS SUBMITTED BY MEMBERS POST HEARING
January 7, 2016
=======================================================================
QUESTIONS SUBMITTED BY MR. THORNBERRY
Mr. Thornberry. During the hearing, witnesses expressed concern
about the need for research and development funding, and additional
flexibility in how funding can be used, to conduct experimentation and
prototyping outside programs of record.
a. What factors limit the use of 6.4 funding (Advanced Component
Development and Prototyping)? b. If more flexibility were provided so
that budget requests require less specificity about experimentation and
prototyping efforts, what oversight mechanisms would you employ to
ensure funds are used appropriately? c. To what extent is Other
Transaction Authority used in your service for experimentation and
prototyping efforts? Is it an effective approach for expanding these
efforts?
General Williamson. There is a long standing institutional barrier
and culture of resistance to funding prototypes for concepts the Army
needs to evaluate but may not buy. Prototyping for risk reduction and
competition for formal programs has been more successful. The biggest
barrier is that the Army does not have enough funds for the prototyping
and experimentation that the Army needs to do early in the lifecycle.
A good example for governance and oversight is the Executive
Steering Group that maintains oversight of the Technology Maturation
Initiative program. The Technology Maturation Initiative is a
prototyping, budget activity 4 account the Army stood up under the
authority of the DASA(R&T) to develop prototypes to reduce technical
risk, inform concepts and reduce integration challenges to programs of
record. The objective of the Technology Maturation Initiative program
is to facilitate the transition of priority technologies at reduced
cost and risk or evaluate the concept or use of new technologies. This
is done by partnering S&T with acquisition program offices to further
mature, prototype and validate emerging technologies prior to Milestone
B.
Army Science and Technology uses the Ground Vehicle System (GVS)
Other Transaction Authority (OTA) to focus on vehicle and robotics
technology research, development, test and evaluation projects. The GVS
OTA mechanism facilitates collaboration and innovative technology
development with industry, academia, and other Services and allows us
to leverage Industry Research and Development Funding. The OTA
mechanism allows a wider base of industry and academia partners to
develop more rapid responses to DOD Warfigher requirements.
Specifically, the Army is using this OTA for our Modular Active
Protection Systems and Combat Vehicle Prototyping programs, among other
efforts. Having OTA options and opportunities for prototyping opens
additional possibilities to traditional contracting methods.
Mr. Thornberry. Witnesses stated that a culture that is open to
failure is necessary to foster experimentation and innovation, and
ensure DOD retains its technological edge. What steps do you suggest
Congress and the services take to move the culture toward one that is
more willing to accept failure?
General Williamson. As I alluded to during the hearing, if we want
our potential enemies to achieve parity with regard to our
technological military advantage, we should only pursue low risk
technologies. To maintain our technological edge, we must be willing to
accept more risk in pursuit of innovation and learn to tolerate
occasional failure to that end. Today, when our brightest minds in
government push the envelope and fail, it too often leads to the abrupt
end of that technological pursuit. In the Services, it is increasingly
difficult to defend the funding of a program perceived as marred by
failure, particularly in an environment of limited resources and
competing priorities. In Congress, failure is met with budget cuts or
restrictive language in condemnation of a program perceived as flawed.
The end result is an institutional culture that has become too risk
adverse and has created perverse incentives that are driving our most
innovative talent out of government and into the arms of industry.
Both the Services and Congress must first recognize that they are
part of the problem, and then work hand-in-hand to encourage a culture
that is more tolerant of risk and willing to accept failure, so long as
it can be justified. Accountability remains paramount. Risk must be
carefully calculated, our choices should be well informed, and when we
fail we must be able to demonstrate measurable progress toward greater
goals.
Mr. Thornberry. During the hearing, witnesses repeatedly expressed
concern about the need for the S&T, acquisition, and war fighter
communities to work together early and often. What are the barriers to
achieving more effective collaboration?
General Williamson. The different levels of risk tolerance across
the S&T, acquisition and warfighting communities can hinder effective
collaboration. I believe we have made significant progress on achieving
better collaboration between the S&T, acquisition, and warfighter
communities through our Long-range Investment Requirements Analysis
(LIRA). The LIRA is being used within the Army to facilitate more
informed program planning and budget decisions and strengthen the ties
between the S&T community and their Program Executive Office (PEO) and
Requirements community partners. We continue to work to refine this
process, and tie in a broader set of stakeholders, such as the
intelligence community, to ensure maximum collaboration across the
Army.
Mr. Thornberry. During the hearing, witnesses expressed concern
about the need for research and development funding, and additional
flexibility in how funding can be used, to conduct experimentation and
prototyping outside programs of record.
a. What factors limit the use of 6.4 funding (Advanced Component
Development and Prototyping)? b. If more flexibility were provided so
that budget requests require less specificity about experimentation and
prototyping efforts, what oversight mechanisms would you employ to
ensure funds are used appropriately? c. To what extent is Other
Transaction Authority used in your service for experimentation and
prototyping efforts? Is it an effective approach for expanding these
efforts?
Secretary Stackley. Factors for Budget Activity BA4 (6.4), Advanced
Component Development and Prototyping funds, are provided and defined
by the Department of Defense Financial Management Regulations to cover
efforts necessary to evaluate integrated technologies, prototype
systems in a high fidelity and realistic operating environment. The
intent is to expedite technology transition from the laboratory to
operational use. Emphasis includes component and subsystem maturity
prior to integration in major and complex systems. In addition, some
BA4 (6.4) funds are tied to programs of record, so the Department of
the Navy (DON) is working to establish BA4 (6.4) funds that are not
aligned to programs of record to further address Fleet needs and
priorities.
b. Internal to the DON, governance and oversight for rapid
prototyping experimentation and demonstration (RPED) will be provided
by the DON RDT&E Corporate Board. This Corporate Board is comprised of
ASN (RD&A), the Vice Chief of Naval Operations, and the Assistant
Commandant of the Marine Corps. The RPED process includes briefing the
Corporate Board on actions being pursued as part of prototype
selection. The Corporate Board will be notified of the need, the
prototype, and RPED execution strategy, including financial execution.
Upon identifying a prioritized Fleet need and selecting strategy and a
prototyping plan, the DON will notify Congress and provide information
on the identified need, the prototype being pursued, and a short
summary of plan of actions and milestones.
c. In the DON, the Other Transaction Authority (OTAs) awarded or
active in FY2010-FY2014 totals $143.4 million. OTAs provide one of
several contracting options for prototyping and experimentation, and
will be considered when developing prototyping and experimentation
strategies and plans.
Mr. Thornberry. Witnesses stated that a culture that is open to
failure is necessary to foster experimentation and innovation, and
ensure DOD retains its technological edge. What steps do you suggest
Congress and the services take to move the culture toward one that is
more willing to accept failure?
Secretary Stackley. Supporting rapid prototyping and
experimentation is an important step in moving the culture in DOD. The
Navy and Marine Corps leadership has embraced this idea and recognizes
that even when prototyping efforts do not result in increased
capability, technical insight is gained as part of the discover,
develop, transition, and field cycle. It is important that Congress
recognizes that every prototyping effort is an opportunity to ``learn
fast,'' push the technological envelop, and inform requirements,
budget, and acquisition decisions. This recognition will contribute to
moving the culture.
Mr. Thornberry. During the hearing, witnesses repeatedly expressed
concern about the need for the S&T, acquisition, and war fighter
communities to work together early and often. What are the barriers to
achieving more effective collaboration?
Secretary Stackley. There are no major barriers, but there are
collaboration challenges typical of separate communities with different
functional roles. A key element of the DON's rapid prototyping
initiative is the active and continuous interaction between the Fleet
operators, planners, and requirements developers and the scientists and
engineers from across the Naval Research and Development Establishment
(NR&DE). Continuous interaction between these key communities enhance
and expedite crucial collaboration (technical and operational),
minimizing barriers to the delivery of new capabilities to the Fleet.
The Fleet will be a part of senior leadership prototyping decisions and
continue their involvement throughout the experimentation and
demonstration phase.
An additional approach to further enhance collaboration is the use
of multi-day Fleet engagement workshops involving key communities.
These workshops are held prior to prototype development to explore
emerging technologies, engineering innovations, and advanced
warfighting concepts.
The Chief of Naval Operations recently established Warfighting
Development Centers to develop advanced tactics, training and
procedures, conduct training and warfighting effectiveness assessments,
set and enforce performance standards, and identify and mitigate
warfighting gaps. Operators from these newly established Warfighting
Development Centers are integrated into the prototype development and
experimentation teams to further enhance collaboration and expedite
delivery of new capabilities to the Fleet.
Mr. Thornberry. During the hearing, witnesses expressed concern
about the need for research and development funding, and additional
flexibility in how funding can be used, to conduct experimentation and
prototyping outside programs of record.
a. What factors limit the use of 6.4 funding (Advanced Component
Development and Prototyping)? b. If more flexibility were provided so
that budget requests require less specificity about experimentation and
prototyping efforts, what oversight mechanisms would you employ to
ensure funds are used appropriately? c. To what extent is Other
Transaction Authority used in your service for experimentation and
prototyping efforts? Is it an effective approach for expanding these
efforts?
Mr. Lombardi. a. The primary limiting factors we see in the use of
our 6.4 (Advanced Component Development and Prototyping) funding are
institutional and cultural, both of which can be overcome through
enhanced Service-wide and DOD-wide understanding. Historically, the
expectation is that 6.4 funds will be used to address the technology
development and maturation needs or performance requirements associated
with a particular capability, according to a planned budget. Therefore,
funds in this budget activity without clear or unambiguous traceability
to a specific program plan and/or major shifts in the capabilities
being focused on are sometimes subject to premature cuts or
elimination. We're working to shift to a more agile mindset where we
are able to use knowledge gained from our experimentation and
prototyping efforts to inform the use of our 6.4 funding closer to and
during the year of execution. We're working closely with our planning,
programming, and budgeting process stakeholders to ensure the need for
this type of flexibility is understood and can be communicated
accordingly.
b. Air Force senior leadership provides strategic direction for our
experimentation and prototyping efforts and we believe this oversight
provides the requisite discipline and accountability in this spending.
We will maintain transparency by ensuring that our budget documentation
for these efforts clearly describes the nature and type of
experimentation and prototyping activities. At the same time, the
documentation will still provide us the space to explore new ideas,
concepts, and technologies, with the assumption that some may not work
or be feasible.
c. Currently, Other Transaction Authority is not highly utilized
within the Air Force; however, we do think it could be an effective and
powerful tool for our experimentation and prototyping efforts. We
recently established an Other Transaction Consortium for use in
acquiring open architecture systems for Air Force programs. We
successfully demonstrated this with the Air Force's Distributed Common
Ground System (DCGS) program and are on track to fulfill other Air
Force requirements in FY 16. We plan to grow the effort in future years
and are investigating other areas where we can use Other Transaction
Authority.
Mr. Thornberry. Witnesses stated that a culture that is open to
failure is necessary to foster experimentation and innovation, and
ensure DOD retains its technological edge. What steps do you suggest
Congress and the services take to move the culture toward one that is
more willing to accept failure?
Mr. Lombardi. We know we cannot accept failure in carrying out our
core Air Force missions critical for the security of our Nation.
However, we want to emphasize that this is different than overcoming
the fear of attempting difficult things, some of which may fail or turn
out differently than expected. As many others have noted, we live in an
era marked by great complexity and rapid change. Ensuring mission
success in the future means we cannot become complacent or be afraid of
exploring new ideas and concepts. We must rigorously challenge
currently accepted ways of fighting and continually learn, innovate,
apply, and adapt. The Air Force must become more of a learning
institution and one of the steps we're using to get us there is
employment of experimentation. Experimentation enables the exploration
of new concepts to understand the interplay of combinations of
technologies, organizations, and employment, and doing so rapidly and
cost effectively. We must not be afraid of trying out innovative ideas
and failing; we must test such innovative ideas to their breaking point
so we can understand weaknesses, vulnerabilities, and causes of
failure. We believe instituting a culture of experimentation, with
those experimentation activities supported by Congress, will help us to
better learn, adapt and field the next generation of game-changing
warfighting capabilities.
Mr. Thornberry. During the hearing, witnesses repeatedly expressed
concern about the need for the S&T, acquisition, and war fighter
communities to work together early and often. What are the barriers to
achieving more effective collaboration?
Mr. Lombardi. The Secretary and Chief of Staff have initiated
Enterprise Capability Collaboration Teams (ECCT) to facilitate
development planning for our highest-priority mission areas. We are
using this ECCT approach to break down collaboration barriers in the
exploration of alternatives and formulation of recommended courses of
action (COAs). These alternatives and COAs will inform decisions on new
capability development and enterprise affordability spanning both
materiel and non-materiel solutions. ECCTs bring cross-functional users
of core mission areas together with requirements, acquisition and S&T
communities to collaboratively examine and comprehend operational needs
and then formulate and explore new multi-domain concepts and
capabilities that may address those needs. The members of ECCTs are
highly motivated, innovative and empowered. They leverage knowledge and
expertise residing in the Air Force acquisition enterprise, the DOD
laboratory enterprise, Federally Funded Research and Development
Centers, academia, and industry, as appropriate.
______
QUESTIONS SUBMITTED BY MR. SHUSTER
Mr. Shuster. One of the concerns I have heard from my district is
that there is a lack of visibility for smaller contract suppliers, and
that often the relevant people at the Pentagon are not necessarily
aware of the benefits or drawbacks of some smaller components purchased
as part of a larger contract. Indeed, the 2012 panel on Business
Challenges in the Defense Industry that I helped lead found that DOD
lacks the ability to track small business participation at the lower
subcontract tiers. Do you think this is still the case? And how do you
believe we can properly ensure that if a smaller company makes a good
product, it is properly recognized when so much of the focus is on
bigger ticket items?
General Williamson. The FY14 National Defense Authorization Act
provided a means for prime contractors to report small business
participation at the second and third tiers, in addition to the first
tier. This reporting requirement, once fully implemented, will provide
greater visibility of small business participation at those levels.
As part of the Better Buying Power initiative, Program Managers
(PMs) are encouraged to collaborate with the Small Business Innovative
Research (SBIR) and Small Business Technology Transfer (STTR) PMs to
review new technology that can be incorporated into their SOR
throughout its acquisition life cycle. The Army Office of Small
Business Programs (OSBP) participates in the Army System Acquisition
Review Council (ASARC) to advocate for maximum opportunities for small
businesses throughout a system's acquisition life cycle. During ASARC
meetings, OSBP encourages PMs and Contracting Officers to consider
including contract incentives for prime contractors if they exceed
their small business subcontracting goals.
Mr. Shuster. In 2012 I helped lead a panel on Business Challenges
in the Defense Industry, and at the time one of the issues we
discovered was that small and midsize businesses face particular
challenges in contracting with the Department of Defense. At the time
of the panel, DOD had been unable to meet its small business Federal
procurement goals. Has this situation changed, to your knowledge, in
the last three years, and what further steps do you intend to take to
ensure participation of small and medium sized businesses in DOD
contracting?
General Williamson. The Army is committed to contracting with small
business and has achieved its statutory goals for three consecutive
years. In FY15, 31.6 percent of all Army contracting actions, valued at
$17.5B were awarded to America's small businesses. The Army exceeded
its annual goal of 26.5% for small business awards by 5.1 percent.
The Army led the way for DOD in achieving its statutory assigned
goals for FY15. For the third consecutive year the Army met all five
statutory goals. Similarly, all assigned goals in the different small
business categories were exceeded; for example: the small disadvantaged
business goal achieved was 15.5% exceeding the 11% goal; service-
disabled veteran-owned business goal achieved was 4.75% exceeding the
3% goal; the Historically Underutilized Business-Zone goal achieved was
3.32% exceeding 3%; and the women-owned small business goal achieved
was 5.85% exceeding the 5% goal.
The Army continues to focus on small business participation across
the enterprise at the prime and subcontractor levels. Army small
business is concentrating on outreach and increased internal advocacy
for small business involvement in contracting. Focus areas include
improving market research to better enable contracting personnel to
find capable small businesses. The Army is also leveraging the Mentor
Protege program to foster more relationships between large and small
businesses.
Mr. Shuster. One of the concerns I have heard from companies in my
district and that was also brought to light in our panel on Business
Challenges in the Defense Industry is that the ever-changing nature of
the laws and regulations governing defense acquisitions can make it
difficult for companies with limited resources to stay abreast of the
changes that could impact their business strategies. This places larger
companies with teams of contract attorneys at a competitive advantage.
How do you think we can bring greater streamlining and transparency
this maze of rules and regulations?
General Williamson. The implementation of Better Buying Power (BBP)
focuses on many of these issues. The Army acquisition community is
focused on streamlining the processes, removing barriers and investing
in our acquisition workforce. The Army is working to address the
complexities of acquisition to include, reexamining statutory and
regulatory requirements, the reduction of which will improve
responsiveness and agility.
The Army continues to leverage use of commercial items and
streamlined practices to eliminate costs unique to DOD/Army in order to
capitalize on existing commercial capabilities. Commercial acquisition
by its nature, is streamlined and more closely resembles rules in the
commercial marketplace. Army is also increasing use of its Other
Transaction Authority in the areas of R&D and prototyping to attract
businesses that would not otherwise do business with the Government.
OTAs are not a ``one size fits all'' and provide relief from Federal
Acquisition Regulation based rules making them more flexible and
attractive methods to bring new sources of technical innovation to the
Department quickly and economically.
Since the implementation of BBP, there has been a steady increase
in the number of small businesses doing business with the Army,
indicating an increase in streamlined arrangement. In FY15, the Army
awarded 31.6 percent valued at $17.5B to small businesses whereas in
FY11 small business represented only 22 percent of eligible dollars.
Mr. Shuster. An issue raised by companies doing business with DOD
in my district is that there is no incentive for large companies and
contractors holding multiple year contracts to seek out the newest,
most advanced and less expensive products, even when it would save
taxpayers millions of dollars. Is there someone keeping an eye on such
advancements when developing projects and upgrades, as well as
allocating tax payer monies to them? If so, how do they approach this
problem? Would a move to more open system architecture provide greater
flexibility in this area?
General Williamson. A key tenant of Better Buying Power (BBP)
initiatives is to use appropriate incentives. The Army has and
continues to implement BBP initiatives and apply appropriate
incentives. One example is to align profitability with contractor
performance and reward successful contractors by using special
incentive fee structures. The Army also makes effective use of value
engineering (VE) change proposals to reduce costs, increase quality,
and improve mission capability. Whether voluntary or required by
Federal Acquisition Regulations, the VE program assists with saving
costs as well as benefiting technology insertion.
The Army maximizes use of commercial products and services to keep
pace with technology. In addition, the Army uses Other Transaction
Authority (OTA), a flexible arrangement not subject to Federal
Acquisition Rules, over traditional contracts to seek new technologies
and innovation from industry. Use of these agreements are attractive to
nontraditional contractors as well as traditional contractors as the
Federal and Defense Acquisition rules do not apply. OTAs foster
collaboration on the best approach for developing and leveraging
commercial technology and R&D.
The Army follows the DOD open systems architecture (OSA) laid out
in the Defense Acquisition System Regulations (5000 series) and
structures its contract language to target areas that foster open
architecture (e.g., continuous competition, seeking data deliverables
and rights in technical data). OSA is both a business and technical
strategy for developing a new system or modernizing an existing one.
Mr. Shuster. One of the concerns I have heard from my district is
that there is a lack of visibility for smaller contract suppliers, and
that often the relevant people at the Pentagon are not necessarily
aware of the benefits or drawbacks of some smaller components purchased
as part of a larger contract. Indeed, the 2012 panel on Business
Challenges in the Defense Industry that I helped lead found that DOD
lacks the ability to track small business participation at the lower
subcontract tiers. Do you think this is still the case? And how do you
believe we can properly ensure that if a smaller company makes a good
product, it is properly recognized when so much of the focus is on
bigger ticket items?
Secretary Stackley. DOD and DON are aware of the challenge of
collecting information on small business subcontracting achievements.
As a starting point, the departments and agencies can determine the
subcontracting dollars reported on Individual Subcontracting Report
(ISR) submitted in Electronic Subcontracting Reporting System (eSRS)
which is administered by GSA. However, ISR data fails to fully reflect
DON's small business subcontracting achievement in terms of dollars
because it does not capture orders under Basic Ordering Agreements,
Blanket Purchase Agreements, SeaPort-e, or data related to Commercial
Subcontracting Plans or the Comprehensive Subcontracting Plan Test
Program. In addition, eSRS does not capture subcontracting by small
business firms nor does it capture subcontracting efforts less than
$700,000.00, the threshold for requiring a subcontracting plan. As a
result, Command specific subcontracting goals cannot be established
with any accuracy and, therefore, cannot be used to establish
performance metrics. There is another challenge regarding identifying
which small businesses which are performing subcontracts, especially,
where the prime large businesses has a subcontracting plan which covers
multiple prime contracts. In December 2014, the GAO conducted a study
(GAO-15-116) on this subject and concluded that actions are being
undertaken to facilitate linking small business subcontractors to prime
contracts (e.g. Federal Acquisition Regulation (FAR) Clause 52.204-10
which requires prime contractors to report first-tier subcontracts to
small businesses of $30,000 to the Federal Subaward Reporting System).
In an effort to improve subcontracting monitoring and compliance
oversight, the DON Office of Small Business Programs (OSBP) is
developing baseline performance metrics for the DOD Comprehensive
Subcontracting Plan utilizing data obtained from the Defense Contract
Management Agency's annually performed FAR and DFARS compliance reviews
of contractors and the Contractor Performance Assessment Reporting
System. It is anticipated these metrics will be in place by March 31,
2016. Additionally a subcontracting metrics initiative, utilizing eSRS
data, is being developed to provide contracting officers enhanced
visibility to monitor and enforce Individual Subcontracting Plan goal
achievement on contracts purporting the largest DON subcontracting
efforts. It is anticipated this action will be completed by the end of
Fiscal Year 2016.
Mr. Shuster. In 2012 I helped lead a panel on Business Challenges
in the Defense Industry, and at the time one of the issues we
discovered was that small and midsize businesses face particular
challenges in contracting with the Department of Defense. At the time
of the panel, DOD had been unable to meet its small business federal
procurement goals. Has this situation changed, to your knowledge, in
the last three years, and what further steps do you intend to take to
ensure participation of small and medium sized businesses in DOD
contracting?
Secretary Stackley. The Department of Defense has placed special
attention on the use of small business consistent with Better Buying
Power initiatives and to support the White House's 23 percent small
business goal. Because a significant percentage of the Department of
Navy's (DON) budget is dedicated to the procurement of ships, aircraft,
missiles, and combat vehicles, clearly outside small business, DOD
determined the Fiscal Year 2015 DON share of the 23 percent goal to be
16 percent which DON exceeded. DON's small business performance for the
last three fiscal years is as follows:
Actual Goals
FY13 15.11% 16.50%
FY14 16.50% 17.20%
FY15 18.57% 16.00%
The DON has taken several actions to ensure small businesses
receive maximum opportunities to provide quality products, services and
solutions to meet the needs of our warfighters. As an example, I issued
a memorandum in January 2015 assigning each Deputy Program Manager
(DPM) as the Small Business Advocate responsible for identifying
opportunities within their program for small business participation as
well as serving as the technical point of contact for small businesses
interested in pursuing these opportunities. This affects 13 Program
Executive Offices and over 60 DPMs. Through collaboration, interviews,
and engagement with industry a training curriculum is under
development, designed to educate DPMs on their role as a Small Business
Advocate. The intent is to expand the training to include all
acquisition career fields. As the DON product lines move to
sustainment, the goal is to track current vs. future procurement
patterns to measure changed behavior.
DON's Office of Small Business Programs (OSBP) monitors the
Department's performance through contract award data analysis of the
ten major buying commands and the 124 subordinate buying activities,
which are responsible for the acquisition of over $80 billion in DON
Procurements annually. OSBP monitors the five socio-economic
categories, small business assessable markets, service portfolios,
small business set-aside rate, percentage of GSA small business awards
and SeaPort-e performance.
The DON is actively working the Acquisition Professional Workforce
Development, a DOD initiative. This initiative redefines the
professionalism of the entire small business workforce through
competency analysis, education, training and establishing criteria to
develop a professional and respected cadre of Small Business
Professionals equipped to support the acquisition process to its
fullest capability. A professional, educated small business workforce
will help DON achieve its innovation initiatives and bring in non-
traditional suppliers.
Major components of the program are: (1) building leadership skills
(leadership development program, functional experience, developmental
assignments); (2) building technical skills (formal education,
acquisition training, rotational assignments, functional experience);
and (3) development continuum.
Implementation initiatives include appropriate policy updates,
workforce planning, standards, competency-based training, career
development information and requests for requisite resources. While
these professionals influence over 20 percent of DOD discretionary
spending, the small business workforce had not been identified as a
separate acquisition workforce functional area prior to this
designation. The Director of the DON OSBP serves as the Small Business
Functional Leader. The Small Business Functional Leader's vision is to
transform the small business workforce into a highly skilled, business-
oriented force that provides innovative, efficient, and effective
influence to the Department's readiness and technological superiority.
Mr. Shuster. One of the concerns I have heard from companies in my
district and that was also brought to light in our panel on Business
Challenges in the Defense Industry is that the ever-changing nature of
the laws and regulations governing defense acquisitions can make it
difficult for companies with limited resources to stay abreast of the
changes that could impact their business strategies. This places larger
companies with teams of contract attorneys at a competitive advantage.
How do you think we can bring greater streamlining and transparency
this maze of rules and regulations?
Secretary Stackley. While the acquisition system is a maze of rules
and regulations, fortunately not all of the rules and regulations
result in a burden to contractors. Many involve internal operating
procedures to DOD. To the extent new and evolving procurement rules
affect contractors, the rules are set forth in the Federal Acquisition
Regulation (FAR) and the Defense FAR (DFARS) Supplement in title 48 of
the Code of Federal Regulations (CFR) and are available online. The FAR
and DFARS are living documents, continuously amended to capture the new
or revised laws set forth in annual authorization acts or other
statutes and delete laws which are no longer in effect. The FAR and
DFARS are organized into 52 chapters and are comprehensive, to the
point of containing required contract clauses. In most cases, FAR or
DFARS revisions are published for comment in the Federal Register. When
a new statute must be implemented in a relative short period of time,
FAR or DFARS coverage is issued on a temporary basis while public
comments are pending.
Besides the FAR and DFARS for contracts, OMB is in the process of
streamlining grants and cooperative agreement regulations for all
federal agencies by consolidating them into part 2 of the CFR. DOD is
now migrating its portions of its agency specific grants and agreements
regulation from part 32 of the CFR to title 2.
Mr. Shuster. An issue raised by companies doing business with DOD
in my district is that there is no incentive for large companies and
contractors holding multiple year contracts to seek out the newest,
most advanced and less expensive products, even when it would save
taxpayers millions of dollars. Is there someone keeping an eye on such
advancements when developing projects and upgrades, as well as
allocating tax payer monies to them? If so, how do they approach this
problem? Would a move to more open system architecture provide greater
flexibility in this area?
Secretary Stackley. Certain contracts specify products with well-
defined requirements. These products have been qualified via
demonstrated acceptable performance to fill critical warfighting needs.
Other contracts are performance based, which may allow greater
latitude. In either case, companies are motivated to provide products
in a manner to maximize their profits. Program Managers keep an eye on
advancements, continuing to monitor defense and commercial advancements
in technology to better align acquisition plans.
Yes, a move to more open system architecture would provide greater
flexibility in this area. Open systems architecture (OSA) has been
shown to have a definite impact on the integration of new capabilities.
Program managers are moving towards these practices to ensure that
innovations can be adopted in both new and existing programs thereby
helping to improve capability and reduce cost. The standard in the
Department of the Navy is that new systems in development will be open
by design.
Mr. Shuster. One of the concerns I have heard from my district is
that there is a lack of visibility for smaller contract suppliers, and
that often the relevant people at the Pentagon are not necessarily
aware of the benefits or drawbacks of some smaller components purchased
as part of a larger contract. Indeed, the 2012 panel on Business
Challenges in the Defense Industry that I helped lead found that DOD
lacks the ability to track small business participation at the lower
subcontract tiers. Do you think this is still the case? And how do you
believe we can properly ensure that if a smaller company makes a good
product, it is properly recognized when so much of the focus is on
bigger ticket items?
Mr. Lombardi. Although current statutory provisions do not allow us
insight into lower sub contract tier data, we have increased
competition and small business participation in our acquisitions.
However, it is recognized that additional opportunities exist to
improve competition and leverage small business across the Air Force
enterprise.
Mr. Shuster. In 2012 I helped lead a panel on Business Challenges
in the Defense Industry, and at the time one of the issues we
discovered was that small and midsize businesses face particular
challenges in contracting with the Department of Defense. At the time
of the panel, DOD had been unable to meet its small business Federal
procurement goals. Has this situation changed, to your knowledge, in
the last three years?
Mr. Lombardi. As of 2015, the Department of Defense (DOD) is not
meeting small business subcontracting goal of 34.5%. In order to meet
the department-wide small business goal, the DOD Office of the Small
Business Programs sets challenging, but realistic, goals for the DOD
Components. The Air Force has met Office of the Secretary of Defense
(OSD)-set component goals for the past two years. In FY14, the Air
Force exceeded the small business prime contracting goal for the first
time ever, resulting in over $54B of contracts with small businesses
and representing 23.47% of all DOD procurement funding for the fiscal
year. Unofficial results for FY15 indicate the Air Force will exceed
24% of Small Business contracts for DOD procurement. Although the DOD
does not assign component level small business subcontracting goals,
the DOD goal is to achieve at least 34.5% subcontracting to small
business from DOD prime contractors. The department also strives to
meet the four aspirational socioeconomic goals, such as the 5% prime
contracting with women owned small business (WOSB).
Mr. Shuster. What steps need to be taken to ensure participation of
small and medium-size business?
Mr. Lombardi. To ensure participation, the Air Force Office of
Small Business Programs (USAF OSBP) is expanding and improving the
training provided to small business professionals, encouraging
compliance with subcontracting plans and utilization of small business
participation plans, and engaging in aggressive outreach to purchasing
organizations to educate on small business capabilities. The USAF OSBP,
in addition to continually improving internal processes and procedures
in response to advances in technology, plans to improve upon and
increase the number of Mentor-Protege agreements and advocate for the
use of SBIR/STTR programs.
Mr. Shuster. One of the concerns I have heard from companies in my
district and that was also brought to light in our panel on Business
Challenges in the Defense Industry is that the ever-changing nature of
the laws and regulations governing defense acquisitions can make it
difficult for companies with limited resources to stay abreast of the
changes that could impact their business strategies. This places larger
companies with teams of contract attorneys at a competitive advantage.
How do you think we can bring greater streamlining and transparency
this maze of rules and regulations?
Mr. Lombardi. The Air Force Office of Transformational Innovation
(OTI) is spearheading an initiative called AQ,-Cognitive Computing that
will create a publicly-available information resource that utilizes
advances in artificial intelligence to help navigate acquisition laws,
policies, and regulations. This system will use an easy-to-understand
natural language query system that will help acquisition professionals
as well as the business community. Many of the barriers small
businesses face when partnering with the federal government could be
removed by providing this clear and intuitive system to understand the
requirements of and flexibility within the DOD contracting statutes,
regulations, practices, and policies.
Mr. Shuster. An issue raised by companies doing business with DOD
in my district is that there is no incentive for large companies and
contractors holding multiple year contracts to seek out the newest,
most advanced and less expensive products, even when it would save
taxpayers millions of dollars. Is there someone keeping an eye on such
advancements when developing projects and upgrades, as well as
allocating tax payer monies to them? If so, how do they approach this
problem? Would a move to more open system architecture provide greater
flexibility in this area?
Mr. Lombardi. In line with DOD's Better Buying Power 3.0
initiative, the Air Force incentivizes procurement of innovative less
expensive products and services at various levels within our
acquisition community. We emphasize technology insertion and refresh in
program, planning, use Modular Open Systems Architecture to stimulate
innovation, and utilize enhanced competition techniques such as market
intelligence, pursue procurement of necessary data rights, and the
development of alternate sources.
______
QUESTIONS SUBMITTED BY MR. COFFMAN
Mr. Coffman. With regards to the C-130 AMP Increment 1, can you
explain why a recent RFP to pursue the required air traffic control
upgrade requested a separation of integration and installation efforts?
Would this sort of procurement be a good opportunity for utilizing a
combined commercial approach? Finally, could you please provide an
explanation of the estimated costs of the AMP-1 program?
Mr. Lombardi. The C-130H AMP Increment 1 strategy separates
integration and installation. The separation followed several industry
days and robust dialogue with industry. Based on industry response and
market research indicating two or more capable small businesses,
integration will be competitively awarded to a small business.
Installations will be competitively awarded through the Air Force
Sustainment Center's Contract Field Team (CFT) contract, which offers
lower costs. CFT contractors have proven track records for similar C-
130 modifications and have demonstrated ability to meet schedule
requirements. While a combined commercial approach was considered
utilizing the existing lower cost Air Force Sustainment Center's CFT
contract offers the best value for the government.
Finally, the Air Force investigated multiple options available to
reduce costs for the C-130H AMP Increment 1 effort, including
procurement of mature technologies, use of existing Commercial Off-The-
Shelf (COTS) solutions, and installation efficiencies. The Program
Office cost estimates have been updated, leveraging industry dialogue
and COTS-based solutions. This selected strategy also permitted the Air
Force to accelerate the fielding of these important upgrades to meet
the January 2020 mandate. Updated program funding and schedule is
reflected in the Fiscal Year 2017 President's Budget.
Mr. Coffman. Mission success is of the upmost importance to the
Department of Defense, and the Department has historically driven
contracting practices to ensure quality and high performance of systems
and platforms. Certification processes and military specification
standards have been continually refined through lessons learned and
reflect the marquee standards necessary to protect our national
security interests. In some circumstances cost-saving procurement
approaches featuring streamlined process and reduced bureaucracy
introduce additional risk into the process. For example, last June,
very shortly after a rocket was certified in an accelerated fashion by
the Air Force, the rocket exploded on its very next launch attempt.
This same rocket has now been re-engineered to include larger thrust,
and a new propellant, yet the provider is challenging the need for a
new Air Force certification of the rocket. How can DOD address the need
for streamlined procurements and reduced bureaucracy without
jeopardizing mission success and national security?
Mr. Lombardi. The DOD has a well-defined developmental process
grounded in statue and implemented by DOD Instruction 5000 which allows
for the balancing of Public Safety, National Security, Mission Success,
Cost and Schedule concerns. The DOD developed systems proceed through
developmental and operation test programs to ensure that these systems
meet the needs of the nation with maximum streamlining, minimal
required bureaucracy and prudent risk taking on the part of the program
managers.
Additionally, in Air Force Instruction 63-101 Acquisition and
Sustainment Life Cycle Management, current Air Force policy allows
acquisition program tailoring to accommodate the unique characteristics
of a program while still meeting the statutory and regulatory needs for
oversight and decision making and ensuring the program is able to
provide the needed capability to the warfighter in the shortest
practical time and balance risk.
In regards to the specific space example referenced above, National
Space Transportation Policy, approved November 21, 2013, states that
U.S. commercial space transportation capabilities that demonstrate the
ability to launch payloads reliably will be allowed to compete for
United States Government missions on a level playing field, consistent
with established interagency new entrant certification criteria. The
Air Force certification process is defined in the United States Air
Force Launch Services New Entrant Certification Guide (NECG) published
in 2011. The NECG provides a risk-based approach with four
certification options based on maturity of the launch system. Despite
the SpaceX launch failure June 28, 2015, SpaceX remains certified to
compete for and win the award of National Security Space (NSS)
missions. A failed mission does not automatically drive a revisit to a
certification decision or a revocation of a certification. A launch
system remains certified unless a process or design change, or some
other certification factor (such as manufacturing quality, for
example), causes the certification authority (SMC/CC) to determine that
the launch system or provider is no longer certified.
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