    [House Hearing, 115 Congress]
    [From the U.S. Government Publishing Office]

    .
                             [H.A.S.C. No. 115-78]

                 ASSESSING MILITARY SERVICE ACQUISITION REFORM

                                   __________

                          COMMITTEE ON ARMED SERVICES

                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  HEARING HELD

                                 MARCH 7, 2018

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                    __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    29-416                       WASHINGTON : 2019

    -----------------------------------------------------------------------------------

                          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
    BILL SHUSTER, Pennsylvania           MADELEINE Z. BORDALLO, Guam
    K. MICHAEL CONAWAY, Texas            JOE COURTNEY, Connecticut
    DOUG LAMBORN, Colorado               NIKI TSONGAS, Massachusetts
    ROBERT J. WITTMAN, Virginia          JOHN GARAMENDI, California
    DUNCAN HUNTER, California            JACKIE SPEIER, California
    MIKE COFFMAN, Colorado               MARC A. VEASEY, Texas
    VICKY HARTZLER, Missouri             TULSI GABBARD, Hawaii
    AUSTIN SCOTT, Georgia                BETO O'ROURKE, Texas
    MO BROOKS, Alabama                   DONALD NORCROSS, New Jersey
    PAUL COOK, California                RUBEN GALLEGO, Arizona
    JIM BRIDENSTINE, Oklahoma            SETH MOULTON, Massachusetts
    BRAD R. WENSTRUP, Ohio               COLLEEN HANABUSA, Hawaii
    BRADLEY BYRNE, Alabama               CAROL SHEA-PORTER, New Hampshire
    SAM GRAVES, Missouri                 JACKY ROSEN, Nevada
    ELISE M. STEFANIK, New York          A. DONALD McEACHIN, Virginia
    MARTHA McSALLY, Arizona              SALUD O. CARBAJAL, California
    STEPHEN KNIGHT, California           ANTHONY G. BROWN, Maryland
    STEVE RUSSELL, Oklahoma              STEPHANIE N. MURPHY, Florida
    SCOTT DesJARLAIS, Tennessee          RO KHANNA, California
    RALPH LEE ABRAHAM, Louisiana         TOM O'HALLERAN, Arizona
    TRENT KELLY, Mississippi             THOMAS R. SUOZZI, New York
    MIKE GALLAGHER, Wisconsin            JIMMY PANETTA, California
    MATT GAETZ, Florida
    DON BACON, Nebraska
    JIM BANKS, Indiana
    LIZ CHENEY, Wyoming
    JODY B. HICE, Georgia

                          Jen Stewart, Staff Director
                   Eric Mellinger, Professional Staff Member
                          William S. Johnson, Counsel
                             Britton Burkett, Clerk

                                C O N T E N T S

                                  ----------
                                                                       Page

                  STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

    Smith, Hon. Adam, a Representative from Washington, Ranking
      Member, Committee on Armed Services............................     2
    Thornberry, Hon. William M. ``Mac,'' a Representative from Texas,
      Chairman, Committee on Armed Services..........................     1

                                   WITNESSES

    Geurts, James F., Assistant Secretary of the Navy, Research,
      Development, and Acquisition...................................     4
    Jette, Dr. Bruce D., Assistant Secretary of the Army,
      Acquisition, Logistics, and Technology.........................     3
    Roper, Dr. William, Assistant Secretary of the Air Force for
      Acquisition....................................................     5

                                    APPENDIX

    Prepared Statements:

        Geurts, James F..............................................    65
        Jette, Dr. Bruce D...........................................    53
        Roper, Dr. William...........................................    72
        Smith, Hon. Adam.............................................    52
        Thornberry, Hon. William M. ``Mac''..........................    51

    Documents Submitted for the Record:

        [There were no Documents submitted.]

    Witness Responses to Questions Asked During the Hearing:

        [The information was not available at the time of printing.]

    Questions Submitted by Members Post Hearing:

        Mr. Bacon....................................................    93
        Mr. Banks....................................................    93
        Mr. Courtney.................................................    87
        Mr. Gallagher................................................    92
        Mrs. Hartzler................................................    90
        Mr. Scott....................................................    91
        Ms. Speier...................................................    88

                 ASSESSING MILITARY SERVICE ACQUISITION REFORM

                                  ----------

                              House of Representatives,
                                   Committee on Armed Services,
                              Washington, DC, Wednesday, March 7, 2018.
        The committee met, pursuant to call, at 10:02 a.m., in Room
    2118, Rayburn House Office Building, Hon. William M. ``Mac''
    Thornberry (chairman of the committee) presiding.

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

        The Chairman. The committee will come to order. A major
    priority for this committee over the past 3 years has been
    reforming DOD's [Department of Defense's] acquisition system to
    help ensure that taxpayers get more value for their money and
    to improve our agility in dealing with the many serious
    security threats our country faces.
        We have enacted literally hundreds of changes to the law
    designed to improve agility, streamline processes, remove
    cumbersome statutory requirements, and foster greater
    commercial industry participation in the defense sector.
        We have also augmented authorities to support rapid
    prototyping and fielding the use of other transaction
    authority, as well as engagement with non-traditional
    contractors, all intended to accelerate innovation during a
    time when, as Secretary Mattis testified here last month, ``our
    competitive edge has eroded in every domain of warfare: air,
    land, sea, space, and cyber.''
        A major part of the changes we have enacted have placed
    more authority and more responsibility for acquisition
    decisions back with the services. Thus, it is essential for us
    to closely monitor whether the law is being followed and
    whether adjustments need to be made.
        In addition, we are looking to take additional steps in
    this year's bill. We have done a lot, but a lot remains to be
    done. Today, we welcome as witnesses the service acquisition
    executive [SAE] from each of the three services. Only recently
    have all three services had their confirmed SAEs in place.
        But I also know that each of these three witnesses have had
    extensive experience in overcoming DOD's institutional
    challenges to agile acquisition in order to deliver better
    capabilities to our warfighters.
        Having this discussion early in their tenure in these
    crucial positions is appropriate. But we will also be
    discussing these issues in hearings and briefings in the coming
    weeks with the service secretaries and with the service chiefs.
        As with most initiatives in this committee, the push for
    acquisition reform has been nonpartisan with many members on
    both sides of the aisle making substantial contributions. I
    have no doubt that the commitment from the legislative branch
    on this issue will continue, and we look forward to working
    with our witnesses today and with others at DOD toward these
    essential goals.
        I yield to the ranking member.
        [The prepared statement of Mr. Thornberry can be found in
    the Appendix on page 51.]

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

        Mr. Smith. Thank you, Mr. Chairman. I agree substantially
    with your remarks. I think it has been a huge priority for this
    committee to work on acquisition and procurement reform so that
    we can get more for the money that we spend, and I think the
    chairman here and also in the Senate has done great work on
    providing the Department with options to improve that process.
        So several things we are interested in today; number one,
    how is implementation going on the acquisition reform. Have we
    done too much? Have we thrown too much process at them to get
    them to try and fix it? Is there more that we could do on that
    front?
        And then the other thing, we had a discussion at our
    retreat with the Deputy Secretary about some of this. What
    would be really helpful I think on acquisition reform is,
    frankly, when you say acquisition reform people's eyes
    primarily glaze over. And this is not the most well-attended
    committee hearing I think we have ever had.
        It is not terribly exciting. It is terribly important
    because it is a matter of how much money we spend. If we could
    come up with some measurables, some anecdotes. The Secretary
    was talking about some of his frustrations with the per
    airplane cost of the F-35 versus the per airplane cost of the
    787 when he was working at Boeing.
        Yes, it is worth noting that the 787, you know, did not
    have to be stealth, did not have to fire any missiles, did not
    have to go at Mach 3, so there are reasons for that. But he
    also mentioned how difficult it was to get a replacement part
    for a 737 in the DOD versus a 737 commercial. You can do it in
    like less than 24 hours commercial. It took like 2 months.
        So as we are looking at acquisition reform, if we can have
    success stories, like here is a per unit cost, here are some
    things we are having trouble with repairs, we have cut that
    time in half, we sped that up. If we could show measurable
    improvements, I think that would help get people more excited
    about acquisition reform.
        And also final point, and I think this is the most
    important thing in acquisition reform is changing the culture
    within the Pentagon. We can write whatever laws we want to
    write. We can write the best acquisition process the world has
    ever seen.
        At the end of the day, the people over in the Pentagon are
    going to be there a lot longer than any of us and they are the
    ones who are going to make the decision.
        And I think if the culture comes down to the point where
    everyone at the Pentagon is really excited because they
    replaced a flap on an airplane in half the time they used to
    and that becomes incentivized and rewarded, that is what is
    going to be the key to get us moving in the right direction.
        So I thank the chairman for having this hearing and for all
    of his work on acquisition reform, and I yield back.
        [The prepared statement of Mr. Smith can be found in the
    Appendix on page 52.]
        The Chairman. I thank the gentleman.
        We are pleased to welcome as witnesses today the Honorable
    James F. ``Hondo'' Geurts, the Assistant Secretary of the Navy
    for Research, Development, and Acquisition; the Honorable Bruce
    Jette, Assistant Secretary of the Army for Acquisition,
    Logistics and Technology; and the Honorable William Roper,
    Assistant Secretary of the Air Force for Acquisition.
        Without objection, your full written statements will be
    made part of the record and we will turn the floor over to you
    all for any oral comments that you would like to make. Again,
    thank you for being here.
        Dr. Jette, maybe we will start with you.

      STATEMENT OF DR. BRUCE D. JETTE, ASSISTANT SECRETARY OF THE
              ARMY, ACQUISITION, LOGISTICS AND TECHNOLOGY

        Secretary Jette. Chairman Thornberry, Ranking Member Smith,
    and distinguished members of the Committee on Armed Services,
    thank you for the opportunity to appear before you today to
    address Army acquisition reform initiatives.
        The Army is fully committed to leveraging the reforms
    Congress has provided. As the Assistant Secretary of the Army
    for Acquisition, Logistics and Technology, I fully support the
    Secretary of the Army's top priorities: readiness,
    modernization, and reform.
        Readiness is essential to current world environment.
    However, today's modernization will be tomorrow's readiness.
    Acquisition reform is absolutely essential and is ongoing.
        The Rapid Equipping Force and the Rapid Capabilities Office
    already provide rapid solutions. Streamlined processes,
    policies, and direct senior leader guidance to the acquisition
    workforce are setting expectations. Coherency between
    operational requirements and acquisition communities is being
    accomplished through the Chief of Staff of the Army's
    reinvigorated Army Requirements Oversight Council.
        Moving milestone decision authority to the services for all
    but select programs has enabled both greater flexibility and
    accountability. NDAA [National Defense Authorization Act] 2016
    section 804 bolsters and simplifies rapid maturation of viable
    requirements and select procurements. Better management of
    intellectual property provides contractor protection while we
    retain control of our destiny. Central to this is maximizing
    the use of modular open system architecture.
        Other transaction authority can allow greater contract
    flexibility; however, all contract types offer strengths to be
    exploited, including in combination. Data transparency, one of
    my priorities, enables data-based decision making.
        The Secretary the Army and the Chief of Staff of the Army
    have established six modernization priorities to ensure
    overmatch. Our acquisition system must switch from a slow,
    sequential Industrial Age model to one more aligned with
    commercial concepts and timelines.
        Realignment of research and development programs and
    funding to the six priorities ensures a focus against military
    unique needs. A gating process enhances fiscal and project
    control. Innovation is enabled through better funding
    allocation rules. Crossing the valley of death from research
    programs to programs of record is now a deliberative process.
        Directed energy, artificial intelligence, ultra-secure
    communications, robotics, energetics, and altered-design
    materials must provide advantages beyond mere commercial
    application to ensure an overmatch against our adversaries.
        As I said during my confirmation hearing, there are about
    5,000 government contractors but about 23 million corporations
    in the United States. We must make it attractive to do business
    with us in order to increase competition, decrease costs, and
    gain access to innovative technologies.
        In order to fully realize the benefits of acquisition
    reform, it takes a talented, well-trained acquisition
    workforce. The Defense Acquisition Workforce Development Fund
    and the Defense Acquisition Workforce Improvement Act have been
    excellent tools. However, particularly in the uniform side, the
    20-year career pattern of the Defense Officer Personnel
    Management Act places constraints on training and experience
    development.
        Mr. Chairman and distinguished members of the committee,
    the Army has benefited greatly from this committee's ongoing
    emphasis on reform, for which I am grateful to the members of
    this committee. Thank you for your steadfast support to the
    outstanding men and women of the United States Army, Army
    civilians, and their family.
        I look forward to your questions.
        [The prepared statement of Secretary Jette can be found in
    the Appendix on page 53.]
        The Chairman. Mr. Geurts.

    STATEMENT OF JAMES F. GEURTS, ASSISTANT SECRETARY OF THE NAVY,
                 RESEARCH, DEVELOPMENT, AND ACQUISITION

        Secretary Geurts. Chairman Thornberry, Ranking Member
    Smith, distinguished members of the committee, thank you for
    the opportunity to appear before you today with my fellow
    service acquisition executives.
        I look forward to discussing how the Department of the Navy
    has embraced the new acquisition authorities, the obstacles and
    opportunities we have experienced in accelerating the benefits
    of these new acquisition authorities, and recommendations we
    have on how to continue to improve the defense acquisition
    enterprise.
        We are taking a 3D [three-dimensional] approach to
    improving the Department of the Navy's acquisition:
    Decentralization, by that I mean putting authority and
    accountability at the right level; differentiation, having
    several acquisition tools available and choosing the right tool
    for the job; and digitization, harnessing the power of the
    digital age in all we do and how we do it all.
        All of this relies on our most important asset, our people,
    and the approaches we take to recruit, train, and retain the
    workforce we need to compete and win in support of our National
    Defense Strategy.
        An experienced, trained, and empowered workforce is by far
    the most important driver in achieving strong, repeatable, and
    sustained performance in defense acquisition. I greatly
    appreciate the committee's leadership in helping the services
    improve our acquisition outcomes.
        Thank you for the opportunity to appear before you today,
    and I look forward to answering your questions.
        [The prepared statement of Secretary Geurts can be found in
    the Appendix on page 65.]
        The Chairman. Dr. Roper.

    STATEMENT OF DR. WILLIAM ROPER, ASSISTANT SECRETARY OF THE AIR
                         FORCE FOR ACQUISITION

        Secretary Roper. Chairman Thornberry, Ranking Member Smith,
    and distinguished members of the committee, it is an honor to
    appear before you today to discuss defense acquisition reform
    and to do so with my fellow acquisition executives.
        While I am still newly appointed as the Assistant Secretary
    of the Air Force for Acquisition, Technology and Logistics, I
    am encouraged by steps the Air Force is taking to implement
    recent reforms championed by this committee.
        Our acquisition work force is strong, technically skilled,
    and motivated to build and sustain the world's most lethal Air
    Force. So my top priority is empowering them to leverage the
    newly restored power at the edge.
        This is more than just delegating decision authority. It is
    creating opportunities to reorganize, retrain, refocus, and
    remove barriers so that our workforce can fully take advantage
    of having the reins in their hands.
        To this end, I applaud your recent reforms and for your
    important action to lift the sequestration caps for fiscal
    years 2018 and 2019. Stable and timely budgets devoid of
    continuing resolutions and budget caps are absolutely necessary
    to build the Air Force this country needs and deserves.
        The Air Force is aggressively implementing the recent
    acquisition reforms. We continue to delegate milestone decision
    authority to the lowest possible level to speed up decision
    timelines. We are also reinvigorating prototyping to accelerate
    technologies and to operational capabilities.
        From platforms like the light attack experiment, to weapons
    like hypersonics, to enabling subsystems like the adaptive
    engine transition program, we have great examples of flying
    before buying that I will endeavor to make the norm, not the
    exception.
        Finally, we are also beginning to adopt and adapt
    commercial technology and practices that can help solve today's
    military challenges with lower cost and speed.
        But there are some areas I know we can improve. Software
    acquisition continues to lead to overruns. Though we have many
    remedies underway, we need an enterprise cure. This will be
    challenging, but we have fertile ground in many areas, like
    space, to experiment with doing things differently and more
    commercially.
        Another area is innovation in logistics and sustainment. As
    I look at the total Air Force costs, logistics and sustainment
    encompass the majority, yet it receives disproportionate focus
    in our research and development portfolio.
        Many commercial technologies and practices have the
    potential to reduce cost while simultaneously increasing the
    availability of Air Force systems. These technologies should be
    explored.
        A final area is operationalizing artificial intelligence.
    The Air Force has always pioneered new warfighting domains that
    allow us to observe, orient, decide, and act the fastest: first
    air, then space, then cyberspace, each new domain shrinking the
    decision loop.
        Now a new domain looms that will likely draw this loop into
    a knot of unprecedented decision speed. We must dominate the
    new blue yonder of AI [artificial intelligence], but to do so
    we have to design for it.
        In summary, the Air Force is off to a good start in
    reforming acquisition, but there is another level we can reach.
    Though reforming the process typically receives the focus, it
    is empowering people that historically made Air Force
    acquisition a powerhouse of innovation and agility.
        It is time to return to those roots and build and sustain
    next-generation systems that will bequeath our current
    dominance and lethality to future airmen. Given our talent,
    leadership, and new authorities, I am very excited about what
    is to come. Thank you.
        [The prepared statement of Secretary Roper can found in the
    Appendix on page 72.]
        The Chairman. Let me ask each of you just a couple of basic
    questions. Number one, is there anything in the reforms we have
    enacted in the last 3 years you think we just got wrong?
        Dr. Jette.
        Secretary Jette. Congressman, I think that there are two
    things that I think that might be addressed or considered. I
    mentioned 2016 section 804 allows us to do a rapid acquisition
    but it has a limitation on it. So it says you can do 0 to 5
    years but in 0 to 5 years what you have to do is you have to be
    able to field the full set to the Army.
        The Army is pretty big. It makes it very difficult to use
    that. If we were able to make that change from fully field to
    IOC [initial operating capability], and my preference would be
    IOC and/or block upgrade, that would give me a great deal more
    flexibility to apply that particular section to a broader array
    of opportunities.
        The second one, I think I would probably get some agreement
    on this, we push everything down to--push more of the program
    decision making and the MDAs [milestone decision authorities]
    down to the services and then we can push them out. But we then
    turn around and have an 807 requirement to run everything back
    up through the DEPSECDEF [Deputy Secretary of Defense]. And of
    course whenever you move it down and then move it back up it
    adds a great deal of additional processes.
        I would suggest that you might consider changing that.
    Either making it those select programs which remain a 1D or
    perhaps eliminate that requirement altogether.
        The Chairman. Okay. Thank you. I appreciate that answer. I
    am not sure if those are big things we got wrong. Those are
    tweaks that need to be fixed, and I have no doubt there are
    some of those. But we need to identify them and so I think you
    are right.
        Mr. Geurts, did we get something wrong?
        Secretary Geurts. Sir, I do not think you got anything big
    wrong, and I appreciate all the authorities. I think I speak
    for all of us here. There are plenty of authorities for us to
    go off and use in all the legislation that has been passed in
    the last couple of years.
        So from the Navy perspective there is nothing I cannot go
    off and do because I am waiting on an authority or a
    limitation. I would agree with my counterpart here, Dr. Jette,
    that there are some areas where there is conflicting guidance.
        One, we want to push it down, but then decisions still have
    to go up through different levels so I would put that in a
    refinement category. And then I think there is a little bit of,
    and again I would put this in refinement, decluttering. There
    is a lot of legislation out there. Some of it is very close,
    but just offset by a few degrees.
        And so I think the opportunity for this year is we have had
    some runtime with these authorities so we can provide some
    input on what is working and what we are having trouble
    implementing. And then there are probably some opportunities to
    refine and declutter.
        The big trick is transitioning from authorities to trained
    workforce and power to implement. And I think that is all of
    our challenge. And so as we can solidify the authorities,
    refine them, then we can perfect how to operationalize them
    through a trained workforce. That is our job moving forward
    here as service acquisition executives.
        The Chairman. Okay. And I would just mention we are keeping
    a close eye on the [Section] 809 Panel for some of that
    decluttering, too.
        Dr. Roper.
        Secretary Roper. Yes, Mr. Chairman. I think the committee
    should declare victory on the reforms. I think it is what we
    need as service acquisition executives to go try to restore the
    appropriate level of decision authority where it belongs.
        I think I share the insights from both Dr. Jette and from
    Mr. Geurts that there are some implementation details in things
    like 807, but those are implementation details.
        What I expect that each of us will do is keep coming back
    to you with slight friction points that can be refined but they
    are still going to fit within the overall construct of the
    reforms that you have put in place.
        One of the very important things that this committee is
    doing, aside from doing the language, which we very much
    appreciate, is holding hearings on this topic, which is a
    useful way for us to share information between ourselves, but
    it also sends a clear message to the workforce that this
    delegation of authority and expecting people to be able to, be
    able to make decisions on their own and that that is okay and
    is in keeping with the intent of Congress is very useful.
        I share Mr. Geurts' view that we really now have to equip a
    workforce that are ready to take the reins that you have
    allowed us to put in their hands and to feel empowered to use
    them and also knowing what the boundaries are.
        So I think over the next few years we will be coming back
    to you in a continuing dialogue about how to refine the
    process, but I think as a first step it is a very good one.
        The Chairman. Let me ask one more question, and I am going
    to bounce off a comment that Mr. Smith made. He talked about
    how do you measure whether things are getting better or not?
        It seems to me that a lot of what we talk about is process
    changes and what we ought to be looking at is what is the
    output because it does not really matter if we write lots of
    laws and you all educate the workforce and change the
    regulations. If we do not have the best our country can produce
    getting to the warfighter faster then all of this is--is for
    naught.
        So what would you say to Mr. Smith's point about how you
    measure output--not process changes, but output? What can you
    all and what should we be watching for? Go down the line again
    if you do not mind.
        Secretary Jette. Mr. Chairman, I think you must have sat in
    the back of the room in my first briefing to all my PEOs
    [program executive officers]. In my time in the Army when I was
    a program manager I took over two programs.
        Both programs I took over were considered successful
    programs from the program management perspective, but nothing
    worked. The process was adhered to to the nth degree, every box
    checked, everything square, but there is no product. That is an
    unacceptable outcome.
        And in fact what I have done is I have turned around to my
    workforce and I have said we are going to be product-oriented.
    Your accountability is not whether you followed the process in
    detail but whether or not you generate a product.
        And to that end you have given us great authorities. We
    have a sequence of things we have to do to make sure we get to
    the end state. Step one, step two, step three, step four, but
    underneath that is a series of opportunities in how do we do
    that.
        I kind of tell them you have got subparagraph A which says
    do everything, all the boxes checked; B does most things; C do
    some things; D ask forgiveness.
        They are being held accountable initially. My approach is
    they are being held accountable to make a proper selection of
    that pathway, not to take the safest path.
        I then turn around and reflect on what metrics we have in
    place. What real tools do we have in place to do measuring and
    accountability? And I have to admit that the tools that we have
    in place are weak, too, as was stated by my colleagues. We need
    to establish good measurements of what is being done to train
    our workforce and then hold them accountable to it.
        I think that your recent provisions in reform have given us
    some of those tools. We now need to go put them in place and
    make them work.
        Secretary Geurts. So sir, to add on to that I would say,
    and again my almost 12 years before coming here at Special Ops
    [U.S. Special Operations Command], it was delivery to the
    field. That is the ultimate outcome. Did we get product into
    the hands of our warfighters and let those men and women take
    those products and do the Nation's bidding. So ultimately that
    is always my measure of performance is did that get to the
    field?
        I would also say though there is a portfolio view of the
    world, so just because something did not get to the field in
    itself may not always be a bad mission outcome. And so
    depending on what phase of acquisition we are talking about, it
    may be how fast did I approve, you know, did I actually want to
    have a requirement for that?
        So on some of the prototyping in early science and
    technology, it is kind of I want to acquire to decide if I have
    a requirement. So I am going to quickly build a little
    expendable weather thing. And then I will decide if that can
    work and I can build it cheaply, I might have a requirement. If
    it is going to take me 10 years and cost a fortune, so I use
    acquisition in that phase to inform requirements. And so from
    that the mission outcome is could I better inform the
    requirement and then create a better acquisition outcome if we
    want to go down that line? And so I would go with those.
        And then the last is what is our ability to push innovation
    out to the point of need? And again, some of the technology
    with either open source or with applications and software and
    cloud-based things or with 3D printing.
        So how do I let the soldier in the field actually figure
    out how to build this tank impeller that he could get built in
    3 weeks there locally for, you know, a fraction of the cost
    and, quite frankly, a fraction of the time it would have taken
    them to get that through the normal supply system?
        So to Dr. Roper's point, you know, how do we apply
    technology in this, you know, every dollar counts, every day
    counts, every person counts approach all the way through to
    sustainment? And so in that phase the mission outcome is how
    much more available can I make the equipment that the Nation is
    invested in available to those men and women?
        So I think there are different measures depending on which
    piece, but ultimately it comes down to is the equipment
    available, is it capable, and do we have it in enough quantity
    so that the men and women can use it to get the missions done
    that we have asked them to do.
        Secretary Roper. Mr. Chairman, it is a great question. I
    have thought a lot about this, especially during the first 2
    weeks in this job. Most of the things that I am looking at in
    programs, the accountability and balance sheets are based on
    dollars. They are based on cost.
        We have a lot of different ways to track cost in programs.
    And what I predict we are going to see greater need for and
    demand for is to have time-based metrics, tracking things like
    time to contract, time to complete development, time to field,
    time to fail, right? It would be a great one if we want to try
    to quit having these large program where the failure occurs 10
    years after the start.
        And one that is very important to me is time to upgrade. It
    takes a very long time for us to upgrade anything today,
    especially software, but we all brought smartphones in that can
    upgrade their software continuously. And so to me, thinking
    about the future military, we need to provide our warfighters
    capabilities that they can upgrade continuously in the field to
    deal with advanced adversaries.
        And the new National Defense Strategy says we need to start
    building that military now. So I expect a lot more time-based
    metrics in the future that will balance the cost-based metrics.
        The Chairman. Okay, thank you.
        Mr. Smith.
        Mr. Smith. Thank you. You mentioned the, you know, 10-year
    process of investing in something and then finding out it does
    not work. And I think that, you know, for all the details of
    acquisition reform, again, if you wanted to sort of make it
    simple for people looking at it, the question is what can we
    do?
        What is acquisition reform doing to help us avoid, and we
    all have our favorite examples, but if we could go back to
    1997, we would not build the F-35 the way we are currently
    building it. It is, at the moment, too big to fail. It is the
    only jet fighter that we have or fighter attack plane that we
    have to replace. We have got to build it. We have got to make
    it work.
        But you know, 20-some years later and, you know, hundreds
    of billions, coming close to trillion dollars, we have that
    example. You also have the expeditionary fighting vehicle in
    the Marine Corps, $8 billion, I do not know, 7, 8 years, and
    then yes, this is not going to work. Let us get out of it.
        You know, you had Future Combat Systems. Actually I love
    quoting Neil Abercrombie on this. See, he said that the only
    reason that the Army came up with Future Combat Systems is the
    Army really did not have any big systems.
        You know, the Navy has got aircraft carriers, you know, the
    Air Force has got bombers and all this. So they wanted
    something that, you know, they could force to get started and
    then force people to spend an unlimited amount of money on it
    because they just could not walk out of it.
        So they created Future Combat Systems, which was going to
    try to throw everything into one. I am not sure he is entirely
    wrong about that.
        So how do we avoid that, get stuck in this pattern of,
    okay, this is what we have got to have? And I think a big part
    of it is the perfect becoming the enemy of the good. That is
    easy to say but what does it mean?
        I mean, and I think going at the F-35 would be a good way
    to do it. You know, let us time travel back to 1997 with the
    benefit of foresight and what would we do differently in the
    way we constructed that program so that it did not become the
    money pit that it has become?
        Secretary Roper. Ranking Member Smith, I wish we had a time
    machine. We are working on it, but it is not going to field
    anytime soon.
        Mr. Smith. Yes, I get that part. I am speaking
    metaphorically here.
        Secretary Roper. Yes.
        Mr. Smith. This is with the benefit of hindsight.
        Secretary Roper. Yes. So Congressman, one thing that I
    really----
        Mr. Smith. Can you pull your microphone----
        Secretary Roper. Yes. So Congressman, one thing that I
    really encourage members to take an active interest in is
    prototyping. It is not just something that is a boundless term
    or word. It really means something when you do it right.
        And when I look back at a time when the U.S. Air Force
    prototyped well was during the experimental plane heyday when
    we were continually spiraling advanced aircraft to try to stay
    ahead of the Soviet Union. The reason that that worked so well
    is there was discipline to only do one new thing per prototype.
        So whatever we did before, we are going to build one thing
    on top of it. And if we are not able achieve it then we know
    the thing we are hoping to do----
        Mr. Smith. Is this----
        Secretary Roper [continuing]. Is going to be the cost
    driver or the time driver.
        Mr. Smith. To make sure that I am tracking, you know, you
    have, like, a fighter plane. It's like, okay, we built this; it
    is good. It would be nice if we added this one thing to it.
        So you added that one thing to it and you had a B model.
    Then you sort of moved slowly forward like that----
        Secretary Roper. In fact----
        Mr. Smith [continuing]. Instead of trying to say we are
    going to just eat the whole buffet in one big bite and we are
    going to make the perfect plane right now today.
        Secretary Roper. Exactly, sir. And most people will
    remember planes like the SR-71, an amazing plane, but rarely do
    people mention the A-12, which was the plane before it that
    mastered Mach 3 flight. So we knew when it was time to build
    the SR-71 that we had Mach 3 flight down and so then it was
    time to do the next thing, which was move it to a two-seater.
        So there was a lot of discipline to spiral as opposed to
    just kicking off a large program where there are multiple
    difficult things to do and hoping that they will somehow all
    work out and in the end you will get the system that you want.
        Mr. Smith. I think that is absolutely crucial, and the only
    way I can see us avoiding that because the reason we get into
    this trap is because of the briefings that come our way to say,
    okay, you are building this thing, but my gosh, the Russians
    are building this, the Chinese are building that.
        And you do not have this, and we have simply got to be
    willing to accept, build something that is going to work,
    because look, you know, I mean the odds are we are not going to
    be fighting the Russians or the Chinese.
        We are going to be fighting something else anyway, and we
    can build up to it and it just puts us into this trap. And I
    think that, you know, that I totally agree with that. I just
    hope that we can start doing it on a consistent basis.
        Secretary Geurts. Sir, maybe taking a little more
    generalized than just the F-35 example, although if you looked
    at my resume I was the X-35 guy prior to that, so I was around
    in the late 1990s. I think the challenge is how do you grow
    resiliency in your programs?
        And so how do you focus on getting a good base platform
    that then you can rapidly adapt and modify as the threat
    changes, as the technology changes, as the, you know, needs of
    the Nation change? And where we have got it right, I think in
    many of the programs--I will take submarines. We come up with a
    good submarine and then now we have got a very disciplined,
    rapid way to quickly get new technology onto those submarines.
        But, you know----
        Mr. Smith. We all thank Joe Courtney for that, by the way.
        Secretary Geurts. Yes, sir. Yes. But, you know, we have
    been forced a little bit into shipbuilding side because you
    only get access to the ship at certain points.
        And so, you know, taking a lot of time to actually think in
    advance how are we going to--and we did not have it on
    submarines, right, 20 years ago, and we had to actually sit
    down and think very methodically about how do we continue to
    always have the best submarine even though we only get a chance
    to, you know, build them on very small centers and then get
    them back in the yards.
        And so I think that is another way that we have tried to
    approach it so that you have a good base platform with a lot of
    resiliency and margin so you can quickly iterate to wherever
    direction goes, because we will not know what we need on those
    platforms 10 years from now
        Mr. Smith. I will move on to other people here, but that
    seems so utterly logical. How did we get so off the beam in the
    late 1990s and the early part of this century?
        Secretary Geurts. I think, again, you start trying to do a
    lot of things simultaneously, right, and not really look at
    what I would call a minimum viable product. You know, if I take
    my SOCOM [Special Operations Command] experience, a lot of it
    is what is the minimum that adds capability to the commander in
    the field? Let us focus on that and then rapidly iterate.
        Mr. Smith. Yes. For----
        Secretary Geurts. So----
        Mr. Smith [continuing]. For all the acquisition reform, I
    mean, that is really what we have to do. And the SOCOM
    experience, I will close with this thought--sorry. I will move
    on to other people here, but I always tell a story of being
    down at AFSOC [Air Force Special Operations Command] about 10
    years ago, 8 years ago, and talking about how, because, you
    know, they do not get to buy their own stuff. They have got to
    go through somebody most of the time unless it is small enough,
    but they do have flexibility within their acquisition.
        And they were short of ISR [intelligence, surveillance, and
    reconnaissance] platforms. I am sorry. Long couple of days. And
    so normally the way we would do this within the bigger military
    is you would send out an RFP [request for proposal]. You know,
    people would give you all these different models.
        And then people would look at it and say, well, I like that
    one, but what if it had a gun here? What if it had that? It
    would go through three, four--they went on Craigslist. And they
    found some company down in Latin America that was selling,
    like, an eight-seater, I forget what it was. I think it was
    like a P-28 or something, plane from some company.
        They bought a dozen of them and then they put a lot of
    electronics on it and they had themselves an [ISR] platform in
    about a month. That is what I would love to see us do in the
    Pentagon vastly more often than we do.
        And I think having talked to the Secretary, the Deputy
    Secretary, and others over at the Pentagon, I think that is
    where you guys want to go. So I apologize, but I am going to
    yield back and let some other members get in here.
        The Chairman. Mr. Wilson.
        Mr. Wilson. Thank you, Mr. Chairman, and thank each of you
    for your service to our Nation.
        I first would like to recognize Chairman Mac Thornberry for
    his continued work on reforming the outdated and inefficient
    acquisition process. And in light of today's hearings, one of
    my concerns is not only about the cultivation of research,
    development, test, and evaluation, RDTE, but the protection of
    subsequent intellectual property.
        A recent issue of concern for the committee has been the
    Chinese government financing of Confucius Institutes, which
    have been partnered and embedded in over 100 universities
    across the United States.
        In 2009, the head of the propaganda division for the
    Chinese Communist Party and a member of the party's politburo
    standing committee, called Confucius Institutes, quote, ``an
    important part of China's overseas propaganda setup,'' end of
    quote.
        In light of China's use of the nontraditional collectors
    like the Confucius Institutes, which, the FBI [Federal Bureau
    of Investigation] director stated in recent testimony, allow
    the Chinese government to exploit, quote, ``the very open
    research and development environment that we have, which we all
    revere, but they are taking advantage of it,'' end of quote.
        And this is for each of you, what protections are in place
    to protect the American people?
        Secretary Jette. Congressman, IP [intellectual property] is
    a really important issue to me. In fact, I was happy that the
    Patent Office issued me another patent yesterday. So our
    openness is one of our strengths and it is also one of our
    weaknesses.
        When I was at MIT [Massachusetts Institute of Technology]
    there were a number of Chinese students that were in the
    student body and you could tell that they were specifically set
    there to gather, to understand, to gain, to be educated, and
    they were going back. And they were held in that position to do
    that.
        If you take a look, before I took this position one of the
    things I did was teach over at Georgetown University,
    ``Robotics and the Future of War.'' Without any classified
    sources you can get online and you can find the leadership of
    the Chinese government standing next to technologies that were
    developed using DARPA [Defense Advanced Research Projects
    Agency]--not their DARPA, our DARPA.
        And so we do have a significant weakness in our overall
    protection of our intellectual property. Some of that I am not
    sure is really a protection issue that we can resolve because
    we have this open society and open publishing of patent data
    and intellectual property in that side of things.
        We have openness on the side of education. These are not
    defense acquisition-related issues specifically. Where we can
    be involved on our side, and I think that we do try to do that
    in a fairly careful way is we do very little, if any, research
    in a classified mode at universities. And then if we have a
    classified or sensitive data research that we want to do using
    universities, we try to do that separately.
        Are we doing it as well as we could or should? I do not
    think we looked at it as hard as we probably need to at this
    point. MIT has Lincoln Labs. Lincoln Labs is where they do any
    classified research. It is separate from, but the professors
    can move between.
        We need to take a much stronger look at that type of a mode
    and make sure we are not doing any classified research at
    universities.
        Mr. Wilson. Thank you.
        Mr. Geurts.
        Secretary Geurts. Yes. Sir, I would second Dr. Jette's that
    we need to be sensitive to that and to agree we can separate
    out academic learning from academic research and in particular
    applied research.
        And so as we look at it from the Navy and Marine Corps a
    lot of what we look at is how to think about those differently
    and then how do you use institutions like UARCs [university
    affiliated research centers] and some of these other affiliated
    institutions to get the benefit, and there is great benefit
    from that close integration with academic research, and that is
    an absolutely critical part of our national security, while
    protecting.
        And now what we do in the Navy also is look very closely at
    the classification regimes and control measures around that to
    make sure that we have got the right guidelines in the right
    place and protect things.
        But it is a balance and it is one I think, you know, the
    larger issue of supply chain integrity, I think, is, you know,
    this is part of that larger issue of how do we guarantee that
    we are protecting those either knowledge or actual solutions so
    that we remain competitive and in a position to win.
        Mr. Wilson. Thank you.
        And Dr. Roper.
        Secretary Roper. I will just briefly add, since I know we
    are past time, the divide between secret and below has long
    been something that we have had a few tools to defend. So data
    that is unclassified becomes more and more sensitive as it
    becomes more applied, but still is not across the line.
    Historically if we wanted to protect data we create a network,
    a protected network and we say put your data on it.
        So one area that we really should focus on is there is a
    lot more focus on protecting data today. Technologies that are
    protecting data, whether it is encryption or block chain, not
    the network itself.
        And so there is promise that maybe there is a way that we
    could protect sensitive but not yet classified data. And I
    think it is something that we should look at seriously.
        Mr. Wilson. And thank you, Mr. Chairman, for allowing a bit
    more time for such an important issue. Thank you.
        The Chairman. Okay.
        Mr. Courtney.
        Mr. Courtney. Thank you, Mr. Chairman and like Mr. Wilson,
    again, this is a great hearing and I want to salute both you
    and the ranking member for the 2016 and 2017 NDAAs. I mean, one
    of the signature brands of those pieces of legislation was
    acquisition reform, which is, again, not for the faint of heart
    in terms of trying to sort of plow into the very complex
    issues.
        And as we have heard from the witnesses, I mean, this is
    really showing real results. So congratulations to both of you.
        And congratulations to all three of you for your
    confirmation and, you know, it is an historic time lifting the
    caps in the bipartisan budget agreement obviously is going to
    hopefully take the handcuffs off in terms of moving forward in
    a smart way with the priorities of the country.
        Assistant Secretary Geurts, you and I have talked a lot, in
    fact yesterday, about the fact that we are in a, again, a big
    sort of moment as far as shipbuilding goes. You know, one of
    the challenges of this sort of congressional process when you
    talk about shipbuilding is that shipbuilding is a long game
    and, you know, the sort of catechism in Congress is really to
    do sort of budgets on a 1-year increment.
        And one of the things that this committee has tried to do
    is sort of to, you know, think smarter and move smarter with
    multiyear authorities in terms of block buys, incremental
    funding, continuous production authorities.
        Your testimony on page 2 talked about the potential savings
    for the next block contract for Virginia and I was wondering if
    you could sort of talk about that a little bit, and really sort
    of connect it to the fact that this committee sort of, again,
    created the legal environment so that that kind of contracting
    process could move forward.
        Secretary Geurts. Yes, sir. You know, and as I have kind of
    joined the Navy team and got to see what is going on behind the
    scenes more than I did in my last role, I am impressed with
    the--again, it is a long game and you cannot just react on the
    spot.
        And this idea of how do we create the right business
    environment to allow business to operate cost effectively and
    with an element of urgency? Part of that was putting together a
    shipbuilding plan which shows a multiple of trajectories
    depending on how, but at least lays out here is the framework
    with which we get a serial production that industry can
    understand where they can invest.
        And where this committee has really helped out is we are
    saving on--you know, and I can point to multiple continuous
    production on--that is going to save $1.2 billion.
        The potential, our discussion yesterday of maybe block-
    buying the two carriers can save billions of dollars. We have
    saved, we think $5.4 billion on Virginia just by, I know, all
    deciding what we want to buy and then creating the right
    environment to buy it as cost effectively as possible. And it
    is not just money. If you look at it, sir, you know, on
    Virginia we have taken 2 years out of that span time.
        So back to, sir, your question of what do I measure? We are
    delivering submarines to the fleet 2 years earlier at a greatly
    reduced price with a more capable submarine. That to me is a
    good mission outcome. If you see what we are doing on P-8s,
    delivering those on time, under budget to the point where we
    could buy additional P-8s with the budget we had allocated
    because of that.
        So I think when we can marry up, synchronize what do we
    want to buy with a long-term view, not just in the current
    budget session, and then allow us to bring forward options for
    how we can buy it, then I think we can see how we really get
    some savings.
        And when I look at the 30-year shipbuilding plan, I do not
    think it is just on Congress if we want to go faster to add
    more money. We need to be challenged to deliver more capability
    for the money we have and that is where I think these
    authorities can really be powerful.
        Mr. Courtney. Thank you. You know, as we sort of have our
    inevitable negotiations with the appropriators I may frame your
    remarks to pass around the room when we have those discussions.
        Secretary Geurts. Yes, sir, and in particular our efforts
    to think about not just the prime contractor but the supply
    base and to Dr. Jette's point of we often focus, at least in
    shipbuilding, on the primary yard, which is important. But the
    most critical thing in my experience, 30 years of being a
    program manager, is the supply base.
        That tends to be what paces everything. That tends to be
    where your hidden risk is, and it tends to be where your
    biggest opportunity, if focused with resources and predictable
    production, where you have got an ability to really accelerate
    and so----
        Mr. Courtney. Thank you.
        Secretary Geurts. So, you know, our first----
        Mr. Courtney. So yes, and just for the record I will submit
    a follow-up question on that point. The Procurement Technical
    Assistance Centers which provides technical assistance to the
    small guys is a critical program that obviously as a committee
    we want to protect. And again I will submit a question for the
    record so that you can respond to that in the future.
        Secretary Geurts. Yes, sir. Will do.
        Mr. Courtney. With that I yield back.
        The Chairman. Ms. Hartzler.
        Mrs. Hartzler. Thank you, Mr. Chairman. It is a great
    hearing and I, too, applaud your leadership in moving us
    forward here and appreciate your comments today.
        A number of large programs are being managed by rapid
    capabilities offices, and for example, in the Air Force, the B-
    21 Raider Long Range Strike Bomber and the X-37B Orbital Test
    Vehicle are both being run by the Air Force Rapid Capabilities
    Office [RCO].
        And if such large and complex programs are run using rapid
    capabilities offices and authorities, the question is should we
    scrap the current acquisition process and have all DOD
    procurement go through rapid acquisitions?
        So I guess we will start with you, Dr. Roper, since I cited
    two examples in your department.
        Secretary Roper. Yes, Congresswoman. One, I am a big fan of
    the Air Force RCO. I have had the privilege to work with them
    through my career and a lot of what we need to do in
    acquisition reform is taking the best practices from
    organizations that know how to get it done and spreading them
    across our respective services.
        One thing about the Air Force RCO that I do not think is
    commonly known is they do not have any special or unique
    acquisition authorities. They follow the 5000 series like
    everyone else. But they do have something that we could learn a
    lot from, and that is a much thinner oversight mechanism.
        They have a board of directors' advice through the
    continual review process through the bureaucracy, and they also
    really value workforce. They put an effort into making sure
    that their program managers are properly trained, know how to
    streamline. And so that we start today needing to do
    acquisition reform with a few bastions in the Air Force that
    know how to do it well.
        And what I think my job is is to take the best practices
    from those organizations like the RCO and move them across the
    service so that in the future everyone is a rapid capabilities
    office.
        Mrs. Hartzler. So are you actively doing that?
        Secretary Roper. Yes, Congresswoman. I did my first review
    with the RCO yesterday. I am very pleased with what they are
    doing on all of their programs, including the B-21. There are a
    lot of lessons learned.
        And I think what we can do to speed the transition is
    getting people out of our normal program offices and just
    having them interface with an organization that does have a
    different business model and I think the migration of learning
    should happen quickly.
        Mrs. Hartzler. That is great. I know change is hard but I
    am glad you have a model you feel confident in and that you are
    taking steps. And you mention workforce and that is my second
    question, and I guess to you and Dr. Jette at this point, and
    if we have time certainly Mr. Geurts.
        But it seems like, you know, many major defense acquisition
    programs are troubled by lack of government ownership of key
    research and design information which we have heard about,
    especially software developed at the research and design phase
    of acquisition. A notable recent instance is the F-35 program.
    But the problem extends to many other major weapons that have
    been fielded for decades.
        Some have asserted that these problems stem from the
    government being outgunned when it comes to contract
    negotiation. And in other words, relatively young, Active Duty
    service members with only a few years' experience compete with
    very highly paid corporate lawyers with decades of experience
    on the other side of the negotiating table.
        And I am wondering first what you think about that
    acquisition, but then also in your testimony, Dr. Jette, you
    reference the Army Acquisition Workforce Human Capital
    Strategic Plan where you are trying to focus on the acquisition
    workforce. And you say it is also about recruiting and
    retaining high or top-notch acquisition professionals to
    sustain the workforce through time.
        You say the Army is examining these things, but then you
    say we are examining the constraints of the Defense Officer
    Personnel Management Act [DOPMA] on offering full development
    of acquisition professionals. So there are several questions in
    this, but I think this is a key point.
        I have met with multiple people in the Pentagon. These
    personnel are key to this to be able to move this forward, and
    so I would like to hear your thoughts about first of all on the
    assertion are we outgunned by corporate lawyers and others?
        And two, do you feel like what is going on in the Army, Dr.
    Jette, is going to help address this?
        And third, what are--you say you are examining the
    constraints of the Defense Officer Personnel Management Act. So
    what are some of those constraints you feel like to gaining
    those high-quality acquisition professionals?
        So I guess, you know, go ahead and start with you and then
    hopefully Dr. Roper can answer, too.
        Secretary Jette. Congresswoman, that is a great question.
    First, I will tell you that we do have tremendously talented
    and high-quality people.
        It is often difficult to have a person whose primary goal
    in life had been to be a soldier turn around and have to
    develop all the skill sets necessary to sit across the table
    from somebody who went through Harvard Business School and got
    a law degree at Yale and then suddenly is sitting on the other
    side of the table with 15 years' experience in negotiations. So
    just simply, we need to up our game to be able to properly
    manage that.
        From the talent development piece, soldiers--the DOPMA
    piece is soldiers have 20 years. Things have to fit in there.
    They have certain things they have to do on the military side.
    We have certain things we are supposed to do to make sure they
    are qualified acquisition individuals.
        When you get done, I am limited on the experience I can
    offer them. I have begun talking to the Chief of Staff of the
    Army about the possibility of perhaps generating a sabbatical,
    allowing them to have a paid sabbatical so we can send them off
    to additional graduate school, to additional experiences in
    industry.
        I would love to have some of my acquisition officers [be]
    lawyers, not to be JAG [Judge Advocate General] officers, not
    to be in the general counsel's office but to sit there at the
    table with that type of background so that I can sit across the
    table more effectively. And to look at those who are going to
    bring me the technical competencies I need to be able to
    predict the future 5, 10, 15, 20 years out and be leaders in
    that area as opposed to simply program managers.
        And I am not diminishing program management. I am just
    saying there are skill sets we tend to develop one and not the
    other. And I am sorry I went over.
        Mrs. Hartzler. Well, I appreciate your indulgence, Mr.
    Chairman. Maybe Dr. Roper or Mr. Geurts, if you have something
    you could get me in writing or something? Thank you, for the
    record.
        [The information referred to was not available at the time
    of printing.]
        The Chairman. Thank you. I am trying to be a little more
    flexible as long as the questions are good.
        So Mr. Carbajal.
        Mr. Carbajal. Thank you, Mr. Chair. In today's environment,
    where operational needs are constantly changing and services
    are pushed to meet emerging needs while quickly fielding new
    capabilities, we must ensure the most efficient authorities and
    processes are in place.
        Acquisition reform is also significant because it fosters
    innovation and opens more opportunities for services to take
    advantage of these new technologies. My question is, aside from
    what you all are all doing now, what are some of the future
    plans to improve and expand innovation?
        For example, I know there are many academic institutions
    that are engaged in these emerging technologies that the
    services are pursuing. Are we taking advantage of these
    resources?
        Secretary Geurts. Sir, I will start and then obviously turn
    it over to my colleagues. I would say, yes. Part of what I am
    bringing from SOCOM is how do we--how do we get our problems
    out to the non-traditionals as Dr. Jette mentioned? The number
    of the suppliers in the DOD versus the number of suppliers
    available is a fairly small number.
        The challenge, I think, is how do we interact with them
    from a business standpoint so that they do not have to change
    their business to work with us. We can adapt how we are asking
    them for work so that they can be cost efficient and efficient
    in the way they do work I think in particular as we look at
    software and how do we really think about data, artificial
    intelligence, and software development.
        That may be a completely different model, and I think it is
    going to have to be a completely different model than the
    traditional hardware-based acquisition approach.
        And I think we are using the authority that this committee
    has put out there to prototype. So when I think of prototyping,
    I do not just think of a thing. I think of prototyping a
    process or prototyping how we develop folks.
        So I think all of us are experimenting in different ways
    how to prototype processes and cultural change to allow us then
    to get that iteration speed and that iteration cost down, and
    bring in lots of different nontraditional suppliers.
        Secretary Roper. Congressman, I am glad you brought up
    universities and colleges because I do think, although we are
    using them, I do think that we are generally guilty in the
    Department of thinking of universities as places where we do
    basic research and not applied. We created UARCs and FFRDCs
    [federally funded research and development centers] to try to
    transition from basic to applied work.
        But technologies today aided by agile manufacturing, 3D
    printing, artificial intelligence, really allow universities to
    do applied research that we can go directly into the field. So
    I am very thankful that we are getting new contracting
    authority so we can work more closely with universities and
    colleges.
        But I think it is generally we need to retrain the
    workforce, that there is a lot they can get out of the
    universities that maybe do not have a UARC attached to them but
    can do the basic groundwork laying that we can then build upon
    with our government scientists and engineers.
        Mr. Carbajal. Great.
        Secretary Jette. Congressman, just a little over 2 months
    ago I was a contractor myself and my company had to reach into
    the Army. Now, I know my way around acquisition and it is still
    daunting to go through the SAMs [system for award management]
    process, open that up and see the pages of clauses which I then
    have to certify that I will abide by under penalty of law.
        That scares away a lot of potential vendors, a lot of
    people that we would like to have involved with us. They look
    at that, and they say I am done. I am not going there. I have
    got commercial applications I can pursue with my company.
        So I think one of the things I am looking at is in my
    commercial sector I would become a qualified vendor. I had a
    major company's qualified vendor. They had a set of things I
    had to abide by. I would set those down. I would sign up, my
    contract would be signed, and then it would become a simple
    task order, and it was a very simple process.
        They held me to the standard. If I failed in the standard,
    maintaining the standard, I was off their qualified vendor
    list, and they could not make internal purchases directly
    through me. It simplified the entire process.
        I know we have got one of the acquisition reform efforts is
    concerning e-commerce. It is focused primarily on, at this
    point, on GSA [General Services Administration], but I believe
    I want to take a look at whether or not I might create Army's
    On or something similar.
        Mr. Carbajal. Let me cut you off there because I am running
    out of time. What is the protocol or staffing within your
    organizations that continue to manage continuous process
    improvements?
        You have all identified a number of reforms and efforts,
    but unless there is a strategic focus that is guiding and
    managing those efforts, everybody is just spinning their
    wheels. There is no focus, there is no timelines, there is no
    action plans. Is there a mechanism that does continuous process
    improvements, that manages that in your offices?
        Secretary Geurts. Sir, one of the things I am taking from
    SOCOM is I had an agile acquisition cell. And their entire job
    was to look out right, left, talk to their partnerships.
    Obviously, the three of us are very well-connected and know
    each other from past lives, so we are sharing back and forth.
        But that cell for me was the cell that their sole job was
    to figure out what everybody else is doing and what can we do
    to bring that in and do it better and then measure that? I am
    planning to bring that same mentality here to the Office of the
    Navy as we look at that across the Navy and the Marine Corps.
        Mr. Carbajal. Thank you. Mr. Chair, I yield back.
        The Chairman. Mr. Scott.
        Mr. Scott. Thank you, Mr. Chairman. Gentlemen, thanks for
    being here. Secretary Geurts, you come from the SOCOM community
    and as you know the Marines are about to buy, as I understand
    it, 15,000 M27s without putting out a competitive bid. Is that
    right on the number, the 15,000?
        Secretary Geurts. Sir, let me take that for the record and
    make sure I get you the exact number.
        [The information referred to was not available at the time
    of printing.]
        Mr. Scott. Fair enough. The Marines just testified before
    us yesterday and one of the things that they said was that it
    would cost between $5 million and $25 million to compete the
    purchase. Well, the total purchase value of 15,000 rifles will
    be somewhere in the $40 million range. I think I am pretty
    close on that.
        And then there is a range that we were given that it would
    cost to compete for that $40 million purchase of between $335
    and $1,650 a rifle. That is a pretty broad spread. So any
    information that could be provided there would be appreciated.
        And to me it is very different in competing something that
    is a rifle versus the more advanced systems that we have. And
    certainly, coming from SOCOM, you would be able to provide a
    lot of input there.
        I do worry that from an industrial base standpoint, that if
    we start giving these contracts without competing the bid then
    we will turn around and put companies out of business that,
    quite honestly, we need to be in business, so that we are
    paying $2,500 for the rifle instead of--instead of $3,500 or
    $4,500 if there is no competition.
        Secretary Geurts. Yes, sir, I will be happy to take a QFR
    [question for the record] and then go and get the specifics. I
    would say--and again, we face big challenges, you know, think
    of ships. And we have come up with some creative ways, which I
    will call continuous competition, which may mean you are not
    doing individual competitions but you are always looking at
    multiple products and you are always----
        Mr. Scott. Right.
        Secretary Geurts [continuing]. Weighing those and it gets
    to Dr. Roper's point about modularity and open architectures.
        Mr. Scott. That is right.
        Secretary Geurts. So that whatever the next best product
    is----
        Mr. Scott. Yep.
        Secretary Geurts. I am not vendor-locked to whatever
    decision I made 5 years ago.
        Mr. Scott. Absolutely.
        Secretary Geurts. And I think that is something we are all
    going to drive in. And as commercial products and the ability
    to integrate products becomes easier because we are more
    thoughtful on our architectures, I think that will allow us to
    get after continuous competition. So you do not have this false
    kind of decision of I----
        Mr. Scott. Absolutely.
        Secretary Geurts [continuing]. You know, you are choosing
    between two bad decisions.
        Mr. Scott. Absolutely, and I think that that is probably
    fairly easy with a rifle where you have multiple high-quality
    manufacturers that have provided good service. And I hope you
    get the best rifle at the best price as we go forward and look
    forward to continuing that discussion with you.
        My colleague, Mrs. Hartzler, mentioned the data. Data is a
    big deal with the F-35. It is a big deal with anything that we
    procure today. And I represent Robins Air Force Base, and we
    have companies around the base and in surrounding counties that
    have very advanced CNC [computer numerical control] machines.
    3D printing and other things have changed our ability to
    manufacture our own products.
        As you used the example of the impeller, one of the
    concerns that we have had is that when we have a contractor or
    a company, major defense contractor, that they do not have the
    part available, they want to charge us for the schematic for us
    to go to a local machine shop to have the part made, when we
    paid for the development of the system.
        And I just wonder from the standpoint of the impeller, did
    the original contractor try to claim a patent on the impeller
    so that we could not manufacture it ourself?
        Secretary Geurts. Sir, not in this case, but I would say
    your more general issue is one we have got to tackle. And
    again, this is a mutual issue across both sides of the aisle
    here, understanding the data rules and rights, ensuring we have
    those accurately captured on a contract and then fighting for
    those rights so that we protect the interests of the taxpayer,
    are all things I would say we need to be doing a better job of
    doing.
        It is no single person's fault, it is just not----
        Mr. Scott. I agree.
        Secretary Geurts [continuing]. It is not something we have
    focused on. And if we drive to this new data-driven world where
    whoever owns the data wins, and it is something I think there
    is opportunity to do much better in the future.
        Mr. Scott. When we pay for--it seems to me that we could
    have some type of uniform language in contracts where when we
    pay for the research and development of the system, then we
    should own the data, including the schematics. And therefore,
    the right to manufacture the parts ourself if the defense
    contractor chooses to charge us an unreasonable price or not
    make the product available.
        Secretary Geurts. Yes, sir, and I am happy to follow this
    in more detail with you. It is one thing we have been talking
    to the committee about is, you know, refining those
    intellectual property laws and guidelines as we go in the
    future. Pretty complex issue but one we have got to, I think,
    spend some more time on together.
        Mr. Scott. Well, thank you for your service. I look forward
    to the further discussions on the M27 and why it would cost
    between $5 million and $25 million to simply compete a rifle.
        The Chairman. Mr. Suozzi.
        Mr. Suozzi. Thank you, Mr. Chairman. Thank you for your
    testimony today, for your good work. Legislators like to
    legislate. They like to pass a lot of rules, especially to go
    after waste, fraud, and abuse.
        And sometimes we end up with so many rules and regulations
    that we spend more preventing waste, fraud, and abuse than
    there would be an actual waste, fraud, and abuse if we did not
    have all those rules.
        And one of the manifestations is something that Dr. Jette
    talked about, is that there are only 5,000 contractors in this
    business. And Mr. Geurts talked about the clutter that exists.
        What do we need to do--you started to talk about it. I
    wanted to get some more out of this. What do we need to do to
    get more, to go from 5,000 contractors to 10,000 contractors?
    How can we get more people competing to do this type of
    business?
        How many corporations did you say there were in the
    country, overall?
        Secretary Jette. Congressman, from the research I did, and
    I know I was told there are 5,000 government contractors. The
    reason I know is, I was told I cannot own any of their stock
    anymore.
        Secretary Geurts. Yes.
        Secretary Jette. And then I looked up on the internet, a
    very simple process, finding 23 million contractors in the
    country.
        Secretary Geurts. Right.
        Mr. Suozzi. Right. I would be curious, you probably do not
    know off the top of your head. We should find out, you know,
    did it used to be a bigger number? Did there used to be 10,000
    contractors? Did there used to be 20,000?
        We should really track how that has changed over time as to
    how many people have participated in supplying the United
    States Department of Defense. But how can we get more
    contractors competing in this field? What do we need to do to
    make it more attractive to do business?
        Secretary Jette. Congressman, I will take the first shot at
    this. I mentioned earlier, if you just simply go on and try and
    open your own account--you could all do this and just open the
    SAM----
        Mr. Suozzi. SAM stands for?
        Secretary Jette. I do not know what SAM--it's the
    government registration point where you get on so that you can
    be a contractor.
        Mr. Suozzi. Okay.
        Secretary Jette. And I can provide you, sir, the contact
    point, how you get on the website. If you go through that, you
    will find there are just these enormous numbers of you must
    testify that you are not going to hire Bangladeshi children to
    make your--I mean there are things that specific in there. You
    will not ship any goods by foreign carrier.
        And these things become just onerous to people who are
    smaller companies that do not want to--they do not have lawyers
    on their staff on a day-to-day basis. And they do not
    understand the implications of the rules.
        So we seem to have this one-size-fits-all. There was a
    comment earlier about one-size-fits-all approach to doing our
    contracts with these rules that get put in place. The end state
    of that is, if I am a small company, and I think I would like
    to try and participate in government contracting, I immediately
    have to go to that top level. It is no different. What I have
    to do is no different than what Lockheed or Raytheon or
    Northwest.
        Mr. Suozzi. It is overwhelming.
        Secretary Jette. Yes, sir. And so we need to take a look at
    whether or not there is some way to scale that or make it
    simpler for those smaller companies who do not have lawyers on
    the staff all day, to be able to participate. That is an area I
    am trying to take a look at, this qualified vendor concept.
    Perhaps an alternative website that might allow simpler
    connectivity with smaller vendors, both for products and
    services. We spend a lot of money in consolidated services
    because the consolidator does all that paperwork for the
    smaller companies.
        Mr. Suozzi. And that was something that I always thought
    about at local government levels and worked on is to move from
    mandates, you know, rules you must--to guidelines. And then if
    you are someone who is complying with the guideline, you know,
    we leave you alone.
        And if you are someone who abuses the guidelines, then you
    start going after that person and you make it a little bit more
    difficult. But that is very interesting way of trying to--I
    will work with you on that if you would like me to.
        Mr. Geurts, you want to add something to that?
        Secretary Geurts. Sure. Sure. I agree with everything Dr.
    Jette--I think the other issue we have is we do not do a very
    good job of informing, you know, as the percentage of military
    in the country has gotten smaller or folks who have had
    families, there are a lot of folks that want to help the DOD
    and they just do not know how. And our mechanisms to tell them
    what we need or what we are interested in, you have to be a
    jujitsu expert in [inaudible].
        Mr. Suozzi. It is too overwhelming.
        Secretary Geurts. And so another, I think, key element is
    how do we simplify how we let individuals, academic
    institutions, small companies, nontraditional companies know
    what we are looking for and then make it easy for them to
    supply it.
        Mr. Suozzi. I have only got 10 seconds left, Mr. Chairman.
    You know, I will work on this if you would like me to. The
    bottom line is is that you--would you all agree, including you,
    Dr. Roper, that it would be better if we had more than 5,000
    contractors? Would that be better?
        Secretary Roper. Yes.
        Secretary Geurts. Absolutely.
        Mr. Suozzi. Okay. Thank you, Mr. Chairman.
        The Chairman. I thank the gentleman.
        Dr. DesJarlais.
        Dr. DesJarlais. Thank you, Mr. Chairman.
        Dr. Roper, I wanted to talk to you for a minute about a
    conversation we had with Deputy Secretary of Defense Patrick
    Shanahan. He was at our HASC [House Armed Services Committee]
    retreat about a month ago. And over the past years, we have
    been hearing the stories about half of our military aircraft
    that cannot fly due to maintenance issues.
        He told us a story about when he was in the private
    sector--and obviously he brings a lot of expertise in that
    area--about an example if a Southwest plane were to land with a
    problem, let us say--I think he used a wing flap. They could
    have that turned around, order the part, get it in, fix it, and
    flying in 24 hours. But put that same plane in a military skin,
    you might be looking at 6 months to get the part, another 3
    months to fix it.
        First of all, is that even close to accurate? And if so,
    you had mentioned in your opening remarks about adopting
    commercial principles to help deal with our acquisition reform.
    Is this an area that we can improve on? And what would you say
    to that analogy and what is being done to help improve that
    situation?
        Secretary Roper. Congressman, I am glad you brought up
    keeping aircraft up in the air because it is a big part of the
    Air Force's business. It is also an area where we spend a lot
    of money. And I think it is ripe for--for new emphasis of
    research and development.
        One thing that I have seen, at least at a cursory level
    coming into this job, is that air worthiness and safety
    certification is something that will be a challenge for using
    things like 3D printing or agile manufacturing. Who will say
    that the thing you want to use from commercial industry,
    whether it is a practice or a part, is safe?
        And so we are trying to think of ways to get around--not
    get around, but to navigate our safety processes but still
    allow us to get data on things that are made with advanced--
    advanced processes like agile manufacturing.
        And we are even kicking around ideas like calling a plane
    with 3D printed parts an X-plane, which is a process we have
    for development side of the house. When something cannot be
    certified as absolutely safe because it is new and cutting-
    edge, you slap an X on it and you can go fly it and get the
    data you need to certify it is safe.
        To my knowledge, we have never done that on the sustainment
    side, but we spend a lot of money there. So I really think this
    is an area that is ripe for new thinking, new investment, and
    expect it to be an area of focus for me in this job.
        Dr. DesJarlais. Is he correct in the amount of time? Does
    it really take that long on military aircraft?
        Secretary Roper. Well, sir, if the Deputy Secretary was
    sharing from his past experience I certainly trust his
    expertise in this area. It is true that it takes us much longer
    than commercial industry for a variety of reasons.
        Sometimes our planes are a lot more complicated than
    theirs, but just because we have extra hurdles that we have to
    cross does not mean we cannot adopt best practices from them.
        Dr. DesJarlais. Give--give us a few examples of those
    hurdles? What are they? What is the bureaucracy that slows you
    down so much?
        Secretary Roper. Well, parts obsolescence is one issue. So
    we get backlog on parts, but we need it from the particular
    vendor who made it because that is what is safety certified.
    And then we have a lot of airplanes that are grounded currently
    waiting on backlog parts that we currently cannot get easily
    because they are not made anymore.
        That is an area you could imagine, well, if you could make
    that part yourself and have the data rights to it, which is
    another issue, then maybe you could sweep that backlog. And in
    some cases we have planes that are going to be down for months,
    even close to years waiting on parts.
        Another is just switching to predictive maintenance. We
    wait for things to break and then we fix them. The commercial
    airline industry predicts when things are going to break and
    they fix them ahead of time. So that is an area that we should
    look at.
        Dr. DesJarlais. And obviously they are very concerned about
    safety as well?
        Secretary Roper. We would not be flying, sir, if they were
    not, so they are just as concerned about safety. I think they
    are just using more modern technology to achieve it. And even
    though our mission is more complicated, there are a lot of
    things that we can adopt from them.
        And it would be great to make sustainment as cool as doing
    development so we get the same talent in the workforce focusing
    on that side. Developing new things is cool. I loved doing that
    in my past job. But sustaining things and keeping it up in the
    air is necessary for readiness, so it needs the equal focus
    from us.
        Dr. DesJarlais. Okay. Thank you, Dr. Roper.
        And I yield back.
        Secretary Geurts. Sir, could I maybe add one----
        Dr. DesJarlais. Absolutely.
        Secretary Geurts. Well, sir, and I just brought some toys
    along. This is actually a 3D parted--3D printed nacelle to a V-
    22 that is fully flight certified. And so at the working level
    between the Air Force and the Navy, because we have a lot of
    aircraft as well, creating the standards by which we can then
    3D print what we need.
        And on some--some are flight critical so you need to make
    sure you have got really tight standards. Some are not. Maybe
    the valve on this thing we printed, designed, and flew in 5
    days. And we were having a problem with one of our masks.
        That is a little different than this, but we are looking at
    how do you think about--how do you separate the different parts
    and their criticality? How do you create the certification
    regimes, and then how do you then operate at speed? And as Dr.
    Roper said, there is tremendous opportunity to be more
    operationally responsive and more cost effective.
        Dr. DesJarlais. All right. Thank you.
        The Chairman. Mr. Langevin.
        Mr. Langevin. Thank you, Mr. Chairman. I want to thank all
    of our witnesses for your testimony here today and what you are
    doing to help the warfighter.
        I am glad to hear the last line of questioning, especially
    on 3D printing. I think it is essential that we be aggressive
    in owning the intellectual property, both for hardware and
    software. On the 3D printing side there should be no such thing
    as obsolete parts anymore. And that is going to help us on the
    readiness side and maintenance and keeping our equipment in
    top-notch shape.
        So I will not--I am not going to go into that area since
    those issues have already been touched on. But I wanted to
    focus on our industrial base as it grows. We obviously have to
    ensure the security of our supply chain.
        So how are you safeguarding our commercial and dual-use and
    in-house end products for the warfighters while still pursuing
    a more rapid and agile acquisition process?
        Secretary Roper. So, Congressman, it is--you hit nail on
    the head, is we are going to have to use commercial technology
    to keep our advantage. There are going to be a lot of
    technologies that we will want to operationalize for
    warfighters that are going to come from private industry. And
    we need to be able to use them faster than our enemies can.
        But coming with the opportunity hand-in-hand are risks
    associated with things that we do not control. I think this is
    going to be an area where we are going to have to fundamentally
    shift how we think about developing.
        And you see in industry standards like fault-tolerant
    designs, where you use a variety of different, say, processors
    that have a variety of different computers associated with
    them, all of which sum total to give the output because the
    maker does not want to trust any one individual computer or
    processor with the decision. It is a way to spread out the
    reliability.
        I think there are some analogs for that for safety is you
    may be able to be part of our supply chain, but can you be all
    of it? And so I think we will have to design things differently
    to use commercial tech.
        And part of what I am looking to use prototyping for over
    the next few years is to not just prototype systems for
    warfighting, which is very important, but to also prototype new
    design philosophies that allow us to use commercial tech more
    readily.
        Secretary Geurts. And sir, I would just pile on. You know,
    CFIUS [Committee on Foreign Investment in the United States]
    and some of the other, 806 and all those authorities I think
    are critical for us. If we find a supplier that is suspect, our
    ability to then exclude them under the right sorts of
    circumstances, I think is another critical authority.
        And I think that one is due to expire here at the end of
    the fiscal year, and so I think all of us would agree, anything
    we can do to get more assurance in the supplier chain and then
    if we see some issues, have the ability to deal with that in
    competitive situations would be beneficial.
        Secretary Jette. I agree with my colleagues, Congressman.
    It is a significant challenge to try and make sure that we have
    dependable parts. I am somewhat less concerned about things
    which are components, metal components, those type of things.
    We can qualify them. It is fairly straightforward to make sure
    that they function the proper way.
        My bigger concern is embedded systems that are embedded in
    another system that we finally buy as a total system. And our
    ability to make sure that somebody--when you get an item, you
    buy a U.S. chip from a U.S. manufacturer, however, the chip
    itself was manufactured in another country. And how do I know
    that that chip does not have some other things embedded in it?
        And I do not think that our method of ensuring that that is
    not occurring is quite as robust as it needs to be,
    particularly with our systems getting us--you know, becoming
    more and more dependent upon those technologies.
        Mr. Langevin. So let me go into a related issue. How are
    each of your services building cyber resiliency measures into
    the requirement-setting and acquisition processes to ensure
    that our platforms and systems will fulfill their--still
    fulfill their missions despite being exposed to hostile network
    actors? And what more should we be doing to enhance this part
    of the process?
        Secretary Geurts. Sir, I think at least the Department of
    the Navy, we are attacking it in a couple different areas. One
    is how do we get the requirements upfront and then build the
    testing on the back end so we have got confidence in the either
    piece of IT [information technology] software or hardware
    system, whatever that is.
        And then I would say more broadly we are looking at it
    architecturally so that we do not rely on, you know, so we
    build resilience into the architecture so if one element of
    that architecture gets attacked or gets thrown offline or
    something, that does not have a cascading effect throughout the
    entire system.
        So, you know, there are efforts we are doing at the
    individual platform and component level and then larger efforts
    all the way through operational design of how we, you know,
    intend to fight to deal with the fact that pieces may come and
    go but we do not want that to in itself take out the entire
    capability.
        Secretary Roper. And very briefly, Congressman, there is a
    lot that we can use from commercial technology as well. I mean,
    the idea that we are going to have networks or systems that we
    can say at 100 percent no enemy will ever penetrate, that era
    is probably coming to an end. So we need to change the way that
    we design systems to deal with threats that get inside of
    systems that are critical for national security.
        Artificial intelligence provides an opportunity to be able
    to fight back and protecting data vice the network perimeter
    itself is another opportunity. So I think there is some hope
    here, but it is going to require change.
        Mr. Langevin. Dr. Jette. Dr. Jette, do you have anything to
    add?
        Secretary Jette. Sorry. Thanks. We are doing--working with
    the other services as well in very similar ways, sir. We have
    requirements to test against cyberattack. There is a lot that
    is being done in the cyber regime for the network-type of side
    of things. But one of the concerns we have greatly is how much
    of our electronics are embedded inside of the systems
    themselves? How do we make sure that those things are safe?
        So we have got a number of things that require testing
    inside of the systems. We have a red team established
    specifically to do cyberattack against all of our systems
    before we are allowed to get them fielded so we can determine
    if there is a method of corruption.
        And it was interesting, the Secretary of the Army asked me
    the other day why he saw PEOs [program executive officers], PEO
    teams that had cyber people in them? Are they all doing cyber?
    We have got a cyber command over here. And I said they are the
    ones who are making sure that the cyberattack is not occurring.
        So we do have--we do have some pieces in place. I just
    would not say that we are where we need to be yet.
        Mr. Langevin. And the sooner we--the earlier we can vet it
    and look at that in the requirements process and the
    acquisition process and the requirement setting the better I
    think we will be.
        Thank you, Mr. Chairman. I yield back.
        The Chairman. Mr. Banks.
        Mr. Banks. Thank you, Mr. Chairman.
        Mr. Geurts, the Fat Leonard scandal was back in the news
    again last week, and the shadow that it has cast on the United
    States Navy continues to be an issue that seems to be far from
    an end. Can you give us an update today on what the United
    States Navy is doing to make sure this never happens again and
    how we are addressing the scandal?
        Secretary Geurts. Yes, sir, and if I could maybe take a QFR
    to give you a more comprehensive than I can in the time, but
    obviously our key concern for us, what I have done in my
    portion, which is the contracting element, is put the
    safeguards in place on those [inaudible] contracts, looking at
    authorities, looking at where unilateral authorities are versus
    oversight authorities.
        And I believe we are getting that balance, taking the
    lessons learned and ensuring that we have got both trust and
    transparency in that, so that, you know, we are--we can hold
    folks accountable as well as have a transparent system so we
    can understand if there is something that is occurring that
    does not appear to be within the rules we have set forward.
        And then obviously, as you are seeing through the Secretary
    of the Navy, holding folks accountable if we do find they are
    out--acting outside of those norms.
        Mr. Banks. But what do you do from day-to-day or regularly
    to stress to those acquisitions and contracting officers, both
    in uniform and civilian under your authority to try to raise
    the level of integrity to make sure that this never happens
    again?
        Secretary Geurts. Yes--yes, sir, and again, I think it all
    comes to the culture they are operating in and the people we
    are selecting. I think we have great folks. It is stressing the
    culture of accountability. That is empowering also.
        So I need to empower them. If I do not empower them to act
    I cannot hold them accountable. They can, you know, blame
    somebody else. So part of it is get that empowerment down but
    then have an accountable system with the right checks and
    balances.
        You know, our contracting officers are many times the last
    line of defense and so making sure that they are comfortable
    that if something does not look right, they are not going to
    let the pressure of the operational mission pressure them into
    doing something that is not right.
        And then I would say the last is trust in leadership. And
    so me getting the word out and me going around and them having
    the trust that I will back them up if they see something that
    is wrong and I am not going to, you know, I am not going to
    blame them for the failure.
        Part of what we are also trying to do by decentralizing a
    little bit more on the acquisition piece is we will let folks
    operate at a lower level so that they can learn at a low level
    where if they do not have it perfectly right they can learn
    without a massive impact.
        Part of the challenge when you have a bureaucracy that
    pushes decision making too high up, the first time they
    actually learn is when it is very risky if they do not get it
    right. And so part of the culture is it is okay to fail if you
    are failing doing the right thing. It is not okay to fail if
    you are willfully or--or, you know, acting in a deceitful way
    to try and----
        Mr. Banks. So we both agree it is culture?
        Secretary Geurts. Yes, sir.
        Mr. Banks. When did the culture change? When did it change?
    Assure us today that the culture is different than it was.
        Secretary Geurts. Yes, sir. I mean, I have got a dates
    time--you know, daytime group of 2 December, so I can tell you
    that is everything I have been doing since the 2nd of December,
    you know, in looking at the Navy. I know the CNO [Chief of
    Naval Operations] and the SECNAV [Secretary of the Navy] have
    been pushing that since they have got on tenure.
        Mr. Banks. Can--can you elaborate on what that culture
    looked like then that led to the scandal to begin with and why
    you think it is different today?
        Secretary Geurts. Sir, I can. I would be happy to take a
    QFR for you and get more details. That was before my time in
    the Navy, but I am--I am--I would be happy to provide my
    perspective, at least on what we are doing going forward and my
    personal commitment that, you know, we are putting the
    safeguards in place so that that could not have happened either
    from a, you know, instance perspective or from a cultural
    perspective.
        Mr. Banks. Fair enough. Thank you very much.
        The chairman of this committee last week said that, quote,
    the Pentagon does not have enough contracting officers to
    obligate all the money it is about to get. Everyone on this
    committee has been focused on rebuilding and restoring the
    strength of the United States military.
        And I thought that--I do not have time left for a question,
    but as a former supply corps officer in the United States Navy
    myself, my hope is that each of the branches will explore
    avenues to go out and recruit contracting officers, both in
    uniform and civilians to join your ranks.
        But find those in the private sector who have good
    experience, that have the right background and integrity, and
    that you will find innovative and creative ways to do that.
        So with that, I yield back.
        The Chairman. Mrs. Murphy.
        Mrs. Murphy. Thank you, Chairman. First I want to thank you
    all for appearing before the committee today. I also want to
    thank the chairman and the ranking member for holding this
    hearing to continue to provide oversight over such an important
    topic. You know, I wholeheartedly agree that the Department's
    traditional acquisition process is too slow and cumbersome,
    especially when it comes to keeping up with the short
    technology life cyle.
        And Mr. Geurts, it was great to see you in Tampa last
    November when you were still the acquisitions executive at
    SOCOM. I want to congratulate you on your new role with the
    Navy and I think the entire acquisition community will benefit
    from your extensive experience and your appreciation for
    innovation and rapid acquisition.
        I want to ask you, Mr. Geurts, and all of the witnesses,
    about the value of rapid acquisition models. In particular, I
    know that SOCOM had used an alternative acquisitions
    authorities and exemptions with great success, including the
    use of other transactional authority or OTA, which was granted
    to the Department as an alternative business process to quickly
    and flexibly fund research and prototype development.
        In my district in Orlando, the Army just recently stood up
    an OTA consortium called the Training and Readiness
    Accelerator, which is affectionately known as TReX. This OTA
    consortium will focus on investing in opportunities to expedite
    prototypes in areas like AI, cloud computing, medical modeling
    and simulation in cyber in order to increase our readiness.
        Can you talk a little about--about the value of alternative
    acquisition models like OTAs. Specifically, how are you
    currently using OTAs in each of your respective services? And
    how are you ensuring that this contract instrument is properly
    managed and used to its greatest effect? Thank you.
        Secretary Geurts. Ma'am, maybe I will start and then I will
    pass on to my colleagues, and thank you for those nice
    comments.
        It gets back to my opening comment. I talked about kind of
    the 3D approach we are taking. One of that is differentiation
    and I think one of the challenges we have had in the
    acquisitions system was trying to create one perfect process to
    do everything. And I would say some of our success at SOCOM was
    related to having many different ways to do things and then
    empowering the workforce to choose the right things to do.
        And I think this committee has done a great job of giving
    us more tools to use. Our job now is to train the workforce to
    use those tools effectively. I would put OTAs in that category,
    prize challenges, rapid prototyping events. And I think we are
    each doing all of those.
        I will at least speak for the Navy, you know, we are doing
    all--putting OTAs in place. But OTAs are good for some things
    and not for others so you have got to put the education and
    training in there.
        So I guess my final plea is, you know, the continued
    support for the Defense Acquisition Workforce Fund because we
    will not succeed if we cannot get the training out to all the
    workforce members so they know how to properly use the tools:
    one, so they know the tools are available, and two, so they use
    them in the correct manner.
        As we do that, I think we can really accelerate our
    capability. And I will turn it over to----
        Mrs. Murphy. And before I have the other witnesses answer,
    do you feel that the Defense Acquisition Workforce Fund today
    is adequate for what the needs are?
        Secretary Geurts. I think we are going to have to continue
    that dialogue. I think over the years it has been whittled down
    some. I think there is some more flexibility we might be able
    to put in there that would allow us to do some things.
        You know, each of the services I think uses it uniquely for
    their particular situation, which I think is a strength. And so
    I think that is probably something worthy of continued
    dialogue. I am happy to take a question for the record and have
    a follow-up with you on that specifically.
        Mrs. Murphy. Thank you. I look forward to that.
        Dr. Jette.
        Secretary Jette. As you cited, the OTAs are a vehicle that
    we have been using. We did 361 agreements last year for $1.5
    billion, so we have gone from basically $634 million to $1.5
    billion in 3 years, though we are trying to find the most
    appropriate applications for them.
        But as I said in my comments, and I totally agree with Mr.
    Geurts, the right type of contract gives us the best vehicle.
    And one of the pieces there is in combination as well.
        Recently one of my program offices PEOs came in and he had
    a project, it had always been a cost-plus contract so he was
    proposing a cost-plus contract but it was near the end of the
    deliverable. And I said no; go back and take a look.
        How much of that is cost-plus? Because cost-plus I am
    essentially hiring that company to be part of my staff. They
    are just my additional workers. How much is deliverable? How
    much is something that takes more research?
        And we broke the contract into two pieces, one being a firm
    fixed incentive fee because I would like them to be motivated
    to do well on the firm fixed piece and a much, much smaller
    piece that was actually the cost-plus. So there are other
    mechanisms, too, we are trying to use.
        Mrs. Murphy. Great. Thank you.
        The Chairman. Mr. Brooks.
        Mr. Brooks. Thank you, Mr. Chairman. By way of background,
    I am from the Tennessee Valley of Alabama where Redstone
    Arsenal is located and the Army Materiel Command, and so we
    have a lot of acquisition work that emanates in my district.
    When there is a bid or a contract award protest, who pays the
    various parties' attorneys' fees and litigation costs?
        Secretary Jette. I am going to yield because I am not sure
    I would give you the right answer. I can provide you the QFR
    for that, sir.
        Mr. Brooks. Well, is it the parties themselves?
        Secretary Geurts. Yes, sir. I think it is the parties
    themselves up until the point where there is a--depending on
    the settlement or the resolution of that. But obviously there
    is the legal fee piece of that and then there is the impact of
    the program as we are going through their protest.
        And so, you know, there are two or three different elements
    of cost depending on if you are talking the legal fee for the
    activity or the impact as we are going through the----
        Mr. Brooks. I am talking about the legal fee incurred by a
    party who hires an attorney and then also the associated
    litigation costs for the appeals process, whether you are the
    proponent or you are defending.
        Secretary Geurts. So I think, why do we not take one for
    the record because what I am not--there is a direct cost. I do
    not know what is billable downstream in overhead.
        [The information referred to was not available at the time
    of printing.]
        Mr. Brooks. Right.
        Secretary Geurts. Because there may be within the cost
    accounting standards, a way to bill that.
        Mr. Brooks. Well, by way of background, again, long, long
    ago, in another life it seems, I litigated a number of Federal
    Acquisition Regulation disputes, contract award protests and
    the like before various boards of contract appeals. And unless
    things have changed, one of the strategies that was often
    employed by a losing party in a bid would be to file a bid
    protest or contract award protest.
        And they would do it even if it lacked merit. They might do
    it for strategic or tactical reasons rather than substantive
    reasons, i.e., substantive being because they were wronged and
    now they want to be righted.
        And these kinds of bid protests and contract award protests
    often result in contract award delays and ultimately as a
    result much higher costs in the acquisition process occasioned
    by those delays.
        So what I would like for you all to consider, to the extent
    the law has not changed from the time when I was in this
    process, is please give consideration to a loser pay rules
    wherein the loser in a protest must pay the prevailing party's
    attorneys' fees and litigation costs.
        And the reason that I would suggest you consider that as
    you are looking at all the acquisition rules that are currently
    in play is that creates a deterrence to a party filing a
    meritless bid protest or contract award appeal when they do it
    for tactical or strategic reasons rather than substantive
    reasons.
        Certainly, if that party is looking at having to pay the
    prevailing party's costs incurred by what turns out to be a
    frivolous protest, that might cause that party to pause and
    have a second thought about whether to engage in that kind of
    strategic maneuver, which in turn might mean that the contract
    actually does get awarded promptly, which in turn saves time
    and saves cost during our procurement system.
        And that is my personal experience. And if any of you three
    gentlemen would like to comment on that, I would love to hear
    your opinion about how the current process works or what
    changes we can make to try to reduce the number of bid protests
    that lack merit and are filed for tactical or strategic reasons
    rather than substantive reasons.
        Secretary Jette. Congressman, I will make a quick comment
    on this area. I know that in the NDAA 2018, section 827, there
    is a new section in there, a pilot program on payment of costs,
    much as you are talking about for denied government
    accountability, GAO [Government Accountability Office] bid
    protests, that have a threshold of $250 million. The pilot
    begins 2 years after enactment of the act, so we are kind of
    ahead of the game. You are thinking ahead of the game.
        We--we are looking at this very carefully because if--what
    we see is if an incumbent is in place and they lose the next
    competitive bid, they protest. Why not? They are going to
    keep--they are going to cause the contract to get extended and
    then they get paid during that extended period. So there are a
    number of little loopholes in the way we do our business that
    encourages them with no penalty on the other side.
        Mr. Brooks. Well, if I might, if the chairman will permit,
    I would encourage--I am vaguely familiar with that provision in
    the last National Defense Authorization Act. But it seems to
    me, if my memory serves me correctly, it was somewhat limited
    in scope. It did not apply to all the parties who were involved
    in the protest. And you have got the dollar figure.
        But anything you can do to help deter these frivolous
    protests, I would submit, would better enable the acquisition
    process to do what it is supposed to do, and that is get what
    our warfighters need and get it faster and cheaper and better.
        Dr. Roper, the chairman says you can also add your insight.
        Secretary Roper. Just one quick comment for consideration.
    So you are absolutely right that the government pays for
    protests. Whether we pay 100 percent, we will get back to you,
    but we definitely pay for it. And the warfighter pays, too,
    because it delays fielding.
        And one thing that has always given me concern is you can
    really protest twice. You can do the protest through the GAO
    and then you can go to claims court. And I think it is worth
    considering.
        It is not something that we can do, I think, regulatorily.
    But it would be great if a--if a protestor had to pick where
    they wanted to go, so you only get to protest once. And that
    would take two steps out of the process.
        So I definitely agree that this is an area that is ripe for
    thinking. We love OTAs because you can't protest them. But that
    is really--we are really looking at the symptom. The thing we
    need to actually fix is not making protests where they are so
    hard to get through that they delay time and increase cost. So
    I am glad you brought that up today.
        Mr. Brooks. Well, if I could conclude with this one, short
    comment. In the private sector, the fee award system, losing
    party pays, does act as a deterrent to the filing of meritless
    lawsuits in the private sector. And I would hope that you would
    consider applying that to the acquisition process in order to
    raise the stakes, put more skin in the game. You better be
    right if you are going to protest.
        Thank you for the additional time, Mr. Chairman.
        The Chairman. Yes. Good questions.
        Ms. Davis.
        Mrs. Davis. Thank you, Mr. Chairman. Thank you to all of
    you for being here today. I know there has been a great deal of
    discussion about, you know, how do we measure the way we train
    the acquisition workforce, finding a way to get this better
    incorporating not just civilians and military as well as the
    private sector.
        One of the things that I think has not come through as--as
    strongly and I wanted to ask you about is how we actually
    reform contracting in the war theater? How do we make sure that
    people are thinking not just in acquisition, but strategically?
    How do you train acquisition officers to be strategic thinkers?
        Secretary Geurts. Ma'am, I will start, then I will--I will
    pass you to Dr. Roper. I think a key piece of decentralization
    what I found coming back into the big service was decision
    making had been pressed up to such a high level that your
    senior folks were spending your time, in my mind, doing
    tactical work, not taking the time to have strategic
    discussions. So part of the decentralization piece is in
    pushing accountability down so the work can move down there to
    free up thinking time.
        And then the second piece, at least the way we are
    attacking it, is have a much more thoughtful dialogue very
    early in the program. What are the framing assumptions, what
    are the outcomes we are trying to achieve? Have that before we
    starting writing documents and creating budget exhibits and
    those things that the process requires.
        And what we are finding is having that discussion much
    earlier and freeing up the leaders' time so that they can have
    those discussions is enabling us to be much more thoughtful on
    the front end. Okay, what is the strategy? We do not need--it
    is not just cost-plus or fixed-fee. Are we going to do--you
    know, you can have multi varying strategies.
        Mrs. Davis. Not just faster and better, but yes. Yes.
        Secretary Geurts. Yes, ma'am.
        Mrs. Davis. Is that aligning with NDU's [National Defense
    University's] program?
        Secretary Geurts. What was that, ma'am?
        Mrs. Davis. Is that aligning with NDU's program?
        Secretary Geurts. Yes. I think that is. Again, I would ask
    other colleagues to break in here. Another piece we are looking
    at--like on commercial, where we get in trouble on commercial
    is we try and use it differently than it is used in commercial.
        So how do we buy the way it is sold, not buy a commercial
    product and then try and do a bunch of things to it so that we
    no longer get the value of it being commercial and we kind of
    own our own variant of it. I think that is a similar kind of
    thing.
        I do not know, Dr. Roper, if you----
        Mrs. Davis. And maybe you all could describe what--to the
    extent that all the services are learning from one another in
    this area?
        Secretary Roper. Yes. Congresswoman, it is a great point is
    we need to think more strategically inside acquisition. Just
    know, like, coming into this job, I have been extremely
    impressed with the talent that the Air Force acquisition
    workforce has. And I know from my past job that that same
    talent is resident in the other services. Amazing people,
    technically competent, skilled, and motivated.
        But for years, they have had to not just be experts in
    acquisition, they have had to be experts in bureaucracy. The
    best skill you could have as a program manager, a program
    executive, is navigating the many, many hurdles of the
    Pentagon. So as we take that skill set down, we have an
    opportunity to reinvest it in training in the new authorities
    that you have given.
        I think it is going to be very important that as we push
    authorities down, we invite the acquisition workforce to think
    horizontally. There is not much that is horizontal in
    acquisition. If you are building an airplane, you are building
    an airplane.
        But what--what frustrates me is that we have software in
    every system that we build, almost, but none of it is common,
    none of it is recycled. And when we look at commercial
    industry, the same software is resident everywhere.
        So one of the things that I am interested in doing, and I
    am certainly going to work with my colleagues here, is to try
    to experiment with some horizontal things in acquisition while
    we still focus on doing the verticals.
        Mrs. Davis. Do they ever bring in multidisciplinary teams
    that can--perhaps have not had the same experience, but have a
    whole different way of looking at things? Is that part of what
    you need?
        Secretary Roper. Yes, Congresswoman. Cross-functional teams
    are very much in vogue and I am a big supporter of them. They
    bring together people that have different backgrounds so they
    may be an acquisition person, a requirements person, a
    technical person. And even though not every member of the party
    may be related to the type of decision that is being made, they
    bring something that allow the decision maker to make a broader
    set.
        Mrs. Davis. Yes.
        Secretary Roper. So I really wish that we would take things
    that were serial in decision making and make them parallel by
    getting all the right people in the same room at the same time
    to make a decision. It is common sense. The common sense is
    really what we need to bring back to acquisition.
        Mrs. Davis. Thank you.
        Dr. Jette.
        Secretary Jette. Yes, Congresswoman. One of the things I
    will say is that cross-functional teams, the Army has placed a
    big bet on these. We have put together teams that are--one team
    behind each of the Secretary and the Chief's priority areas,
    plus two additional ones, which are critical enabling
    technology areas.
        And they are led in a way that bring in the military
    competency with technical competency with the acquisition
    competencies so that we can try and get that team to look for
    realistic and viable solutions to problems.
        Internally, I am also reinvigorating our--we have an
    office. We call it system-to-systems integration. I think that
    that is probably not quite the way it is going to turn out, but
    I have to crosscut these organizations and make sure that we
    are looking across them.
        And I think that, as my colleagues have said, pushing the
    decision-making process down to our senior leaders in the PEOs
    in particular, is just tremendously enabling because all of a
    sudden they are not just process people.
        They are looking for products. They are looking to make
    something happen and they feel the responsibility. And it is
    making a big difference.
        If I had one last comment to make, it would be that I am
    looking at specifically how to get contracting not something
    that gets done over there and you watch it leave the station
    once you buy your ticket. But bring the two, the program
    management and the contracting much closer together so that we
    have a more coherent process.
        Mrs. Davis. All right. Thank you. I hope we can measure
    that in a year from now. Thank you.
        The Chairman. Thank you.
        Ms. Stefanik.
        Ms. Stefanik. Thank you, Mr. Chairman. Last fall, Cyber
    Command began executing limited acquisition authority to speed
    up the acquisitions process for cyber-specific tools.
        This was based on an authorization included in the fiscal
    year 2016 NDAA for Cyber Command to execute contract actions up
    to $75 million a year through the end of fiscal year 2021. Has
    that improved the acquisitions process in our rapidly changing
    cyber world--our rapidly changing world of cyber warfare?
        Secretary Jette. I will--Congresswoman, I will give you my
    quick examination of this to this point. It has expedited an
    ability to reach out and grab a lot of readily available tools
    that would have otherwise been very difficult to just bring
    into the system, particularly because cyber changes constantly.
    It is a constant battle.
        And so if you do not have that tool set availability and
    upgrades to those tool sets, then you are going to be falling
    behind. So far, the examination I have made, and it is not as
    deep as I plan to, has shown that this ability to reach out and
    go directly to get the things they need more quickly and more
    directly has allowed them to keep up much better with the cyber
    threat than trying to go through the classic system.
        Ms. Stefanik. Do you see any challenges with this new
    format when it comes to introducing this into the acquisitions
    process?
        Secretary Jette. Whenever we put rules in place which give
    people a lot more freedom, eventually, what I see is, we back
    up. And my concern is making sure that we measure what we want
    to do, measure what we expect of them, make clear what that is,
    and then we allow them to do what you have given authorities to
    do.
        Otherwise, you know, I give my great example as, Rapid
    Equipping Force is an organization that procures things rapidly
    and gets them to the field. It does not have a milestone
    decision anywhere in its path.
        It now must report to a milestone decision authority,
    because we just want to make sure that they are doing things
    right. And so the same type of process encroachment can happen
    to this process as well if we do not watch it.
        Ms. Stefanik. Yes.
        Secretary Geurts. Ma'am, good to see you again.
        Ms. Stefanik. You, too.
        Secretary Geurts. As I think you know, we at SOCOM had kind
    of put in a person there in CYBERCOM [United States Cyber
    Command] to get them kind of up to speed and at least start
    with that model. And at least in my discussions with him as he
    came back was, you know, they are getting the discipline in.
        I would say, though, that in terms of impacting acquisition
    programs may not be a direct correlation, and so, you know, in
    the Navy we have designated tech warrant holders just like we
    do for shipbuilding in the cyber domain. So we have tech
    warrant holders who are the technical authority of any cyber
    capabilities either we are developing or we need to put into
    programs.
        And those warrant holders are the ones I hold accountable
    as we birth programs, as we test programs, as we field programs
    to ensure we have got cyber resilience and all that. They are
    connected with CYBERCOM and obviously there is some learning
    there, but that CYBERCOM acquisition element is not directly
    acquiring the cyber capability or testing in, you know, in the
    Navy weapons systems, if that makes sense.
        Ms. Stefanik. Yes.
        Secretary Roper. Well, Congresswoman, I think what you
    should expect to see over the next couple of years from me, and
    I would not be surprised if it is true for my colleagues, is a
    continual frustration with applying normal acquisition
    processes that were really developed for hardware-driven things
    to software.
        My opinion is just a different beast, and we probably need
    a different process and need to train people fundamentally
    differently than we would someone that is going to build
    something that is very hardware-driven like a plane or a
    bomber.
        Whether or not we have the authorities to do it as
    currently given, I think that is an open question that we will
    keep coming back to say, you know, this is an area where what
    you have given us is not quite tailored for this.
        But in order for us to build the military that is going to
    be needed to deal with peer competitors, which the National
    Defense Strategy demands of us, we are going to have to
    dominate in software. And we cannot do it the 1990s way.
        And so I think you will see lots of things pop up, but we
    really need a systemic change. And that is something I look
    forward to working with my colleagues. We cannot do this one
    way in the Air Force and then do it a different way in the Navy
    and the Army, so we have committed to work together on these
    things that are enterprise-wide.
        Ms. Stefanik. Yes, I think your point, Dr. Roper, about
    applying the acquisitions process from hardware to software is
    not the right approach, so we need to continue hearing from you
    about the authorities in terms of how we move towards a
    software-specific acquisitions process.
        My time has expired.
        The Chairman. Mr. Lamborn.
        Mr. Lamborn. Thank you. Last but hopefully not least. Thank
    you for having this important hearing and I could not be here
    earlier. I got here as quickly as I could, so hopefully my two
    questions have not already been asked.
        But the first one is on innovation strategy. In June of
    last year GAO identified several key enablers for promoting
    innovation. Having a strategy was one, aligning investments
    with goals is another, and the third one I want to focus in on,
    protecting funding for riskier projects.
        And I think of directed energy. A lot of times that has
    been starved for funds because people say, oh, it is always
    over the horizon. The potential is there, but it is too far in
    the future.
        Now we are seeing both strategic and tactical applications
    and possibilities for all of the branches, all of the branches
    that you represent. So but that is an example where you can
    starve the funding because there are always more urgent needs
    that are current.
        So how do you protect riskier projects and technologies and
    innovations by giving them the proper funding that they have to
    have as they are being matured?
        Secretary Geurts. Yes, sir, I again appreciate that. You
    know, a challenge in my previous life at Special Operations
    Command, a very busy command, and if you were not careful you
    would prioritize readiness today and then lose readiness
    tomorrow.
        And so a piece of it and I will go back to Dr. Roper's
    comment earlier, was we also have to look at how do we really
    drive cost effectiveness and sustainment and readiness to
    create headroom for continued funding in science and
    technology?
        And then how do we then create processes and a culture
    that--in that early on really rewards risk-taking, quick
    iteration speed, get a quick lesson, get with the operators,
    put it in the field, see if it works, a little bit of the
    acquire before you require mentality.
        So we need to make sure we are driving costs down that--in
    the readiness accounts that do not crowd out our ability to
    invest in the modernization accounts.
        And then I think the last thing I would say, and we all get
    together fairly regularly. Congresswoman Davis had a question,
    do we interact? You have got an Air Force SOCOM guy in the Navy
    and you have got a--you know, you have got a very--you know, we
    are--we are here as a very interesting brand.
        We spend probably more time together now than ever in
    figuring out how to cross-deck ideas, technologies, because the
    fastest way to get into the field is take what somebody else
    has already taken to one point or another.
        Secretary Roper. Congressman, there is a lot that we can
    do. And if we are going to achieve a military that can deal
    with peer competition, we are going to have defense funding
    that is for the future and be very, very strategic and
    dedicated to not making it a sacrificial lamb for today.
        Now, often this is a classic readiness versus future
    capability argument, and that, I think is--will be recalibrated
    based on the National Defense Strategy.
        But there is a lot we can do to make that recalibrating
    easier. We could certainly try to get the cost of logistics and
    sustainment down where a lot of money is going. I feel like
    that is a place where we have got bad cost, what we could fix
    that would free up money that we could invest elsewhere.
        I am frustrated that we do not design for upgradability, so
    we pay a lot upgrading systems. It takes a long time. It takes
    a lot of money. Commercial technology upgrades sometimes on its
    own. So we can learn a lot from them, that a way you can
    maintain readiness is to have systems that can upgrade and
    spiral faster than the enemy.
        And if we were to do those two things, there might be even
    more resources that we could dedicate to the future so we could
    finally have laser weapons and hypersonics and all the other
    things that we want but so often become the bill payer because
    of the here and now.
        The funny thing is you can get everyone to agree, the most
    important thing for us to do is to have those capabilities in
    the future; but it is never the most important thing today.
        Mr. Lamborn. Yes.
        Secretary Roper. And so we need to make it easier to make
    it the most important thing today.
        Mr. Lamborn. Yes, thank you.
        Secretary Jette. Congressman, the Secretary of the Army has
    said that readiness is critically important. Modernization
    comes next. And--but he also has said that modernization is our
    next readiness. It is a continuous process. It is not, that is
    modernization, this is readiness.
        So to that end we have been working on developing some
    methodologies and policies to ensure that we do not allow our
    seed corn to be eaten by today. One of the things is we have a
    60/40, 80/20 rule that we are putting in place in Policy which
    helps 61, 62 money. Sixty percent of it has to be tied directly
    to a path to some sort of programmatic application, but 40
    percent of it does not.
        It gives--you can be a little more circumspect in exactly
    how you are going to apply it. And that gives the freedom for
    innovations you do not expect and you do not see.
        And the same way even at the 63, 64 level, same situation;
    80 percent for something that is pretty well tied, 20 percent a
    little less so. It gives us an ability to leverage that
    creativity again.
        We keep talking about the valley of death, and then we do
    nothing about it. So we are actually fencing off money
    specifically that senior leaders will then decide, yes, I am
    going to transition that and I am going to take--I am going to
    deliberately decide to delay the program 6 months, whatever it
    takes to get this technology into the program as opposed to
    leaving it to the technologists and the PM [program manager] to
    try and figure out.
        I think the last thing I would bring up is that we have a
    mechanism for funding. The RCO, the Rapid Capability Office and
    the Rapid Equipping Force. The Rapid Equipping Force is sort of
    a pot that gets refilled.
        The RCO is a decision-making process with the funding
    people in the room and the Chief and the Secretary make
    decisions on that. That is, in fact, how we are funding right
    now an accelerated effort on directed energy is through those
    processes.
        Mr. Lamborn. Thank you.
        The Chairman. Let me touch on just a few other things or
    maybe rehash a couple of them, starting with a couple questions
    I have been asked in the last day or two.
        Dr. Jette, why are not these cross-functional teams that
    the Army has set up just another layer of bureaucracy?
        Secretary Jette. Mr. Chairman, I have been looking at the
    cross-functional teams [CFTs]. I am being introduced to their
    purpose and objective, and I think that there are some real
    values to them. The biggest issue to me is I see the value. I
    want to see whether or not there is a decay in the value over a
    long period of time. And I do not think there is any intention
    with the senior leadership to allow that to happen.
        If you were to ask me what the biggest problem I would have
    with respect to acquisition, it would be that I do not have a
    tight linkage between the people who generate the requirements,
    the technology people who can bring the capabilities to the
    table that you want to think about as you are looking to the
    future, and the acquisition people who actually have to get it
    into the field.
        The idea of the cross-functional teams is to bring that
    entity together in one place for specific areas of critical
    importance. And those are the eight areas that they have been
    designed for.
        By putting these CFTs together and selecting leaders that
    have a lot of operational experience to be the leaders of the
    teams, so they would bring leadership as well to the team, and
    then you tie across that, we are required by the Chief and the
    Secretary to put good people underneath that team.
        I think that it may well be a much more expeditious way of
    getting to good requirements and prototyping and prototype
    experimentation on the operational side of things than each is
    here, here, and here. The question is can we sustain that
    effort? And I know the Chief and the Secretary are committed to
    do so.
        The Chairman. Okay. I think it makes sense, for what it is
    worth. I think the challenge is not just making--having it be
    something other than just another hurdle that a program has--
    has to get through. And obviously a lot of that falls on your
    shoulders.
        Second question I have been asked in the past couple days
    is suppose that we have a firm fixed price contract on a
    vehicle or a ship or an airplane that requires steel or
    aluminum and the government takes an action that raises the
    cost of steel or aluminum. Are you all going to renegotiate
    those contracts?
        Secretary Geurts. I guess, sir, I will go first being the
    shipbuilder with a lot of steel or aluminum. I think all three
    of us would, you know, certainly support the SECDEF's
    [Secretary of Defense's] position on this whole issue.
        I think with the Buy America Act, particularly in the
    shipbuilding industry, and all the U.S. ships being built in
    the U.S., we do not see a huge issue yet. Still trying to
    understand the policy at the big level.
        I think some more studies are going to have to be done and
    it is at the supplier level and as the policy becomes better
    understood and its final implementation side then we are going
    to have to look at what those implications are and then what
    does that mean to each of the individual programs.
        So I would say too early to say yes, we are going to
    renegotiate or not. I think we are--still need to understand
    the policy and the impact perspective and then from there we
    will go investigate the impacts of the programs.
        The Chairman. Okay.
        Secretary Roper. Mr. Chairman, I think this is one of the
    issues that we will truly have to have a Department position
    on. So I think for the Air Force's point of view we are
    committed to work with the other services and the Office of the
    Secretary of Defense to make sure that whatever our response is
    it is done together. But your point is well taken that this
    will impact programs and we need to understand that sooner
    rather than later.
        The Chairman. Yes. Well, I think that is definitely true.
        There was some discussion earlier on intellectual property
    and data rights. And I think you all have alluded to the fact
    that there is criticism from contractors when the government
    comes in and says give me all your data or else. There is
    criticism when a different contractor wants to bid for repairs,
    but the initial contractor owns all the data and will not let
    loose.
        We put some provisions in previous legislation to try to
    help build up a pool of expertise on intellectual property so
    that there could be a negotiation from the get-go about this,
    so these concerns could be part of the negotiation every step
    of the way.
        My question to you all is today do you have the expertise
    you need to navigate through these different considerations and
    challenging issues?
        Secretary Roper. Mr. Chairman, I think this is an area we
    are going to look for additional expertise in the acquisition
    workforce. I felt one of the important questions earlier is
    about putting in the young officer to negotiate a contract
    against a team of lawyers from a large company.
        And although we ought to train that officer or acquisition
    professional to be as good as they can at the negotiating
    table, I think there is a broader issue, which is we are not
    really incentivizing the behavior that we want.
        We say we want open architecture. We say we want
    modularity. We say we want data rights, but it is hard for us
    to actually reward a contractor for giving them to us.
        And so I think we will want to balance being able to have
    the right expertise in the government to be able to argue well,
    but also explore ways to try to make giving us a truly open
    system where we can change things quickly an advantage to the
    company that gives them to us. And it is something that I feel
    that we have not done a great job of in the past that I hope we
    will think about very earnestly for the future.
        Secretary Jette. Mr. Chairman, I think that this is an area
    that is critically important. I mean, I own IP. I was a small
    company. I do not have big corporate headquarters. I do not
    have lots of land. I do not have a shipyard. My value was in my
    head and on a piece of paper. So I understand and appreciate
    the IP issue from the commercial sector side.
        On the other hand, I also understand the government's side
    of things. And I have worked for many other commercial
    companies as well. If you pay me to do it, you own the IP. If I
    bring something to the table, then we can negotiate a license.
    The issue is I do not believe that we pay attention to that,
    particularly at the beginning of our discussions and
    contracting.
        So someone bids, I am going to bring this IP to the table
    and I need you to mature it through a cost-plus contract into
    something else. And this is the type--it is a linkage like
    fingers together. And the next thing you know, you are stuck.
    He is holding you and you cannot let go.
        In the commercial sector, particularly with modular open
    system architecture and our proper definition of that at that
    beginning of the contract proposal, you bring a proposed IP to
    the table, you put a box around it. I know the goes-intos, the
    goes-out-ofs, and what the functionality is. What is your
    license fee for it?
        Tell me in the beginning. I will not even ask you for the
    innards. I will not ask you to deliver it because I own the
    license. If I buy your product and your contract, I will own
    that license in perpetuity. Then when you develop something I
    want the commercial standard.
        Commercial standard is if I paid you to deliver it. It
    comes with a piece of paper telling me how it looks. I think
    that we need to take a much harder look at this issue that
    companies, if we ask them after we put that in--we did not put
    that in the contract. We asked them later on and we get these
    huge bills for delivery of something they have on hand because
    they cannot make it themselves if they do not have it on hand.
        So I think the biggest focus is we need to take a hard look
    at the front end the way we do contracts to make sure we honor
    theirs and have control of ours.
        The Chairman. I would just say that is exactly where we
    have been trying to push things, and I continue to worry about
    whether the government has the knowledge and expertise and
    experience base to get into those negotiations early on, which
    is what needs to happen.
        Secretary Jette. Yes, sir, Mr. Chairman. I think that we
    have a lot of people who are talented in this area. I do not
    think that we have--it is a cultural issue we have been talking
    about. We have got to get them to think differently about these
    things and IP is not government rights use or use rights,
    whatever that is.
        I always love to have the government pay for research and
    development because I knew even if I delivered them the package
    with the intellectual property, it would go right next to the
    Ark of the Covenant in that warehouse someplace in a government
    warehouse. Nobody ever in the government pays attention to
    either honoring or using their IP rights.
        The Chairman. Yes. Congratulations on your patent by the
    way.
        Secretary Jette. Thank you, sir.
        The Chairman. Mr. Geurts, do you have something else you
    would like to----
        Secretary Geurts. Sir, I mean I would--I mean and there are
    a couple different issues. One is new efforts, how do we get
    those right? How do we create the tools so it is not just
    mandraulic response? If we have to hire a lot of folks what are
    tools, guidelines and training?
        And then we have got some fairly challenging legacy issues
    where there are reversely asserted rights. And in that case I
    think we just have to get to those discussions and resolutions
    whether it is within the program or not as fast as we can to
    understand.
        Part of my challenge is we have had a lot of lingering
    disagreements that linger on through and do not get resolved in
    one way or the other. So I think where we have got legacy
    programs it is driving to quick resolution, whatever that is,
    so that we can move on.
        For the new programs it is having the workforce and the
    guidelines so we can put the right things in upfront. And we
    will be working both of those simultaneously.
        The Chairman. Everything we have talked about pretty much
    today has been hardware or software. We have not talked about
    service contracts where, according to some estimates, most of
    the contracting money goes. Can each of you offer some
    observations about the challenges with service contracts and
    areas of reform you think we ought to consider together?
        Secretary Geurts. Sir, I think the number one thing I found
    over my experience as a service contractor is it is
    requirements-driven. Many times the requiring agent, if they
    are an operational unit or they are using component, they do
    not tend to be, you know, heavily steeped in acquisition
    expertise, so training a requiring agent and working with them
    to get an actionable requirement that we can create a good
    business solution for I think is a critical step.
        Actually, understanding the spend and looking where we have
    got cross-enterprise spend, and so Big Data and all that I
    think will help in that regime.
        And then some of the discussion on protest reform and
    understanding, particularly in service contracts where you have
    got incumbents and we are re-competing those contracts, how do
    you have fair, transparent but mission-effective re-
    competitions? Those would be the three areas where I think
    continued emphasis would be worthwhile on all sides on that
    equation.
        Secretary Roper. Mr. Chairman, I certainly think that one
    of the themes from today are metrics for acquisition for the
    new authorities we have been given. I think service contracts
    are a great example of a contract where we do not have great
    metrics to determine the value that we are getting to the
    government.
        So I think it is an area where we are looking at new ways
    to weigh value and auditability is the way that we can do that.
    There are a lot better tools that are available today than
    would have been available, say 10 years ago, that do auditing
    of where spend is going and where workflow is happening.
        So that is an area we should up our game because when we
    talk acquisition reform, we tend to talk hardware and software.
    To your point, we talk systems, we talk, you know, the ACAT-1
    program that so often start snowballing in risk and costs. But
    a lot of the money is in service contracts so I am glad that
    you brought that up.
        Secretary Jette. Mr. Chairman, last year my contracting
    command, just the Army Contracting Command, ACC, did about
    210,000 contract actions. About 100 of them cover 80 percent of
    my money. So that means that I have got a lot of contracting
    officers do a lot of other contracting actions.
        One of the methods that they do to try and reduce that
    number, because it would be even greater if we would have--to
    really get a better handle on these service contracts, is they
    consolidate. So they hire one consolidated vendor, who then
    does really all their contract actions.
        The end state of that is whatever you negotiate on day one
    is what you have 5 years later on that contract. And you have
    no real competition internal to that contract, and you have
    difficulty adding and removing people that are performing well
    or poorly or new players.
        I think that this goes back to one of my issues of taking a
    look at our contract methodologies, not necessarily the
    vehicles themselves but how we allow small vendors to
    participate. The mom-and-pop shop cannot just enter the
    marketplace, get involved.
        You have to become a SAM-registered contractor to be a part
    of the team that wins the local base contract for plumbing. And
    then you have to agree to the price to install a water heater,
    the price to, you know, fix a toilet, the price to dot, dot,
    dot. And these service contracts, those types of service
    contracts are not inconsequential. And they add up and we have
    little control once we let them go.
        I just bring it all back to us taking a hard look at
    exactly how we can reduce the need for consolidation and put a
    much more qualified vendor or some other system in place that
    makes it very easy to just let a task order instead of a whole
    contract for some of these smaller service issues.
        The Chairman. Well, that gets back to the data
    transparency, which is what we ran into last year as we started
    to look at this issue. Just a lack of information and obviously
    it spans a wide range from mowing the grass at the base to
    everything, you know, space services or something. So it is a
    wide range.
        Thank you all for being here today. Thank each of you for
    being willing to serve in these positions at this time. As I
    said at the beginning, I think we have done a lot but I think
    there is a lot more to do and we can all be more successful
    working together.
        We may not agree on everything. A lot of the reforms we
    passed in the last 3 years have not exactly met with
    enthusiastic support from the Department. But as I said, we are
    committed to continue and we look forward to working with each
    of you to make acquisition more agile and to get more value for
    the taxpayers.
        Hearing stands adjourned.
        [Whereupon, at 12:13 p.m., the committee was adjourned.]

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                                A P P E N D I X

                                 March 7, 2018

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                  QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                                 March 7, 2018

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                      QUESTIONS SUBMITTED BY MR. COURTNEY

        Mr. Courtney. The Procurement Technical Assistance Program provides
    critical training and in-depth, individualized counseling that small
    businesses need to compete and succeed in defense contracting. There
    are 98 of these procurement centers, or PTACs, in all 50 states, Puerto
    Rico, and Guam, with over 300 local offices. These programs help
    existing local businesses jump through the hoops that are required to
    do business with a nearby military base or facility.
          How important are small businesses and small producers
    with respect to maintaining a broad-based, resilient defense industrial
    base?
          Even as we seek to reduce red tape through many of the
    acquisition reform efforts discussed today, would you be supportive of
    expanding local technical assistance programs to increase competition
    and expand the supplier base for your respective military services?
        Secretary Jette. Small businesses and resilient defense industrial
    base to enable the Department of the Army and Department of Defense to
    maintain a pool of suppliers to procure products and services to meet
    our mission requirements and compete in the current and future threat
    environments. Small businesses are the suppliers of innovative
    products, techniques, processes and services to help the Department
    maintain its competitive advantage, improve its technological
    advantage, and increase readiness of the warfighter. Small Businesses
    assist the Army with meeting the Secretary's priority of readiness,
    modernization, and reform. I would support expanding local technical
    assistance programs to include training on Small Business Innovative
    Research, Small Business Technology Transfer, and Other Transaction
    Authorities and other acquisition mechanisms, and dissemination of
    changes to contracting requirements such as the Defense Federal
    Acquisition Regulation Supplement (DFARS). Organizations such as the
    Procurement Technical Assistance Centers provide critical resources to
    small businesses and help them remain a competitive and viable part of
    the industrial base.
        Mr. Courtney. In your testimony, you use the example of the
    Virginia Class Submarine as a success story for using block buys and
    multiyear procurements to take advantage of economies of scale and
    consistent, long-term funding to maximize efficiency and drive down
    costs. You state ``These kinds of authorities can result in substantial
    savings; we estimate they may be as much as $5.4 billion for the Block
    V VIRGINIA Class Submarines Multiyear Procurement.''
          Your savings of $5.4 billion in a large, multiyear
    procurement contract is in comparison to individually contracting those
    same submarines?
          The Navy's 30-year shipbuilding plan notes that there is
    additional industrial base capacity in 2022 and 2023 that could allow
    the procurement of two additional submarines during the years covered
    by the Block V contact.
        Do you believe that the most efficient way to procure those two
    additional submarines would be to individually contract those
    submarines or would it be more efficient to explore adding those boats
    to Block V as authorized by the FY18 NDAA?
        Secretary Geurts. The Navy estimates that the use of Multiyear
    Procurement (MYP) contracts for 10 submarines between FY 2019 and FY
    2023 will result in savings of $5.4 billion as compared to single year
    procurements. The Long-Range Plan for Construction of Naval Vessels for
    Fiscal Year 2019 notes additional industrial base capacity exists in FY
    2022 and FY 2023 to allow for the procurement of one additional
    VIRGINIA Class submarine in each of those years. The most efficient way
    to procure two additional submarines would be to add them as options on
    the Block V MYP contract. Since these submarines are not part of the
    Navy's budget and there is no economic order quantity (EOQ) for these
    two submarines, they would not achieve the full MYP savings.
        Mr. Courtney. The Procurement Technical Assistance Program provides
    critical training and in-depth, individualized counseling that small
    businesses need to compete and succeed in defense contracting. There
    are 98 of these procurement centers, or PTACs, in all 50 states, Puerto
    Rico, and Guam, with over 300 local offices. These programs help
    existing local businesses jump through the hoops that are required to
    do business with a nearby military base or facility.
          How important are small businesses and small producers
    with respect to maintaining a broad-based, resilient defense industrial
    base?
          Even as we seek to reduce red tape through many of the
    acquisition reform efforts discussed today, would you be supportive of
    expanding local technical assistance programs to increase competition
    and expand the supplier base for your respective military services?
        Secretary Geurts. Small businesses and small producers are critical
    to maintaining a broad-based, resilient defense industrial base. These
    innovative and agile companies participate in the industrial base as
    both prime and sub-contractors and provide capable and affordable
    solutions to meet the needs of the Navy and Marine Corps.
        Yes, the Procurement Technical Assistance Centers (PTACs) provide
    information and support that is vital to competing for Government
    contract awards. The Department of the Navy Office of Small Business
    Programs collaborates with PTACs to assist small businesses entering
    the federal market place and to increase awareness of solicitations and
    outreach events. The Navy and Marine Corps have multiple opportunities
    for small businesses and non-traditional suppliers to be part of our
    team. The local technical assistance support provided by the PTACs is
    vital to helping these businesses become ``procurement ready'' thus
    expanding the defense industrial supplier base and increasing
    competition.
        Mr. Courtney. The Procurement Technical Assistance Program provides
    critical training and in-depth, individualized counseling that small
    businesses need to compete and succeed in defense contracting. There
    are 98 of these procurement centers, or PTACs, in all 50 states, Puerto
    Rico, and Guam, with over 300 local offices. These programs help
    existing local businesses jump through the hoops that are required to
    do business with a nearby military base or facility.
          How important are small businesses and small producers
    with respect to maintaining a broad-based, resilient defense industrial
    base?
          Even as we seek to reduce red tape through many of the
    acquisition reform efforts discussed today, would you be supportive of
    expanding local technical assistance programs to increase competition
    and expand the supplier base for your respective military services?
        Secretary Roper. [The information was not available at the time of
    printing.]
                                     ______

                       QUESTIONS SUBMITTED BY MS. SPEIER
        Ms. Speier. What mechanisms (if any) does your service have in
    place to review the relative type, size, and goals of programs moving
    through traditional (including Major Defense Acquisition Program) and
    newer acquisition authorities and processes (such as Other Transaction
    Authority, Rapid Capabilities Office, etc.)? Have you or do you plan to
    review their comparative strengths and weaknesses in terms of their
    ability to identify clear requirements, build a business case for a
    program before making large purchases, and meet mission requirements?
    What are the conclusions of any such reviews?
        Secretary Jette. The execution and oversight of Major Defense
    Acquisition Programs (MDAPs) continues to be carried out in accordance
    with the statutory requirements of Chapter 144 of Title 10 U.S.C. and
    the regulatory requirements of DOD Instruction 5000.02. DOD and Army
    policy (Army Regulation 70-1) also provide guidance for the use of
    rapid acquisition authorities for urgent capabilities that can be
    fielded within two years. A defined and repeatable mechanism to review
    program type, size, and goals to determine the appropriate pathway
    (traditional or middle tier) is still being defined. We are pursuing an
    efficient solution in earnest and expect it will be codified in policy
    by the end of this quarter. Coherency between operational requirements
    and acquisition communities is being accomplished through the Chief of
    Staff's participation in the Army's reinvigorated Army Requirements
    Oversight Council (AROC). In addition to and in support of future
    AROCs, the ASA(ALT) is developing a revised method of producing and
    tracking requirements for a given program and its related products.
    Clear traceability from the National Defense Strategy through the Army
    Operating Concept to a material need is the objective. Characteristics
    of that material need are to be further traceable to specific
    offensive, defensive, and other system requirements. For example, if a
    radar must see ballistic missiles, specify which ones. This will allow
    for development of technically reasonable Key Performance Parameters,
    Key System Attributes, and other requirements which can further be tied
    to the program plan. By doing so in cooperation with the requirements
    generating portion of the Army, it will be possible to link trades to
    operational requirements. Such a clear framework will also facilitate
    greater input from modeling and simulation and other study methods to
    provide decision makers with the data necessary to make informed
    decisions. Furthermore, the Army is examining methods of ensuring that
    overall coalition and joint battlespace is considered in development of
    guiding systems architecture requirements which support the integration
    of systems developed under a single Battlefield Operating System (BOS).
    Each system will also have specific requirements for integration
    capabilities. This will facilitate a more holistic view toward total
    battlespace operations and allow for the impact of trades on that space
    to be assessed. A number of systems are being used as exemplars to
    develop this more detailed analysis. First examples are to be completed
    within 12 months. The Army is implementing initiatives to encourage its
    program managers to identify suitable candidates for newer acquisition
    authorities. The intent is to promote awareness of the new acquisition
    flexibilities to help ensure the Army acquisition community is postured
    to take full advantage of ``middle tier'' acquisition for rapid
    prototyping and fielding, commercial items procurement, and the use of
    other transaction authority. The Army is improving its data
    transparency to enable data-based decision making. As the Army uses
    these new authorities and collects performance data it will be able to
    best use these new acquisition authorities. While these are aggressive
    reform initiatives with expected successful outcomes, improvement is
    the actual objective of each. Therefore, periodic and, in some cases,
    continuous reviews are being made to assess the results versus the
    expectation and to make changes as necessary in as timely a manner as
    possible. Reviews accomplished to date are the basis of the above
    initiatives.
        Ms. Speier. What mechanisms (if any) does your service have in
    place to review the relative type, size, and goals of programs moving
    through traditional (including Major Defense Acquisition Program) and
    newer acquisition authorities and processes (such as Other Transaction
    Authority, Rapid Capabilities Office, etc.)? Have you or do you plan to
    review their comparative strengths and weaknesses in terms of their
    ability to identify clear requirements, build a business case for a
    program before making large purchases, and meet mission requirements?
    What are the conclusions of any such reviews?
        Secretary Geurts. The Department of the Navy (DON) conducts annual
    Gate Reviews and Configuration Steering Boards of all Major Defense
    Acquisition Programs to conduct appropriate oversight of Navy
    acquisition program execution, meet program baseline goals, and
    validate existing and new program requirements. The DON has
    intentionally embedded accelerated acquisition initiatives within its
    existing organizational constructs and processes. DON has no current
    plan to develop a separate Rapid Capability Office as embedding new
    accelerated pathways in the Navy culture will maximize their benefits.
        DON released interim guidance for Middle Tier Acquisition and
    Acquisition Agility on 24 April 2018, which describes the
    implementation of those authorities. That guidance directs System
    Commands and Program Executive Offices to assess their organizations'
    contracting, technical, legal, and financial processes to facilitate
    program acceleration, when appropriate and possible. The DON is
    actively evaluating current processes and procedures to better use and
    integrate accelerated acquisition when it best achieves the goals of
    the Navy and with proper stewardship of taxpayer dollars. This guidance
    supports a new strategic focus on better managing the Navy's
    acquisition portfolio to deliver lethal capacity, drive affordability,
    increase agility, and build a workforce to compete and win. I am
    currently undertaking a comprehensive internal review with the Navy's
    acquisition community to develop and share best practices,
    decentralizing decision making, differentiate program management, and
    digitize data and information sharing, where possible.
        For example, Other Transaction Authorities are being actively
    implemented across the Naval enterprise to accelerate knowledge and/or
    accelerate acquisition, where appropriate. The DON recently delegated
    the authority to enter into transactions other than contracts,
    cooperative agreements, and prototype projects grants not expected to
    exceed costs of $100M, which may be further delegated to Agreements
    Officers.
        Ms. Speier. If the Navy builds new Ford class carrier hulls before
    shock testing the existing hull, what is the range of potential costs
    for retrofitting each hull already being constructed?
        Secretary Geurts. The cost risk of requirement to retrofit
    subsequent FORD-class hulls following Full Ship Shock Trials (FSST) on
    CVN 78 is assessed as low.
        The hull form for CVN 78 is identical to the Nimitz hull form which
    was executed a shock trial on CVN 71. However, CVN 78 has been designed
    and built to meet the requirements for shock hardening and is projected
    to complete 99 percent component shock trial qualification prior to
    FSST. Existing FORD-class system and equipment designs will have
    already incorporated component design revisions based on component
    level shock qualification tests, reducing most of the liability of FSST
    findings.
        Ms. Speier. What mechanisms (if any) does your service have in
    place to review the relative type, size, and goals of programs moving
    through traditional (including Major Defense Acquisition Program) and
    newer acquisition authorities and processes (such as Other Transaction
    Authority, Rapid Capabilities Office, etc.)? Have you or do you plan to
    review their comparative strengths and weaknesses in terms of their
    ability to identify clear requirements, build a business case for a
    program before making large purchases, and meet mission requirements?
    What are the conclusions of any such reviews?
        Secretary Roper. [The information was not available at the time of
    printing.]
                                     ______

                      QUESTIONS SUBMITTED BY MRS. HARTZLER
        Mrs. Hartzler. Many Major Defense Acquisition Programs are troubled
    by the lack of government ownership of key research and design
    information, especially software developed as part of the research and
    design phase of acquisition. A notable recent instance is the F-35
    program, but the problem extends to many other major weapons systems
    that have been fielded for decades. How are the DOD and Services
    avoiding these problems in ongoing acquisition efforts like the B-21
    and other major programs moving forward?
        Some have asserted that these problems stem from the government
    being ``out-gunned'' when it comes to contract negotiation. In other
    words, relatively young active duty service members, with only a few
    years' experience, ``compete'' with very highly-paid corporate lawyers
    with decades of experience on the other side of the negotiating table.
    What do you make of that assertion?
        Secretary Jette. The Army is in the process of crafting a service
    level Intellectual Property (IP) policy to assist program managers and
    other material developers with an understanding of IP and the
    importance of a properly integrated, synchronized and tailored IP
    Strategy as part of their programs. This is an area of weakness that
    has needed clear guidance and focused attention for some time. The
    objective of the Policy is to ensure both the vendor and Army are
    fairly treated in IP management. Vendors who integrate IP into an
    offering should make clear any licensing constraints and identify all
    foreground IP in such an offering. No acquisition strategy will be
    acceptable that requires the use of foreground IP linked in an intimate
    and inseparable manner from government funded IP. This results in the
    government being captured by vendors through IP and is not an
    acceptable approach. If the government pays for the IP development,
    there are clear laws and regulations concerning differing levels of IP
    rights (government use rights, etc.) but its delivery needs to be
    considered at the outset in the RFP and not a follow-on negotiation
    after contract award. We are currently looking for an appropriate pilot
    program to require IP foreground and licensing, to include whose
    responsibility maintenance of such IP would be, and delivery of all IP
    funded by the Army to be priced as a separate bid item. This will
    reduce the dependency on the negotiating skills of a specific
    contracting officer and allow the Army to get competitive costs for the
    proposed IP and all delivered government IP from all offerors in a
    manner which allows clear comparisons between them. The programs
    referenced, F-35 and B-21, are not Army managed programs. On Army
    managed major weapons systems there is a deliberate process to
    determine parameters for an appropriate management and allocation of
    risk. There already exists a process that includes decisions on
    management of intellectual property, including key research and design
    information, to align with the requirements for the weapons system.
    Contract negotiations are a vital part of the procurement process. The
    Army provides all active duty service members and civilians involved in
    negotiations, the tools and support to ensure negotiations are in
    accordance with the Federal Acquisition Regulation (FAR) and have an
    effective outcome. To ensure active duty service members and civilians
    have the experience to effectively conduct negotiations, the Army
    conducts negotiations using a team approach. The team approach ensures
    the proposals are negotiated with appropriate experts. If a lawyer
    attends the negotiation, the Army team will also include an experienced
    lawyer. The team approach mitigates being ``outgunned'' during contract
    negotiations. All active duty service members and civilians assigned to
    an acquisition position comply with the Defense Acquisition Workforce
    Improvement Act (DAWIA) and achieve the certification level required
    for their position. Certification requires both training and
    experience. The training is both on-the-job and formal training. The
    formal training is conducted by the Defense Acquisition University
    (DAU). The required training provides a solid foundation in
    negotiations. In addition, courses are available to enhance negotiation
    skill sets, including: Contracting Negotiation Skills; Contract
    Negotiation Techniques; Negotiation Essentials; and, Contract
    Negotiation Strategies and Techniques. The Army recognized the need to
    better understand what drives industry behavior and assist negotiators
    to predict how industry will react to government requests for proposals
    (RFP). The goal was to allow Army professionals to structure RFPs for
    favorable outcomes to the government. This led the Army to develop two
    courses at the Darden School of Business, University of Virginia. The
    two courses, U.S. Army Understanding Industry Course and Advanced
    Program in Acquisition Excellence, provide students with education and
    training in current and cutting-edge business practices sufficient to
    allow them to recognize business risks and opportunities.
        Mrs. Hartzler. Many Major Defense Acquisition Programs are troubled
    by the lack of government ownership of key research and design
    information, especially software developed as part of the research and
    design phase of acquisition. A notable recent instance is the F-35
    program, but the problem extends to many other major weapons systems
    that have been fielded for decades. How are the DOD and Services
    avoiding these problems in ongoing acquisition efforts like the B-21
    and other major programs moving forward?
        Some have asserted that these problems stem from the government
    being ``out-gunned'' when it comes to contract negotiation. In other
    words, relatively young active duty service members, with only a few
    years' experience, ``compete'' with very highly-paid corporate lawyers
    with decades of experience on the other side of the negotiating table.
    What do you make of that assertion?
        Secretary Geurts. While the assertion cannot be ruled out for every
    acquisition, a number of other considerations explain the acquisition
    of less design information and rights to design information than would
    ultimately be in the Government's long term interests. These include
    that the cost to obtain such information or rights is often quite high.
    Obtaining data rights is one of many trade-off decisions often made in
    identifying how to spend funds. In addition, in the early stages of a
    major defense acquisition program, what data will be most useful during
    sustainment is often difficult to predict. Most hardware undergoes
    refinement during development and early production such that data from
    the award of development contracts may be superseded or obsolete by the
    time of sustainment. Such considerations explain why DOD has sought
    broad deferred ordering authority and has opposed statutory limitations
    on deferred ordering recently incorporated into 10 USC 2320.
        Mrs. Hartzler. Many Major Defense Acquisition Programs are troubled
    by the lack of government ownership of key research and design
    information, especially software developed as part of the research and
    design phase of acquisition. A notable recent instance is the F-35
    program, but the problem extends to many other major weapons systems
    that have been fielded for decades. How are the DOD and Services
    avoiding these problems in ongoing acquisition efforts like the B-21
    and other major programs moving forward?
        Some have asserted that these problems stem from the government
    being ``out-gunned'' when it comes to contract negotiation. In other
    words, relatively young active duty service members, with only a few
    years' experience, ``compete'' with very highly-paid corporate lawyers
    with decades of experience on the other side of the negotiating table.
    What do you make of that assertion?
        Secretary Roper. [The information was not available at the time of
    printing.]
                                     ______

                        QUESTIONS SUBMITTED BY MR. SCOTT
        Mr. Scott. What specific actions are you taking to promote the use
    of prototyping to inform requirements, encourage competition, and
    deliver capability faster?
        Secretary Jette. The Army has been utilizing prototypes to help
    reduce risk for programs of record through discovery of any issues
    early in the development cycle, including refinement of operational
    requirements. Early prototyping informs requirements and encourages
    competition helping the Army achieve a high level of maturity of our
    technologies before we invest deeply in time and money while
    facilitating delivery of capability faster. The Army is undertaking the
    following specific actions. The Army's Technology Maturation Initiative
    (TMI) further matures technology options emerging from Science &
    Technology before transitioning to acquisition programs. The TMI is for
    research and development in advance of requirements to conduct
    experimental prototyping for emerging or future Programs of Record to
    inform capabilities and system requirements. The Army has established
    Cross Functional Teams (CFTs) to inform requirements and buy down risk
    for the Army's Modernization Priorities. These CFTs will use
    prototyping to inform requirements, obtain early Warfighter feedback,
    and buy down risk for the Army's Modernization Priorities of Long Range
    Precision Fires, Next Generation Combat Vehicle, Future Vertical Lift,
    the Army Network, Soldier Lethality, and Air & Missile Defense. The
    Army is committed to leveraging the Rapid Prototyping and Rapid
    Fielding authorities Congress has provided in recent National Defense
    Authorization Acts to drive down and manage risk. Army is currently
    establishing an Army Prototyping Board to set strategic direction for
    the use of these authorities and to encourage their use. To better
    facilitate implementation of prototype development, the Army is
    examining redesign of several of our acquisition organizations. One
    such consideration is transforming the the Rapid Capabilities Office
    into PEO Rapid Capabilities focused on prototype development which
    provides testable items within five years. While this can be
    accomplished using DOD 5000, use of 804 may be a more expeditious
    method more fitting the purpose of more complex prototype systems which
    must eventually fit into larger architectures. Furthermore, the Rapid
    Equipping Force which focuses on two years or less developments is
    being considered for a more focused effort for prototyping which is
    less systemic in character and more rapidly developed. This balanced
    approach allows responsiveness while facilitating transition to more
    deliberate development.
        Mr. Scott. What specific actions are you taking to promote the use
    of prototyping to inform requirements, encourage competition, and
    deliver capability faster?
        Secretary Geurts. The Department of the Navy (DON) engages the
    Naval Research and Development Establishment, industry, and academia
    through a series of technology explorations and Advanced Naval
    Technology Exercise (ANTX) to evaluate technology advancement and apply
    them to the Navy and Marine Corps pressing problems. Examples of these
    technology exploration/ANTX include Smart Mining, Counter-Unmanned
    Aerial Systems, Urban 5th Generation Marine, Ship-to-Shore Maneuver,
    Unmanned Systems, and Advanced Combat System Technology. These efforts
    have provided the platform for the DON to more efficiently utilize the
    organic prototyping capabilities and focus the efforts on the DON's
    most pressing needs.
        Additionally, the DON established the Accelerated Acquisition Board
    of Directors (AA BoD), that I co-chair along with the Chief of Naval
    Operations/Commandant of the Marine Corps, to provide clear capability
    objectives within the DON, to create urgency to enabling organizations,
    and to address acquisition system impediments and barriers. The AA BoD
    has several prototyping initiatives in development including Navy Laser
    Family of Systems, the Expeditionary Surveillance Towed Array Sensor
    Systems (SURTASS-E), and Standard Missile (SM)-6 Block IB and SM-2
    Block IIIC which inform requirements, encourage competition, and will
    deliver capability to the fleet faster than under traditional
    acquisition processes.
        On April 24, 2018, the DON promulgated interim guidance for
    implantation of the Middle Tier of Acquisition and Acquisition Agility
    authorities. The guidance directs the establishment of pilot programs
    to exercise these authorities and inform further policy development.
    Both the SM-2 Block IIIC and SM-6 Block IB mentioned above are programs
    that are being executed under the Middle Tier Acquisition authority to
    rapidly prototype enhanced capabilities in order to rapidly field
    interim capability to mitigate the future threat.
        Mr. Scott. What specific actions are you taking to promote the use
    of prototyping to inform requirements, encourage competition, and
    deliver capability faster?
        Secretary Roper. [The information was not available at the time of
    printing.]
                                     ______

                      QUESTIONS SUBMITTED BY MR. GALLAGHER
        Mr. Gallagher. The Secretary of Defense and the President have
    endorsed reform of the Committee on Foreign Investment in the United
    States (CFIUS) process and the FIRRMA legislation in particular. Why is
    this legislation important to the services? Can you offer any concrete
    examples of why this legislation is important to your service?
        Secretary Jette. The Army shares the Administration's concern about
    foreign investment and supports the Foreign Investment Risk Review
    Modernization Act (FIRRMA) to maintain military readiness by closing
    the related gaps in CFIUS and export control processes to keep pace
    with rapidly changing world. Specifically, through broadening the
    Committee's abilities to review transactions beyond those that involve
    just the transfer of control of a U.S. businesses, to include the
    capability to review certain real estate acquisitions near sensitive
    Army installations, FIRRMA help facilitate the Army's efforts to
    safeguard its critical technologies and intellectual property. For
    example, the Chinese previously acquired vacant land in close proximity
    to a U.S. military base; a transaction that was then outside the scope
    of CFIUS because it was considered a greenfield investment. With FIRRMA
    in place, CFIUS can review, and potentially prohibit, transactions like
    this from occurring which will help guard against adversaries from
    establishing collection platforms outside of our military
    installations. Additionally, FIRRMA expands the scope of critical
    technologies and provides expanded jurisdiction over investments into
    those critical technologies to help guard against transfers of critical
    technologies in a manner that threatens national security interests of
    the Army. The CFIUS process has proven invaluable to protecting Army
    assets and FIRRMA will help continue that in the future. For example,
    the Army was able to mitigate national security risks arising from the
    purchase of a single domestic, qualified source of activated carbon by
    a foreign company. Activated carbon is used in water purification,
    toxin removal, gas mask and fire resistant clothing in support of over
    70 DOD programs. Working with the Committee, the Army was able to
    secure a commitment from the foreign company to continue supplying
    activated carbon for a minimum of two years, which will allow time for
    a new domestic company to qualify as a replacement source. FIRRMA will
    only broaden the Army's ability to establish similar protections to
    help maintain a resilient domestic supply chain.
        Mr. Gallagher. The Secretary of Defense and the President have
    endorsed reform of the Committee on Foreign Investment in the United
    States (CFIUS) process and the FIRRMA legislation in particular. Why is
    this legislation important to the services? Can you offer any concrete
    examples of why this legislation is important to your service?
        Secretary Geurts. The FIRRMA legislation provides significant and
    necessary improvements to CFIUS. The Navy depends on critical,
    foundational, and emerging technologies as well as our installations
    and ranges to maintain military readiness and preserve our
    technological advantage over potential adversaries. FIRRMA legislation
    is very important to the Navy because it enables review of several
    types of foreign transactions that are not covered under current CFIUS
    legislation, and better addresses the growing complexity of foreign
    transactions.
        For example, with respect to testing and training missions, FIRRMA
    clarifies the scope of CFIUS review to include real estate transactions
    in close proximity to DOD/Service assets across the United States and
    territories where critical technologies are tested or training
    capabilities are demonstrated. FIRRMA also closes significant gaps in
    the current legislation by extending CFIUS review to new start up
    investments known as ``greenfields,'' which are transactions involving
    no preexisting business. Overall, FIRRMA is necessary for the Navy in
    order to strengthen our ability to better protect intellectual
    property, our naval industrial capabilities and supply chain, and
    critical testing and training missions on our ranges and installations,
    which enables us to preserve our warfighting advantage and military
    readiness.
        However, broadening the scope of covered transactions will not
    result in success without the associated resources to perform the
    reviews and to monitor mitigation agreements. The process changes and
    resources, including the establishment of a CFIUS Fund, addressed by
    FIRRMA are welcome and necessary, in light of the increasing complexity
    and caseload.
        Mr. Gallagher. The Secretary of Defense and the President have
    endorsed reform of the Committee on Foreign Investment in the United
    States (CFIUS) process and the FIRRMA legislation in particular. Why is
    this legislation important to the services? Can you offer any concrete
    examples of why this legislation is important to your service?
        Secretary Roper. [The information was not available at the time of
    printing.]
                                     ______

                        QUESTIONS SUBMITTED BY MR. BACON
        Mr. Bacon. DOD has a poor history of IT acquisition programs that
    cost billions, fall years behind schedule, and deliver technology that
    is inferior to what is readily available in the commercial market. To
    improve the cost, performance and timeliness of IT acquisition, Section
    2377 of Title 10 requires a ``commercial first'' approach to IT
    acquisition. The AOC modernization program is another example of a
    failing program that was in need of a ``rescue mission.'' Can you tell
    us what the AF is now doing that will accelerate the upgrade and
    fielding of the IT enterprise that we use to plan and execute joint air
    operations around the world?
        Secretary Roper. [The information was not available at the time of
    printing.]
                                     ______

                        QUESTIONS SUBMITTED BY MR. BANKS
        Mr. Banks. In a follow-up to our discussion regarding the culture
    of the military in the wake of the ``Fat Leonard'' scandal, I want to
    inquire as what was the culture of the affected service like before and
    at the time of the scandal?
        Furthermore, how has it specifically changed in response to this
    lack of oversight? I want to make sure scandals like these are stopped
    and avoided entirely in the future. Specific measurements of change or
    success would be helpful in this answer to quantify if the problem has
    been fixed.
        Thank you in advance for your insight.
        Secretary Geurts. After the arrest of Leonard Francis, Chief
    Executive Officer and President of Glenn Defense Marine Asia (GDMA) and
    others on September 16, 2013, the Secretary of the Navy (SECNAV)
    directed the DON to discontinue all active contracts, task orders, and
    delivery orders with GDMA and affiliated companies.
        On September 19, 2013, the DON Suspending and Debarring Official
    (SDO) suspended Francis, and Glenn Defense Marine (Asia) Pte. Ltd., and
    its 55 affiliates (collectively, GDMA). Additionally, as of July 30,
    2018, nineteen other individuals have been suspended or proposed for
    debarment, and ten individuals have been debarred by the SDO. These
    parties remain excluded from federal contracting. The SDO has yet to
    suspend or debar several individuals who have been indicted and/or
    convicted in court because they have not separated from service.
        On December 5, 2013, the Assistant Secretary of the Navy (Research,
    Development and Acquisition) (ASN (RD&A)) was directed to undertake a
    comprehensive review of all acquisition strategies for husbanding and
    similar service contracts worldwide. The SECNAV also directed an audit
    of husbanding and port services contracts to identify internal control
    weaknesses. The audit's objective was to identify opportunities to
    improve internal controls regarding the awarding of task orders/
    contracts, surveillance roles and responsibilities, and invoice review
    and payment process supporting the delivery of goods and services for
    husbanding and port services contracts.
        On March 11, 2014, ASN (RD&A) submitted a report detailing
    vulnerabilities in the Navy's husbanding contracting processes and
    providing recommendations for improvement. On April 30, 2014, the
    SECNAV directed ASN (RD&A) and the Chief of Naval Operations (CNO),
    with support from the Naval Supply Systems Command (NAVSUP), to
    continue with the implementation of recommendations developed in the
    ASN (RD&A) report. On September 30, 2014, the SECNAV received the Naval
    Audit Service (NAVAUDSVC) report with recommendations for corrective
    action to improve husbanding services contracts.
        The NAVAUDSVC report addressed internal controls in the following
    areas:
        --Award of task orders/contracts
        --Ship scheduling process for port visits
        --Ship requirements and modification approval process for goods and
    services
        --Oversight of the receipt and acceptance of husbanding goods and
    services
        --Review of invoices and the payment process
        The following actions to improve processes and reduce the potential
    for fraud and payment error, based on the recommendations from ASN
    (RD&A), supported by NAVSUP and the NAVAUDSVC, have and continue to be
    implemented:
          Implement standardized Indefinite Delivery/Indefinitely
    Quantity (IDIQ) multiple award contracts (MACs) for husbanding and port
    services (HSP) contracts;
          Establish a process that requires ASN (RD&A) approval to
    use other than IDIQ MACs for HSP contracts;
          Standardize Logistics Requirements Requests for all
    fleets as of April 28, 2014;
          Establish a standard fleet review process to validate
    requirements in advance of port visits as of May 30, 2014;
          Issue a new policy, effective August 1, 2014, that
    eliminated current ship orders for unpriced line items in HSP contracts
    without a fair and reasonable determination by a warranted contracting
    officer;
          Eliminate orders for unpriced contract line items
    (CLINS);
          Revoke a supply officer's afloat contracting authority to
    negotiate contract terms and conditions, establish contract line item
    pricing or place orders for any line item not specifically priced under
    existing contract vehicles as of November 24, 2014; o Establish a
    Financial Improvement Audit Readiness (FIAR) compliant Off Ship Bill
    Payment (OSBP) and ordering process as of October 1, 2015;
          Conduct training for Contracting Officers, and
    Contracting Officer Representatives (COR) on newly created OSBP
    policies and procedures;
          Develop COR instruction to specifically outline COR
    duties and responsibilities under OSBP;
          Establish standardized contract structure to facilitate
    electronic payments for Off Ship Bill Payment (OSBP) Process. The OSBP
    requires the following:
              Ship submits unclassified logistics requirements
            (LOGREQ) message 30 days prior to port visit or as soon as
            operationally possible.
              Numbered Fleet COR assesses requirements to determine
            organic support with Navy Region, and submits reviewed and
            approved requirements to the supporting Fleet Logistics Center.
              The Contracting Officer determines fair and
            reasonable pricing through comparative analysis and develops a
            task order after forwarding the ship the port cost estimate.
              Upon receipt of goods and services, the ship's
            Receipt Inspectors validate the invoices and the Supply Officer
            submits the port visit checklist and DD250 to the COR.
              The HSP vendor loads invoices into Invoicing,
            Receipt, Acceptance, and Property Transfer (iRAPT), and the COR
            verifies submissions and reviews for discrepancies.
              The Type Commander (TYCOM) comptroller acts as the
            final review and initiatives the Defense Finance and Accounting
            Services (DFAS) payment via electronic funds transfer.
        ASN (RD&A) continues to work with the NAVAUDSVC in following up on
    the effectiveness of corrective actions to improve the HSP contracting
    process. Similarly, the Assistant Secretary of the Navy (Financial
    Management and Comptroller) is closely monitoring the implementation of
    OSBP.
        The NAVAUDSVC announced another audit on December 19, 2017. The
    objectives are to verify that: 1) processes and internal controls over
    management, execution, and oversight of the Navy HSP Program are in
    place, functioning effectively, and in compliance with applicable
    Department of Defense and DON laws and regulations; and, 2) agreed-to
    corrective actions on closed recommendations in its previous NAVAUDSVC
    report, N2014-0048, ``Navy Husbanding and Port Services Contracts,''
    dated September 30, 2014, were properly implemented. A report of the
    audit results is expected this year.
        The Acquisition Integrity Office (AIO) continues to maintain
    liaison with the affected commands, criminal investigative agencies,
    auditors, and the Department of Justice to ensure that all criminal,
    civil, contractual, and administrative remedies are considered and
    undertaken, as appropriate. AIO also continues to deliver acquisition
    fraud training to DON personnel.

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