[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
[H.A.S.C. No. 115-43]
_______________________________________________________________
INITIAL FINDINGS OF THE SECTION 809
PANEL: SETTING THE PATH FOR
STREAMLINING AND IMPROVING
DEFENSE ACQUISITION
__________
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
MAY 17, 2017
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
_________
U.S. GOVERNMENT PUBLISHING OFFICE
25-836 WASHINGTON : 2018
____________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
Internet:bookstore.gpo.gov. Phone:toll free (866)512-1800;DC area (202)512-1800
Fax:(202) 512-2104 Mail:Stop IDCC,Washington,DC 20402-001
COMMITTEE ON ARMED SERVICES
One Hundred Fifteenth Congress
WILLIAM M. ``MAC'' THORNBERRY, Texas, Chairman
WALTER B. JONES, North Carolina ADAM SMITH, Washington
JOE WILSON, South Carolina ROBERT A. BRADY, Pennsylvania
FRANK A. LoBIONDO, New Jersey SUSAN A. DAVIS, California
ROB BISHOP, Utah JAMES R. LANGEVIN, Rhode Island
MICHAEL R. TURNER, Ohio RICK LARSEN, Washington
MIKE ROGERS, Alabama JIM COOPER, Tennessee
TRENT FRANKS, Arizona MADELEINE Z. BORDALLO, Guam
BILL SHUSTER, Pennsylvania JOE COURTNEY, Connecticut
K. MICHAEL CONAWAY, Texas NIKI TSONGAS, Massachusetts
DOUG LAMBORN, Colorado JOHN GARAMENDI, California
ROBERT J. WITTMAN, Virginia JACKIE SPEIER, California
DUNCAN HUNTER, California MARC A. VEASEY, Texas
MIKE COFFMAN, Colorado TULSI GABBARD, Hawaii
VICKY HARTZLER, Missouri BETO O'ROURKE, Texas
AUSTIN SCOTT, Georgia DONALD NORCROSS, New Jersey
MO BROOKS, Alabama RUBEN GALLEGO, Arizona
PAUL COOK, California SETH MOULTON, Massachusetts
JIM BRIDENSTINE, Oklahoma COLLEEN HANABUSA, Hawaii
BRAD R. WENSTRUP, Ohio CAROL SHEA-PORTER, New Hampshire
BRADLEY BYRNE, Alabama JACKY ROSEN, Nevada
SAM GRAVES, Missouri A. DONALD McEACHIN, Virginia
ELISE M. STEFANIK, New York SALUD O. CARBAJAL, California
MARTHA McSALLY, Arizona ANTHONY G. BROWN, Maryland
STEPHEN KNIGHT, California STEPHANIE N. MURPHY, Florida
STEVE RUSSELL, Oklahoma RO KHANNA, California
SCOTT DesJARLAIS, Tennessee TOM O'HALLERAN, Arizona
RALPH LEE ABRAHAM, Louisiana THOMAS R. SUOZZI, New York
TRENT KELLY, Mississippi (Vacancy)
MIKE GALLAGHER, Wisconsin
MATT GAETZ, Florida
DON BACON, Nebraska
JIM BANKS, Indiana
LIZ CHENEY, Wyoming
Robert L. Simmons II, Staff Director
Alexis Lasselle Ross, Professional Staff Member
Douglas Bush, Professional Staff Member
Britton Burkett, Clerk
C O N T E N T S
----------
Page
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Thornberry, Hon. William M. ``Mac,'' a Representative from Texas,
Chairman, Committee on Armed Services.......................... 1
WITNESSES
Lee, Deidre, Chair, Section 809 Panel, Former Administrator for
the Office of Federal Procurement Policy, Former Director,
Defense Procurement and Acquisition Policy; William LaPlante,
Commissioner, Section 809 Panel, Former Assistant Secretary of
the Air Force for Acquisition; Charlie E. Williams, Jr.,
Commissioner, Section 809 Panel, Former Director of Defense
Contract Management Agency; Joseph W. Dyer, Commissioner,
Section 809 Panel, Former Chief Operating Officer and Chief
Strategy Officer, iRobot Corporation, Former Commander, Naval
Air Systems Command............................................ 2
APPENDIX
Prepared Statements:
Smith, Hon. Adam, a Representative from Washington, Ranking
Member, Committee on Armed Services........................ 41
Documents Submitted for the Record:
Advisory Panel on Streamlining and Codifying Acquisition
Regulations, Section 809 Panel Interim Report, May 2017.... 45
Witness Responses to Questions Asked During the Hearing:
[There were no Questions submitted during the hearing.]
Questions Submitted by Members Post Hearing:
[There were no Questions submitted post hearing.]
INITIAL FINDINGS OF THE SECTION 809 PANEL: SETTING THE PATH FOR
STREAMLINING AND IMPROVING DEFENSE ACQUISITION
----------
House of Representatives,
Committee on Armed Services,
Washington, DC, Wednesday, May 17, 2017.
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. Committee will come to order.
The purpose of today's hearing is to receive the initial
findings from the Section 809 Panel. Now, as members may
remember, in the fiscal year 2016 NDAA [National Defense
Authorization Act] we created an advisory panel under,
appropriately, section 809 to review acquisition regulations
and make recommendations for streamlining and improving defense
acquisition process, and also to advise us on improving our
defense technological advantage.
We are pleased to welcome four of the commissioners here
today to report on the interim findings of that panel. I
understand that the panel has--was, due to no fault of its own,
delayed in getting started, partly because of the Department.
But all members have before them an interim report dated May
2017 that, in my opinion at least, does a very good job of
explaining the problems and where we are.
I think my favorite sentence is where the report says,
``The way the Department of Defense buys what it needs to equip
its warfighters is from another era.'' None of us can afford to
have that situation continue because the era we are in is
dangerous enough, and it is not stopping to wait on us.
We are pleased to have, as I say, four of the commissioners
with us today.
Before turning to them, I will yield to the distinguished
acting ranking member, Mr. Carbajal, for any comments he would
like to make.
Mr. Carbajal. Thank you, Mr. Chair.
I don't have any comments, but I would like, without
objection, to submit Ranking Member Adam Smith's testimony into
the record. And I have a few questions for later on.
[The prepared statement of Mr. Smith can be found in the
Appendix on page 41.]
The Chairman. Without objection, so ordered.
Let me welcome our witnesses today. We have Ms. Deidre Lee,
who is the chair of the Section 809 Panel; Mr. William
LaPlante; Mr. Charlie Williams, Jr.; Mr. Joseph Dyer. Each of
them have impressive backgrounds that are helpful, I think, for
this purpose. Members have more complete bios in front of them.
We, again, appreciate the work you all have done so far and
the work that you will do in the months to come.
Ms. Lee, we will yield to you for any comments you would
like to make.
And, ma'am, if you would--and put that microphone right in
front of your face.
That works better. Thank you.
STATEMENTS OF DEIDRE LEE, CHAIR, SECTION 809 PANEL, FORMER
ADMINISTRATOR FOR THE OFFICE OF FEDERAL PROCUREMENT POLICY,
FORMER DIRECTOR, DEFENSE PROCUREMENT AND ACQUISITION POLICY;
WILLIAM LAPLANTE, COMMISSIONER, SECTION 809 PANEL, FORMER
ASSISTANT SECRETARY OF THE AIR FORCE FOR ACQUISITION; CHARLIE
E. WILLIAMS, JR., COMMISSIONER, SECTION 809 PANEL, FORMER
DIRECTOR OF DEFENSE CONTRACT MANAGEMENT AGENCY; JOSEPH W. DYER,
COMMISSIONER, SECTION 809 PANEL, FORMER CHIEF OPERATING OFFICER
AND CHIEF STRATEGY OFFICER, IROBOT CORPORATION, FORMER
COMMANDER, NAVAL AIR SYSTEMS COMMAND
Ms. Lee. Thank you, sir.
Chairman Thornberry, Ranking Member Carbajal, thank you, on
behalf of the 18 commissioners, for the opportunity to present
the 809 Panel's interim report. I will give an opening
statement, and then we have the other commissioners who will
hear--will answer your questions, and we will all try to answer
your questions and respond to you.
Since the panel's first meeting we have heard from the men
and women who work as professionals in the defense acquisition
system; those who support the Department in industry, including
those who have yet to do business with the Department; those
who study the system in think tanks and academia; and those who
provide leadership and oversight in Congress. We sincerely
thank all of those who have offered their thoughts to us and
welcome others to reach out and contribute.
Through these conversations themes have emerged, and these
themes are the foundation for the panel's work going forward.
We know that mission must come first. We have to value time.
The system needs to be simplified. And another--probably more
discussion later--we need to decriminalize the commerce.
We have learned that there are barriers to entry doing
business with the government. Some are small, while too many
others are large, complex, and time-consuming.
We have learned that there are out-of-date regulations that
have served their purpose and today only serve as drag on the
system.
We have learned that protests, or the fear of protests,
makes a slow, cautious contract process. We have learned that
there is a lot of flexibility in the system and we need to be
systemically confident enough to use it.
We have learned that we fail to adequately distinguish
between those systems that are multi-decade platforms and those
that have a short technology life.
And we note that the pace of innovation in America is the
hare, while we wish and act as if it is the tortoise. There are
too many unique policies, exceptions, thresholds, and reviews
for acquisition to be timely at a fair price to the taxpayer.
These complexities prevent our trusted, qualified personnel
from making decisions at the appropriate level and create
barriers for our access to new technologies when industry
cannot even fathom how to engage.
The 809 Panel is working toward a system that puts trust in
our professionals to do the right thing at the right time, and
empowers them to make appropriate risks and to be able to make
an honest mistake. Oversight is important, but not to the
degree that it punishes many for the acts of a few and creates
more burdensome costs and expends more precious time than can
ever be recovered.
Some businesses--especially small businesses--hesitate to
engage in commerce with the government because they fear minor,
unintentional mistakes may result in criminal charges, hefty
fines, and damaged reputations. For many, including some of
the--on the cutting edge of technology, the benefits of doing
business with the government are insufficient to offset the
potential downsides.
Companies should not have to invest time and money just
figuring out how to do business with the government. Wouldn't
it be better if instead they could focus all of their resources
on innovation, trying new technologies, establishing new
thinking, and encouraging transformative ideas?
We are at a critical inflection point. The geostrategic
challenges the U.S. are facing is--are not lessening. In order
to continue to ensure our technological dominance on the
battlefield, we need an organization that is capable of looking
past how it has always been done and how it can be done--to how
it can be done.
We must be agile enough to respond to rapidly evolving
threats and fast enough to develop and deliver new capabilities
within the arc of emerging threat. Let's design for the 22nd
century in the beginning of the 21st.
Reforming DOD [Department of Defense] acquisition is a most
admired problem, and we are not the first to consider it.
Dozens of reform efforts precede this panel, and in order to
move past tweaking around the edges of the system as it exists
today, we have charged ourselves with being bold yet
actionable, and you will see those reports in our subsequent
report.
Our interim report illustrates the demand for change. It
provides just a small example of a level of detail that will
accompany our recommendations.
In the supplemental, the case studies illustrated may seem
minor, but as we all know, hundreds of minor combined with
major changes make a difference. No recommendation is too small
nor too large. Let me say that again: No recommendation is too
small and no recommendation is too bold.
We look forward to continuing to engage the community and
welcome thoughts and recommendations on areas of improvement.
We are hearing a lot from industry, from people in the
community, and we appreciate their input and are considering
all those recommendations.
As laid out in the written report, we are committed to
recommending a system that will adapt at the speed of changing
world, leverage the dynamic defense marketplace, allocate
resources effectively, simplify acquisition, and enable the
workforce. Our tagline is, ``Bold, simple, and effective.''
And we are today releasing our interim report, and as you
know, it is on our website and our team has put it on a QR code
and are--so this is how we are releasing the report and it is
available for everyone. So we present our interim report to you
today and we anticipate your questions.
Thank you.
[The Section 809 Panel Interim Report can be found in the
Appendix on page 45.]
The Chairman. Thank you. I will just say, everything you
just said is consistent with and, I think, supportive of the
emphasis that this committee has put on acquisition reform over
the last 2 years: the imperative for us to act. And we made
some significant changes, as you know, but I don't think any of
us believe that we have done enough or fixed the problem. And
that is part of the reason this panel was created, and we look
forward to your further--to your recommendations and to your
final report.
I might just mention that tomorrow I will introduce a--some
further proposed changes, and I do that about a month before we
mark up our bill so that everybody can comment. And I certainly
invite the panel as a whole or individual members of the panel
to make comments, suggestions, especially if you think we are
headed in the wrong direction for the bill that I will
introduce tomorrow in anticipation of further reform.
Let me just start out with a question for each of you,
because each of you has in the past served in the government
or--in either civilian, military capacity. And just for a
little perspective, is it worse now than it has been in the
past?
Ms. Lee. Yes, sir.
The Chairman. And we can't go on too long here, but just
for each of you, can you describe how much worse? Can you give
me a couple sentences on why you think it is worse?
I mean, what is--you said this is an inflection point. Why
is this an inflection point? What is the imperative of acting
now?
Dr. LaPlante. So I would start by just saying, as the
committee knows, that our technological superiority has been
eroding. We have been all, unfortunately, watching this for the
past decade, whether it is in cyber, weapon systems, air
dominance, space, EW [electronic warfare]. It has just been
consciously eroding right in front of us.
While we are doing as much as we can the traditional way--
the industrial way, Mr. Chairman--doing things like studying
for analysis of alternatives for 3 years before we decide what
to do on something, our peer adversaries don't seem to be doing
that. They are not studying things. They are fielding things.
And what seems to be happening to us is our ability to
deliver things quickly to the warfighter, other than through
workarounds, like the MRAPs [Mine-Resistant Ambush Protected
vehicles] or other ways we have done it, is worse than it has
ever been.
Mr. Williams. Yes, Mr. Chairman. I would note that in order
to achieve this necessary advancement in technology it is going
to require a significant amount of collaboration across
industry and DOD.
And unfortunately, I would suggest to you that today the
trust factor across the table isn't what it used to be. And I
think as a result of that we create a tremendous amount of
risk-adverse attitudes; we create a tremendous amount of
oversight. And that burdens the system down such that you don't
have the collaboration across the table necessary to ensure
that we get to the right collaborative solution.
Mr. Dyer. Mr. Chairman, thanks for the question. And we
commend the progress that the panel has made and your
leadership, sir. But much more does need to be done.
As Mr. LaPlante--Dr. LaPlante indicated, it is the erosion
of dominance that worries some of us the most. And a return to
dominance needs to come from high-tech, innovative,
nontraditional companies that have become reluctant to do
business with us either because of the complexity or because of
greener fields being found elsewhere.
The Chairman. Well, that is the other question I want to
ask before yielding to other members. I hear anecdotal
evidence--I hear directly from people who--companies,
especially small but some big companies, who say, ``We all made
a business decision that it is not worth doing business with
the Department of Defense anymore.''
Based on what you all can tell so far, is that a real
problem that we have to confront?
Mr. Williams. I will speak to that, Mr. Chairman.
I happen to be a part of a sub-team that is looking
specifically at the area of barriers to entry. And we have
talked to a lot of companies that are interested in doing
business with the Department but choose not to, companies that
do business with the government but yet are challenged by the
processes.
And so the answer is yes, this is a huge and significant
challenge. The challenge gets into very simple things like how
long it takes the government to make a decision simply about
whether or not it wants to proceed with a requirement, the fact
that the government goes out and announces its intent and
companies put together proposal teams and things of that
nature, and it takes then the government a long time to get
back to them. And companies can't carry that.
If that is a problem for a large industry, imagine what it
causes for the smaller companies who are often out there on the
leading edge of technology advancements.
Dr. LaPlante. I would add, just as a small example, when I
was the Air Force assistant secretary we pulled the data and
found out it took us 18 months to go from initial RFP [request
for proposal] to award of a sole source contract--18 months.
Now, if you remove the foreign military sales it still is
about a year.
So if you are a small company and that is even from when
the final RFP drops to when you are potentially going to get
the money for a sole source in a year, you know, you can just
imagine how hard that is. And I know one of my other colleagues
has direct experience.
Mr. Dyer. Mr. Chairman, I will tell you a story from
personal experience, if I may. I retired in 2003 as the
commander of the Naval Air Systems Command down in southern
Maryland. I was the Navy's senior acquisition uniformed person
at that time.
I went to work in Boston building robots with the iRobot
Corporation, first as the president of their defense unit and
later as the corporate COO [chief operating officer] and then
chief strategy officer.
iRobot was a company that spun out of MIT [Massachusetts
Institute of Technology]. It is exactly the kind of company
that I feel we need most: experts in autonomy, artificial
intelligence, man-machine interface.
But in my trips to Wall Street representing the interest of
the company, one of my analyst friends took me to lunch one day
and said, ``Joe, you have to get iRobot out of the defense
business. It is killing your stock price.''
And I countered by saying, ``What about the importance of
DARPA [Defense Advanced Research Projects Agency] and the
investment in leading-edge technology? What about the stability
that sometimes comes from the defense industry? Or what about
this, or what about that? What about patriotism?''
And his response was, appreciating that the requirements
for corporate officers is to attend to the interest of their
investors, he says, ``Joe, what is it about capitalism you
don't understand?''
His point, sir, was that profits are limited by weighted
guidelines. It is something of maximum of around 13 percent.
The call on data rights and intellectual property, the crown
jewels of the company--these things send you away.
There are just greener fields that companies like iRobot
feel better represent the interest of the investors. And last
year, sir, iRobot divested their defense business.
The Chairman. Thank you.
Mr. Carbajal.
Mr. Carbajal. Thank you, Mr. Chair.
And thank you, to the commissioners that are here today to
share with us a little bit about their interim report.
My question is, every administration and virtually every
Secretary of Defense since World War II has embarked on an
acquisition reform effort, yet we still face significant
challenges. What will this panel recommend that will be
different to ensure a lasting impact that you have already
started identifying? Because if not, this is going to be yet
another exercise and 10 years from now we are going to be at
the same place again.
So I think despite looking at the whole system, it is
really identifying those particular recommendations that are
going to help take a different approach.
Ms. Lee. Excellent point, and I think that is what we are
trying to say in our interim report is there is an imperative,
as has been discussed here. We have to be more agile, more
responsive. We cannot continue in the mode that we are
progressing.
So the environment is right. You in the Congress are
interested. Your staff has been incredibly helpful and
supportive. I think that is helping us from setting that up.
And then the other thing that our supplemental is, what we
plan to give to you that is different than so many of the other
excellent reports in front of us, are that level of detail. And
that is why we did the supplement, to show you that we are
going to actually give you marked-up language of the
recommendation. Obviously the recommendation is still yours to
decide on, but we are trying to give you data-driven,
actionable recommendations so you can look at those.
We also have some very bold recommendations that will come
out later that will impact some particular constituencies and
there will be some hard decisions to make significant changes
for us to move on and modernize this acquisition system.
Bill.
Dr. LaPlante. I would add a different--maybe a slightly
different perspective, because the question you ask is the
question all of us ask when we get asked to put our precious
time into another acquisition reform study. I have a different
view, which is--I have changed my mind over the years.
I will give you an example. I think reform--what reform is
needed at one time is different depending on the age. I will
back up to 2009 when the Weapons Acquisition Reform Act was put
in place, WSARA, as some people call it.
That had some very good reforms in it. It required an
independent cost estimate at the beginning of programs, for
example. It codified how to do analysis of alternatives.
And actually, if you--one argument, if you look at the cost
performance of the major weapon systems over the past 6, 7
years, I think a lot of us have seen and the data shows that
the cost growth is actually lower than it has ever been. It did
help some things.
While all that was going on, the world is changing very
rapidly. And I think the problem today as I see it--and it is
driven by this technology threat and the change in the
technology--is the commercial world practices have moved
totally beyond the industrial model that we said that the DOD
uses.
So I will just give one example: software development. In
DOD we spec out a software problem, a software system--a ground
control station for satellites, for example. We get the
requirements honed perfectly, then we translate them into a
system spec, we issue an RFP, and then we give the award, and
then we hold the contractor accountable to cost performance
schedule. It is typically scheduled for 5 years and it will
take 7 and it will go over budget. We all know that.
The commercial world developing software has left that
waterfall model 20 years ago. The idea that Google develops
software and then deploys it is wrong. They develop software
every day. Facebook drops hundreds of releases every day.
The idea that you would even spec out in detail the
requirements of something 5 years from now is laughed at by
fast-moving commercial software developers. They say, ``No, you
never get it right. You gotta be able to go fast, go in short
sprints, and if you make a mistake you get back on track.''
So if you look at the way our system is set up, it is set
up for the old model. And so that is an example of why we need
reform now is because the world has changed and we have to
adjust to that.
Mr. Dyer. Congressman, one of the things the panel is
doing, I think to gain some new insight, one of our eight teams
are looking not just at problem programs but taking a far-too-
unique look at programs that succeed and asking why, and seeing
if there are common themes of experience, training, approach,
culture that can be applied across the DNA of other programs,
and we can take a reverse look of saying, ``This is what you
should do,'' as opposed to perhaps a history where DOD has said
primarily, ``This is what you cannot do.''
Mr. Carbajal. Thank you. My last question is the interim
report recommends DOD spend its resources more efficiently and
effectively in all types of acquisitions, including the
procurement of low-dollar goods. Does the Department overpay
for commercial off-the-shelf, also known as COTS, items?
Mr. Williams. Yes, Congressman. I would say that the panel
has not looked at and taken on the job of looking at the
pricing of commercial items, so we aren't prepared to offer an
opinion on whether or not commercial items are overpriced.
What I think we are suggesting here is that often when we
look at these reform efforts we are simply focused on large-
dollar procurements. We are focused on big programs.
The problem in the system often relates to all these non-
complex efforts in procurement and services. When you look at
the equation, you know, 80 percent of the dollars are spent on
20 percent of the actions, but there are 80 percent of these
actions that are really critical to the Department being
successful, and we have to pay attention to those just as well.
In the report we talk a lot about clearing the underbrush.
There is a whole lot of stuff in the underbrush that affects
how we get work done, and so I think we are simply saying that
in the area of commercial, in the area of services across the
spectrum of everything that the Department acquires, we have to
pay attention because each piece makes up the big picture.
Dr. LaPlante. We always have to remind people that
services--Department buys services from everything from cutting
the lawn to launching our most precious national security
payloads into space. Department spends probably more on
services still than on major weapons acquisition program.
Mr. Carbajal. Thank you very much. Mr. Chairman, I yield
back.
The Chairman. It definitely spends more. Something like 53
percent of everything that is on contract is services, not
weapons and equipment.
Mr. Cook.
Mr. Cook. Thank you very much, Mr. Chairman.
I want to thank the chairman for doing this. And this is
going to be very, very tough to get done and I appreciate the
panel working on this.
And it is a lot of frustration for me and a lot of other
people, and I am a historian by trade, I guess, military by
trade. And you go back and you--the system we have right now, I
swear to God we would have lost World War II.
We do not have the luxury of waiting that long to bring new
weapons systems online. I was out at Fort Irwin the past week,
which is in my district. Perhaps one of the greatest training
areas of all.
And one of the days was live fire, but the first day was
cybersecurity. I met with these young soldiers and they are
talking about some of the things that they were doing off the
shelf and they are making changes.
Now, remember, I am an infantry guy. I am just a dumb
marine, and I really am, and they are talking about space-age
stuff, and they are doing it right then and there.
And I am saying, ``God, why can't you be in charge of the
whole system?'' And I understand that is not feasible, and
contracts and everything else.
And I asked them about it and they said, ``Time,'' and they
said the same thing that you said. We don't have the luxury.
You know, the changes are made. You know, when I was in
Vietnam they were making changes. That was 50 years ago and it
seems like it was taking forever. Even then some of the systems
coming online were flawed, not correct, and took forever to get
there.
And here we are now. We don't have that luxury. I am going
to be leaving here. I am going to have a brief on the T-14 and
the T-90, the improvements to some of these systems today. It
just gets so depressed.
So I think this is a great first step. We have gotta change
this and we have gotta change it now, whether we go back in
history, whether we look at how the Israelis change. Why do
they change so quickly? Because they won't survive as a country
if they don't.
So the stakes are enormous, and if we don't get it right
then, you know, my original reason for coming to Congress--and
that was, you know, the military and veterans--I have failed. I
have failed miserably.
Now, you guys and gal, you have a tremendous amount of
expertise and I appreciate what you are doing. And I am going
to be the junkyard dog just saying we gotta cut through the red
tape, and we have gotta get it done, and we gotta get it done
now. And we have no excuses anymore.
So I have vented, and I appreciate the chairman. I will
drink some more coffee and go back to my office, and I yield
back.
The Chairman. Venting appreciated.
Mr. Garamendi.
Mr. Garamendi. I want to thank you for the panel discussion
and for, obviously, a very, very important issue.
It seems to me that there are at least--that in analyzing
this acquisition you need to put into various categories the
kind of acquisitions we are talking about. We just discussed a
moment ago services and then major acquisition of airplanes, or
whatever.
With regard to the latter, I recall a hearing we had in the
naval subcommittee last--2 weeks ago in which the littoral
combat ship came up. And the fundamental argument made by the
Navy and by the defense industry was, ``Well, we gotta continue
to produce another 20 of these ships that serve really no good
purpose and, by the way, will probably be sunk at the very
first shot that will be fired and don't have much utility, but
we need to do it because we need to keep the defense base
working.''
Now, that is a policy question that we need to address
here. So you got those kinds of issues.
When you get down to other issues, there are the public
policy questions. I could probably mention the issue of
greenhouse gas emissions and the consumption of fuel oil, or
fuel--the Defense Department being the single largest consumer
of petroleum products in the world. So should there be a policy
question put on the Defense Department dealing with
conservation, or moving away from fuel to green energy
technologies?
How do those kind of policy issues come into play in the
issue of defense acquisition strategy? Should we simply abandon
these policy issues, which do, seem to me, provide some brake
on the rapidity of a contract going forward or the continuation
of a previous program?
What is your recommendation? You make recommendations here
about policies that get in the way. Should some of those
policies remain in the way?
Ms. Lee. I think that will obviously be an end decision for
this body. We were going to--what our plan is to look at all of
these and, as we all know, individually each one has a
constituency, has a value, and probably a very good purpose.
Cumulatively they are clogging the system.
So I think it is going to be a very difficult question to
say, you know, what are the priorities? Our report says mission
first. We will offer up some recommendations to you all to a
very challenging decision is what is that balance?
Mr. Williams. I would offer, Congressman, that the critical
question here is the question of mission and the purpose of the
system. And I believe if we start there, we start with mission
first, that the system that the Department has to use for
acquisition is focused on ensuring it can accomplish its
mission, and we evaluate these various policy questions along
that continuum, and I think it will allow us to have a way to
think these things through.
I don't think anyone has reached any conclusion as to what
is good, what is bad, what is problematic, but to Ms. Lee's
point, the accumulation of these things together put extreme
pressure on the system and cause many, many hurdles for the
acquisition community to have to go through to get to that
mission result.
Dr. LaPlante. I will give an example of maybe one or two
policies that make perfect sense from a certain aspect of
public policy but actually can maybe have a collateral impact
you may not understand. One is competition, the CICA
[Competition in Contracting Act] thing, which is that--the
assumption being that whenever you can, you do competition.
Makes perfect sense and all that.
To the extent that, getting at what my colleague said in
her opening, the fact that we are worried about protests so
much during either the RFP release or the award, bend over
backwards, do competition when there is an obvious quick
solution ready to go by just going sole source because it
hits--gets the mission, there is a very big reluctance to do it
because of, understandably, because of the pressure to do
competition.
So again, you have to say, is it--what is better for the
mission?
We do have waivers in the system that allow seniors to
waive and say, ``I am going to do sole source for national
security.'' My experience in recent years is they are very
reluctant to use them because of the scrutiny it gets.
So that is an example where you can see both sides of the
argument, and it is the cumulative effect of all of these
policy issues.
Another one is small business. Small business is a very
important thing for the country. We all get that. But that is
something that plays a big role in our deliberations as we put
acquisition strategies together because we know we are going to
be looked at for our small business numbers.
And so those are two examples of good, well-understood
policy things, but their impact on acquisition.
Mr. Garamendi. Thank you. Yield back.
The Chairman. Mr. Knight.
Mr. Knight. Thank you, Mr. Chair. And I will echo Colonel
Cook: I appreciate the chairman for doing this. This is long
overdue.
So I am going to--I am not going to vent because I can't do
what Colonel Cook did, but I am going to bring up a few things.
So I firmly believe that the country is risk aversive, and
I think that that has stifled us in many of the things that we
have tried to do. The F-22, F-23 program went through a 50-
month culmination to get to a first flight program. I mean, it
was a perfect example of how you get to stifling America's
growth.
And now we have the F-22 and we have gone through a great
program, even though Congress cut that short way before I was
here. It is a perfect example of what we shouldn't do.
The Century Series fighter system was built in the 1950s--
all of them in about 9 years. We put out the F-100 to the F-106
in about 9 years.
How we could do that and then we move to the fifth
generation and it took 50 months to the first flight just
boggles me.
But my questions are a little bit anecdotal because we all
get to talk to Vietnam vets and we all get to talk to our vets
and our warriors who are in the field.
I talked to some the other day who used an unmanned system
that was on the ground and they were doing it for IEDs
[improvised explosive devices]. And I looked at the controller
they were using. They were using an Xbox controller. And I
said, ``Why are you using that?''
And they said, ``It works better. It just works better.''
And I said, ``Well, it is not as durable.''
And he said, ``No, it is definitely not as durable, but you
know what? I went over and I bought this thing for $29, and if
it breaks I buy another one for $29.''
So those kinds of things, you know, how much we act with
the people in the field who are actually doing the chore I
think is most important.
I think Dr. LaPlante brought up a big part, and that is
maybe SBIR [Small Business Innovation Research] and STTR [Small
Business Technology Transfer]. If we are going to get the
cutting edge it might not be from the big companies. It will
probably be from the smaller companies. And if we don't kind of
push forward those types of programs, like STTR and SBIR, then
we might not ever see them.
So, get to my questions here. Contracts across the board--
and I have talked to many different companies that work either
in the--in Navy contracts or Air Force contracts or so on and
so forth, and they say that the contracts are not the same--the
basic contract, not the full-blown, but kind of the basic DD214
base sheet.
Is that something that we can make across the board so that
when these contracts come up--and maybe not a contract like,
you know, a new bomber or a new fighter or something, but these
contracts that are coming out with the Navy, that it looks like
the Air Force one or it looks like the Army contract so that
they know how to fill this out? They might not know how to fill
out sections 2 through 4 million, but they know how to fill out
the face sheet.
Ms. Lee. We have certainly heard from a good number of
people that the complexity is daunting, especially for small
businesses. So this kind of links to the policy question and
the underbrush question as we are looking--in fact, in our
report at the end there is a kind of a list of questions that
we are asking ourselves and pursuing, but one of those is how
do we simplify this so people aren't spending all their time
figuring out how to do business with them?
And as Mr. Williams said, the barriers to entry team found
from--I will let him speak on it, but some of the people said,
``We just cannot afford, from a time standpoint, to invest the
time that it requires to figure out how to do business with you
guys when someone else will pick us up just like that and we
can actually, you know, market our product or service.''
And so we recognize that somehow that ability to enter
quickly and to simplify our process has got to be primary. And
one of the questions we are asking--talk about buttons that
might be hot here--is: Is competition in the 21st century
aligned with the Competition in Contracting Act?
In 1984, competition was way different, and yet now how our
environment works, every day you can look online and see prices
change and products change and updates and technology
available. Not in our system you can't.
Mr. Williams. Mr. Congressman, I would just offer that
certainly consistency has its place, clearly across those
smaller-dollar types of acquisitions. I think what we have to
think through is balancing between perfect consistency and the
flexibility that you want a contracting officer to have to go
out and strike the deal that is available to them on that
particular day to be able to achieve mission results.
So clearly there are two sides to that question, and I
think as we think this through we have to look at what you
achieve and how much you can achieve through that consistency.
Because having come from the Defense Contract Management
Agency, where we administer contracts across the industry, it
is extremely important and valuable to us to not go from one
contract issued by the Navy and another contract issued by the
Air Force and they look completely different at the same
contractor.
So that is important, but we also don't want to lose the
opportunity to have the flexibility necessary based on the deal
that is needed.
Mr. Knight. And I appreciate it. My time has run out. Thank
you, Mr. Chair. I yield back.
The Chairman. Mr. Veasey.
Mr. Veasey. Thank you, Mr. Chairman.
I was hoping that you would be able to elaborate a little
more on the defense industrial base company mergers you
mentioned in your report on page 10 and how those are going to
affect DOD acquisitions in the future.
Dr. LaPlante. I mean, I can say a few words.
You have seen all the charts that have--probably over the
years that show the number of companies in the defense base and
how they have collapsed. We are sort of at a point now, for
example, where we are--we really have one major fighter line in
the country, with another one we are keeping alive every year
as a country. I mean, we sort of have one guy that builds
fighters for us, largely. We are trying to keep another one in.
I mean, that is pretty--that is something to watch, right?
How did we end up in that situation?
Another one is vertical lift. All these places you look and
you see we are one merger or acquisition away from sort of
having all our eggs--you know, that company does all our ships,
that company does all our fighters, that one does all our
tankers. And so at the big--even at the big prime it is a big
concern that we have.
And I know it has been in the past couple of years there
has been discussion about, you know, the way that M&A [mergers
and acquisitions] is analyzed by the executive branch, they
look very much more at a tactical issue: Does it directly
cause, you know, something today, as opposed to look two steps
ahead and say, ``Well, maybe this acquisition today doesn't
cause a problem, but the next one combined with this one, you
have one--only one contractor to build this.''
So it is something we are very concerned about but we, I
think, note in the report that this is--we think this is going
to continue. The pressure is going to continue.
Mr. Williams. I would only add that I think this gets back
to the recognition that the entire defense industrial complex
is completely different than it was, and so when we started off
discussing the fact that we are dealing with a Cold War-era
acquisition system, that system today doesn't reflect the fact
or deal with the fact that we have 70 percent of major programs
work often is in the subcontract and the supply chain, not at
the prime. Our system still thinks of it as at the prime level,
and tearing those barriers down and understanding that is very
important in being able to be agile in the system.
Ms. Lee. And in our report we have dubbed that the
``dynamic defense marketplace'' to try to explain how these
sands are all shifting and the work is done at different levels
by--in a very different format.
Mr. Dyer. Congressman, it is not just the companies that
are merging and leaving the business; it is the lack of input
of new companies coming in willing to aggressively do business
with us. It ties back to this question of contracts, of
policies, of fairness.
In my last company we did not have a defense business unit.
And I had the opportunity to build one from a green field. We
were required to do major programs of record to have CMMI
[Capability Maturity Model Integration] level three, the
software management process, to have earned value management,
to have AS 9100, to have all these process requirements, which
I will tell you every one of them in and of themselves made us
a better company. But as our chairman, Ms. Lee, says, the
integral of all those together was stifling for a
nontraditional company.
I kept track of a company that at that point in time was
doing less than $100 million a year, and the cost of laying in
all those processes to do program of record business was
between $35 million and $40 million. You just can't afford it.
Mr. Veasey. Well, thank you very much.
And also your report recommends that the Department align
its resources more carefully in this constrained budget
environment that we are living in and we have all heard a lot
about. And you include in your recommendation critical
consideration of the Department's use of contracted services,
and I was hoping that you could elaborate a little bit more on
the potential inefficiencies in the Department's spending for
contracted services.
Mr. Williams. Yes, I think this goes back to the point we
were making earlier. First of all, recognizing the fact that,
you know, dollars spent on services has gone beyond what we
spend on products, and all too often we forget to think through
the services process.
From a budgetary perspective, what we have to think through
is also aligning the budget with the services and the
contracted services that it requires. So as you go through a
contract cycle and budgets change and ebb and flow, that
doesn't line up well with the services that are needed if
contractors are not sure that they are going to have the
resources or the budget to continue that contract and they have
to start thinking about how they lay people off.
And as you turn around then and switch back and say, ``I
still need that work,'' the contractors may have let those
people go; they may not be available at the time. And so we
have to ensure that the budgetary processes that we use in
support of services support the labor needs that the
contractors have to ensure that they have the right workforce
in place.
It is those kinds of inefficiencies that challenge the
service contracting community.
Mr. Veasey. Thank you. Thank you, Mr. Chairman. Yield back.
The Chairman. Mr. Gaetz.
Mr. Gaetz. Thank you, Mr. Chairman.
I am looking at page 24 and 25 of your report where we
speak to the mission and its interaction with some of the other
social objectives that are occasionally injected into the
acquisitions process, and I am hoping that members of the panel
can elaborate on the extent to which this drains away from the
focus on the necessary innovations and actions that the
warfighter needs to be prepared when they are downrange.
Dr. LaPlante. Well, I would start by saying--just telling a
personal anecdote. Right before I became the assistant
secretary I spent a day with the acquisition university folks
and they were briefing the 5000 and how acquisition works. And
I would say, ``Well, what about all the stuff we had to do
during the wars to go around the system to deliver counter-IED
capability, you know, where we had to basically throw that
system out and go around it?''
They said, ``Yes, that is because this is a peacetime
system.''
So I think you are hitting the point, and this is the point
that the panel is hitting by the mission focus. If you actually
ask yourself to do the mission and we are essentially at war,
what are the things that are nice-to-haves and what are the
things that are essential, and are our priorities straight,
including on these good-to-do social things?
And so I think one of the reasons that we are looking at
this CICA the chairman brought up is because we are looking at
that foundational precept that competition is, by nature, good.
Mr. Gaetz. Is it the position of anyone on the panel that
having our providers and contract partners comply with one-
dollar coins instead of paper currency enhances the mission for
the warfighter?
Ms. Lee. Sir, we selected these couple of very simple,
small examples to demonstrate the underbrush. This is a
sampling of what is in there, and so what happens, talking
about time and labor and complexity, is every single
acquisition has to look at these kind of things and say, ``Yes,
that has gotta be in there.''
And then the contractor has to respond: Okay, have I done
that? Do I have a program for accepting dollar coins? Do I have
a program? What kind of review is done? What kind of reporting
do I have to do?
We specifically selected these very small examples and
then, also using our supplemental, are showing you exactly how
we think it would have to be marked up to either eliminate the
requirement for the Department of Defense or to make a decision
to eliminate it government-wide. And we submit to you there are
dozens if not hundreds like this, and we are going to submit
that package to you and there is going to be some policy
decisions in that.
Dr. LaPlante. Suffice to say, we did not select that
example because we thought it was a great example of public
policy.
Mr. Gaetz. Yes. Mr. Chairman, I--given the day, I think in
my district I have the privilege to represent some of the most
warfighters in the country in a congressional district, and I
can't say I have ever interacted with any that say that their
readiness is enhanced or their safety is enhanced as a
consequence of a contractor utilizing one-dollar coins.
In technology and in innovation we see in this country so
many additives and attributes that have come from small and
medium-sized companies sufficiently nimble to be able to
innovate and meet needs in the corporate space and in any other
spaces. When we have to have such draconian compliance with
these sort of bizarre social objectives that have been woven
into our acquisition process, do we crowd out some of the
innovation opportunities that would be created by those who
maybe don't have a compliance department to write a texting-
while-driving policy, or recycled-paper policy, or any of these
other ridiculous examples that you have cited?
Mr. Williams. We absolutely do, Congressman. As we talk to
particularly the smaller companies on the leading edge of
technology, those are the challenges that they present. They
don't have the capability to put together the oversight
structures and compliance structures that are necessary to meet
some of those requirements and it keeps them out of the
business.
Dr. LaPlante. I will just add to--Admiral Dyer referred to
this in his example with iRobot. The government is also really
clumsy about IP, intellectual property, and small business. We
don't really--and small startups. They should be scared of us.
Mr. Gaetz. Thank you, Chairman. I yield back.
The Chairman. Mr. Brown.
Mr. Brown. Thank you, Mr. Chairman.
When we talk about mission first in the acquisition
process, you know, I understand sort of, you know, how do we
ensure that we are acquiring the goods and services in the most
cost-effective and efficient and timely manner so that our
service men and women are ready to fight tonight, tomorrow, and
in the next decade, and the focus is on, you know, really
efficient and effective acquisition to meet the needs of the
warfighter.
I think that, you know, I mean, I would certainly argue
that that is an important mission. I commend you for your focus
in taking on this responsibility.
We have other missions that are larger and yet related. The
gentleman from California, in his question, talked about energy
conservation. That certainly is essential for our national
security.
I think that small business inclusion, particularly given
that small businesses often--offer up and develop some of the
most innovative technological solutions for our warfighters, so
ensuring that that secondary public policy that you mentioned
on page 24 is promoted. It may be secondary, but I hope it is
not a distant second because these are important public
policies that go directly to our national security and
supporting our warfighters.
So my question is--and you comment on that as--on that, but
also, just in terms of small business inclusion, there are a
number of areas where small businesses have challenges. You
mentioned a few.
One was knowledge of the contracting process, but there is
also the lack of monitoring in agencies, including the DOD, of
subcontracting plans. There is often a lack of access by small
businesses to contracting officials. There is contract bundling
that often is an obstacle to small businesses, and a number of
others.
Could you comment on what specifically you are looking at
and what you may be anticipating, in terms of recommendations
to increase small business inclusion in the DOD acquisition
process?
Ms. Lee. Yes, sir. We certainly have heard from a good
number of small businesses, and have invited them and will
continue to do so, and in fact, are going to meet with the SBA
[Small Business Administration] on some issues.
But what we have heard is time and simplicity, that we are
torturous in our process, and for these small companies they
just cannot hang on that long and spend time and effort and
money and dollars and lose other opportunities. So one of the
things that certainly is going to benefit small businesses is
more respect for time.
The other thing is the simplicity. Not that they are not
sophisticated, because they absolutely are, but having to hire
a whole staff just to execute things that really don't deliver
the mission is not efficient for them and is very difficult for
them, and actually their competitors, larger business, can do
that. So it probably puts them at a disadvantage.
So we think those are at least two things that are going to
significantly help small businesses. We are looking at SBIR,
STTR.
We are also looking at possibly some opportunities where
small businesses with--would have some technology opportunities
unique to the Department, and I know that the others may want
to comment on that.
Mr. Williams. Yes, Congressman. I think what is really
critical here is to think about how we can better utilize small
businesses to achieve that mission, connecting them to the
mission in terms of technology needs and advancements in the
Department's warfighting capabilities. So that is one of the
things that we have really focused on, not just awarding
dollars for dollars' sake, but ensuring that we connect small
businesses to the mission.
We are paying attention, as Ms. Lee said, to the SBIR
program, STTR program. We are very focused on ensuring that
small businesses have access, that they know how to get in,
that they know who to communicate, that they understand and can
get to understanding those requirements that are coming down
the line.
They tell us that they just struggle connecting the dot
between what they offer and the Department of Defense, and so
we are looking at that very closely.
Mr. Brown. Just a quick follow-up, I apologize. But how
about on contract bundling? Have you seen anything there? Is
there any comments you have on whether we need to further
unbundle contracts?
Mr. Williams. I haven't specifically seen any comments on
that, and we haven't looked at it yet but that doesn't mean
that we won't.
Dr. LaPlante. And I just want to add on to my colleague
here. The report actually points out that, Congressman, a point
you made about the connection that small business and
technology is not a nice-to-have policy, but it actually, done
right, is essential for our technological superiority. We can't
be technically superior unless we tap into those folks.
So that is an example of something which the--where the
policy itself can be very much aligned with what we are trying
to do.
Mr. Dyer. Congressman, just a comment on SBIRs. Many
companies in Boston and Rockville, around the country, have
gotten their start on SBIRs. I look at it as the government's
venture fund.
And one of the interesting pieces of that: We are willing
to accept failure in the SBIR arena. Companies can stretch far,
reach for a brass ring; if they don't make it they still profit
and they still get up and try again. That is a facet we don't
really have in a lot of the rest of our acquisition business.
Mr. Brown. Thank you, Mr. Chairman.
The Chairman. Mr. Hunter.
Mr. Hunter. Thanks, Mr. Chairman. Thank you, panel, for
being here. I guess two questions.
One, talk to us a little bit about putting somebody in
charge of anything. It seems what we have done in Congress is
said, ``Because people screw up''--which people do, including
us and everybody--``we are going to take the personal
responsibility element out of acquisition and create so many
steps and milestones that no one has to take responsibility for
anything,'' as opposed to saying, ``This guy with his Ph.D. is
great on space robots; we are going to put him in charge of
putting us ahead of our peer competitors in space robots,'' or
any other example on those high-end weapon systems.
Talk about putting just somebody in charge, because that
is--in the past 50 years that is one way that we have done a
lot of our great stuff is by putting one person in charge and
saying, ``You just do it. And you can fail and try again and
fail and try again, but we are going to put it on you to get it
right.''
Dr. LaPlante. One of the things that I think is really
clear that comes up all the time is we say we have a program
manager, PEO [program executive officer], SAE [service
acquisition executive] chain of command, but certainly there
are so many people and forces that can influence things that
are not in that chain of command that don't have any
accountability.
As my old colleague in--when I was in the Pentagon, Heidi
Shyu--my former colleague--used to say as the acquisition
executive for the Army, in industry the program manager is the
bus driver to get from A to B and everybody on the bus is to
help get them from A to B, whether human resources,
engineering, contracting. When the bus goes in the ditch
everybody gets out and puts the bus back on the road because it
is everybody who is in it.
In the DOD those people all in the back of the bus have
their own steering wheel, their own brake, they don't have an
accelerator, and when the bus goes in the ditch the SWAT team
comes and shoots out the windows and kneecaps the bus driver.
Why? Because there is money to take it.
So this idea of putting people in charge and holding them
accountable--and more importantly, people who are not
accountable should not be interfering--is very, very important
to what we--what has to be done.
Mr. Hunter. What specific recommendations--are you going to
have specific recommendations? And how many layers can you cut
out of the process in DOD if you put somebody in charge of
let's say big systems, big programs?
Ms. Lee. We are certainly looking at that as far as what is
causing this, and we have seen in some cases that it appears to
be functional authorities that perhaps are not appropriately
placed and how--and that is where I think one of our teams,
what does go right, is going to see some of the things of how
that interaction is successful.
Mr. Dyer. Congressman Hunter, your comment about someone in
charge I think links back to the question earlier of, is it
harder now or easier? It is harder. And the erosion of
authority, power, by the program manager is perhaps a most
important part of the equation.
Mr. Hunter. Okay. The second question I have here with the
last 2 minutes: A lot of these issues arise in the military.
For instance, the Army pistol, which you guys talk about,
that--you know, what a joke: 10 years just to put out your
requirements for a handgun is just stupid. The Distributed
Common Ground System--billions and billions of dollars when
they could have used commercial sources to do a lot of that.
Those are both Army programs. I am not going to pick on the
Army, but those are--those--the Army acquisition program, and I
am sure the other services, too, is what I would like to term a
``self-licking ice cream cone.'' They exist to write things for
themselves so they can do more things for themselves to do more
things for themselves, ad nauseam.
That happens in DOD too, but that--the Army pistol issue
was not a DOD acquisition issue, it was an Army issue. The
Distributed Common Ground System was not a DOD issue, it was an
Army issue.
Are you guys going to make recommendations on the services?
And are you going to be service-centric, meaning are you going
to say, ``Here are problems with the Air Force, here are
problems with the Army, Navy''? Marine Corps just buys other
people's stuff so that is different for the most part. But are
you going to make those recommendations, too?
Ms. Lee. Our focus is certainly on acquisition, so as they
impact that, but we are not at this point doing a restructuring
look at the Department. I think, in fact, that this committee
has submitted some direction to the Department to make some
changes themselves.
So what we are looking at is where that would touch and
impact acquisition in our charter.
Mr. Hunter. Okay. All right. Thank you all very much. Mr.
Chairman, I yield back.
The Chairman. Ms. Hanabusa.
Ms. Hanabusa. Thank you, Mr. Chairman. And, Mr. Chairman, I
do thank you for this hearing. It is unfortunate that I don't
believe people really recognize the significance of our
acquisition process.
I have always felt that the problem with how we operate,
especially in recent years, is that we actually set the policy
through acquisition, and that it is very unfortunate because
our acquisition is so delayed. That is why in your report,
beginning on page 2 when you recount that in the last 50 years
there have been more than 100 reports, studies on how DOD
acquires goods and services, and then you do say--and you quote
a 1986 Packard Report that talks about a commonsense approach.
But, you know, these things have been around for a very long
time and we haven't moved forward.
We mentioned SBIR. It was this body, by the way--and I was
privileged to sit on a panel which looked at, quote, the--
really the difficulties in doing business with the defense
industry, and it was from the small business perspective. And
one of the issues that was raised there was SBIR was not
authorized, and it was through the NDAA that it got
reauthorized and I think it is up pretty soon.
We look at what Mr. Dyer talked about, which I have always
been a fan of DARPA, but it all comes back to one area. As you
look at this and you look forward, how are you going to
interface the FAR [Federal Acquisition Regulation], which is
really the governing document for everyone, and what we need, I
believe, in terms of the flexibility of addressing the policy
that we are going to set for the defense industry through
acquisition?
How are you going to do that unless you are potentially
looking at an exemption from many of the provisions of the FAR
and developing a whole acquisition process that is relevant to
the defense industry in order to give it the flexibility that
we talk about?
Ms. Lee.
Ms. Lee. We have certainly looked at that. In fact, our
listing of teams in the report, we have a team that is called
``Reg to Statute Baseline,'' so we have a team of people that
are actually going through, and it is a torturous meeting--
anyone is welcome to attend--where they go through the FAR
section by section and trace it back to the origin. We have
found some very interesting things, some things that are in the
1947 vintage, et cetera, that remain in the regulation. And for
each section they are making recommendations on what can be
eliminated, streamlined.
And in some cases those policies--to your point exactly--
they are riding on how we spend money in the acquisition
system. But probably if they are that important a policy can be
accomplished another way, not necessarily in this system.
So we are working through that, and that will be part of
our report is this plethora of activities that are, in fact,
influencing the way people do business.
Ms. Hanabusa. But if you don't wipe it out almost--I am not
advocating for it; I am just saying that if you don't wipe it
out, so people doing business with the defense industry can go
to one set of guidelines that has the preemptive power over
others, you are going to have--I think what Mr. LaPlante was
talking about--this whole problem with small business--or was
it Mr. Williams--small business trying to figure this out. And
they have such a difficulty doing that.
It is not only the acquisition. It is the compliance part
of it later. That is also very difficult.
So my problem in listening to how we are going to change
the acquisition process is the whole gamut. And what I want to
hear--and you have only got another year to do this--is how
radical a change does this body need to expect? Because if we--
if you give us something in a year that is extremely radical,
we are not going to be able to make the change.
I love the concept of being able to do this in a DARPA type
of format. I think that would be absolutely the greatest things
we can do.
But the only way we get there is if you actually propose
that we may have to eliminate or preempt the whole acquisition
process that is defense-related from the rest of FAR.
Ms. Lee. That has certainly been discussed. We have
actually had some people recommend starting from fresh
baseline. What that does bring is some complexities because, as
you know, the FAR applies government-wide so that would be--now
you are a company that wants to do business with DOD but now
there are new rules for both.
So we have certainly looked at that and we have had some
recommendations. We have some possibilities on how to give you
some information in a more--more regular intervals, and I do
think there will be some very difficult decisions to make.
Ms. Hanabusa. Thank you, Mr. Chair. My time is up. I yield
back.
The Chairman. Thank you.
Mr. Gallagher.
Mr. Gallagher. Thank you, Mr. Chairman. Can I dig into that
a little more, or related topic? Excuse me.
I want to thank you all for your work and joining us here
today. I was especially impressed by the urgency of your
conclusion. You wrote, ``The time for superficial conversation
and insubstantial changes to regulations and statutes has
passed. The Section 809 Panel has no interest in putting
patches on a broken system. We intend to take a big bite into
real change rather than just nibble around the edges. To do
otherwise is to put our military's mission and our Nation's
safety and security at risk.''
I couldn't agree more, and I applaud you for saying it in
such clear language. And I look forward to working with my
colleagues on the committee and under the chairman's leadership
to advance big and bold reforms.
In recent years we have seen both the Defense Business
Board and a lot of think tank experts call for zero-basing the
defense acquisition system. This procedure would essentially
hold that all acquisition regulations are guilty until proven
innocent that their benefits outweigh their costs.
And I know you are still in the interim stages of your
investigation, but can you talk a little bit more about that
and how seriously you are looking at zero-basing? And in your
professional estimation, would a--such a wholesale change be
practically possible?
Ms. Lee. I think anything is possible. It is do we have the
will and commitment? And one of the things that happens as we
dig through, you know, the Federal--there is this belief by
some that say, ``Oh, you know, the Department did that to
themselves.''
And what we are finding is there is a spectrum here. That
is why we are chasing back every regulation. And it is very
detailed, as where is the source? Where is the origin?
And as you see in our supplemental, on those little, tiny
examples, even those little examples we had to go all the way
back to a statute or an executive order to say, ``In order to
change it in the regulation this source document must also be
changed.'' And so we are providing that information so that it
actually can be acted upon.
Some of our prior reports would say, ``Go make this
happen,'' but without the due diligence to make it happen it is
very difficult.
So yes, we have talked about baselining. It is not only the
Federal Acquisition Regulation; for the Department of Defense
it is also the 5000 regulation, which, as you know again, is
governing to our particularly major weapon systems
acquisitions, but that is one of our findings.
We seem to like to use that huge, one-size-fits-all on
everything and that is part of the problem. No decision is made
yet, but we have discussed that perhaps we have segmented buys,
these--you know, where these long-term platforms do require a
great deal of diligence, a great deal of commitment, but some
of this other technology we should be doing like this. And when
you apply this same process to that, neither one benefits
appropriately.
Dr. LaPlante. I would just add to the--our chair's comment,
to her credit, the chair--and--is that the way the panel is
working is it is working simultaneously with the big concept
ideas, the be bold part. But we know being bold and vague
doesn't help too much. So while we are being bold at the
concept level and reevaluating fundamental assumptions going
back decades, we also have this team that our chairwoman said
is actually going to prepare to go back and do line-by-line
through the regulations to make the changes or recommendations
and go back to the sources.
So we give to you-all--do that work for you. So it is the
simultaneously--you have to really do both.
Mr. Dyer. Mr. Congressman, I will preface this by saying we
don't know the answer yet, but one of the areas of research is
do successful programs succeed because they are walks, because
they are experts in the FAR and how to get through the wickets?
Or are they just more courageous in their culture in using the
freedoms that are allowed within an existing system? Which
works best?
And I think that will inform the question of zero-basing
versus more freedom or more see room.
Mr. Gallagher. Okay. Well, by the time I ask my next
question and you answer I will have exceeded my time, so in
deference to the chairman I won't do that.
I would just say that--maybe because I am new and not yet
jaded, but I think you have a lot of allies here when it comes
to embracing bold reform, and so I encourage you to continue
down that path and hopefully we can muster up the will power
you referenced to be a partner in that.
And so, Mr. Chairman, I yield.
The Chairman. Ms. Shea-Porter.
Ms. Shea-Porter. Thank you. And thank you, Mr. Chairman,
for having this hearing. It is incredibly important.
First I wanted to make a comment.
Mr. Dyer, I was very disturbed but I heard before from a
CEO [chief executive officer] the kind of statement that you
made when they said, ``What is it about capitalism that you
don't understand?'' And I was thinking, well, we wouldn't have
capitalism if we didn't have this great democracy.
And I am wondering where--as I asked my friend who is a
CEO, and I was talking to him about parts and outsourcing, et
cetera, and the concerns, and he said, ``Well, I have to answer
to stockholders.''
And I said to him, ``Well, do you have an office of
patriotism?''
And so you touched on that. So how deep a problem is this?
Have we, like, lost our sense that while the profit is very
important--obviously, people need to have profit--have we lost
our sense of also responsibility and the patriotism? I mean,
you are standing here as patriots and saying, you know, we need
to clean this up, and I agree with you. But I have had 6 years
on this committee and this is a fairly familiar conversation
that we are having right now.
So I just wanted to put that out there and see if anybody
wanted to comment on that. Do we need to have a discussion, a
revisit, a review of, you know, who we are and why we are doing
this?
Mr. Dyer. Well, it is an important question, but it is an
issue of erosion of dominance and timing. I think American
companies--high-tech companies--if they believe we are in a
genuine extremis, if in a World War II kind of a situation, as
Congressman Russell mentioned, I am absolutely confident they
will lay aside everything else and come to the support of the
Nation in a very patriotic sense.
The problem, though, is the time constant of being prepared
today for an erosion of dominance and the time we will have to
harness that patriotism. Companies that are on their way to
being publicly traded companies benefit by operating as a
public company before they go there. We would benefit by
operating as a warfighting acquisition community before we have
to do it.
Mr. Williams. Congresswoman----
Ms. Lee. Go ahead----
Well, I would also like to just mention one of the things
in our report that is a sensitive subject is the balance of
oversight. You notice that I use a term that makes everybody
uncomfortable, which is the--we need to decriminalize commerce.
We many times go into agreements expecting that there is
something nefarious about a company who actually wants to be
treated fairly, is concerned about their reputation, wants to
make a fair product and profit, but yet if they make one little
mistake or they don't sign up--I mean, some recent decisions
where every certification is subject to treble damages,
companies sit back and say, ``Wait. I don't know if I can do
this because of the reputational risk and the very onerous
application of remedy for something that might be--that
certainly is unintentional and may be monitored.''
So I think that is a contributor and certainly I think----
Ms. Shea-Porter. That is a fair comment. And maybe we need
to have this discussion and bring in these companies and sit
and talk about all of this and what the needs are in a
different setting.
And I have one last question: We--our procurement technical
assistance program. I am excited about these young new
companies with their emerging technology, et cetera, but I know
it is difficult. Are we utilizing this? Are they utilizing this
enough? Are they aware of it? Are we making sure they are aware
of it?
Mr. Williams. Congresswoman, we are looking exactly at that
question. In fact, as we think about our small business issues
and things of that matter--that nature, we want to understand
just exactly what you are asking. So we have got a group of
folks who are going to go out and spend some time with PTACs
[Procurement Technical Assistance Centers] and understanding
how much involved and what they are doing to connect small
businesses to the Department.
Ms. Shea-Porter. Right. So because safety and our security
is a responsibility for all of us, and so thank you very much
for the work that you are doing. And I yield back.
The Chairman. Mr. Bridenstine.
Mr. Bridenstine. Thank you, Mr. Chairman. And thank you, to
our panel, for the great work you are doing on behalf of our
country.
I wanted to share with you one of my concerns in the
acquisition process. It starts when requirements are generated,
and then we look through all the different ways to fill those
requirements, and in many cases there is a commercial service
that could be purchased but it only meets 95 percent of the
requirements, and so since it doesn't meet 100 percent of the
requirements we end up immediately moving to a program where
the government is purchasing, owning, and operating an entire
system to meet really what is only 5 percent that commercial
off-the-shelf can't provide as a service. And, of course, that
adds costs, complexity, time, effort, and challenges.
And I see this especially in space-based communications.
There is a lot of opportunity for us to lease capacity from
commercial operators to change the way we do acquisitions of
space-based communications.
But you also see it--and I know, Dr. LaPlante, you and I
have talked in the past about avionics modernization in
aircraft, and I am not going to bring up the C-130 at all
today.
But I will tell you, you know, we see it when we need to do
a modernization of a cockpit and there are commercial off-the-
shelf capabilities and then there is this MILSPEC and we have
to meet a very specific military specification that, you know,
has all these requirements for heat and vibration and all these
hardened kind of capabilities. And then you look at the
aircraft that this avionics modernization is going to go into
and it is a trainer, a T-1, for example, which is not going to
be flying into combat at all.
But we see these kind of programs where there is a 95
percent solution. And sometimes we add requirements that aren't
necessary, and other times if we just included commercial off-
the-shelf in the process ahead of time they could save us a ton
of money and a ton of time and they could do things--I know one
of the things I advocate for is for the protected tactical
waveform, but that is one example of a lot of different
opportunities, if we can involve commercial off-the-shelf ahead
of time we can ultimately save time and money.
And I would like to hear your feedback on these things.
Dr. LaPlante. I will start by saying I think you are
hitting a key point. There is a type of analysis--it is going
to sound very bureaucratic, but called cost capability
analysis. It is really monetizing requirements, basically
saying--to your point about, ``This is going to cost you to get
95 percent; to get to 100 percent is going to double the cost.
Okay, do you really want to do that?''
That analysis, what I just--monetizing requirements
generally does not happen. If it does happen it is not done
robustly because we tend to have these serial processes where
the requirements get finished, they get stamped, they get
released, and then the acquisition people roll up their sleeves
and start working.
No. They should have gone back and forth on this
monetization.
The other piece, I think, which you would appreciate: It
should be transparent. It should be public as best as possible,
including the industry, how much these requirements are
costing. Because then people will say, ``Really? You are really
going to double the cost of that just for that last 5
percent?'' And I think that piece is not done.
And there are pilots being done around. We did one in the
Air Force when I was there on EPAWSS [Eagle Passive Active
Warning Survivability System] for F-15. I recommend you look at
it. We had one lieutenant or captain in the Air Force probably
saved--he saved us a ton of money by just going back to ACC
[Air Combat Command] and saying, ``Look how much more this is
costing for this requirement.'' And they said, ``Oh, okay.
Never mind.''
So this is really important.
Mr. Bridenstine. And in many cases what you find in these
programs where you are trying to finish that last 5 percent, we
come to the end of the useful life of one satellite program and
now in order to maintain that extra 5 percent, whether it is
protection or some other kind of capability that is necessary
for the military but not necessarily for--necessary for
commercial, we enter into an entirely new military, you know,
government-purchased, government-owned, government-operated
system when it is not necessary if we would just include
commercial in what we were trying to accomplish to begin with.
Some of the folks that I have talked to have described it
as the ``tyranny of the program of record,'' where you finish
one program of record and you go on to the next program of
record without looking at what are all the options available to
us. And I know that is what the analysis of alternatives kind
of process is all about, but I don't think that always that is
as utilized as it ought to be, as you articulated just now.
So with that, Mr. Chairman, I thank you for the time. I
yield back.
The Chairman. Thank you. Mr. Courtney.
Mr. Courtney. Thank you, Mr. Chairman. And thank you, to
all the witnesses, for being here and for the report, which,
again, really is a serious analysis of the challenge that we
face.
I represent southeastern Connecticut, which a few years ago
we celebrated the 60th anniversary of the launch of the
Nautilus, and the story of Hyman Rickover, Admiral Rickover, in
terms of how he basically went around the Navy and the Pentagon
to bring to fruition. It was a 5-year gap in time from the
first lightbulb that was powered by nuclear power to the launch
of the Nautilus.
Inside the Navy they were telling him it would take 75
years before they would ever see a nuclear-powered vessel and,
again, he actually went to Congress to find ways to get around
the, you know, the Pentagon sort of bureaucracy.
And, you know, looking at the path forward at the end of
your report in terms of just, you know, ideas that you are
looking at in terms of thinking bold and moving forward, how
can Congress sort of help with that?
I mean, other than, you know, obviously, I am sure the
chairman who is so passionate about this is going to do what he
can to authorize, but, you know, obviously that story, which is
probably going to never be repeated again--maybe not--but, you
know, Congress really was a very big sort of player in terms of
an advance that I think has really stood the test of time. I
mean, our Navy still, I think, you know, surpasses in terms of
capability because of that incredible genius and determination,
you know, that took place 60-some-plus years ago.
So I don't know if you have any sort of comments about, you
know, ways this branch of government can sort of, you know,
kind of help sort of goose the process.
Mr. Williams. Yes, Congressman. I think your question
speaks to as we put together a set of bold recommendations, how
do we make sure that they are fully implemented to achieve the
success that we collectively believe is important? And I think
there is a series of things that have to go on.
Obviously within the Department there has to be a
phenomenal change in management activity established and we
have to inculcate this kind of thinking philosophically into
our training programs.
I think the Congress has to provide the sort of stick-to-
itiveness from sort of an independent perspective, you know, of
even thought, you know, there needs to be a continual, ongoing,
independent authority that looks at, are we actually
implementing the way that the Congress believes these kinds of
recommendations should be implemented? Because typically what
seems to happen is as we go through administrations and changes
of cycles people lose priorities and they refocus and we start
to get away from things that we collectively believed were
important before we even put them in place or--and can
understand whether or not they make a difference.
So I think there are some efforts that can put--be put
together to help us get down the road and make these things
effective.
Mr. Dyer. Congressman, there are similar stories today of
tremendous success at great speed, but they are from Amazon and
from Facebook and from Google. America knows how to do this. We
just need to make it attractive to do it for the common good.
Dr. LaPlante. And I would have to say, I just credit this
committee and the chairman of this committee for your steady
attention on this. It is making a big, big difference. It is.
It is a hard slog, you know, it is a hard slog.
The other thing I really commend doing--and I think this
committee has done this over the years--stick to root cause.
Treat the underlying disease, not the symptoms. That is one
thing we are always asking ourselves.
But again, I think to Admiral Dyer's point, you guys all
know you go out to the Valley and you sit down with Facebook,
Google, and the companies, and you look at what they are doing
and you say, ``We can still do this stuff. It is just we gotta
be doing it in the government.''
The Chairman. Mr. Wittman.
Mr. Wittman. Thank you, Mr. Chairman. I would like to thank
the witnesses for joining us today.
Dr. LaPlante, I want to begin with you. I recently had a
meeting with the CEO of one of the most successful defense
contractors in the world and I asked him what goes into a
successful contract. And he outlined three items: requirement
stability, financial stability, and execution.
And I wanted to get your perspective. Obviously through the
acquisition process in the Air Force you have seen a lot
through the years. Give me your perspective: What do we do to
address the first item he points out, which is requirement
stability? How do we push out requirement creep?
And you have spoken a little bit about that but I want to
get a little more specific in your ideas about how that can
happen.
Dr. LaPlante. Yes. Actually, I think my experience in the
last 3 years when I was in the Pentagon, for the big weapon
systems programs I didn't see requirements creep. You know, the
cliche is that the four-star comes running in and pounds on
your desk and says, ``Oh, never mind. I don't want the fighter
to do this; I want it to do that.'' That doesn't happen.
In fact, if you look at the bomber, what is now called the
B-21, those requirements--they were classified requirements,
mostly--were signed out by Robert Gates, Secretary of Defense,
in 2011 and they remained completely unchanged to this day. And
that was really important for this industry because what
industry will tell you is, finalize your requirements, get it
to us early, don't change them, and give us stability in
funding and we will execute to it.
The only addition I would make, which is something that I
am still struggling with and I know the panel is struggling
with, is the commercial companies that are moving fast don't
pretend that they are going to know all the requirements when
they start something fast.
Mr. Wittman. Right.
Dr. LaPlante. So I think there are some activities with
technology that you have to have a much more give-and-take on
requirements as you build it, sort of the discussion we were
just having with Congressman Bridenstine.
But I think for the big weapons platforms it is exactly
right. What industry hates is they hate the fact that you are
modifying the requirements a month before you drop the RFP.
They say, ``Wait a second. I can't invest.''
So that is really hard. And it takes discipline not to
change requirements.
In fact, in the tanker--the tanker is a fixed-price
contract--my job and the job of the Air Force was never change
the requirement. Not once. And so far they have managed to do
that. So it is very important.
Mr. Wittman. Is there more we can do up front with certain
elements in the industry in the RDT&E [research, development,
test, and evaluation] to say, ``Give us your thoughts and ideas
about what we can accomplish''?
And obviously within the Pentagon there needs to be a
baseline about what the needs are, but as Mr. Bridenstine spoke
about too, it is a matter of, you know, what can you do quickly
and what can you do most cost-effectively not just in the
acquisition process but also the life cycle?
And if you can take an off-the-shelf technology, many
times, you know, value, life-cycle cost, all are much, much
better in that realm than something that is driven to 100
percent requirement.
Dr. LaPlante. Right. I believe very strongly that you have
to do the kind of work that we were discussing with Congressman
Bridenstine very early before you get the big acquisition. You
go back and forth and say, ``What can be done commercially?
What can be done? Can we go back and forth?''
That has to be transparent, as I said, with industry.
The interesting thing is in the Pentagon you are
discouraged from doing that because you are interacting with
industry while you are forming the requirements. And people
used to ask me, ``Well, isn't industry going to steer your--the
requirements to their solution?'' You know, I said, ``Well, of
course they are going to but let's at least be transparent
about it. Let them be an advocate for their solution.''
But that has all gotta be done at the very beginning. And
then once you are done then you don't change the requirements.
Mr. Wittman. I agree.
Mr. Williams, let me ask a little bit different track
question. Give me your perspective on the use of incremental
funding, especially for larger programs where we expend dollars
over a number of years and being able to leverage the most out
of the dollars that we allocate in any one year. Give me your
perspective on that.
Mr. Williams. It is absolutely critical. I mean, that gives
us the funding flexibility that we need as we look across the
years. I mean, this question of how we think about requirements
and the changes that need to occur across the technology space
as it goes forward requires that we are able to fund contracts
based on the need as it exists and as it changes.
We all too often get stuck in a requirements set,
particularly in the high-tech community where things are
changing rapidly, and the nature of the funding, the
incremental approach would be critical to allowing us to do
that in a more flexible way.
Mr. Wittman. Very good. Admiral Dyer, any thoughts about
requirements creep or incremental funding?
Mr. Dyer. I am often asked, after having spent a long
career in defense acquisition and then in my corporate world,
``What are the differences?''
You have, I think, touched one of the primary differences
that I observe, and that is the ability to--for commercial
industry to sit down with suppliers, to have a discussion about
what technology can bring to the need that the company has. And
that is an intense dialogue that arrives at an understanding of
requirements and contract much earlier and much faster than we
do it in government.
Why is it hard for us in government? I always suck wind
through my teeth when I say this, but we are so worried about
the appearance of fairness that sometimes we act not in the
best interest of the Nation.
Mr. Wittman. Very good. Thank you, Mr. Chairman. I yield
back.
The Chairman. Mr. Wilson,
Mr. Wilson. Thank you, Mr. Chairman. And, Chair Lee and
fellow commissioners, thank you very much for your thoughtful
report--interim report. We appreciate your dedication and hard
work.
And, Madam Chair, led by Chairman Mac Thornberry the House
Armed Services Committee has been concerned about the
cumbersome and time-consuming acquisition process that has
hindered the Department's ability to get innovative technology
to the warfighter quickly enough to make a difference. In your
view, is the Department competitive in getting the best
technology to the warfighter in the theater, and do you have
any recommendations to expedite?
Ms. Lee. That certainly is a thrust of our report.
My concern, as we have heard from many of the members here,
is we do have a very powerful military. We don't want to in any
way, shape, or form belittle what has been accomplished. But
what we are saying is the environment has changed so
substantially that that era and that approach needs to be
modernized to address the emerging and changing threat and the
changing dynamic marketplace.
I think time is critical, and we have got to figure out a
way to do these things much more quickly.
Mr. Wilson. And I wish you well because in my National
Guard service we work with communications, the SINCGAR [Single
Channel Ground and Airborne Radio] system. And it certainly
occurred to me, as--even as a JAG [Judge Advocate General]
officer, that we could do better, and with more advanced
technology. And so I look forward to your recommendations
particularly on communications.
And, Secretary LaPlante, the report indicated the growing
and changing global defense marketplace where companies are no
longer dependent on the Department of Defense for contracts and
parts for major systems are sometimes built all over the world.
Specifically, the report references the F-35 is produced in
part by eight foreign nations.
Is your view that all components should be manufactured in
the United States, or is multinational manufacturing helpful
while securing our technological advantage? And keeping in
mind, too, that the F-35 multinational manufacturer creates an
international market.
Dr. LaPlante. Yes, that is a--it is a great question.
I think it was just the other day that the first F-35 was
built in Italy was just rolled out, if I remember right, and it
is going to be produced, I believe, also in Japan. So yes,
there is--the international aspect of the F-35 program is a
huge strength of the program, frankly.
It is a huge strength for multiple reasons. One is we want
our allies and partners to be buying the airplane because it is
the best airplane in the world for that kind of plane, and we
are going to fight with them. We certainly don't want them to
go to other people.
I was going to the airshows; I know some of you go to these
airshows. Was at the last one I went to as assistant secretary
was Dubai. The Chinese push of their military equipment there
was very strong. They had their replica of the F-35, the J-31;
they had their version of the MQ-9.
You know, they were--so it is very clear we don't want
other countries to buy their stuff; we want it to buy the F-35.
So it is a strength of the F-35.
The question that you are getting at, which is the risk
equation, which is the supply chain risk, and do we have an
understanding of the supply chain and its global origins. I
think where technology is going, without getting too technical
here, the idea of having a root of trust in, for example, our
hardware, regardless of where it is developed, is something
that we as technologists have to give everybody because we are
at a point even in cellular communications just in this country
where the root of trust of the cellular communications may be
produced in China.
So it is a much bigger issue than just with the military,
and I think the technical solution to it is understand the
supply chain, understand how the root of trust is ensured,
meaning how do we understand the sanctity of what has been done
or not to that supply chain. That is not easy, but I think the
answer of pulling everything back in and not having F-35s
produced globally is not the right answer.
Mr. Wilson. And I appreciate particularly the concern of
security of maintaining, that indeed what is produced is not
copied by some other country that might come to mind.
And for Commissioners Williams and Dyer, your interim
report indicates that DOD asked if it could dictate terms to
the industry, driving many companies not to be a part of the
defense market. Can you elaborate on what DOD can do to change
this pattern?
Mr. Williams. Yes. I think we have to look particularly at
the oversight structure that is involved in managing and
supporting contracts. The whole issue of compliance centered
around audit requirements, and pricing, and things of that
nature is robust opportunity because when you think about the
timeframe that it takes and the amount of resources that
industry has to bring to bear to meet those compliance
requirements, it often keeps them from wanting to do business
or giving them the ability to do business with the Department.
That is one of the things we hear consistently as we talk
to companies out there who want to do business but have chosen
not to.
Mr. Wilson. Thank you very much.
Mr. Dyer. Congressman Wilson, I should mention especially
for you, sir, that the panel is well-led, and as you may or may
not know, our chairperson, Ms. Lee, is from South Carolina. So
I just wanted to point that out.
Mr. Wilson. That should have been brought up first. I can't
believe it. I always count on the chairman to bring up
important issues. Thank you very much.
[Laughter.]
Mr. Dyer. Sir, in answer to your question, we have to
facilitate a conversation between high-tech nontraditional
industry and DOD. You and I recently have discussed the role
that consortia may be able to provide in terms of bringing in
refreshed R&D [research and development], to expand the base,
and to find those kinds of successes that we see at Amazon,
Google, et cetera, and bring them back into DOD.
The Chairman. Ms. Stefanik.
Ms. Stefanik. Thank you, Mr. Chairman. Thank you, to our
witnesses, for being here today.
In today's economy the pace of technological advancements
is growing exponentially, and in the interim report it--you
write, quote--``The acquisition process must be agile enough to
respond to rapidly evolving threats and fast enough to develop
and deliver new capabilities within the arc of emerging
threats.'' And my particular interest is in the area of the
cyber domain.
Could you discuss the reform measures you have identified
that better achieve this agile system to respond to emerging
threats specifically in the cyber domain?
Dr. LaPlante. I don't know if the commission has weighed in
yet on cyber. I will give you some of my own views that are
not--the commission hasn't done it, but the others can chime
in.
Let's talk about the--what makes it hard for somebody who
is trying to do damage to you with cyber. What makes it hard
for them?
Couple things. One, if you are changing all the time--if I
am putting out, you know, hundreds of versions of Google every
2 days, or Facebook, whatever, for whatever reason I am doing
it, that has gotta be hard on an attacker, number one.
The other is heterogeneity, meaning things are different.
We tend to, for economies of scale, make things the same.
I think those two design principles--speed, which is
already happening anyway in the commercial world, constant
development, constant change, constant pushing--literally
software pushed out overnight, and then look at the design and
heterogeneity. I think those key aspects of design will keep us
ahead in cyber because the benefits we get from the Facebooks
and the Googles and our mobile apps is great for society. It
brings with it risks, but we have to manage it into our system.
And so I think that is a key point for cyber.
Ms. Lee. And I think what we also see in our report, there
is a mismatch between that ability to constantly change when we
want to well-meaning, you know, have this process where it is
full and open, everybody can propose. That takes time and
really impacts the ability to be flexible and make those
changes.
So we are asking ourselves not specifically from cyber--
although we have looked at from a technology standpoint--is
there a better way to have a competitive underpinning but a
much more flexible response?
Dr. LaPlante. That is part of another activity. I have been
looking at this, and just to add to that, I think it is Google
says that they change half their software every month. Now,
what ``change'' means--maybe small change, big change. Cars are
pushing software out overnight, okay?
So the idea that we could move into a system, could you
imagine pushing out continuously software globally to the F-35
mission systems? People shudder at that.
On the other hand, for lots of reasons, including security,
that may be where we need to go. That certainly is where the
commercial world is going.
Ms. Stefanik. Just to follow up, Dr. LaPlante, you talked
about--and Ms. Lee--you spoke about how you are not
specifically looking at cyber or haven't yet as part of--it
wasn't included in this interim report. I think that is really
important.
In my capacity as chairwoman of the Emerging Threats
Subcommittee, Cyber Command falls under our jurisdiction, and
acquisition reforms, we need to look critically on what our
proposals are and how they would impact cyber because, as I
said, the pace of development is much more rapid and we need to
ensure that we are investing in our cyber readiness, in our
cyber defenses.
So a year from now I am hopeful that you can have a
specific response related to cyber.
Any comments? I would like to get your feedback on that.
Ms. Lee. We will certainly put it on our list here and see
how to best go about that.
Ms. Stefanik. Okay. Thank you, Ms. Lee.
Ms. Lee. Look forward to working with you on it.
Dr. LaPlante. I would also commend--there is some great
work that is being done by the Defense Science Board on cyber,
and they are--and I would also get this committee to look at
that, including the resiliency of our weapon systems on all
these issues. Whether this panel gets to it, I leave it to our
chair.
But we appreciate the concern. Obviously cyber is at the
top of all of our minds.
Ms. Stefanik. Okay. Thank you. I yield back.
The Chairman. Mr. Russell.
Mr. Russell. Thank you, Mr. Chairman. And thank you for
this great report, but it is really on us collectively to do
something about it.
I guess, you know, as I look at the threats, powerful
nations with economies that have a totalitarian type of system,
they can streamline acquisition very quickly. The only way we
will be able to leverage and stay ahead is through our
innovation.
And yet, we have seen 300--by your own report--300 primes
now reduced to 5 mega-primes. We see an archaic system where
small businesses that really aren't small anymore, leveraging
our rules where they are a $2 billion to $3 billion company,
and they are still taking small business incentives. I haven't
figured out how they do that.
And as I look at the funding of concepts with no real
delivery. You have small companies out there that are doing
incredible innovation but, you know, a mega-prime will step in
and, ``Well, for $200 million we will come up with a concept
and a plan and we will get back to you,'' and often those
dollars will get siphoned off.
Mid-sized companies, the few that remain, are investing
their own venture capital and they are putting their investment
and innovation in, and then when they come to the table with
fantastic ways to leverage the future, we have the simplified
acquisition program, which is no longer simplified, and then
our FARs. You know, my own thinking is we need to throw out all
of the FARs, just throw them all out, and then make the case
for which ones need to go back in instead of the other way
around, and I think we might be better served.
But with regard to incentives, I was caught in your report
where you say, ``Without changing this mentality of incentives
we will never have reform occur.'' And I agree with that.
And on that note, the Defense Innovation Unit Experimental,
that is something that we have seen some amazing things happen
from. You know, I think of these innovative smaller companies
that gave us the Predator, the OCAS [Obstacle Collision
Avoidance] system, I mean, things that are totally changing in
how we fight and deal with future threats.
Would you all speak to the DIUx program? Because there has,
you know, been kind of the--it has been vogue to try to want to
crush that, and I would like your opinion on that.
Dr. LaPlante. I will just say a few words about it. I don't
know if the panel is--or the commission is looking specifically
at DIUx. What the commission is looking at, which will
hopefully answer your question, is things that DUIx is trying.
And so anybody who is trying the following, we commend them
because it is experimentation.
What they are doing is they are trying things like other
transactional authority. Remember earlier we were talking about
how hard it is to do contracting?
Mr. Russell. Right.
Dr. LaPlante. Well, the DUIxes, both out in California and
in Boston, and maybe the other one, too, is trying to get
people on contract sometimes within weeks and using the
authorities that they have. And just by doing that alone they
are providing a huge value and learning the lessons for it.
So I would commend any activity--and I think the committee
would--any activity that the Department has that is trying
these experiments of using existing authorities to do things
differently or faster.
And I could turn it over to my colleagues for other
comments.
Mr. Williams. Congressman, we have spoken to DIUx a little
bit, and they are doing some tremendous things and they are
taking advantage of authorities that exist to allow them to
move fast. OTs [Other Transactions] are one example.
The question that I think is important for all of us is why
aren't we able to do that in other parts of the Department? You
know, why do you have to have these sort of specialized groups
to do that?
And I think that is the root question here because
obviously one organization is limited in its capabilities and
what it can do, and we need to think that through. I think
DIUx, working with the services, you know, obtain funding to go
acquire things that the services need, but you have to ask
yourself, why do the services need to turn it over to DIUx? Why
aren't they able to do that themselves?
Mr. Russell. Yes. I couldn't agree more. And I think, you
know, when we have a national emergency we see things like the
Rapid Fielding Initiative, DIUx, these different programs that
meet the emergency, where industry, as you have all commented
on, in leveraging their off-the-shelf technologies, it is like,
``Well, okay, how could we harden that?'' Or better yet, how
could we adapt our systems, you know?
And the warriors out there in the field, they figure out
how to do that stuff all the time. And I guess, you know, I am
heartened to hear you say that and I would hope, Mr. Chairman,
that as we look into the future on contracting reform we don't
kill the nascent systems that really help us get to that.
And then I am very interested, Ms. Lee, in some of these
FAR eliminations, and I hope you will let us reach out to your
office because we will have an axe in hand and drop amendments.
So I hope to be contacting you.
Thank you, Mr. Chairman.
Ms. Lee. We look forward to that. Thank you.
The Chairman. Ms. Lee, we really hadn't talked about
timing. I mentioned at the beginning that through no fault of
the commission you all kind of got off to a slow start. What
are you looking at now?
Ms. Lee. Mr. Chairman, thank you for acknowledging that. We
did get a slow start and we very much appreciate the 2017 NDAA
where you clarified that we are an independent panel and that,
in fact, the panel had the authority to use 5 U.S.C. [United
States Code] 3161, which we needed in order to hire our staff
and also to accept industry volunteers, or volunteers. So that
has been very fruitful.
However, we--even though we were sworn in in August of 2016
we couldn't hire any of our small staff until December of 2016,
and so we got internet in March and had quite a celebration
over that. So that is a very long way of saying we would like
to have 2 full years to do our work, and so with a start in
about the, you know, January timeframe, we would like very much
to go to January of 2019 to give our report. I think that
aligns with your calendar.
We are discussing some possibility of some interim
supplemental reports, and then the other thing would be however
long you would want us to be available after that to take your
actions and to do additional work.
The Chairman. Well, we certainly want to work with you on
it. Obviously we want to take advantage of this gathering of
expertise that you have assembled on the commission. At the
same time, I think we feel the same sense of urgency that you
all have so eloquently expressed here today.
So you want to get it right but you also want to push out
boldly, and so we want to work with you on timing. My personal
opinion is that maybe some interim reports help because that
gives us some meat to work with while you continue to work on
the other items.
Ms. Lee. Thank you, Mr. Chairman. We would also really
like--I would like to acknowledge the Army has been very
helpful, forthcoming with detailees and help.
We are working with the other services and we are also
working a little on the budget challenge. So those are the
challenges that remain before us.
The Chairman. Well, I would just say in general that I am
incredibly encouraged by the last 2 hours. I have heard the
same things that you all have referenced, that, ``Oh, just
another study on acquisition. Everybody has tried. You are
beating your head against the wall.''
Number one, I don't think any of us can accept what we have
today because we know we can't defend the country that way. But
secondly, I am really impressed each of you bring particular
expertise based on your experience in various places in the
system, and you feel that urgency and can bring your expertise
to bear with an urgency to get it fixed.
So, you know, I know we will never have a perfect system,
but on the other hand, I am very encouraged. And you could tell
from the questions on both sides of the aisle, there are
members of this committee that are just as determined as you
all are to work to make this better. And I think together, with
your work product, our continued efforts, we definitely can.
And so I want to thank you for what you have done so far,
being here for the--today, the interim report, and especially
for the work that you are going to do in the future.
Hearing stands adjourned.
[Whereupon, at 11:50 a.m., the committee was adjourned.]
=======================================================================
A P P E N D I X
May 17, 2017
=======================================================================
=======================================================================
PREPARED STATEMENTS SUBMITTED FOR THE RECORD
May 17, 2017
=======================================================================
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
=======================================================================
DOCUMENTS SUBMITTED FOR THE RECORD
May 17, 2017
=======================================================================
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Note: Intentionally blank report pages ii, 26, 36, and 50, as well
as back cover pages, were not included in this reproduction of the
Section 809 Panel Interim Report.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]