[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]


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                    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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              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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