[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
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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
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Page
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Smith, Hon. Adam, a Representative from Washington, Ranking
Member, Committee on Armed Services............................ 2
Thornberry, Hon. William M. ``Mac,'' a Representative from Texas,
Chairman, Committee on Armed Services.......................... 1
WITNESSES
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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PREPARED STATEMENTS SUBMITTED FOR THE RECORD
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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