[Senate Hearing 115-296]
[From the U.S. Government Publishing Office]
S. Hrg. 115-296
DEPARTMENT OF DEFENSE ACQUISITION REFORM EFFORTS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON ARMED SERVICES
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
THURSDAY, DECEMBER 7, 2017
__________
Printed for the use of the Committee on Armed Services
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.fdsys.gov/
__________
U.S. GOVERNMENT PUBLISHING OFFICE
30-987 PDF WASHINGTON : 2018
-----------------------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center,
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].
COMMITTEE ON ARMED SERVICES
JOHN McCAIN, Arizona, Chairman JACK REED, Rhode Island
JAMES M. INHOFE, Oklahoma BILL NELSON, Florida
ROGER F. WICKER, Mississippi CLAIRE McCASKILL, Missouri
DEB FISCHER, Nebraska JEANNE SHAHEEN, New Hampshire
TOM COTTON, Arkansas KIRSTEN E. GILLIBRAND, New York
MIKE ROUNDS, South Dakota RICHARD BLUMENTHAL, Connecticut
JONI ERNST, Iowa JOE DONNELLY, Indiana
THOM TILLIS, North Carolina MAZIE K. HIRONO, Hawaii
DAN SULLIVAN, Alaska TIM KAINE, Virginia
DAVID PERDUE, Georgia ANGUS S. KING, JR., Maine
TED CRUZ, Texas MARTIN HEINRICH, New Mexico
LINDSEY GRAHAM, South Carolina ELIZABETH WARREN, Massachusetts
BEN SASSE, Nebraska GARY C. PETERS, Michigan
LUTHER STRANGE, Alabama
Christian D. Brose, Staff Director
Elizabeth L. King, Minority Staff Director
(ii)
C O N T E N T S
_________________________________________________________________
Thursday, December 7, 2017
Page
Department of Defense Acquisition Reform Efforts................. 1
Lord, Honorable Ellen M., Under Secretary of Defense for 4
Acquisition, Technology, and Logistics.
Esper, Honorable Mark T., Secretary of the Army.................. 10
Geurts, Honorable James F., Assistant Secretary of the Navy for 13
Research, Development, and Acquisition.
Wilson, Honorable Heather A., Secretary of the Air Force......... 16
Questions for the Record......................................... 44
(iii)
DEPARTMENT OF DEFENSE ACQUISITION REFORM EFFORTS
----------
THURSDAY, DECEMBER 7, 2017
U.S. Senate
Committee on Armed Services
Washington, DC.
The committee met, pursuant to notice, at 10:00 a.m. in
Room SD-G50, Dirksen Senate Office Building, Senator John
McCain (chairman) presiding.
Present: Senators McCain, Inhofe, Wicker, Fischer, Rounds,
Ernst, Tillis, Sullivan, Perdue, Reed, McCaskill, Shaheen,
Gillibrand, Blumenthal, Donnelly, Kaine, King, Heinrich, and
Warren.
OPENING STATEMENT OF SENATOR JOHN McCAIN, CHAIRMAN
Chairman McCain. The Senate Armed Services Committee meets
today to receive testimony on the Department of Defense
acquisition reform efforts.
We welcome our witnesses, Ellen Lord, Under Secretary of
Defense for Acquisition, Technology, and Logistics; Mark Esper,
Secretary of the Army; Heather Wilson, Secretary of the Air
Force; and James Geurts, Assistant Secretary of the Navy for
Research, Development, and Acquisition.
Acquisition reform is one of the most important and
frustrating topics this committee addresses. For years, we have
been warned that America is losing its technological advantage.
I hope you all have seen the work by RAND on this topic.
That is why the Department of Defense needs acquisition
reform, not just for efficiency or to save money. Simply put,
we will not be able to address the threats facing this Nation
with the system of organized irresponsibility that the defense
acquisition enterprise has become.
I want the witnesses to pay attention here, okay?
We are still dealing with a trillion-dollar F-35 program
that continues to operate in dysfunction. The Air Force still
subsidizes ULA [United Launch Alliance] for space launch with
cost-plus-fixed-fee contracts. The Army has sunk nearly $6.5
billion into Win-T, a network that doesn't work. And the Navy's
LCS [Littoral Combat Ship] program is delayed. The costs are
now $6 billion and rising, and many of the key capabilities
remain unproven.
That is why this committee enacted the most sweeping
acquisition reforms in a generation through the last two
National Defense Authorization Acts [NDAA]. And yet, despite
that legislation, and in the face of our eroding military
advantage, the Department has been unable or unwilling to
change.
While the previous administration offered some rhetoric
about reform, this committee was disappointed that we saw no
meaningful action. Though I remain deeply concerned about the
state of our acquisition system, I am encouraged by the early
signs from your team. It appears that you are beginning to make
progress.
Let me remind you of our expectations.
First, the Office of the Secretary of Defense [OSD] needs
to let the services manage their programs. Congress has
returned significant authority to the services, but we will be
watching closely to make sure that you do business differently
and use that authority wisely.
Second, while we have empowered the services, that doesn't
mean you can go and do whatever you like. The services must let
OSD set strategy and policy, and do real oversight. That means
being transparent, providing data to and following the guidance
set by OSD.
Again, we will be watching. This committee takes its own
oversight role seriously, and we will rely on you to keep us
informed so that we can do our job.
Third, the system must move faster. Time is of the essence.
The work of groups like DIUx [Defense Innovation Unit
Experimental], the Strategic Capabilities Office [SCO], and the
Rapid Capabilities Office [RCO] should become standard
practice, not workarounds to the regular system. We need these
innovations for major defense acquisition programs, not just
science and technology efforts.
Fourth, you need to be willing to take more risk and be
willing to fail when you try new things. We recognize that
Congress can make that difficult. Keep us informed of your
plans so that we can work together, so that we are not
surprised when things do not go exactly as planned. We would
rather have a small failure that teaches us something early in
the acquisition process than deal with a multibillion-dollar
program that becomes ``too big to fail.''
Fifth, invest in the acquisition workforce and empower them
to succeed. Too often, we hear that acquisition personnel are
unfamiliar with or nervous about new authorities.
Finally, reform your organizations and business practices
to simplify and move faster. The major changes we have
instituted through legislation are intended to give you the
opportunity to make more detailed changes in your
organizations. This is an opportunity to update your
organizational structures and internal processes accordingly.
And along those lines, I would much rather that you try and
fail than do nothing, okay? And if you keep in contact with us
and tell us what you are trying to do and what you are doing,
we will be patient for about 5 minutes.
[Laughter.]
Chairman McCain. And finally, reform your organizations and
business practices to simplify and move faster. The major
changes we have instituted through legislation are intended to
give you the opportunity to make more detailed changes in your
organizations. This is an opportunity to update your
organizational structures and internal processes accordingly.
Now, if you have reforms and you want to try them, come see
us, come talk to us, and we will be glad to cooperate with you.
And do not be afraid to fail, because the only way that we will
succeed is to take the risk of a failure.
Congress has provided you with all the tools you require.
We expect you, as part of a new administration, to use these
tools, unlike your predecessors. As you do so, you will have a
willing partner in this committee. Do not hesitate to pick up
the phone or come over and see any members of this committee.
We have given our subcommittee chairs a great deal of
latitude and a great deal of authority as we go through the
decision-making process. Do not hesitate to call any of them,
with the exception of Senator Reed.
Senator Reed. That is right.
Chairman McCain. Finally, we will be glad to hear your
requirements and how we can help you do your business better
and in a more efficient fashion. We expect you, as part of the
new administration, as I said, you will have a willing partner
in this committee.
Look, we had a briefing from the RAND study that I think my
friend Jack Reed would agree is one of the more disturbing
briefings that we have had in the years that I have been a
member of this committee. The gap is closing. There is no doubt
about it.
So we will be expecting a lot of you, but we are not going
to succeed unless we have a partnership here, okay?
Thank you.
Jack?
STATEMENT OF SENATOR JACK REED
Senator Reed. Thank you, Mr. Chairman. Thank you for
holding this very important hearing, as you have pointed out in
your opening remarks.
I want to thank the witnesses also for appearing here
today. We look forward to your testimony.
We have a shared goal, to ensure that our military forces
are equipped with the best systems and technology that the
Department of Defense [DOD] builds and buys, and that those
systems are the most effective and efficient ways possible to
protect the Nation and protect, particularly, the men and women
in our Armed Forces.
We also have a shared goal that the Pentagon should be able
to access the most innovative people and technologies available
from the best small companies, defense industry, labs, and
universities.
Also, we owe it to the taxpayers to ensure that we are
buying things at reasonable prices and within reasonable
budgets. This hearing will give us a chance to learn how the
Department is also working to make those shared goals a
reality.
In my view, the services should play a very important role
in the research and acquisition programs that provide advanced
systems and capabilities to our combatant commanders.
Under Chairman McCain's leadership, Congress has
strengthened the services' role in the planning, requirements,
and program review processes that strongly shape whether our
acquisition programs succeed or fail. These new
responsibilities are in addition to the role the services have
always played in the development of their plans and budgets,
ensuring that programs are appropriately prioritized and
funded, especially in difficult budgetary environments.
Finally, the services play a critical part in nurturing the
careers of the military and civilian personnel who work in
acquisition requirements and budget fields. Too often, we
forget about those individuals and the necessity to maintain,
enhance, and prolong their effective careers within the
Department of Defense.
Building on the successes of the Weapon Systems Acquisition
Reform Act and the Pentagon's Better Buying Power initiatives,
and making use particularly of the new reforms in the recent
National Defense Authorization Acts, again, led by Chairman
McCain, we are seeing some improvements in acquisition
processes and outcomes today and are well-positioned to make
more improvements. But we must do much, much, much better. And
that is why you are here today.
I look forward to seeing how the services plan to use their
authorities and live up to their responsibilities to support
successful acquisition efforts. I also welcome a discussion of
further changes that can be made to strengthen their role, as
appropriate, with the hopes of continuing to improve
acquisition outcomes and provide the best value and the best
military capabilities for the Nation.
Thanks again to the witnesses and the chairman, and I look
forward to the testimony.
Thank you, Mr. Chairman.
Chairman McCain. I would like to say how much I appreciate
the partnership that I have with Senator Reed despite his
educational----
Senator Reed. Deficiencies.
Chairman McCain.--lacking. But we are partners, and the
fact that the defense bill was passed through this committee
without a single dissenting vote I think is ample testimony to
the bipartisanship that characterizes our conduct of this
committee, and I am very proud to have Senator Reed as a
partner.
So we will begin with the Honorable Ellen Lord, Under
Secretary of Defense for Acquisition, Technology, and
Logistics.
Secretary Lord?
STATEMENT OF HONORABLE ELLEN M. LORD, UNDER SECRETARY OF
DEFENSE FOR ACQUISITION, TECHNOLOGY, AND LOGISTICS
Ms. Lord. Chairman McCain, Ranking Member Reed,
distinguished----
Chairman McCain. By the way, could I just mention one
thing? Depending on what happens here, there is going to be an
event at 11:45 on the floor of the Senate, and we may have to
recess until that event is completed.
Go ahead, please. Thank you.
Ms. Lord. Thank you for the opportunity to testify today on
defense acquisition and reform efforts. I am pleased to be
joined by Secretary Esper, Secretary Wilson, and Assistant
Secretary Geurts.
After having spent 33 years in industry, I have come to my
current position during a unique period in time, one which
provides a great opportunity to make a positive change.
First, the National Defense Authorization Acts for fiscal
years 2016 and 2017 have provided the direction and the tools
for the Department to advance the capabilities required to
restore our overmatch, speed the rate at which we field these
advanced capabilities, and improve the overall affordability of
our fighting forces' weapon systems.
Secondly, Secretary Mattis has placed a priority on
implementing these provisions alongside other Department-wide
reforms and practices required to improve the lethality and the
readiness of our military. Using an industry analogy, I believe
that the OSD should function as a corporate office, very lean,
enabling the services as businesses to execute programs they
are responsible for.
AT&L [Acquisition, Technology, and Logistics] should be
pushing the majority of the Department's work back to the
services and focusing on prototyping and experimentation,
developing architectures and standards, interpreting law into
policy and procedures, and simplifying acquisition processes to
quickly and cost-effectively provide material and services to
the warfighter.
Stating it plainly, AT&L needs to be the strategic body,
with focus across the board driving affordability and
accountability, reducing timelines, and equipping the services
to execute their programs.
Given the fact that the DOD, on average, awards daily 1,800
contracts and 36,000 delivery and task orders, every process
improvement we make has the potential to produce significant
results.
Having reviewed data measuring, the typical lead time
following validation of a warfighter requirement until the
award of the resulting major weapon systems contract, I have
concluded that we have the ability to reduce this procurement
lead time by as much as 50 percent. Some of the ways in which
we plan to do this are incentivizing contractors to submit
responsive proposals in 60 days or less, and implementing
electronic Department-wide acquisition streamlining tools.
Furthermore, Congress gave us the ability to conduct 10
pilot programs, permitting the reduction of cost and pricing
data for Foreign Military Sales [FMS]. Key to our success would
be to have the same flexibility for our U.S. procurements. If
we were granted the statutory authority on sole-source
procurements, it would allow us to use our judgment to reduce
the cost and pricing data we would require when we have cost
transparency with the companies with which we do business.
In my testimony, I stated that we have initiated six pilot
programs that push the limits of our contracting agility. This
is in order to demonstrate our ability to responsibly reduce
this procurement lead time.
Chairman McCain. Tell us a couple of those programs.
Ms. Lord. C-130J retrofit kits and the Japanese Global
Hawk, so one United States, one Foreign Military Sale.
Our goal is to get these pilot procurements done within 210
days from the issuance of the request for proposal.
Chairman McCain. Two hundred and ten days?
Ms. Lord. Two hundred and ten days is the interim goal. We
would like, eventually, to get to 180 days. We have the process
to work down. We are going to work with you and your team to
demonstrate how we do it.
And we are going to you come back to you as we need
additional authorities, if needed. But we believe it is really
interpreting the authorities we have now, making sure you agree
with them, and having us move forward.
So we are also pre-positioning production contracts to
include options for yet-to-be-developed FMS requirements. In
other words, in the initial contracts, we have the language, so
we can almost fill in the blank for FMS sales. Again, pre-
thinking this is going to reduce the timeline and allow us to
be very, very responsive to international customers.
Chairman McCain. So you do not need a 100-page RFP [Request
for Proposal] for a pistol?
Ms. Lord. Absolutely correct.
On the Joint Strike Fighter [JSF] program, we are
determined to reduce the cost of production and sustainment. We
have initiated an extensive JSF cost deep dive, led jointly by
my office, ATL, and CAPE [Cost Assessment and Program
Evaluation].
The purpose of this cost review is to understand in detail
at Lockheed Martin, Northrop Grumman, Rolls-Royce, and BAE, as
well as their primary subcontractors, and there are 100 of them
in total, what JSF costs, why it costs what it costs, and, most
importantly, what we can do to improve cost performance at the
prime contractor and up and down the supply chain.
This will be a completely transparent process with the
companies involved. The knowledge gained will inform our
product contract negotiations and all our sustainment efforts
on a go-forward basis, and will promote more effective and
timely contract negotiations.
Just yesterday, the fiscal year Defense Acquisition
Workforce award ceremony was held. Deputy Secretary Shanahan
and I recognized the outstanding accomplishments of 27 top DOD
acquisition professionals out of a workforce of 165,000.
A few of their accomplishments include: implementing a
cutting-edge approach to cybersecurity, testing for aircraft
weapon systems, accelerating the testing for defensive systems
on AC-130J aircraft by 2 years, getting 3,000 Tactical Combat
Casualty Care units to medics and special forces operators,
improving cybersecurity for medical facilities, and reducing
biological agent decontamination time by 50 percent to
accelerate the return of equipment back to the fight.
Out of the 17 individual awards across requirements and
acquisition-critical functions, the United States Special
Operations Command [SOCOM] received four. Our challenge is to
take these pilots, these silos of excellence, and scale them to
the big Army, the big Navy, the big Air Force. We are also----
Chairman McCain. And how many F-18s are operational and
ready to fly?
Ms. Lord. Not enough. I will defer to my colleague, Mr.
Geurts, on that one.
Chairman McCain. Okay.
Ms. Lord. All right.
Chairman McCain. The numbers I recall are 60 percent are
not flying.
Ms. Lord. Operational availability across our air asset is
an issue. As I talk to each of the service secretaries, it is
very clear. There is a lot we can do at the beginning of these
programs to design in the sustainment portion, and we are
focusing on that. And we will come back and tell you how we are
working on it.
Chairman McCain. And let us know who is responsible.
Ms. Lord. Absolutely. I would look forward to a small
discussion in your office, and we can talk about the actions we
are already taking in terms of accountability with individuals.
Chairman McCain. Thank you.
Ms. Lord. So we are also working to make use of the new
rapid hiring flexibilities provided by this committee to bring
in world-class talent in areas like robotics, lasers,
artificial intelligence, as well as new contracting specialists
and test engineers. For example, in 2016, our labs hired nearly
2,000 new scientists and engineers using the hiring authorities
Congress provided.
Reforming and improving the Defense Acquisition System to
create an agile enterprise is a continuing process requiring
close partnership across the Department and with Congress. You
have my total commitment to the success of that partnership.
I am looking forward to working closely with the committee
and the professional staffers to further implement the
initiatives we have already begun. Thank you for your support
in this significant effort, and I look forward to answering
your questions.
[The prepared statement of Ms. Lord follows:]
Prepared Statement by The Honorable Ellen M. Lord
Chairman McCain, Ranking Member Reed, distinguished members of the
Committee, thank you for the opportunity to testify today on defense
acquisition and reform efforts. I am pleased to be joined today by
Secretary Esper, Secretary Wilson, and Assistant Secretary Geurts.
Our Nation's security is underpinned by the quality of the men and
women who serve in our Armed Forces, and it is our collective
responsibility--the Department leadership working closely with the
Congress--to ensure the superiority of the weapon systems that our men
and women in uniform train and deploy with as they conduct the business
of our Nation around the world. Too, in the course of developing and
fielding these weapon systems, it is our responsibility to uphold the
highest standards of efficiency and effectiveness as we commit the
resources entrusted to us by the taxpayer.
Arguably, the weapon systems that the Department delivers to the
warfighter today are the finest in the world. Inarguably, however, the
current pace at which we develop advanced capability is being eclipsed
by those nations that pose the greatest threat to our security,
seriously eroding our measure of overmatch. Additionally, the
increasing cost of our major weapon systems has placed at risk our
ability to acquire and sustain these systems at the level required by
our fighting forces.
The National Defense Authorization Acts (NDAA) for fiscal years
(FY) 2016 and 2017 have provided the direction and the tools for the
Department to reverse these trends; specifically, to advance the
capabilities required to restore our overmatch, speed the rate at which
we field these advanced capabilities, and improve the overall
affordability of our fighting forces' weapon systems. Secretary Mattis
has placed priority on implementing these provisions alongside other
Department-wide reforms and practices required to improve the lethality
and readiness of our military.
As reported to Congress in August, 2017, the Department is moving
forward with restructuring the Office of the Under Secretary of Defense
(Acquisition, Technology and Logistics) (USD(AT&L)) to form the two new
Under Secretary offices for (Acquisition and Sustainment (A&S)) and
(Research and Engineering (R&E)). We are currently conducting the
detailed planning necessary to ensure that the roles and
responsibilities of the two Under Secretaries have been clearly
delineated and that personnel and processes are aligned to ensure that
the objectives of the reorganization are met.
As described in detail in the report to Congress, the new USD(R&E)
will set the technology strategy for the Department, solve our critical
technical warfighting challenges, retire risk and speed the development
of our most advanced capabilities through increased prototyping,
experimentation, and exploitation of technologies made available
through non-traditional sources. The new USD(A&S) will focus on
improving the affordability and timely delivery of Defense procurement
through the life cycle of our weapon systems, serve as principal
advisor to the Secretary and the Services on acquisition policy and its
execution, provide a joint, cross-domain view to ensure the integration
and interoperability of the Department's high end capabilities, and
guide related investment decisions. Pending the series of Senate
confirmations for the principals to be assigned to the new
organization, we are on schedule to stand up USD(R&E) and USD(A&S) on
February 1, 2018.
This reorganization, the most significant change to Defense
Acquisition since the Goldwater-Nichols Act, must be accomplished in-
stride as we continue to execute the vast array of developmental
activities, service contracts, and Major Defense Acquisition Programs
that comprise the $300 billion annual investment portfolio that is
aligned under the current USD(AT&L) organization. Accordingly, we will
be deliberate in ensuring clear accountability as we transition from
the current to the future organization.
In advance of formally standing up the new organization, the
Department has commenced implementing processes which support the
intent of the reorganization within the Department's fiscal year 2019
budget deliberations. In particular, the Department is shaping its
modernization strategy in the future years defense program consistent
with the same objectives Congress envisions for the new USD(R&E). We
look forward to discussing these modernization initiatives and the
accompanying prototyping and experimentation efforts that will speed
their development in conjunction with the submission of the fiscal year
2019 budget.
Beyond the reorganization, however, there are significant new
authorities and tools provided by Congress aimed at improving the way
we do business, which need to be placed into policy and practice across
the Department. In total, 139 provisions supporting acquisition reform
efforts have been enacted across the fiscal year 2016 and fiscal year
2017 NDAAs. Of these, the Department's implementation is nearly 50
percent complete. Across the board, the Department is revising the DOD
5000 Instruction series governing the Defense Acquisition System,
issuing new instructions for the acquisition of Business Systems and
services, and initiating Defense Federal Acquisition Regulation System
cases to codify the new rules, in accordance with governing authorities
provided by Congress. Commensurate with these changes, the Defense
Acquisition University is updating its instructional materials to
ensure the prevailing policies are embedded in the practices of our
acquisition leaders and program managers. I have placed priority on
working closely with Service Secretaries and their Acquisition
Executives to accelerate completing the implementation of these
provisions to ensure that the Department reaps the benefits they offer
to Defense Acquisition as soon as possible.
An important example is the ``Designation of Milestone Decision
Authority'' provided by section 825 of the Fiscal Year 2016 NDAA, which
delegates decision-making from OSD to the Services. I have completed my
review of MDA designation for the current 87 Major Defense Acquisition
Programs and have issued further delegation such that the Service
Acquisition Executives hold authority for 73 of these programs. I will
continue to review these programs and work towards further delegation,
as appropriate, to meet the objectives of establishing greater
accountability and improving the timeline and affordability of our most
critical defense programs. I intend to ensure similar progress on the
equally important sections 804 and 806 of the same Act, to provide the
Services the authorities they need to press forward with their rapid
prototyping and fielding initiatives. I look forward to updating the
Committee of progress in these areas in the weeks ahead.
Consistent with this emphasis on placing decision authority for
major programs in the hands of the leadership that will be accountable
for their execution, I have placed priority across the Defense
Acquisition System on reducing the time required to award contracts
once the requisite funds are authorized and appropriated by Congress.
Having reviewed data measuring the typical lead time following
validation of a warfighter requirement until awarding the resulting
major weapon systems contract, I've concluded that we have the ability
to reduce this procurement lead time by as much as 50 percent;
significantly reducing our costs while accelerating our timelines for
fielding major capability. I have initiated six pilot programs that
push the limits on our contracting agility to demonstrate our ability
to responsibly reduce this procurement lead time with the intent of
implementing the lessons learned from these pilot projects at scale
across Defense contracting. I look forward to sharing these results and
further recommendations with Congress as we proceed.
As well, we are building on the initial success of earlier reform
initiatives. For example, the Department requested and Congress
provided authority to conduct a pilot effort to acquire innovative
commercial items, technologies, and services using other than
traditional transaction authority. The associated Commercial Solutions
Opening (CSO) process piloted by the Defense Innovation Unit
Experimental (DIUx) is a merit-based process that enables the
Department to rapidly acquire promising innovative commercial
technologies using non-traditional contracting tools. Since
implementation, DIUx has awarded 61 such transactions totaling $145
million, averaging only 78 days from initial contact with the company
to signing an agreement. More recently, they awarded the Department's
first two 'other transaction' production contracts which, with a
combined ceiling over $1 billion, will enable the Services to more
broadly leverage these new authorities provided by Congress.
Key to our success, as we implement the broad scope of reform
initiatives, are the strength of the acquisition work force that will
employ the new acquisition tools and processes, and the strength of our
industrial base, which will ultimately develop and produce the
capabilities needed by our military.
As the USD(AT&L), one of my top priorities is to improve our
competitive posture as we seek to attract, train, and retain talented
leaders uniquely skilled in the complex business of defense
acquisition. With the help of Congress, the Department has made
significant progress in rebuilding the acquisition workforce and
invigorating the science and technology workforce. The Defense
Acquisition Workforce Development Fund (DAWDF) provided by Congress,
and related special hiring authorities for the Science and Technology
Reinvention Laboratories, have been particularly critical to the
Department's efforts to rebuild its technical workforce, strengthen
early and mid-career year groups, improve certification and education
levels, and expand participation in the contribution-based Acquisition
Demonstration (AcqDemo) personnel management system. I thank the
Committee for making DAWDF permanent and extending AcqDemo until 2023
as part of the Fiscal Year 2018 NDAA, and I'm committed to continue
working with the Committee to ensure the success of the AcqDemo
initiative with a vision of making AcqDemo permanent in the future.
The nation's ability to maintain technological superiority and
prevail in a sustained conflict is predicated on a robust industrial
base. In July 2017 the President directed the Department, in
collaboration with other Agencies, to assess and strengthen the
manufacturing and Defense industrial base. We are working on this
assessment and will share our policy, legislative, regulatory, and
investment recommendations to improve the competitiveness of our
industrial base, reduce risks to its viability, and to improve the
resiliency of our supply chain after full review by the Administration
in 2018. Similarly, the Department is assessing reform and expansion of
authorities of the Committee on Foreign Investment in the United States
(CFIUS) and Foreign Investment Risk Review Modernization Act
legislation to protect critical defense technology. We look forward to
working with Congress on these and related measures necessary to
protect critical defense technologies placed at risk by foreign
competition, global business dynamics, and cyber threats.
At the same time, however, Congress has provided broad authorities
and tools to expand our sources of supply beyond the traditional
defense industrial base to leverage the innovation and competitive
potential offered by commercial technologies and small businesses.
Though we are yet in the early stages of implementing the range of
tools provided for this purpose, I am committed to accelerating their
practice throughout the Department and will keep the Committee apprised
of our progress with these important initiatives.
Looking ahead, the Department is carefully reviewing the
acquisition reform provisions in the Fiscal Year 2018 NDAA that is
pending signature by the President. Once enacted, I will move out
quickly with the Services to ensure the effective implementation of
those provisions affecting the Defense acquisition system. In parallel,
we are continuing to work across the Department and alongside what is
commonly referred to as the section 809 panel, to identify further
opportunities to streamline acquisition regulations. I am meeting
regularly with the Service leadership and the panel leaders on these
initiatives and look forward to bringing recommendations forward to
Congress in 2018 in support of the Fiscal Year 2019 NDAA.
As USD(AT&L) completes its reorganization, we are reforming the
Defense Acquisition System to create an agile acquisition enterprise
that acquires and fields products and services that provide significant
increases in mission capability and operational support in the most
cost-efficient, timely manner possible. This reorganization, and the
associated reform effort, is a continuing process requiring close
partnership across the Department, and with the Congress, to refine and
improve the Defense acquisition system.
You have my total commitment to the success of that partnership.
Thank you for your support in this significant effort. I look forward
to answering your questions.
Chairman McCain. Thank you.
Secretary Esper?
STATEMENT OF HONORABLE MARK T. ESPER, SECRETARY OF THE ARMY
Mr. Esper. Chairman McCain, Ranking Member Reed,
distinguished members the committee, good morning.
When I appeared before this committee in mid-November, I
stated that modernization was a top priority of mine and that
ensuring the future readiness of the total force in a high-end
fight would be very difficult without fundamental reform of the
current acquisition system. In my few weeks as Army Secretary,
I am even more convinced that this is true and more aware of
the urgency for us to modernize.
I am encouraged, though, by the progress that the Army has
made, consistent with congressional direction, to begin
overhauling the current system. To be sure, a long road lies
ahead, and the challenges are great. But Army leadership with
the support and advice of Congress is fully committed to bold
reform that promises to provide America's soldiers with the
weapons and tools they need to fight and win our Nation's wars
as part of the joint force.
This committee is well-aware of the growing challenges our
military faces around the world. Rising near-competitors
threaten and sometimes challenge America's interests with
capabilities that often match and, in a few cases, exceed our
own.
In short, our failure to modernize as quickly as possible
will most likely increase risk to the force. This makes reform
of our Industrial Age acquisition system a strategic
imperative.
Together with leaders from the regular Army, Army National
Guard and Army Reserve, I am approaching this endeavor through
the priorities I outlined previously.
First, taking care of our people: our soldiers, civilian
professionals, and their families.
Next, readiness: ensure the Army's ability to deploy,
fight, and win across the entire spectrum of conflict,
especially the high-end.
Third, modernization: build greater capability and capacity
in the longer term to ensure clear overmatch the future.
Finally, reform: improve the way we do business to free up
resources, time, money, and manpower that will make the Total
Army more lethal, capable, and efficient.
Given these priorities, the Army is currently undertaking
five acquisition reform efforts designed to promote unity of
effort, unity of command, efficiency, cost-effectiveness, and
leader accountability.
First, a three-star level task force is mapping out a new
command, Army Futures Command, that will consolidate the
service's modernization enterprise under one roof.
Second, the Army is executing eight directives intended to
improve our capability and material development process by
refining how we generate requirements; simplifying our
contracting and sustainment processes; and evaluating our
progress through metrics to enable our ability to deliver
capabilities to soldiers faster, among other things. These
directives leverage authorities contained in the fiscal year
2016 and fiscal year 2017 NDAAs.
Third, the Army has stood up eight cross-functional teams
[CFT] to enable our leadership to efficiently identify and
manage investments across the Army's six modernization
priorities. These cross-functional teams are charged with using
technical experimentation and demonstrations to inform
prototype development and reduce the requirement process.
Mindful of past failures, the Army's fourth effort is to
ensure that technological solutions are mature before we begin
a program of record. This includes a threat-based strategy that
has aligned 80 percent of the Army's science and technology
[S&T] funding requests against our six modernization
priorities.
Fifth, we are directly engaging Army senior leadership as
decision-makers, as directed in the Fiscal Year 2016 NDAA,
through a reinvigorated Army Requirements Oversight Council
process.
Underlying these efforts are the other benefits the Army
has derived from the recent NDAAs. For example, streamlined
requirements and processes are being captured in a rewritten
Army Regulation 70-1 Army Acquisition Policy.
But there is more that we can and must do. To be effective,
we must have predictable, stable, and adequate funding to
restore balance and reduce risk.
Ultimately, we are accountable to Congress and the American
people. This is why we will continue to work with you and your
staffs on the tasks before us. I fully believe you will see
marked, clear progress in the coming months. You will see much
more unity of effort, unity of command, efficiency, and
accountability as we move forward.
However, the ultimate test we will face is on the future
battlefield, where we will succeed or fail based on our efforts
to reform and modernize today.
Mr. Chairman, I cannot help but be reminded that today is
the anniversary of December 7th, when we were caught off guard
at Pearl Harbor. And in a few short years, we reenergized the
country, industry, the American people to fight and win that
war. I think we need to take that same sense of urgency to the
challenges we face today as we did in the 1940s.
So with that, we understand the stakes. We have begun to
make progress. And we will not fail. Thank you.
[The prepared statement of Mr. Esper follows:]
Prepared Statement by The Honorable Mark T. Esper
Chairman McCain, Ranking Member Reed, distinguished members of the
committee--good morning.
When I appeared before this committee in mid-November, I stated
that modernization was a top priority of mine, and that ensuring the
future readiness of the total force against near-peer competitors in a
high-end fight would be very difficult without fundamental reform of
the current Acquisition system. In the couple weeks that I have been
serving as Army Secretary, I am even more convinced that this is true,
more aware of the pressing reasons why modernization is needed, and
more encouraged by the progress the Army has made to date--consistent
with Congressional direction--to begin overhauling the current system.
A long road lies ahead, for sure, and the challenges are great. But the
Army leadership, with the support and advice of Congress, is fully
committed to bold reform that promises to provide America's Soldiers
with the weapons and tools they need, when they need them, to fight and
win our Nation's wars.
This committee is well aware of the growing challenges our military
faces around the world. Rising near-peer competitors threaten America's
interests. The forces they are building often match, and in a few cases
exceed, our own capabilities. And even in the absence of direct
conflict with such states, we should expect to encounter their weapons
and systems in the hands of others. In short, our failure to modernize
as quickly as possible will most likely exacerbate the significant
risks the Total Army now faces. This makes reform of our industrial-age
Acquisition system a strategic imperative.
As such, together with the rest of the Army's leadership--Regular
Army, Army National Guard, and Army Reserve--I am approaching this
endeavor through the priorities I outlined previously:
First and foremost, People--take care of our Soldiers,
civilian professionals, and their families;
Readiness--ensure the Army's ability to deploy, fight,
and win across the entire spectrum of conflict, especially the high
end;
Modernization--build greater capacity and capabilities in
the longer term to ensure clear overmatch in the future;
Reform--improve the way we do business to free up
resources that will make the Total Army more lethal, capable, and
efficient.
Given these priorities and the strategic imperative we face, the
Army is currently undertaking five acquisition reform efforts designed
to promote unity of effort, unity of command, efficiency, cost
effectiveness, and leader accountability:
First, a three-star level task force is mapping out a new command--
Army Futures Command--that will consolidate the service's modernization
enterprise under one roof. This task force will report directly to the
Under Secretary and Vice Chief of Staff of the Army on a weekly basis.
Once this new command is stood up, which is currently targeted for the
summer of 2018, it will be the most significant organizational change
to the Army's procurement system since 1973.
Second, the Army is executing eight directives intended to improve
our capability and material development process by refining how we
generate requirements, improving how we educate the acquisition
enterprise, simplifying our contracting and sustainment processes, and
evaluating our progress through metrics to enable our ability to
deliver capabilities to Soldiers faster and more efficiently.
Specifically, we intend to reduce the requirements development process
from up to 60 months to 12 months or less. This requires Army
leadership to be directly involved in making tough choices to divest
inefficiencies and reinvest in priorities, which we are committed to
doing. All of these directives will help us to implement the many
authorities contained in the fiscal year 2016 and fiscal year 2017
NDAAs.
Third, and key to our reform efforts, will be the Army's eight
cross functional teams. These teams have been stood up to enable the
Army's leadership to efficiently identify and manage investment and
divestment priorities by assessing them against the Army's key
modernization priorities:
Long Range Precision Fires--that will increase our reach
and ability to acquire targets under adverse conditions.
Next Generation Combat Vehicles--in manned, unmanned, and
optionally-manned variants to give our troops unprecedented freedom of
maneuver in many different environments.
Future Vertical Lift platforms--attack, lift, and
reconnaissance airframes that are survivable on the future battlefield.
An Army Network--hardware, software, and infrastructure
that can be used in any environment, including places where the
electromagnetic spectrum is denied or degraded.
Air and Missile Defense Capabilities--that will protect
of our forces from air and missile delivered fires, including drones.
Soldier Lethality--the Army's most important capability,
which aims to improve their abilities to shoot, move, communicate,
protect, and sustain.
Each of these cross functional teams is a flat organization made up
of subject matter experts from across the requirements, acquisition,
and technical communities, and led by a hand-picked officer--a
warfighter--who currently reports directly to the Under Secretary and
Vice Chief of Staff of the Army. These cross functional teams are
charged with using technical experimentation and demonstrations, in
conjunction with industry and commercial sector partners, to inform
prototype development and reduce the requirement process. These
prototypes will enable us to learn and make informed resource decisions
in less time and with fewer resources.
Mindful of past failures, the Army's fourth effort is to ensure
that technological solutions are mature before we begin a program of
record. This includes a threat-based strategy that has aligned eighty
percent of the Army's $2.4 billion science and technology funding
profile against our six modernization priorities. Improved science and
technology governance, and revised transition agreements with material
developers, will ensure that we are judicious with taxpayer dollars. We
have completed science and technology reviews that identified programs
to divest, enabling us to realign $1.1 billion in science and
technology funding toward the Army priorities mentioned above.
Fifth, we are directly engaging Army senior leadership as decision
makers for the first four efforts. The Fiscal Year 2016 NDAA provided
the Chief of Staff of the Army an enhanced role in the Army
Requirements Oversight Council. We have combined that with the Army
Systems Acquisition Review Council to expand that oversight and
decision-making role to ensure the Chief of Staff of the Army and I
concur with program developmental decisions.
Underlying these efforts are the benefits the Army has derived from
the fiscal year 2016 and fiscal year 2017 NDAAs. Streamlined
requirements and processes are now captured in a rewritten Army
Regulation 70-1: Army Acquisition Policy. Simplified Acquisition
Management Plans are reducing the amount of paperwork needed to manage
a program and the establishment of a fourth Acquisition Category for
programs that spend under $185 million in procurement is enabling
faster decisions.
These reforms will require predictable, stable, and adequate
funding to restore balance and reduce risk. The Defense funding levels
under current law, the Budget Control Act and Continuing Resolutions
hinder our ability to resource the Total Army over the long term by
prohibiting the service from starting new procurement programs and
military construction projects. They also prohibit entering into multi-
year contracts, increasing production rates, or realigning funds to
higher priority requirements.
Ultimately, we are accountable to Congress and the American people.
I fully believe you will see marked, clear progress in the coming
months. You will also see the Army's new Futures Command stand up next
summer. You will begin to see outputs aligned to our six modernization
priorities within three years or less, barring any major funding
shortfalls or significant international events. And you will see much
more unity of effort, efficiency, and accountability in these early
waypoints, and the ones that will follow later.
However, the ultimate test we will face will be on the battlefield,
where Regular Army, Army National Guard, and Army Reserve Soldiers will
succeed or fail based on our efforts to reform and modernize now. Past
ways of thinking, organizing, and executing have limited our ability to
keep pace with technological development and our potential adversaries.
There is a clear strategic imperative to reform our industrial-age
acquisition system and modernize as quickly and efficiently as
possible. We understand the stakes, we have begun to make progress, and
we will not fail.
Thank you.
Chairman McCain. Thank you, Mr. Secretary.
Secretary Geurts?
STATEMENT OF HONORABLE JAMES F. GEURTS, ASSISTANT SECRETARY OF
THE NAVY FOR RESEARCH, DEVELOPMENT, AND ACQUISITION
Mr. Geurts. Mr. Chairman, Ranking Member Reed, and
distinguished members of the committee, thank you for the
opportunity to appear before you today to discuss acquisition
reform efforts, recommendations for further reform, and
requests for congressional support to improving acquisition
outcomes.
The Department of the Navy has embraced the recent
acquisition reforms on multiple fronts. We are actively
pursuing initiatives to capitalize on the new mid-tier
acquisition authorities provided in fiscal year 2016 and 2017
NDAAs. We continue to leverage available tools to drive down
procurement costs and assist the workforce. We have made
meaningful progress to date, and we will continue to be
efficient and effective managers of the acquisition reform
efforts and our resources. Our workforce, in particular, has
made progress advancing their professional and technical
talents, thanks to your support.
Further meaningful acquisition reform must be assisted by
sufficient and predictable funding. Timely budgets, avoiding
further C.R.s [continuing resolutions], and amending the Budget
Control Act [BCA] to increase funding levels would reduce
market uncertainty and improve our ability to maintain schedule
and cost across all the Department of Navy acquisition
programs.
Sufficient and predictable funding translates into more
capability delivered more efficiently, which reduces cycle time
and cost, the goals we all share here together.
We appreciate the support of this committee providing the
guidance on acquisition policy and reform. Thank you for the
opportunity to speak before you today, and I look forward your
questions.
[The prepared statement of Mr. Geurts follows:]
Prepared Statement by The Honorable James F. Geurts
Mr. Chairman, Ranking Member Reed, and distinguished members of the
committee, thank you for the opportunity to appear before you today to
discuss acquisition reform efforts, recommendations for further reform,
and requests for Congressional support to improving acquisition
outcomes.
We in the Department of the Navy (DON) succeed in acquisition when
we work as part of a team that includes our acquisition workforce, our
scientists and engineers, our resource professionals, and our men and
women in uniform who identify what we need, and then test, train, and
deploy with the resulting systems. That team cannot succeed, however,
without the full participation of our industry partners and you in the
Congress. No acquisition process can be successful without a true
partnership by all stakeholders. And by partnerships I mean shared risk
resulting in shared benefits. We must all be good stewards of our
resources for the American taxpayers and leverage every tool at our
disposal to ensure the continued security of our Nation.
The DON's priorities focus on people, capabilities, and processes.
Those priorities are aimed at delivering readiness, lethality, and
modernization, all with a sense of urgency. Recent laws have offered
new tools that allow us to streamline how we develop and deliver
necessary weapon systems, promote a healthy industrial base, and
strengthen our acquisition workforce.
The DON has embraced recent acquisition reform efforts on multiple
fronts. For example, we have developed and implemented a new
accelerated acquisition policy, which established an Accelerated
Acquisition Board chaired by the Service Chiefs and our Service
Acquisition Executive. This policy improves our ability to leverage
technological innovations by relying on rapid prototyping and fielding
and hastens our ability to respond to urgent needs. It establishes two
paths; for priority needs where a suitable material solution has been
identified, the preferred path is through a Maritime Accelerated
Capability Office (MACO) program. Current MACO programs include the
unmanned carrier-based tanker (MQ-25), the Large Displacement Unmanned
Undersea Vehicle (LDUUV), and the SM-2 Block IIIC active medium range
missile, which will field initial capability up to three years earlier
than the previous programs of record. For priority needs where a
suitable materiel solution is not sufficiently developed, the preferred
path is through a Rapid Prototyping, Experimentation and Demonstration
(RPED) project. Current RPED projects include the Navy Laser Family of
Systems and the Expeditionary Surveillance Towed Array Sensor System.
The Marine Corps has also established a Rapid Capabilities Office
(RCO) to exploit emerging technological opportunities for rapid
prototype development, fielding, and operational assessment that will
improve the lethality and survivability of Marine units. Projects
initiated or planned include Ship-to-Shore Maneuver Exploration and
Experimentation, Tactical Electro-Magnetic Signature Operations and
Support, Long Range Precision Fires, and Unmanned Swarm Systems.
All of these represent exciting new efforts that we are pursuing
with vigor, but that also serve as case studies in action that allow us
to measure, assess, and refine our approaches to gain even greater
efficiency and effectiveness over time.
None of these efforts will result in meaningful and sustainable
change unless the people who carry them out are properly trained and
incentivized. To that end, the DON has issued and is implementing an
Acquisition Workforce Strategic Plan. This plan connects people to the
product and mission more directly by aligning professional and
technical excellence with capability needs, while reinforcing
responsibility and accountability. Our efforts to execute this plan
have been enhanced by Congressional extension of the Expedited Hiring
Authority (EHA) that streamlines recruiting selection and hiring
processes for acquisition professionals, for which we are grateful. We
also appreciate your support of the Defense Acquisition Workforce
Development Fund (DAWDF), which allows us to provide the appropriate
training to our professionals and continue their development.
The DON also continues to leverage available tools to drive down
procurement costs, which is imperative as we move towards a 355-ship
Navy. We continue to refine our requirements, seek to maximize
competition, capitalize on multi-year and block buy contracts, explore
cross-program efficiencies, and manage our cost of doing business to
ensure we obtain as much warfighting capability out of every dollar as
we can. For large and enduring programs, such as the VIRGINIA Class
Submarine, the Navy uses these approaches to manage costs and stabilize
the industrial base, as well as explore proven strategies such as
making appropriate use of block buys and multiyear procurements as we
have in the past with various ship types (carriers, subs, etc.) when
supported by thorough analysis. 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 Multi-Year Procurement.
Additionally, the DON is developing agile policy and procedures aligned
with commercial best practices to support our defense business systems
and information technology infrastructure. Lastly an appropriate cloud-
based infrastructure will maintain a secure cyber posture, support
flexibility and technology software updates, and reduce total ownership
costs.
The DON is actively pursuing initiatives to capitalize on the new
mid-tier acquisition and acquisition authorities provided in the fiscal
year (FY) 2016 and 2017 National Defense Authorization Acts (NDAA). In
the first application of the new authorities the DON intends to develop
a new increment of capability for the Standard Missile-2 program. In
addition, the DON continues to leverage important DOD Laboratory
authorities, executing over 1100 initiatives to make impactful
improvements in critical technology areas as well as ensure we have the
technical expertise we will need in the coming years. Taken as a whole,
these new authorities provide the DON many new and important tools
which we can tailor to our specific needs. This tailored approach
retains the required rigor and oversight but relieves us of the
requirement to make every program and project fit into a traditional
Major Defense Acquisition Program (MDAP) model, increasing acquisition
velocity and reducing fielding times. Through the use of these reforms,
we are beginning to move the needle on our priorities and increase the
readiness and lethality of our forces. While we have made progress,
there is the potential for still more. As is described more fully
below, we would welcome further adjustments to milestone decision
authorities (MDA), additional expansion of funding mechanisms for rapid
prototyping and fielding initiatives that will increase our ability to
operate within a budget cycle, and further provide autonomy in DAWDF
execution.
The Fiscal Year 2016 NDAA directed program oversight and MDA be
returned to the Services to speed decision making, improve efficiency,
and ensure greater involvement of the Service Chiefs in acquisition
programs. The DON is currently the milestone decision authority for 40
Acquisitions Category (ACAT) 1C MDAPs. Since passage of the Fiscal Year
2016 NDAA, the DON has initiated several new MDAPs, including the
future Guided Missile Frigate (FFG(X)) and the MQ-25. In addition, the
DON has gained approval to delegate five of the ten current ACAT-1D
programs from USD(AT&L) to the Navy. We will continue to work with
USD(AT&L) to pursue delegation of the remaining programs under its
oversight, in accordance with Congressional intent. Placing the
authority and accountability for these programs within the Navy will
increase program agility, reduce decision timelines, and better align
accountability and responsibility.
The DON is also exploring the value of making greater use of rapid
prototyping. We will work with our fellow Services, the Department and
the Administration as we consider the utility of current authorities
and whether or not refinements to these authorities would be helpful.
And while efforts have been made to better support the acquisition
workforce, the DON would like greater autonomy in our ability to target
the areas of greatest need, develop and implement more efficient
acquisition workforce development programs, reduce administrative
burdens, and increase the rate of delivery of resources.
Finally, and most importantly, meaningful acquisition reform will
remain elusive until we can obtain sufficient, predictable funding. I
cannot overstate how critical this is to our success. Continuing
Resolutions (CRs) create tremendous disruption to programs that are
vital to readiness--postponing vital work, delaying training and
maintenance until the arrival of full funding, and causing tremendous
amounts of programmatic and contractual re-work. Additionally, short-
term fiscal uncertainty drives long-term industrial base concerns,
which translate into higher prices and reduced flexibility. Timely
budgets, avoiding further CRs and amending the Budget Control Act to
increase funding levels would reduce market uncertainty and improve our
ability to maintain schedule and cost across all DON acquisition
programs. Resource predictably gives small businesses, second- and
third-tier suppliers, non-traditional companies, and major suppliers'
confidence to smartly invest in a skilled workforce, infrastructure
improvements, and research and development to inform our future
options. All of this translates into more capability delivered more
efficiently--which in turn reduces time and cost, the goals all of us
share.
We in the DON are appreciative of the interest and efforts this
Committee has made to improve Defense acquisition policy, our
processes, and the people who conduct this critical work. The new
authorities provided in the fiscal year 2016 and fiscal year 2017
NDAAs, the continued support of acquisition workforce development
initiatives, and the return of acquisition program oversight to the
Services have been important steps towards our common goal of improving
acquisition outcomes for the Department. All of these changes are
needed for the Navy Marine Corps team to maintain our advantage against
our adversaries and deliver the capabilities needed for the future. We
appreciate the opportunity to speak before you here today and look
forward to your questions on how we might further work together for the
good of the Navy and Marine Corps team.
Chairman McCain. Thank you.
Secretary Wilson, welcome.
STATEMENT OF HONORABLE HEATHER A. WILSON, SECRETARY OF THE AIR
FORCE
Ms. Wilson. Mr. Chairman, I would like to put my full
statement in the record and just summarize a few key points.
Chairman McCain. Without objection.
Ms. Wilson. Mr. Chairman, I wanted to thank the committee
for the authorities that you have given to the services to
continue to accelerate procurement and to streamline getting
capability to the warfighter more quickly.
The Air Force manages 470 acquisition programs, programs of
record. It is about $158 billion, if you add up what we were
authorized to spend over a 5-year period.
There are few things in the legislation that you have given
us that I want to update you on where we are.
The first has to do with delegation of authorities back to
the services, which was very clear guidance in the Fiscal Year
2016 National Defense Authorization Act. Before that act came
into being, 19 of 49 of the largest Air Force programs were
actually managed in decision authority kept at the Office of
the Secretary of Defense level. So only 39 percent of our
programs did we have a decision or authority on.
Chairman McCain. So you see it as an improvement?
Ms. Wilson. Today, I have 76 percent of those programs.
And last week, the Under Secretary delegated eight more
programs to the Air Force to manage. One of those was the GPS
III follow-on. So last Thursday, Secretary Lord gave us
authority to move out on that program. And in the last week, we
have moved forward and approved a strategy and put out the
request for proposal. Just in that one action, we have saved 3
months on the timeline to acquire that system.
So we are taking advantage of those authorities, but we are
also doing the same in the service by pushing authority down to
program managers, to the colonels who can run these programs.
We have not been changing things above them in the past. They
know what they are doing. Let's support them and let them get
after their programs.
The second major change in the defense authorization act
was prototyping and experimentation. We have been beginning to
take advantage of those new authorities in a couple of ways.
The most publicly discussed one is the light attack aircraft
[OAX].
You mentioned about the 100-page request for proposal for a
9mm pistol. I think it was actually more than that. It looked
like a pretty big stack to me.
This is the letter of invitation and 4-page set of
requirements on the light attack aircraft. It was sent on the
8th of March. In less than 5 months, we had four aircraft on
the ramp to test at Holloman Air Force Base. And last night, I
just got the test report.
So in less than 11 months, with five pages, we have tested
four aircraft for a potential light attack aircraft for the
United States and allies.
Chairman McCain. What conclusion have you reached?
Ms. Wilson. Senator, I was busy preparing for this hearing
and did not read the report last night.
[Laughter.]
Ms. Wilson. But it is not just the light attack aircraft
that we are experimenting with. Another very promising one is
something we call an adaptive engine. It is intended to get an
increase in thrust of about 10 percent with a 25 percent
increase in fuel efficiency, and we have two contractors
working on that.
It is not a program of record. It is an experiment. But we
are trying to mature the technology, refine the requirements,
reduce the timelines to get better engines that are more fuel-
efficient to the warfighter faster.
So those prototyping and rapid fielding kinds of
authorities are, I think, going to pay us big dividends, both
in the short term and the long term.
The third thing that your authorities gave us was something
called the Other Transaction Authority [OTA], and we are taking
advantage of that in a number of our different program areas.
It really targets those nontraditional DOD contractors, the
small, innovative companies that will not do business with the
Department of Defense under normal circumstances, because we
are too hard to work with.
An example, Space and Mission Systems just let $100 million
contract, an umbrella contract for a consortium of innovative
companies, to give us space, ground and communication
capabilities, particularly for our space forces. And that
consortium is managing things for us under Other Transaction
Authority contract. It took us 3 months to put that contract
together.
Rome Labs is another one that is using Other Transaction
Authority arrangements that you authorized to put together
consortiums of companies that are helping us on cyber,
intelligence, surveillance, and reconnaissance.
The fourth area that I wanted to highlight for you has to
do with people and the emphasis of this committee on both
expedited hiring and the professionalization of our workforce.
In fiscal year 2016, we used expedited hiring in the Air Force
to hire 810 people. In fiscal year 2017, we almost doubled that
up to 1,600.
In direct hiring, we are even seeing more effort by the Air
Force to take advantage of the authorities that you have given
us. In fiscal year 2016, we hired only two people under those
direct hiring authorities. In fiscal year 2017, it is 266.
Thank you, also, for the Defense Acquisition Workforce
Development Fund [DAWDF]. We are using those funds to enable,
empower, educate, and train exceptional acquisition officials
to be able to take advantage of the authorities that you have
given them to do things differently, faster, and with bringing
more capability.
There is much more work to be done, but we are beginning to
make some progress. There are areas where we are, frankly, not
very good at buying stuff. Software is one real example and is
an area of continued focus and extra emphasis by the Air Force.
Not all of this will work. That is why we call them
experiments. But if we have productive failures, if we fail
fast and learn from it and continue on in different vectors of
technology, we have a chance of better meeting the adversary in
2030. And that is what this is all about.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Wilson follows:]
Prepared Statement by The Honorable Heather Wilson
Thank you to the Committee for holding this hearing. I appreciate
your advocacy to improve the defense acquisition system and the
additional authorities Congress has provided to the Air Force. These
new authorities help us accelerate the Air Force acquisition process in
order to support a more lethal force. The Air Force is taking advantage
of the new authorities, but there is much more work to be done.
Paramount is the need for budget stability. The most important
action the Congress could take would be to lift the sequester in its
current form. As this committee knows all too well, sequester did more
to damage the Air Force than anything our adversaries have done in the
past ten years. Continuing Resolutions and the defense budget caps in
current law jeopardize our ability to successfully execute the National
Defense Strategy. We trust the Congress under the structure of our
Constitution to decide spending levels and appropriate.
The Air Force develops, acquires and sustains everything from
satellites and aircraft, to information technology and spare parts.
While, in the past 16 years the United States has controlled the pace
of conflict, in the future, speed will matter and we may not have
control over timing. The Air Force must deliver capability from the lab
bench to the warfighter faster than ever, to prevail against rapidly
innovating adversaries. Congress has recognized that this requires
changes to the ways we develop and acquire systems. In accordance with
the intent of this committee, we are assuming more authorities from the
Department of Defense and delegating more authority to empowered
program managers. We are using new techniques to innovate including
rapid prototyping and experimentation. All of these initiatives require
a skilled, highly competent acquisition workforce prepared to use the
authorities you have given to us.
delegation of authority to lower levels
The Fiscal Year 2016 National Defense Authorization Act directed
that after October 1, 2016, the Milestone Decision Authority for
programs reaching Milestone A, our first major milestone for an
acquisition program, reside with the Service's Senior Acquisition
Executive, unless otherwise designated by the Secretary of Defense.
The acquisition rules divide acquisition into three categories.
Acquisition Category I (ACAT I) are the largest programs. ACAT II and
ACAT III are smaller.
The Air Force currently manages 470 acquisition programs valued at
158 billion dollars (fiscal years 2016-23) that are in varying stages
of research, development and production. Of those, the Air Force has
milestone decision authority over 39 of 51 Acquisition Category I (ACAT
I) Major Defense Acquisition Programs and Major Automated Information
System programs amounting to over 113 billion dollars. This is up from
19 of 49 programs before the Fiscal Year 2016 Defense Authorization
Act.
Some of the newly delegated programs are the B-52 Radar
Modernization, Protected Tactical Enterprise Service, and the Advanced
Pilot Trainer. In addition, this past July the Under Secretary of
Defense for Acquisition, Technology and Logistics (USD(AT&L)) returned
Milestone Decision Authority to the Air Force for some space programs,
to include Space Based Infrared System Follow-on, Protected Satellite
Communications Services-Aggregated, Mid-Term Polar Satellite
Communications, and Military Global Positioning System User Equipment
Increment 2. As of 30 November, USD(AT&L) further delegated Defense
Enterprise Accounting and Management System Increment 1, Family of
Advanced Beyond Line of Sight Terminal, Global Positioning System III,
Integrated Strategic Planning and Analysis Network Increments 4 and 5,
KC-46, Military GPS User Equipment Increment 1, Three-Dimensional
Expeditionary Long-Range Radar This allows us to reach key decision
points and field capabilities to the warfighter faster because there
are fewer levels of review involved in each decision. We will continue
to work with USD(AT&L) for additional delegations of Milestone Decision
Authority to the Air Force for other programs which we are well-suited
to execute.
While the Office of the Secretary of Defense has delegated
significant programs to the Air Force, the Air Force has taken steps to
delegate decision authority for ACAT II programs from the Service
Acquisition Executive to lower levels, either the Program Executive
Officer (PEO) in order to shorten the acquisition timeline to field
needed capabilities. PEOs have also delegated ACAT III programs to O-6
level Program Directors where appropriate. See Table 1.
Table 1. Summary of Milestone Decision Authority Delegation
----------------------------------------------------------------------------------------------------------------
Number of Delegated to Total funding Average funding
Fiscal years 2016-23 programs lower level (in then-year) per program
----------------------------------------------------------------------------------------------------------------
ACAT I...................................... 51 39 (AF) $113 B $ 2.2 B
ACAT II..................................... 43 43 (PEO) $ 19 B $437 M
ACAT III.................................... 376 274 $ 27 B $ 70 M
(Program
Directors)
----------------------------------------------------------------------------------------------------------------
prototyping and rapid fielding
The Fiscal Year 2016 National Defense Authorization Act also
authorized rapid prototyping and rapid fielding. Under this authority
we are experimenting with innovative and affordable systems before a
lengthy requirements process or detailed specifications are developed.
An example of this is the Light Attack Experiment successfully
conducted this past summer. From a simple letter of invitation from the
Chief of Staff, to the day we had four aircraft on the ramp to flight
test was less than 5 months. The results of the testing of the aircraft
will be delivered to the Chief of Staff and I before the end of
December--less than 10 months from the time we decided to do the
experiment.
Prototyping is a valuable tool for evaluation of design and
performance to help speed transition from the research phase to
production. As an example, under this umbrella we are accelerating
research and development efforts in hypersonics to meet emerging
threats in contested environments. We are also leveraging innovations
in advanced manufacturing including 3-D printing.
developing people
Our need for skilled and innovative acquisition professionals to
execute these numerous initiatives has never been greater. We greatly
appreciate Congress' continued support of the Defense Acquisition
Workforce Development Fund and expedited hiring authorities to attract,
recruit, hire, develop, and retain a high-quality workforce. While
there is important work to be accomplished on speeding the acquisition
process and cost effectively delivering capability, our continued focus
on talented acquisition professionals will be the biggest enabler to
improving Air Force acquisition overall.
The acquisition enterprise is currently optimized for industrial-
age procurement of large weapons systems with extensive requirement
development, military specifications and resultant long acquisition
timelines. We must shift to align with modern industry practices in
order to get cost-effective capabilities from the lab to the warfighter
faster. We are changing the culture in the Air Force to focus on
innovation, speed and risk acceptance while meeting cost, schedule and
performance metrics. But we still have much to do.
Innovation is part of the heritage of the United States Air Force
and we must continue to drive innovation to secure our future. We are
leveraging our partnerships with industry and academia to apply
commercial best practices, talent, and technology. The Air Force is
adopting new approaches to ease bureaucracy and rapidly deliver
technology to warfighters on time and on budget.
One of our more successful techniques has been to use rapid
capability offices to accelerate prototyping for rapid fielding. The
rapid capability office operates under a charter with senior level
oversight and is compliant with all acquisition rules, but is empowered
to take full advantage of the opportunities for rapid acquisition with
a smaller team of highly competent people. A rapid procurement process
has been developed to extend this streamlined decision-making approach
to other parts of the Air Force acquisition enterprise.
There are areas where the Air Force is still struggling to be
exceptionally good buyers. Software is one. We need to improve the
development and deployment of software-intensive national security and
business information technology systems. As we move toward industry
practices and standards, the line between development, procurement, and
sustainment for software are blurred. Development cycles of 3-5 years
or longer do not align with the pace of technological advancement. They
contribute to failures in software-intensive programs and cause cost
and schedule overruns. We have initiated pathfinder efforts and are
working to improve the speed of software development. Likewise, we are
continuing efforts with Open Mission Systems architecture, and
initiatives with Defense Digital Services, Air Force Digital Services,
and Defense Innovation Unit Experimental, in addition to our organic
development capabilities, to improve software agility, development, and
performance.
This shift toward rapid development, experimentation and
prototyping also requires an understanding that not everything we try
will work. We need to create an oversight culture within the Department
and with the Congress that supports experimentation because it allows
failure. Risk-averse cultures inhibit rapid development and innovation.
Programs need the ability to experiment first in order to quickly
identify and develop capabilities that meet warfighter requirements,
and provide program off-ramps to quickly adapt to technology
breakthroughs. Failing fast and productive failure that leads to
finding a better path toward the future is a virtue.
The Congressional authorities provided to date are producing
results. The Services have more authority and accountability in the
execution of major programs. There are several areas we continue to
explore that could lead to further improvements to the acquisition
process:
1. Current law requires us to establish program cost and fielding
targets that are approved by the Secretary of Defense or the Deputy
Secretary of Defense. We are working with our counterparts within the
Office of the Secretary of Defense to determine where such authority
would be best located. These targets are already included in annual
reports and baselines. (Fiscal Year 2017 NDAA, section 807)
2. Explore funding flexibility to align with more modern software
practices.
3. We should weigh the value of requiring contractors to select
one bid protest forum and live with the results, and not be permitted
to file bid protests at the Court of Federal Claims after losing at the
Government Accountability Office. It is vital to prevent lost time,
effort, and delays of needed warfighter capabilities.
4. We are exploring ways to streamline our internal processes to
eliminate duplication of effort wherever possible. We will also be
looking at statutory requirements which may be imposing duplication of
effort and look forward to working with the Committee to institute
process improvements.
Working with Congress, we can improve our ability to outpace the
threat, and deliver capabilities to our Airmen to protect our vital
national interests. Once again, thank you for your continued support.
Chairman McCain. Thank you, Madam Secretary.
And I thank the witnesses.
I would like to point out that it was about 3 years ago
that we were having a hearing with the service chiefs, and we
were looking at the fact that the USS Gerald R. Ford had a $2
billion cost overrun, and I asked the Chief of Naval
Operations, who is responsible for a $2 billion cost overrun?
You know what the answer was? He did not know. He did not know.
I mean, there is such a thing as accountability. And all of
the things that were just covered by the witnesses here, there
is no penalty for failure.
Can you tell me one or two individuals that, because of the
failure, for example, the $6 billion Future Combat Systems
[FCS] that never worked, can you tell me an individual or
individuals that paid a penalty for that failure?
Ms. Lord. Senator?
Chairman McCain. Yes?
Ms. Lord. Senator, I would be more than happy to have a
meeting in your office and talk about some actions we have
taken over the past several months to get at that very issue.
Chairman McCain. What can you illuminate for us as to
what----
Ms. Lord. We, as a team, are working very closely together
to look at functions and individuals in OSD, and in the
services, the duties they are required to perform, and are
determining whether or not we have the right people in the
right slots. And I do not want to talk about individuals here
in a broad forum----
Chairman McCain. Okay.
Ms. Lord.--but would appreciate the opportunity to do that
behind closed doors with a smaller group.
Chairman McCain. I thank you, but when I go to a town hall
meeting and tell my constituents that we blew $6 billion, and
there has not been anyone fired or replaced or a new way of
doing things, they are not really very happy.
So we will be glad to hear what you have done and what you
plan on doing, but there is no reason why you shouldn't tell
the American people. That is why we have hearings in the Armed
Services Committee, okay? So the next time that you come before
this committee, and you will, I want to know what you have
done, besides say, ``We do not know who is responsible.'' Okay?
Ms. Lord. Sir, excuse me. I want to be on record. We hold
people responsible, and we will talk about that.
Chairman McCain. All right. You hold people responsible.
That is our system of government. Who is it that has been
fired? Any answer? No.
Mr. Esper. Senator, I am not aware of anyone being fired
for FCS, to your point. We completely agree.
Chairman McCain. All right.
Senator Reed?
Senator Reed. Thank you very much, Mr. Chairman.
Following along these lines of accountability, because I
think that is probably the most critical principle, one of the
practical difficulties is that these programs sometimes stretch
over decades. And there are people who change out, retire, who
are promoted, et cetera.
So starting with Secretary Lord and going down, any
thoughts about how we can have this accountability stretch over
many, many years? And as a subset of those questions, on a
year-to-year basis, what kind of metrics can we use to make
sure we are on track and the individuals will be closely
associated with accountability?
So, Secretary Lord?
Ms. Lord. Absolutely.
First, there is an active discussion going on about when we
rotate program managers out. It has not always been aligned
with critical milestones in the program, and that is somewhat
problematical in terms of discontinuity. So we are looking at
holding onto program managers through key milestones or key
events. I think that that is one helpful issue.
Secondly, in the Department, I will speak for myself here,
but I know we all talk about this, I, on a monthly basis, roll
out the 87 major Defense program metrics. So in other words, we
have 87 ACAT [Acquisition Category] I programs that are
accountable for about 96 percent of our $1.9 trillion programs
of record.
We rack and stack those programs in terms of their
performance, not only to the contract itself, but to the needs
of the COCOMS [Combatant Commands] down range, because, for
instance, you could look at some precision-guided munitions
programs that look green, if you will, if you look at the
letter of the contract, however, we know we know we have
shortages downrange. We know we have COCOMS who are asking for
more. So we take that market intelligence, if you will, and
factor it in.
We look at the metrics. Where are we in terms of cost?
Where are we in terms of delivery? Where are we in terms of
quality? We review that, and we roll that all the way up to
Secretary Mattis.
Then I spend my time, from an OSD AT&L point of view, on
those critical joint programs. So right now, an enormous amount
of my time is focused on F-35.
Those are some of the ways we are holding people
accountable. In fact, we have what we call war rooms that we
have put together. It is very transparent. You all are invited
to come see. We have the metrics up on the wall.
In terms of accountability, we have the PEOs [Program
Executive Officer] and the program manager names. And they come
and report out to us. We flow that information up.
So again, I am taking that lens that I had in industry, and
every month, rolling the numbers up and seeing where we are,
seeing where we are in delivery time, and where we are in
quality, and going back and making sure we have action plans
against those.
Senator Reed. Thank you.
Secretary Esper, in the remaining time, a brief comment to
amplify what Secretary Lord has said?
Mr. Esper. Yes, sir.
First of all, I completely agree with what she said with
regard to aligning the program managers' tenures with the
critical milestones. And there are other things that we should
look at doing on the personnel side as well.
I also want to address briefly what you said about the
process being so long. Under the concept we are developing with
Army Futures Command with regard to the cross-functional teams,
what we envision is, with the unity of effort and unity of
command, adopting a process that is enabled by the NDAAs where
we will prototype, test, learn, fail, prototype, test, learn,
fail.
We are looking at reducing a requirements development
process that currently runs about 5 years, 60 months, down to
12. And so, if you reduce that time frame, clearly, there would
be one person in charge of that effort, the CFT leader.
So that gives you one example of how we are trying to
reduce the timelines to ensure accountability.
Senator Reed. Secretary Geurts and then Secretary Wilson, I
apologize. My time is limited.
Mr. Geurts. Yes, sir. I agree with both Secretary Esper and
Secretary Lord. Tenures are key.
The Navy, we have a gate review process where we, myself,
and the CNO [Chief of Naval Operations] or Commandant, we are
looking at these programs at milestone, and then we do annual
reviews. So that is a key point where we can see where the
program is and then assess that program manager or PEO to see
if they are delivering, if not, then hold them accountable at
that point.
Another key issue Secretary Wilson mentioned, push
responsibility down. It is hard to hold somebody accountable
when they do not have the authority to actually make the
decisions. So pushing that authority down is a key element.
Finally, and probably most importantly, is workforce
training and certification, because if we have not done the
effort to train them, certify them, and make sure they are
capable, then it is hard to hold them accountable. That is our
fault, if we have not given them the skills to actually be
successful.
Senator Reed. Thank you.
Secretary Wilson?
Chairman McCain. Whose fault is it that they are working
100-hour workweeks? Whose responsibility is that?
Mr. Geurts. Onboard the ships, sir?
Chairman McCain. Onboard the ships.
Mr. Geurts. Sure. That would be on the CNO side, through
the operational command.
Chairman McCain. When I asked the question, they said,
well, we are going to do a study on this. A study as to whether
our sailors and marines should be working 100-hour workweeks?
We need a study to figure that out?
Mr. Geurts. Sir, I am not familiar of the details of that
plan, if I could take a question for you and get back with the
exact strategy to get after that question I know you had
previously.
Chairman McCain. Thank you.
I am sorry, Jack.
Senator Reed. That is quite all right, Mr. Chairman.
Secretary Wilson, if you have any additional comments, we
would appreciate it.
Ms. Wilson. No, sir. I think my colleagues covered it.
Senator Reed. Thank you very much, and thank you for your
service, Secretary.
Thank you.
Chairman McCain. Senator Rounds?
Senator Rounds. Thank you, Mr. Chairman.
Let me begin, Secretary Wilson, you have mentioned the
light attack aircraft and where we are moving on that. I want
to compare that with the B-21 Raider program, which is also
under development at this time, and that program. As you
mentioned in your prepared statement, there is a movement in
both the OAX and also in the B-21 Raider program.
A recently declassified audit from the Pentagon inspector
general praised the B-21 program's plan for beating cost goals
and requirements. I think if this trend continues, the B-21
could one day emerge as a model acquisition program.
Congress and the taxpayers might wonder if we could
duplicate all or, in part, a process that has worked well in
this particular program for subsequent programs. I know that
the chairman had expressed real reservations as to the approach
that had been proposed. And I think he has been very interested
in the development and the movement forward, in terms of
getting this done on time and on contract.
Do you see some similarities between that and the light
attack aircraft possibilities? And can we use the process that
we have been successful, so far, in developing in the B-21
plan? Is that something that can migrate to other plans, such
as light attack aircraft, as well?
Ms. Wilson. Senator, we are actually using different
authorities there. We use other transaction authorities or
simple authorities or experimentation authorities for light
attack. B-21 is more traditional.
The thing that is different is, it is being done by
something we call the Rapid Capabilities Office, which kind of
has a board of directors of senior people, including myself,
AT&L, the acquisition authority. And things move very quickly.
We are actually extending that down and using that charter
for the Rapid Capabilities Office to extend that construct to
our other procurements. We are going to give this a try. It is
a charter for kind of a rapid capabilities process where senior
leaders will allow a program manager to identify a program they
want to move quickly on, set some parameters, and, instead of
having to walk it around the Pentagon to get 20 signatures,
they come to a board meeting, they make a presentation, they
get a real hard-wire scrub, and then we move.
So we are actually modeling that in the Air Force.
Senator Rounds. Thank you.
Secretary Lord, there was a discussion that I had with my
staff in terms of the time frame it takes to get new data or
new information, new plans put together. And they used as an
example, when we were talking about it, a cell phone,
straightforward, off-the-shelf. I can buy it, make a decision
on it, put it to use in about a week at the most, to the time
that I can use it.
Acquisition time for a new piece of software and hardware
combination today through the Pentagon could take as much as
2.5 years to acquire. This is basically out of date after a
year to 1.5 years.
My question to you, when you are all said and done, using a
piece of hardware and software combination available today in
the general public for, perhaps, purchase within a 1-week or 2-
week period of time, what is your goal for getting the
acquisition process down from a 2.5-year time period for
Pentagon acquisition and issue?
Ms. Lord. Our goal is to look at where we have had
successes with DIUx, with SCO--in fact, I have asked and asked
Will Roper to be here with me today, because we think that they
demonstrated the right kind of behaviors. We are looking at
what the Rapid Capabilities Offices have done.
Frankly, as we organize AT&L into A&S [Aquisition &
Sustainment] and R&E [Research & Engineering], what we are
doing is basically trying to scale the behaviors, the
processes, or the lack thereof, that we have seen in these
different groups. And it is an issue of scaling----
Senator Rounds. I am going to run out of time, but let me
just ask one more time. What is the goal, in terms of--is there
goal for cutting back acquisition times?
Ms. Lord. Twelve months for major programs.
Senator Rounds. From 2.5 years to 12 months?
Ms. Lord. Correct.
Senator Rounds. Okay.
Ms. Lord. Now, that is a first step, I just would like to
be on record as saying.
Senator Rounds. Okay.
Next of all, cloud computing is here to stay. Clearly, the
Pentagon has to be able to make decisions about how they
acquire capabilities. You currently chair the Cloud Executive
Steering Group, or the CESG. Does the membership include
warfighter representation from military services, combatant
commands, to include Cyber Command, or DISA [Defense
Information Systems Agency]? Or if not, why not?
Ms. Lord. We have pulled in all of the services and are
talking to them. We put out an RFI [Request for Information]
and have gotten 52 responses. Right now, we are working on how
we are going to go about that contract. We do not know how we
are going to structure it yet.
But absolutely, because what we are looking at is mission
focus here, not backroom business systems. And it is all about
getting that computing capability out to the edge. We want our
warfighting systems to be able to do machine learning, to have
artificial intelligence. And until we have all of our data in
just a few places, it is going to be very hard to do that.
So frankly, sir, everything I do is about lethality and the
warfighter.
Senator Rounds. Thank you.
Thank you, Mr. Chairman.
Chairman McCain. Senator Shaheen?
Senator Shaheen. Thank you, Mr. Chairman.
And thank you all for being here today.
The Defense Federal Acquisition Regulation Supplement
[DFARS], as I know all of you know, requires that all DOD
contractors, including small businesses, comply with a complex
series of cybersecurity requirements by December 31st of this
year. Now, I certainly think it is very important for us to
address the cyber concerns, and have been banging the drum on
that, particularly with respect to Kaspersky software.
But I am concerned, as a member the Small Business
Committee in the Senate, as someone who comes from a small-
business State, that our small businesses are very important to
technological innovation. And I have heard from many of them
that they are very concerned that they cannot comply by this
deadline, that unlike some of the bigger businesses that work
with the Department of Defense, they do not have the support to
comply with these complex regulations by this deadline.
Can you tell me how concerned any of you are about this,
and whether there are ways in which we can do more to help
small businesses comply?
Ms. Lord. I am very, very interested in this topic. In
fact, we are concerned about being compliant and worrying about
risks. We heard back over a year ago that there was great
concern about the difficulty of implementing these
requirements, so we went and modified them.
In order to most effectively and efficiently get out to the
whole community, especially the small-business community, we
used a forum that I have set up where, quarterly, I meet with
all the different components, with three industry associations,
AIA [Aerospace Industries Association], NDIA [National Defense
Industrial Association], and PSC [Professional Services
Council]. They all have small-business components, the
Professional Services Council, especially.
In our early October meeting, we talked about this very
issue, because it was brought up. We said that, clearly, the
only requirement for this year is to lay out what your plan is.
That can be a very simple plan, and we can help you with that
plan. We can give you a template for that plan. And then just
report your compliance to it.
So we are trying to reach out very hard through the
industry associations to get this word out. I think there may
be some old information out there.
Any small company that has any issue can come to us, and we
will help them with that.
Senator Shaheen. That is really helpful. Are there
guidelines that we can share with the business community in our
States to let them know?
Ms. Lord. Absolutely. I will get that to your office.
Absolutely.
Senator Shaheen. That would be very much appreciated.
Secretary Geurts, the Virginia-class submarine is one of
the more successful acquisition programs. It is delivered on
schedule and on budget. Can you talk about what happened in
that program early on that has allowed it to be so successful,
and whether there are lessons that we can transfer as we are
looking at the Columbia-class subs to ensure that they also can
deliver on time and on budget?
Mr. Geurts. Yes, Senator.
I am third day on the job, so I was not around that program
as it originated in person.
Senator Shaheen. You should know the answer to this, come
on.
[Laughter.]
Mr. Geurts. Yes, ma'am.
I would say, looking back on it, though, designing for
affordability and then holding a stable design were key traits,
having the right government and industry team working together
all through all of it. As Secretary Spencer likes to say,
shared risk, shared benefit, so a very good working
relationship between the government and industry team.
As we look at Columbia, we are taking that philosophy and
taking it to the next level. Quite frankly, using any of the
common equipment we can across all the submarine fleets, so we
do not have to reinvent equipment, and then we can get greater
economic order. And then really focusing early on the design
for affordability.
Secretary Lord and I had a review yesterday, I think it
was. I am very impressed with their thought process, their
discipline process of really looking at cost in the design
phase, not trying to make it more affordable after it is
designed.
I think those are great principles that we will look to
continue across the other parts of the Department of the Navy.
Senator Shaheen. I appreciate that, and I hope that you
will take the lessons that are learned and make sure that they
are incorporated into Columbia.
Mr. Geurts. Absolutely, Senator.
Senator Shaheen. To go back to small businesses, as I said,
and I know you all know this, that a lot of the technological
innovation that we are now adopting in our military come from
small businesses.
The SBIR [Small Business Innovation Research] program, the
STTR [Small Business Technology Transfer] program, have really
been successful. For SBIR, for every dollar spent through the
Air Force, $12 was returned. In the Navy, for every dollar, $19
was returned.
So these are programs that really work. Can you elaborate
on what more we can do to encourage the use of small business
in these programs?
Ms. Lord. I was just speaking with Raj Shah at DIUx a
couple of days ago about how we can take the success they have
had at DIUx, because they have let over 60 contracts using
their Other Transaction Authority to work with small businesses
who might not have worked with the Department of Defense
otherwise.
I asked him that exact same question. He told me that there
are some constraints on some of the SBIR money that doesn't
allow it to flow. I do not have the specifics here, but I would
love to come back to you. This answers the question of what
else can this committee do to help move along toward
incorporating commercial technology and so forth.
I think this is one of the few cases I have seen so far
where another authority or taking away some kind of legislation
right now might help us, but I would love to come back and give
you specific examples.
Chairman McCain. Tell us what you need.
Ms. Lord. I will.
Senator Shaheen. Yes. Also, if the Small Business Committee
also needs to do anything, please, we can move on that as well.
Ms. Lord. Very, very timely. I appreciate it.
Mr. Esper. Senator, I would add to your point that small
business tends to be an engine of innovation. That is something
that we have to preserve.
The Army works hard to meet and exceed its annual goals for
business, and we do. I think the key thing is, we talked
already about the complexity of regulations, something we are
working hard to deregulate, to delayer, I would say security
clearances are a big challenge for businesses.
Senator Shaheen. Absolutely.
Mr. Esper. We now have over a yearlong process.
Complexity, the other thing I would mention--this is
preaching to the choir. I mean, clearly with C.R.s and the
uneven funding, if you are a small mom-and-pop shop out there,
and I am referring to my industry experience, it is hard for
them to survive in an uncertain budgetary environment. We risk
losing those folks who may, over time, decide that they are
going to get out of the defense business and go elsewhere.
So that is a big threat to our supply chains.
Senator Shaheen. Thank you.
Chairman McCain. How would you characterize your
relationship with Silicon Valley?
Mr. Esper. Senator, I think from the Army prospective, it
is a growing one. I think it is something we need to develop,
particularly when we talk about IT [information technology]
systems. I think as Senator Rounds pointed out, I think it is a
very particular challenge, given the fact that the technology
changes so quickly, and now the innovation is happening mostly,
if not entirely, in the commercial sector.
So I think it is a relationship we have to continue to
build with Silicon Valley and then, broadly, with the
commercial sector, and make DOD acquisition more friendly to
the commercial sector.
Chairman McCain. The relationship between the CIA [Central
Intelligence Agency] and this outfit and DOD is not nearly as
progressive.
Ms. Lord. I agree with that. CIA has done some great work,
for instance, migrating to the cloud.
To answer your question from my prospective, I am
leveraging the Defense Innovation Board [DIB] pretty
significantly, and that is how I am tying into Silicon Valley.
I have worked on the subject of software, where I think the
most opportunity lies for the Department, both from a
contracting point of view as well as developing commercial
techniques.
So I speak routinely with the Defense Innovation Board
about how to do things differently and particularly Eric
Schmidt I speak a bit with. I was just on the phone with him on
Monday afternoon, asking him specifically what I can do
differently to solve some specific issues. And that is helpful.
We also are using our DIUx arm out there to set up
roundtables for me to meet with a variety of software
companies, because that is where I am focused right now.
Chairman McCain. How long has DIUx been in business?
Ms. Lord. For 2 or 3 years, perhaps. I am going to have to
get back to you on the specifics on that. I am not smart enough
to know that right now.
Chairman McCain. That is not a lot of progress.
Ms. Lord. I want to build on it.
Chairman McCain. Senator Ernst?
Senator Ernst. Thank you, Mr. Chair.
Thanks to all of you for joining us today.
We had a great forum this last weekend, the Reagan National
Defense Forum.
Secretary Lord, I am glad you were there.
Secretary Esper and I sat together on a wonderful,
wonderful panel. I think everybody was engaged at one point or
another through those discussions.
It was very helpful to see so many people that agreed on
some of the challenges that we have, including the C.R.s, as
was just mentioned, sequester, our budgeting issues here in
Congress.
Secretary Lord, from this past weekend, you had mentioned
the need to redirect our investments to meet the demands of a
shifting world. I agree with that as well, and we do need to
invest in innovation to keep our competitive edge over near-
peer adversaries, like China and Russia. That is a topic that
Secretary Esper and I were engaged in on our panel.
Can you talk about some of the emerging capabilities the
Department of Defense should be investing in, to ensure that we
are keeping that technological edge? How do we balance those
investments, then, with the need that we have to improve our
readiness?
Ms. Lord. What we are trying to do is strike that balance.
We were talking about operational availability of aircraft
earlier. We obviously need the readiness.
What we are doing is trying to take a very federated system
of labs that we have right now right now, between the services,
FFRDCs [Federally Funded Research and Development Centers],
OSD, and so forth, and align them in terms of modernization.
What do I mean by that? Instead of working on maybe
hundreds of projects, we are trying to identify specific
technology domains that we agree, across the Department, are
critical to really reach the overmatch capability we want to
have.
So specifically, what does that mean? Hardened
microelectronics, absolutely; hypersonics; then the whole cyber
area. Everybody defines cyber a little bit differently, but I
am talking about offensive and defensive cyber. Those are three
areas where we are committed, and we are looking at aligning
our investments to make sure we make a step function change in
our capability.
Senator Ernst. Okay, I appreciate that.
Chairman McCain. Do you have a strategy for cyber?
Ms. Lord. What we are doing right now is working on the
elements of that, and we would love to come back and talk to
you about that in more depth.
As you know, we just stood up Cyber Command we have a whole
series of efforts.
Senator Ernst. Yes.
Chairman McCain. We would be very interested, since we have
been fooling around with this issue without a strategy for
years.
Ms. Lord. Understood.
Senator Ernst. Yes, the Chairman and Senator Rounds have
been very passionate about making sure that we are nesting our
capabilities together and understanding who is responsible and
in what domain. So very, very important.
And, Secretary Lord, as well, I have heard just recent
reports that this Distributed Common Ground System, or DCGS-
SOF, the software that aggregates intelligence data for our
special operators, is problematic. It is ineffective, is what I
have heard from some of those operators.
I also understand there are a number of commercial
solutions that may be better and immediately available, and in
some cases, they are already in use.
At what point does the Department then decide to simply cut
its losses and move away from a program that they feel is
ineffective?
Ms. Lord. I do not want to comment too specifically about
DCGS, because when I was at Textron, we did have one of those
contracts. But I will vector over to an Air Force program to
answer the same type of question.
We feel strongly when the environmental conditions and our
adversaries have changed rapidly, and we no longer believe that
programs that we are pursuing can achieve the lethality that we
wish, then we will talk about potentially terminating programs.
In fact, General Holmes and I were just here talking to
HAC-D [House Appropriations Committee-Defense] last week about
JSTARS's [Joint Surveillance Target Attack Radar System] recap.
That is a perfect example of where, given the contested
environments in which we are fighting, we are thinking that
perhaps there might be better ways to get sensors to work
closer to the adversary.
So that is an example of where we came up and said, we are
strongly considering and want you to understand this is our
thought process. We want you to be thought partners with us,
and these are all the reasons.
It was a secret hearing, so I cannot get into too many
details. But that is an example of where we are looking at the
current state of events, our current capability, a current
program, and what we now know about other ways to achieve the
end objectives we were trying to initially address.
Senator Ernst. Okay, so multiple factors involved in that
decision-making process, dollars, capabilities, overmatch.
Ms. Lord. Absolutely, and it is one that is not taken
lightly. All of the different equities within the building are
considered before we come and take the time of Congress to say
this is a serious concern of ours.
Senator Ernst. Okay, thank you very much.
Chairman McCain. How long have we been spending money on
JSTARS?
Ms. Lord. Several years.
Chairman McCain. Several years.
Ms. Lord. For the recap.
Senator Ernst. Thank you, Mr. Chair.
Chairman McCain. Do you have an idea of how much we have
spent?
Ms. Lord. I do not have it here today, but I certainly
could get that. Yes, we do know.
Chairman McCain. In the billions?
Ms. Lord. On the recap, I do not believe it is in the
billions, but I shouldn't speak without the data in front of
me. We will get back to you.
Chairman McCain. Senator Warren?
Senator Warren?
Senator Warren. Thank you, Mr. Chairman.
Thank you to our witnesses for being here today on this
important topic.
I previously asked each one of you if you would make
research a priority in your work. You have all said yes, so I
am going to start with a really simple question. Are you still
committed to prioritizing basic and applied research? Will this
commitment be reflected in the fiscal year 2019 budget? I am
willing to take really short answers, like yes.
Secretary Lord?
Ms. Lord. Yes.
Senator Warren. We've got this.
Secretary Esper?
Mr. Esper. Yes, Senator.
Mr. Geurts. Yes, Senator.
Ms. Wilson. Yes.
Senator Warren. Good.
So I have another question. In an effort to emphasize the
importance of R&D [Research and Development], and in
recognition of the span of responsibilities at AT&L, that they
were so big, that, last year, this committee directed that the
position that Ms. Lord now holds be split into two separate
positions, one that focused on research and engineering, and
the other that focused on acquisition and sustainment. And I
know you are all working hard to try to implement that.
I think having a senior leader focused on future technology
is incredibly important. I support that. But one of the real
problems in our system right now is that we struggle to convert
promising new technologies in the lab into the field, and the
gap from the lab to the field is sometimes known as the Valley
of Death. I am worried that splitting oversight of R&D from
acquisition is going to make this problem even worse.
So let me start with you, Ms. Lord. After the split, how
will the Department ensure that our research and development
program stays closely linked with the Department's acquisition
requirements, and that promising technologies are actually
nurtured and incorporated into our programs of record?
Ms. Lord. This is something we are working on right now. In
fact, I have had conversations, and I am meeting with staffers
next week to go over what our preliminary plans look like, to
have them be thought partners with us.
But, quite simply, what we are trying to do is push the
risk into the research and engineering side with a lot of
prototyping and experimentation, so that there are many, many
iterations in order to understand the capabilities of new
systems and the cost of new systems before pushing them over to
the A&S side.
Senator Warren. So you are just saying, get it further
along while it is still in the research bucket?
Ms. Lord. That is one piece of it. A second piece of it is,
we are working on streamlined acquisition processes, where you
basically have a flow chart, and you use the simplest
methodology possible to get things on contract, so that we are
not held up in this do-loop of you want to do something, but
you cannot get it on contract.
Senator Warren. Right.
Ms. Lord. And these Other Transaction Authorities are
particularly germane here, because they have helped us.
Thirdly, we are going to have some common resources between
R&E and A&S, so it is not as if we have people that are either
100 percent R&E or 100 percent A&S. We will have a lot of
those, but we are going to have some shared resources that span
that gap that allow one group to understand what the other
group is doing. This cannot be personality-dependent. It needs
to be sustainable, as we all move on.
So we are going to actually be prototyping and
experimenting over 2 years to make sure we get that right. The
construct I have right now, and I will be coming back to brief
all of you on this, is we are going to do a 2-year, 8-quarter,
transition. We have a model for what we are going to do. And we
are going to tell everyone what that is, and we will begin
moving toward that model.
But we are not being rigid about it. We are experimenting
and seeing what works.
We are also making sure we get a lot of brains around the
table to talk about all the what ifs.
Senator Warren. Good. I really appreciate it. I appreciate
the thought you are putting into this. We do not want to lose
at that space.
Secretary Esper, would you like to add to that? We are low
on time.
Mr. Esper. Yes, Senator. You ask a very good question.
I would just say, briefly, that the Army has begun a
process of realigning its S&T investments toward our six
priority areas. So for fiscal year 2019 to 2023, we have
already realigned over $1.13 billion toward S&T along our
priorities.
The way we are also doing that is, as the cross-functional
teams are stood up, and they are responsible for their specific
capability areas, with S&T now aligned to that specific
capability area, we are actually issued a directive that would
require standardized written agreements about what is expected
to be delivered from the S&T community to hand off to the
actual CFT leader to begin the acquisition process.
Senator Warren. Okay.
Mr. Esper. We are trying to do exactly what I think you
were saying.
Senator Warren. I am out of time, so I am going to ask the
other two of you to answer this in questions for the record, so
we can get it in writing.
But I just want to say, we have to get better at this.
Anything that has a name of the ``Valley of Death'' is not
good, in terms of acquisition of new, cutting-edge technology.
We can do all the terrific research in the world, but if we
cannot translate that into something that helps our
warfighters, then we have failed at our essential mission.
Senator King. Except for the Clemson football stadium. That
is known as the Valley of Death.
[Laughter.]
Senator Warren. Not to me.
All right, thank you.
Chairman McCain. What does Maine have to do with that?
Senator Reed. What does Maine have to do with anything?
Chairman McCain. Senator Perdue?
Senator Perdue. Thank you, Mr. Chair. Let's bring this back
to this topic here.
First of all, thank you. I am so encouraged to hear the
conversation today. I heard the word ``crisis'' mentioned
twice. I have heard ``sense of urgency'' mentioned several
times. As an ex-business guy and seeing this crisis, I am
terribly encouraged by what you all are doing.
I have met you, and we have had private conversation.
Secretary Wilson, yesterday, was so gracious with her time,
talking about a major Air Force base and major piece of
technology.
I want to talk about something a little different.
Secretary Esper, you mentioned first in your opening
comment, in 1941, we built up not in years, in months,
literally. We had things coming off the production lines
literally in months, because we broke through everything,
because we considered it a crisis. But in 1949, just 3 years
after we demilitarized after World War II, we were right back
in the same position. That war was a little different.
But today, we find ourselves--I do not have time for
describing the crisis. But after 30 years of disinvestment and
only one major recap, and after 16 years of active combat, I
believe we have a crisis. The global situation is more
dangerous than it has ever been. We have a debt crisis here. We
have a near-rival that is now going to be a full rival that is
actually spending more money than we are in real terms,
adjusted for purchasing power parity.
General Mattis says that there are three phases to solve
this problem, and you have each spoken about it in different
ways. There is a 3-year term of readiness. We have to get
readiness recovered. There is a 15- to 25-year plan for new
technology and recap, and the full bloom of U.S. innovation and
technology, with regard to providing for national security.
At the same time, China is coming online. It is not going
to take 15 years before a lot of their new technology is
hitting. They have leapfrogged major areas of restrictions.
They are bringing product online much cheaper than we do, much
quicker than we do, and with far less restriction and
government intervention.
I am worried about the shoulder season from year 3 to year
12. And I would like, I think, Secretary Lord, if you will
start with this, I am really concerned about how we find quick,
low-cost solutions for the battlefield.
I would like the combatant commander representatives of
Army, Navy, and Air Force to comment on this as well, because I
am very concerned that we have our eyes out here. We are
looking at where the money is needed, and yet these high-cost
solutions, flying F-35s into battlespace where an A-29 might be
okay--I am not saying we are doing that, but those types of
examples.
JSTARS, you mentioned JSTARS just a minute ago, great long-
term capability. We have a dying platform right now.
Technology, the battlespaces are changing. That interim period,
that is a perfect example of where I do not, personally, see
the Air Force, or anybody else, really, moving toward that
interim solution in a way that gives me comfort with a low-
cost, current technology platform that is better than what we
have, more cost-effective than what we have, but doesn't get in
the way and take money away from long-term development.
Would you address that?
Ms. Lord. Two-part answer to the question.
One, I would really like to come back and in a different
setting, in a classified setting----
Senator Perdue. That is fair.
Ms. Lord.--talk to you about some of the programs going on.
Senator Perdue. I look forward to that.
Ms. Lord. But secondly, what you are talking about is
exactly what DIUx, SCO, and the Rapid Capabilities Office are
doing. We should come back and tell you about some of those
successes.
What we have to figure out how to do is scale that, and
right now, we have not scaled it.
Probably the best meeting I go to in the Pentagon is
something called the Warfighter Senior Integration Group where
we sit down every 2 weeks, and we have on VTC Afghanistan every
2 weeks, and then the other 2 weeks, Iraq. And we talk to the
warfighter about what is going on today and what they need in
terms of rapid capabilities.
This is what has spun out an enormous amount of counter-UAS
[unmanned aircraft system] equipment, and that has been fast.
JIDO [Joint Improvised-Threat Defeat Organization] has come up
with that.
So we can do this, but we do it on a small scale. That is
what this reorg is all about, in my mind. It is getting away
from the 5000 process, other than very complex areas where we
might need some of that. But just use the little bit of process
we need to get stuff out the door.
Senator Perdue. So, Secretary Esper, would you comment?
I am out of time. I would love to hear from all of you, but
I would love to have all of you respond to that question after
the hearing.
Mr. Esper. Yes, sir, because it is a great question. I
would just connect a couple dots from the historical example.
Senator Perdue. Please.
Mr. Esper. The key here is changing culture.
Chairman McCain. Witnesses will be allowed to respond.
Senator Perdue. Thank you.
Mr. Esper. Senator, the key is changing culture. At the end
of the day, we have to change the culture. That is what came
out of the 2011 Decker-Wagner acquisition reform report. That
is the most crucial element.
The way the Army is getting at this is standing up the Army
Futures Command to do just that. Take an approach that says,
let's not make the perfect the enemy of the better. Let's
prototype, demonstrate, learn. Let's fail early. Let's fail
cheaply. And let's go with the 80 percent solution. Get
something fielded.
The view is, if we can stand up the organization to command
quickly, get that unity of effort and unity of command, get
some early wins under our belt, we can start changing the
culture, so that we are ready, position, posture to begin
looking simultaneously at those mid- and far-term threats that
you described.
Chairman McCain. And how long have we been fooling around
with Future Combat Systems?
Mr. Esper. Thank goodness, it is in our rearview mirror
now, Mr. Chairman.
Mr. Geurts. Senator, in the Navy, we are taking an approach
with an agile acquisition office. And that whole acquisition
process, which I co-chair--there is a board. I co-chair with
the CNO or the Commandant. And that is really looking at that
sweet spot of something that we know that is out there that we
can either accelerate up quickly to give us a bridge, or there
is a problem that we need a solution for. We cannot for wait
for business as usual.
We are seeing about a 3-year acceleration for the projects
we are getting through those programs, unmanned aerial refueler
on the carriers, one of them, total array on some of the high-
speed vessels we are doing.
Again, we should have a menu of options. Some need to be
rapid, exactly what we have today, buy as sold commercially,
get them in the field tonight, like I used to do at SOCOM. Some
need to be build-to-carrier, very deliberate. You want to make
sure you get it right, because it is going to be around for 40
years. And then there is a sweet spot. Quite frankly, your
committee's authorities and 804 and some of these rapid
prototyping abbreviated acquisitions really gets at that sweet
spot. That is what we have been missing.
And so you have given us the authorities. We now have to go
implement those. I think all of us are in the emerging stages
of that, and I think in the next 2 or 3 years, that is really
going to get at that shoulder thing that, yes, we cannot wait
for 15 years for something that is going to happen 5 years from
now.
Ms. Wilson. Senator, for the Air Force, we look 5 to 15
years. And you are right, the technical risk in the shoulder
season is something that all of us are worried about along all
of our programs, particularly those that are new ways of doing
business. And I know you and I have a scheduled classified
session to go through some of those that are a high priority
for you.
Senator Perdue. Thank you, all.
Mr. Chairman, thank you for your courtesy. And to the
ranking member, thank you.
I would think it would be very important if we could have
this similar conversation and follow-up meeting in a classified
environment at your discretion. Thank you.
Chairman McCain. I think it is something we ought to
pursue.
Senator Donnelly?
Senator Donnelly. Thank you, Mr. Chairman.
Thank you to the witnesses.
Secretary Wilson, I want to thank you and your staff for a
unique level of prompt and clear communication since your
confirmation. We have been able to work together on some
important issues to improve the readiness of our forces and the
lives our airmen and their families.
One of the challenges will be the readiness of the A-10
fleet. If the Air Force intends to maintain the current A-10
fleet for the foreseeable future, I am concerned about the
shortfall in funding for new wings. One-third of the A-10
fleet, more than 100 aircraft, still need new wings, and the
Air Force will be forced to ground some of these next year
because their current wings have reached the end of their
service life.
I understand the many, many challenges the Air Force is up
against right now, but this, obviously, has a very real impact.
What do you see as the Air Force's options on this issue,
taking into account budgetary challenges, readiness
requirements, and our timelines?
Ms. Wilson. Senator, thank you for the question.
The defense authorization bill that the Senate passed and
the House passed, and the House Appropriations mark, add money
into the Air Force budget to retool and open a line for wings.
It was not in our budget. I know the Senate Appropriations
Committee is working on that now.
If that comes through, we will execute that and get that
line started back up so that we can re-wing. I think the amount
would be the tooling and the first four or five sets of wings
for the A-10.
You are right. We are always managing how we move to new
platforms. At the same time, we try to maintain capability and
cover missions with existing fantastic platforms. And I happen
to be kind of a fan of the A-10 myself.
Senator Donnelly. Thank you.
Secretary Lord, I appreciate the hard work you are putting
into getting our acquisition systems running more efficiently.
It is really important to get it right, as you well know. We
have discussed hypersonic systems in the past. I would like to
revisit that today.
Conventional Prompt Strike, or CPS, is Defense's most
advanced hypersonic development effort. Testifying to this
committee earlier this year, STRATCOM [Strategic Command]
Commander General Hyten advocated for fielding a CPS capability
by the mid-2020s.
I believe the Navy has a vital role to play in fielding
CPS. Do you see that as a priority for the Department? And if
so, why?
Ms. Lord. Yes, I see it as a priority. In fact, there are
two key programs going on right now, one at DARPA [Defense
Advanced Research Projects Agency] and one within OSD that are
moving along. So I would be more than happy to come and have
the technical lead brief you on those.
Senator Donnelly. I was going to say, if you could provide
us with an update on where you are with this effort?
Ms. Wilson. Yes. Senator, can I just add one thing to that?
Senator Donnelly. Sure, absolutely.
Ms. Wilson. On hypersonics, there are two demonstrators
where the Air Force, and I believe the Navy as well, are
working with DARPA. And it is a prototyping experimentation
effort. We are using the authorities that you all gave us for
experimentation and testing. So we did not wait for extensive
requirements kind of things. We are moving forward on an
experiment for hypersonics, and it was through the authorities
you gave us.
Senator Donnelly. Thank you.
Secretary Geurts, I want to ask you about the role our
Defense labs play in the acquisition process. I have spent a
lot of time at the Crane Navy lab in Indiana. I have been
struck by how integrated they are in not only innovating new
capabilities to meet Navy requirements, but testing and
evaluating and verifying systems developed for the Navy by
private industry throughout the acquisition process.
I would love to get your view of Defense labs as a vital
player in the acquisition system.
Mr. Geurts. Yes, Senator. I think, in coming to the Navy, I
am really impressed with their warfare centers and their labs
and how well they are tied. I think having an organic
capability, especially as we have this rise of commercial
technology and commercial products, that organic capability to
take them, test them quickly, perhaps integrate them in a
different way than would be done commercially, is a critical
piece for us.
Back from my SOCOM days, Navy Dahlgren does all the
software for our gunships. That is all written organically.
That gave us great flexibility in the Special Operations
Command to change requirements on the battlefields.
So I think it is an absolutely critical piece. I think it
is a key in us getting through the Valley of Death, because
they can help mature an immature commercial product from a
small business, work with them, and then get it so it is in a
fieldable or close to fieldable condition for us to then put
into the field.
Senator Donnelly. Thank you.
Thank you, Mr. Chairman.
Chairman McCain. Senator Tillis?
Senator Tillis. Thank you, Mr. Chairman. Mr. Chairman, you
know anytime we have a committee talk about acquisition, I have
to bring out my favorite prop and remind everybody of the
actual pages.
Almost 700 pages, 10 years to define a handgun, next-
generation handgun. I just found out with the update, good news
is we have down selected. We have a manufacturer. Ten years
from now, all the Army units will actually have this gun, 20
years after it was conceived by the Air Force.
First off, I thank you all for your service. Welcome.
[Laughter.]
Senator Tillis. But we know there is no logical basis for
something like this, for something as straightforward as a
handgun, a 20-year process from concept to full deployment
within the Army. I do not even know what it means for the whole
of DOD, but within the Army.
So Senator McCain in his opening comments said, with the
exception of Senator Reed, he would like for you to talk with
all of us. I think that is what he said.
But in all seriousness, as somebody who has worked in
procurement, as somebody who has worked in strategic sourcing
and acquisition, if I were going into an organization to be
retained to fix their acquisition process, I would probably be
firing quite a few people.
Now, we operate a little bit differently here because you
have constraints that are placed on you by Congress, so we
probably need to shine a mirror on us and fix some of the
constraints. But shine light on that. Come to people like me
and others who are passionate about this issue.
The chair has empowered the subcommittees to look at this.
Get us on a fast track for providing you with relief, and get
on a fast track for removing some of the constraints that you
have placed on yourself.
I would just like you to respond to that in the remaining
time.
Mr. Esper. Senator, if I may, since the handgun was an Army
system, let me give you some good news. The handgun was
actually fielded last week at my old unit, the 101st Airborne
Division. That fielding has begun.
I would note, since I saw him yesterday, that your
colleague, Senator Tom Cotton, actually qualified on the weapon
and was very pleased with it. The troops been very happy with
what we fielded.
I would also note, because it is important to what you are
saying, after the years of going through that extended process,
the Chief of Staff of the Army, General Milley, took to heart
what Congress said, used the legislation that was contained in
the NDAA--we had stood up about 20 months ago or so, the
reinvigorated Army Requirements Oversight Council.
So he took that case what you are talking about, refined
the requirements process. Eighteen months later, we got to the
point that we were delivering weapons.
We have managed to turn a bad news story, I think, into a
good news story. I think that type of process, leveraging the
authorities we got from Congress, is the basis for which the
Army is heading with regard to Futures Command and all the
changes we plan on making to improve the acquisition process
and make sure that we do not see that again.
Mr. Geurts. Sir, from the Navy's perspective, you guys have
been very helpful. We have been doing some piloting of reducing
the number of critical performance parameters. You gave us
authority to try one where we only had two critical performance
parameters. That simplified the solicitation. Then we can work
with industry. Again, getting to Secretary Wilson a much
shorter requirement, it gave us a much broader look. That saved
years from us going through the normal, traditional piece.
So the authorities you give us, again, help us try and
drive that change, because, ultimately, we have to get the
workforce training and get the culture shifted from what has
been to what needs to be.
Senator Tillis. As Secretaries Wilson and Lord respond, we
have to keep in mind about the cumulative cost of this. We have
to take a look at, when you have to participate in a
procurement for 10 years how much cost you are building into
the industrial base that we ultimately pay for. So I also want
to make sure that I am getting a commitment from you all to
come up with specific actions that we need to take to
accelerate the process.
Secretary Wilson?
Then we will finish with Secretary Lord.
Ms. Wilson. Senator, I think you were out of the room when
I did my opening statement, and I need to get a red ribbon, but
this is the letter of invitation, and there is a four-page
document for the light attack experiment. It fits nicely in a
very slim briefcase.
Senator Tillis. You get a blue ribbon for that one.
Ms. Wilson. I will put the blue ribbon on this for and
provide you a copy. But the final report, we tested four
aircraft, and a final report arrived last night with me, so it
is less than 11 months from a letter of invitation to the final
report on testing, and we will make a step from there.
"What else can Congress do to be helpful?'' You often ask
that. I do have some suggestions for you, but maybe I will just
provide those in answers to questions.
Senator Tillis. Thank you.
Ms. Lord. We are coming up with methodologies to step
through a flow chart to arrive at the simplest and quickest
compliant contracting methodology for different procurements. I
think part of the issue with this gun you are referring to is
we applied a one-size-fits-all, bring it on mentality. We are
trying to learn from our Rapid Capabilities Offices, from DIUx,
from SCO, who have taken the authorities that Congress has
provided and applied them appropriately to speed things up,
therefore, have them be more cost-effective, and thereby
allowing smaller companies that couldn't afford to go through
this multiyear process to participate.
So what we are trying to do is scale all of those
activities, but we have to educate our acquisition workforce to
be able to do that, and that is a huge issue. So I am taking a
fundamental relook at how the Defense Acquisition University
operates, and we are looking at more 1-, 2-day sessions where
we teach people skillsets that they use the next day.
But we have to give people the tools, and then we have to
train them. I am very optimistic that we can do that.
Chairman McCain. What makes you so optimistic?
Ms. Lord. Because I think we have a lot of smart people
that are looking for leadership and----
Chairman McCain. You didn't have smart people before?
Ms. Lord. I do not think the focus was on cost-effective,
quick solutions. I do not think people had the intestinal
fortitude to come up here and say what needed to be changed. I
think we have an environment now where we have a huge number of
people that are all aligned on the same objective, and we are
all very comfortable having a conversation saying, this is
working, and this perhaps has an unintended consequence.
I see a lot of momentum between the building and between
the Hill to work together to achieve our shared goals.
Chairman McCain. I certainly hope you are correct.
Senator King?
Mr. Esper. Mr. Chairman, if I can add just one quick thing
to Mr. Tillis' question, you asked about things that the
Congress could do.
I would tell you, in the case of the handgun, through that
18-month process, we have prototyped, tested, demonstrated,
used soldiers, selected the handgun, and we had a protest. I
think to the degree that Congress can act on getting rid of
frivolous protests, at least what the Army considered a
frivolous one, would be very helpful, because all it does is
add time, cost, and, of course, delays giving the soldier what
he or she needs to be successful.
Chairman McCain. Senator King?
Senator King. Perhaps the handgun example can remind me of
my father's advice that even the worst person can serve as a
bad example. So maybe we can learn from that.
Mr. Geurts, a couple preliminary observations. First,
somebody at the Pentagon has a sense of humor to send you here
on your third day. It will only get better from here, I can
assure you.
Mr. Chairman, this is a very important hearing, and I want
to thank you for calling it.
Secondly, to the entire panel, this is one of the better,
or I would say best hearings I have seen on this subject in 5
years. You are clearly focused on this problem.
Secretary Wilson, what you told us about the light attack
aircraft and the process is incredibly encouraging. I hope that
you will be able to continue along those lines.
Secretary Lord, Freud said, ``Anatomy is destiny.''
Napoleon said, ``War is history.'' My modest contribution to
that is, ``Structure is policy.''
I would like it if you could supply to this committee your
organizational chart of the acquisition process. I am
interested in seeing how many committees there are, how many
approvals, what the levels are, because I do think, I am not
being facetious, I do think the structure largely determines
the outcome. If you have a complex, cumbersome structure, you
are going to have a cumbersome outcome.
Somebody said the ideal committee is made up of three
people, two of whom are absent. And so if you could share with
me your thoughts on this.
Ms. Lord. No, I agree with you, structure is policy. And so
what we are doing is putting together flowcharts that allow
contracting officers to pick the simplest route to get to
placing a contract and delivering the materials or services.
That means you need to understand what you are buying and how
to tailor the process. That is what we have our contracting
people doing right now, using real-life examples of how we have
done this. So that is what I will bring you, what that flow
chart is.
Senator King. I would really appreciate that.
I think I heard in one of your testimonies, perhaps yours,
that you are making an effort to keep people in these
positions, at least though milestones. I mean one of the
problems we have identified is acquisitions people come and go,
and it creates a herky-jerky process.
Ms. Lord. We are trying to be much more thoughtful about
critical program junctures and aligning people being reassigned
with that.
Now moving forward, that takes a lot of coordination. I
think we are all committed to do that. I will say that we all
spend a lot of time in one another's offices, and I know I meet
with the service acquisition executives on a weekly basis, so
we are committed to doing this.
Senator King. This is sort of technical government
organization, but I hope you can really focus on this issue of
how long people stay in a particular office, because if they
keep turning over, that has been identified in prior hearings
as a significant problem.
Ms. Lord. We are committed.
Senator King. The other piece is off-the-shelf technology.
Mr. Geurts, I commend to you the P-8, which is the new
naval anti-submarine aircraft, which I went out to see them
building them. It is an off-the-shelf Boeing 737 with
electronics inside.
Somebody should be congratulated for not having to invent a
new airplane.
By the way, at that factory, Boeing produces one 737 a day,
which is an amazing technological feat, in my mind. But the P-
8, it seems to me, is an example of how we can do this without
redesigning everything from the ground up.
Are you familiar with that program?
Mr. Geurts. Yes, Senator, I am getting more familiar in the
new job here. But, certainly, my background as a special ops
guy is to leverage whatever is there and put it to use as
quickly as possible.
I think back to this idea that we will have to build new.
That will take some time. We will have to fight with what we
have tonight. A lot of what we can do in the interim is
leverage what we have in new and creative ways, leverage what
is in the commercial market in new and creative ways, leverage
what each of us are doing in the services. So the Navy is
leveraging the Air Force's work in JASSM [Joint Air-to-Surface
Standoff Missile] to create a new capability quickly, so we do
not have to reinvent a whole new cruise missile.
So this focus on every dollar counts, every day counts, we
are in a war tonight, and we need to think that way in
everything we are doing, whether that is organizational design,
acquisition requirements, operational tests, all of that has to
play together. I think as you are seeing here, we are all
committed to doing that for the Nation.
Senator King. I have seen that today, and it is reassuring.
Two quick points, and you do not need to respond. But
reducing lead times is almost as important as price. I mean, we
cannot maintain our qualitative edge if it just takes too long
to get the weapon into the field.
Finally, to reiterate what everyone has said today, we want
to be partners. To the extent you can tell us what could be
changed in terms of regulation, in terms of congressional
requirements, please do so. Everyone at this desk is committed
to helping you to succeed, because when you succeed, our
country succeeds.
Thank you very much for all the work you are doing.
Senator Reed. Mr. Chairman, I have to respond to a
rhetorical question I raised about the importance of Maine.
It is important because it sent us some of the most
impressive Senators in our history: Margaret Chase Smith,
Edmund Muskie, George Mitchell, Olympia Snowe, Susan Collins,
and Angus King.
For the record, please note that. Thank you.
[Laughter.]
Chairman McCain. Senator McCaskill?
Senator McCaskill. Thank you.
I would like to take a moment, personally, just to thank my
fellow, my military fellow, Lieutenant Colonel Sean Foster.
This is his last hearing. He is an Army JAG officer. He has
been incredibly helpful to my office. I am very appreciative of
the military for providing us fellows. Sean was particularly
terrific.
He is leaving to go to the Army Legislative Liaison office,
so all of us will get to know him better.
But I wanted to briefly recognize his great work in my
office over the last 2 years. I am going to miss Sean a lot.
How many of you have read the November 2017 DOD I.G.
[Inspector General] top 10 management challenges that was
issued in November? Everybody read it? No? Who has read it?
Ms. Lord. I glanced over it, I must admit. It was in my
read-ahead package.
Mr. Geurts. Yes, ma'am. I read it yesterday.
Senator McCaskill. Okay.
Secretary Esper, have you read it?
Mr. Esper. No, ma'am.
Senator McCaskill. How about you, Secretary Wilson?
Ms. Wilson. No.
Senator McCaskill. Okay. I am going to ask this question
almost every time any of you come up here. I am going to ask
you if you have read I.G. reports.
Nothing is more irritating to me than when the really hard
work of GAO [Government Accountability Office] and the I.G.s
identify problems, and really make your jobs easier in terms of
where you should focus, and nobody consumes the product. It is
really important, I think, that all of you consume this
product, because they identified 10 challenges of management.
That is what your jobs are, management.
I am going to focus on a couple of those today, but I
certainly would advise all of you to take this report
seriously.
Sustainment problems, the market leveraging for spare
parts, they identify in this report that for the H-60
helicopter used by the services and SOCOM, that they have
purchased 2.9 million spare parts for the H-60, DOD has, using
2,000 separate contracts awarded to 590 different contractors
over a 12-month period for almost $400 million. Often, these
parts were purchased for different prices, the same part.
This is the kind of stuff that just makes you want to tear
your hair out, as somebody who is a former auditor.
What roadblocks you can you identify, Secretary Lord, that
would keep you from fixing something ridiculous like that? I
mean, 2,000 separate contracts to 590 different contractors for
spare parts for the same helicopter?
Ms. Lord. Since August, I have been doing a lot of data
dives to understand the body of work in the acquisition
workforce, and this is the type of thing I keep coming across.
What I find are a couple trends relative to sustainment.
One, early on in programs, people are not thinking about
designing for sustainability. They are not thinking about
setting up the right contract vehicles. It is often rather
reactionary for different parts. So as we develop these
systems, we need a holistic contracting strategy because
contracting is a strategy itself.
Senator McCaskill. I mean, I just think, when something
comes online, you should begin the process of identifying a
handful of contractors, because you want the consistency, and
if somebody falls off, you have others, and to get the best
deal and leverage the best deal for that helicopter.
Ms. Lord. Right.
Senator McCaskill. I mean, I cannot tell you how many time
I have sat in this committee and pointed out inefficiencies
between the services for things that they are all using.
Ms. Lord. That is where AT&L comes into play. We talk about
delegating programs back. That is absolutely what we want to
do.
Where AT&L can be very helpful, and A&S moving forward, is
taking that horizontal look across the services for similar
programs that leverage the same bill of materials and do the
types of buys you are talking around about.
Senator McCaskill. I do not have much time left. For the
record, I am going to ask you about reporting contractor past
performance. It is another really irritating thing for me, that
we have bad contractors and we keep doing business with them
with no consequence whatsoever. We never remove them from the
list.
But that the last thing I really want touch on is supply-
chain management risks. In this report, I was really concerned
about the identified risk of an adversary infiltrating the
supply chain and sabotaging, maliciously introducing an
unwanted function or otherwise compromising the design or
integrity.
They specifically point out the Missile Defense Agency as
it relates to the Ground-Based Midcourse Defense system. That
is, obviously, of grave concern.
I am out of time, but what I would like for each one of you
to do is to speak to me, especially Secretary Lord, what are
you doing to secure the supply chain in terms of the integrity
being compromised?
I do not need to explain to any of you what the dire
consequences of that could be in today's world.
Ms. Lord. I would be happy to do that. In fact, I just had
an early morning meeting with General Ashley from DIA [Defense
Intelligence Agency] about that very topic in my office this
morning.
Senator McCaskill. I will ask about all of these 10
management areas. But I would recommend, the next time you
come, check and see if an I.G. report or a GAO report has been
issued in last 30 days, because I guarantee I am going to ask
you about it.
And I will tell you, I am following up.
You would not believe this, Senator McCain, but when I was
with Secretary Wilson at the Air Force base in Missouri, which
was terrific that she visited, she told me that she was trying
to hire trainers for the Joint Strike Fighter, and they sent
over somebody to get approved for hiring at OPM [Office of
Personnel Management], and guess what OPM told them? They did
not have enough experience flying the Joint Strike Fighter.
So obviously, the job requirements that are imposed upon
you by OPM sometimes are ridiculous, beyond the pale. Clearly,
nobody at OPM knew that nobody had flown a Joint Strike Fighter
yet.
Has that been resolved? I am working on it from my end. I
just wanted you to know.
Ms. Wilson. Thank you for your help on this one. We can
surely continue to use the help.
Senator McCaskill. Did you get it approved, finally?
Ms. Wilson. That particular one has been approved, but my
average time to hire a civilian is about 180 days.
Senator McCaskill. Totally ridiculous.
Ms. Wilson. It is a major issue.
Senator McCaskill. Thank you, Mr. Chair.
Ms. Wilson. Senator, we have a task force looking at all
the requirements to hire people, how we can streamline those,
both regulatory and legislative fixes, so that we can get good
people on board.
Chairman McCain. I want to apologize to Senator Blumenthal,
because, obviously, there is an event on the floor of the
Senate, which I know he is very interested in and so----
Senator Blumenthal. If I may, Mr. Chairman?
Chairman McCain. Please.
Senator Blumenthal. I will submit my questions for the
record, and I hope we will get prompt responses focusing on,
among other issues, on the Huey replacement program.
Thank you, Mr. Chairman.
Chairman McCain. I thank the witnesses. This has been very
helpful.
And again, I hope the message is, from this committee to
you, that we want to work with you. We also have our
responsibilities, and we will try to carry those out as well.
So I think this hearing has been very helpful, including
the recent one we just had. And I thank the witnesses for their
willingness to help.
This crowded hearing will adjourn.
[Whereupon, at 11:47 a.m., the committee adjourned.]
[Questions for the record with answers supplied follow:]
Questions Submitted by Senators John McCain and Jack Reed
rapid prototyping
1. Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, in fiscal year 2016 and 2017, statutory authority was given for
the use of alternative approaches to rapid prototyping and rapid
fielding.
What has been the Department and Services approach to implementing
these alternative approaches?
Secretary Lord. My team is working on a memorandum, ``Policy for
Middle Tier of Acquisition for Rapid Prototyping and Rapid Fielding
Programs,'' that establishes interim Department policy and assigns
Component responsibilities for the implementation of middle tier of
acquisition programs. This will facilitate initial execution of these
authorities while allowing for data/lessons learned to be compiled and
further refined for incorporation into issuance of a formal DOD
instruction.
Secretary Esper. The Army's approach has been to direct its program
managers to identify efforts that would be suitable candidates for use
of the new ``mid-tier'' acquisition authorities and to leverage them to
rapidly prototype and field capabilities that address combatant
commander needs against near-peer adversaries. For such projects, our
intent is to utilize a streamlined and coordinated requirements,
budget, and acquisition process to expedite approval, operational
assessment and delivery. We have already successfully used the mid-tier
acquisition approach through the Army Rapid Capabilities Office, which
rapidly prototyped and delivered an electronic warfare capability for
the European theater.
Secretary Geurts. The Department of the Navy (DON) has refined its
policy with regard to accelerating acquisition to ensure the full
extent of acquisition approaches are available to our acquisition
teams. The new governance policy was developed to take maximum
advantage of recent acquisition reforms aimed at rapid prototyping,
rapid fielding and acquisition agility at large. As a component of this
accelerated acquisition policy and process, I co-chair the Accelerated
Acquisition Board of Directors (AABoD) alongside the Chief of Naval
Operations (CNO) and Commandant of the Marine Corps (CMC) to establish
Rapid Prototyping, Experimentation and Demonstration (RPED) projects,
and Maritime Accelerated Capability Office (MACO) programs. The policy
takes maximum advantage of recent acquisition reforms for rapid
prototyping, rapid fielding and acquisition agility at large to
streamline and more rapidly deliver capability to the fleet.
Secretary Wilson. The Air Force has started implementing these
alternative approaches, and to that end, I recently signed out the
Rapid Procurement of Air Force Capabilities Charter which aims to
streamline procurement and prototyping of certain Air Force
capabilities. To do this, the charter applies the governance structure
and key principles established for the Rapid Capabilities Office,
allowing us to inculcate a culture of agility and innovation across the
Acquisition Enterprise and the Air Force. Additionally, we are working
to implement open system approaches into our programs. This approach is
a key enabler to inject new technology into subsystem or component
levels. The Air Force is a strong proponent of using prototyping as one
method to infuse agility into the acquisition process and will continue
to look for opportunities to use these authorities.
2. Senators McCain and Reed. What have been the challenges or
impediments for the acquisition community, if any, to implementing
these approaches?
Secretary Lord. Emerging needs are unknown during the two-year
planning and programming budget cycle and therefore not programmed in
the Department's budget requests. As a result, the Department is in the
position only to request funds for known requirements. If dedicated
funding for the new prototyping authorities is not appropriated, then
the Department must prioritize middle tier of acquisition programs
alongside other competing priorities for allocation of available funds.
To enable the Department to efficiently and effectively react to
emerging threats and take advantage of innovative technologies, I
recommend that Rapid Prototyping Funds, or other flexible funding
accounts, be appropriated at both the Department and Service levels.
Secretary Esper. One challenge is the timeline allotted to complete
rapid prototyping and fielding efforts. For these mid-tier acquisition
projects, it would benefit the Army to have the option to continue the
equipping phase beyond five years. While a rapid project may deliver
the initial operational capability to the first unit equipped very
quickly, and certainly within the five-year limit, the ability to
continue fielding to additional units beyond five years would enable a
multi-year approach to resourcing and incremental capability upgrades.
Secretary Geurts. Although the authorities are present and aimed at
speed, the current budget process limits innovation and agility. We
still lack the flexible funding constructs and associated
appropriations that will allow new technologies, engineering
innovations and, in some circumstances, game changing capabilities to
be introduced to the Fleet as fast as possible. We cannot afford to
wait two years--our typical budget cycle time--to address our
adversaries' new capabilities, nor should we wait two years to
introduce our latest innovations.
Secretary Wilson. The Air Force has experienced challenges in
funding, processes and training. While we appreciate the authorities
the Congress has provided for rapid prototyping and rapid fielding, the
limiting factors are often not the authority to execute, but rather
clearly defined implementation guidance, a source of funds, and
workforce training. The Air Force does not have a dedicated source of
funds for rapid prototyping, so potential prototyping opportunities
must still compete for funding against other pressing Air Force
priorities. We continue to work towards a balance of rapid prototyping
efforts and traditional acquisition programs to ensure the right mix of
rapid and revolutionary capabilities. Additionally, the Air Force is
waiting for Department guidance on implementation of these authorities
and we continue to work with the OSD policy team in writing the
instructions. In the interim, the Rapid Procurement of Air Force
Capabilities Charter will provide the strategic guidance for our rapid
prototyping efforts. Finally, the Air Force needs to continue educating
our workforce on the new authorities, and how and when to use them
appropriately.
3. Senators McCain and Reed. Can you highlight a few examples of
programs that are taking advantage of the alternative approaches?
Secretary Lord. We're working with the Navy on the pilot effort to
use these authorities to accelerate Standard Missile (SM)-2 Block IIIC
development through rapid prototyping. This effort will deliver an
initial fielding capability 3 years ahead of the program's planned
Initial Operational Capability (IOC).
Secretary Esper. Yes. Consistent with the intent of these
approaches, the Army rapidly assessed commercially available Active
Protection Systems (APS) candidates in fiscal year 2017 and is now
actively exploring the feasibility of equipping Abrams, Bradley, and
Stryker vehicle platforms with APS variants as an interim solution for
the European theater. Another example is the Army Rapid Capabilities
Office Electronic Warfare project, which used a rapid fielding approach
in fiscal year 2017 to provide an integrated electronic support and
attack capability for the European theater.
Secretary Geurts. In accordance with the DON's new Accelerated
Acquisition governance policy we designated our first MACO Program (MQ-
25) as a Key Performance Parameter (KPP) Reduction Pilot Program.
Having just two KPPs allows the Department to better manage cost,
schedule, and performance by focusing on MQ-25's most important
capabilities--Carrier Suitability and Aerial Refueling. Additional
prototyping efforts in the Accelerated Acquisition process include:
Unmanned Undersea Vehicles (UUV) Family of Systems which
provides long-endurance and off-board systems for Intelligence
Preparation of the Operational Environment.
Navy Laser Family of Systems (NL FoS) which demonstrates
High Energy Laser (HEL) capabilities in Naval surface combatants.
Expeditionary Surveillance Towed Array Sensor System
(SURTASS-E) which prototypes and explores a ``roll-on, roll-off'',
modular, passive SURTASS capability.
Standard Missile (SM) Family of Systems which provides
new increments of capability and increased range and lethality
leveraging SM investments and accelerated through rapid prototyping and
rapid fielding.
Ship-to-Shore Maneuver, unmanned swarm systems, long
range precision fires and electronic attack prototyping of new
operational concepts for Naval amphibious warfare.
Secretary Wilson. One program that is taking advantage of these
authorities is the Next Generation Command and Control Digitally Aided
Close Air Support (DACAS) Platform software. The effort is a $1
million, six-month project under Defense Innovation Unit Experimental
(DIUx) to create a modular, core software architecture and Joint
Terminal Attack Controller software apps. Another example is the Micro
Weather Sensor. This project is designed to assist Air Force Special
Operations weather teams by collecting critical weather information in
inhospitable environments. Having successfully developed and tested the
sensor, the program is planning to execute $1.7 million of fiscal year
2018 procurement funding to acquire 100 sensors to meet the current
requirement.
4. Senators McCain and Reed. In your opinion, have there been any
successful efforts to date or programs you would consider models?
Secretary Lord. Successful efforts specifically associated with
utilization of rapid prototyping/rapid fielding authorities granted via
fiscal year 2016 and fiscal year 2017 legislation have not yet be
aggregated; however, in 2017, the Department established a Rapid
Prototyping Program which co-funded eight prototyping projects with the
Services. Each of these projects will rapidly develop prototypes and
deliver new capabilities to the warfighter over the next three years,
and are summarized as follows:
1. Electronic Warfare (EW)--U.S. Army. This project will
accelerate EW prototyping to allow dominant maneuver in EW denied
environments for the tactical soldier in the field. Technologies
include offensive radio operations pods; Raven Claw software
enhancements; electronic support and attack capabilities; radio
frequency mitigation filters; and artificial intelligence and machine
learning algorithms. This capability will support a USAREUR operational
needs statement.
2. Position, Navigation & Timing (PNT) / Project TITAN--U.S.
Army. This project will enable U.S. Army platforms to continue
operations in global positioning system (GPS)-challenged environments,
providing an anti-jam antenna for the Defense Advanced GPS Receiver
(DAGR). Enhanced PNT prototypes will be evaluated for the Abrams,
Stryker, Bradley, and Paladin systems. This capability will support a
USAREUR operational needs statement.
3. Passive Wide-Area Detection of Small Unmanned Aerial Systems
(sUAS)--U.S. Navy. This project will accelerate a counter-UAS
capability for naval land and shipboard systems to automatically
detect, track, and classify targets, and to provide threat alerts.
Prototypes will consist of wide-area, 360-degree electro-optical (EO)
and infrared (IR) imaging systems, wide-area acoustic sensors, and
high-speed, low-light EO and IR inspection of targets.
4. Ship to Shore Maneuver Exploration and Experimentation
(S2ME2)--U.S. Navy / U.S. Marine Corps. This project will extend the
reach and increases the capability of the individual Marine by
prototyping a suite of unmanned assets that enable approaches to
amphibious fire support and underwater survey. Prototypes will enable
the Marine Corps Forces to plan, execute, and monitor battlefield
conditions and deceive the enemy as to maneuvers, strength of the
forces and intentions for deployment.
5. High Power Microwave (HPM) for Air Base Air Defense--U.S. Air
Force. This project will advance two HPM prototypes capable of
defeating enemy UAS's and missiles. A counter-UAS prototype will
integrate an Air Force developed counter-electronic system into a
mobile unit to counter swarms of UAS's. The counter-missile (CM)
prototype will evaluate U.S. Navy HPM technology for use on a
transportable system capable of defeating multiple missiles in a
relevant operational environment.
6. Open Mission Systems Contribution for Next-Generation
Architectures (OCNA)--U.S. Air Force. The Air Force will prototype a
platform architecture that combines an on-board data communication bus
with advanced broad-band multi-element antennas and shared processors
to enable use of non-proprietary standard interfaces. This prototype
will expand the open mission systems (OMS) open messaging standard to
capitalize on the capabilities of PlatformNxt, the Air Force's next-
generation avionics architecture.
7. Army Navy/Transportable Radar Surveillance and Control Mode 2
(AN/TPY-2) Adjunct Sensor--Missile Defense Agency. The Missile Defense
Agency will develop and provide a prototype adjunct sensor to be
integrated with fielded forward-based mode AN/TPY-2 radars. This sensor
with X-band dish capability will provide an extended field of regard
and low elevation angle tracking. The capability will expand the TPY-
2's performance against hypersonic glide vehicles.
8. Mission Rehearsal Trainer (MRT)--Joint Staff/J8. This project
will prototype a distributed learning / training system to enhance the
intelligence collection capabilities of a specific Combatant Command.
Project details are classified.
The process being utilized to develop the above prototypes
represents a successful template the Department will use to allocate
funds to support rapid prototyping projects. These projects emerged
from requirements from the military Services, Missile Defense Agency,
and the Joint Staff and include such diverse capabilities as enhanced
electronic warfare, counter unmanned aerial systems, and high-power
microwave based air defense prototypes. All of these projects are
intended to reduce overall cost and deliver capability to the
warfighter more rapidly, in some cases by several years.
Secretary Esper. While we are still in the early stages of
incorporating these new authorities into Army business processes, I
would consider both the Active Protection Systems project and Army
Rapid Capabilities Office Electronic Warfare project good initial
models. Both leveraged current and emerging technologies to deliver
quick solutions to address urgent capability gaps. These projects are
also following a phased approach that continuously improves capability
and applies operator feedback to inform and reduce risk for enduring
programs of record.
Secretary Geurts. While we believe that projects and programs
designated for accelerated acquisition will be successful in the timely
delivery of critical warfighter capability, it is early in their
respective execution.
Secretary Wilson. We are currently evaluating our prototyping
efforts and organizational structures, training, and funding that
support them so that we can establish model efforts. We will continue
monitoring the progress of ongoing and future efforts and evaluate what
lessons can be applied.
5. Senators McCain and Reed. In your opinion, what additional steps
are needed to advance these approaches?
Secretary Lord. Appropriating dollars in prototyping accounts will
allow the Department to address some of the emergent warfighter needs
to include fielding proven technologies of new or upgraded systems with
minimal development in 6 months and complete fielding within 5 years
In addition to funding prototyping and production, it's also
important to fund experimentation that facilitates prototype
utilization in realistic settings by operational users. This maximizes
the value of the prototyping efforts, and provides the real-world
experience that lets the Services define more detailed requirements.
These requirements enable transition to a current or new weapon system
program. Experimentation sometimes requires operations and maintenance
(O&M) and other types of RDT&E.
Secretary Esper. The Army must continue to institutionalize these
alternative approaches, which are critical to our efforts to defeat
emerging threats and keep pace with technological change. While I am
encouraged by the results thus far, we must expand the application of
these approaches as part of our larger effort to reshape and improve
the agility, synchronization, and responsiveness of the Army
acquisition enterprise. With regard to ``mid-tier'' acquisition for
rapid prototyping and rapid fielding addressed in section 804 of the
Fiscal Year 2016 NDAA, we are hampered by the requirement within this
language to complete fielding within five years as opposed to achieving
Initial Operational Capability and block or unit set fielding within
five years, which is more consistent with our multi-year resourcing
process.
Secretary Geurts. The DON will work with the Congress to seek
support for flexible funding constructs and associated appropriations,
alongside an agreed-to framework of governance and oversight that will
ensure the effective and efficient use of such funds for their intended
purpose. In addition, we are ramping up training efforts for our
acquisition workforce. We are developing course work and other lines of
effort with our Defense Acquisition Workforce Development Fund with
specific concentration on the new acquisition authorities and how these
can be applied to speed capability to the Fleet through rapid
prototyping and rapid fielding.
Secretary Wilson. Clear implementation guidance, as well as a
dedicated source of Air Force funds for rapid prototyping would
facilitate a streamlined process for quickly identifying and executing
the highest priority prototyping efforts. Additionally, we need to
train our workforce. Program managers are reluctant to try non-standard
acquisition approaches due to fear of failure. We need to encourage
prototyping strategies to be inserted into programs from the beginning.
These efforts will require more cross-functional teaming to ensure they
are provided a well-planned pathway to success.
streamlined acquisition process
Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, in recent years there has been an increased emphasis on
adopting more streamlined acquisition management processes with a goal
of reducing the administrative documentation and reporting burden on
acquisition programs.
6. Senators McCain and Reed. In your opinion, has DOD and the
Services been successful in achieving this goal?
Secretary Lord. The Department's leadership at every level is
firmly committed to streamlining our acquisition management processes.
While I believe many of our reform efforts to date have put us on the
path to achieving that goal, there's clearly more to do. Consequently,
we will continue to identify and eliminate burdensome administrative
and reporting requirements. This is not a short term goal, but a long
term commitment to improve the efficiency of our acquisition system.
Additionally, we will scale practices used by the Strategic
Capabilities Office (SCO), Defense Innovation Unit--Experimental
(DIUx), Rapid Capabilities Office (RCO), Joint Improvised-Threat Defeat
Organization (JIDO), Joint Rapid Acquisition Cell (JRAC), etc. to
account for a greater percentage of our procurements.
Secretary Esper. The Army, empowered by Congress, has begun its
efforts to streamline acquisition with several of the most important
reform initiatives in progress. The Army has embraced the authorities
provided by Congress in the fiscal year 2016 and fiscal year 2017
National Defense Authorization Acts and has taken action to
reinvigorate the Army Requirements Oversight Council; consolidate Army
staff elements; establish the Army Rapid Capabilities Office; and
establish the Office of Process Innovation and Integration.
The Army is executing eight acquisition reform directives that will
streamline acquisition processes and increase the Army's ability to
quickly provide capabilities to Soldiers. These reforms will not be
accomplished overnight and there will be challenges; however, I am
convinced that we are reshaping and streamlining the Army acquisition
management process to improve the agility, synchronization, and
responsiveness of our Army's acquisition enterprise. I expect you will
see marked, clear progress in the coming months.
Secretary Geurts. I agree that acquisition documentation is overly
burdensome, and that we need to find a better balance between oversight
and transparency and the need to move more expeditiously. I note that
programs that have been delegated to the Services for oversight still
require many program documents which by statute must be approved at the
OSD level. The DON appreciates your efforts to reform and eliminate
some of these burdensome requirements, and will continue to work with
you and your staff to identify requirements that can be eliminated or
minimized where there is little to no value added by the requirement.
Secretary Wilson. We still have a lot of work to do, although we
have had some successes. For example, I have directed a review of all
Air Force directive publications with the goal of reducing the number
ensuring they provide current, clear and concise guidance. Within
acquisition, I have ensured approvals are delegated to the lowest
appropriate levels, reducing the administrative burden for approvals
and freeing up the workforce to manage their programs.
7. Senators McCain and Reed. What specific steps is the Department
and Services taking to help achieve this goal?
Secretary Lord. Recent changes to our principal acquisition
procedures have given decision makers in every acquisition category
broad authority to tailor acquisition documentation and other
regulatory requirements that are not required by statute. Tailoring in
this context can include the elimination of the document where not
required for the program under review and/or combining several
documents where it is logical to do so. In addition, decision makers
have the authority to tailor the acquisition approach consistent with
specific program requirements and, consequently, reduce oversight and
the associated reporting burden. We have also developed more focused
procedures tailored to the unique requirements of services acquisitions
and defense business systems. The associated documentation and
reporting requirements are uniquely designed for the needs of those
programs. As I mentioned in my testimony, we are initiating action
intended to streamline our contracting procedures with the long term
goal of awarding a contract in 6 months from the issuance of the
Request For Proposals. Now, we need to memorialize successful tailoring
practices in the form of case studies and teach our Acquisition
Workforce through these real examples at the Defense Acquisition
University (DAU).
Secretary Esper. Four of the Army acquisition reform directives
specifically address streamlining the acquisition management process to
reduce administrative documentation and reporting burdens on
acquisition programs. These reforms will; (1) streamline and
synchronize acquisition planning and processes; (2) streamline the
development and approval of capability requirements to reduce the time
it takes from concept development to an approved capability
requirements document; (3) streamline test and evaluation and minimize
redundant testing; and (4) streamline the contracting process to reduce
the time it takes to develop and award a contract.
In addition, the Army established eight cross functional teams
(CFTs) to enable the Army's leadership to efficiently identify and
manage investment and divestment priorities by assessing them against
the Army's key modernization priorities. These CFTs are charged with
using technical experimentation and demonstrations, in conjunction with
industry and commercial sector partners, to inform prototype
development and reduce the requirements process. These prototypes will
enable us to learn and make informed resource decisions in less time
with fewer resources.
Finally, the Assistant Secretary of the Army (Acquisition,
Logistics and Technology) recently introduced several initiatives to
streamline the acquisition process and adapt the acquisition culture
across the enterprise to empower program managers and promote smart
decision making. The intent is to promote awareness of the acquisition
flexibilities contained in recent Defense authorization acts to help
ensure the Army acquisition community is postured to take full
advantage of new authorities in areas such as ``middle tier''
acquisition and rapid prototyping and fielding of innovative system
components and technologies, commercial items procurement, and other
transactions authority.
Secretary Geurts. DON has recently refined its policy with regard
to accelerating acquisition, to include our responses to urgent needs.
The new governance policy was developed to take maximum advantage of
recent acquisition reforms aimed at rapid prototyping, rapid fielding
and acquisition agility at large, to include the use of Rapid
Acquisition Authority when warranted. For our Defense Business Systems
(DBS), many of the regulatory requirements and documentation
requirements in the DODI 5000.02 have been eliminated in the 5000.75
because they are not applicable to DBSs. In addition, I have directed a
review of all documentation required for all the different ACAT level
programs to identify and eliminate documents which do not add value.
Secretary Wilson. To achieve the goal of reducing administrative
documentation and reporting, the Air Force continues to review and
revise acquisition guidance to eliminate duplication. Policy has been
updated to allow for additional decision authority delegation and to
encourage a culture of ``information vs. documentation'' based decision
making. Additionally, we are finalizing Air Force guidance amplifying
current DOD policy for Defense Business Systems that streamlines
oversight by aligning the acquisition, functional, and information
technology compliance communities. We have implemented a Rapid
Procurement of Air Force Capabilities Charter to streamline reviews and
documentation for critical programs.
8. Senators McCain and Reed. In your opinion, what additional steps
are needed?
Secretary Lord. We are finding more opportunities to tailor our
policies and reduce administrative burden as we implement the
acquisition reform provisions in the fiscal year 2016, 2017, and 2018
NDAAs. I believe than an ongoing conversation with Congress is
necessary to discuss what is working and what is not. I would like to
hold a hearing highlighting excellent examples of programs where
creative solutions were applied in a compliant manner. If we held
hearings showing the art of the possible and the value of critical
thinking, then we have the opportunity to motivate the Acquisition
Workforce.
I am also meeting regularly with the Advisory Panel on Streamlining
and Codifying Acquisition Regulations (the section 809 panel) to
discuss the recommendations they are making to Congress to streamline
the acquisition process and to identify ways to update and modernize
how the Department acquires systems while also reducing cumbersome
procedures and statutory reporting requirements that no longer add
significant value. Their final report's Volume 1 includes some 74
specific recommendations in the areas of Commercial Buying, Contract
Compliance and Audit, Defense Business Systems, Earned Value
Management, Services Contracting, Small Business, Statutory Offices and
Designated Officials, and Statutory Reporting Requirements. I look
forward to continued discussions with the Panel on these and the next
two volumes of recommendations.
Secretary Esper. The Army must successfully implement its ambitious
slate of reforms to streamline acquisition processes and increase
efficiency, cost effectiveness, and leader accountability while
reducing administrative burdens. These reforms are underway and are
expected to be implemented by the end of fiscal year 2018. We continue
to seek flexibility in funding under Continuing Resolution and
reprogramming authority once a funding bill has been enacted. The Army
also believes greater flexibility in a Continuing Resolution that would
allow the Services to execute programs at the lowest committee mark
even under a Continuing Resolution would be beneficial.
In addition to these reforms, the congressionally chartered section
809 panel is reviewing defense acquisition regulations to streamline
and improve the defense acquisition process. The panel will recommend
statutory reforms to simplify the acquisition system. The delegation of
authority to the Service Acquisition Executive, coupled with internal
Army reform efforts and relief from unnecessarily burdensome
acquisition regulations identified by the section 809 panel will
provide the additional steps needed to implement an agile and
accountable defense acquisition system. Steps in Continuing Resolution
reform would allow the Services to move forward on programs at the
lowest committee mark instead of waiting for the final bill.
Secretary Geurts. While OSD has delegated authorities for most
Navy/USMC programs back to the DON, there are several statutes and OSD
policies which require DON to gain OSD approval in spite of these
delegated authorities, thus greatly reducing the positive impacts of
the delegation of these programs back to the Services. The DON will
continue to work with the appropriate offices within OSD to identify
additional opportunities to delegate authority currently retained by
OSD to the Military Departments (MILDEPs).
Secretary Wilson. The steps taken to date represent a significant
culture change from risk aversion to risk management at all levels of
governance. This culture change will enable speed but needs time to
become standard practice.
9. Senators McCain and Reed. Given the other ongoing changes in the
acquisition structure, such as shift of acquisition authority to the
services, what challenges to you see in providing oversight of an
acquisition program without placing an unnecessary burden on the
acquisition workforce managing the program?
Secretary Lord. My statutory responsibilities as Under Secretary of
Defense for Acquisition and Sustainment will include (among others) the
responsibility to serve as the chief acquisition and sustainment
officer of the Department and to be principal advisor to the Secretary
on acquisition and sustainment. Consequently, I will have an enduring
need for information about the status of our ongoing investments so I
can assess progress, identify issues, and assist the program if needed.
Access to program information will be a continuing requirement which I
believe we can satisfy without burdening the services. I am using a
monthly scorecard to follow MDAP cost, schedule and performance and
will manage by exception. In order to increase the capability of the
entire Acquisition Workforce, I am undertaking a reorganization of DAU
and a total revamping of the curriculum. Only by attracting, developing
and training a skilled workforce, will we truly make an enduring
difference in program execution.
Secretary Esper. The major challenge is to provide oversight for
the breadth and depth of programs already managed by the Army
Acquisition Executive in addition to the Major Defense Acquisition
Programs delegated from the Office of the Secretary of Defense. To
mitigate these challenges the Army must improve acquisition oversight
through centralized planning, decentralized execution, and improved
performance metrics. To achieve this the Army is driving down Milestone
Development Decisions (MDD) and Milestone Decision Authority (MDA) to
Program Executive Officers (PEOs) for Acquisition Category (ACAT) II
and III programs. PEO's with Milestone Decision Authority will be
authorized to further delegate select ACAT IV programs down to O6/GS-15
Project Managers. We will align the duty assignments of PEOs and PM
with the milestones established for their programs to ensure a clean
handover of the program at critical points, and so that clear measures
of effectiveness--cost, schedule, and performance--can be assessed. The
Army has also initiated ACAT IV programs within our acquisition system.
We have defined an ACAT IV program that includes efforts with mature
technologies, limited complexities and lower risk that also have
funding below $100 million for Research Development, Test and
Evaluation and/or $400 million Procurement.
The delegation of this execution authority will improve
accountability by empowering the PEOs and PMs. It will allow the Army
Acquisition Executive to focus on higher risk ACAT I programs while
maintaining the mechanisms required to oversee the remaining programs.
For instances, the MDAs will conduct an annual program review of all
non-ACAT I programs and provide a concise report of the results of the
reviews no later than the end of the fiscal year. Additionally, PEOs
will ensure that the Army Acquisition Program Master List (AAPML) is
updated quarterly, and will report all performance metrics required by
Army Directive 2017-35, (Acquisition Reform Initiative #8) no later
than the end of each fiscal quarter.
Secretary Geurts. With the ongoing changes in the acquisition
structure, it is critical that the MILDEPs have sufficient numbers of
trained acquisition professionals to provide the requisite oversight in
light of the Services' increased authority and responsibility.
Continued support for the Defense Acquisition Workforce Development
Fund (DAWDF) will be a key enabler for the Services to maintain
effective oversight.
Secretary Wilson. We have made strides in reducing bureaucracy. We
continue to monitor activities to balance providing sufficient and
timely information to senior leaders on our delegated programs against
the burden of generating the information. The key is to find the right
balance of speed and risk acceptance versus risk aversion.
10. Senators McCain and Reed. What additional steps, including
legislation, do you feel are needed from Congress?
Secretary Lord. The Fiscal Year 2018 NDAA HASC report directed the
Department to conduct a review of acquisition statutes to identify
process requirements in acquisition statutes that hinder agile
acquisitions; to identify obsolete statute; and to recommend related
statutory changes that should be considered to simplify or improve the
agility of the defense acquisition system. As of today, there are 34
candidates for acquisition related legislative changes that are in
review within the Department. These potential legislative changes span
topics of delegation of various waiver and approval authorities,
monetary thresholds, written determinations and approvals, information
technology acquisition, and numerous other topics to include potential
expansion of exceptions related to the Competition in Contracting Act.
Additionally, the Department currently has several authorities
related to supply chain risk management considerations, based upon
foreign ownership control and influence, in order to ensure secure
procurements. Section 806 of the Fiscal Year 2011 NDAA provides the
Department with authority to exclude a source on the basis that it
presents significant supply chain risk to a National Security System,
and the Department is requesting that this authority be extended by
five years, from 30 September 2018 to 30 September 2023. In accordance
with section 807 of the Fiscal Year 2018 NDAA, the Department is
ensuring utilization of this authority and implementing processes for
enhancing scrutiny of acquisition decisions in order to improve the
integration of supply chain risk management into the overall
acquisition decision cycle. Also, as part of this effort, the
Department is collaborating with related activities underway in the
Office of Management and Budget, Office of the Director of National
Intelligence, the Department of Homeland Security, and the General
Services Administration to inform processes and determine additional
authorities that may be needed, such as provision of more streamlined
authorities for National Security Systems and expansion of authorities
to cover other than national security systems.
Review and collaboration with your staffs will be key to ensuring
we jointly champion implementation of changes with the goal of securely
acquiring and fielding products that provide significant increases in
mission capability and operational support in the most cost effective
and schedule efficient manner as possible. I look forward to reviewing
these with staffers as soon as possible.
Secretary Esper. Many of the reforms required to streamline
acquisition management processes are now internal to the Army, and we
appreciate Congressional action in the Fiscal Year 2018 National
Defense Authorization Act (NDAA) to further streamline acquisition
process. The Army could benefit further from; (1) a capabilities based
versus program specific Program Element (PE) lines. Under this concept,
the Army would be able to realign funding within a portfolio (with
notification to Congress) should the need arise to accelerate or slow
and effort without the need for an Above Threshold Reprogramming; (2)
an additional increase in the ceiling of the Simplified Acquisition
Threshold from $250,000 to $500,000 to provide greater agility and
streamlining for these small purchases and allow us to keep pace with
the threat and enabling a less bureaucratic and lengthy process in
getting to expedited contract awards; (3) protection of Technology
Maturation Program Element in Research and Development (R&D) so that
programs would have a balanced approach between requirements pull and
innovative technology driven; (4) continuing resolution (CR) reform.
Secretary Geurts. By statute, several major defense acquisition
program (MDAP) documents and other requirements still require approval
or action within the OSD, even for MDAPs for which the Service
Acquisition Executive (SAE) is the Milestone Decision Authority (MDA).
Congress can further reduce the administrative documentation and
reporting burden on acquisition programs by assigning authority for
these requirements to the MILDEPs when the SAE is the MDA. Examples
include:
Program cost, fielding, and performance goals under 10
U.S.C. Sec. 2448a (must be established by the Secretary of Defense,
delegable only to the Deputy Secretary of Defense);
Independent cost estimates (ICEs) under 10 U.S.C. Sec.
2334 (must be either conducted or approved by DCAPE);
Analysis of Alternative study guidance under 10 U.S.C.
Sec. 2366a (must be developed by DCAPE).
In addition, amending 10 U.S.C. Sec. 2306b(i)(3) to allow the
Secretaries of the MILDEPs (delegable to the SAEs) to make the required
certifications and determinations for multiyear contracts would reduce
administrative burden for programs that are authorized by law to
utilize such multiyear contracts.
Secretary Wilson. The Air Force appreciates the authorities
provided by Congress and requests continued efforts to ensure
authorities and decisions that still reside outside the Air Force are
delegated to the Service or appropriate level to align with
Congressional intent.
Current law (section 807 of the Fiscal Year 2017 NDAA) requires the
Services to establish program cost and fielding targets and those cost
and fielding targets must be approved by the Secretary of Defense or
the Deputy Secretary of Defense, even for programs delegated to the
Services. We believe that making the approval authority for these
targets at the Milestone Decision Authority level would be more
consistent with the direction Congress has been taking with delegation
of other acquisition authorities. We would recommend that the law be
changed to allow the Milestone Decision Authority be the approver of
those targets.
non-traditional companies
Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, the Department of Defense has a history of investing in
innovative technologies, allowing the United States to maintain
superiority on the battlefield and beyond. Now that commercial science
and tech firms--"non-traditional companies"--are on the leading edge of
innovation, DOD relies on them for new products and ideas. However,
many non-traditional companies find the cost of doing business with DOD
to be expensive, slow, and cumbersome. As a result, they are often
reluctant to modify their products for DOD's use or give up trying to
navigate DOD's complex acquisition process.
11. Senators McCain and Reed. What do you consider to be the
biggest obstacle to attracting non-traditional companies to modify
their products for DOD use?
Secretary Lord. The biggest obstacle is overcoming the perception
that DOD does not have the flexibility or the ability to contract with
non-traditional companies using scalable, commercial-like acquisition
practices. DOD can contract, or enter in other forms of agreements with
these companies using commercial procedures consistent with Other
Transaction Authorities (OTAs), and the commercial item acquisition
methods in the Federal Acquisition Regulations (FAR) Part 12. Although
their use has not been widespread in the Department, the military
services and defense agencies began using OTAs in the 1990s. The
challenge is to expand awareness of the available flexibilities and
developments in statute, policy and regulations to the broader
acquisition community to enable procurement of the innovative products
and services that meet the rapidly evolving warfighter needs. The
Department is taking steps to expand their usage by establishing
centers of excellence including the Defense Innovation Unit
Experimental (DIUx) as supported by Army Contracting Command--New
Jersey, and Defense Advanced Research Projects Agency (DARPA), host OTA
training events, and broaden acquisition and contracting workforce
awareness of these techniques and best practices. We will ramp up our
efforts to work with Industry Associations (AIA, NDIA, PSC, etc.) as
well as government agencies like the SBA to reach out to small
businesses. Additionally, we are leveraging our Defense Innovation
Board members to connect with Silicon Valley software and artificial
intelligence companies to establish working relationships that will
allow us to connect with an entirely different base.
Secretary Esper. The federal acquisition process is encumbered with
stifling regulations and processes that make it difficult for non-
traditional companies to participate, and make the acquisition process
untimely and sometimes even costly. In particular, we would support
change to make the current process more inviting and easy to navigate,
and decreasing barriers such as rigid requirements standards.
Secretary Geurts. Non-traditional suppliers to the DOD often cite
factors such as (1) heavy legal requirements/regulations, (2) onerous
cost accounting standards, (3) unpredictable contracting timelines, (4)
slow contracting timelines, and (5) fear of loss of intellectual
property as disincentives to working with the DOD. I would agree that
these factors, as well as the lack of training of government
acquisition professionals on how to incentivize and contract with non-
traditional suppliers and lack of open interfaces and architectures are
obstacles.
Secretary Wilson. The feedback we have received from industry
points to misperceptions and concerns about certified cost and
accounting requirements the Department levies to meet the Truth in
Negotiations Act and intellectual property requirements under the
Federal Acquisition Regulation. These drive up the cost of doing
business and increases the risks for these companies. Industry also
does not want to risk giving away their Intellectual Property or to
spend the money to get an ``approved and certified'' system when what
they have works for every other facet of their business. From a small
business perspective, entering into a contract with the DOD is a big
challenge. Allowing the acquisition process to attract innovative and
non-traditional businesses is key.
12. Senators McCain and Reed. What steps are the services and OSD
taking to address concerns raised by non-traditional companies,
specifically as they relate to (1) simplifying the acquisition process,
(2) protecting intellectual property rights, (3) decreasing contracting
timelines, (4) reducing contract terms and conditions, and (5) training
the contracting workforce? How are you measuring your progress?
Secretary Lord. Using OTAs, DOD has dramatically simplified the
research and development acquisition process using best business
practices, negotiated flexible intellectual property rights, decreased
contracting timelines, and dramatically reduced contract terms and
conditions. We are making progress using commercial-like practices and
utilizing commercial solutions (products and services) to meet the
Department's mission needs. Building on the success of the Commercial
Solutions Opening (CSO) process conceived in the office of the Under
Secretary of Defense for Acquisition, Technology, and Logistics and
piloted by DIUx to award OTAs, the Department is working to implement
section 879 of the National Defense Authorization Act for fiscal year
2017, Public Law 114-328 (fiscal year 2017 NDAA) pilot authority to
acquire innovative commercial items, technologies, and services using
the CSO process to award FAR based contracts or OTAs. The CSO process
is a merit-based source selection strategy, similar to broad agency
announcements (BAAs), enabling the DOD to acquire promising innovative
commercial technologies in response to problem statements, rather than
conducting a traditional competition for specific solutions. With the
express authority in the National Defense Authorization Act for fiscal
year 2018, Public Law 115-91 (Fiscal Year 2018 NDAA), DOD expects that
OTA usage will be expanded into DOD's Small Business Innovative
Research (SBIR) programs along with other non-traditional companies.
DOD recently hired an OTA expert as the Learning Director at Defense
Acquisition University to develop training programs and host innovative
acquisition workshops for all of the Department. DOD began tracking the
use of OTAs in Federal Procurement Data Systems (FPDS) information in
fiscal year 2013. The Department has experienced a steady growth in
actions and obligations associated with non-traditional companies. With
the statutory changes provided by Congress, this trends is expected to
grow significantly. We have pilot projects to measure how quickly we
can get on contract and look forward to measuring progress using a
series of metrics.
Secretary Esper. The Fiscal Year 2018 NDAA continues a trend from
the previous two NDAAs by encouraging the procurement of commercial
items. By using commercial procedures to purchase supplies and
services, we can attract more non-traditional defense contractors, and
allow the rapid acquisition and delivery of capabilities to our
Warfighters. An emphasis on commercial contracting will simplify
acquisitions, protect intellectual property rights, decrease
contracting timelines, and reduce contract terms and conditions. DOD
training requirements for contracting professionals are well
established. The Defense Acquisition Workforce Improvement Act (DAWIA)
requires personnel to become certified through contracting specific
training.
In support of the NDAA reforms, the Army has taken steps to
implement eight key Acquisition Reform Initiatives. The Army is in the
process of streamlining the contracting process to reduce the time it
takes to develop and award a contract and establishing metrics to
improve efficiency and effectiveness.
Secretary Geurts. The DON is exploring the increased use of Other
Transactional Authorities (OTAs) to combat these concerns and offer a
great deal of flexibility in working with non-traditional and
traditional suppliers. We are taking steps to increase our knowledge
and develop an expertise in contracting using OTAs. In addition,
through the Office of Naval Research, DON has effectively used Broad
Agency Announcements for research topics to encourage small and large
companies to share and develop their ideas and new or improved
technologies. For small businesses, the DON uses the Small Business
Innovation Research (SBIR) and Small Business Technology Transfer
(STTR) program to encourage small businesses to share and develop their
new or improved technologies. To encourage small business participation
in our programs, the DON has assigned each Deputy Program Manager the
responsibility to be the small business advocate for all things
associated with the program. The DON regularly promotes increased
participation by nontraditional small and large companies through DON
outreach efforts conducted jointly with our Office of Small Business
Programs to hear different perspectives and ideas. Finally, we are
exploring new collaboration models such as SOFWERX, to enable earlier
and more robust sharing of our capability gaps to enable earlier
identification of potential existing commercial solutions from non-
traditional suppliers to solve DON capability gaps.
Secretary Wilson. The Air Force is making greater use of Other
Transaction Authorities that allow more flexibility in negotiating
intellectual property with companies. Additionally, our Small Business
Innovative Research (SBIR)/ Small Business Technology Transfer (STTR)
Program allows for a more streamlined process for small businesses to
enter into a SBIR/STTR contract. The SBIR/STTR program has started
working with innovative programs such as Technology Accelerators to
align solicitation guidelines to best meet the rapid pace of an
Accelerator and speed up contracting actions. Another benefit of SBIR/
STTR is that all companies awarded a contract from a SBIR/STTR topic
retain intellectual property rights. The Defense Acquisition University
offers Other Transaction Authority training courses to acquisition and
contracting personnel. The Air Force is reviewing its initial skills
training course to incorporate Other Transaction Authorities.
13. Senators McCain and Reed. Congress has taken action to address
some of the concerns raised by non-traditional companies in the fiscal
years 2016 and 2017 National Defense Authorization Acts, for example by
allowing greater use of Other Transaction Authority and eliminating or
reducing the burden of some contract terms and conditions . What
additional authorities, if any, do you need from the Congress to
address concerns raised by non-traditional companies?
Secretary Lord. At this time we do not anticipate needing any
additional authorities to address concerns raised by non-traditional
companies. The Department appreciates the flexibilities provided by
Congress in the fiscal year 2016 and 2017 NDAAs, as well as the
recently passed Fiscal Year 2018 NDAA. The Department continues its
efforts to increase awareness and encourage use of OT authorities by
the acquisition workforce through additional training and OTA
delegations. We are implementing these provisions via Defense Federal
Acquisition Regulation Supplement Cases, Defense Procurement and
Acquisition Policy Memoranda, or updates to the OT Guide, with the
intent of increasing awareness and access to non-traditional
contractors. However; we would like to reserve the ability to revisit
this topic with your staffs and discuss additional authorities needed
as we identify areas of opportunity. As stated in responses to other
questions, our ability to establish streamlined, effective training
methodologies using a new approach at DAU is critical to enabling a
sustained capability within our Acquisition Workforce to facilitate a
simple, fast and flexible acquisition system.
Secretary Esper. DOD is implementing legislative reforms in fiscal
years 2016, 2017 and 2018 NDAA. As we work towards instituting these
reforms, we will identify the need for future legislative reforms and
work with Congress to develop legislative solutions. One example is
improving commercial buying policies to be more consistent with
commercial practices in order to attract the best and the brightest
non-traditional companies to the government market place. Achieving the
definition of commercial items and challenging operational testing with
commercial items also could add many of the implementation steps are in
the early stages, therefore, it is too early to determine whether
additional Congressional authorities are warranted.
Secretary Geurts. The DON greatly appreciates the additional
acquisition flexibility provided with the expansion of our ability to
use OTAs to reach firms, products and ideas that we have not been able
to reach with the more traditional acquisition authorities for research
projects, prototypes and limited production. No additional authorities
are requested at this time. Continued support for the Defense
Acquisition Workforce Development Fund will be critical so that we can
properly train our acquisition workforce on best practices to leverage
these new authorities to reach a broader set of solution providers.
Secretary Wilson. The Air Force appreciates the Congressional
support of expanding the use of Other Transaction Authorities and
minimizing the burden on small business entry into the Department of
Defense. The Air Force would like to see authorization for Direct to
Phase II Small Business Innovative Research / Small Business Technology
Transfer contracts. It was not re-authorized in the Fiscal Year 2018
NDAA and lapsed as of 1 October 2017. The reauthorization of Direct to
Phase II would give non-traditional companies a streamlined option to
do business with the DOD.
major weapons systems
14. Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, when DOD awards major weapon system development contracts that
establish cost, schedule and performance goals that are informed by
mature technologies and early systems engineering analysis--an approach
that reflects best practices used by many leading commercial
companies--those goals are more realistic and program success is much
more likely. While DOD has made progress in this area over the past
decade, many programs continue to experience cost, schedule, and
performance problems.
In your opinion, what are the root-causes of major weapon system
program problems, and what additional changes, if any, do you think DOD
needs to make to address them?
Secretary Lord. The Department conducts a detailed root cause
analysis (RCA) on all programs that breach critical Nunn-McCurdy (N-M)
thresholds. While these kinds of breaches are uncommon, the forensic
analysis embodied in the root cause analyses illustrate how poor
planning and/or execution leads to these poor outcomes. An analysis of
all the critical N-M breaches from 2010 to 2018 revealed a number of
cross-program trends. Among those are the development of unrealistic
baseline estimates for cost and schedule and poor performance by
government and contractor personnel responsible for program management.
The most recent N-M breach on the Advanced Arresting Gear (AAG) program
is an example of both these causes. The RCA concluded that the program
failed to understand the technical maturity of the program at its
inception and to plan properly. Additionally, program management and
leadership failed to recognize these latent problems early and execute
fixes early on. These causes are further demonstrated by the Next
Generation Operational Control System (OCX) program where an
unrealistic externally dictated schedule was established without
reference to program content. Unrealistic schedules and cost estimates
have been seen on a number of other N-M RCAs such as the F-35, the
Assembled Chemical Weapons Alternatives (ACWA) program, and the Global
Hawk. For this reason, the Department has been driving the requirement
to understand and track throughout development the basic framing
assumptions that programs baseline cost and schedule estimates are
based on. Understanding cost, schedule and performance risk is greatly
facilitated by prototyping and experimentation prior to program
kickoff. We are striving to introduce more prototyping and
experimentation through the new R&E construct. Additionally, I believe
that flexibility with requirements is key as programs progress in order
to facilitate streamlined, cost effective and schedule efficient
execution. As discovery occurs over the course of a program and
shortfalls are identified, non-materiel effective and suitable
compensatory measures may be identified, such as updates to tactics,
techniques and procedures. Speed of decision is critical during program
execution, as every additional day represents more tax payer dollars
spent and delayed fielding of critical capabilities to our nation's
forces. As such, authority to approve such requirements changes needs
to be delegated to the lowest possible level.
In terms of personnel performance, I am taking major steps to
improve program management and the acquisition workforce. These steps
include making sure we have the right people in the right positions, as
well as ensuring they have the right education and training for the
duties they will be expected to perform. Additionally, the Defense
Acquisition University curriculum is being reconsidered in regard to
content and delivery.
Secretary Esper. A root cause for major weapon system program
problems within the Army starts with requirements that take too long to
establish, are often too ambitious, and frequently change throughout
the process.
Secretary Geurts. Poorly defined requirements, a lack of proper
change control, and non-flexible architectures and processes are the
root-causes of major weapon system program problems. Our focus is on
stable, well-defined and understood requirements prior to weapons
systems production while also building flexibility into our systems and
processes that allow for accelerated system delivery and adaptability
in the integration of new requirements within appropriate cost.
Secretary Wilson. The Air Force believes there are a few root
causes of problems--technical challenges, requirement stability, and
stable budgets. Technical challenges during system development often
cause delays and cost growth. We can alleviate these by pursuing more
prototyping and experimentation to identify the achievable capabilities
and technical requirements in the timeframe the warfighter needs them.
In addition, ensuring requirement stability curbs program cost growth
and schedule delays. For example, the Air Force has experienced
challenges with software development-intensive programs. We have
started Pathfinder efforts to relook at how we initiate these programs.
The Air Force also experiences challenges ensuring stable and timely
program budgets. We identify the budgets programs need to execute the
acquisition strategy. However, the instability of funding amounts and
timeliness are challenges all programs face. We need stable, timely
budgets to execute the plans and programs to deliver the warfighter
capability.
15. Senators McCain and Reed. Given the shift in acquisition
authority from OSD to the military services, do you anticipate any
challenges with ensuring programs begin with well informed and
realistic goals?
Secretary Lord. I do not. The shift in authority to the Services is
balanced by the requirements of section 807 of the Fiscal Year 2017
NDAA which requires the Secretary to establish cost, schedule and
performance goals prior to beginning Major Defense Acquisition Programs
to ensure the Service programs are affordable and will deliver when
needed. We are currently working through section 807 requirements on
the Army Lower Tier Air and Missile Defense Sensor (LTAMDS) program.
Secretary Esper. I believe that the shift in acquisition authority
coupled with the establishment of Cross Functional Teams and a
reinvigorated Army Requirements Oversight Council posture us to
establish well-informed and realistic goals. With renewed emphasis on
aligning resources, requirements, and acquisition, and emphasis on
Senior Leader engagement, the real business of developing and fielding
capabilities quickly and efficiently can be addressed in real time with
all of the key participants.
Secretary Geurts. The delegated authority allows DON to manage the
performance of programs designated as Acquisition Category 1C and IB.
There are, however, numerous additional milestones and phase documents
still requiring OSD approval. Examples include:
Program cost, fielding, and performance goals under 10
U.S.C. Sec. 2448a (must be established by the Secretary of Defense,
delegable only to the Deputy Secretary of Defense);
Independent cost estimates (ICEs) under 10 U.S.C. Sec.
2334 (must be either conducted or approved by DCAPE);
Analysis of Alternative study guidance under 10 U.S.C.
Sec. 2366a (must be developed by DCAPE).
The DON will continue to ensure appropriate analysis and rigor is
taken when developing program capability, cost, and schedules, and will
continue to work with the experts across the DOD and industry for
review, validation and best practices.
Secretary Wilson. The Air Force has put an emphasis on ensuring
realistic technical requirements and cost goals that will result in the
timely delivery of affordable capability within the appropriate level
of risk. We will continue that emphasis for all of the Air Force
acquisition programs. Additionally, Congress put in place requirements
for both the Service Secretary and Chief of Staff to concur with the
cost, schedule, technical feasibility, and performance trade-offs for
our Major Defense Acquisition Programs. These reviews ensure leadership
receives adequate information before program initiation.
16. Senators McCain and Reed. Given your prior experiences, what do
you believe are the keys to a successful product development program,
and to what extent do you believe those keys are resident within the
DOD acquisition environment? Please explain.
Secretary Lord. Based on my industry experience, we need to
establish a proper program baseline and identify realistic cost,
schedule, and performance metrics. Then we put people with the
appropriate skill sets, training and leadership capability in key roles
and hold them accountable. As I did in industry, we look at the numbers
every month to see where we are and establish action plans where we are
not meeting targets. I believe the keys to success depend on
attracting, developing and retaining motivated people in the
acquisition workforce. I will also be retooling the Defense Acquisition
University so that the workforce has the proper training and resources
to be successful.
Secretary Esper. I believe keys to a successful product development
program are stable, realistic requirements, predictable and stable
funding and sufficiently mature technologies prior to integration,
test, production and fielding. We absolutely have the capabilities to
successfully execute product development within the Department of
Defense.
Secretary Geurts. Successful programs have well defined
requirements, built in open standards and flexible architectures. They
have the right government and industry team for the particular program,
who are both empowered and held accountable, with access to rapid
decision making processes.
I believe there are many examples of these programs in the DON
including the Virginia-class Submarine Program and the P-8 Program. My
focus will be to continue to ensure we focus on these factors for
success as we execute our existing portfolio or programs and design
MDAPs in the future. I believe putting program responsibility back into
the hands of the Services to execute will greatly enhance the ability
of more programs to be successful in the future as it enables the key
tenets of accountability, rapid decision making, and empowered teams.
Secretary Wilson. The keys to successful product development:
understand the feasibility of capabilities given the required timeframe
and available resources; continue to emphasize technical maturation and
risk reduction activities; and aggressive use of tools such as
prototyping and experimentation before pursuing the full development of
a system.
lptas
17. Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, section 832 of the Fiscal Year 2018 NDAA prohibits the use of
the low-cost, technically acceptable (LPTA) source selection approach
for DOD's engineering and manufacturing development contracts for
MDAP's.
In your opinion, is there any situation that you would feel
warrants a LPTA source selection approach for DOD's engineering and
manufacturing development contracts?
Secretary Lord. No. The Lowest Priced Technically Acceptable (LPTA)
source selection process is the appropriate source selection process to
use when the products and services are well-defined, commercial, or
non-complex; there is minimal risk of unsuccessful contract
performance; price has a dominant role in source selection; and there
is no value, need or interest to pay for higher performance. These are
not characteristics of engineering and manufacturing development (EMD)
contracts for Major Defense Acquisition Programs (MDAP); therefore, I
do not believe there are any situations that would warrant an LPTA
source selection approach for DOD's EMD contracts.
Secretary Esper. Current Army and DOD Source Selection procedure
guidance specify that LPTA should only be used when there are well-
defined requirements, the risk of unsuccessful contract performance is
minimal, price is a significant factor in the source selection, and
there is neither value nor willingness to pay more for higher
performance. Since requirements for engineering and manufacturing
development phase contracts are typically not as well defined as
requirements for subsequent program phases, use of an LPTA contract
would generally be inappropriate.
Secretary Geurts. The Lowest Price Technically Acceptable (LPTA)
method is a tool in the Best Value Continuum, and when used in
appropriate circumstances and combined with effective competition and
proper contract type, can provide a best value solution. The first
prerequisite to use of LPTA is a firm understanding of what constitutes
``technically acceptable.''
Secretary Wilson. Every acquisition program is different and must
be evaluated on the specific program details. In general, the LPTA
source selection approach is not appropriate for Engineering and
Manufacturing Development contracts for Major Defense Acquisition
Programs.
18. Senators McCain and Reed. In the past, programs have stated
that they are not using an LPTA source selection approach but the
intent of the approach was to select the lowest cost, technically
acceptable bidder, what steps will you take ensure that the approach
taken by programs follows the intent of section 832?
Secretary Lord. The Milestone Decision Authority for each MDAP
approves an Acquisition Strategy that describes the source selection
strategy for the EMD contract. The Department also conducts multi-
functional senior-level peer reviews of solicitations for contracts
over $1 billion. Contracts less than $1 billion are reviewed by senior
acquisition leaders at each component. We will continue to leverage
these tools to ensure that MDAP source selections are consistent with
section 832.
Secretary Esper. There are appropriate levels of review and
approvals to monitor use of LPTA. The Army seeks best value in all
procurements that ensure we secure the best price, the items meet
technical standards and safeguard taxpayer dollars.
Secretary Geurts. The intent of section 832 is regularly shared in
senior acquisition forums such as the Naval Contracting Council. The
statutory prohibition will be implemented by the DOD in the Defense
Federal Acquisition Regulation Supplement.
Secretary Wilson. The Air Force will use the procedures established
in the Defense Federal Acquisition Regulation Supplement as section 832
is implemented.
19. Senators McCain and Reed. In your opinion, what do you see as
the challenges in enforcing this provision?
Secretary Lord. In 2010, the GAO reported challenges the Department
faced when using best value tradeoff procedures and recommended
developing training elements such as case studies. The Department
concurred and implemented the recommendation in August 2012. The DOD
Source Selection Procedures were issued in March 2011 and expanded in
April 2016 to provide additional guidance in making sound award
decisions. No further recommendations were made by GAO in its 2014
follow-up study or its 2017 report; however, we will also ensure that a
module addressing section 832 is included in applicable Defense
Acquisition University courses. I am confident that the processes
described above are adequate to ensure compliance with section 832.
Secretary Esper. Army and DOD guidance aligns with the provision in
section 832 of the Fiscal Year 2018 NDAA regarding the use of LPTA. We
will continue to scrutinize all program decisions including the
contracting approach to identify and mitigate any emerging challenges
with enforcing this provision.
Secretary Geurts. As LPTA contracts were previously often contract
``vehicles of choice'' by many buying organizations, ensuring they have
the proper training and mindset will be required. In addition, training
the requiring organizations to be able to clearly articulate what is of
value will be critical to ensuring we are selecting the right offeror
for the requirement.
Secretary Wilson. Once the requirements of this provision are
implemented for the Department of Defense we do not anticipate
significant challenges enforcing this guidance.
osd(at&l) reorganization
20. Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, the Fiscal Year 2016 National Defense Authorization Act
significantly enhanced the role of the service chiefs in acquisitions,
giving the chiefs input into decisions regarding balancing resources
and priorities (such as tradeoffs between the cost, schedule, and
performance of major weapon systems), and the management of career
paths in acquisition for military personnel. \1\
---------------------------------------------------------------------------
\1\ Section 802 of the Fiscal Year 2016 NDAA, amending 10 USC
2547(a).
---------------------------------------------------------------------------
The Fiscal Year 2016 NDAA also requires the JROC to ``seek, and
strongly consider, the views of the Chiefs of Staff of the armed
forces'' and for the chiefs to advise the decision authority for
Milestones A and B on cost, schedule, technical feasibility, and
performance trade-offs.
Given their other responsibilities, is this asking too much of the
Service Chiefs?
Secretary Lord. From my perspective, the goal is not to make the
Service Chiefs and non-acquisition senior officers into experts in
acquisition, but rather to ensure they have the opportunity to provide
their warfighting perspective and recommendations before and during
program execution. Their input on priorities and trade-offs facilitates
more informed acquisition decisions and improved program outcomes. I
value their input and perspective.
Secretary Esper. No, I do not believe that this is asking too much
of the Service Chiefs. The Chief of Staff of the Army has embraced his
enhanced role in acquisitions while capably discharging his important
title 10 responsibilities. I'm confident that the Chief of Staff of the
Army is fully capable of executing his authorities.
Secretary Geurts. The Service Chiefs provide a valuable perspective
as we develop and procure systems for the warfighter. The DON has
refined our gate review process to ensure the alignment of the new role
of the Services Chiefs as part of the acquisition process, and have
also established a new Accelerated Acquisition Board of Directors
(AABoD), composed of the CNO, CMC and myself, to designate selected
warfighting needs and priorities to be accelerated and increase the
speed to capability. The involvement of the Service Chiefs is critical
to this effort to streamline the development and approval of top level
requirements designed to support a more flexible, agile and cost
effective path to solution development and fielding.
Secretary Wilson. The inclusion of the Service Chiefs is critical
to ensuring we are integrating and balancing requirements, technical
feasibility and affordability in acquisition.
21. Senators McCain and Reed. Do you believe that three should be
an increased focus on acquisition in senior officer training, to
instill a greater understanding of acquisition among senior officers?
Secretary Lord. From my perspective, the goal is not to make the
Service Chiefs and non-acquisition senior officers into experts in
acquisition, but rather to ensure they have the opportunity to provide
their warfighting perspective and recommendations before and during
program execution. Their input on priorities and trade-offs facilitates
more informed acquisition decisions and improved program outcomes. I
value their input and perspective.
Secretary Esper. Increased understanding of the acquisition process
helps ensure better acquisition outcomes across the force. We will
continue to build upon the progress made to date in training that
encompasses the basics of the acquisition process but also includes a
focus on writing clear, concise and executable requirements. Current
senior officer training leads to a better understanding of the value
that acquisition expertise brings to bear on the process and a greater
synchronization of our total Army efforts to equip the force.
Secretary Geurts. In order to grow the acquisition skills in our
requirements offices, we must provide general acquisition training at
every level of Officer training to ensure we are developing well
rounded Officers that are positioned to have a solid understanding of
the acquisition process as they progress through the ranks. My staff
has been working very closely with the Service Chiefs to ensure
increased communication and training.
Secretary Wilson. Yes, I believe that senior officers need to have
a better appreciation and understanding of how the Air Force acquires
systems. An understanding of acquisition assists in more informed
decisions by those officers serving in crucial areas such as
requirements, development, budgeting and financial management.
22. Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, the Fiscal Year 2016 NDAA shifted significant acquisition
authority to the services. For example, generally, the service
acquisition executive will be the milestone decision authority for
major defense acquisition program. \2\
---------------------------------------------------------------------------
\2\ Section 825. Under certain circumstances, the Secretary of
Defense may designate an alternate milestone decision authority,
including for joint programs. See 10 USC 2430.
---------------------------------------------------------------------------
Do the services have the necessary expertise and personnel to
execute these new responsibilities?
Secretary Lord. I believe the Services, for the most part, have the
necessary expertise and personnel. The Services have always acted as
the Milestone Decision Authority (MDA) for those programs where
USD(AT&L) was not designated as the MDA. Even in cases where USD(AT&L)
was the MDA, the Service Acquisition Executives reviewed the programs
prior to the OSD review. The same expertise and personnel will be
resident in the Services for delegated programs. In addition, even
where the USD(AT&L) was the MDA, the Services still executed the
programs so no additional preparation on their part should be required.
The measure of success should be whether needed capabilities are
delivered on time, in militarily meaningful quantities, at an
affordable cost. Progress towards these goals needs to be measured on a
monthly basis. I plan to significantly revamp the Defense Acquisition
University, add many short courses, focusing on utilizing the
authorities provided by Congress. Acquisition professionals will have
the opportunity to review case studies that show how these authorities
have been successfully implemented to simplify and speed up
acquisition.
Secretary Esper. In the Army, we have a skilled cadre of
Acquisition Workforce professionals who are trained, educated,
experienced and certified in the acquisition process within one or more
of the Department's 14 specific acquisition career fields. Depending on
the mission, I am confident that there are extremely qualified and
experienced acquisition professionals and teams ready to execute these
responsibilities. That said, I understand from recent conversations
with my Army Acquisition Executive that he has a plan for ensuring
greater technical competencies both within the general acquisition
workforce but in the leadership as well. This includes the requirements
development community. I will work closely with Dr. Jette and, as
necessary, officials within the office of the Assistant Secretary of
the Army (M&RA) to ensure the Army acquisition workforce has the skills
and capabilities to develop and acquire the best equipment, services
and technologies available today and in the future. This includes
properly balancing the necessary skills and resolving the constraints
on developing inherently governmental technical talent.
Secretary Geurts. Yes. The Navy's acquisition workforce has the
necessary expertise and personnel trained to execute these new
responsibilities. The Navy was the Milestone Decision Authority (MDA)
for 29 of our ACAT I programs, and now is the MDA for 37 of our 39 ACAT
I programs.
Secretary Wilson. Today, the Air Force has the expertise and
personnel necessary to execute the increased responsibilities for
acquisition authority. I will monitor the workload and skill sets
needed to exercise these increased authorities.
23. Senators McCain and Reed. What steps does your service need to
take to be fully prepared to execute these duties?
Secretary Lord. I believe the Services, for the most part, have the
necessary expertise and personnel. The Services have always acted as
the Milestone Decision Authority (MDA) for those programs where
USD(AT&L) was not designated as the MDA. Even in cases where USD(AT&L)
was the MDA, the Service Acquisition Executives reviewed the programs
prior to the OSD review. The same expertise and personnel will be
resident in the Services for delegated programs. In addition, even
where the USD(AT&L) was the MDA, the Services still executed the
programs so no additional preparation on their part should be required.
The measure of success should be whether needed capabilities are
delivered on time, in militarily meaningful quantities, at an
affordable cost. Progress towards these goals needs to be measured on a
monthly basis. I plan to significantly revamp the Defense Acquisition
University, add many short courses, focusing on utilizing the
authorities provided by Congress. Acquisition professionals will have
the opportunity to review case studies that show how these authorities
have been successfully implemented to simplify and speed up
acquisition.
Secretary Esper. My understanding is that the steps are already in
place. The Army Acquisition Workforce Human Capital Strategic Plan
focuses on five major goals: Workforce Planning; Professional
Development; Leader Development; Employee Engagement; and
Communications and Collaboration. Readiness is the Army's number one
priority, and this plan, which is executed by the Army Director,
Acquisition Career Management (DACM) Office, ensures our Army
acquisition professionals remain ready to provide the equipment and
services for our Soldiers to win across multiple spectrums, conditions
and geographies now and in the future.
Secretary Geurts. To properly execute our new responsibilities, it
will be necessary to maintain a robust acquisition workforce that can
provide to effective oversight without undue burden on programs. The
Navy will continue to utilize and leverage the Defense Acquisition
University and other acquisition training and continuous learning to
maintain and grow our acquisition professionals.
Secretary Wilson. We already have the processes in place needed by
the Air Force Service Acquisition Executive to make milestone decisions
for programs at the Air Force level.
24. Senators McCain and Reed. How will your service manage these
programs differently than OSD in order to deliver better outcomes?
Secretary Lord. I believe the Services, for the most part, have the
necessary expertise and personnel. The Services have always acted as
the Milestone Decision Authority (MDA) for those programs where
USD(AT&L) was not designated as the MDA. Even in cases where USD(AT&L)
was the MDA, the Service Acquisition Executives reviewed the programs
prior to the OSD review. The same expertise and personnel will be
resident in the Services for delegated programs. In addition, even
where the USD(AT&L) was the MDA, the Services still executed the
programs so no additional preparation on their part should be required.
The measure of success should be whether needed capabilities are
delivered on time, in militarily meaningful quantities, at an
affordable cost. Progress towards these goals needs to be measured on a
monthly basis. I plan to significantly revamp the Defense Acquisition
University, add many short courses, focusing on utilizing the
authorities provided by Congress. Acquisition professionals will have
the opportunity to review case studies that show how these authorities
have been successfully implemented to simplify and speed up
acquisition.
Secretary Esper. The delegation of milestone decision authority
will help the Army improve both accountability and efficiency in
acquisition. First, control of the decision making process allows the
Army to be accountable for its decisions. With the authority and
manpower, the Army can take meaningful steps to ensuring its program
managers' tenures are aligned with the critical milestones, and ensure
that those program managers and the Army will be answerable for their
decisions.
We intend to expand on this concept, and drive down the decision
authority to the program offices where able. Centralized planning and
decentralized execution will help drive agile initiatives as the
program offices will be able to operate without unnecessary
bureaucratic interference delaying programs, changing requirements, or
driving up cost. Through our ongoing Army Acquisition reform efforts
and developing organizational concepts, we intend to reduce the
requirement development process from nearly five years down to one. It
will also insure that our warfighters are in involved from the earliest
stages of acquisition and partnering in the decisions.
Secretary Geurts. The Navy takes the new responsibilities enacted
in the Fiscal Year 2016 NDAA very seriously. We have worked with USD-
ATL to delegate eight of our 10 ACAT 1D programs to the Navy for
management, and will continue to work with ATL to identify additional
opportunities for streamlining under the new authorities. The Navy
already utilizes the gate review process to manage and review programs
annually. I intend to provide a monthly snapshot of our acquisition
programs to the Secretary, CNO and CMC. I also intend to conduct
regular portfolio reviews with each of the Program Executive Offices
(PEO) to ensure programs are on track and risks are identified with
mitigation plans in place. While delegating milestone decision
authority to the Navy means that the PEO and program offices most
familiar with the issues are the organizations resolving them, I note
that programs that have been delegated to the Services for oversight
are still subject to certain program documentation being approved at
the OSD level. The Navy will reach out to the appropriate offices
within OSD for subject matter expertise as required.
Secretary Wilson. The Air Force will not specifically manage the
programs differently than OSD. With processes already in place to work
towards major program decisions, we anticipate more timely decisions
from the Service Acquisition Executive with the reduction of
bureaucracy. The Air Force will continue to keep a streamlined decision
process in place to prevent needless delay.
25. Senators McCain and Reed. How should we measure the success of
the services in executing acquisitions?
Secretary Lord. I believe the Services, for the most part, have the
necessary expertise and personnel. The Services have always acted as
the Milestone Decision Authority (MDA) for those programs where
USD(AT&L) was not designated as the MDA. Even in cases where USD(AT&L)
was the MDA, the Service Acquisition Executives reviewed the programs
prior to the OSD review. The same expertise and personnel will be
resident in the Services for delegated programs. In addition, even
where the USD(AT&L) was the MDA, the Services still executed the
programs so no additional preparation on their part should be required.
The measure of success should be whether needed capabilities are
delivered on time, in militarily meaningful quantities, at an
affordable cost. Progress towards these goals needs to be measured on a
monthly basis. I plan to significantly revamp the Defense Acquisition
University, add many short courses, focusing on utilizing the
authorities provided by Congress. Acquisition professionals will have
the opportunity to review case studies that show how these authorities
have been successfully implemented to simplify and speed up
acquisition.
Secretary Esper. A measure of success should be whether we fielded
the equipment necessary within specified resourcing allocations to
achieve a sustained overmatch against our adversaries in time to meet
the need. We should specifically measure acquisition programs against
their approved Acquisition Program Baselines (APB) and should also use
metrics to assess our success in achieving stability in resourcing and
requirements.
Secretary Geurts. The success of the Services in executing
acquisitions should be measured by their ability to affordably deliver
capable capacity to the warfighter in a timely manner, on cost and on
schedule.
Secretary Wilson. The Air Force should measure success through the
on-time, on-budget delivery of capabilities the warfighter needs. We
have in place today measures that track our performance in these areas
and we will continue to track our performance going forward.
26. Senators McCain and Reed. What should be the benchmark for
determining if this assignment of authority to the services was
successful? Or for determining that the services have not lived up to
expectations and acquisition authority should be assigned to OSD?
Secretary Lord. I believe the Services, for the most part, have the
necessary expertise and personnel. The Services have always acted as
the Milestone Decision Authority (MDA) for those programs where
USD(AT&L) was not designated as the MDA. Even in cases where USD(AT&L)
was the MDA, the Service Acquisition Executives reviewed the programs
prior to the OSD review. The same expertise and personnel will be
resident in the Services for delegated programs. In addition, even
where the USD(AT&L) was the MDA, the Services still executed the
programs so no additional preparation on their part should be required.
The measure of success should be whether needed capabilities are
delivered on time, in militarily meaningful quantities, at an
affordable cost. Progress towards these goals needs to be measured on a
monthly basis. I plan to significantly revamp the Defense Acquisition
University, add many short courses, focusing on utilizing the
authorities provided by Congress. Acquisition professionals will have
the opportunity to review case studies that show how these authorities
have been successfully implemented to simplify and speed up
acquisition.
Secretary Esper. The execution of acquisition programs against
their approved APBs should be the benchmark we use to measure the
success of delegation of Milestone Decision Authority to the services.
Secretary Geurts.The Services ability to affordably deliver the
required capability to the Fleet in a timely manner on cost and
schedule should be the benchmark. The Navy will still work closely with
the OSD AT&L staff during program execution and will transparently
inform the Hill on program progress for any program within the Navy's
portfolio.
Secretary Wilson. The Air Force should be reaching milestone
decisions more expeditiously than before. The benchmark for determining
if this assignment authority is successful will be the delivery of
warfighter capability on time and within budget.
general acquisition reform and improvements
27. Senators McCain and Reed. Senators McCain and Reed. Secretaries
Lord, Esper, Geurts, and Wilson, we are hearing about numerous efforts
to reform acquisition. Some of the services have publicly embarked on
acquisition reform initiatives. OSD is working on reform efforts. The
Administration has talked about such reform and issued an executive
order that affects acquisition regulations. The 809 Panel--which this
body established to put forward recommendations--will be issuing a
report in January. Such a fragmented approach risks competing efforts
and conflicting approaches, potentially leading to little meaningful
progress. Who is coordinating, overseeing, and ultimately managing
these disparate efforts to ensure unity of effort?
Secretary Lord. The Department recognizes that, as the attached
chart shows, there are multiple and in some cases overlapping efforts
ongoing, all with the goal to improve acquisition agility and
innovation; improve acquisition outcomes; and reduce regulations. I am
responsible for overseeing these efforts as the USD(AT&L); once the
reorganization is in effect the USD(A&S) and the USD(R&E) will share
that responsibility and will coordinate with each other and the
Services. With regard to ongoing efforts:
a. With regard to the section 809 panel, while that panel was
established as an independent panel I meet with them regularly. Their
final report's Volume 1 includes some 74 specific recommendations in
the areas of Commercial Buying, Contract Compliance and Audit, Defense
Business Systems, Earned Value Management, Services Contracting, Small
Business, Statutory Offices and Designated Officials, and Statutory
Reporting Requirements. I look forward to continued discussions with
the Panel on these and the next two volumes of their recommendations.
When they publish their final volume, I will provide my recommendations
to you.
b. DCMO is leading the Department-wide Regulatory Reform Task
Force, but my Defense Procurement and Acquisition Policy staff leads
the acquisition-specific DFARS subgroup.
c. OSD and the Services are participating in the Acquisition
Statute Review as called for in the fiscal year 2018 HASC committee
report. That review is well underway. I will identify opportunities to
modify statute that will help us streamline the acquisition process
while still achieving the statutory intent. Among the 35 proposals
under review include statutory revisions intended to delegate approval
and waiver authority to a lower level than currently provided;
elimination of certain written determinations and approvals; and other
changes to streamline IT acquisition and generally allow for approval
authorities closer to the level of execution. I will approve the
recommendations included in the report which we will transmit to the
HASC and SASC.
d. I anticipate USD(R&E) will coordinate with me on their Review
of Barriers to Innovation in R&E Activities.
e. I will soon issue two key policies, the first a revision to
DODI 5000.02 which provides overarching policy on the operation of the
acquisition system and second, a separate policy document uniquely
tailored for Middle Tier acquisition programs.
f. The Independent Advisory Panel on Tech Data Rights was
established pursuant to the Federal Advisory Commissions Act. When they
publish their final report, the Department will transmit it to the
Defense committees and I will include my recommendations at that time.
Secretary Esper. The Office of Assistant Secretary of the Army for
Acquisition, Technology, and Logistics (OASAALT) has served as the
Army's lead for implementing the acquisition reforms Congress has
enacted. The Army also is participating in the Department of Defense's
implementation efforts and has representation in most if not all fora
for those endeavors. We are also attempting to pilot key efforts that
will provide feedback on our lessons learned to the Office of the
Secretary of Defense.
Secretary Geurts. ASN (RD&A) oversees and manages all DON
acquisition reform initiatives in close coordination with USD (AT&L) in
order to ensure unity of effort within the DON and among the DON and
other DOD components.
Secretary Wilson. Within the Air Force acquisition enterprise, we
have a Chief Process Officer and a team coordinating, overseeing, and
managing these efforts. This team tracks progress against acquisition
reform efforts. Additionally, we have created an Acquisition Process
Model, which gives program managers a tool for mapping their processes
to align with the most recent guidance and policies.
28. Senators McCain and Reed. Senators McCain and Reed. Secretaries
Lord, Esper, Geurts, and Wilson, a number of analysts have raised
concerns that there is not enough coordination between requirements,
budget, and acquisition execution. Do you believe this to be true? If
so, what are your thoughts on how to address any lack of coordination?
Secretary Lord. I do not believe there is a lack of coordination
between the Department's three business cycles. Rather, there is a
natural tension engendered by competing demands for scarce resources
and the need to address shifting priorities to meet immediate threats.
The key is for open communication between the stakeholders so that the
Department can optimize resources to meet short- and long-term needs. I
believe that there is good teamwork among DOD senior leadership that
enables better communication and collaboration than in the past.
Secretary Esper. Yes, the Army has taken several steps to improve
coordination between its requirements, acquisition, and budget
processes, and is currently implementing additional reforms to further
integrate and strengthen these processes. The Fiscal Year 2016 NDAA
(section 808) directed the Army to report on the links between
requirements, acquisition, and budget processes. The then Acting
Secretary and the Chief of Staff took some immediate actions as a
result of this study to improve the Army's ability to evaluate and
reform our acquisition process. Some of the actions include; (1)
reinvigorating the Army Requirements Oversight Council; (2)
consolidating staff elements; (3) establishing the Army Rapid
Capabilities Office; and (4) forming the Office of Process Innovation
and Integration to provide further support for Army Acquisition reform.
The Office of Process Innovation and Integration has followed these
initial reforms with a total of nine new initiatives that will increase
the Army's ability to more quickly provide capabilities to Soldiers
while being fiscally responsible. The most pertinent reform is the
establishment of Army Modernization Task Force to explore all options
to establish unity of command and unity of effort that consolidates
Army's modernization process under one roof. These initiatives will
adhere to the following overarching principles to improve the Army's
processes: use of (1) early engagement and collaboration, (2)
centralized planning and decentralized execution, (3) cost- and
resourced-informed decisions, and (4) consistent metrics to evaluate
success. This ensures that those developing the requirements have
insightful realistic advice on technologies essential to operational
concepts, that realistic costing is applied to concepts for more
informed trades, and that those involved in the specific acquisition
process understand their programs from the underlying operational
concepts, technologies, costs, and trades to contracting and execution.
Secretary Geurts. No, I do not believe there is a lack of
coordination between the requirements, budget and acquisition
processes. The Navy ensures close coordination through the Gate Review
process which enables the CNO and CMC to directly participate in the
requirements and acquisition process and work with me to balance the
necessary trades among cost, schedule and technical maturity to meet
the Fleet needs. As the SAE, I participate with the CNO's requirements
officials on the Corporate Review Board which is responsible for
oversight of the Navy budget.
In addition, I am initiating monthly portfolio reviews that will
bring together the acquisition, programming, and requirements officials
to discuss coordination, support, execution and delivery of the right
capability and capacity for the DON's warfighting requirements.
Secretary Wilson. The Air Force has made a concerted effort to
improve the coordination between requirements, budget, and acquisition
execution. We believe we have in place today the processes in all of
these areas that bring these key players together to help make programs
successful. There is always room for improvement and we need to
continue to look at ways to ensure we have in place the appropriate
checks and balances.
29. Senators McCain and Reed. Senators McCain and Reed. Secretaries
Lord, Esper, Geurts, and Wilson, CBO and GAO have regularly reported
that DOD starts more acquisition programs than it can afford to
complete. As a 2016 CBO report stated ``Several areas of DOD's budget
have frequently turned out to cost more than originally planned or to
increase more rapidly than expected. Those areas include the following:
costs to develop and purchase weapon systems . . . [and] operation and
maintenance costs.'' \3\ How do you guard against starting more
programs than you can afford? How do you ensure that the cost estimates
are realistic?
---------------------------------------------------------------------------
\3\ Congressional Budget Office, Long-Term Implications of the 2016
Future Years Defense Programs, January 2016, p. 3, https://www.cbo.gov/
sites/default/files/114th-congress-2015-2016/reports/51050-2016--
FYDP.pdf. See also U.S. Government Accountability Office, Defense
Acquisitions: Assessments of Selected Weapon Programs, GA0-15-342SP,
March 12, 2015 (reissued April 9, 2015), p. 5, http://www.gao.gov/
assets/670/668986.pdf, which states ``the majority of programs actually
experienced a cost increase over the past year, and more than half of
the 78 programs in the portfolio reported cost increases not related to
quantity changes, which we refer to as a loss in buying power.''
---------------------------------------------------------------------------
Secretary Lord. Current policy requires the Milestone Decision
Authority (MDA) to assess affordability and establish corresponding
acquisition and sustainment constraints which are to be monitored
throughout the program's lifecycle. This was reinforced in the Fiscal
Year 2017 NDAA which codified establishing program cost, fielding, and
performance goals before funds are obligated for technology
development, systems development, or production of an MDAP. The
Department is in the process of establishing the mechanisms to
implement specific requirements of the statute, starting with near term
new Army and Air Force programs.
To ensure cost estimates are realistic, I rely on the Department's
cost estimating community, particularly CAPE and the Service Cost
Agencies to produce estimates based on historic data that consider
prior contractor performance, historic program performance, and risk,
plus the associated costs if those risks are realized. These cost
estimates represent the best judgement and assumptions available at a
point in time. Rather than being inviolable, costs estimates can and
should change as we respond to changes in technology, threats, budget
priorities, and other factors to ensure we're being responsive to
evolving needs. I meet weekly, one-on-one, with the Cost Assessment and
Program Evaluation (CAPE) Director to ensure adequate communication.
Secretary Esper. The Army must fully fund programs to the cost
position in the Future Year Defense Plan (FYDP) at Milestone (MS) A, B,
and C Decision Reviews and Full-Rate Production (FRP) Decisions or Full
Deployment Decision (FDD) reviews. The Army identifies specific offsets
to address any funding shortfalls that may exist in the current FYDP.
In order to ensure cost estimates are realistic, the Army has
implemented formal cost estimation measures for Major Defense
Acquisition Programs (MDAPs) and Special Interest programs across the
HQDA level that convene at the Request for Proposal (RFP) Releases and
each of the Milestone Decision Reviews (MS A, MS B, MS C, and FRP) to
reconcile the Program Office Estimate (POE) and the Army independent
estimate into a single Army estimate through a Cost Review Board (CRB).
The reconciled position is a complete life-cycle cost from inception to
disposal and becomes the Army Cost Position (ACP). The ACP is compared
to program funding to determine program affordability and ensure full
funding of the program. If the program cannot be fully funded to the
ACP, it is adjusted by adding additional resources, program re-phasing,
or de-scoping. ACAT II and III programs are delegated to the Program
Executive Offices (PEOs), which are responsible for conducting reviews
at their respective levels. In addition, Headquarters Department of the
Army conducts annual reviews of ACAT II programs. To further improve
cost estimation, the Army validates early course of actions for Initial
Capabilities Document (ICD) estimates and develops independent cost
estimates for Army Acquisition Executive (AAE) selected non-Major
Defense Acquisition Programs (MDAP). Finally, the Army conducts
Operational Sustainment Reviews (OSRs), which are initiated five years
after the Initial Operational Capability (IOC) is declared and
continues through the life cycle of the system. These engagements
provide Army leaders with consistent and accurate information to make
informed resource decisions.
Secretary Geurts. Our program wholeness efforts as part of our
budgeting process, combined with Gate Reviews, Configuration Steering
Boards, and program Sufficiency reviews are geared to provide the
leadership with the information about programs Cost, Schedule, and
Technical challenges, and to inform on program affordability.
Stability is key to controlling costs across our acquisition
programs. We accomplish this by: setting firm requirements; stabilizing
designs; taking an incremental approach to technology development (via
prototyping and experimentation, as appropriate) to decrease technical
risk prior to approving major defense acquisition programs; employing
acquisition strategies that maximize multi-year procurements, block buy
contracts, and economic order quantity and cross program common
equipment buys when applicable; obtaining stable budgets; and
increasing competition at all levels of procurements whenever possible.
Competition produces both technological and cost benefits to the Navy
and is a critical enabler of performance.
Secretary Wilson. The Air Force has an established process to
determine an acquisition program's long term affordability. The process
looks beyond the Future Years Defense Program and estimates costs to
acquire as well as cost to sustain the programs. This process ensures
the Air Force has a long term view and funding strategy before starting
new programs.
To ensure cost estimates are realistic, cost estimators have been
incorporated into the early phases of the acquisition process and they
constantly update their cost estimation models with the latest program
execution costs to keep the affordability process informed.
30. Senators McCain and Reed. Senators McCain and Reed. Secretaries
Lord, Esper, Geurts, and Wilson, senior leaders frequently state the
DOD needs to take more risks and be willing to fail. How will you
create a culture that is accepting of risk and failure while ensure
that such risks and failures are small, managed, and generate useful
information? Do you have examples of good failures in your
organizations?
Secretary Lord. The stand-up of the new USD(R&E) organization will
be the first true sign of culture change within the DOD. This
organization will be designed to take risk and be forward leaning in
providing capability to our Warfighters. Technology developers are
motivated to take risk and to explore the art of the possible, while
acquisition managers are motivated to minimize risk and to pursue
stable, well-understood capabilities to minimize overall acquisition
program risk. I believe that aligning incentives so as to motivate
program managers to review technology options to improve performance
and reduce cost, and to motivate technologists to harden, demonstrate,
and de-risk emerging technologies, would significantly aid technology
transition.
An example of a past failure that increase our knowledge base, a
few years ago, we invested in a prototyping effort to provide a low
cost orbital launch vehicle to address urgent warfighter needs for
imagery augmentation. As we got into the project, we found out we
underestimated technical risk associated with software limitations,
which in turn increased program schedule and resulted in hardware re-
designs. We eventually terminated the program, but residual assets,
including engines, test data and a preliminary technical data package
were transitioned to our missile and space programs to ensure we
captured this innovation for use in future programs.
In addressing culture change, our goal is to ensure our design,
development, and early production teams work more closely with the
Intel, sustainment and test community, as well as the Warfighter, to
identify and monitor risks early in the development process before
transitioning technologies into Programs of Record. In parallel, we are
working to increase the use of other transactional authority that
employs simpler and more rapid contracting mechanisms that make it
easier for non-traditional sources of innovation to work with the
Department of Defense. We are also seeking to attract, train, and
retain talented leaders uniquely skilled in the complex business of
defense acquisition, bringing aboard innovative thinkers who understand
the art of risk taking in both science and technology and acquisition
programs as well as technical leaders in critical technology areas
essential to our National Defense.
USD(A&S) will ensure that an acquisition ecosystem is developed
that enables a culture of innovation, critical thinking and
``creative'' compliance. This integrated, flexible and adaptable
acquisition ecosystem will be enabled by clearly articulated
authorities, policy improvement, data and tools. We are striving to
scale innovation.
Secretary Esper. Creating a culture that is accepting of risk and
failure can be accomplished by prototyping new capabilities early,
soliciting Soldier input and reducing the requirements timeline.
Leaders must also communicate this philosophy to Program Managers and
Program Executives Officers. This ensures issues are identified before
large costs and lengthy development times are incurred, allowing us to
fail small and early. One example of ensuring risks are small, managed
and generate useful information is the Trophy Active Protection System
effort for the Abrams tank. Utilizing the Buy-Try-Decide model has
allowed the Army to take prudent risk by procuring the Trophy System,
validating vendor performance claims and addressing integration issues,
based on Soldier feedback, in less than 18 months. In addition to
providing immediate capability for Soldiers, this method will also
inform future efforts for all ground and air Active Protection Systems
going forward.
Secretary Geurts. Maintaining our edge is critical and more
challenging due to current strategic environment and the availability
of leading edge commercial technology. Our ability to maintain Fleet
capabilities and technological advancements requires us to identify,
understand and take appropriate, well-informed, and calculated risks.
Delegation of Milestone Decision Authority to the Services will enable
better risk management by focusing and streamlining the Department's
oversight of programs and encourage faster decision making in response
to market forces and industry operational needs. Through rapid
prototyping and more agile acquisition, we will learn and advance more
quickly, allowing early failures at relatively low cost of time and
resources. Recent examples of designated rapid prototyping include
Expeditionary Surveillance Towed Array Sensor System, and Navy Laser
Family of Systems. We are also expanding the use of innovative
approaches such as Prize Challenges, which have proven to enable
outside the box thinking and development of ambitious, novel solutions
to difficult technical and operation problems. These price challenges
attract a wide array of non-traditional and creative thinkers, and
build an ecosystem of risk tolerant organizations. We continue to
explore opportunities to adapt and leverage commercial best practices,
as appropriate.
Secretary Wilson. In order to create a culture that accepts risk
and failure, we need to experiment, try something, learn from it, and
call it a ``productive failure''. We need to celebrate ``productive
failure'' and the individuals responsible. To date, we do not have an
example of what I would categorize as a productive failure. We
anticipate as we continue to delegate authorities and stress this
culture shift with our people that examples will become readily
available.
31. Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, please provide a few specific items that you are willing to be
held accountable for over the course of the next calendar year. For
each item, please establish a specific goal for success that you wish
to be measured against and when would be an appropriate time during the
calendar year to evaluate performance against that metric.
Secretary Lord. I am committed to organizing and staffing A&S to
make it easy to do business with the government while being great
stewards of taxpayers' dollars. I am also committed to drive excellence
with respect to program sustainment by increasing availability and
responsiveness while lowering cost. I will lead efforts to increase the
National Security Innovation base. I believe that an interim report on
progress is appropriate in the mid-June timeframe with a final report
no later than January 15, 2019.
Secretary Esper. While I am responsible for the execution of all
Army programs, I will be focusing my efforts on standing up and fine
tuning the Army Futures Command. Given that this command promises to
fundamentally transform the Army modernization process, this is the
most significant action that my performance should be evaluated
against. Our intent is to achieve Initial Operating Capability by July
2018. An evaluation of our progress in the early autumn of this
calendar year would be appropriate.
Secretary Geurts. In the first few months on the job, I've met with
the Navy and Marine Corps Systems Commands and the Program Executive
Offices to reinforce the lines of accountability and to establish my
four specific focus areas of: lethal capacity for the Naval forces;
increasing agility; driving affordability; and building the workforce
for the future. I am developing a strategic plan to lay out my vision
and focus areas throughout the organization which will include specific
goals, objectives, and measures of performance.
In January we completed a DON Acquisition Workforce Summit to
identify key activities, actions, and measures of performance for the
next year to ensure we are recruiting, selecting, developing, and
retaining the talent needed for the future. In February I will complete
a comprehensive review of MDA levels for all DON programs. The results
of this review will be used to adjust MDA authority to the appropriate
level to provide effective oversight of Navy programs. Beginning in
April I intend to institute monthly comprehensive portfolio reviews of
all DON programs and provide monthly updates to the Secretary, CNO and
CMC. These are but a few of the numerous actions underway to accelerate
the DON Acquisition Enterprise.
While I welcome a review of these activities and the resultant
impact on the DON Acquisition Enterprise at any time, a review this
summer would be a reasonable time to assess the initial impacts of
these initiatives and our recommendations where Congress could provide
additional help to reduce bureaucratic burden and increase efficiency
and effectiveness.
Secretary Wilson. I am working with the Assistant Secretary of the
Air Force (Acquisition, Technology & Logistics) to establish a set of
initiatives to measure the successes and challenges within the
acquisition enterprise. We have implemented the Rapid Procurement of
Air Force Capabilities Charter, with a goal of using it for at least
one program in fiscal year 2018. In an effort to reduce the number of
steps in the acquisition process, we are planning to transition to the
Joint Business Clearance Pilot Program. This pilot program is for small
acquisitions to implement across applicable Program Executive Offices
to streamline business clearance by combining Milestone Decision
Authority and Clearance Approval Authority review and approval into a
single step.
other transaction authorities (otas)
32. Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, this committee believes that Other Transaction Authorities are
an important tool to speed experimentation, prototyping, and
acquisition. The DOD and services still underutilize this authority
despite additional flexibilities being provided in recent years.
How will you ensure that OTAs are used as a matter of standard
practice while guarding against their misuse?
Secretary Lord. There are opportunities to employ OTAs more broadly
across the Department to spur innovation and attract companies with
leading-edge technologies and business practices that enable us to
explore innovative technology rapidly. Because OTAs are formed under
the authorities that do not require standard terms found in Federal
Acquisition Regulation (FAR)-based procurement contracts, DOD
practitioners must have the requisite training and experience to guard
against their misuse. Obtaining senior leadership support and
establishing robust training programs to promote judicious use of OTAs
with senior level acquisition personnel negotiating the terms and
conditions of the agreements is the next step. Centers of Excellence in
the use of OTAs are emerging in the Department to include the Defense
Innovation Unit Experimental (DIUx) as supported by Army Contracting
Command--New Jersey and the Defense Advance Research Projects Agency
(DARPA). Leveraging this expertise and sharing their best practices are
an important first step toward adopting the innovative contracting and
agreement changes to promote increased flexibility and speed in the
acquisition process. We will establish training modules at the Defense
Acquisition University (DAU) to ensure that we memorialize our OTA
learnings and train acquisition professionals using actual examples.
Secretary Esper. The Army utilizes the standard practices outlined
in the 17 January 2017 OSDOTA Guide which outlines the processes and
procedures for executing OTAs. Use of OTAs is now widely considered in
developing the contracting approach for Army weapon systems programs.
Secretary Geurts. The DON has delegated authority to utilize OTA to
our major acquisition commands (i.e. NAVSEA, NAVAIR, SPAWAR,
MARCORSYSCOM, and ONR) for projects under $50 million. We look forward
to implementing the even greater flexibilities included in the Fiscal
Year 2018 NDAA. I will ensure that DON acquisition personnel are
familiar with the appropriate potential uses for OTA under 10 U.S.C.
Sec. Sec. 2371 and 2371b and that highly trained contracting and
acquisition personnel are assigned to DON OTA projects. The DON will
leverage DOD's OTA Centers of Excellence to enhance OTA competency
throughout the Department. As we expand the use of OTA, we must assign
our best people the task of learning from those with OTA experience in
order to make the most of this exceptional authority while
simultaneously protecting the Government's legitimate interests.
Secretary Wilson. The Air Force has used and continues to use OTAs
for research and prototyping as appropriate. We employ OTAs within
established DOD processes to ensure they are used properly. As new
efforts come forward, we are challenging our acquisition professionals
to ensure they are considering OTA use.
33. Senators McCain and Reed. Do you have examples where OTAs have
been used in a way you would like to see replicated?
Secretary Lord. A recent example of a streamlined program
solicitation that resulted in the award of an OTA for prototype was
DARPA's Robotic Servicing of Geosynchronous Satellites (RSGS) public-
private partnership program.
Secretary Esper. Other OTAs that are either in process or we
envision executing support the Lower Tier Air and Missile Defense
System (e.g., accelerated the program's Milestone A from 1QFY19 to
2QFY18, the Expedited Active Protection System effort for Bradley and
Stryker, the Next Generation Weapon Systems (will allow for weapon
fielding acceleration by five years), Long Range Precision Fires, and
the planned Maneuver Short-Range Air Defense program (ASD(A)).
Secretary Geurts. The DON's recent and current OTA efforts leverage
the U.S. Army's OTA experts in Picatinny working through DIUx and a
number of industry consortia for command and control, cyber, vertical
lift and ordnance. Some examples include use of the Army's DOD Ordnance
Technology Consortium for prototypes and demonstrations for the
Electromagnetic Rail Gun, the Hypervelocity Projectile, high energy
lasers, and radio frequency weapons technology. Our special operations
forces, explosive ordnance disposal community, C4I professionals, and
unmanned underwater vehicle designers are all currently using OTA for
advances in unmanned and counter unmanned systems, human systems and
talent management, and leading edge software development techniques
from Silicon Valley. We have and we will continue to collect the
lessons learned from these initial experiences, in order to expand the
use of OTAs as we integrate them into our routine way of doing business
and as the workforce becomes more comfortable with the tool.
Secretary Wilson. We have multiple examples where OTAs have been
used and that we would like to see replicated. One of these highly
successful examples is the Light Attack Experiment, a live-fly event
held in August 2017. Use of the OTA allowed the Air Force to move
quickly, with the Light Attack Experiment taking place within 5 months
of the Invitation to Participate being released to industry. Being able
to move rapidly is critical to ensuring the Air Force can efficiently
and effectively execute our experimentation campaigns. These campaigns
are not acquisition programs, and they allow the Air Force to explore
the art of the possible and quickly assess utility for the warfighter.
A second example is the Command, Control, Communications,
Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) OTA
consortium managed by the Air Force Research Laboratory (AFRL). AFRL's
Information Directorate in Rome, New York has an OTA with the System of
Systems Security Consortium (SOSSEC) to develop C4ISR Information
System prototypes, which will provide ``plug-n-play'' technologies via
modern open systems architectures to provide rapid adaptation and
integration of new capabilities. The agreement allows AFRL to quickly
and efficiently reach the 70+ member companies of SOSSEC while
leveraging SOSSEC as a single point intermediary, reducing overhead and
facilitating project execution.
The Air Force currently has four OTAs with industry for rocket
propulsion systems, all of which require shared cost investment between
the government and industry. These investments initiate the transition
away from the RD-180 by investing in critical Rocket Propulsion System
technologies. These Rocket Propulsion Systems were proposed by industry
for commercial launch systems that can be enhanced to meet more
stressing National Security Space requirements. The Air Force intends
to release an RFP later this summer for Launch Service Agreements to
complete the development of the replacement launch systems continuing
the shared industry/government investment approach.
Finally, the Air Force has established a Space Enterprise
Consortium using an OTA for prototyping activities to attract new space
and non-traditional mission partners.
software acquisition reform
34. Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, the committee continues to be concerned about the way the DOD
and services acquire software and software intensive systems. What
specific changes are you making to the way you manage software? Which
programs do you intend to make changes to? How will you ensure that new
software intensive programs do not fall victim to the same problems
that plague current programs?
Secretary Lord. I recognize that large-scale software development
and sustainment are key acquisition challenges that the Department must
confront across all of our programs--including information and weapon
systems in all warfare domains. DOD is already challenged to deliver
software on time and within budget. The demand for software-reliant
capability will only continue to rise and the inherent challenge of
large-scale development is further compounded as the DOD must maintain
operational advantage in an environment of constant change (e.g.,
evolving threats; disruptive technological change).
To address the challenge, the Department is modernizing our
practices, workforce, competencies and training to enable more rapid
delivery of reliable and secure software across the enterprise--in all
Warfare domains and application types. DOD needs to consider how
modern, commercial best practices and robust software development and
test environments can help avoid big bang integration and late,
expensive defect discovery at the end of a prolonged development
cycles--and help validate requirements and deliver value sooner.
However; we are in the early phases of adopting agile software
development practices to deliver software capabilities more rapidly and
in smaller increments in order to address the rapidity of change
affecting our software intensive systems. We need to scale our efforts
and are developing a plan to do so. I hiring a Special Assistant for
Software Development and Acquisition onboard, reporting directly to me,
to organize and implement this process. Several programs are already
utilizing a variety of agile development tools and quality metrics
(such as velocity, sprint burn down charts, and release burn up charts)
such as, Integrated Personnel & Pay System--Army (IPPS-A), Distributed
Common Ground System--Navy Increment 2 (DCGS-N Inc 2), Global Command &
Control System--Joint Enterprise (GCCS-JE) (DISA), Air & Space
Operations Center--Weapon System (AOC-WS) (USAF), Next Generation
Operational Control System (OCX) (USAF), Key Management Infrastructure
(KMI) (NSA). These programs are also instituting governance forums to
emphasize user involvement in early experimentation/observation efforts
and allow user feedback to shape capability development, with less
emphasis on perfecting requirements or upfront planning ahead of the
actual development activity.
Our efforts are not yet mature enough to have settled on final best
practices, but we have already revised formal policy guidelines.
The newly enacted sections 873 and 874 of the NDAA require that DOD
select a number of programs to pilot agile development methods. These
programs will be monitored to inform further development of best
practices guidebooks, Defense Acquisition University training
materials, and policy guidelines. It is important that we consider and
assess the best approach for bringing essential reliability and
cybersecurity skills into the engineering and design process early
enough to avoid costly redesign and late defect discovery--and enable
rapid delivery of secure, reliable software. Updating current policy
will be an iterative effort as we continue to gain experience in agile
development. A major change is forthcoming to the Department's formal
acquisition policy that will institutionalize several improvements
suggested via legislation over the past two years and implement
transition of milestone decision authority to the lowest appropriate
level. This will reduce decision delays and streamline alignment of
resources with schedules to reflect end-user capability needs and
timelines.
People are the biggest enabler of program success, whether software
or hardware or system of systems integration. To modernize Software
Engineering (SWE) competency and practice, we need to attract, train
and retain a capable workforce. We must incorporate modern software
engineering skills, technology and development practices such as scaled
Agile, build/test/release automation environments, continuous
integration and tool chains, and DevOps. To increase use of these
solutions, the Department must realign its processes for identifying,
training and managing software competencies to keep pace with these
advances. The Defense Acquisition University has begun to deliver
continuous learning resources in the area of Agile software development
for our acquisition workforce to enroll as part of their professional
development. In the Fiscal Year 2018 NDAA, section 891 will provide a
deeper Defense Acquisition University in residence training program to
prepare the staffs of the Agile or Iterative Development Method pilots.
As DAU constructs this workforce development program, they are expected
to involve instructors and content from non-government entities to
highlight the commercial best practices and well as lessons learned
from DOD programs.''
Secretary Esper. Virtually every warfighter and enterprise system
in the Army today requires complex software that must be developed or
acquired, updated, integrated, and maintained, in quick succession, to
support the end user. Recognizing the criticality of software to
maintain overmatch, the Army is establishing greater unity of effort in
the governance, development, and sustainment of software. We are
working to enable a more defensible network by improving the
integration of software assurance and acquisition life cycle
activities. Our software assurance activities will allow us to identify
and fix cyber and software quality holes before software is put in the
hands of our Soldiers. We are also driving Army-wide efficiencies in
the software life cycle to improve readiness, while reducing cost,
risk, and complexity. A key component of these efforts is optimizing
Army software development and sustainment oversight and policy for both
the operational and administrative elements of the Army. Our
sustainment considerations will include Commercial-Off-The-Shelf
product selection criteria, including license maintenance costs, and
the appropriateness of acquiring rights for selected software code. On
the tactical side, we are implementing a plan to update Mission Command
software to a single standard baseline across 400 Army, Army Reserve,
and Army National Guard units. This initiative will reduce system
complexity; improve interoperability; simplify network initialization,
software patching, and sustainment; and facilitate a smoother
transition to the next baseline as part of the Army's Common Operating
Environment.
Secretary Geurts. Information technology is changing faster than
our processes and policies can keep pace. The DON is not an IT company
so we do not want to duplicate IT sector efforts, but rather we want to
be a faster follower of industry and leverage their investment in the
IT sector. Our efforts are focused on buying IT as a service,
essentially ``leasing'' commercially available products and
infrastructure, and maximizing the use of enterprise license
agreements. When we buy IT the same way it is sold and used in the
commercial sector, the DON is able to take advantage of industry best
practices, maximize efficiencies and receive all the patches and
updates the vendors provide.
The acquisition of Defense Business Systems (DBSs) will pave the
way for this new business model. OSD has recently issued the DODI
5000.75 to provide guidance for software dependent DBSs, and the DON is
developing our own policy and implementation guidance for these
systems. We will buy commercial-off-the-shelf (COTS) products that
satisfy the majority of our requirements, modify our business processes
to adopt the commercial product to the maximum extent possible, and
only configure the products where needed to meet our unique Naval
requirements. This process minimizes or eliminates costly custom
development and shifts our resources from capital investment to
operations and maintenance. We are also increasingly looking to acquire
necessary hardware and/or infrastructure as a service, to include cloud
services.
The Fleet's portfolio of software intensive weapons systems such as
the AEGIS Weapon System, AN/SQQ-89(V) Surface Ship ASW Combat System,
and the Submarine Warfare Federated Tactical Systems have been
modernized using open architecture code bases; leveraging, to the
maximum extent practical, the investment of the commercial IT sector in
delivering effective warfighter capability. We are shifting to more
Agile development so capability can be deployed more rapidly to pace
the threat, technology can be inserted more frequently, and the overall
system can be kept more current and secure. This shift to an Agile
software development approach is occurring in weapon system development
programs for the Aegis Weapons System and the Air and Missile Defense
Radar Program (SPY-6). Within the Aegis Weapon System program, Agile
software principles and the use of a common source library of have
enabled engineering for maximum proliferation across baselines through
In-Stride deliveries.
Secretary Wilson. To manage software differently, the Air Force has
developed implementation across the acquisition enterprise and must
continue oversight of software across our weapon systems. To manage
software differently, the Air Force is embracing modern software
development practices such as Agile DevOps for many programs across the
acquisition enterprise. We have initiated pathfinder efforts and are
working to improve the speed of software development. Likewise, we are
continuing efforts with Open Mission Systems architecture, and
initiatives with Defense Digital Services, Air Force Digital Services,
and Defense Innovation Unit Experimental, in addition to improving our
organic software development capabilities.
For example, the Air Force initiated AOC Pathfinder to test a new
software development methodology to meet warfighter needs. AOC
Pathfinder more closely aligns software development to commercial
practices. To date, the AOC Pathfinder has delivered 3 applications to
Air Force Central Command. These 3 apps iterate daily and push 10-20
new features to end users each week. We are delivering apps faster than
originally planned, and significantly faster than AOC Increment 10.2
Program of Record.
Reforming software acquisition is a top priority for the Air Force.
We must train our workforce appropriately and have dedicated subject
matter expertise, just as we do for other science-related fields.
35. Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, as the Department and Services seek to change their acquisition
systems, particularly in the context of software intensive systems, in
what ways do you need to change your approach to testing? What changes
do you intend to make to developmental test processes and
organizations? How can you better collaborate with the Director of
Operational Test and Evaluation to speed time to deployment while
making sure that deployed capabilities are safe and fit for purpose?
Secretary Lord. Software is an integral part of all Department
capabilities, to include weapon systems, information enablers and
business systems. The Department needs to modernize our practices,
workforce competencies and training to enable more rapid delivery of
reliable and secure software across the enterprise. DOD needs to
consider how modern, commercial best practices and robust software
development can help avoid late big bang integration and defect
discovery. The Department also needs to move towards earlier, more
frequent test engagements, which are focused on working capabilities,
using short cycle, incremental, testable software builds. This allows
developers to conduct multiple test and integration events and field
intermediate products to gain user acceptance and feedback to improve
future builds or increments. Cybersecurity T&E must be integrated with
these efforts, and the Department is working to provide acquisition
programs with approaches to integrate earlier cybersecurity testing and
industry software testing best practices.
Testing is a critical component of software development and can be
a time-consuming aspect of software delivery. The Department's testing
communities need to evolve their testing policies, procedures and
approaches to accelerate software fielding cycles. Automation and
artificial intelligence are areas the Department needs to invest in and
leverage highly efficient industry best practice, improved adoption of
automation, artificial intelligence, and higher fidelity integration
labs. The Department's testing community needs to collaborate with
industry to identify new ways of addressing software testing
requirements and adopt best practices for agile development and DevOps
development which leverage performance and cybersecurity test data from
early in development through sustainment. For example, in fiscal year
2017, the current OSD level DT&E organization supported 22 Cyber Table
Top Exercises with programs that averaged identified 15 High or Very
High system vulnerability risks per event. Cybersecurity risk will
continue to challenge the Department as it moves to more COTS based
software and cloud-based environments. Mission-Based Cybersecurity Risk
Assessments must become the norm across the system development life
cycle for the Department.
I will work with the Undersecretary of Defense for Research and
Engineering and the Director of Operational Test and Evaluation
community to include the operational test community's equities of
suitability, effectiveness, and cybersecurity are considered early in
both the design and the developmental test process to ensure efficient
testing is done. My ultimate goal is to acquire safe, combat-capable
systems for the Warfighter at the speed of relevance.
Secretary Esper. Although the current Army approach is effective,
we are considering new ways to better execute our test and evaluation
mission. As part of the Army's Reform, the Test and Evaluation
Enterprise is examining and proposing legislative changes, as well as
making changes to regulations, policies, and infrastructure to put them
in line with a culture shift towards rapid and agile acquisition. A few
improvements being considered are: (1) contract language that includes
the requirement to show evidence of software analysis, safe design,
implementation, coding, and low-level testing to ensure software
safety; (2) shifting senior management assessments to the left by
conducting program assessments at each software drop along the
acquisition cycle to ensure program performance is demonstrated and
validated prior to operational events; and (3) the Army Test and
Evaluation Command (ATEC) will be directly engaged in the reform
process, placing emphasis on tailoring test strategies to consider
critical program requirements.
At the conclusion of the Army Acquisition Reform effort, I put
several directives in place to improve the acquisition process as a
whole and for testing specifically. The establishment of Cross
Functional Teams (CFT) will streamline the development and approval of
capability requirements thus streamlining the test and evaluation
planning and execution processes. We are further streamlining and
minimizing test and evaluation processes through standardizing test
language, metrics, data dictionaries, and data methods. We are also
bringing cybersecurity to the forefront of our test operations by
requiring the test community to provide results of cyber and cyber
electromagnetic tests at various milestones in the acquisition process
to ensure program security prior to progressing into an operational
test.
Successfully coordinating with DOT&E early to reach an agreement on
the appropriate levels of testing and acceptable levels of risk for
specific programs, will expedite the Test and Evaluation input to
acquisition program decisions and the resulting fielding decisions.
Secretary Geurts. The traditional snapshot-in-time testing of DOD
systems is not applicable for IT systems and software given cyber
vulnerabilities and threats can change daily. Our testing should focus
more on process and less on the status of the system at a specific
point of time. Testing should evaluate and validate risk management
framework (RMF) processes and disciplined cyber hygiene processes. A
product which passes a cyber `test' today provides no assurance that it
will defend against a threat tomorrow; however, a program with a solid
RMF process should have adequate discipline to identify risk and defend
against threats throughout the lifecycle. Certification, compliance and
authority to operate a system on the network are of equal concern to
testing. We need faster processes to get our systems approved to
operate, and the RMF process should also facilitate this. The CIO is
critical in this area as well on working reciprocity agreements. Within
the DON, we are reorganizing our CIO organization to streamline
processes and reduce bureaucracy.
Testing of commercial IT products (hardware, software and services)
which have already received commercial certification should not require
the same level of testing as something developed from scratch or
significantly customized. Doing so is redundant and costly. Acquiring
hardware, software, and the cloud as they are developed, sold and
certified, often as a service, allows us to be a fast follower of
industry and pace technology. Additionally, products that have been
previously certified and are considered cyber safe should not require
lengthy retesting and recertifying when they migrate from a data center
to the cloud. We need to leverage more reciprocity with industry and
other government agencies and trust the vetting which has already been
done. I intend to require the Navy team to ensure redundant testing is
not performed.
This can differ for shore-based business systems and tactical
afloat systems. Tactical IT systems often need a product developed or
software customized, so an agile software development process should be
used. Agile development requires continuous planning, continuous
testing, continuous integration, and continuous fielding. Agile
developmental efforts should develop a little, test a little and field
a little. If the testing construct is not equally agile, the benefits
of the agile process are negated. I will work with our Navy test
organizations and DOT&E to streamline where applicable.
Secretary Wilson. Software intensive systems, especially those
using agile development approaches, present unique challenges to test
and evaluation. The Air Force is currently evaluating, with a few pilot
programs, the impacts of agile development to traditional test and
evaluation methodologies. We have initially identified the need for
more automated test tools and processes to provide more rapid feedback.
Additionally, we've identified a need to address test and evaluation
throughout a system's lifecycle to continue to support agile
development in the fielding of updates, patches, and fixes. We will
also assess the workforce for skills and training required for agile
software development. Finally, the Air Force works closely with the
Director of Operational Test and Evaluation and will continue to
collaborate on the approval of Test and Evaluation Master Plans, data
sharing, and other areas as needed to speed fielding of capability to
the warfighter.
developmental test and evaluation (dt&e)
36. Senators McCain and Reed. Secretaries Lord, Esper, Geurts, and
Wilson, the Congress has demonstrated through legislation such as the
Weapons Systems Acquisition Reform Act of 2009 and other Public Laws in
recent years that the Congress places high value on the need for
conducting thorough Developmental T&E to assist program managers and
the Department leadership by providing essential information on the
progress of a program during the acquisition progress. The Congress has
included legislation requiring high level reviews of the developmental
test and evaluation for the Departments major acquisition programs. Do
you agree that thorough DT&E is essential to program progress and the
ability of the leadership and Congress to have independent information
derived from the DT&E to measure the progress of programs and assist
the program manager to find the best design solution during development
of acquisition programs? How do you use that information at the
Military Service leadership levels and Office of Secretary of Defense
level and where within your organizations does the oversight for DT&E
reside?
Secretary Lord. Yes, I agree that thorough DT&E is essential and an
effective way to minimize risk by avoiding discovery of deficiencies
late in program development and providing valuable information to
support sound decision making. The goal of DT&E is, put simply, to
devise, resource and execute plans to discover as many issues as
possible associated with the most significant risks on programs, and to
do it as early as possible in these programs when the impacts are far
less severe/costly and when appropriate corrective actions are feasible
without major disruption in the programs. Methodical, build-up
prototype testing and risk management approaches are necessary in
support of design/technology maturation in order to minimize risks as
programs progress, and hence increase confidence in successful
engineering and manufacturing development efforts leading to production
and fielding of critical capabilities.
Having said the above, I also believe that combined developmental
and operational testing, under an integrated test and evaluation (IT&E)
construct utilizing both developmental and operational test personnel,
is absolutely key to success. Under this IT&E construct, effective
communication and collaboration is achieved spanning the developmental
and operational test agencies, utilizing a framework under which test
data are collected and shared and deficiencies are jointly
dispositioned and assessed for potential corrective actions. The result
is a more efficient means of achieving the goal of fielding effective
and suitable systems/capabilities to the operational communities as
rapidly as possible.
The information provided by DT&E, and IT&E, informs the acquisition
community at several levels, from the program manager who must make
informed decisions about when to proceed through critical phases
between milestones, to acquisition executive who must decide program
readiness to enter a major milestone and proceed to the next phase. As
Milestone Decision Authority shifts to the Services, I am returning
DT&E oversight responsibilities and program progress tracking to the
Service developmental test organizations. Senior leadership will be
informed of critical test results via monthly updates on MDAPs reviewed
by OUSD(A&S) and subsequently submitted to DEPSECDEF and SECDEF.
Currently, the senior leader responsible for DT&E resides within
the office of the Assistant Secretary of Defense for Research and
Engineering in the Under Secretary of Defense for Acquisition,
Technology, and Logistics. We are in the detailed planning phase of the
restructuring the offices and functions of AT&L into the two new
Undersecretaries of Defense for Research and Engineering and
Acquisition and Sustainment. Subsequent to the statutorily mandated
reorganization effective February 1, 2018, I will work with the new
USD(R&E) to implement an organizational structure that ensures a
developmental test and evaluation office is properly staffed and
resourced and given sufficient authorities within the Department.
Secretary Esper. Developmental testing is important to the Army and
we understand Congressional desire for appropriate Service Department
oversight. In the office of the Secretary, the Deputy Undersecretary,
has responsibility to ensure that proper test plans, policy oversight
and funding will enable a robust and independent testing program for
Department of the Army. The independent US Army Test and Evaluation
Command conducts Developmental testing as one of the three formal types
of T&E, by statute. DT&E verifies that the system's design is
satisfactory and that all technical specifications and contract
requirements have been met, and most importantly certifies readiness
for operational testing.
Secretary Geurts. Yes. Thorough DT&E, as part of the systems
engineering process, conducted for acquisition programs, is essential
to inform program managers, Department leadership and Congress. T&E is
conducted to gain knowledge to advance systems development, understand
technical and operating characteristics and performance to support
acquisition decisions. DT&E provides early learning and identification
of technical, operational and system deficiencies to ensure that
appropriate and timely corrective actions can be developed prior to
system fielding. Test results inform decision makers at critical points
in a program's development. Within the Navy, each program has a Chief
Development Tester and a Lead DT&E Activity are assigned to oversee
developmental test planning, execution, analysis and reporting
activities. The DON T&E Executive is the senior executive for T&E
policy, capability and T&E workforce.
Secretary Wilson. Yes, the Air Force agrees developmental test and
evaluation is essential in developing combat capabilities and informing
the warfighter and decision makers, including Congress. The Air Force
uses developmental test and evaluation results to measure program
progress, determine overall system maturity, aid in system development,
identify program risks, and prepare for operational test and
evaluation. The Air Force includes these results in regular program
reporting to senior leaders as well as the Office of the Secretary of
Defense. The Air Force's Director, Test and Evaluation (AF/TE) performs
developmental test and evaluation oversight. AF/TE works with the Air
Force Test Center and Air Force program offices to ensure developmental
test and evaluation is properly resourced and that Air Force test
ranges are capable of supporting Air Force programs. Individual program
offices and lead developmental test and evaluation organizations
provide day-to-day oversight of developmental test and evaluation
activitiess.
37. Senators McCain and Reed. Secretary Lord, the Congress in
recent years has passed legislation that included specific duties for a
strong, well-resourced DT&E oversight organization within your broader
organization at the OSD level. Do you agree that you need such an
organization and, if so, where do you believe it should reside in your
new reorganization plans and how do you intend to address the
requirements for such an organization that we have included in prior
legislation such as having direct access to your leadership, having
authority to review and approve Test and Evaluation Master Plans and
providing direct input to milestone decisions for major acquisition
programs?
Secretary Lord. Yes, I believe in a strong, well-sourced
Developmental Test and Evaluation (DT&E) because it is important to the
success of acquisition programs in the Department. A strong DT&E
organization, via ``hands-on'' engagement, can assist programs in
devising developmental test plans that enable discovery of as many
deficiencies as possible associated with the most significant risks on
programs, and as early as possible when the impacts are far less
severe/costly, thus enabling programs to take appropriate corrective
actions without major disruption. Ultimately, insight and active
participation in programs, vice oversight, is what enables the DT&E
organization to be most effective with respect to minimizing risks as
programs progress, and hence increasing confidence in successful
engineering and manufacturing development efforts leading to production
and fielding of critical capabilities. Further, a well-resourced DT&E
organization maintains insight and active assistance efforts on
programs, establishes policy and direction, and ensures the up to date
education and continuous learning of the 8,700 plus T&E workforce in
the Department.
The final decision of where the senior leader responsible for DT&E
will reside within the restructured Under Sectary for Research and
Engineer is in the planning phase. The future roles and functions of
the DT&E organization will be shaped by prior congressional legislation
concerning access to leadership, Test and Evaluation Master Plans
approval authorities, and inputs to milestone decisions for major
acquisition programs. I, along with the new Under Secretary of Defense
for Research and Engineering, will review and implement an appropriate
organizational structure to ensure that developmental test and
evaluation is properly staffed and resourced and given the right
authorities in the Department.
Secretary Wilson. Yes, I agree that we need a strong, well-
resourced organization providing DT&E oversight at the OSD level. In
the Air Force, we oversee the execution of developmental and
operational testing with a single Director of Test and Evaluation who
is independent of acquisition. OSD and Congress should likewise
consider a test and evaluation oversight construct that combines
developmental and operation test oversight into a single office
independent of the acquisition chain. This combination would promote
both test and acquisition efficiencies and better align with the vision
for rapid acquisition outlined in the National Defense Strategy. These
efficiencies would include streamlined review and approval of Test and
Evaluation Master Plans; encourage the sharing of data, analyses, and
reporting; allow quicker identification of duplicative test needs or
common test gaps; and provide a single, independent test voice to
Milestone Decision Authorities.
__________
Questions Submitted by Senator James Inhofe
sustainment costs of new programs
38. Senator Inhofe. Secretary Lord, Secretary Esper, Secretary
Wilson and Secretary Geurts, do you think that weapons system
sustainment is being adequately incorporated into initial acquisition
planning for new weapons systems to ensure these programs can be
efficiently and effectively maintained over their life cycles?
Secretary Lord. While there are many factors contributing the
current troubling state of materiel readiness, not the least of which
are budget uncertainty and high optempo, the high cost to sustain our
weapons systems is a factor that is particularly difficult to address
once a system is fielded. For example as Naval aviation depot level
reparable items costs have risen by 2.5 percent above inflation
annually over the past 20 years, mission capable rates for Naval
tactical aircraft have declined by 2.5 percent per year on average. The
Department's greatest leverage over weapons systems Operating and
Support costs is in the earliest acquisition decisions, including
initial design and those that precede the decision to down-select to a
single vendor and commit resources to a particular design. During these
early decisions typically 80 percent of program controllable O&S costs
are determined through design decision. Leverage over O&S costs
declines to under 10 percent by the time a systems enters production.
Some of these early impactful decisions occur even before we've
formally established a program of record. While the Department has made
progress over the past few years emphasizing sustainment planning in
weapons programs, there is still more that we can do to drive cost out
of sustainment and improve our prospects to improve readiness in future
systems.
It is vitally important to acknowledge, engage, and equip those
functions upon which Program Managers are critically dependent for
sustainment direction and support, specifically the requirements and
resourcing functions. These functions fall under the purview of the
Service Chiefs, but I see a real opportunity for the OUSD(A&S) to
advise the Services on practical analyses that can inform development
of sustainment requirements that will yield improved readiness outcomes
and lower cost, while not over constraining the design space such that
capability is sub-optimized. An essential component of maintaining
sufficient operational availability at affordable costs is leveraging
data analytics and machine learning. I believe that we have an
opportunity to leverage industry practices to set up sustainment
systems that are far more predictive in nature and better rationalize
the number and physical location of spares.
Resourcing for appropriate sustainment analysis early in weapons
system development is also critical to ensuring that systems are best
postured for effective and efficient sustainment. Incorporating
sustainment strategy options into an analysis of alternatives may add
modestly to the cost of the analysis, but such cost is dwarfed by the
returns in sustainment productivity over a weapon system's life cycle.
Similarly, investment in supportability analyses in concert with
technology maturation can yield technologies that are more reliable and
maintainable when incorporated into system designs, yielding more
supportable end items. History has shown us that 70 percent of product
cost is in sustainment. We therefore have a significant opportunity to
impact lifecycle cost if we improve our sustainment capability.
Secretary Esper. We currently plan and document weapon system
sustainment in a Lifecycle Sustainment Plan (LCSP) for each weapon
system. This is a detailed and collaborative effort between our
acquisition program offices and the Army Materiel Command with great
focus on key elements to include reliability, availability,
maintainability and operations and support costs. In 2016, the Army
introduced the Operational Sustainment Review (OSR) to examine how well
each major defense acquisition program's sustainment strategy is
performing once fielded to Army units. The OSR is a detailed metrics-
based assessment that looks at all aspects of a weapon systems
sustainment strategy two years after initial operational capability has
been declared. Since 2016, we have conducted fourteen reviews and have
six more scheduled for the rest of 2018. In addition, the Army is
running a pilot to add a Transition to Sustainment annex to the
existing Life Cycle Support Plan (LCSP) with a focus on setting the
conditions early in a program as well as using insight gained from the
OSRs that will improve the Army's sustainment functions. The Army can
effectively and efficiently maintain our systems with these processes.
Secretary Geurts. While sustainment cost projections are considered
through the phases of product development, the Department could do a
better job of considering sustainment costs on equal footing with
procurement costs. The goal of the Department is to produce, support,
and maintain the required performance and readiness objectives of our
weapon systems efficiently and effectively. In fiscally constrained
environments, we have been challenged with achieving this goal with
lower levels of Total Obligation Authority. Thus, it is important for
programs to consider and review all potential strategies to optimize
program planning and costs while providing the required levels of
future readiness.
Clearly, one standard solution does not fit all weapons systems
sustainment scenarios. Program Managers have to consider organic,
commercial, and hybrid sustainment solutions to meet both program and
mandated United States Code, Title 10 requirements. DON uses integrated
product teams and/or cross-functional relationships working groups in
defining depot maintenance requirements. Additionally, Systems
Engineering Technical Reviews, Life Cycle Sustainment Plans, and
milestone reviews ensure programs include realistic considerations for
industrial depot maintenance solutions to capture support and
sustainment requirements.
Secretary Wilson. Yes. Product Support Managers, who are
accountable to the Program Manager, support the Air Force's acquisition
programs for planning and executing sustainment strategies that achieve
operational readiness outcomes at an affordable cost. Throughout the
acquisition process, the Product Support Manager continuously assesses
system design to ensure they give adequate consideration to
reliability, availability, maintainability and sustainment costs. The
Air Force also places affordability constraints on acquisition
programs, ensuring that each program's estimated sustainment costs fit
within future Air Force resource allocations. Finally, the Air Force
executes Independent Logistics Assessments to validate the sufficiency
of sustainment planning and identify areas for improvement.
39. Senator Inhofe. Secretary Lord, Secretary Esper, Secretary
Wilson and Secretary Geurts, how do we balance the need to consider
long term costs associated with sustainment of aging weapons systems
with the need to speed up the acquisition process and get emerging
technology to warfighters?
Secretary Lord. Among our options to lower costs to sustain
currently fielded systems is a greater emphasis on data-driven
sustainment and condition-based maintenance. Our experience is that
data driven condition-based maintenance approaches will yield
conservatively a 5 percent increase in a system's materiel availability
and an associated 5 percent decrease in the cost of sustainment. In
concert, these thrust areas will provide DOD with the insight to target
areas providing the greatest opportunity to reduce sustainment costs
and the means to quickly address these leverage points. Such efforts
could be accelerated and the likelihood of cross-Departmental adoption
increased through an appropriately resourced DOD-level sustainment R&D
program specifically chartered to improve sustainment productivity.
Approximately 3 percent of RDT&E is currently used for readiness
improvement and sustainment R&D.
Options for improving long-term sustainment for any acquired
capabilities will vary in large part depending on the degree to which
the new capability includes dual use commercial technology. Where the
ratio of commercial technology is small compared to technology
developed for DOD's unique purpose through DOD funding, improved
sustainment will depend on the Department investing in data, tools and
analysts that support design influence and more effective technical
data procurement. For capabilities largely comprised of commercially
development technology, the Department's sustainment options are likely
to vary from disposable end items that are replaced rather than
repaired to using field service representatives where the warfighting
concept of operation is supportive or establishing innovative technical
data provisions and pricing that supports organic sustainment.
Secretary Esper. The Army conducts comprehensive annual Strategic
Program Analysis Reviews (SPAR) of future and sustained systems over
30-year roadmaps. These roadmaps include Science and Technology (S&T)
insertion opportunities and serve as a guide for senior leaders to
discuss the point at which emerging technology becomes mature enough to
consider replacing our aging weapon systems. The end product is a
coordinated strategy to meet the Army's strategic equipping goals,
including divestiture of legacy equipment, at an acceptable level of
risk. This decision process is key to balancing funding for systems in
a disciplined approach to when the Army initiates a new development or
procurement, a deliberate transition to sustainment, and a directed
disposal timeline aligned with fielding new technologies.
Secretary Geurts. Speed to the fleet of new technology and
restoring and maintaining readiness of our fielded products are equally
important. Life cycle costs are considered throughout the development
and sustainment of a weapon system. There are occasions where speed of
a capability can temporarily drive a less cost effective sustainment
solution that are usually tied to Urgent Need Statements from the
combatant commanders.
To have an effective balance between legacy system sustainment and
speed of emerging systems to the warfighter we must think in terms of
velocity (speed in a given direction) vice simply speed. The
collaborative work that the DON Product Support Managers and Program
Managers do at the initiation and throughout each weapons systems
program provides system sustainment direction for each program
throughout its life-cycle. Velocity is accomplished by making informed
risk-based procurement and maintenance decisions at every stage of a
programs life-cycle.
Secretary Wilson. The Air Force balances long term sustainment
costs with the need to speed up the acquisition process by executing an
integrated life cycle management approach. The Air Force has taken
several steps to achieve this integration, better aligning at all
levels the roles and responsibilities for acquisition and sustainment
of our weapons systems. The Assistant Secretary of the Air Force for
Acquisition, Technology, and Logistics now has a Deputy Assistant
Secretary for Logistics and Product Support responsible for ensuring
that acquisition programs appropriately plan for the long-term
sustainment of our systems. Also, the 2011 reorganization within Air
Force Materiel Command reinforced our Program Executive Officers and
Program Managers are responsible not only for acquiring systems, but
also for sustaining them. Finally, the Air Force has assigned Product
Support Managers to its program offices, ensuring that a senior life
cycle logistician focuses on planning and execution of sustainment
strategies that achieve operational readiness outcomes at an affordable
cost. While we balance these long term sustainment costs with the need
to field emerging technologies, we have not been able to retire weapon
systems. The Air Force would like the flexibility to make these trades.
changing acquisition processes
40. Senator Inhofe. Secretary Esper, understanding the Army is in
the process of replacing the M4, how can you ensure the Army will avoid
another 350 page requirements document and years of wasteful testing?
Secretary Esper. The lengthy Request for Proposals associated with
the Modular Handgun System was a Federal Acquisition Regulation-based
contract which included many clauses that were mandated by statute.
However, based on language in the fiscal year (FY) 2016 and fiscal year
2017 National Defense Authorization Acts, Congress has provided us the
tools that allow us to shift the paradigm. The Army will leverage Other
Transaction Authorities to further streamline the acquisition process
and leverage commercial industrial expertise for the technologies
required to develop the Next Generation Squad Weapon.
The Army is also is looking at test reform to focus on priorities
of warfighters, specifically capabilities and limitations of our
systems in a more cost and schedule effective way.
__________
Questions Submitted by Senator Roger Wicker
national security technology accelerator
41. Senator Wicker. Secretary Lord, Congress has expressed strong
support for the MD5 National Security Technology Accelerator
Initiative. MD5 accelerates technology development by facilitates
collaboration between civilian and military personnel, their
counterparts in academia, and the high-tech industry. The organization
has launched a number of successful initiatives including Hacking 4
Defense, the Innovation Boot Camp, and the Marine Corps Adaptive Threat
Force program. How do you plan to support MD5 in the future?
Secretary Lord. MD5 has provided real value, both to the Department
and the broad array of non-traditional partners with whom it interacts,
through the creation of two programs of record for the US Marine Corps
and more than 900 new applications, concepts or solutions back to
problem sponsors throughout DOD. Although I believe the Department
needs to evaluate MD5 as part of a broader, holistic discussion related
to program priorities and attendant resources, my office intends to
advocate for its inclusion in the Department's submission as part of
the President's Budget for fiscal year 2020 to build upon early success
stories like Capella Space, which started as a Hacking for Defense team
at Stanford University in 2015 and has already raised more than $20
million in private funding as a venture. I will also ensure that funds
are available to sustain MD5 operations through fiscal year 2018 and
fiscal year 2019 without disruption, including seeking continuing
resolution funding for the program, so long as this is consistent with
the intent of Congress.
efficient shipbuilding
42. Senator Wicker. Secretary Geurts, the President will sign the
National Defense Authorization Act into law very soon. The NDAA
includes my legislation--the SHIPS Act--that will make it national
policy to meet the 355-ship requirement. As part of a naval buildup,
the Navy needs to accelerate shipbuilding and leverage our hot
production lines. Is the Navy buying ships in the most efficient manner
possible? If not, do you need additional authorities from Congress or
modified authorities?
Secretary Geurts. The Navy is committed to building ships in the
most efficient manner possible to meet the 355-ship requirement
summarized in the 2016 Force Structure Assessment. Our goal is to
maintain stable production lines throughout the shipbuilding industrial
base for all core platforms. This ensures a surge capacity throughout
the industrial base that will allow the Navy to retain the ability to
surge to meet fleet requirements.
By balancing long-term efficient acquisition profiles with targeted
service life extensions and aggressive growth options, the Navy plans
to stabilize the industrial base and set the foundation for efficiently
and deliberately growing the force towards its warfighting requirement.
Of particular importance is the sustainment of the industrial base at a
level that supports more affordable acquisition, predictable and
efficient depot level maintenance and modernization, and an
appropriately sized experienced workforce for more aggressive growth if
additional resources become available.
Key to maintaining stable production lines is stable funding
coupled with contracting strategies that provide a long-term commitment
to industry. The Navy utilizes contracting tools such as multi-year
procurements, block buy contracts, and economic order quantity buys,
when and where it makes sense to do so to provide a stable commitment
to industry.
incremental funding authority for amphibious ships
43. Senator Wicker. Secretary Geurts, the NDAA also contains
Incremental Funding authority for the Navy to buy either the 30th LPD
amphibious ship or the first LXR amphibious ship. Incremental Funding
is a tool to help the Navy to get started on ship production without
having to budget for the entire ship. Can you commit to me that the
Navy will take advantage of the incremental funding authority in NDAA?
Secretary Geurts. The Navy is currently exploring all options with
regards to the fiscal year 2018 incremental funding of the next LPD or
the first LXR. The funding will help jump start the LXR program. This
earlier start will reduce the risk of a loss of learning and will help
ensure the most efficient use of taxpayer funds.
block buy of ford-class aircraft carriers
44. Senator Wicker. Secretary Geurts, the Senate Armed Services
Seapower Subcommittee conducted a number of hearings on options to
build the 355 ship Navy. We held a hearing with former Reagan
Administration officials--including Secretary Lehman--to learn about
the 1980s fleet buildup. The Reagan executed a block-buy of aircraft
carriers. The Navy got carriers faster and saved money through
leveraging competition in the supplier base. On the current trajectory,
when will the Navy meet its requirement for 12 aircraft carriers? Could
a block-buy strategy get us to 12 carriers faster? What are the
implications for the shipbuilding industrial base? Would a block-buy
stimulate the industrial base and generate competition and new
suppliers? Do you see benefits for the rest of the shipbuilding
program?
Secretary Geurts. The current legislative requirement is for eleven
operational aircraft carriers (CVNs). On the current trajectory with
five-year build centers, the Navy will not meet 12 operational aircraft
carriers. A multi-ship buy alone will not increase the operational
aircraft carrier inventory to 12 CVNs any sooner. To achieve a 12-CVN
force, the frequency of aircraft carrier procurement would have to
increase to every three to four years in comparison to the current
five-year build centers.
Returns from multi-ship buys have consistently shown that volume
material buys and level loading of the shipbuilder and vendor base is a
proven practice to reduce cost of shipbuilding programs. Previous
experience with two ship buys of CVNs (CVN 72 and CVN 73 were procured
in fiscal year 1983 and CVN 74 and CVN 75 were procured in fiscal year
1988) demonstrated significant savings. Multi-ship buys enable both the
Navy and the shipbuilder to take advantage of material procurement
efficiencies, and the stability it affords industry provides for more
efficient use of resources and a more favorable market for suppliers to
enter, thereby encouraging more competition. Component commonality
between the submarine and CVN industrial base furthers the opportunity
for stability and savings. Multi-ship buys also minimize fact-of-life
changes between ships, thus reducing follow-ship drawing and
construction costs, and affording the shipbuilder the ability to
optimize production trades management. The shorter time between
deliveries results in increased design stability, minimizes potential
obsolescence, and provides greater opportunities for learning.
frigate program acquisition strategy
45. Senator Wicker. Secretary Guerts, the new Frigate will be an
essential component of the future fleet. The Navy's acquisition
strategy for the Frigate is commendable. You are going to pick a proven
design rather than start over with a clean sheet design. This decision
should accelerate the program significantly. Is there anything else
that could be done to accelerate this program?
Secretary Geurts. The Navy is currently on the quickest path to
procure the Frigate (FFG(X)). To allow adequate time to define FFG(X)
requirements, thoroughly evaluate design alternatives and mature the
design, the President's Budget (PB) 2018 submission deferred the first
year of FFG(X) procurement to fiscal year 2020 with additional Littoral
Combat Ships (LCS) being procured in fiscal year 2018 and fiscal year
2019.
The Navy is using a two-phase acquisition approach to procure
FFG(X) starting with a Conceptual Design phase from Q2FY2018 until
Q3FY2019. This will allow Navy and Industry to reduce risk by maturing
parent FFG(X) designs and identifying cost and capability drivers, to
incorporate into the Navy's requirements. The Conceptual Design phase
will be followed by a full and open competition for Detail Design and
Construction in Q4FY2019 with award to a single shipbuilder in
Q4FY2020.
__________
Questions Submitted by Senator Mike Rounds
cesg membership
46. Senator Rounds. Secretary Lord, at the SASC hearing on Dec 7, I
asked whether Cloud Executive Steering Group (CESG) membership included
warfighter representation from the services and combatant commands
(including cyber command). You responded in the affirmative that ``We
have pulled in all of services.'' Please provide the Committee the
names of individuals from the military services and combatant commands
who are voting members of the CESG and the roles they serve so that the
Committee can consult with them on their participation.
Secretary Lord. The CESG, through their action officer
representatives, has conducted numerous information gathering sessions
with the Combatant Commands, Services, and agencies, and continues to
do so on a regular basis. My response was not intended to imply that
there were additional voting members of the CESG. Per the Deputy
Secretary of Defense's January 8, 2018 memorandum titled ``Accelerating
Enterprise Cloud Adoption Update,'' the Deputy Chief Management Officer
(DCMO) is responsible for execution of the new enterprise cloud
program. DCMO will chair the CESG going forward. My role will be to
serve as the acquisition decision authority.
bid protest reform
47. Senator Rounds. Secretary Esper, you stated the Army needs help
from Congress to protect programs from frivolous bid protests. You said
the context was the Army's handgun program. What difference do you
believe the reforms in Sec. 827 of the NDAA 2018 conference report will
make?
Secretary Esper. I fully support the pilot program authorized by
section 827, which will allow the DOD to determine the effectiveness of
requiring larger contractors to reimburse the Department for costs
incurred in filing protests denied by the Government Accountability
Office. I believe this is a good first step in reducing frivolous bid
protests.
48. Senator Rounds. Secretary Esper, how will you make use of this
authority?
Secretary Esper. The Army will work closely with the DOD to develop
and implement the pilot program authorized by section 827. Authorizing
Competition in Contracting Act (CICA) reform would hold contractors
responsible for frivolous protests and for the Services to be able to
execute their contracts in a timely manner to avoid schedule delays
awaiting a decision that typically takes 90 days to occur. The delays,
pending the results of a bid protest end up shifting program schedules
to the right, even when protests are usually ultimately resolved in the
government's favor.
49. Senator Rounds. Secretary Esper, what additional legislative
support do you require to address the Army's needs and concerns?
Secretary Esper. The Army recommends Congress consider legislation
that would give Competition in Contracting Act (CICA) relief and the
ability for the Government Accountability Office to implement a ten day
rule on stays, instead of the traditional 90 days, and a penalty if the
contractor loses the protest. Penalties can be scaled based upon
contract value as to not discourage small businesses from filing
legitimate protests. We would also recommend enacting relief right away
as opposed to waiting for a pilot program.
__________
Questions Submitted by Senator Dan Sullivan
blank slate acquisition reform
50. Senator Sullivan. Ms. Lord, Dr. Esper, Mr. Guerts, and Dr.
Wilson, what are your best, most radical ideas to improve Department of
Defense acquisitions? If you could start with a clean slate for
acquisitions, what would you do?
Secretary Lord. Fundamental changes are required of the Department
of Defense's acquisition system if we are to achieve the objectives
articulated in the National Defense Strategy (NDS). In my view, we
require a transition from the traditional linear acquisition process to
an Adaptive Acquisition Ecosystem. This unified framework would enable
key stakeholders in execution organizations (e.g. R&E, the Services,
and COCOMs) to use both traditional and innovative acquisition pathways
based on program need as a standard practice. I intend to organize
OUSD(A&S) to manage, analyze, and provide data to govern programs,
executed by components, by linking their products to NDS objectives. We
will fundamentally change the Defense Acquisition University (DAU) to
teach through case studies that will highlight real examples of how a
variety of contract vehicles are appropriately utilized to simplify and
speed up acquisition. We have goals of reducing acquisition time by 50
percent with pilot programs currently being executed. We are not only
focused on domestic procurement, but Foreign Military Sales (FMS) as
well.
Secretary Esper. A successful acquisition system is fast and
responsive to current and emerging needs, and visionary in meeting
long-term threats, leaping ahead of capabilities of major adversaries.
It requires centralized planning, decentralized execution, and
accountability. With these concepts in mind I have three
recommendations. First, authorize and appropriate ``colorless''
acquisition funding to provide predictable, stable, and adequate
defense acquisition funding over a two year cycle. To increase
effectiveness of this recommendation, reduce current restrictions under
Continuing Resolutions and amend the Budget Control Act that create
budget uncertainty hindering the Army's ability to predictably start
new programs, enter into multi-year contracts, increase production
rates, or realign funds to higher priority requirements or simply allow
the Services to execute at the lowest committee mark under a Continuing
Resolution. Second, allow greater reprogramming thresholds. Higher
below-threshold reprogramming gives the Army greater authority to move
cost savings within our funding lines and incentivize delivering
programs on time and under budget. Third, improve the flexibility of
the acquisition personnel system to alleviate required wait periods to
hire former military personnel and accelerate the accession process to
hire and relocate civilian personnel.
Ideally we would request the flexibility to execute our programs,
including the ability to start new programs, enter into multi-year
contracts, increase production rates or realign funding to higher
priority requirements, even under Continuing Resolutions.
Secretary Geurts. I offer the following ideas to improve DOD
acquisition:
1. Significantly reduce or eliminate statutory information
requirements for MDAPs and major systems acquisition programs, and
allow DOD to set and refine these requirements in regulatory issuances
such as DOD Instruction 5000.02 (similar to recent legislation
pertaining to major automated information system (MAIS) programs). This
would allow program managers and milestone decision authorities greater
flexibility in tailoring program information requirements to the needs
of the particular program.
2. Provide for defense budgeting and defense appropriations to be
made on no shorter than a two-year basis, rather than an annual basis,
to provide stability in program budgets and mitigate the impact of
continuing resolutions.
3. Expand certain acquisition authorities of the Secretary of
Defense to the Secretaries of the MILDEPS, in particular:
Congress has granted the Secretary of Defense, without
power of delegation, statutory authority to waive any acquisition law
or regulation to acquire a capability that would not otherwise be
available to the DOD Components. Congress can grant similar waiver
authority to the secretaries of the MILDEPs.
Congress has granted the Secretary of Defense, without
power of delegation to the Under Secretary of Defense only, statutory
authority to initiate section 804 (Fiscal Year 2016 NDAA) rapid
prototyping projects and rapid fielding programs by using on an annual
basis up to $200 million cumulatively of any funds available to DOD.
Congress can grant similar funding flexibility for section 804
initiatives to the secretaries of the MILDEPs.
I will continually encourage the DON acquisition enterprise to
identify game-changing ideas to improve DOD acquisition, including
clean-slate proposals. I will also work with USD (R&E), USD (A&S), and
the other MILDEPs to develop such ideas.
Secretary Wilson. If I could start with a clean slate, the Air
Force would streamline the approval process required to execute an
acquisition program, so that all decisions are made at the appropriate
level. Additionally, the Air Force would like additional funding
flexibility particularly for software development efforts. On software
development efforts, the line between development, production and
sustainment is blurred or non-existent. The current appropriation
categories limit and slow acquisition activities and fielding of
software-intensive capabilities. The Air Force encourages the
establishment of a new appropriation for software-intensive systems.
multiyear acquisitions and icebreakers
51. Senator Sullivan. Secretary Lord and Secretary Guerts, does it
make sense to sign multi-year acquisition contracts to reduce overall
program costs for shipbuilding?
Secretary Lord. I fully support the use of multi-year acquisition
contracts for shipbuilding programs once there is a stable design
baseline for the program accompanied by realistic estimates of contract
cost and savings. Multi-year acquisition contracts have proven to
reduce overall shipbuilding program costs by reducing risk via
stabilization of the shipbuilders' workforce and the vendor base that
supports many of our shipbuilding programs, by enabling economic order
quantities, and by reducing overhead costs related to multiple
proposals and contract negotiations. Some programs include fragile
suppliers that might not otherwise be able to remain viable or cost
effective. Multi-year acquisition contracts can incentivize the
shipbuilders to establish a procurement plan with their suppliers to
sustain the industrial base through workload balancing, process
improvements, or other investments.
Secretary Geurts. Yes. Multi-year contracts provide stability,
commitment, and more effective use of funding to the shipbuilding
industrial base that result in lower costs to the Navy. Multi-year
contracts enable the Navy and Industry to take advantage of material
procurement efficiencies and to utilize resources in an efficient
manner, while also providing industry at the prime and sub-vendor
levels with the commitment necessary to support investment in their
facilities and people. The Navy will continue to aggressively pursue
multi-year procurement contracts whenever feasible and where it makes
sense to do so.
52. Senator Sullivan. Secretary Guerts, if we do not procure ice-
breakers through a multi-year procurement contact, in your personal
opinion, will it likely result in an inefficient use of valuable U.S.
tax dollars? Shouldn't any plan for icebreaker procurement include a
multi-year acquisition plan?
Secretary Geurts. Since forming an Integrated Program Office in
2016, the Coast Guard and Navy have been developing an acquisition
strategy that makes the most efficient use of government resources to
procure heavy polar icebreakers. Although the statutory requirements in
10 U.S.C. Sec. 2306b prevent the use of a multi-year procurement
contract for the lead ship, the Services are jointly exploring cost-
saving acquisition approaches on follow-on ships, including block buy
contracts. The Navy and Coast Guard will work with Congress to
determine whether additional authorities are required.
53. Senator Sullivan. Secretary Guerts, given the urgent need of
U.S. icebreaker capacity and capability, combined with an outlook for
limited procurement, does it make sense to analyze purchasing
icebreakers from allied and partner nations?
Secretary Geurts. The U.S. Coast Guard (USCG) has conducted the
analysis to determine whether there are any in-service, foreign
icebreakers available for purchase and has determined that there are
none that meet the USCG's heavy polar icebreaker requirements.
As a bridging strategy and to maintain the nation's current heavy
icebreaking capability the USCG has chosen to extend the service life
of the POLAR STAR (the nation's only operational heavy polar
icebreaker) until new heavy polar icebreakers are delivered.
jaasv acquisition
54. Senator Sullivan. Secretary Esper, how will recent acquisition
reforms enable system like the JAASV--which should consider existing
domestic or foreign platforms--be procured more efficiently and
expediently? Would you recommend procuring the JAASV as a ``middle
tier'' program to enable rapid fielding?
Secretary Esper. In 2012, the Army determined that no short-term or
long-term operational warfighting requirement exists that supports the
continued ownership and sustainment of the current Small Unit Support
Vehicle (SUSV) or a successor (e.g. JAASV). The Army's current
modernization priorities are designed to drive the allocation of
limited resources to ensure overmatch with respect to anticipated
threats and operational requirements. At the same time, I also
recognize that our Total Force faces unique needs in cold weather,
austere, and other environments. I remain committed to evaluating how
those capability requirements align with the Army's modernization and
sustainment priorities-including identifying the optimal way to procure
new capabilities within available authorities and funding.
combat rescue helicopter acquisition timeline
55. Senator Sullivan. Secretary Wilson, given the critical
importance of the personnel recovery mission to the Air Force, what
steps is the Air Force taking to ensure an on-time delivery of the Ops
Loss Replacement helicopter (and eventually, the Combat Rescue
Helicopter) to sustain this sacred mission?
Secretary Wilson. The Air Force is diligently working to deliver
the Operational Loss Replacement HH-60Gs. The Air Force is committed to
Combat Rescue Helicopter. The Air Force structured the contract for
Combat Rescue Helicopter to incentivize early delivery. If the
contractor meets the goal, they receive an incentive and we immediately
start procurement
__________
Questions Submitted by Senator David Perdue
acquisition strategy--are we ignoring the medium term?
56. Senator Perdue. Secretary Lord, DOD is facing today in terms of
balancing readiness, modernization, and this time in between where
we're seeing increasing capability gaps. The last big boost in military
spending, wasn't to recap, but rather was spent fighting wars. As you
well know, we're still living on the last legs of the Reagan build-up,
and all the bills are coming due at once with a major acquisition bow
wave. At the same time, our adversaries are showing that they can get
new platforms online a lot faster than we can. Right now, we're dealing
with the near-term issue of restoring readiness in the immediate future
of 0-3 years, and we're also focusing on future threats and
capabilities in the 15-25 year-out window. I'm concerned we're not
looking to the 3-12 year window, where we're going to see a lot of
capability gaps--including with our submarine fleet, the JSTARS recap,
and other programs. Defense expert Mackenzie Eaglen told this committee
last week that, quote, ``policymakers must avoid a ``barbell''
investment strategy that deemphasizes the medium-term needs of the
2020s.'' As I said on Thursday, I worry that's what we're doing now
with JSTARS. How will acquisition reforms help us bridge the capability
gaps we're going to have in the next 3-12 years?
Secretary Lord. While the modernization of the platforms supporting
the nuclear triad is a long term challenge, we are making investments
in more robust capabilities for the mid-term. We are ramping up
production of the F-35; increasing quantities of ground systems such as
Joint Light Tactical Vehicle, Armored Multi-Purpose Vehicle, Paladin
Integrated Management, and the M-1 Abrams Tank Modification/Upgrades;
and going to maximum rates of production across multiple preferred
munitions. We also have opportunities to address medium term capability
needs by inserting innovative technologies that enhance our
capabilities and confound our adversaries; for example, by exploring
opportunities and new capabilities that sustain and extend DOD's
military advantage in the Electromagnetic Spectrum. The Department's
commitment to Modular Open Systems Architecture and standard interfaces
encourage traditional and non-traditional sources of supply to offer
subsystem options and more rapid insertion of capabilities into
platforms. And our investments in advanced design and manufacturing
tools enable faster and more affordable prototype development, which
accelerates time to market. The broad reform efforts within the
Department aimed at improving business operations will generate savings
that can be applied to more pressing warfighting needs in the 2020's.
The Department also requires the support of Congress to reduce the
costs of things we no longer need such as excess infrastructure and,
where warranted, program cancellations. Most importantly, we need
repeal of the Budget Control Act caps and substantially higher topline
to pay for increases in procurement and targeted force structure
growth.
57. Senator Perdue. Secretary Lord, will you commit to working with
me and this committee to look at low-cost, rapid solutions which
support our first National Defense Strategy, for JSTARS recap and other
programs so we can be sure that we're taking care of our needs in the
near, medium, and long term?
Secretary Lord. I look forward to working with you and the
committee to look at low cost, rapid solutions to meet our national
defense needs for the future.
jstars--example of rapid acquisition?
58. Senator Perdue. Secretary Lord, the JSTARS program is a unique
capability that provides not only valuable ISR--including ground moving
target indicator, but also battle management and command and control in
an on-board management suite that allows warfighters on the tactical
edge of battle to cut through the fog of war, real-time. In fact, Air
Combat Commander General Holmes testified in March of 2015 that, quote,
``The capability to perform this dual mission at the tactical edge
provides C2 (command and control) mission assurance in a contested
environment. The USAF is fully committed to the JSTARS mission.'' Since
1991 when the initial JSTARS concept was proven as a critical, joint,
combat capability for real time intelligence, battle management and
command and control which we still use today on the E-8C fleet of
aircraft. In 1999, the Air Force decided the unique JSTARS capability
should be recapitalized and developed the initial JSTARS recap for the
E-10. However, in 2008 and after spending almost $2 billion in research
and development, the E-10 program was cancelled, with the intent of
replacing JSTARS with a future, space-based or networked technology.
The legacy fleet continues to perform and support forces across the
globe identifying threats on the ground and providing timely
intelligence analyzed by airmen and soldiers on board to manage the
battle for ground forces. According to the Congressional Research
Service, in 2008 the E-10, which was the first attempt at a JSTARS
recap, was cancelled because quote, ``Some people believed the mission
could be accomplished by space-based assets, while others, viewed
unmanned aircraft as most cost effective, while others believed in
downgrading with role of high-cost platforms in favor of networked,
distributed collection systems.'' That sounds like the exact same
strategy the Air Force is considering pursuing again, while the legacy
fleet continues to support real world missions and is now 9 years
older, with uncertainty on the what the replacement will be, how much
the replacement will cost, and when that replacement will be developed,
tested and fielded if the JSTARS acquisition strategy changes. This
envisioned future, space-based technological replacement never came to
fruition, and not until 2015 did the DOD decide to start the current
JSTARS recap program. And as they looked at how to move forward, they
had 5 analyses of alternatives telling them that the current JSTARS
recap plan is the best way to proceed to fulfill this critical
capability. The current JSTARS recap program is scheduled to announce
source selection early next year based on the fiscal year 2018
acquisition strategy. All while the current, aging legacy fleet is
being sustained for $348 million per year, with growing sustainment
costs and time in depot to conduct maintenance and modifications. I
agree that the Air Force needs to plan for and maintain Air
Superiority, today and in the future, in 2030 and beyond with cost
effective modernization. However, for JSTARS we need rapid, innovative,
bridging or interim solutions to cover the gap created by cancelled and
changing acquisition strategies based on something better in the future
without a cost or schedule. Right now, we're heading towards a massive
capability gap. The current JSTARS recap, which could be fielded within
the next five year Future Years Defense Program (FYDP) based on the
latest schedule we have seen, is a perfect candidate to use for rapid
acquisition to field the next planes quicker and reduce the sustainment
costs of the legacy fleet, which is probably a lower cost solution than
the proposal I have seen to bridge the gap until the latest and
greatest can come online in 2030 or even later. We need to close this
capability gap that I see happening between fiscal year 2019 (when 3
planes from legacy fleet go offline) and 2030 (an optimistic estimate
of when the new system will be up and running). We need this capability
today and in the future with non-traditional concepts. Do you think the
JSTARS recap is a program that could benefit from a rapid acquisition,
given the legacy fleet sustainment costs, PDM delays, and long lead
time for us even getting the technology to provide a new solution?
Secretary Lord. As the Department moves forward in recapitalizing
the JSTARS capabilities, I believe there should be opportunities to
leverage rapid acquisition processes to ensure we continue to provide
the capabilities provided by JSTARS in all warfighting environments in
a prudent and expeditious manner.
59. Senator Perdue. Secretary Lord, General Holmes previously
testified to Congress that the recap would reduce operation and
sustainment costs by 27 percent compared to the legacy fleet. Would you
be open to looking at the JSTARS recap as a rapid acquisition as a way
to save costs as we work towards a future solution?
Secretary Lord. Yes, I would be open to looking to leverage rapid
acquisition processes to save cost as we pursue future solutions to
provide the battle management command and control and wide area
surveillance capabilities capable of operating in all warfighting
environments.
60. Senator Perdue. Secretary Lord, if JSTARS is not a candidate
for rapid acquisition, why not?
Secretary Lord. We will explore opportunities to leverage rapid
acquisition processes to save both cost and time as the Department
moves toward future solutions to provide JSTARS capabilities.
61. Senator Perdue. Secretaries Lord, Esper, Wilson, and Geurts, do
you agree that the JSTARS should be considered a joint program in terms
of your oversight policy since the Air Force, Army, Marine Corps and
Navy all depend on its targeting information to detect and attack
moving ground targets?
Secretary Lord. While the JSTARS platform is but one of our many
warfighting assets that provide vital data to a myriad of joint
customers, only the Air Force will procure and operate the aircraft.
This is different from traditional joint programs, such as the F-35
Lightning II and the Joint Light Tactical Vehicle, where more than one
service will procure and operate the weapon system. Our traditional
management approach is appropriate for the JSTARS program.
Secretary Esper. We have no issues with the Air Force continuing to
be the executive agent for JSTARS.
Secretary Geurts. From an acquisition perspective, the Navy does
not believe that JSTARS should be considered a joint program in terms
of Navy oversight policy. That being said, the Navy's Intelligence,
Surveillance and Reconnaissance (ISR), requirements are satisfied by
the Global Force Management (GFM) process. The Navy agrees that JSTARS
fills a Combatant Commander (COCOM) requirement.
Secretary Wilson. The Air Force would defer to Ms. Lord and
Secretary of Defense, in consultation with Combatant Commanders, on
this inquiry.
62. Senator Perdue. Secretaries Esper and Geurts, since the JSTARS
platform supports your soldiers on the ground, could you tell me if
you've been consulted about the new approach to the JSTARS recap, and
how this decision to accept more risk in the interim will impact to our
soldiers, sailors and marines in theater on the ground?
Secretary Esper. The Army is aware of the approach to the JSTARS
recap. The Air Force plans to utilize the RQ-4 Global Hawk Block 40
GMTI sensors during the JSTARS recap transition to mitigate risk. The
Air Force has committed to continuous coordination with the Army to
ensure interoperability and maximize sharing of collected data. The
Army remains platform-agnostic to how we receive GMTI data.
Secretary Geurts. Having assumed my position as ASN RD&A in
December 2017, I have not yet been consulted about JSTARS.
isr requirements
63. Senator Perdue. Secretary Wilson, as a follow up to a RFI
submitted through the Air Force Liaison Office on November 2nd, could
you clarify the ISR statistics for me--you have said that today only 5
percent of ISR requirements are being supported. Of the 5 percent
supported, what percentage is filled by JSTARS?
Secretary Wilson. While the JSTARS currently accounts for 1.4
percent of the total AF ISR contribution and 13 percent of the total
Ground Moving Target Indicator (GMTI) support provided to combatant
commanders, it does this in an uncontested environment. In the future,
near-peer competitors will not allow the joint force unimpeded access
across the battlespace we enjoy today. The JSTARS cannot survive in
that contested environment. However, the Air Force will keep the JSTARS
through the current Future Year Defense Plan, and invest in a family-
of-systems to support combatant commanders in the highly contested
environment of the future.
64. Senator Perdue. Secretary Wilson, could you provide an apples-
to-apples comparison of percentage of ISR requirements being fulfilled
by each of the Air Force's ISR platforms? And of what percentage of ISR
provided is done by each ISR platform?
Secretary Wilson. Our inventory of ISR assets have different
capabilities by design. Together with our team of ISR Airmen doing
analysis, these assets each provide pieces of the puzzle to answer key
intelligence questions. They are part of a larger Joint Force ISR and
Intel Community Enterprise. The table lists the platforms and
contributions to the COCOMs in 2017:
----------------------------------------------------------------------------------------------------------------
Air Force Asset GMTI FMV SIGINT GEOINT
----------------------------------------------------------------------------------------------------------------
E-8C:................................................... 1.4% N/A N/A N/A
MQ-1/9:................................................. N/A 13.8% 8.7% N/A
RQ-4 Block 30:.......................................... N/A N/A 0.7% 6.1%
RQ-4 Block 40:.......................................... 1.0% N/A N/A N/A
RC-135:................................................. N/A N/A 0.4% N/A
U-2:.................................................... N/A N/A 1.0% 6.6%
USAF Total:............................................. 2.4% 13.8% 10.8% 12.7%
DOD Total:.............................................. 5.7% 46.1% 29.2% 20.5%
----------------------------------------------------------------------------------------------------------------
65. Senator Perdue. Secretary Wilson, today 5 percent of ISR
requests are supported, and in 2030, the supported percentage is
expected to fall to 1 percent of ISR requirements supported. If so,
what are the factors driving that reduction in support of ISR request
from 5 percent to 1 percent?
Secretary Wilson. The exact percentage of ISR requirements that
will be satisfied in 2030 is unknown and could vary greatly based on
assumptions. However, based on the historical trends and an increasing
demand for ISR, we know combatant commander requirements will continue
to grow. At the same time service inventories remain constrained at a
relatively steady state. This increasing quantitative gap is further
exacerbated by retaining inventory that is challenged by peer adversary
advancements, reducing our previous qualitative advantage. The Air
Force supports the National Defense Strategy position to migrate away
from costly, non-survivable weapons systems and move toward countering
the gaining influence by potential adversaries. We are building a
strategy to leverage data from multiple domains to create clear
advantage for our military.
66. Senator Perdue. Secretary Wilson, I understand that of the 5
percent of ISR requirements being supported, I understand that roughly
80 percent of the GMTI requirements are supported by JSTARS. Is that
number correct?
Secretary Wilson. JSTARS provides approximately 13 percent of the
total GMTI requirements supported by assets through the Global Force
Management Allocation Process. That equates to about 1 percent of the
total GMTI requested by combatant commanders.
67. Senator Perdue. Secretary Wilson, if we know and expect that
today, what is the plan to address this decrease in support? For
example, if we only have 11 Block 40 Global Hawks that can provide GMTI
(which reportedly would take at least 4 to match the JSTARS in area
covered), and no plans to procure more Block 40 Global Hawks, how are
we going to meet requirements in the interim?
Secretary Wilson. JSTARS will continue to operate throughout the
Future Years Defense Program, as will RQ-4 Global Hawk Block 40, so we
do not anticipate a drop in support to the joint force in the near
term.
68. Senator Perdue. Secretary Wilson, what is a low-cost solution
to fill the loss in capability between today and 2030 and beyond?
Secretary Wilson. We believe a networked system of systems approach
will provide more capability and greater flexibility in the near term
at a lower lifecycle cost, while also providing more capability to the
warfighter in a near-peer engagement.
69. Senator Perdue. Secretary Wilson, what is the feasibility of an
interim solution to mitigate the forecasted gap and reduction in
support between now and 2030 and beyond?
Secretary Wilson. Our work up to now points to a low technical risk
in achieving a near-term, networked GMTI solution.
70. Senator Perdue. Secretaries Lord and Wilson, if we know there
will be a gap in 2030 and beyond, we should work to a rapid acquisition
solution for JSTARS recap, or use a used plane and existing radar for
the recap. Wouldn't you agree that supporting 1 percent of our ground
forces ISR requirements is better than not providing or supporting any
requirements, especially given what JSTARS is doing in less-contested
environments (like counter-drug and counterterrorism missions)?
Secretary Lord. ISR is a critical enabler for our ground forces and
is in extremely high demand across all operational levels. The demand
is insatiable so any amount of ISR we can provide is operationally
valuable. That said, the Department must be prepared to provide
critical ISR capabilities, such as those provided by the current JSTARS
platform, in both contested and less (or non)-contested warfighting
environments. We are committed to doing that in the most cost-effective
and operationally-relevant manner.
Secretary Wilson. ISR is a critical enabler for the joint force and
is in high demand across all spectrums of conflict. The Air Force must
prepare itself to provide ISR for not only counter drug and
counterterrorism missions, but also for high-intensity, near-peer
conflicts. As we move to the future, in line with the National Defense
Strategy, we will use a combination of existing platforms and sensors
while investing in new systems for the long term. We will keep current
E-8C JSATRS operational through the mid-2020s, as we develop and
transition to an advance battle management system.
acquisition speed
71. Senator Perdue. Secretary Lord, do you think the JSTARS recap
is a program that could benefit from a rapid acquisition, given the
legacy fleet sustainment costs, PDM delays, and long lead time for us
even getting the technology to provide a new solution?
Secretary Lord. As the Department moves forward in providing the
next iteration of the Ground Moving Target Indicator (GMTI) and Battle
Management Command & Control (BMC2) capabilities, I believe there are
benefits in leveraging rapid acquisition processes to acquire key
technology solutions for the JSTARS recap program.
72. Senator Perdue. Secretary Lord, given that JSTARS recap is a
joint Major Defense Acquisition Program, will this program be managed
by AT&L or will this Air Force led program which supports the other
services ground forces or will the management of this program be
delegated to the Air Force?
Secretary Lord. The USD(AT&L) is the Milestone Decision Authority
for the JSTARS recap program, however, I am working closely with the
Services to look at every program individually to determine if and when
a given program can be delegated.
jstars--unique capabilities and demand from cocoms
73. Senator Perdue. Secretaries Lord, Esper, Wilson, and Geurts, as
you know, JSTARS is a truly joint platform that provides unparalleled
Battlefield Management, Command and Control, and Intelligence,
Surveillance, and Reconnaissance (BMC2ISR) capabilities. Could you
comment on what makes the JSTARS platform unique across the services
and the importance of this Joint Force capability to the warfighter on
the ground?
Secretary Lord. JSTARS is an important component of a suite of
airborne-based sensors and platforms that support our warfighting
requirements. What makes this unique from other capabilities is that
JSTARS provides airborne Battle Management Command and Control (BMC2)
using an on-board radar capable of providing ground moving target
indications (GMTI) of various target sizes and speeds to our
warfighters in a permissive environment. This target information can
then be matched to direct attack aircraft, stand-off weapons, and
ground based attack assets in direct support to the warfighter on the
ground. This is why it is important the JSTARS replacement be viable in
future contested environments in order to support the joint warfighter
anywhere and anytime.
Secretary Esper. The Army utilizes a wide range of Ground Moving
Target Indicator (GMTI)/Synthetic Aperture RADAR (SAR) collection
platforms and sensors to determine patterns of life, perform
intelligence preparation of the battlefield, define the operational
environment, and evaluate the threats in support of ground forces. The
specific platform and sensor tasked depends on the mission, terrain,
weather, region, and factors such as platform/sensor specifications and
the Joint Commander's priorities. The Army is platform agnostic as to
how it receives GMTI data.
GMTI capability is not unique to JSTARS. There are two other Air
Force platforms that provide high altitude global GMTI coverage, the U-
2 and RQ-4B Global Hawk Block 40. The Navy's MQ-4C Triton and the new
P-8A Poseidon multi-mission aircraft also have this capability. The
Army's medium altitude Aerial Reconnaissance-Low (ARL), Enhanced Medium
Altitude Reconnaissance and Surveillance System (EMARSS), and the MQ-1C
Gray Eagle provide GMTI to Army ground tactical units. While the Army
does not utilize the JSTARS' BMC2 capabilities, the Air Force utilizes
this capability to coordinate air assets to support air and ground
missions.
Secretary Geurts. I am not aware of anything about JSTARS that
makes this platform unique although I do note that it provides critical
capabilities to the Joint Force.
Secretary Wilson. JSTARS is an important airborne BMC2 platform
that can effectively integrate on-board battle management command and
control, robust communications, and wide-area surveillance sensors into
a single platform. However, the system cannot survive in contested
environments. It cannot safely get close enough to perform its critical
mission. We owe it to our warfighters and the American Taxpayer to find
a better way to provide the capabilities.
74. Senator Perdue. Secretaries Lord, Esper, Wilson, and Geurts,
what does JSTARS do that other platforms (specifically AWACS, Global
Hawk, or RPAs) can't?
Secretary Lord. JSTARS provides real-time battle management and
organic wide-area surveillance in support of ground forces on a single
platform.
Secretary Esper. JSTARS is a manned platform that provides both
BMC2 and GMTI data. AWACS is manned but only provides BMC2. The RQ-4
Global Hawk Block 40 and other Remotely Piloted Aircraft (RPAs), such
as Predator or Reaper, are unmanned and provide GMTI data.
Secretary Geurts. I defer to the Air Force regarding JSTARS
capabilities.
Secretary Wilson. JSTARS combines robust communication systems, on-
board battle management, and an organic wide-area surveillance sensor
onto a single aircraft in support of ground forces.
75. Senator Perdue. Secretaries Lord, Esper, Wilson, and Geurts,
Admiral Locklear, the former PACOM Commander, said before Congress in
2015, ``JSTARS is a critically important capability in the ISR world,
also in the battle management world, particularly when you operate in
potentially contested environments where other parts of your command
and control may be under cyberattack or space attack, having an
aircraft that's manned that has that ability to have that functionality
and thinking work is good.'' Would you agree with that assessment?
Secretary Lord. The ability to operate in contested environments
requires us to maintain the right mix of cross-domain solutions for
command and control of our forces.
Secretary Esper. Yes. The mobility of the JSTARS platform will
prove valuable, if other parts of the Joint and Satellite Command and
Control System are under attack. However, the intensity of the
contested environment will impact JSTARS' ability to operate due to
vulnerabilities to threat anti-air capabilities.
Secretary Geurts. I believe this was an honest and accurate
assessment in 2015. Regarding current ISR requirements, I defer to the
Joint Staff and the Combatant Commanders the importance of JSTARS.
Secretary Wilson. The global security environment has changed and
future wars against near-peer adversaries will be devastating if the
Air force does not change to focus our readiness and lethality on
resources for a highly contested environment. The JSTARS cannot survive
in contested environments. Adversary threat systems have evolved
denying our ability to access battlespaces from where JSTARS
communication and sensor capabilities are effective. We believe this
requires us to carefully consider the right mix of capabilities to
ensure resiliency and agility of our ISR and command and control forces
in the future.
76. Senator Perdue. Secretaries Lord and Wilson, without going to a
classified level, can you tell us how JSTARS could maintain command and
control during a cyber or other attack on sensors or satellites?
Secretary Lord. In order to operate in contested environments,
JSTARS requires redundant and protected communications paths to
maintain combat effectiveness.
Secretary Wilson. The system cannot survive in contested
environments, where the aircraft cannot safely get close enough to
perform its critical mission. We expect to operate in contested
environments in all domains, including both space and cyber domains.
Our forces will require redundant, agile communication paths to enable
combat effectiveness. We owe it to our warfighters and the American
Taxpayer to find a better way to provide these capabilities.
77. Senator Perdue. Secretaries Esper, Wilson, and Geurts, how and
why is JSTARS (specifically, its BMC2ISR capabilities) so important to
the joint and combatant commanders needs?
Secretary Esper. The combatant commanders' ability to access GMTI
capability is integral to react to a dynamic and changing operating
environment. This capability to collect GMTI data deep into enemy
territory provides collection to support the combatant commanders'
Priority Intelligence Requirements (PIRs). The Army does not have a
requirement for BMC2.
Secretary Geurts. I defer to the Joint Staff and the Combatant
Commanders the importance of JSTARS.
Secretary Wilson. Effective BMC2 and ISR capabilities accelerate
the find, fix, track, and engage kill chain and provide direct support
to ground units.
78. Senator Perdue. Secretaries Esper, Wilson, and Geurts, what is
the demand signal looking like from your Soldiers, Airmen, Marines and
Sailors through combatant commanders for JSTARS capabilities?
Secretary Esper. The combatant commands' demand for Aerial
Intelligence Surveillance and Reconnaissance (AISR) continues to grow.
The demand for JSTARS GMTI capability is comparable to other AISR
platforms. Demand currently exceeds capacity.
Secretary Geurts. Regarding the current and future demand signal
for JSTARS, I defer to the Joint Staff and the Combatant Commanders.
Secretary Wilson. JSTARS demand signal consistently exceeds
capacity.
79. Senator Perdue. Secretaries Esper, Wilson, and Geurts, could
they use more JSTARS to help with their missions?
Secretary Esper. Additional AISR capability and specifically GMTI,
are always in demand so our current requirements exceed available
capacity.
Secretary Geurts. Regarding the current and future demand signal
for JSTARS, I defer to the Joint Staff and the Combatant Commanders.
Secretary Wilson. Combatant commanders request the use of the
capabilities JSTARS brings in multiple theaters and demand currently
exceeds capacity.
80. Senator Perdue. Secretaries Esper, Wilson, and Geurts, do you
expect demand signal to decrease any time in the near future?
Secretary Esper. No. The Army does not expect the demand signal for
GMTI to decrease, but rather to increase based upon the anticipated
threats and the increasing complexity of the operational environment.
Secretary Geurts. Regarding the current and future demand signal
for JSTARS, I defer to the Joint Staff and the Combatant Commanders.
Secretary Wilson. We do not expect to see a reduction in the demand
signal for JSTARS capabilities in the near future.
81. Senator Perdue. Secretaries Esper, Wilson, and Geurts, to give
you some scenarios, without going into a classified level, if we had a
war with North Korea in the near term, would you need JSTARS?
Secretary Esper. Yes. Once air superiority is established,
platforms with GMTI capability are key components in responding to
combatant commanders' Priority Intelligence Requirements. We need GMTI,
along with other AISR capability.
Secretary Geurts. Regarding operational use of JSTARS, I defer to
the Joint Staff and the Combatant Commanders.
Secretary Wilson. Yes, JSTARS would benefit the Joint Force as both
a battle management command and control and intelligence, surveillance,
and reconnaissance platform. However, the system cannot survive in
contested environments where the aircraft cannot safely get close
enough to perform its critical mission. We owe it to our warfighters
and the American Taxpayer to take a new approach to fulfill the GMTI
and BMC2 missions. To achieve this evolutionary shift, the Air Force is
transitioning from a primarily aircraft-centric approach to a net-
centric approach using sensors across the battlespace linked by agile,
resilient communications to provide the warfighter persistent
capabilities in both uncontested and highly-contested environments well
into the future.
82. Senator Perdue. Secretaries Esper, Wilson, and Geurts, if we
had a simultaneous problem in Europe and Korea, or in the Middle East--
for example Syria or Afghanistan--do we have all the assets today that
we need to meet those simultaneous requirements, in terms of the JSTARS
fleet?
Secretary Esper. No. Requirements exceed current GMTI capacity. The
Joint Staff reallocates assets to meet priorities.
Secretary Geurts. Regarding operational use of JSTARS, I defer to
the Joint Staff and the Combatant Commanders.
Secretary Wilson. No, the simultaneous requirements for BMC2 and
GMTI in these conflicts would likely exceed our current capacity.
jstars recap change in acquisition strategy
83. Senator Perdue. Secretaries Lord and Wilson, has a cost
estimate been conducted on a new JSTARS replacement (ie the ABMS if
JSTARS recap is cancelled), and how does that compare to the current
JSTARS recap total program cost?
Secretary Lord. I have not been briefed on an updated cost
estimate, however, I will continue to work with the Air Force to
understand the costs as they evolve to their future system of systems
approach to providing battle management command and control and wide
area surveillance to the Joint Force.
Secretary Wilson. The Air Force realizes the importance of the
Ground Moving Target Indicator and Battle Management Command & Control
missions. As we evolve the mission to a system of systems approach, we
will provide a detailed cost estimate.
84. Senator Perdue. Secretaries Lord and Wilson, has a cost benefit
analysis been conducted on a new strategy for JSTARS recap, given that
JSTARS recap is the number four acquisition priority for the Air Force
in a fiscally constrained environment?
Secretary Lord. There has not been an updated cost benefit analysis
conducted by the Air Force regarding their new strategy for JSTARS
Recap.
Secretary Wilson. No, there has not been a cost benefit analysis
regarding a new strategy for JSTARS Recapitalization.
85. Senator Perdue. Secretary Wilson, I understand that it would
take multiple RQ-4 Global Hawk Block 40s to provide the same broad view
of the battlespace as JSTARS does today with one aircraft. How many
Global Hawk Block 40s would provide the same coverage as a legacy
JSTARS for GMTI given the difference in size of the antennas on the E-
8C and RQ-4 block 40?
Secretary Wilson. It would take approximately two RQ-4 Block 40s to
provide the same maximum geographic coverage as a JSTARS system.
However the long endurance of the RQ-4 Block 40 significantly reduces
the force structure costs and eliminates the air refueling costs to
sustain a 24-hour operations. Also, the RQ-4's higher operating
altitude provides better visibility in complex terrain types. Lastly,
the remotely piloted aspect of the RQ-4 eliminates risk to aircrew in a
more contested operations environment.
86. Senator Perdue. Secretary Wilson, I understand there will be a
capability gap if the RQ-4 Global Hawk Block 40s provide GMTI in place
of the E-8Cs, given the sensors and ground-based BMC2 are not currently
available. Does the Air Force intend to invest in more Block 40s to
provide an equivalent capacity (comparable coverage) and capability
(comparable timely analysis and battle management) of GMTI coverage for
ground forces?
Secretary Wilson. At this time, the Air Force has no plans to
invest in additional RQ-4 Global Hawk Block 40s and there is no funding
allocated for the procurement of additional Block 40s in the future.
87. Senator Perdue. Secretary Wilson, if not, why not?
Secretary Wilson. We routinely consider the right mix of ISR
capabilities and currently we don't believe additional RQ-4 Global Hawk
Block 40s are required.
88. Senator Perdue. Secretaries Esper, Geurts, and Wilson, what is
the risk to the ground forces of no longer having GMTI and BMC2
available to ground forces with a capability gap and possible
transition to RQ-4 Global Hawk Block 40s with yet-to-be-developed
sensors ground based BMC2 capability?
Secretary Esper. The Army does not foresee a risk, assuming the
capability gap can be mitigated by other Services' GMTI capabilities.
Secretary Geurts. Regarding operational use of JSTARS, I defer to
the Joint Staff and the Combatant Commanders.
Secretary Wilson. The Air Force budget request in the Fiscal Year
2019 President's Budget operates the E-8C JSTARS and the RQ-4 Block 40
Global Hawk, at the same level of support to ground forces, throughout
the Future Year Defense Plan (2019-2023). This mitigates near-term
capability gaps while the Air Force develops the future replacement
systems.
89. Senator Perdue. Secretaries Esper and Geurts, what are your
thoughts on a possible JSTARS recap capability gap in the next 3-12
years in support for your ground forces?
Secretary Esper. JSTARS recap would be important to the Army to
continue to receive GMTI data to ground forces from the future JSTARS
platform.
Secretary Geurts. I am not aware of a future JSTARS recap
capability gap.
90. Senator Perdue. Secretaries Esper and Geurts, what is the risk
to our ground forces in the next 3-12 years without a JSTARS recap, and
relying on other ISR assets that are currently overstretched?
Secretary Esper. Without a JSTARS recap and no other replacement
for the GMTI capability that JSTARS currently provides, the Joint Force
will have less GMTI capacity.
Secretary Geurts. Regarding operational use and demand signal for
JSTARS, I defer to the Joint Staff and the Combatant Commanders.
91. Senator Perdue. Secretaries Esper and Geurts, have you
submitted issue papers or letters of dissent during the POM-19 process
regarding the JSTARS recap decision?
Secretary Esper. No. The Air Force provided a bridging strategy to
utilize the RQ-4 Global Hawk Block 40, which will provide GMTI to
ground forces. Additionally, the Services can provide other GMTI
capabilities for Joint Staff allocation.
Secretary Geurts. To my knowledge, the Navy has not submitted any
issue papers or letters of dissent during the POM-19 process regarding
the JSTARS recap decision.
92. Senator Perdue. Secretaries Lord and Wilson, I understand that
a competitive range determination was made on November 8, 2017 for the
radar for the JSTARS recap. However, the Radar Risk Reduction was
extended through December 20, 2017, and the RRR was not yet complete
when this decision was made. Why did the Air Force ``down-select'' on a
radar prior to the completion of a $130 million radar risk reduction
program? How will this impact the source selection for the JSTARS
recap?
Secretary Lord. The details regarding the Air Force's competitive
range determination are source selection sensitive. Therefore, I have
not been briefed on the Air Force's rationale or the impacts on their
source selection timelines.
Secretary Wilson. The Radar Risk Reduction and competitive range
determination for source selection activities are independent efforts.
The competitive range decision was not contingent upon the completion
of Radar Risk Reduction activities. Any further details regarding the
acquisition remain source selection sensitive.
software acquisition reform
93. Senator Perdue. Secretary Lord, what specific changes are you
making to the way you manage software?
Secretary Lord. The Department believes that software development
is never complete and must be managed as a continuously improving
product. This is largely done post initial capability development.
Industry best practices of smaller incremental improvements that are
robustly and automatically tested then deployed are being pursued. In
short, contracting language to incentivize agile software development
frameworks and secure continuous development and delivery is now being
considered.
Several programs, such as the Reserve Component Automation System,
already utilize a variety of agile development tools and quality
metrics (such as velocity, sprint burn down charts, and release burn up
charts). Newer piloting activities, particularly in the area of cyber
capability development, are also instituting governance forums to
emphasize user involvement in early experimentation/observation efforts
and allow user feedback to shape capability development, with less
emphasis on perfecting requirements or upfront planning ahead of the
actual development activity. We anticipate that new programs of record
that stem from these pilots, such as the forthcoming Joint Cyber
Command and Control, Unified Platform, and Persistent Cyber Training
Environment, will benefit from these types of governance processes.
Our efforts are not yet mature enough to have settled on final best
practices, but we have begun revising policy guidelines. Since
publishing a new instruction for business systems acquisition in
February 2017, the Department continues to work through organizational
and cultural changes, implement the policy and adopt industry best
practices. OSD established a community of practice approach to policy
clarification and training. Business systems acquirers in the Services
and DOD Components work with functional proponents to manage their
programs. As part of the AT&L reorganization, I am creating a Special
Assistant for Software that will report to me directly. This office
will focus on addressing the challenges that the Department has faced
with implementing and managing major software based programs or complex
weapon systems, like the Joint Strike Fighter program, that include a
significant amount of embedded software.
As you know, newly enacted sections 873 and 874 of the Fiscal Year
2018 NDAA require that DOD select a number of programs to pilot agile
development methods. My staff is assessing several high-risk, software-
intensive candidates to pilot use of tailored acquisition procedures
and DevOps software methods to meet simplified requirements. Each
Service has had programs that experienced cost growth, schedule delays,
or difficulty in delivering operational capability. These programs
present opportunities to try new and innovative acquisition approaches
precisely because cost/schedule/performance are already off track. The
potential benefits from new development methods outweighs concerns
about deviating from an existing and previously unsuccessful plan. We
will monitor the selected programs to inform further development of
best practices guides, Defense Acquisition University training
materials, and policy changes. It is important that we consider and
assess the best approach for bringing essential reliability and
cybersecurity skills into the engineering and design process early
enough to avoid costly redesign and late defect discovery--and enable
rapid incremental delivery of secure, reliable software. Updating
current policy will be an iterative effort as we continue to gain agile
software development experience. Formal acquisition policy changes are
forthcoming that will institutionalize several improvements undertaken
over the past two years via legislation, including transition or
delegation of milestone decision authority to the lowest appropriate
level. This will reduce decision delays and streamline alignment of
resources with schedules to reflect end-user capability needs and
timelines.
In addition, we will leverage several years of work piloting Rapid
Cyber Acquisition processes allowed within existing law and policy to
assist United States Cyber Command as they comply with the Fiscal Year
2018 NDAA section 1642 requirement to complete an `` . . . evaluation
of alternative methods for developing, acquiring, and maintaining
software-based cyber tools and applications.'' In short, we are
committed to rapidly modernizing how DOD develops software.
94. Senator Perdue. Secretary Lord, which programs do you intend to
make changes to?
Secretary Lord. I defer to the Service Acquisition Executives to
confirm changes envisioned for those programs for which I have
delegated Milestone Decision Authority, in accordance with section 825
of the Fiscal Year 2016 NDAA. However, I anticipate the Services and
DOD Components will be making changes to several programs, with OSD
support as needed.
In addition, we are changing our approach to some complex, joint
programs for which I have retained acquisition oversight. We are
leveraging commercial best practices and lessons learned from early
work of the Defense Digital Service and the Defense Innovation Unit
Experimental (DIUx) for programs such as the F-35 Lightning II, Next
Generation Operational Control System (OCX), and Air & Space Operations
Center--Weapon System (AOC-WS).
The F-35 Joint Program Office (JPO) has reassessed the planned
approach for executing Follow-on Modernization (FoM) and determined
that we cannot continue as we did in the System Development and
Demonstration (SDD) phase to apply a slow, rigid ``big bang''
development approach2 designed and optimized for hardware intensive
solutions. The F-35 JPO is instead establishing a holistic acquisition
strategy based on agile practices called Continuous Capability
Development and Delivery (C2D2). The C2D2 methodology is designed to
deliver continuous modernization, enhancements, and improvements to the
entire F-35 Air System, and deliver Block 4 in smaller capability drops
to the Warfighter on an expedited timeline. This new agile approach to
capability development will be characterized by capability-based
engineering, agile/automated test, parallel development and operational
test, flexible contract strategies, and new Cost Estimating
Relationships. Additionally, this approach will be facilitated by an
increased use of open architectures, Government-purpose data rights,
and the right organic software engineering skill sets to effectively
manage the process. The result is that capabilities will be
continuously developed using expedient, tailored, predictable processes
and will be available to the field in relevant, timely, verified
releases. The Department must apply a more rapid and iterative process
to field its software intensive solutions, aligned with enabling
hardware upgrades, to keep pace with the dynamic threat environment and
maintain the viability of the Joint and International F-35 fleet over
its 50+ year lifecycle. The F-35 JPO is now in the process of
formalizing the C2D2 acquisition strategy.
Following a Critical Change in 2016, the AOC-WS program continued
to struggle with a traditional acquisition approach. Even the most
optimistic schedule projections indicated the program would not field
capability for several more years. The Air Force re-assessed AOC
modernization plans in light of DIUx successes with agile development
of the Tanker Planning Tool (TPT). The Air Force is now pursuing a
twelve month Pathfinder proof of concept that will deliver a dynamic
targeting capability and validate the agile methodology. OCX is
currently implementing modern software development techniques via
DevOps. This approach, recommended by Defense Digital Services, will
help produce high quality software for Blocks 1 and 2. Raytheon expects
to field those major system elements in 2021-2022.
As a result of sections 873 & 874, of the Fiscal Year 2018 NDAA and
with the Department's adoption of commercial best practices, the
Services and Defense Agencies are encouraged to adopt iterative and
agile approaches more broadly in order to reduce the time needed to
deliver capabilities. The Defense Innovation Board, the Defense Digital
Service, DIUx, and the Department as a whole will continue to examine
high payoff opportunities for streamlining of current policies,
practices, and processes.
95. Senator Perdue. Secretary Lord, how will you ensure that new
software intensive programs do not fall victim to the same problems
that plague current programs?
Secretary Lord. The Department is early in the process of adopting
DevOps and agile software development practices to deliver software
capabilities more rapidly and in smaller increments. Several programs,
such as the Reserve Component Automation System, already utilize a
variety of agile development tools and quality metrics (such as
velocity, sprint burn down charts, and release burn up charts). Newer
piloting activities, particularly in the area of cyber capability
development, are instituting governance forums to emphasize user
involvement in early experimentation/observation efforts and allow user
feedback to shape capability development, with less emphasis on
perfecting all requirements before proceeding to development
activities. We anticipate that new programs of record that stem from
these pilots, such as the forthcoming Joint Cyber Command and Control,
Unified Platform, and Persistent Cyber Training Environment, will
benefit from these types of governance processes.
In addition, practitioners will be able to share lessons learned,
isolate recurring challenges, and identify requests for policy-makers
to remove bureaucratic roadblocks. OSD will engage with governance
across portfolios of programs to ensure they are progressing toward
their objectives.
We should expect improved outcomes when DOD and industry
collectively empower a workforce of motivated and properly trained
program management teams with sufficient insight into the risks,
opportunities and ultimate rewards of a capability developed, tested,
and fielded quickly and with end-user participation. To modernize
software engineering (SWE) competency and practice, we need to start
with our people. The Department needs to be able to identify and
characterize its software engineering and acquisition professionals so
that it can assess and address its SWE workforce gaps (quantity/
quality) and inform its recruiting efforts. Recent rapid advances in
SWE skills, technology, and modern software development practices have
proven highly successful in a competitive marketplace. Examples include
scaled Agile, build/test/release automation environments, continuous
integration and tool chains, and DevOps. To increase use of these
solutions, the Department must realign its processes for identifying,
training and managing software competencies to keep pace with these
advances. Initial policy changes and process improvements are already
underway. These initial steps are part of a crawl, walk, run strategy
that addresses an increasingly complex and uncertain cyber environment
and that will transform our software development processes and improve
our products in the months and years to come.
96. Senator Perdue. Secretary Lord, as the Department and Services
seek to change their acquisition systems, particularly in the context
of software intensive systems, in what ways do you need to change your
approach to testing?
Secretary Lord. Software is an integral part of all Department
capabilities, to include weapon systems, information enablers and
business systems. The Department needs to modernize our practices,
workforce competencies and training to enable more rapid delivery of
reliable and secure software across the enterprise. DOD needs to
consider how modern, commercial best practices and robust software
development can help avoid late big bang integration and defect
discovery. The Department also needs to move towards earlier, more
frequent test engagements, which are focused on working capabilities,
using short cycle, incremental, testable software builds. This allows
developers to conduct multiple test and integration events and field
intermediate products to gain user acceptance and feedback to improve
future builds or increments. Cybersecurity T&E must be integrated with
these efforts, and the Department is working to provide acquisition
programs with approaches to integrate earlier cybersecurity testing and
industry software testing best practices.
97. Senator Perdue. Secretary Lord, what changes do you intend to
make to developmental test processes and organizations?
Secretary Lord. Software is an integral part of all Department
capabilities, to include weapon systems, information enablers and
business systems. The Department needs to modernize our practices,
workforce competencies and training to enable more rapid delivery of
reliable and secure software across the enterprise. DOD needs to
consider how modern, commercial best practices and robust software
development can help avoid late big bang integration and defect
discovery. The Department also needs to move towards earlier, more
frequent test engagements, which are focused on working capabilities,
using short cycle, incremental, testable software builds. This allows
developers to conduct multiple test and integration events and field
intermediate products to gain user acceptance and feedback to improve
future builds or increments. Cybersecurity T&E must be integrated with
these efforts, and the Department is working to provide acquisition
programs with approaches to integrate earlier cybersecurity testing and
industry software testing best practices.
Testing is a critical component of software development and can be
a time-consuming aspect of software delivery. The Department's testing
communities need to evolve their testing policies, procedures and
approaches to accelerate software fielding cycles. Automation and
artificial intelligence are areas the Department needs to invest in and
leverage highly efficient industry best practice, improved adoption of
automation, artificial intelligence, and higher fidelity integration
labs. The Department's testing community needs to collaborate with
industry to identify new ways of addressing software testing
requirements and adopt best practices for agile development and DevOps
development which leverage performance and cybersecurity test data from
early in development through sustainment. For example, in fiscal year
2017, the current OSD level DT&E organization supported 22 Cyber Table
Top Exercises with programs that averaged identified 15 High or Very
High system vulnerability risks per event. Cybersecurity risk will
continue to challenge the Department as it moves to more COTS based
software and cloud-based environments. Mission-Based Cybersecurity Risk
Assessments must become the norm across the system development life
cycle for the Department.
I will work with the Undersecretary of Defense for Research and
Engineering and the Director of Operational Test and Evaluation
community to include the operational test community's equities of
suitability, effectiveness, and cybersecurity are considered early in
both the design and the developmental test process to ensure efficient
testing is done. My ultimate goal is to acquire safe, combat-capable
systems for the Warfighter at the speed of relevance.
98. Senator Perdue. Secretary Lord, how can you better collaborate
with the Director of Operational Test and Evaluation to speed time to
deployment while making sure that deployed capabilities are safe and
fit for purpose?
Secretary Lord. Software is an integral part of all Department
capabilities, to include weapon systems, information enablers and
business systems. The Department needs to modernize our practices,
workforce competencies and training to enable more rapid delivery of
reliable and secure software across the enterprise. DOD needs to
consider how modern, commercial best practices and robust software
development can help avoid late big bang integration and defect
discovery. The Department also needs to move towards earlier, more
frequent test engagements, which are focused on working capabilities,
using short cycle, incremental, testable software builds. This allows
developers to conduct multiple test and integration events and field
intermediate products to gain user acceptance and feedback to improve
future builds or increments. Cybersecurity T&E must be integrated with
these efforts, and the Department is working to provide acquisition
programs with approaches to integrate earlier cybersecurity testing and
industry software testing best practices.
Testing is a critical component of software development and can be
a time-consuming aspect of software delivery. The Department's testing
communities need to evolve their testing policies, procedures and
approaches to accelerate software fielding cycles. Automation and
artificial intelligence are areas the Department needs to invest in and
leverage highly efficient industry best practice, improved adoption of
automation, artificial intelligence, and higher fidelity integration
labs. The Department's testing community needs to collaborate with
industry to identify new ways of addressing software testing
requirements and adopt best practices for agile development and DevOps
development which leverage performance and cybersecurity test data from
early in development through sustainment. For example, in fiscal year
2017, the current OSD level DT&E organization supported 22 Cyber Table
Top Exercises with programs that averaged identified 15 High or Very
High system vulnerability risks per event. Cybersecurity risk will
continue to challenge the Department as it moves to more COTS based
software and cloud-based environments. Mission-Based Cybersecurity Risk
Assessments must become the norm across the system development life
cycle for the Department.
I will work with the Undersecretary of Defense for Research and
Engineering and the Director of Operational Test and Evaluation
community to include the operational test community's equities of
suitability, effectiveness, and cybersecurity are considered early in
both the design and the developmental test process to ensure efficient
testing is done. My ultimate goal is to acquire safe, combat-capable
systems for the Warfighter at the speed of relevance.
__________
Questions Submitted by Senator Ben Sasse
diux
99. Senator Sasse. Secretary Lord, what obstacles do you anticipate
while making DOD's overall acquisition effort function more like DIUx,
the Strategic Capabilities Office (SCO), and the Rapid Capabilities
Offices (RCO) in the various services?
Secretary Lord. We intend to transition from a traditional, linear
acquisition process to an adaptive acquisition ecosystem. The goal of
this transition is to allow acquisition professionals to use multiple
pathways/models for their programs as a standard practice. In some
cases, that will require the agility demonstrated in the DIUx/SCO/RCO
models. When successfully prototyped and implemented, the goal would be
to scale the innovative solution across the adaptive acquisition
ecosystem. We will need to attract, develop and retain the appropriate
acquisition work force. A key element for training will be to
reorganize the Defense Acquisition University (DAU) curriculum to focus
on the appropriate use of specific contract vehicles by presenting case
studies that depict actual programs. I envision a much more modular
approach to developing courses with one to two day modules focusing on
specific subjects with pertinent examples. We desire to instill a
culture of ``creative compliance''.
100. Senator Sasse. Secretary Lord, how will you scale the
acquisition success you've had with DIUx, SCO, and the RCOs as you
begin the formal split of Acquisition, Technology, and Logistics (AT&L)
into Research and Engineering (R&E) and Acquisition and Sustainment
(A&S) on February 1, 2018?
Secretary Lord. We intend to transition from a traditional, linear
acquisition process to an adaptive acquisition ecosystem. The goal of
this transition is to allow acquisition professionals to use multiple
pathways/models for their programs as a standard practice. In some
cases, that will require the agility demonstrated in the DIUx/SCO/RCO
models. When successfully prototyped and implemented, the goal would be
to scale the innovative solution across the adaptive acquisition
ecosystem. We will need to attract, develop and retain the appropriate
acquisition work force. A key element for training will be to
reorganize the Defense Acquisition University (DAU) curriculum to focus
on the appropriate use of specific contract vehicles by presenting case
studies that depict actual programs. I envision a much more modular
approach to developing courses with one to two day modules focusing on
specific subjects with pertinent examples. We desire to instill a
culture of ``creative compliance''.
101. Senator Sasse. Secretaries Esper, Geurts, and Wilson, how has
your service worked with DIUx or other offices to use Other Transaction
Authority (OTA) to speed up acquisition cycles?
Secretary Esper. The Defense Innovation Unit Experimental (DIUx)
provides a mechanism for the Army to connect with small, non-
traditional businesses in the technology sector, and has assisted the
Army with contracting and market research to speed up acquisition
cycles. For example, DIUx supported the Army Cyber Command in the
procurement of an industry standard end-point platform that increases
network asset awareness and visibility. The Army has achieved success
using Other Transaction Authority (OTA) for prototyping and limited
fielding of defensive cyberspace operations (DCO) capabilities. The
Army will continue to leverage OTAs and other instruments to keep pace
with the rate of technological change, as well as enable widespread use
of evolutionary and streamlined acquisition approaches.
Secretary Geurts. The DON uses OTAs to accelerate prototyping and
acquisition, where appropriate, and has engaged with DIUx and other
offices on multiple occasions.
DON's recent and current OTA efforts leverage the U.S. Army's OTA
experts in Picatinny working through DIUx and a number of industry
consortia for command and control, cyber, vertical lift and ordnance.
Some examples include use of the Army's DOD Ordnance Technology
Consortium for prototypes and demonstrations for the Electromagnetic
Rail Gun, the Hypervelocity Projectile, high energy lasers, and radio
frequency weapons technology. Our special operations forces, explosive
ordnance disposal community, C4I professionals, and unmanned underwater
vehicle designers are all currently using OTA for advances in unmanned
and counter unmanned systems, human systems and talent management, and
leading edge software development techniques from Silicon Valley.
Early collaboration has shown promise in getting the best
commercial innovators and technology to help develop superior war
fighting capability. Future efforts include expanding with key Naval
warfare centers, system centers and laboratories, and continued
leveraging of existing mechanisms such as Small Business Innovative
Research.
Secretary Wilson. We have multiple examples where OTAs have been
used and would like to see replicated. One of these highly successful
examples is the Light Attack Experiment, a live-fly event held in
August 2017. Use of the OTA allowed the Air Force to move quickly, with
the Light Attack Experiment taking place within 5 months of the
Invitation to Participate being released to industry. Being able to
move rapidly is critical to ensuring the Air Force can efficiently and
effectively execute our experimentation campaigns. These campaigns are
not acquisition programs, and allow the Air Force to explore the art of
the possible and quickly assess utility for the warfighter.
A second example is the Command, Control, Communications,
Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) OTA
consortium managed by the Air Force Research Laboratory (AFRL). AFRL's
Information Directorate in Rome, New York has an OTA with the System of
Systems Security Consortium (SOSSEC) to develop C4ISR Information
System prototypes, which will provide ``plug-n-play'' technologies via
modern open systems architectures to provide rapid adaptation and
integration of new capabilities. The agreement allows AFRL to quickly
and efficiently reach the 70+ member companies of SOSSEC while
leveraging SOSSEC as a single point intermediary, reducing overhead and
facilitating project execution.
The Air Force currently has four OTAs with industry for rocket
propulsion systems, all of which require shared cost investment between
the government and industry. These investments initiate the transition
off the RD-180 by investing in critical Rocket Propulsion System
technologies. These Rocket Propulsion Systems were proposed by industry
for commercial launch systems that can be enhanced to meet more
stressing National Security Space requirements. The Air Force intends
to release an RFP later this summer for Launch Service Agreements to
complete the development of the replacement launch systems continuing
the shared industry/government investment approach.
Finally, the Air Force established a Space Enterprise Consortium
using an OTA to utilize for prototyping activities and to attract new
space and non-traditional mission partners.
affordable acquisition
102. Senator Sasse. Secretary Lord, are any legislative, policy, or
regulatory changes needed to increase small businesses or non-
traditional defense contractor involvement in DOD acquisition programs?
Secretary Lord. As I lead the congressionally directed
reorganization of DOD's management of Acquisition, Sustainment,
Research and Engineering; I will identify and implement or recommend
appropriate legislative, policy, or regulatory changes to increase
small business or non-traditional defense contractor involvement in DOD
acquisition programs. In the meantime, I recommend the following six
legislative changes related to the Small Business Innovation Research
and Small Business Technology Transfer (SBIR/STTR) programs to
immediately help DOD increase small business or non-traditional defense
contractor involvement in DOD acquisition programs.
1. Program Permanence for SBIR and STTR--The SBIR and STTR
programs are proven enablers that allow DOD to engage with small
business and research institutions to develop technical capabilities
for many complex problems facing our warfighters today. In addition to
providing enhanced capabilities for national security, these programs
are a significant driver of innovation in our Nation-leveraging U.S.
strengths in entrepreneurship, acceptance of risk, and access to
technical talent and smart capital to create businesses that are
shaping the commercial technology landscape. In fact, the section 809
panel volume 1 report recommended DOD, ``Build on the success of the
SBIR/STTR and RIF programs.'' Unfortunately, these two critical
programs, SBIR/STTR, are not permanent and require periodic
reauthorization by Congress. Making these programs permanent would
allow for consistency and remove uncertainty over the long-term support
for this critical driver of innovation for DOD and job growth for the
country. Permanency also improves the ability for the DOD consumers of
SBIR/STTR technology solutions to plan for technology integration and
insertion, and clarifies the program status for contracting officers,
thus improving the timeliness of awards and development of technical
solutions.
2. Use of Other Transaction Authority (OTA)--Other Transaction
Authority (10 U.S.C. sections 2371 and 2371b) provides DOD with a
flexible business tool to enable smarter and more efficient acquisition
of research projects and prototype systems. Agreements under this
authority can improve the operation of the SBIR and STTR programs by
allowing a flexible agreement with the ability to quickly award SBIR/
STTR efforts and decrease the time between Phase I and Phase II awards.
In addition to decreasing time to prototype, the use of OTA can reduce
wait times for small businesses and decrease the level of contracting
overhead during the Phase II award process. Amending 15 USC 638(e)(3)
to include OTA in the definition of SBIR/STTR funding agreement will
greatly enhance the ability of OTAs to contribute to innovation and job
growth by including them as an option for funding SBIR and STTR
research.
3. Reauthorize the pilot three percent Assistance for
Administrative, Oversight, and Contract Processing Costs Authority--The
SBIR/STTR Reauthorization Act of 2011 (Public Law 112-81) authorized
the head of each federal agency required to conduct an SBIR program to
use up to 3 percent of such funds for costs relating to administrative,
oversight, and contract processing activities. This pilot admin
authority expired on September 30, 2017. Reauthorization of this
authority will provide necessary resources to administer the programs,
conduct targeted outreach, enhance fraud waste and abuse efforts, and
implement efforts to improve program responsiveness. DOD Components
used this authority to enhance SBIR/STTR outreach and marketing efforts
and improve the availability of commercialization and transition
support to small businesses. An effort to use Contracting Focus Centers
for SBIR/STTR to streamline acquisition processes, reduce time to
contract award, reduce proposal burdens and standardize the experience
for submitters has been discontinued due to expiration of this
authority.
4. Reauthorize Phase Flexibility--In today's environment, rapid
delivery of technical capabilities to the warfighter is critical. Phase
flexibility, or Direct to Phase II, provides the Department with the
ability to shorten the development cycle for critical technology
solutions as appropriate. By using the phase flexibility authority, the
Air Force was able to quickly develop and field devices for dismounted
navigation in a GPS denied environment. The potential for a direct to
Phase 2 award also encourages companies with more mature technologies
to participate in the program, further enhancing the technical
solutions available to DOD.
5. Authorize DOD to approve waivers--The ability to approve
waivers for DOD Components and Agencies consistent within the intent of
the SBIR/STTR programs will improve the ability for DOD to provide
responsive program execution. DOD and its components need the ability
to make rapid decisions for the most effective use of SBIR/STTR funding
in support of technology overmatch. This request is not to change the
SBA's role but would provide the Secretary of Defense with the
authority to approve waivers for DOD components and agencies in the
efficient use of SBIR/STTR funding. Examples of the waiver types are a
waiver to exceed the time limit to notify a small business of their
selection for award and a waiver to exceed award amount guidelines by
more than 50 percent.
6. Authorize DOD to conduct pilot programs to improve SBIR and
STTR processes--DOD needs the ability to experiment with new processes
and procedures in the use of SBIR/STTR authority to quickly respond to
emerging threats, technology advances, and market changes. DOD needs
the ability to create and execute pilot programs to evaluate the
effectiveness of innovative SBIR and STTR processes to include but not
be limited to, efforts to decrease time to prototype, methods to work
with DOD innovation efforts to include SBIR technology in capability
enhancements, developing methods to work with DIUx and other
organizations to leverage rapid contracting and rapid prototyping
initiatives, and contracting process improvements.
program managers
103. Senator Sasse. Secretaries Lord. Esper, Geurts, and Wilson,
what problems exist with the way program manager personnel rotations
are currently conducted and how might such rotations be altered to
increase continuity and efficiency in acquisition programs?
Secretary Lord. Recent statutory changes require any Program
Manager for an ACAT I or IA program assigned before Milestone B to be
assigned at least through Milestone B approval. Any ACAT I or IA
Program Manager assigned immediately following Milestone B approval is
required to be assigned until initial operational capability is
achieved. By policy, program managers outside of these periods will be
assigned for at least 4 years or until the completion of the phase of
the program that occurs closest in time to the date on which the person
has served in the position for 4 years. These changes are recent enough
to preclude recognition of any trends.
Based on trends previous to the statutory change, the biggest
challenge to ensuring adequate tenure length for military program
managers of major acquisition programs is competing with requirements
associated with career progression and promotion. In the past, some
military program managers were rotated from their program manager
position with notably less than four years of tenure (the previous
requirement). This was often due to being promoted to general/admiral,
or to gain other experiences needed to remain competitive for
promotion. Follow-on job opportunities also led to shorter than optimum
tenures for some civilian program mangers albeit at a lower rate than
military counterparts.
The most effective means to improve continuity and efficiency is to
more strictly enforce the tenure agreements program managers are
required to sign before beginning their tour as program manager. The
Department needs to ensure the agreements conform to the above criteria
and that they are adhered to. Some have suggested that continuity would
be improved if only civilians were eligible for the program manager
position. However, I do not feel there is a need for this limitation
since each community brings unique skills and knowledge. Personnel with
these varied skills should be available and selected based on the needs
of the program.
A second initiative that may improve continuity and efficiency in
acquisition programs is for the Services to ensure program managers
have completed all required training before beginning their program
manager tour. Often, for various reasons, some resident training is not
completed before the program manager has started in their position and
must be completed sometime during their tour. The Department can
increase consistency and take better advantage of skills and knowledge
gained in class if all required training was done prior to managing the
program.
Secretary Esper. In an effort to promote greater accountability, I
would aim to ensure the alignment of the duty assignments of PMs with
the Milestones established for their programs to ensure there is a
clean handover of the program at critical points, and that clear
measures of effectiveness--cost, schedule, and performance--can be
assessed. I would aim to do the same with PEOs and their responsibility
for the highest priority programs in their portfolio.
Secretary Geurts. I believe Program Manager (PM) personnel are
rotated properly in the Navy. We assign PMs and Deputy Program Managers
(DPMs) using a very selective slating process where both military and
civilian applicants are considered for each PM and DPM position. We
closely monitor the performance of the PMs and DPMs and have these
individuals sign tenure agreements based on the ACAT Level of their
program. While the personnel have a prescribed tenure, Navy Leadership
monitors the phase of the program and determines the proper time to
rotate personnel on a case by case basis as necessary. For example, in
certain circumstances, Navy Leadership may extend a PM to ensure
disruptive changes are not made immediately prior to a program
milestone.
Secretary Wilson. The Air Force takes the rotation and development
of its program managers seriously. The Air Force strives to make
certain its program managers rotate between assignments based on the
individual's skill-levels and capabilities so they are developed for
future assignments. We have established processes to approve program
manager moves earlier than their expected tours are completed. These
are approved by the Service Acquisition Executive. We continue to
closely monitor key leadership moves during critical milestones on our
programs.
__________
Questions Submitted by Senator Bill Nelson
space acquisition
104. Senator Nelson. Secretary Wilson, recently the Commander of
STRATCOM, General Hyten, said this country has lost the ability to ``go
fast''. He said we now take four years to study a problem before do
something about it. He also said this is not acceptable when it comes
to space, because while we can compete right now, in the future, others
will easily overtake us. I was glad to hear that you had agreed with
him. So, what institutional changes is the Air Force making when it
comes to space acquisition?
Secretary Wilson. I have requested delegation of Acquisition
Category I programs from AT&L to the Air Force in order to speed
decision making and avoid multiple levels of bureaucracy. Internally,
the Air Force delegated Acquisition Category II and Acquisition
Category III programs to the lowest possible level. We are evaluating
how we organize our acquisition centers to be more responsive and agile
to new and changing threats and to work with our operators to make our
warfighting forces more effective. We are also leveraging developmental
planning, experimentation, and prototyping to support fielding of
future Air Force capabilities to support the joint force. Our
technically advanced Air Force must embrace a willingness to ``fail
fast'' in order to iterate and harvest lessons as keys to innovation.
105. Senator Nelson. Secretary Wilson, to what extent does space
acquisition need to be different than other programs outside of space?
Secretary Wilson. Every warfighting domain faces unique challenges
that impact how we develop, acquire, and present our forces. All
domains need to be responsive to new and changing threats and be able
to rapidly integrate new capabilities to make our warfighting force
more effective. This agility must extend through the entire space
enterprise, to include how we learn about the threat; develop
solutions; acquire, test, deploy, operate, and evolve new systems; and
ensure our space mission force is ready to defeat a thinking adversary
in a complex, multi-domain battlespace.
106. Senator Nelson. Secretary Wilson, how will you prioritize
making these changes in regards to the other Air Force missions?
Secretary Wilson. The action I have taken are for all programs, not
just for space. The Air Force has requested the delegation of the
Milestone Decision Authority for Acquisition Category I (ACAT I) Major
Defense Acquisition Programs from the Under Secretary of Defense for
Acquisition & Sustainment back to the Air Force. Of the 14 programs
recently delegated or reverted back to the Air Force, seven fall under
the space umbrella.
We will continue to work with the Under Secretary of Defense for
Acquisition & Sustainment for additional delegations of Milestone
Decision Authority to the Air Force for other programs, which we are
well-suited to execute.
While the Office of the Secretary of Defense has delegated
significant programs to the Air Force, the Air Force has taken steps to
delegate decision authority for ACAT II programs from the Service
Acquisition Executive to lower levels, either the Program Executive
Officer (PEO) in order to shorten the acquisition timeline to field
needed capabilities. PEOs have also delegated ACAT III programs to O-6
level Program Directors where appropriate.
107. Senator Nelson. Secretary Wilson, what changes need to be made
to space acquisition that would capitalize on cost savings that have
been made by commercial space?
Secretary Wilson. Private sector research and development continues
to outpace military investments in space. The Air Force is actively
exploring opportunities to leverage the commercial sector wherever
possible, including launch, space command and control, and satellite
communications. One place where change would be helpful is in the use
of next-generation commercial satellite communication services. The Air
Force has been using commercial satellite communications for years but
found legal and policy impediments to taking full advantage of the cost
savings. A legislative proposal that is working through the approval
process for fiscal year 2019 would remove hurdles and allow the Air
Force to take full advantage of the potential reduced costs and
increased performance capability of commercial systems.
cyber acquistition
108. Senator Nelson. Secretaries Lord, Esper, Geurts, and Wilson,
Another area we need to be able to move fast in is in acquiring cyber
capabilities. Can you explain how your services are acquiring cyber
capabilities in coordination with Cyber Command?
Secretary Lord. As the Department stands up its Cyber Mission Force
(CMF) of 133 teams, the Services and U.S. Cyber Command are both
playing a key role in equipping this force for conducting cyberspace
operations. Currently, the Services have the lead role for acquiring
the capabilities for equipping Cyber Protection Teams. Equipping the
Combat Mission Teams and National Mission Teams is a shared acquisition
responsibility. To help synchronize the acquisition of cyberspace
capabilities across the Department, U.S. Cyber Command conducts
quarterly cyber capability reviews with the Services.
U.S. Cyber Command's acquisition authorities were recently
enhanced. As part of the Fiscal Year 2016 NDAA section 807 (Acquisition
Authority of the Commander of U.S. Cyber Command), the USD(AT&L)
delegated acquisition authority to Commander, Cyber Command to
organically manage non-major system acquisitions (i.e., acquisition
category (ACAT) III or below).
For larger ACAT programs or acquisitions of foundational
infrastructure (e.g., the Unified Platform (UP)) or software
architectures the duration of which is expected to last more than five
years, U.S. Cyber Command works with the Services to provide validated
cyberspace operations requirements.
In response to previous Congressional direction (e.g., NDAA 2016
section 1645), the Department designated Executive Agents (EAs) for
critical cyber capabilities. The U.S. Army is the DOD EA for DOD Cyber
Training Ranges and the acquisition lead for the Persistent Cyber
Training Environment. The U.S. Air Force is the DOD EA for Joint Cyber
Command and Control as well as the UP. For the UP, the U.S. Air Force
is the EA. The stand-up of these EAs and governance boards has helped
the Department place the appropriate emphasis on delivering these key
capabilities required to train and equip the Cyber Mission Force.
One of our most important ongoing acquisition efforts is for the
Unified Platform, a cyberspace operations capability that will help the
CMF teams more effectively conduct cyberspace operations. U.S. Cyber
Command conducted UP operational prototyping in fiscal year 2017 and is
continuing prototyping in fiscal year 2018 to supplement the longer
term technology prototyping and development of the U.S. Air Force's UP
Program Management Office (PMO) and the Services' related acquisition
PMOs.
Secretary Esper. The Army recognizes the need to rapidly evolve
cyber capabilities by quickly injecting technologies in response to new
and emerging threats. The Army is increasingly synchronized with U. S.
Cyber Command and the other services through joint programs such as
unified platform, joint command and control, and the persistent cyber
training environment. Through Army Cyber Command, the Army's component
headquarters to the U. S. Cyber Command, the Army remains aligned to US
Cyber Command requirements and priorities. In fact, the Army was
designated by Joint Staff as the lead service for a priority US Cyber
Command Joint Urgent Operational Needs Statement last year. The Army
continues to rapidly develop that solution and other capabilities based
on US Cyber Command prioritization. With regard to the Army's portion
of the Cyber Mission Forces, the Army has made great strides by
developing requirements, prioritizing resources, and establishing rapid
acquisition models. The Army's cyber acquisition approach leverages
rapid requirements development, the use of Other Transaction Authority
to achieve commercial off the shelf solutions, some limited authorities
for Army Cyber Command in-house procurements, and a ``DevOps''
environment to create new capabilities. Through this approach, the Army
is well-postured to present fully equipped Cyber Mission Forces to US
Cyber Command according to joint standards.
Secretary Geurts. The Navy works closely with both US Cyber Command
(USCC) and the Defense Information Systems Agency (DISA) to acquire
joint/common cyber tools. As the service components of USCC, Navy Fleet
Cyber Command (FCC) and Marine Forces Cyberspace Command (MARFORCYBER)
are the direct links between the Department of the Navy and USCC. FCC
and MARFORCYBER coordinate requirements and acquisition with the Navy
and Marine Corps operational staffs (OPNAV and HQMC) and their
acquisition commands. OPNAV and HQMC also directly coordinate with the
Joint Staff and USCC on Joint Urgent Operational Needs that trigger
rapid acquisition efforts. The cyber Subject Matter Experts at FCC,
MARFORCYBER and PMW 130 assist USCC and DISA with design, analysis, and
acquisition of cyber tools and systems to meet Naval requirements. An
example of this is the current system used DOD wide (with metrics and
reporting to USCC) of the Host Based Security System (HBSS). DISA
manages the central acquisition of the HBSS system and licenses based
on USCC and Service requirements and the Navy (via PMW 130) deploys the
system to all required networks and computers. The Navy acquires other
cyber capabilities (e.g. SHARKCAGE) that are unique to the Navy for
cyber intrusion detection. In accordance with the direction given in
Fiscal Year 2018 NDAA section 1642, USCC is also working closely with
the Services to evaluate alternative methods and repeatable,
disciplined processes for increasing the speed of developing,
acquiring, and maintaining effective cyber tools across the DOD.
Secretary Wilson. As the Executive Agent for the Unified Platform
and Joint Cyber Command & Control programs, the Air Force is overseeing
the standup of program management offices focused on agile software
development processes. Direction from stakeholder governance bodies,
which includes representatives from the Air Force, Cyber Command and
other Department of Defense stakeholders, guides the course for these
programs. To support maximum warfighter responsiveness for evolving
requirements, the primary decision body is delegated to the lowest
practical level (O-6/Civilian equivalent) with stakeholder Senior
leadership providing oversight and strategic direction. This framework
allows for close teaming between the operations and acquisition
communities.
__________
Questions Submitted by Senator Claire McCaskill
contractor performance accountability
109. Senator McCaskill. DOD IG audits have determined that
contracting officials do not always use the Contractor Performance
Assessment Reporting System as required system, and that the system
itself has ineffective internal control measures that allow incomplete
evaluations of contractor performance to be submitted.
Secretary Lord, what is being done to shore up the weaknesses in
this system to ensure that Federal source selection officials have
access to timely, accurate, and complete past performance assessment
information necessary to make informed decisions related to contract
awards?
Secretary Lord. The Department is fully committed to improving past
performance assessment information. The Department addressed and closed
out all the recommendations in the latest DOD IG audit (DODIG-2017-081)
issued on May 9, 2017. The Director, Defense Procurement and
Acquisition Policy issued a memorandum on May 16, 2017, to DOD
Contracting Organizations and Service Acquisition Executives
emphasizing the importance of contractor past performance evaluations
and the quality of written narratives to ensure ratings given are fully
supported as described in the Federal Acquisition Regulation. In
addition, they were reminded to assign responsibility and management
accountability for the completeness of past performance submissions.
Furthermore, the Department forwarded the DOD IG auditors system
enhancement recommendations to the General Services Administration
(GSA), who has management responsibility for the Federal wide mandated
Contractor Performance Assessment Reporting System (CPARS). GSA
implemented a system enhancement in August 2017 to require narratives
for every factor for which there is a rating. An additional enhancement
was made to provide the FAR ratings definitions as a ``prompt'' to
facilitate ratings consistent with written narratives. GSA and the
Department believes these system enhancements will improve the quality
of past performance information available to our Acquisition Officials.
The CPARS Guide was also amended to emphasize that ``a supporting
narrative must be provided for each factor used.''
Lastly, the Department monitors and posts quarterly compliance
CPARS Metrics to ensure evaluations are being accomplished in a timely
manner. The metrics are posted here: https://www.acq.osd.mil/dpap/pdi/
eb/monthly--contract--distribution--metrics.html. The January 9, 2018,
metric for the first quarter of fiscal year 2018, shows a DOD
compliance rate of 83 percent, which far exceeds the average Federal
Agency compliance rate of 60 percent.
110. Secretaries Esper, Geurts, and Wilson, what training is being
done for your contracting officials to ensure they know how to properly
use this required system, and what are you doing to hold contracting
officials accountable for their failure to use systems like this? Are
you ensuring that their use of or failure to use such systems is
included in their regular evaluation reports?
Secretary Esper. The Army leverages existing Contractor Performance
Assessment Reporting System (CPARS) training provided by the CPARS
Program Manager for those Army contracts that meet reporting
eligibility requirements. Additionally, many of our Command-level
contracting activities provide one-on-one training to assessing
officials (including requiring activity representatives) on the ``how
to'' workflow process for the use of the CPARS system. The Army also
takes advantage of Army Logistics University and Defense Acquisition
University training modules that incorporate limited CPARS instruction.
The Army's contracting leadership continues to place emphasis on
monitoring contractor performance of all contracts that meet reporting
eligibility requirements through CPARS. Contracting Leaders are held
accountable at the Command-level for ensuring that CPARS accurately
captures contractor performance.
There are a number of systems that contracting officials utilize in
the performance of their duties, CPARS is just one of those systems.
Metrics and measures are in place to ensure compliance with utilization
of those systems across the Acquisition community. Depending upon
mission priorities, leadership includes compliance with set standards
in individual evaluation assessments which would include utilization of
the standard reporting systems such as CPARS.
Secretary Geurts. The DON is committed to ensuring that Navy and
USMC contracting officials and program offices are using the Contractor
Performance Assessment Reporting System (CPARS). Contracting officials
are responsible for registering applicable contracts after award into
the CPARS and program/requiring office personnel are responsible for
completing the actual assessments of Contractor performance. DON works
closely with the Naval Sea Logistics Center Portsmouth, which is
charged with providing supplier performance and material quality
support/services across a broad customer base that includes the DON,
Joint Services, DOD, and Federal and Civilian Agencies. Together, we
develop and implement CPARS training and guidance that is supportive of
Navy procedures and processes. Additionally, each Navy buying activity
has specific CPARS Agency POCs charged with monitoring local CPARS
compliance.
Secretary Wilson. The Air Force uses the Contractor Performance
Assessment Reporting System (CPARS) tool and policies established by
the Defense Department to train personnel and record evaluations of
contractor performance. Individuals appointed to CPARS roles must
complete training specific to their CPARS role(s) within 30 days of
appointment. This includes contracting officers as well as program
managers and PEOs.
111. Senator McCaskill. Secretary Esper, in June 2017 the GAO
released a report (GAO-17-457) that I asked them to conduct regarding
the Army's contract operations. One of their key findings was that Army
leaders regularly did not have the necessary information to properly
evaluate and improve operations regarding contracts. Another important
finding was the existence of the ``use it or lose it'' mentality when
it comes to measuring the efficiency of obligating taxpayer funds.
Essentially, the most important metric involved was whether or not
funds were obligated, but not whether they were obligated efficiently
or whether the best deal was obtained for the taxpayer. One of the key
recommendations made that go to both of these issues was to develop
metrics to assess contracting operations in terms of timelines, cost
savings, and contractor quality--metrics that are not currently part of
the assessment of the quality of the Army's contracting operations.
What has the Army done since the publication of this report to try and
change the ``use it or lose it'' culture mentality of the Army's
contracting and procurement personnel? What is the Army doing to ensure
that proper metrics are being put in place so that senior Army leaders
like yourself and Acquisition Decision Authorities can make informed
decisions when it comes to overseeing, evaluating, and managing the
Army's contracting operations?
Secretary Esper. The Army acquisition community emphasizes
proactive requirements development and timely funding obligation. Early
planning requirements review with all stakeholders, and the receipt of
funding improves contracting execution and counters the ``use it or
lose it'' culture. The frequent reliance on Continuing Resolutions to
provide incremental funding to the Army, however has an extremely
negative impact on contract and budget execution. Continuing
Resolutions force the Army to postpone projects, the maintenance of
equipment, and initiatives involving training and recruitment.
Continuing Resolutions also prevent the Army from reprogramming funding
to meet emerging needs and prohibit the start of new programs to
modernize for future threats. For the current fiscal year, it locks the
Army into previous levels, mandating a level of spending that is
billions less than the fiscal year 2018 Presidents Budget.
In September and November 2017, the Acting Secretary of the Army
issued eight key Acquisition Reform Initiatives, to include evaluating
the health of Army Contracting through assessment of contracting
operations. Subsequently, an initial set of metrics have been put in
place. An integrated product team was formed to identify additional
strategic metrics that will be value-added, influence strategic
decisions and support optimal acquisition outcomes.
112. Senator McCaskill. In October 2016 GAO released a report (GAO-
17-17) on the need for DOD to improve its efforts to identify and use
contractor inventories in particular for contracted services. GAO noted
that the services have not developed the plans to integrate the
contractor inventories into their total workforce planning, strategic
budgeting, and decision-making process.
Secretary Lord, what efforts are you taking at the Departmental
level to drive better integration of contractor inventories into the
workforce planning, strategic budgeting, and decision-making process
for determining the use of service contracts?
Secretary Lord. As the Department seeks to maximize lethality,
improve and sustain readiness, grow the force, and increase capability
and capacity, we must improve the overall management of our Total Force
of active and reserve military, government civilians, and contracted
services. The contractor inventories that DOD Components are required
to compile provide increased visibility into contracted services,
supporting and informing the Total Force planning and management
necessary in achieve these objectives. Jointly with the Under Secretary
of Personnel and Readiness, I signed out annual guidance in September
2017 directing DOD Component heads to complete reviews of contracted
services in accordance with the statutory requirements of 10 U.S.C.
sec. 2330a. These reviews are particularly focused on categories of
high-risk contracted services providing special studies or analysis
that is not research and development, information technology services
and telecommunications services; and contracts providing professional,
administrative, or management services, especially where they are staff
augmentation contractual efforts to in-house organic government staff.
These reviews are designed to: 1) ensure that DOD components are not
inappropriately leveraging contract support for inherently governmental
functions or critical work; 2) assess the level or reliance on
contractor support and capabilities; and 3) facilitate and inform
workforce mix determinations, force management decisions, risk
assessments, mission prioritization, and resource allocation. However,
the inventory and subsequent review process is just one tool/process
that DOD components have at their disposal. We are also continuously
improving on and executing Services Requirements Review Boards to
validate and prioritize contract requirements. As part of the on-going
reform efforts, the Deputy Secretary of Defense (DEPSECDEF) established
a Services Contract Reform Team to initiate key reforms and develop new
capabilities in support of these goals. As a member of the DEPSECDEF's
Reform Management Group, I am overseeing the Reform Team's efforts as
they develop / implement new capabilities in requirements
prioritization, category management, should-cost for contracted
services and data management to ensure the required integrated cross-
functional areas appropriately support all the aforementioned processes
that govern how the Department acquires services and utilizes services
contracts within the Department to execute its mission.
113. Senator McCaskill. Secretaries Esper, Geurts, and Wilson, what
are your plans for using service contract inventories to inform the
strategic budget and workforce planning and implementation processes?
Secretary Esper. The inventory of contracted services enables the
Army to fully understand the composition of its workforce, provides
better oversight to avoid duplication of effort or shifting of in-house
reductions to contract, enables the Army to better account for and
explain its total workforce, and allows for more informed workforce
staffing and funding decisions.
Since its implementation in 2005, the Army has learned that gaps
and discrepancies between the Inventory of Contracts for Services
(ICS)/Enterprise Contractor Manpower Reporting Application (eCMRA) data
and our programming/budgeting information systems has limited our
ability to use the data to inform the strategic budget and workforce
planning and implementation processes. Beginning in fiscal year 2017
(FY17), the Army embarked on an initiative to integrate the contracted
services data and our programming, budgeting, and execution information
systems. The goal of this initiative is to improve the accuracy and
auditability of contracted services data throughout the programming,
budgeting, and execution cycles; increase the accessibility of
contracted services data to support planning, programming, and
budgeting decisions; and ensure the most appropriate and cost efficient
application of military, civilian, and contract sources of labor. Full
data integration is scheduled to be complete for development of the
Army Fiscal Year 2021-25 Program Objective Memorandum.
Secretary Geurts. The DON compiles the annual inventory of
contracted services per Defense Department guidance and distributes the
information to the financial and manpower Assistant Secretaries for
planning purposes. DON uses the Service Requirements Review Board
(SRRB) process as a means to provide oversight and to validate services
acquisition requirements. The DON requires that every services
acquisition requirement valued in excess of $150,000 be reviewed,
vetted and approved by a SRRB. These SRRBs are chaired by Flag Officers
or Senior Executives and involve leadership reviews by the requirement
owner(s) as well as the acquisition and financial communities.
Secretary Wilson. The Air Force utilizes our service contracts as
required for mission accomplishment and will ensure compliance with all
statutory requirements as described below:
Budget Process: The Air Force will continue to utilize the service
contract inventory to establish an average contractor work year cost by
appropriation which is used to calculate contractor full-time
equivalents as required in 10 U.S.C. Sec. 235.
Workforce Planning and Implementation Process: All contracted
services requirements are reviewed by the cognizant manpower office
which is incorporated into the requirements approval processes across
the Air Force prior to initiating a service contract. The local level
decision authorities throughout the Air Force have real-time access to
the information that is used to build the service contract inventory
and are able to use this information for their decision making
processes.
114. Senator McCaskill. Secretary Wilson, we have discussed the
need to improve the timeliness and efficiency of civilian hiring within
the Air Force and that you established a taskforce to identify and
reform the hiring process including a review of regulatory and
legislative fixes. Can you please submit more details on the goals and
efforts of the taskforce and provide a list of existing hiring
authorities the Air Force is using to recruit new talent and any
regulatory or legislative barriers to improving the hiring process?
Secretary Wilson. Civilian hiring is a top priority for the Air
Force. The ability to hire top-tier talent efficiently and effectively
is essential to sustaining a ready and lethal force. The Air Force is
undertaking a multi-pronged approach that will significantly improve
civilian talent management from recruiting through the entire employee
life-cycle.
Four lines of effort include: Resources, Legislation, Policy and
Process. Within these lines of effort, the Air Force team has
identified near-term (Quick Wins), mid-term (1-3 years) and long-term
(3-5 years) goals to reform and accelerate civilian hiring. These goals
include, but are not limited to: fixing IT infrastructure latency,
streamlining employee onboarding, increasing workforce planning efforts
and maximizing usage of direct hiring authorities. In addition, the Air
Force is pursuing a civilian talent management pilot program that
incorporates greater flexibilities associated with attracting,
compensating and retaining top talent. The desired end state of these
Air Force civilian hiring efforts is to have an agile, flexible Talent
Management System responsive to warfighter needs.
Under the National Defense Authorization Act for fiscal years 2016
and 2017, Congress provided the Department of Defense with numerous new
Direct/Expedited Hiring Authorities enabling the Air Force to hire
faster in critical occupations like depot maintenance and cyber. By
using these authorities, the average time-to-hire is reduced by 40-50
days. These authorities include:
Fiscal Year 2016 NDAA, section 1112, Direct-Hire
Authority (Acquisition-Veterans Technical Experience)
Fiscal Year 2017 NDAA, section 1106, Direct-Hire
Authority for Post-Secondary Students and Recent Graduates
Fiscal Year 2017 NDAA, section 1110, Direct Hire
Authority for Financial Management Experts in the DOD
Fiscal Year 2017 NDAA, section 1125, Temporary Direct
Hire Authority for Domestic Defense Industrial Base Facilities, the
Major Range and Test Facilities Base, and the Office of the Director of
Operational Test and Evaluation
Fiscal Year 2017 NDAA, section 1643. Direct Hiring
Authority for Cyber Workforce
A critical barrier to Air Force civilian hiring is the lack of an
Interchange Agreement that allows managers the ability to effectively
manage its workforce across Title 10 Defense Civilian Intelligence
Personnel System (Excepted Service) and Title 5 General Schedule
employees (Competitive Service) in response to mission needs. The
Office of Personnel Management rescinded this agreement back in 2010
and there is currently no legal authority to internally manage this
part of the hiring process. The Office of Secretary of Defense and
Intelligence Community's efforts to have this agreement reinstated have
not been successful. Absence of this agreement presents major obstacles
to developing and retaining our civilian Airmen in the Intelligence
career field.
__________
Questions Submitted by Senator Jeanne Shaheen
the small business innovation research (sbir) and small business
technology transfer (sttr) programs
115. Senator Shaheen. Secretary Lord, through the SBIR and STTR
programs, Congress has provided the participating agencies with
tremendous statutory flexibility to design their programs to best meet
their needs. For example, even though the law says a Phase I award is
typically six months in timeframe and $225,000 to explore the promise
of an idea, and a Phase II award is typically a maximum timeframe of
two years and $1.5 million to further develop the idea, an agency has
full authority to speed up the process. If DOD likes the shorter turn-
around time of DIUx, the same can be done with the SBIR and STTR
programs, for all the topics or topics that your program offices deem
more time-sensitive. Will you make sure to maximize the SBIR and STTR
programs and their transition into the warfighter as you form the two
new Under Secretary offices for (Acquisition and Sustainment (A&S)) and
(Research and Engineering (R&E))?
Secretary Lord. I am committed to taking the lessons learned from
programs conducted by DIUx, the Strategic Capabilities Office and the
Special Operations Command's SOFWERX and applying them to other
acquisition programs. As we work over the next two years to design and
implement the new structure I will ensure that we maximize the
effectiveness of the SBIR and STTR programs to provide innovative
solutions for our warfighters. The reauthorization of the Assistance
for Administrative, Oversight, and Contract Processing Costs authority
(Pilot Admin Authority) will improve our ability to improve program
execution. Administration of the SBIR and STTR programs requires
significant effort to improve commercialization, perform outreach
initiatives to attract participants, streamline and simplify
contracting and program procedures, implement and continue oversight
and quality control measures, and perform activities related to the
oversight and congressional reporting including fraud, waste and abuse
prevention activities. Dedicated administrative funding will allow DOD
organizations to more effectively administer the SBIR/STTR programs and
maximize contributions.
116. Senator Shaheen. Secretary Lord, as part of the Fiscal Year
2018 National Defense Authorization Act, Congress enacted a five-year
pilot program that will help streamline the acquisition of technologies
developed by non-traditional small businesses through the SBIR and STTR
programs. Specifically, the provision requires the Secretary of Defense
to establish this pilot program within 180 days that uses multiple
award contracts for the purchase of technologies, supplies, or services
that they developed under the SBIR and STTR programs. Will you commit
to me that the Department will work with the Senate Committees on Small
Business and Entrepreneurship and Armed Services to develop and
implement this pilot program within the 180-day deadline?
Secretary Lord. Yes, we will implement the pilot program within the
180 day deadline. The Navy currently supports this approach by using
Indefinite Delivery/Indefinite Quantity contracts for the purchase of
technologies developed under the SBIR and STTR programs. I am committed
to maximizing the effectiveness of all programs that contribute to the
readiness and technological superiority of our forces. To that end I
will work with all stakeholders to seek input and develop an effective
pilot program to award multiple award contract vehicles to covered
small business concerns for the purchase of technologies, supplies, or
services that the covered small business concern developed under the
SBIR or STTR program. I believe this effort has the potential to
improve the efficiency of transition of SBIR and STTR technologies by
simplifying the ability for all Services to acquire the innovations
developed by small businesses under these programs.
117. Senator Shaheen. Secretary Lord, please highlight recent
successes of the SBIR/STTR programs in transitioning technologies to
Phase III.
Secretary Lord. I will highlight four successes of SBIR/STTR
technologies transitioning to Phase III, one each from the Army, Navy
and US Special Operations Command and one example of a cross agency
transition success.
The PowerShade, a portable, survivable, and sustainable energy
source for deployed operations, was developed by PowerFilm Inc. to
support the US Army. The PowerShade integrates flexible solar panels
into a fabric structure to provide power from solar energy and reduce
the heat load on the structures it covers. This provide opportunities
to reduce fuel consumption at Forward Operating Bases and provide
tactical level power to deployed forces. The Army SBIR Program
supported development of technology for applying PowerFilm's flexible
photovoltaic (PV) material to fabric and fabric structures. The two
main products coming out of this program were the PowerShade structure
and the lightweight foldable PV array. The PowerShade structure can
span most standard military tents and work areas providing solar power
and shade. The smaller foldable arrays can be carried in a backpack and
deployed to recharge standard military batteries. Significant follow-on
investments came from both DOD and private sources to drive continual
improvement and implementation of these products. PowerFilm has
received over $20 million in Phase III funding to improve and expand
the technology into new products and allowed significant expansion of
their manufacturing capacity. As a result, PowerFilm is a stable
supplier of advanced portable power technology to DOD and commercial
markets.
The Adaptive Diagnostic Electronic Portable Testset (ADEPT) was
developed by Mikros Systems, Inc. for the Navy as a maintenance
workstation for AEGIS SPY-1 radar, designed to maintain, diagnose,
align, repair, and calibrate this complex electronic system while also
supporting remote predictive analytics and Condition Based Maintenance
(CBM). A SBIR investment of just under $2.1M has generated over $100
million in Phase III funding as Mikros has extended ADEPT to cover
other radar variants and developed a logistics support suite for
surface combatants. ADEPT continues to expand its footprint into new
radar and other systems, with a planned enhancement to provide remote
support to the AEGIS Mk 99 Fire Control System, a collaboration with
IBM that will provide big data analytics for combat systems CBM data.
ADEPT will be installed in varied ship classes to help manage a broad
inventory of Combat System Elements.
Physical Optics Corporation developed the Advanced Micro Weather
Sensor (AMWS) for USSOCOM for a SBIR investment of $2.45 million low-
cost, lightweight, ruggedized, highly integrated sensor gathers and
describes 18 characteristics of weather, such as wind speed, wind
direction, precipitation, temperature, humidity and visibility. The
AMWS replaces a much larger, less capable legacy system that is quickly
becoming obsolete with a three-pound package less than 200 cubic inches
in size. The Air Force awarded a $24.5 million Indefinite Delivery/
Indefinite Quantity contract for the system and has funded $4.8 million
for development and procurement of the AMWS and Micro Weather Sensor.
The Creare LLC Directed Heating System for High Speed Manufacturing
of Thermoplastic Composites, was developed under an Army SBIR and
received US Air Force funding for transition to the F-35 program. The
Directed Heating System (DHS) allows the local and efficient heating of
thermoplastic composites improving tape feed rates by a factor of two
over current techniques. Creare's laser-based approach received
approximately $1.5M in Phase III funding to transition this technology
to the production of the F-35 aircraft. Creare is also working with a
major fiber placement supplier to adapt the DHS technology to support
carbon fiber applications in the automotive industry.
buy america contracting
118. Senator Shaheen. Secretary Lord and Secretary Geurts, the
Committee continues to be concerned about the Department of Defense
(and Federal Government at large) support for ``Made in the USA''
contracting opportunities. As qualified American companies--especially
small businesses--consider participating in the Federal government
procurement process, all options should be made available to consider
these domestic manufacturers and employers when competing with
comparative foreign firms for all federal contracting opportunities.
The Committee has made clear our belief that price is not the single
significant contributing factor toward making contracting awards for
critical DOD contracts--a best value approach that considers past
performance, quality and preferably domestic manufacturing should be
incorporated in the procurement decision-making process. What efforts
are the Department of Defense and service branches taking to ensure
that domestic small businesses are afforded every opportunity to
compete openly and fairly with foreign-owned large businesses for
future contracts?
Secretary Lord. The Department universally applies the restrictions
of the Buy American statute (41 U.S.C chapter 83) which restricts the
purchase of supplies that are not domestically produced end products.
This law mandates that a preference be given for procuring ``domestic''
supplies/products, construction materials, and in some instances
services. On limited cases, the Department considers offers of foreign
products or components that are exempt from the restrictions of the Buy
American statute if the origin of the products or components are from a
Qualifying Country, which has a reciprocal defense procurement
memorandum of understanding (MOU) or international agreement with the
United States. Other limited exceptions may be granted to Designated
Country products or components covered by the World Trade Organization
Government Procurement Agreement or Free Trade Agreement, if purchasing
eligible products or components that are valued above the particular
trade agreement threshold.
The Department awards a significant percentage of all contracting
dollars to small businesses. DOD provides small businesses increased
opportunities when competing with large businesses, foreign and
domestic. The increased opportunities include small business goals,
negotiated annually with the Small Business Administration (SBA). DOD
and Federal Government contract programs authorize contracting officers
to set aside certain federal contracts for eligible Women-owned small
businesses, small businesses in HUBZones, Service-Disabled Veteran-
Owned Businesses, Small Disadvantaged Businesses and the 8(a) Business
Development Program. Small business set-asides are a powerful tool for
helping small businesses compete for and win federal contracts. The
Department and the Federal Government are currently working to increase
opportunities for Small Businesses participating in multiple award
contracts.
Secretary Geurts. Contracting officers located in the US are
required to consider US small businesses first when making any buy
valued over the micro-purchase threshold. Small Business Professionals
have input to this decision for buys valued at or over $10,000.
Continuous auditing programs such as Procurement Performance
Management Assessments and Small Business Administration Surveillance
Reviews are in place to assess how well contracting officers uphold
these rules. New procurement personnel must take training on how to
apply the small business preferences; contracting site Small Business
Professionals supplement this training with updates and on-going
guidance. On-going engagement with industry allows us to hear their
concerns and know where to target additional oversight or education
efforts.
In addition, the Small Business Innovation Research (SBIR) and
Small Business Technology Transfer (STTR) Program requires that all
effort be performed within the USA. One of the unique selling features
of the SBIR/STTR Program is the ability of the small businesses to
deliver quality products and services, usually at lower prices, and to
respond quickly to customer needs. An independent professional study of
the DON SBIR/STTR Program concluded that Phase II projects conducted
between 2000 and 2013 resulted in an average of $5.5 million in sales
per contract, and a total of $14.2 billion in commercial and military
sales, while creating 200,000 new jobs at an average $70,000 wage.
119. Senator Shaheen. Secretary Lord and Secretary Geurts, do
foreign-owned firms benefit from less stringent contracting
requirements, including small business sub-contracting rules?
Secretary Lord. The Department universally applies the restrictions
of the Buy American statute (41 U.S.C chapter 83) which restricts the
purchase of supplies that are not domestically produced end products.
This law mandates that a preference be given for procuring ``domestic''
supplies/products, construction materials, and in some instances
services. When applying restrictions of the Buy American statute to
procurement actions, it is typically not the firms country of ownership
that matters, but rather the country of origin of the materials,
components, or product which is considered.
Foreign contractors do not have an advantage, regarding the Federal
Acquisition Regulation (FAR) requirements for subcontracting plans and
subcontracting limitations. The FAR requirements for subcontracting
plans and subcontracting limitations, applies to all contractors,
including foreign contractors. Contracts, including all subcontracted
work, performed entirely outside of the United States and its outlying
areas are exempt from the FAR subcontracting rules.
Secretary Geurts. No. Foreign-owned firms do not benefit from less
stringent contracting requirements. Foreign-owned firms must meet all
of the small business requirements that domestic large firms are
required to meet. For example, subcontracting plans are required for
contracts performed in the U.S. by both foreign-owned and large
domestic firms. Foreign-owned firms are treated as large businesses in
being excluded from a small business set asides.
The Buy American Act further limits domestic contracting from
foreign firms. FAR Part 25 contains the Buy American Act protections.
While some exceptions do exist based on non-availability of certain
commodities or items, there would be no difference in solicitation
requirements based on foreign ownership.
Under the SBIR/STTR Program the small businesses as well as the
subcontractors must be U.S. owned and operated unless a specific waiver
is granted.
120. Senator Shaheen. Secretary Lord and Secretary Geurts, what
steps are the Department of Defense and the service branches taking to
ensure that American-owned small businesses are given every opportunity
to participate in Federal procurements?
Secretary Lord. DOD has an excellent track record of providing
maximum opportunities for American-owned small businesses to sell to
the Department. In fact, DOD procured over $50 billion of products and
services annually from small businesses during the past few years. This
represents over 22 percent of the Department's procurement actions that
small businesses were eligible to fulfill. Virtually all of the small
business procurement was with American-owned firms. We will continue
our practices of complying with small business procurement laws,
striving to meet our small business procurement goals, and leveraging
the innovation and cost competitiveness of small businesses. SBA
regulations require that a small business be ``independently owned and
operated'' with ``a place of business in the US'' and that it
``operates primarily within the US or makes significant contribution to
the US economy through payment of taxes or use of American products,
materials or labor.'' We will continue to adhere to the laws provided
by the Congress that enable American owned small businesses to compete
successfully for DOD contracts.
Secretary Geurts. DON is engaged and deeply committed to ensuring
that all types of small businesses are provided a chance to participate
in DON contracting opportunities. DON, represented by the Office of
Small Business Programs (OSBP), participates in small business
networking and matchmaking events, as well as congressional, Federal,
state, and local government small business outreach activities,
conferences, training events, partnerships, and working groups. DON's
SBIR and STTR Program gives small businesses the opportunity to solve
tough naval capability and performance challenges by providing
innovative solutions, cost savings, and schedule efficiencies. DON has
ten geographically dispersed buying commands, each of which has a Small
Business Program Director.
DON participates in two signature outreach events to communicate
directly with small businesses across the country; The Navy League Sea
Air Space Expo in April and the DON Gold Coast Procurement Event in
August. These outreach events are great opportunities for small
businesses to network and learn how the DON's acquisition process works
and contracting opportunities within the DON.
121. Senator Shaheen. Secretary Lord and Secretary Geurts, are
there areas where the Department believes contracting opportunities for
domestic manufacturing small businesses can be improved?
Secretary Lord. Small business manufacturers provide DOD with about
15 percent of the annual manufacturing needs of the Department. This
equates to over $15 billion of about $100 billion of annual
manufacturing procurement. Domestic manufacturing small businesses play
an important role in providing parts to sustain DOD weapons systems.
These small business manufacturers all meet the three criteria in
existing laws: 1) they have a domestic place of business, 2) they
primarily use domestic labor and materials and 3) they operate
primarily within the US. In some instances, small business
manufacturers lack the surge capability or ability to provide the
continuous volume of supplies needed by DOD, such as for medical
commodities, food or lumber. Nevertheless, we can improve contracting
opportunities for domestic manufacturing small businesses through
several approaches. First, we could use new or existing authorities to
ease the contracting burden placed upon small businesses. Second, we
can continue to seed future manufacturing by having a permanent Small
Business Innovation Research program that enables domestic firms to
mature their technologies and become future manufacturers. And finally,
we can continue to encourage DOD's large suppliers to use small
business manufacturers in their supply chains as subcontractors.
Secretary Geurts. DON is engaged and deeply committed to ensuring
that all types of small businesses are provided a chance to participate
in DON contracting opportunities. DON, represented by the Office of
Small Business Programs (OSBP), participates in small business
networking and matchmaking events, as well as congressional, Federal,
state, and local government small business outreach activities,
conferences, training events, partnerships, and working groups. DON's
SBIR and STTR Program gives small businesses the opportunity to solve
tough naval capability and performance challenges by providing
innovative solutions, cost savings, and schedule efficiencies. DON has
ten geographically dispersed buying commands, each of which has a Small
Business Program Director.
DON participates in two signature outreach events to communicate
directly with small businesses across the country; The Navy League Sea
Air Space Expo in April and the DON Gold Coast Procurement Event in
August. These outreach events are great opportunities for small
businesses to network and learn how the DON's acquisition process works
and contracting opportunities within the DON.
__________
Questions Submitted by Senator Kirsten Gillibrand
strengthening manufacturing in the defense industrial base
122. Senator Gillibrand. Secretary Lord, during your confirmation,
you agreed that the Manufacturing USA Network is critical to ensuring
the United States remains a global leader in manufacturing. Part of
this bipartisan program's mission is to use these public-private
partnerships to develop and commercialize new defense technologies that
are critical to our men and women in uniform, like the integrated
photonics R&D happening at the DOD institute in Rochester, NY. In
response to my questions, you had committed to placing a high priority
on investing in the Manufacturing USA institute network. Since you were
confirmed, what steps have you taken to evaluate what resources are
required to support the institutes and other industrial base investment
programs?
Secretary Lord. The Department is committed to supporting the
institutes at the agreed upon funding levels. In addition to the
institute start-up funding under my direction, other DOD organizations
have seen value in the institutes and are funding projects at the
Institutes (see chart below).
----------------------------------------------------------------------------------------------------------------
DOD Funding DOD-directed
Commitment on Committed Industry Project Funding
Institute Start-up Agreement Cost Share (in To-Date (in
(in millions) millions) millions)
----------------------------------------------------------------------------------------------------------------
America Makes (Additive Manuf.), Est. Aug 2012 $ 62 $ 58 $19.7
(Youngstown, OH); satellite in El Paso, TX.........
Digital Manufacturing and Design Innovation $ 82 $106 $13.3
Institute (DMDII), Est. Feb 2014 (Chicago, IL).....
LIFT--Lightweight Innovations For Tomorrow, Est. Feb $ 70 $ 78 $ 0.7
2014 (Detroit, MI).................................
AIM Photonics (photonic integrated circuits), Est. $110 $502 $ 16
Jul 2015 (Albany and Rochester, NY)................
NextFlex (Flexible hybrid electronics), Est. Aug $ 80 $ 99 $ 5.9
2015 (San Jose, CA)................................
Advanced Functional Fabrics of America (AFFOA), Est. $ 75 $272
Apr 2016, Cambridge, MA............................
BioFabUSA (Advanced tissue biofabrication), Est. Dec $ 80 $214
2016, Manchester, NH...............................
Advanced Robotics for Manufacturing (ARM), Est. Jan $ 80 $174
2017 (Pittsburgh, PA)..............................
----------------------------------------------------------------------------------------------------------------
The ecosystem within each of the technology spaces associated with
the institutes consists of stakeholders from Government (local, state,
and Federal level), academia, and industry (small, medium and large).
To maintain a nationally relevant institute, all stakeholders must
remain in a relationship with the institute. DOD is focused on
implementing a strategy that will enable a continued partnership
between the Department and the eight DOD-led institutes ensuring that
they are providing value to the Department. We are planning a study
that will assist us in developing a sustainable business model for the
Institutes as they begin to transition from their initial start-up
funding.
With respect to other industrial base investment activities, the
Institutes are part of a portfolio of industrial base investment
programs. This portfolio includes the Institutes, OSD and Service
Manufacturing Technology programs, the Defense Production Act Title III
program, and the Industrial Base Analysis and Sustainment program. As
part of on-going efforts in support of a number of Executive Orders, we
are developing a deeper understanding of our industrial base challenges
and opportunities and evaluating how to better position all of our
investment programs for greater impact for the national security. These
efforts will inform DOD decision making on our investment programs as
we begin to develop our fiscal year 2020 budget later this year.
123. Senator Gillibrand. Secretary Lord, is the Administration
working towards establishing new Manufacturing USA Institutes within
the network, and will there be an investment in the network in the
upcoming budget requests to expand this work?
Secretary Lord. The current DOD budget is focused on the eight
existing DOD Institutes and does not contain funding to establish any
additional Institutes. The Department works with the Department of
Commerce's National Institute of Standards and Technology (NIST), the
Department of Energy, and other Government agencies to support the
current Manufacturing USA network. Funding for the Manufacturing USA
network is appropriated in the NIST budget request. Th2at being said,
the Department is are working to develop contracting scenarios using
Other Transaction Authorities and other innovative agreement methods
that enable our acquisition program managers and others to better
utilize the Institutes for faster innovation and product development.
124. Senator Gillibrand. Secretary Lord, during your confirmation
you confirmed your willingness to make greater use of DOD programs like
financing available to defense suppliers through the Defense Production
Act (DPA), to strengthen the nation's defense production capacity. In
the recently passed NDAA, Sec. 1771 created a pilot program to
accomplish this, by directing DOD to use DPA to scale up production of
defense technologies by providing incentives like purchasing
commitments, issuing loans or loan guarantees, and giving funding to
third party entities to support investments in small- and medium-sized
manufacturers, including debt and equity investments. Will you commit
to working with me to implement this pilot?
Secretary Lord. I will happily work with you and your colleagues to
advance the needs of the warfighter, and this pilot program has the
potential to increase the Department's flexibility to incentivize
suppliers of all sizes.
While section 1711 does not directly mention the Defense Production
Act (DPA), it allows the pilot program to utilize ``such other legal
authorities as the Secretary considers applicable to carrying out the
pilot program.'' Title III of the DPA authorizes the use of purchases,
purchase commitments, loans, and loan guarantees to address shortfalls
facing the defense industrial base, and as such may be an appropriate
authority to leverage through this program.
I see purchase commitments, loans, and loan guarantees as
innovative options for preserving the United States' technological
advantage. Purchase commitments offer an effective, market-based
approach to bridge new technology from research and development
prototypes to scalable production. Loans and loan guarantees provide a
return-on-investment for the U.S. Government while establishing the
credit history necessary for new businesses to obtain follow-on loans
from the commercial sector. Through these market-based solutions, this
pilot's results have the potential to demonstrate how DOD can
proactively preserve technology in the United States, rather than
relying on the more reactive intervention of policy tools like
Committee on Foreign Investment in the United States reviews.
125. Senator Gillibrand. Secretary Lord, last year's NDAA created a
Manufacturing Engineering Education Program (MEEP) to prepare our
workforce with in-demand skills for advanced manufacturing to
strengthen the nation's defense industrial readiness. This program
invests in training at universities and other education institutions
across the country to help give students the skillsets necessary to
succeed in the high-tech manufacturing workforce. This year's NDAA
continued support for MEEP. As MEEP has not yet been fully implemented
since last year's creation of the program, will you commit to working
with me to ensure the program is stood up as soon as possible?
Secretary Lord. I am committed to supporting this program and we
are already making progress. A Funding Opportunity Announcement (FOA)
was released on 12 Jan 2018 in support of MEEP. The DOD, through the
Office of Naval Research (ONR), seeks a broad range of consolidated and
integrated multidisciplinary programs of education with an emphasis on
developing multidisciplinary instruction that encompasses the total
manufacturing engineering enterprise, providing opportunities for
students to obtain relevant work experience in manufacturing,
demonstrating faculty and student engagement with industry that is
directly related to, and supportive of, the education of students in
manufacturing engineering, and geographical diversity. White Papers for
this FOA are due in February 2018 with expectation of awarding grants
the end of June.
In addition, we have also awarded three projects at Lightweight
Innovations For Tomorrow (LIFT) and America Makes Manufacturing
Institutes. The first project is expanding MakerMinded, year-long
manufacturing/technology high school competition series, to reach seven
states. The Advanced Curriculum in Additive Design, Engineering and
Manufacturing Innovation (ACADEMI) Expansion Initiative will target
design engineers, manufacturing engineers, and material scientists to
learn skills from an integrated set of additive manufacturing
disciplines. The third is the creation of a new scalable and replicable
technical manufacturing curriculum, developed by LIFT.
126. Senator Gillibrand. Secretary Lord, the Manufacturing
Extension Partnership (MEP) program within the Department of Commerce
supports a national network of centers that help the nation's small and
mid-sized manufacturers better compete by improving their technology,
accessing skilled workers, and developing additional markets.
Recognizing the well-established services MEP has developed, which have
been proven to be successful, I believe that DOD should partner with
MEP to strengthen the small and mid-sized manufacturers that are
critical to the defense supply chain. Congress recognized the need for
such a partnership by directing DOD to utilize MEPs within the
Department's Manufacturing USA institutes as well as to assist with the
integration of small and mid-sized manufacturers into DOD's supply
chains. Will you commit to working with Commerce on making better use
of MEP within DOD's Manufacturing USA network and other efforts to
strengthen the defense industrial supply chain?
Secretary Lord. In May 2015, the Department signed a Memorandum of
Understanding with the Department of Commerce, the National Institute
of Standards and Technology, and the Hollings Manufacturing Extension
Partnership (MEP). This MOU provides the following
DOD will leverage the assets and resources of the
national MEP Program to assist the Manufacturing USA Institutes led by
the DOD as they strive to broadly and deeply enhance their impact on
small and medium sized U.S. manufacturers.
NIST MEP will expand its ability to positively impact the
competitiveness and growth of U.S. manufacturers by developing
expertise in the focus areas of the DOD-led institutes.
The Department continues to work and support MEP activities. The
most recent effort with the Department and the MEPs is the embedding of
MEP personnel in the Manufacturing USA Institutes. The purpose being is
to assist in connecting mostly small and medium size companies with the
Institutes. The MEPs have become very active in the Manufacturing USA
network and they are also participating in the ongoing review of the
manufacturing and defense industrial base as directed by Executive
Order 13806.
microelectronics
127. Senator Gillibrand. Secretary Lord, this committee has taken a
great interest in ensuring that DOD has access to trusted and reliable
microelectronics for use in defense systems. I understand that DOD is
faced with the challenge or maintaining world class semiconductor
research, design, engineering, and manufacturing capabilities--either
in-house or in the private sector--at a time when budgets are
constrained and when commercial microelectronics continues to far
outstrip military capabilities. How do you plan to ensure that DOD
maintains access to trusted and assured sources for the
microelectronics it needs?
Secretary Lord. The Department, in coordination with interagency
partners, developed the Microelectronic Innovation for National
Security and Economic Competitiveness (MINSEC) strategy to address
current and future microelectronics needs, the threats to assured
access to a robust industrial base, and continued U.S. leadership. This
strategy drew from numerous reports, including the Defense Science
Board, President's Council of Advisors on Science and Technology,
Defense Innovation Unit Experimental, Semiconductor Industry
Association, and National Defense Industrial Association. The MINSEC
strategy is also aligned with the requirement in the Fiscal Year 2017
National Defense Authorization Act, section 231, which directed a
strategy to address access to assured microelectronics, including
investments in science and technology, commercial microelectronics
capabilities, and changes in policies, financial management, and
public-private partnerships.
As part of the larger whole of government MINSEC strategy, the DOD
is investigating a strategy to resource a DOD MINSEC activity that
focuses on disruptive research and development, modernization, and DOD
unique technologies, e.g., strategic radiation-hardening. The DOD
MINSEC activity would build upon the existing Trusted and Assured
Microelectronics (T&AM) program, Trusted Access Program Office, the
Joint Federated Assurance Center, and other related microelectronics
activities.
The Office of the Under Secretary of Defense for Acquisition,
Technology, and Logistics (OUSD(AT&L)) initiated the T&AM program in
the Fiscal Year 2017 President's Budget to ensure assured
microelectronics are available to meet the DOD's needs. This program
provides protections to ensure military unique chips are protected from
malicious exploit (loss of DOD intellectual property), and from
malicious tampering during design and manufacturing.
128. Senator Gillibrand. Secretary Lord, what role does investment
in domestic semiconductor microelectronics design and manufacturing
play in that plan?
Secretary Lord. Over the past decade, microelectronics
manufacturing has migrated offshore. Although the shift to Asia has
occurred, the U.S. is still the preferred investment location for
leading edge fabrication, and today retains a supporting infrastructure
of research, design, intellectual property rights, and physical plants
that make the U.S. a viable investment market for the semiconductor
industry. Aggressive investments and licit and illicit actions by peer
nations threaten this remaining U.S. leadership. China alone purports
investment of $150 billion and a strategy to achieve dominance in this
critical technical area.
The domestic semiconductor design and manufacturing industrial base
is an important element of the Microelectronics Innovation for National
Security and Economic Competitiveness strategy. The Department will
seek to maintain access to U.S. domestic production of advanced state-
of-the-art technologies. This includes advanced microelectronics
design, fabrication, packaging and prototyping, and manufacturing
capabilities, and the ecosystem of expertise, focused to develop
innovative capabilities in performance, size, weight, and power for the
strategic areas mentioned earlier. Further, DOD will seek opportunities
to mature domestic state-of-the-practice foundries to produce more
advanced technologies. This will allow more capacity for innovators,
startups, research institutions, and other low-volume customers, such
as the Aerospace and Defense community. Applications include autonomous
and artificial intelligence systems, strategic and tactical high
performance computing, sensing and processing platforms, and high
performance weapons and electronic warfare capabilities.
129. Senator Gillibrand. Secretary Lord, what role do investments
in research and innovation play in this effort to ensure access to
trusted microelectronics?
Secretary Lord. Research and innovation play a central role in the
strategy to ensure access to trusted microelectronics. Similarly,
strategic management of the intellectual property resulting from these
efforts is critical to ensuring return these investments. The Trusted
and Assured Microelectronics program is investing in technology to
ensure access to assured microelectronics by increasing the ability of
the defense industrial base and commercial industry to more easily
secure, assure, protect, and validate the design and manufacture of
microelectronics across the domestic supply base for critical DOD and
national security needs.
A core element of the DOD Microelectronics Innovation for National
Security and Economic Competitiveness is disruptive research and
development in partnership with industry that is captured and protected
in a robust domestic ecosystem. These investments will allow the DOD
and the nation to maintain leadership in the next generation of assured
microelectronics.
Long-term, a whole of government strategy is needed that includes a
focus on fostering innovation and reducing the barriers to quickly
deliver assured microelectronics. Microelectronics is an enabling
technology that can deliver overmatch capabilities to the DOD and
commercial industry in the areas of autonomy, artificial intelligence,
secure communications, financial and big data information processing,
as well as nuclear and space modernization.
130. Senator Gillibrand. Secretary Lord, what role will DIUx,
Service S&T programs, DARPA, ManTech, DMEA, and OSD(MIBP) each play in
this effort to ensure access to trusted microelectronics?
Secretary Lord. The DOD Microelectronic Innovation for National
Security and Economic Competitiveness (MINSEC) activity is currently
led by the Assistant Secretary of Defense for Research and Engineering
(ASD(R&E)). This activity and participants in the Trusted & Assured
Microelectronics (T&AM) program and the Joint Federated Assurance
Center (JFAC) include the Air Force Research Laboratory, the National
Security Agency, the Naval Surface Warfare Center Crane, the U.S. Army
Aviation and Missile Research, Development, and Engineering Center
(AMRDEC), as well as Defense Microelectronics Initiative (DMEA),
Defense Advanced Research Projects Agency (DARPA), the Department of
Energy (DoE), and the Intelligence Community science and technology
(S&T) organizations.
The Deputy Assistant Secretary of Defense (MIBP) is a key partner
in DOD MINSEC when facilitating interactions with the industrial base.
In accordance with current policy, the DMEA accredits trusted suppliers
of application-specific integrated circuit (ASIC) services, which are
predominantly State of the Practice (SOTP), for the design and
development of custom ASICs for DOD end-use by programs. However the
scope of DOD's current and future needs extend beyond what is currently
available through today's accredited suppliers.
DOD MINSEC investments, through the DARPA Electronics Resurgence
Initiative, will also spur the disruptive technology required to ensure
that the U.S. leads the next generation of microelectronics technology
and that it is assured. Further, the JFAC, T&AM program, DARPA, DMEA,
and industry have, and are developing, the methods to protect the
design intent and operability of critical designs, which is needed to
access State Of The Art (SOTA) foundries in a secure manner. For those
needs that have no commercial supplier due to process or protection
requirements, DMEA will continue to serve as a foundry of last resort.
131. Senator Gillibrand. Secretary Lord, will you use the
authorities of the Defense Production Act in this effort to ensure
access to trusted microelectronics?
Secretary Lord. We are currently using DPA authorities, most
notably Title III, to ensure access to trusted microelectronics.
The Department is already using the authorities, most recently in a
June 2017 Presidential Determination which addressed a variety of
challenges facing the Space Industrial Base. More specifically, this
Presidential Determination selected Radiation Hardened Trusted Field
Programmable Gate Arrays as an area of concern, and since then the
program has been used to develop a trusted domestic source of this
capability to minimize or eliminate the potential insertion of
malicious circuitry in U.S. manufactured semiconductors. Planned
funding for this project is $14.0 million over the next five years.
In addition, the President just signed a determination that
designates trusted advanced photomasks as essential to national
defense. The trusted advanced photomasks project will assure a chain of
custody throughout all steps of the design and manufacturing process of
photomasks from a ``trusted'' merchant supplier. This is critical for
ensuring the integrity and confidentiality of legacy and state-of-the-
art integrated circuits used in sensitive U.S. Government systems. This
sector is becoming increasingly costly and supply chains are
lengthening, threatening U.S. dominance in this space but also
reinforcing the essentiality of Government action to mitigate this
threat. Planned funding for this project is $7.2 million.
DPA also has authorities that are being utilized to protect the
domestic microelectronics industrial base, including Title I (Priority
in Contracts and Orders) and Title VII (General provisions including
the authority establishing the Committee on Foreign Investment in the
United States (CFIUS)). DOD recognizes the significance of ensuring
access to trusted microelectronics and we are using numerous DPA titles
to advance this essential technology.
combat rescue helicopter mission
132. Senator Gillibrand. Secretary Wilson, the many Air Guard units
including the 106th Air Rescue Wing in Gabreski, NY accomplish complex
missions flying Combat Rescue Helicopters. When it comes to acquisition
of new Combat Rescue Helicopters, though, this is a program in which
the Air Force has chosen not to field the aircraft in a concurrent and
proportional manner, putting the Air Guard at risk of never receiving
the latest helicopters and technology. Our Airmen regularly go out on
rescue missions, and they should not be forced to use the oldest
helicopters for years to come. Last month, it was rumored that Air
Force leadership is considering a shift of the Combat Rescue Helicopter
mission from Air Combat Command to Air Force Special Operations
Command--a decision that could result in fewer new rescue helicopters
reaching the force and disadvantaging Guard units. Has the Air Force
reached a decision as to whether the Combat Rescue Helicopter mission
will remain under Air Combat Command or shift to Air Force Special
Operations Command and if so what is that decision?
Secretary Wilson. The decision to realign Air Force Rescue from Air
Combat Command to Air Force Special Operations Command has not been
made. Both applicable Major Command Commanders continue analysis and
discussion in determining the most appropriate train and equip command.
133. Senator Gillibrand. Secretary Wilson, if the Air Force has not
yet decided whether to move the Combat Rescue Helicopter mission, what
is the timeline for the decision?
Secretary Wilson. While analysis remains ongoing, and discussions
amongst Major Command Commanders continue, there is no established
timeline in terms of Air Force Rescue Major Command Realignment.
134. Senator Gillibrand. Secretary Wilson, if the Air Force moves
the Combat Rescue Helicopter to Air Force Special Operations Command,
will you ensure that Air Guard units continue to receive new aircraft
concurrently and proportionately with active units?
Secretary Wilson. If Air Force Rescue is moved from Air Combat
Command to Air Force Special Operations Command, analysis will continue
in order to determine the most capable force needed to meet Combatant
Command requirements. It should also be noted in terms of delivery of
future and effective rescue capability to the Air National Guard, that
ALL Rescue Air National Guard units are scheduled to receive the HH-60G
Operational Loss Replacement aircraft FIRST. These aircraft will be the
lowest hour and most advanced HH-60G aircraft in the Air Force
inventory, and are meant to offset the later delivery of the Combat
Rescue Helicopter to the Air National Guard. Force laydown and unit
distribution of the new Combat Rescue Helicopter are yet to be
determined; however, ANG rescue forces will remain a critical component
of the AF's capability.
135. Senator Gillibrand. Secretary Wilson, how does the Air Force
plan to keep the Senate Armed Services Committee apprised of any
changes to the Combat Rescue Helicopter mission?
Secretary Wilson. My Office of Legislative Liaison will advise the
Senate Armed Service Committee if a decision is made to change the
Combat Rescue Helicopter mission.
air force research lab rome
136. Senator Gillibrand. Secretary Wilson, one of the good fortunes
we have in New York is our talented workforce, and the Air Force
Research Lab in Rome is the perfect example of an installation that has
benefited from the state's ability to attract and concentrate high-
skilled workers. Past Air Force leaders have visited Rome and been very
impressed by the amazing work happening at the lab and its leadership
on cyber in the Air Force and beyond--which you mentioned during this
hearing. Will your team work with my staff to schedule a visit for you
to join me in Rome, NY and see this critical work firsthand?
Secretary Wilson. I'd be happy to join you for a tour of the AFRL
Information Directorate's (AFRL/RI) facilities. I will ensure my team
will work with your office to set up a visit to the Rome, NY facility.
__________
Questions Submitted by Senator Richard Blumenthal
huey replacement program
137. Senator Blumenthal. Secretary Lord, the UH-1N ``Huey'' average
fleet age is over 40 years, and continues to operate under national
security waivers because it is incapable of meeting requirements to
protect our ICBM fleet and National Capital Region. The Huey
Replacement program has been discussed in some form since 2001. What is
your involvement with this program? Why are we now spending an
additional $400 million in research and development for the Huey
Replacement program, when we could be fielding helicopters sooner by
capitalizing on existing production lines?
Secretary Lord. The Under Secretary of Defense for Acquisition,
Technology, and Logistics designated the UH-1N Replacement program as
an Acquisition Category 1C pre-Major Defense Acquisition Program and
delegated Milestone Decision Authority to the Secretary of the Air
Force on August 16, 2016. The Air Force provided the following
information about their acquisition strategy.
The current acquisition strategy capitalizes on existing production
lines. Through voluntary information exchanges, all interested vendors
identified performance shortfalls that necessitated research and
development funding to meet the Air Force's operational requirements.
This funding is necessary to integrate non-developmental items, support
test activities, and deliver the initial four helicopters. Executing
the current acquisition strategy will result in the quickest fielding
of a replacement helicopter that meets the requirements.
cyber and technology security
138. Senator Blumenthal. Secretary Lord, I am concerned following
reports about foreign owned or affiliated products used by the federal
government, including the Department of Defense, which may pose a risk
to our national security. What type of national security due diligence
is performed on products and services before DOD decides to purchase?
Secretary Lord. The Department has several mechanisms in place to,
on a case-by-case basis, perform due diligence on products and services
before purchase. DOD Instruction 5200.44, ``Protection of Mission
Critical Functions to Achieve Trusted Systems and Networks (TSN),''
outlines a risk management approach that spans the entire systems'
lifecycle, including criticality analyses to identify critical
functions and components; use of all-source intelligence on suppliers
of critical components; and use of TSN processes, tools and techniques
to manage risk. We use Program Protection Planning (PPP) activities to
address the full spectrum of security risks for the critical components
contained in our weapons systems to assess supply chain vulnerabilities
and implement mitigations to manage risk to system functionality. Using
the PPP to inform courses of action, we can apply the vendor-neutral
Federal Acquisition Regulation and Defense Federal Acquisition
Regulation Supplement (DFARS).
Absent suspension or debarment, or country- or vendor-specific
prohibitions, individual vendors are not precluded from providing
products or services to the DOD, nor would our cleared defense
contractors be precluded from using such products or services. However,
when necessary, there are authorities available to the Department to
limit or exclude vendors in specific circumstances, and the Department
is currently working on a number of activities to review and improved
its capabilities to identify and mitigate these supply chain risks.
More specifically, section 806 of the Ike Skelton National Defense
Authorization Act (NDAA) for fiscal year 2011, as amended, has been
implemented at DFARS Subpart 239.73, ``Requirements for Information
Relating to Supply Chain Risk.'' The rule enables DOD components to
exclude a source that fails to meet established qualifications
standards or fails to receive an acceptable rating for an evaluation
factor regarding supply chain risk for information technology
acquisitions, and to withhold consent for a contractor to subcontract
with a particular source or to direct a contractor to exclude a
particular source.
Section 841 of the NDAA for fiscal year 2015, implemented with
Class Deviation 2015-O0016, ``Prohibition on Providing Funds to the
Enemy and Authorization for Additional Access to Records,'' provides
the authority for heads of contracting activities to terminate, void,
and restrict contracts, grants, and cooperative agreements, with an
individual or entity that has been identified by the Commander of U.S.
Africa Command, U.S. Central Command, U.S. European Command, U.S.
Pacific Command, U.S. Southern Command, or U.S. Transportation Command
to have provided funds, supplies, or services directly or indirectly to
a person or entity that is actively opposing U.S. or Coalition forces
("the enemy") involved in a contingency operation, or that failed to
exercise due diligence to prevent such activities. Section 842 of the
NDAA for fiscal year 2015, implemented with Class Deviation 2015-O0016
and Class Deviation 2018-O0008, ``Additional Access to Records in the
United States Central Command,'' authorizes access to contractor and
subcontractor records, to ensure that funds, supplies, or services
under a covered contract are not provided directly or indirectly to the
enemy.
In the area of space launch, section 50131 of title 51, U.S. Code
(U.S.C.), requires, with limited exceptions, the Federal Government
``shall acquire space transportation services from United States
commercial providers whenever such services are required in the course
of its activities.'' 51 U.S.C. 50101 defines ``United States commercial
provider'' as ``a commercial provider, organized under the laws of the
United States or of a State, that is--(A) more than 50 percent owned by
United States nationals; or (B) a subsidiary of a foreign company and
the Secretary of Transportation . . . . [makes certain findings].''
Additionally, the National Space Transportation Policy (as revised
November 21, 2013) requires ``United States Government payloads shall
be launched on vehicles manufactured in the United States unless an
exemption is coordinated . . . through an interagency process.'' DOD
has processes in place to ensure these requirements are met.
Under circumstances where a foreign company is acquiring a U.S.
company, DOD uses its participation in the Committee on Foreign
Investment in the United States (CFIUS) to identify and mitigate the
national security risks that arise from the transaction. Pursuant to
section 4565 of title 50, U.S. Code, CFIUS may negotiate, enter into or
impose, and enforce any agreement or condition with any party to a
covered transaction to mitigate any threat to the national security of
the United States that arises as a result of the transaction. These
mitigation agreements can and do address concerns related to foreign
control over DOD products and services resulting from CFIUS-reviewed
transactions.
In addition, DOD is able to utilize a number of country- or vendor-
specific authorities:
A country-specific prohibition is found in section 1296
of the NDAA for fiscal year 2017, ``Maintenance of Prohibition on
Procurement by Department of Defense of People's Republic of China-
Origin Items That Meet the Definitions of Goods and Services Controlled
as Munitions Items When Moved to the `600 Series' of the Commerce
Control List,'' amends section 1211 of the NDAA for fiscal year 2006,
and specifically prohibits Communist Chinese military companies from
supplying, through a contract or subcontract at any tier supplies or
services covered by the United States Munitions List or the 600 Series
of the control list of the Export Administration Regulations, contained
in Supplement No. 1 to part 774 of subtitle B of title 15 of the Code
of Federal Regulations to DOD.
In the area of commercial satellites, 10 U.S.C. 2279
requires, with a limited exception, that the Secretary of Defense may
not contract for satellite services with a foreign entity if the
Secretary reasonably believes a ``covered foreign country'' has an
ownership interest that may affect satellite operations; or the foreign
entity plans to or is expected to provide a launch or other satellite
services under the contract from a covered foreign country. The term
``covered foreign country'' includes the People's Republic of China,
North Korea, and any country that is a state sponsor of terrorism. This
prohibition can be overcome if the Secretary of Defense determines
there a national security need to enter into such a contract, and not
later than seven days before entering into the contract, in
consultation with the Director of National Intelligence (DNI), submits
to the congressional defense committees a national security assessment
with various findings.
A vendor-specific authority is provided at section
1634(a) of the Fiscal Year 2018 NDAA, ``Prohibition on the Use of
Products and Services Developed or Provided by Kaspersky Lab,''
prohibits any Department, agency, organization or other element of the
Federal Government from using, whether directly or indirectly or
through work with or on behalf of another Department, agency or
organization or element of the Federal Government, any hardware,
software, or services developed, provided in whole or in part, by
Kaspersky Lab (or any successor entity, by an entity that controls, or
is controlled by, or is under common control of Kaspersky Lab; or any
entity of which Kaspersky Lab has a majority ownership. This
prohibition takes effect on October 1, 2018.
Finally, the Department is currently working to review and improved
its capabilities to identify and mitigate these supply chain risks.
Moving forward, under the direction of section 807 of the NDAA for
fiscal year 2018, ``Process for Enhanced Supply Chain Scrutiny,'' we
are working to enhance our processes to perform national security due
diligence on products and services before DOD decides to purchase.
In addition, pursuant to section 1634(b) of the NDAA for fiscal
year 2018, the Secretary of Defense is required to conduct a review of
the procedures for removing suspect products or services from the
information technology networks of the Federal Government in
consultation with the Secretary of Energy, the Secretary of Homeland
Security, the Attorney General, the Administrator of the General
Services Administration, and the DNI. The Secretary of Defense will
report the results of this review to the appropriate congressional
committees.
139. Senator Blumenthal. Secretary Lord, as the global supply chain
expands, what are the specific considerations for foreign goods? Is
this sufficient?
Secretary Lord. DOD's support and sustainment challenge lies in
continually leveraging evolving global supply chains. This pursuit
provides both opportunities and challenges. We support warfighters
within the boundaries of applicable laws, such as the Berry Amendment
and Buy American Act. Existing authorities rightly bound the DOD supply
chain to focus on procurement and sustainment activities within our own
borders, but we also consider allied support and contractor activities
in these processes. A mature and varied global market affords the
Department greater access to key technologies, products, and services.
The traditional risk framework considers the quality and reliability of
the goods and components we use. A new element of risk now lies in
ensuring all goods and components are cyber secure. To meet this
demand, the Department examines and validates the integrity and
reliability of all critical components, to include foreign items, both
individually and as part of the higher assembly or subsystem. DOD uses
a range of policies and guidance to protect our supply chain against
malicious, defective, and counterfeit parts, whether domestic or
foreign. These include FAR Part 25, Evaluating Foreign Offers in Supply
Contracts, DFARS 252.246-7007, Contractor Counterfeit Electronic Part
Detection and Avoidance System, and DODI 5200.44, Protection of Mission
Critical Functions to Achieve Trusted System Networks. These processes
and procedures identify critical program information and components
that can be expanded to accommodate and sufficiently address the
expanded use of a global supply chain. In addition, we partner with the
intelligence community, the CIO, and others to ensure both awareness of
new and evolving threats and that we are adapting to meet those threats
to ensure secure acquisition and support processes and products, while
continuing to leverage available opportunities.
140. Senator Blumenthal. Secretary Lord, what are you doing to
ensure our acquisition system has the necessary protective measures in
place to prevent national security vulnerabilities for DOD acquired
technology?
Secretary Lord. The Department engages in a comprehensive approach
to protect DOD acquired technology by providing explicit policy to the
acquisition community, employing defense acquisition regulations, and
providing operational protection. Examples of each of these approaches
is provided below.
In 2017, the Department amended the DODI 5000.2, Operation of the
Defense Acquisition System to add Enclosure 14, Cybersecurity in the
Defense Acquisition System which identifies the responsibility for
program managers to identify and mitigate vulnerabilities across the
scope of their program. This scope includes program information,
organizations, supply chain, the system being managed, as well as
networks, and enabling systems.
In addition to policy guidance, DOD requires the inclusion of the
Defense Federal Acquisition Regulations Supplement (DFARS) clause
252.204-7012, ``Safeguarding Covered Defense Information and Cyber
Incident Reporting,'' in all DOD contracts for other than commercial
items. The 252.204-7012 clause requires contractors/subcontractors to:
Safeguard covered defense information that resides on or
is transiting through a contractors internal information system or
network;
Report cyber incidents that affect a covered contractor
information system or the covered defense information residing therein,
or that affect the contractor's ability to perform requirements
designated as operationally critical support;
Submit malicious software discovered and isolated in
connection with a reported cyber incident to the DOD Cyber Crime Center
(DC3);
If requested, submit media and additional information to
support damage assessment; and
Flow down the clause in subcontracts for operationally
critical support, or for which subcontract performance will involve
covered defense information.
In addition to policy and regulatory approaches, DOD provides
several avenues of operational protection. Some examples of these
capabilities include:
The Joint Acquisition Protection and Exploitation Cell
(JAPEC), established to integrate intelligence community (IC), law
enforcement (LE), counterintelligence (CI) and acquisition community
data, analysis, processes, and tools in order to mitigate losses of
unclassified controlled technical information (CTI), and address
compromises. The JAPEC is co-led with USD(I), and prioritizes critical
acquisition programs and technologies to focus efforts.
The Joint Federated Assurance Center (JFAC), established
to federate DOD tools and expertise to better support program needs for
software and hardware assurance evaluations and guidance.
The Committee on Foreign Investment in the United States
(CFIUS), employed by the Department to support foreign investment,
consistent with the protection of national security. As one measure,
CFIUS can apply risk mitigation tools if a mitigation agreement is
required to support a proposed transaction. DOD supports the
modernization of CFIUS by supporting the Foreign Investment Risk Review
Modernization Act of 2017 (FIRRMA).
Other risk mitigation tools are available through the
National Industrial Security Program, administered by the Defense
Security Service (DSS). DSS employs Foreign Ownership, Control, or
Influence (FOCI) mitigation techniques to allow foreign investment
consistent with the national security interest of the United States.
Finally, USD(AT&L) is leading a cross functional team to provide a
comprehensive approach to maintain DOD's technology advantage. This
team is developing and implementing a strategic framework and lines of
effort to counter adversaries licit and illicit technology exploitation
strategies. This comprehensive approach will leverage the above
initiatives, and many other DOD activities and stakeholders.
141. Senator Blumenthal. Secretary Lord, what other authorities do
you need to execute secure purchases?
Secretary Lord. The DOD currently has available several authorities
to ensure secure purchases for the Department. These authorities relate
to supply chain risk management considerations based upon foreign
ownership control and influence. Section 806 of the Fiscal Year 2011
NDAA provides DOD with authority to exclude a source on the basis it
presents significant supply chain risk to a National Security System.
In accordance with section 807 of the Fiscal Year 2018 NDAA, the
Department is moving to ensure utilization of this authority, and other
processes that focus on secure purchases.
As part of this effort, the Department is collaborating with the
related activities underway in the Office of Management and Budget,
Office of the Director of National Intelligence, the Department of
Homeland Security, and the General Services Administration to inform
processes and determine additional authorities that may be needed. One
area of consideration is how to provide streamline authorities in place
for National Security Systems. Another area of consideration is the
expansion of 806 authority to cover than national security systems.
fair pay: responsible contractors
142. Senator Blumenthal. Secretaries Lord, Esper, Geurts, and
Wilson, what processes do you have in place to ensure contracts are
awarded to responsible companies who play by the rules, treat workers
fairly, & uphold existing labor laws?
Secretary Lord. In general, the Department of Defense coordinates
with the Department of Labor (DOL) to administer and enforce
contractors' compliance with most labor laws, as DOL has oversight and
responsibility for remedying labor violations under these laws. This
coordination helps to ensure contracts are awarded to responsible
companies who play by the rules and treat workers fairly. Before
awarding a contract, contracting officers review information regarding
the responsibility of prospective contractors, including the offeror's
ability to perform the prospective contract successfully and has a
record of integrity and business ethics. The source selection
evaluation process reviews offerors proposals and considers past
performance information of the offerors. Contracts are only awarded to
responsive and responsible offerors. Contracting officers must make an
affirmative responsibility determination before award, and it could
affect the Government's determination of the prospective contractor's
responsibility. After contract award, a wage violation for a specific
contract action is frequently referred to the contracting officer, who
in turn would generally coordinate with DOL to pursue corrective
actions through administrative procedures, litigation, and/or criminal
prosecution as appropriate.
Secretary Esper. For all acquisitions, Army acquisition officials
ensure a responsibility determination occurs to validate contractor
fitness or exclusion for doing business with the government. This
validation signifies that the Government has judged the contractor to
have the means and ability to perform the contract. We assess areas
such as contractor financial resources, past performance record,
operational controls and the eligibility of the contractor to receive
an award under applicable laws and regulations.
Secretary Geurts. FAR Part 9 sets forth the policies, standards and
procedures for agencies to determine whether prospective contractors
and subcontractors are responsible entities eligible for contract
award. A responsibility determination includes factors such as whether
such entities have a satisfactory record of integrity and business
ethics and a satisfactory performance record, and takes into account
labor law compliance as set forth below. In determining responsibility,
DON contracting officers review information in the Federal Awardee
Performance and Integrity Information System (FAPIIS), and consider any
other past performance information about the offeror. This assessment
includes a review of information in the System for Award Management to
ensure that agencies do not solicit offers from or award contracts to
entities that have been suspended or debarred from receiving government
contracts.
As part of determining responsibility, DON officials also access
FAPIIS to review and consider contract performance assessments entered
by contracting officers in CPARS. These assessments might explain how a
violation of labor laws negatively affected contract work performance,
product or service quality, and/or employee safety. Pursuant to FAR
Part 15, source selection officials may also use such past performance
information in evaluating offeror bids and proposals. Department of
Labor (DOL) regulations and the FAR provide contracting agencies like
DON with other remedies and enforcement tools to address labor law
compliance under the federal prevailing wage laws. DON enforces the
Construction Wage Rate Requirements statute by performing regular
compliance checks and investigations. The DOD FAR Supplement and
specific DON guidance on these construction requirements assist efforts
to ensure compliance with prevailing wage laws and provide DoN
contracting officers with information to be used in determining a
contractor's responsibility.
Secretary Wilson. The Air Force follows the Federal Acquisition
Regulation (FAR) Part 9 and Defense Acquisition Regulations Supplement
(DFARS) Part 209 which address contractor responsibility, suspension
and debarment. In addition, the Air Force uses the procedures
established in FAR--Part 22 and DFARS--Part 222 for Application of
Labor Laws to Government Acquisitions.
combat rescue helicopter
143. Senator Blumenthal. Secretary Wilson, in October, I led a
bipartisan letter to you and General Goldfein expressing concern about
any change in the current acquisition plan, as has been rumored. My
letter requested an update on the CRH program, as well as your
commitment to keeping us informed of any potential changes. I
appreciated your interim response last month that noted you would look
into it. Please provide an update on maintaining the program of record
and lead of the mission.
Secretary Wilson. The Air Force is fully committed to the program
of record of 112 aircraft. We will keep you informed of any changes.
144. Senator Blumenthal. Secretary Wilson: Following the Air Force
posture hearing earlier this year, you sent me a letter noting that you
``fully support CRH as it moves towards Initial Operational Capability
in fiscal year 2021.'' Do you continue to uphold this commitment?
Secretary Wilson. Yes, the Air Force fully supports the Combat
Rescue Helicopter program as it moves toward Initial Operational
Capability.
future vertical lift
145. Senator Blumenthal. Secretary Esper, please provide an update
on how the Army is progressing in its development of future vertical
lift platforms. How are you partnering with the other services?
Secretary Esper. Future Vertical Lift (FVL) is a strategic advance
in vertical lift capability and remains a high priority for the
Department of the Army. The FVL program is currently preceded by the
Joint Multi-Role (JMR) Science and Technology initiative. This
initiative focuses on an Air Vehicle Demonstrators (AVD) and a Mission
Systems Architecture Demonstration (MSAD). The AVD will produce two Air
Vehicle Demonstrators which will inform and influence the FVL program.
Flight demonstrations are scheduled to take place during fiscal year
2018 through fiscal year 2019 and the Mission Systems Architecture
Capstone Demonstration is scheduled to take place during fiscal year
2018. Both are expected to show significantly improved performance
capabilities over current rotorcraft. The Future Vertical Lift program
will provide a family of vertical lift platforms that deliver next
generation capabilities at the tactical, operational, and strategic
levels.
Future Vertical Lift Capability Set 3 (CS3) is an Army led program
with Joint participation and continues to be the primary joint interest
for the initial FVL acquisition effort. The U.S. Army, in conjunction
with the United States Marine Corps, Special Operations Command, the
Office of the Secretary of Defense, Acquisition and Sustainment, and
the Joint Staff have chartered five Integrated Product Teams (IPT). The
five IPTs are the Acquisition IPT (AIPT), Requirements IPT (RIPT), and
International Engagement IPT (IE IPT), Science and Technology IPT S&T
IPT), and the Common Systems (IPT), and the Common Systems IPT (CSIPT)
and members from the aforementioned agencies are represented at each
IPT. The U.S. Army, the United States Marine Corps, and SOCOM currently
have an Analysis of Alternatives (AoA) in progress and the results are
expected 1QFY19. The outcome of the AoA is a major decision point for
all services involved and will provide options that inform our senior
leaders. Additionally, the IPTs have initiated draft language for
Concepts of Operation, Acquisition Strategy, and early development of
individual service and joint requirements.
joint strike fighter program (jsf)
146. Senator Blumenthal. Secretary Lord and Secretary Wilson, the
Future Years Defense Program attached to the fiscal year 2018 budget
shows another delay for the 60 F-35As per year procurement plan. Two
years ago it was to begin in fiscal year 2018, last year it was pushed
to fiscal year 2021, and now it has been delayed to an undetermined
date beyond FYDP projections. At a time when we are focused on cost
savings, such delay in robust procurement only hampers such savings.
How are we going to achieve more savings with continued delay to
ramping up to 60 F-35As per year? Do you agree that production level
increases will contribute to cost savings?
Secretary Lord. The Department is committed to ramping F-35
production to as high a procurement rate as is affordable in order to
maximize cost savings, but the F-35 procurement must be balanced
against other competing Department priorities as well as the Services
ability to support and sustain their fleets. While I agree that an
increased procurement ramp will help reduce production costs, we must
also consider the costs of retrofit to the Block 4 hardware
configuration we need to counter advancing adversaries. In addition to
those added costs, retrofits also task valuable depot resources and
remove aircraft from operations for an extended period. In light of
these considerations I believe the Department's procurement profile is
appropriate for this budget period.
Secretary Wilson. The Air Force is committed to ramping F-35
production to as high a procurement rate as is affordable in in light
of other F-35 costs. The procurement of the F-35As must be balanced
against other competing priorities, as well as the Air Force's ability
to support and sustain its fleet. While I agree that an increased
procurement ramp will help reduce production costs, we must also
consider the current and future costs to retrofit current production as
well as the existing fleet to counter advancing adversaries and
technology advances. In addition to those added costs, retrofits also
task valuable depot resources and remove aircraft from operations for
an extended period. In light of these considerations, I believe the Air
Force's procurement profile is appropriate for this budget period.
147. Senator Blumenthal. Secretary Lord and Secretary Wilson,
please explain the process and progress you have made on the JSF cost
deep dive review that was mentioned during the hearing. How do these
efforts build on past initiatives? How do they differ? What success
have you had? What engagement and focus have you had on the jet's
engine?
Secretary Lord. The Joint Strike Fighter (JSF) Deep Dive Cost
Reduction Initiative is part of a broader F-35 Affordability Strategy
that focuses on true cost reduction across all three lines of effort--
Development, Production, and Sustainment. In performing the Deep Dive,
the cost structures of Lockheed Martin (LM), Northrop Grumman (NG), BAE
Systems, and Rolls Royce (RR), as well as each of their significant
subcontractors, will be examined. There are four main objectives of the
Deep Dive:
1) Enable the Government to understand what JSF costs, why it
costs what it costs, and define every cost reduction opportunity that
can be realistically implemented;
2) Establish a data driven baseline for use in all future
production negotiations;
3) Provide a firm foundation of information and knowledge to
inform the broader F-35 Affordability Strategy;
4) Train a cadre of approximately 25 Government engineers and cost
analysts who will form an enduring cost analysis capability for JSF.
The Deep Dive will take advantage of the recently completed
aircraft hardware qualification testing, the final aircraft Functional/
Physical Configuration Audits efforts, and leverage the production cost
experience over the first 10 production buys.
The Deep Dive is being led by the Director of Defense Pricing, in
coordination with the Deputy Director for Cost Analysis in the office
of Cost Analysis and Program Evaluation (CAPE). The Government team
will work with engineers from A.T. Kearney, who have significant
experience in cost analysis, commercial manufacturing, and cost
reduction initiatives.
A.T. Kearney previously collected similar cost data from the F135
engine prime contractor, Pratt and Whitney (P&W) as part of a prior
cost assessment. The previously collected data from P&W will be
included in this cost baseline. This initiative will collect data from
RR, which is a sub-contractor to P&W for the F-35B propulsion system.
The work will be performed in three phases. We have commenced work
on Phase One of this effort, which will focus on direct labor and
manufacturing support at LM, NG, and RR, and have made good progress to
define the scope and depth of the review. We are also working issues
related to obtaining access to the necessary cost data at the prime
contractor and each of the major subcontractors. The review will also
leverage the cost data submitted to CAPE on each of the first 10
production buys.
Phase Two of the Deep Dive will focus on continued efforts at LM,
NG, and RR. In addition, direct labor and manufacturing support at BAE
will be examined. Deep analyses of a number of key subcontractors will
take place. Phase Three will primarily focus on the supply chain
structure, to include a review of the remainder of the key suppliers.
In addition, indirect labor and overhead structure reviews at LM, NG,
RR, and BAE will occur. In total, the three phases are expected to take
approximately a year to complete.
As cost savings opportunities are identified, they will be
prioritized and tracked through a detailed Target Assurance Program
(TAP). The TAP will include a detailed action plan to make each
potential savings opportunity a reality.
Secretary Wilson. The Joint Strike Fighter (JSF) Deep Dive Cost
Reduction Initiative is part of a broader F-35 Affordability Strategy
that focuses on true cost reduction across all three lines of effort--
Development, Production, and Sustainment. In performing the Deep Dive,
the cost structures of Lockheed Martin, Northrop Grumman, BAE, and
Rolls Royce (F-35B), as well as each of their significant
subcontractors, will be examined. There are four main objectives of the
Deep Dive:
1) Enable the Government to understand what the JSF costs and
define every cost reduction opportunity that can be realistically
implemented;
2) Establish a data driven baseline for use in all future
production negotiations;
3) Provide a firm foundation of information and knowledge to inform
the broader F-35 Affordability Strategy; and
4) Train a cadre of approximately 25 government engineers and cost
analysts who will form an enduring cost analysis capability for JSF.
The Deep Dive will take advantage of the recently completed
aircraft hardware qualification testing, the final aircraft Functional/
Physical Configuration Audits efforts, and leverage the production cost
experience over the first 10 production buys.
The Deep Dive is being led by the Director of Defense Pricing, in
coordination with the Deputy Director for Cost Analysis in the office
of Cost Analysis and Program Evaluation (CAPE). The government team
will work with engineers from A.T. Kearney, who have significant
experience in cost analysis, commercial manufacturing, and cost
reduction initiatives.
A.T. Kearney previously collected similar cost data from the F135
engine prime contractor, Pratt & Whitney as part of a prior cost
assessment. The previously collected data from Pratt & Whitney will be
included in this cost baseline. This initiative will collect data from
Rolls Royce, which is a sub-contractor to Pratt & Whitney for the F-35B
propulsion system.
The work will be performed in three phases. We have commenced work
on Phase One of this effort, which will focus on direct labor and
manufacturing support at Lockheed Martin, Northrop Grumman, and Rolls
Royce, and have made good progress to define the scope and depth of the
review. We are also working issues related to obtaining access to the
necessary cost data at the prime contractor and each of the major
subcontractors. The review will also leverage the cost data submitted
to CAPE on each of the first 10 production buys. Phase Two of the Deep
Dive will focus on continued efforts at Lockheed Martin, Northrop
Grumman, and Rolls Royce. In addition, direct labor and manufacturing
support at BAE will be examined. Deep analyses of a number of key
subcontractors will take place. Phase Three will primarily focus on the
supply chain structure, to include a review of the remainder of the key
suppliers. In addition, indirect labor and overhead structure reviews
at Lockheed Martin, Northrop Grumman, Rolls Royce and BAE will occur.
In total, the three phases are expected to take approximately a year to
complete.
As cost savings opportunities are identified, they will be
prioritized and tracked through a detailed Target Assurance Program.
The Target Assurance Program will include a detailed action plan to
make each potential savings opportunity a reality.
__________
Questions Submitted by Senator Mazie Hirono
small business r&d and the acquisition process
148. Senator Hirono. Secretary Lord, the DOD runs a $1 billion
annual small business innovation research (SBIR) program that has
successfully invested in high tech businesses and developed advanced
technologies that are being used by operational forces today. I
understand that one challenge facing these small businesses is their
difficulty crossing what is called ``the valley of death''--the stage
after the small business has done some good R&D work--but before they
can really sell a product to the Pentagon. What steps are taking to
address this issue?
Secretary Lord. Technology transition from developmental programs
into acquisition programs remains a challenge. Past technology
transition successes were, in many cases, a result of personalities and
relationships rather than robust process. Program Managers who knew and
trusted the technology developer were often willing to take the risk of
insertion of new technology. We must ensure technology transition is a
critical focus area as the Department pursues new capability.
The Department is focused on reducing the risk of the ``valley of
death'' for small businesses using existing resources and authorities
including the Commercialization Readiness Program and the Rapid
Innovation Fund to support the transition of technologies, products,
and services developed under SBIR and STTR programs. We appreciate the
support of Congress in granting authority for a pilot program to use
multiple award contracts in support of more efficient transition of
SBIR and STTR developed technologies.
The skills necessary to successfully operate a business and
transition or commercialize technologies are different from those
required to develop new technologies, and the Mentor Protege program
provides a unique opportunity for small businesses to learn these
skills from more experienced companies serving as mentors. The Mentor
Protege program provides small businesses an opportunity to learn
skills such as design for manufacture, business development, and
business management; skills necessary to successfully grow a business
and create viable technology transition strategies.
Passing legislation to make the SBIR, STTR and Mentor Protege
programs permanent would assist the Department's efforts to support
innovation and enable consistent funding for small businesses to
navigate the complex process of transitioning technology to the
Department for our use. Reauthorization of the Pilot Admin Authority is
another key enabler to improving the ability to transition or
commercialize SBIR technologies by providing funding for education and
outreach for both government program personnel and small businesses. I
remain committed to identifying further opportunities to work with the
committee to improve our ability to maximize the contributions of small
businesses.
test ranges
149. Senator Hirono. Secretaries Lord, Esper, Geurts, and Wilson,
the Pacific Missile Range Facility, located on the island of Kauai, is
a crown jewel amongst our defense facilities. It is an undersea range
used by our submarines and an above ground range where many of our
missile defense tests are conducted. It would also be a great place to
test Directed Energy projects. What role do test ranges play in
developing systems that will make servicemembers effective in combat?
Are you concerned about the health of our ranges and their ability to
meet operational needs? What initiatives are you undertaking to
strengthen the ranges?
Secretary Lord. I believe that the Department's test capabilities
play a critical role in modernizing our defense systems. Major Range
and Test Facility Base (MRTFB) ranges, such as the Pacific Missile
Range Facility (PMRF), provide a suite of test infrastructure and
operationally realistic environments (e.g., realistic threats) through
the use of modeling and simulation capabilities, hardware-in-the loop
facilities, installed system test facilities and open air ranges. This
capability to conduct realistic testing is critical to any
modernization of our defense systems.
We work together with the Services to address issues to ensure the
DOD has the space, infrastructure and capabilities to support the
development of our current weapons system programs as well as
modernization and sustainment of older systems. There are some military
construction projects currently underway and planned for the near
future that will allay the concerns of some of these issues, and we are
also continuing to resource projects that will modernize or replace
existing aging capabilities.
Secretary Esper. The Army's Test Centers and Ranges plan and
execute developmental testing, support independent operational testing,
and provide technical and safety assessments that are instrumental to
determine equipment effectiveness, suitability, and survivability. The
information derived from analysis of T&E data is critical to inform
senior leader decision-makers and improve materiel solutions while
helping commanders mitigate risk and improve operational readiness.
I believe the Army Test Centers and Ranges are doing an outstanding
job meeting the needs of the warfighter; however, I am concerned with
their overall health and readiness to test future Army equipment. The
Army is currently undertaking a study to determine efficiencies within
the Army Test and Evaluation Enterprise to free up funds that can be
applied to address current readiness issues. We are also working to
identify investment requirements to ensure the Test Centers and Ranges
are prepared to test future Army systems.
Several initiatives are underway in order to both strengthen the
Army Test Centers and Ranges and to prepare for the future. The RAND
Corporation is conducting a study to determine the optimum way to fund
the Army's Test Centers. The Army is conducting a separate but related
study to examine the appropriate physical, intellectual, and regulatory
composition and disposition of the test enterprise, as well as methods
to adequately manage test infrastructure. Under the authorities granted
in section 233 of NDAA 2017, several Army ranges are executing a pilot
program that waives certain regulatory restrictions that impact the
ability to operate in an optimal manner and may initiate a proposal for
statutory changes. In fiscal year 2018, the Army began to include a
major military construction project annually to address critical
facility readiness issues at Army Test Centers. Additionally, the Test
and Evaluation Executive is in the process of developing a life-cycle
sustainment strategy for all instrumentation and facilities to better
forecast the sustainment requirements for existing assets and the
investment requirements to ensure the Test Centers and Ranges are
prepared to test future Army acquisition programs.
Secretary Geurts. Test ranges support the development and testing
of almost all warfighting systems that are eventually deployed into
combat, and play a critical role by providing the sea, air and land
space required to test systems in operationally realistic environments.
Over the last four years, there have been significant investments to
modernize the Navy's Test ranges to address aging infrastructure and
develop new capabilities to address emerging threats, and ensure they
are sufficiently healthy to support our operational needs. The Navy has
a number of ongoing initiatives to strengthen the health of our ranges
to include expansion of Fallon training range, refurbishment of Barking
Sands Tactical Underwater Training Range (BARSTUR), and procurement of
advanced threat emitters. In addition, the Navy continues to explore
opportunities to integrate our open air range capabilities into a Live
Virtual Constructive training concept.
Secretary Wilson. Test ranges are critical to providing
operationally relevant environments in which to develop weapon systems
and conduct developmental testing, operational testing, tactics
development and force development evaluation. I am concerned about the
advancing threat and the need to continuously improve all methods of
developing combat capability to include test and evaluation ranges and
workforce. I am also concerned about the condition of facilities on our
test ranges as I am about Air Force facilities in general. For this
reason, we made significant investments in the fiscal year (FY) 2017
President's Budget (PB) to sustain, repair, and modernize test
facilities. We have made significant investments in air and cyber range
capabilities in the fiscal year 2017 and fiscal year 2018 PBs,
including investments in propulsion, hypersonics, sensor threat and
cyber testing. We are reviewing options for further investing in space
test range infrastructure.
corrosion
150. Senator Hirono. Secretaries Esper, Geurts, and Wilson,
corrosion costs DOD $20 billion/yr. According to Defense Science Board
estimates, approximately 30 percent of current DOD corrosion costs
could be avoided through investment in sustainment, design, manufacture
and other preventative measures. How do each of your services intend to
address the corrosion issue and work with the DOD Corrosion Policy
Office to take a life-cycle view to include addressing the problem
early in acquisition programs?
Secretary Esper. The $20 billion being addressed here is as
reported by the DOD Corrosion Policy Office, using Military Department
information systems, takes into consideration field and sustainment
maintenance activities funded via the Operation and Maintenance (O&M)
appropriation accounts. There is a portion of these funds that are
simply the cost of operation (e.g., cleaning, lubrication, etc.) for
which the operational and training tempo determines.
The Army has emphasized the importance of corrosion prevention and
control in the command maintenance and supply discipline programs. We
have conducted corrosion prevention and control survey teams to
identify corrosion issues. We have completed a number of tests or
demonstrations on equipment covers, conducted a Business Case Analysis,
and published policy on the use of equipment covers in high corrosion
severity zones. We are modifying the policy to use best business
practices for using double galvanizing of select steel substrates and
transitioning to the use of improved metal rich primers to enhance
corrosion resistance. We are publishing a corrosion and acquisition
policy guide that is intended to remind members of the acquisition
workforce to take a life-cycle approach to corrosion prevention and
control.
The Army has designated the Deputy Assistant Secretary of the Army
for Acquisition Policy and Logistics as the Army's Corrosion Control
and Prevention Executive (CCPE) in accordance with section 903 of the
Fiscal Year 2009 National Defense Authorization Act. The CCPE has
developed and maintains an Army Corrosion Prevention and Control
Strategic Plan, which is linked to the DOD Corrosion Policy Office
strategic plan, to govern the Army's corrosion prevention and control
program. We participate on the DOD Corrosion Prevention and Control
Integrated Product Team and its associated Working-level Integrated
Product Teams. Based on the DOD Corrosion Policy Office Impacts of
Corrosion Reports, the trend for Army equipment and facilities
expenditure of O&M funding is downward.
Secretary Geurts. DON maintains an established, Department-wide
corrosion Cross Functional Team to address corrosion concerns. This
program comprises the DON Systems Commands working together to address
both common and platform specific corrosion issues. The program works
on reducing corrosion through research and development efforts, adding
corrosion-resistant product designs, training and educating the fleet
on preventative and corrective corrosion maintenance, and developing
technically sound and operationally viable maintenance procedures for
the system life cycle.
The DON also collaborates with the DOD Corrosion Policy Office
(CPO) and the other Service Corrosion Control and Prevention Executives
to coordinate policy and share best practices that lead to cross-
Service, force multiplier initiatives. The DOD CPO supports these
initiatives and DON efforts by funding research and development of
corrosion control products and processes.
Secretary Wilson. The Air Force is collaborating with the DOD
Corrosion Policy and Oversight office to increase acquisition program
emphasis on corrosion prevention and control across the life cycle. In
particular, new changes in Air Force Service Acquisition Executive
guidance require program managers to obtain early Air Force Corrosion
Control and Preventative Executive involvement in their life cycle
corrosion planning efforts.
151. Senator Hirono. Secretary Lord, any of the materials and
processes which determine subsequent corrosion performance are
specified very early in the design stages. How does AT&L assure that
programs have effectively addressed corrosion from the very beginning
and involved corrosion subject matter experts throughout the life of
that program?
Secretary Lord. Through a comprehensive program, the DOD Corrosion
Policy Office has invested in identifying and having more corrosion
Subject Matter Experts available to Program Managers, along with
improved and updated standards and specifications for materials and
processing impacting corrosion. In the past, the DOD Corrosion Policy
Office has been involved in Defense Acquisition Board reviews but with
an emphasis on acquisition streamlining; the responsibility for
implementing the best corrosion practices has been relegated to program
managers who have been given improved resources in the form of Subject
Matter Experts, instructions, and various guidebooks such as the
Program Managers Handbook, the Corrosion Best Practices Handbook, and
the Corrosion Prevention and Control Planning Guidebook. In addition,
the detailed annual cost of corrosion study conducted by the DOD
Corrosion Prevention Office provides visibility as to the impacts of
corrosion to help ensure that corrosion is considered throughout all
stages of a program.
defense acquisition
152. Senator Hirono. Since the establishment of the Department of
Defense in 1947, the procurement process has been studied, enhanced and
improved over the many decades. Often times there is a pendulum effect
that moves from tighter controls to looser controls allowing more
flexibility in the system depending on what was going on at the time
politically and in industry itself. This includes making the defense
process more like what is in the ``commercial sector'' and allowing
more flexibility or less to the acquisition professionals who do this
work on behalf of the U.S. Government. However, despite all of the
reviews and reforms which have been instituted over the decades we are
still in a place where we experience bad results from the acquisition
system in terms of delivering the needed systems to the warfighter in
an efficient manner that is on time and within reasonable costs. Some
of the programs the Chairman mentions regularly which are spread across
the services come to mind. In your opinion, what are the impediments to
achieving an acquisition system that delivers on schedule and within
cost parameters and what must be done to achieve this goal?
Secretary Lord. As you stated, the procurement process has been
studied, enhanced and improved over decades. The Department has also
tried innovative approaches to acquisition as well, some of which have
worked well and others have not (e.g., Total Package Procurement). I
would expect that Congress and the Department will need to continue to
work together and assess acquisition reforms to identify ways to
improve the process. We owe that to the taxpayers and the warfighters.
I believe that the on-going acquisition reform efforts, including the
section 809 panel review, the Regulatory Reform Task Force, our
Acquisition Statute Review, and an initiative I have on-going to reduce
the time to get on contract will all contribute to reducing
impediments. If there is one area I would ask for help in, it's for
stable funding for our programs. Repeated Continuing Resolutions and
the threat of Budget Control Act induced sequestration require
continual adjustments to our acquisition programs which work against
our ability to deliver systems on time and within cost. We will
continue to focus on attracting, retaining and developing a high
performance acquisition work force while upgrading our educational
programs at the Defense Acquisition University to focus on simpler,
faster tailored processes. The use of case studies and the
incorporation of current practitioners will be critical to rapidly
improving our acquisition capability.
Secretary Esper. The Army needs an acquisition system that is
inherently fast, responsive to current and emerging needs, and
visionary in meeting long-term threats, leaping ahead of capabilities
of major adversaries. This requires hard choices on which programs and
initiatives to fund or forego. Programs must establish well-defined and
realistic requirements to keep programs on schedule and on budget.
Predictable and stable funding are key to maintaining and
delivering needed systems to warfighters. We must also ensure our
programs are structured around mature technology, use open systems
architecture to allow continuous system improvement, and have the
mechanisms in place that allow flexibility of resources, both people
and dollars that can quickly adjust to program changes and
opportunities. Finally, we must delegate and empower our Program
Managers to quickly identify opportunities and resolve issues that
arise throughout the acquisition process.
Secretary Geurts. Instability in funding and requirements are the
main impediments to an effective and efficient acquisition system.
Instability includes uncertainty in budgets and funding or unrealistic
or changing requirements. Within the DON, stability in acquisition
programs is accomplished by establishing firm and realistic
requirements (including close coordination with the Service Chiefs, via
the DON Gate Review process), stabilizing system designs, and
incrementally developing technology in order to reduce technical risks
before defense acquisition programs incorporate new technologies. DOD
and the DON must maximize competition at all tiers to reduce costs and
enhance technical innovation. In addition, the appropriate use of
multiyear procurements, block buys, economic ordering quantities, and
cross-program procurements of common equipment are important tools for
reducing costs and increasing the efficiency of the acquisition system.
Also, an overly prescriptive, burdensome, statutory and regulatory
environment encumbers Program Managers with additional laws, policies,
and rules that limit flexibility, increase oversight and slow the
acquisition system. We will continue to work with Congress to identify
those laws and policies that should be eliminated or revised to improve
acquisition outcomes.
Secretary Wilson. There are several challenges we have within the
Air Force to deliver capability on time and within budget. These
challenges include maintaining stable requirements and stable, timely
budgets. We are taking deliberate actions to ensure we constantly
monitor and ensure that new requirements or changes to existing
validated requirements are not the driving factor in the costs or
schedule growth of programs. To better inform us on the capabilities
and technical requirements that can be achieved in a warfighters needed
timeframe, we are focusing more on prototyping and experimentation.
We also need stability in funding programs to ensure we give
program managers resources when they are needed to successfully execute
the plans they put in place. This will require leadership to ensure we
pursue the right programs at the right time to provide programs the
resources needed. Establishing and adhering to executable schedules
will also improve performance.
__________
Questions Submitted by Senator Martin Heinrich
plutonium capabilities
153. Senator Heinrich. Secretary Lord, I was particularly concerned
recently to learn that the NNSA's required Analysis of Alternatives for
plutonium pit production resulted in only two preferred alternatives,
including a ``big box'' facility at Los Alamos National Laboratory.
Such an impractical and costly facility, the CMRR-NF, had previously
been rejected, and in 2014, the Nuclear Weapons Council explicitly
directed NNSA to instead pursue a ``modular'' building strategy at LANL
as defined in sec. 3114 of the National Defense Authorization Act for
fiscal year 2013. In your role as Chairman of the Nuclear Weapons
Council, have you received and been briefed on the NNSA's report on the
recommended alternative endorsed by the Administrator for
recapitalization of plutonium science and production capabilities of
the nuclear security enterprise?
Secretary Lord. Yes. It is my understanding that the Administrator
of the National Nuclear Security Administration (NNSA) will respond to
the reporting requirements of subsection (a) of section 3114 of the
National Defense Authorization Act for fiscal year 2013 by providing
Congress the October 2017 Final Report of the Plutonium Pit Production
Analysis of Alternatives (AoA). The NNSA provided copies of the
Plutonium Pit Production AoA to the Department of Defense in late
November 2017 and briefed the Nuclear Weapons Council on the AoA on
December 20, 2017. The AoA identifies two recommended alternatives, and
it is my understanding that the NNSA is now conducting an Engineering
Analysis (EA) of the two alternatives, including a ``modular''
strategy, to inform selection of a single alternative and support
conceptual design of the needed plutonium pit production capabilities.
The NWC looks forward to being briefed on the results of the EA no
later than April 2018.
154. Senator Heinrich. Secretary Lord, have you also been briefed
on NNSA's independent Office of Cost Estimating and Program
Evaluation's review of the report?
Secretary Lord. Yes. At the same time that the National Nuclear
Security Administration (NNSA) provided copies of the final Plutonium
Pit Production Analysis of Alternatives (AoA) to the Department of
Defense, it also provided copies of the Office of Cost Estimating and
Program Evaluation's (CEPE) review of the analysis in the AoA. The CEPE
recommended additional analysis be completed prior to selection of a
single alternative. It is my understanding that the CEPE
recommendations are being taken into consideration during the NNSA's
current Engineering Analysis of the two alternatives identified by the
AoA. I look forward to reviewing the results by April 2018.
155. Senator Heinrich. Secretary Lord, do you agree the ``modular''
building strategy at LANL, as defined in section 3114 of the National
Defense Authorization Act for fiscal year 2013, should be fully
analyzed by NNSA as the NWC directed in 2014?
Secretary Lord. Yes. I fully support analysis of reasonable
alternatives that will lead to a long-term, reliable, and flexible pit
production capability that enables the nuclear enterprise to meet the
Nation's military requirements and policy goals. The longer we delay
reestablishing a robust pit production capability for the Nation, the
greater the risk, complexity, and cost we will take on. It is my
understanding that the National Nuclear Security Administration's
(NNSA) Office of Cost Estimating and Program Evaluation's (CEPE) review
of the Plutonium Pit Production Analysis of Alternatives suggests
further study of both modular and greenfield facilities at Los Alamos
National Laboratory (LANL). As the NNSA works toward identifying the
most desirable pit production alternative, I expect the NNSA to brief
the Nuclear Weapons Council and Congress on the analysis conducted,
including the option of a modular building strategy at LANL.
156. Senator Heinrich. Secretary Lord, is it your expectation that
you will be able to respond to the certification required by subsection
(b) of sec. 3141 of the National Defense Authorization Act for fiscal
year 2018 regarding whether the recommended alternative proposed by the
Administrator meets each of the criteria in paragraphs (1) and (2) of
that subsection?
Secretary Lord. Yes. The Nuclear Weapons Council (NWC) will provide
the certification requested by Congress within the timeline identified
in subsection (b) of section 3141 of the National Defense Authorization
Act (NDAA) for fiscal year (FY) 2018 if the National Nuclear Security
Administration (NNSA) identifies a single alternative in its
Engineering Analysis (EA) that meets all military requirements for pit
production. It is my understanding that the Administrator of the NNSA
will respond to the report requirements of subsection (a) of the NDAA
for fiscal year 2018 by providing Congress the October 2017 Final
Report for the Plutonium Pit Production Analysis of Alternatives (AoA).
That report identifies two preferred alternatives, not a single
recommended alternative. In December 2017, the Nuclear Weapons Council
(NWC) was briefed on the AoA and the associated plan for the EA. The
NWC is keenly interested in the NNSA's plans to resume pit production
and looks forward to receiving the results of the single alternative
identified by the EA.
directed energy--new program
157. Senator Heinrich. Secretary Lord, Secretary Esper, Secretary
Geurts, and Secretary Wilson, section 215 of this year's NDAA
Conference Agreement establishes a new Department-wide program to
accelerate the transition of Directed Energy weapon systems within each
of the military services. Specifically, section 215 authorizes
additional funding to be used by military services and Department
agencies specifically for the purposes of prototyping and demonstrating
high-energy-laser and high-power-microwave weapons systems that are
beyond the beginning stages of basic and applied research. The NDAA
also assigns the newly created position of Under Secretary of Defense
for Research and Engineering to lead and coordinate Directed Energy
efforts across the Pentagon. Can I get a commitment from each of you to
utilize this section 215 program next year to help advance and field
this technology?
Secretary Lord. I am committed to using section 215 to advance and
field directed energy capabilities. As directed by the NDAA, the
USD(R&E) will lead and coordinate Directed Energy efforts across the
Department. As the USD(A&S), I will ensure the acquisition and
sustainment communities support the transition and fielding of these
capabilities.
Secretary Esper. We are closely tracking the language in the Fiscal
Year 2018 NDAA authorizing $100 million to be used specifically for the
purposes of prototyping and conducting demonstrations of high energy
laser (HEL) and high power microwave weapons systems that are beyond
the beginning stages of basic and applied research. The Assistant
Secretary of Defense (ASD) for Research & Engineering (R&E), and the
position that will become the Under Secretary of Defense (USD) for R&E,
has been designated as the Senior Official responsible for oversight of
Directed Energy investments across the Department of Defense. We work
very closely with ASD R&E, and will continue to do so with USD R&E, to
leverage these prototyping resources to integrate and demonstrate HEL
technologies that have matured in Science &Technology in order to
accelerate the technologies' transition to the Programs of Record.
Secretary Geurts. Yes. The DON is committed to working with OSD in
using section 215 to advance this technology. The DON has established
new accelerated acquisition processes that are intended to take maximum
advantage of a number of recent acquisition reforms aimed at rapid
prototyping, rapid fielding, and acquisition agility. These Navy
processes are implemented under the direction of an AABoD that I co-
chaired with CNO and CMC. The AABoD has already recognized the
importance of accelerating Directed Energy (DE) capabilities to the
fleet by designating the Navy Laser Family of Systems in 2017 as one of
the first accelerated acquisition effort under the new Navy process.
Secretary Wilson. Yes. The Air Force is committed to the
development and transition of Directed Energy technology and will use
the authorities provided.
air force research laboratory: contracting delays
158. Senator Heinrich. Secretary Lord, Secretary Esper, Secretary
Geurts, and Secretary Wilson, in my role as Ranking Member of the
Emerging Threats and Capabilities Subcommittee, we held a hearing with
some of your former lab directors this year and they pointed to the
slow pace of acquisition and contracting process as a key impediment to
their ability to work with innovative companies. What steps are you
taking to help our labs and contracting offices speed up the
contracting process and what help do you need from us to do this?
Secretary Lord. While challenges in the acquisitions and
contracting process continue to exist, the DOD is taking steps to
streamline both. The DOD established an advisory panel of current and
former DOD executives to identify opportunities to streamline the
acquisition process. There are also a number of provisions in the
Fiscal Year 2018 NDAA that aim to incentivize innovation and to augment
DOD's collaborations with research groups outside the Department. We
are in the early stages of implementing these provisions. Much of the
necessary authorities are in place. The challenge for the Department is
to balance the need for speed and adaptability in order to innovate for
the future battlefield and maintain technological dominance while also
providing adequate oversight and ensuring transparency, best value for
the Department, and preventing mismanagement. Additionally, we will
fundamentally change the Defense Acquisition University (DAU) to teach
through case studies that will highlight real examples of how a variety
of contract vehicles are appropriately utilized to simplify and speed
up acquisition. We have goals of reducing acquisition time by 50
percent with pilot programs currently being executed. We are not only
focused on domestic procurement, but Foreign Military Sales (FMS) as
well.
Secretary Esper. In September and November 2017, the Acting
Secretary of the Army issued eight key Acquisition Reform Initiatives,
to include streamlining the contracting process. In support of these
initiatives, the Army is focused on talent management and streamlining
burdensome policies and oversight.
The Army has increased its use of Other Transaction Authority (OTA)
agreements, which are not governed by the Federal Acquisition
Regulation (FAR). Recent National Defense Authorization Acts (NDAAs)
have given the Government greater flexibility in using OTAs for a wide
range of needs and with a broader group of industry partners.
The Army has achieved success using OTAs for prototyping and
limited fielding of defensive cyberspace operations (DCO) capabilities,
and scientific research and developmental activities. OTAs are a
mechanism that can be used to execute science and technology efforts
that we are aligning to the Army's Modernization Priorities which
include Long Range Precision Fires, Next Generation Combat Vehicle,
Future Vertical Lift, C3I/Networks, Air and Missile Defense and Soldier
Lethality. In fiscal year 2017, the Army has spent $1.5 billion on
OTAs. Programs that the Army has or is planning to use OTAs include,
but not limited to, Long Range Precision Fires, the Expedited Active
Protection System effort for Bradley and Stryker, the Lower Tier Air
and Missile Defense System, and the Next Generation Squad Weapon
System. The Army will continue to leverage OTAs and other authorities
to keep pace with the rate of technological change.
Secretary Geurts. Section 233 of the Fiscal Year 2017 NDAA required
DOD to initiate a pilot program to ``demonstrate methods for the more
effective development of technology and management of functions'' at
science and technology reinvention laboratories. Accordingly, the DON's
laboratories will continue to identify regulations, restrictions, and
other policy and guidance that if waived would streamline their
contracting processes. In the DON's implementation of section 233, the
DON labs have several pilot areas waived. In addition, the Naval
Research and Development Establishment created a Rapid Contracting Team
tasked to identify best practices to support rapid prototyping, provide
practical feedback and lessons learned, and make advisory
recommendations to the DON acquisition leadership. We expect to
implement additional improvements based on this effort. To the extent
that Federal regulations cannot be waived under DOD authority, we may
request additional Congressional assistance.
Secretary Wilson. We are looking across the entire Air Force
contracting enterprise, including the Air Force Research Laboratory, to
evaluate ways to improve our contracting processes and timelines. The
contracting career field faces the challenge of a relatively
inexperienced workforce as a whole because contracting expertise is
highly valued by other employers. We greatly appreciate the additional
hiring and personnel authorities Congress has granted the Department.
We will continue to use those authorities in an effort to improve
contracting agility and reduce delays.
159. Senator Heinrich. Secretary Wilson, I have heard specific
concerns about the speed of contracting by Air Force Research Lab,
especially in New Mexico. Could you have your staff look into this and
get back to us on the situation and how you plan to improve and speed
up the processes?
Secretary Wilson. Yes.
other transaction authorities (ota)
160. Senator Heinrich. Secretary Lord, OTAs provide a powerful
vehicle for encouraging innovation and speeding up the contracting
process for small businesses. This year's NDAA directs the Secretary of
Defense to establish a preference for using OTAs in the execution of
science and technology and prototyping programs. Can you please give
some examples where OTAs have been used in a way you would like to see
replicated?
Secretary Lord. A current example of a streamlined program
solicitation that resulted in the award of an Other Transaction
Authorities (OTA) for prototype is Defense Advanced Research Projects
Agency's (DARPA's) Robotic Servicing of Geosynchronous Satellites
(RSGS) public-private partnership program. From an earlier perspective,
an example of a highly streamlined acquisition resulted in the high-
altitude, high endurance, unmanned aerial vehicle utilized by the Air
Force is Global Hawk. Defense Innovation Unit Experimental (DIUx) and
Army Contracting Command--New Jersey (ACC-NJ) have demonstrated that
the pilot program for the Commercial Solutions Opening (CSO) process
can be used to attract non-traditional vendors who bring critical
technology into the Department. The CSO process could serve as an
example that can be expanded to the other appropriate defense agencies
and activities to efficiently and effectively procure innovative
products and services that meet the rapidly evolving needs of the
Warfighter. We intend to develop a module, based on case studies, at
the Defense Acquisition University (DAU) in the near future to help
educate our acquisition workforce.
space rapid capabilities office (space rco)
161. Senator Heinrich. Secretary Wilson, I believe we need a
greater sense of urgency in space. One of the big changes in the NDAA
this year was making Space Command the sole authority for organizing,
training, and equipping all space forces within the Air Force. What
impact will the centralization of space authority have on building a
more resilient space architecture--both in terms of acquisition and the
use of non-traditional launch services?
Secretary Wilson. I share the committee's sense of urgency with
regard to space and am taking action to address a variety of issues. I
will direct a comprehensive review of Air Force acquisition
organization and authorities, including those of Space and Missile
Systems Center, in order to increase the speed of acquisition of space
capabilities. This review will be consistent with the statutory
authorities and obligations of the President and the Secretary of the
Air Force.
If additional legislative changes are necessary, we will work with
the appropriate elements of the Department, OMB, and the Congress to
address them. Potential impacts that may arise from changing
authorities are uncertain at this time with regard to both resilient
space architectures, acquisition, and the use of non-traditional launch
services, but we will remain focused on increasing lethality and better
supporting the warfighter as space becomes an increasingly contested
and congested environment.
162. Senator Heinrich. Secretary Wilson, we also re-designated the
Operationally Responsive Space office as the Space Rapid Capabilities
Office, which will now report directly to General Raymond at Space
Command instead of SMC. What role does the Air Force see for the Space
Rapid Capabilities Office in terms of acquisition, and how should we
resource that mission?
Secretary Wilson. The Air Force is currently evaluating how best to
use the Space Rapid Capabilities Office to improve enterprise agility
and respond to changing threats. The Space Rapid Capabilities Office is
one tool, but the entire space enterprise must shift to a rapid-
acquisition mindset to stay ahead of the threats. The fiscal year 2019
PB will begin that shift both within the Space RCO and throughout the
space acquisition enterprise.
__________
Questions Submitted by Senator Gary Peters
army acquisition culture
163. Senator Peters. Secretary Esper, last month I asked Dr. Jette,
the nominee to be Assistant Secretary of the Army for Acquisition,
Logistics, and Technology, about the impact of what I feel is an
unhealthy conflict between key communities within the Army acquisition
process. I'm concerned that too often we wind up with a process that
creates over-burdensome requirements that are not tailored to soldiers'
needs, which fosters a testing culture that is too risk-adverse, which
results in a conservative acquisition process that does not provide the
equipment soldiers need on time or on budget. What steps have you
already taken and what action do you plan to take to improve the Army's
acquisition culture?
Secretary Esper. The Army must better integrate the efforts of its
various acquisition communities to ensure that those developing
requirements have insightful advice on technologies essential to
operational concepts, and science and technology efforts must inform
the development of capabilities and fully enable the transition of
technology. To achieve this end the Army established eight cross
functional teams (CFTs) to better integrate the requirements, budget,
science and technology, test and evaluation, and acquisition
communities, among others
The Army is also implementing eight policy directives to change the
acquisition culture and the way we do business. These initiatives will
increase the Army's ability to more quickly provide capabilities to
Soldiers, while being fiscally responsible with the taxpayer resources
Congress allocates. The core policy changes the Army will implement
focus on (1) streamlining the development and approval of capability
requirements; (2) improving talent management; (3) improving the
governance, strategy, and synchronization of science and technology;
(4) streamlining test and evaluation and minimizing redundant testing;
(5) aligning sustainment policy to foster cost efficiency and improved
readiness; (6) streamlining the contracting process; (7) streamlining
and synchronizing acquisition planning and processes; (8) improving
cost estimation and resourcing; and (9) establishing metrics to track
performance and outcomes.
acquisition of advanced technology
164. Senator Peters. Secretaries Lord, Esper, Geurts, and Wilson,
I'm concerned that when it comes to cutting-edge technology such as
artificial intelligence, autonomy, and robotics--the capabilities that
will drive the future of warfare--we are still figuring out how to get
acquisition right. I know there are attempts at utilizing unique
authorities Congress has provided, as well as outreach to industry
through channels like D-I-U-X in key locations across the country. But
this doesn't mean that harvesting from industry is the only answer.
There is very important work happening in Department of Defense labs
and the science and technology community across the Department of
Defense. I'm concerned that we do not leverage the significant S&T
investments made by the Department and each of the services, and we do
not see the results that we could if we made better use of the
innovation that is already occurring within the S&T community. Please
explain how we can improve the acquisition of advanced technology such
as artificial intelligence, autonomy, and robotics working with
industry and Department of Defense labs.
Secretary Lord. I firmly believe that the Department should pursue
opportunities wherever we find them. We must build relationships,
leverage cutting-edge technologies being developed within our labs,
academia, industry or allies, and ensure that we develop acquisition
processes that support our ability to deliver the capabilities we need
at the costs we can afford. Our acquisition processes must be flexible
and rapid enough to meet the pace of development for technologies such
as Artificial Intelligence and autonomy which are driven by commercial
development/investment as well as deliberate enough to ensure
affordable/effective long-term major acquisitions such as the next
generation aircraft carrier.
I agree with you. The DOD laboratories and engineering/warfighting
centers are absolutely a major driver for innovation within the
Department of Defense. They serve as sources of innovation aligned to
solving military problems and often kick-start industry into moving in
a direction that benefits the US military. By doing the early risky
research, we set the stage for industry to take the best ideas from our
labs and make it into products that meet the Warfighter's needs.
For those technologies that fall into a rapidly developing tech
space, such as AI and Machine Learning, the DOD should heavily leverage
the considerable commercial investments to simultaneously increase
capability and affordability across a wide variety of Department
missions. Commercial technology will not meet the military's needs,
however, in all mission areas. In select missions requiring high levels
of trust, some technology development will remain inherently
governmental but still be informed by demonstrated commercial
capability. Our acquisition policy and processes should support this
dual path approach. In the specific areas of AI and autonomy, we are in
the process of developing an overarching strategy for the Department by
identifying target application areas in which emerging technologies can
enhance or transform warfighting capabilities and business processes.
We are doing this in close cooperation with the Services/Agencies and
the Joint Staff. Additionally, this strategy will recommend S&T and
transition initiatives that build on current activities within the DOD
S&T community to assure and extend the nation's competitive advantage
in these areas. Through efforts such as this, we are improving the
engagement between the operational and DOD S&T communities, and taking
steps to ensure that we attract and retain the talent necessary both to
generate and utilize these emerging technologies.
Secretary Esper. I believe that advancements and innovation in
science and engineering are empowered by collaboration among Army and
other Department of Defense or Federal laboratories, academia and the
private sector. I support using rapid acquisition authorities to expand
our outreach efforts to the entrepreneurial community and I believe the
Army has the tools needed to address this challenge. The Army is
invested in curating mechanisms that foster collaboration among small
businesses, universities, and our laboratories, and encourage domestic
investment in critical technology areas. One example is the Small
Business Innovation Research (SBIR) program, a network of Army
laboratory scientists and engineers who provide technical assistance to
small businesses in a wide range of technology areas. Another example
is the Army Research Laboratory's new business model, Open Campus,
which pursues leading-edge basic and applied research in a truly
collaborative fashion by enabling the continuous flow of people and
ideas between Army Science and Technology laboratories, academia, and
the private sector. The Army Open Campus model, along with SBIR and
DIUx, provides mechanisms to transform and enhance the level of
technical collaboration among these entities to improve rapid
acquisition of advanced technologies in rapidly evolving fields such as
autonomy, robotics, and artificial intelligence.
Secretary Geurts. The DON has been investing in cutting edge
science and technology such as artificial intelligence, autonomy, and
robotics since the 1940s. These investments include basic research
(6.1), applied research (6.2), and advanced technology development
(6.3). Discoveries and inventions resulting from these investments have
had significant impact on military and commercial cutting edge
technology. The DON takes full advantage of the unique authorities
provided by Congress such as OTAs. Combined with grants and other
traditional contracting vehicles, the DON has the tools required to
invest in cutting edge technology across industry and academia. The DON
heavily participates in the DOD's Science and Technology Communities of
Interest, which are inter-Service, separate teams, each focused on
different technology areas to collaborate and harness ideas across the
Services. The DON also participates in National Defense Industry
Association events facilitated or sponsored by OSD. These provide an
excellent venue for sharing R&D efforts and needs across the DOD and
our industry partners. The DON routinely leverages DOD Laboratories,
the DOD Research Enterprise, National Laboratories, and Federally
Funded Research and Development Centers in the development of cutting
edge technology.
Secretary Wilson. I agree that we need to innovate across our
acquisition lifecycle, and our science and technology (S&T)
investments. I have directed the development of an S&T 2030 Strategy to
investigate on what basic and applied research areas we should focus
and how we might adjust our processes and structure to improve how we
conduct scientific research and technology development. The effort will
engage academia, industry, small business, investors and others to
provide ideas across the technology spectrum including the important
areas of artificial intelligence, autonomy, and robotics. We have also
pursued an increased focus on obtaining patents and other intellectual
property resulting from work performed at the Air Force Research
Laboratory in an effort to leverage these assets to further support
advanced technology development. The expertise contained in our Air
Force Research Laboratory is highly valued and we must continue to
strengthen and reinforce an integrated, collaborative approach across
the Services, academia, and industry, while bringing on-board non-
traditional partners.
program manager workforce
165. Senator Peters. Secretary Esper, Secretary Geurts, and
Secretary Wilson, the Fiscal Year 2017 NDAA requires the Secretary of
Defense to establish and implement a program to develop the civilian
program manager workforce. Recruiting and retaining a knowledgeable,
stable program manager workforce could have a significant positive
effect on ensuring the continuity of best practices and improving long-
term oversight of major defense acquisition programs. What positive
effects do you think greater continuity in the program manager
workforce will have on acquisition?
Secretary Esper. In the Army Acquisition Workforce, there is a
significant talent management initiative that has been in place for the
last several years focused on identifying civilian talent and
cultivating that talent with the right functional and leader
development activities up front and early. This initiative is based on
the understanding that to grow an Acquisition Program Manager of the
future, we need to ensure the right training, development, education
and experiences are afforded to our acquisition talent so that when we
centrally select our Program Managers, we have the best and brightest
impacting the acquisition process. We are already seeing the benefits
of these efforts for our civilian professionals. We must continue to
invest in developing and retaining critical acquisition skillsets that
grow key program management professionals. Continuity is important and
so is continuing to develop the next group of acquisition professionals
to ensure a critical pipeline of talent is readily available. These
efforts will have the lasting benefit of nurturing a community with the
necessary competencies for today and into the future as professionals
go through their career cycles.
Secretary Geurts. Greater continuity in the program manager (PM)
workforce will improve acquisition outcomes. Military or civilian,
effective PMs have the right balance of competencies, experience, and
expertise. Key to growing and sustaining an effective PM workforce is
professional and technical education and training. The DON uses the
Defense Acquisition Workforce Development Fund (DAWDF) to address
specific hiring, training, and retention needs. This fund is critical
to the Department's efforts to recruit and retain a knowledgeable
acquisition workforce.
Individual Systems Commands utilize tuition assistance and student
loan repayment to retain the best and brightest of the workforce. For
PMs and Deputy Program Managers, we have a formal slating panel process
to evaluate candidates for leadership positions. This allows us to
track and attract talent for our critical jobs at each Systems Command.
A part of the slating process is providing feedback to each candidate
so they can understand areas where they need to focus in order to be
considered for future opportunities. The DON also has a robust SES
Talent management process which includes slating for key acquisition
positions.
Secretary Wilson. The Air Force ensures that the program manager
workforce has the collective skills and knowledge needed to create
economic value for the individuals, their employers, and their
community. Greater continuity within the program manager workforce will
contribute to the Air Force's efforts to produce leaders who understand
the requirements, environmental factors, organizations, activities,
constraints, and motivations impacting a program.
166. Senator Peters. Secretary Esper, Secretary Geurts, and
Secretary Wilson, what do you think is an effective tenure requirement
for program managers?
Secretary Esper. An effective tenure requirement for Project
Managers (PMs) would be in concert with the Milestones established for
their programs. I would aim to ensure Deputy Project Managers (DPMs)
are also in place for the tenure duration and beyond to ensure
accountability and transparency. Alignment of PM tenure with milestones
will help enhance oversight of cost, schedule and performance metrics.
Additionally, determining an appropriate tenure length by taking into
account specific program milestones allows the opportunity to
understand these performance measures of effectiveness and ensures a
clean transition at appropriate critical points.
Secretary Geurts. While program managers (PMs) have a prescribed
tenure, and sign tenure agreements based on their program's ACAT level,
Navy Leadership monitors the phase of the program and determines the
proper time to rotate personnel on a case by case basis. In general, a
PM should remain in their position for approximately four years to
effectively guide their program, but the DON does consider program
events and milestones when establishing a PM's tenure.
Secretary Wilson. Program managers assigned to key leadership
positions are required to remain in the respective position for the
tenure period as specified by the Service Acquisition Executive. As
each individual case is unique and the needs of the Air Force or
personal situations may change, we have an established process to
approve movement of program managers before their tenure period is
complete. We also review and consider extending program managers based
on programmatic milestones.
commercial item procurement
167. Senator Peters. Secretary Lord, the Fiscal Year 2017 NDAA
addresses commercial item procurement by establishing a way for the
Department to purchase commercial items through online e-commerce
platforms. The hope is that this will result in cost savings and faster
acquisition of commercial off-the-shelf items. In your view, do you
think this provision has the potential to realize cost savings?
Secretary Lord. An e-commerce market place promotes competition,
which drives down costs. I believe that with the abundant competition
for commercial off-the-shelf (COTS) items in combination with the e-
commerce site there is a potential for the Department to attain cost
savings.
The Department is supporting the Federal implementation of section
846 ``Procurement Through Commercial E-Commerce Portals'' which is led
by the Office of Management and Budget (OMB) and General Services
Administration (GSA). On January 9, 2018, OMB and GSA hosted the first
public meeting to initiate ongoing dialogue with industry and
interested parties in Government throughout the program's
implementation. The Defense Procurement and Acquisition Policy
organization representatives attended and will continue to participate
in the future.
168. Senator Peters. Secretary Lord, in implementing this
provision, how important do you believe it is for GSA and OMB to ensure
transparency in how prices are generated and displayed on these e-
commerce platforms, especially as certain items may be subject to
dynamic or variable pricing that could impact commercial item
expenditures?
Secretary Lord. Transparency promotes accountability; therefore, I
believe it is extremely important for the Department and the taxpayers
to know how commercial off-the-shelf (COTS) items are priced. This
would include General Services Administration's (GSA's) ability to
adjust to dynamic or variable pricing to ensure the Department gets the
best pricing available on every item, every time. Transparency also
promotes trust and we need the taxpayers to trust we are being good
stewards of their money. An e-commerce portal will address both
objectives.
services contracting
169. Senator Peters. Secretary Esper, Secretary Geurts, and
Secretary Wilson, in order to ensure better oversight of services
contracts and avoid waste of taxpayer funds, the Fiscal Year 2018 NDAA
requires each military Department to make services contract data
available to the Secretary of Defense so that the Department can
analyze past spending patterns and anticipate future needs. Does your
Department have the technical capability to fully provide and analyze
data about services contracts to comply with this requirement, and if
not, what will you do to ensure that becomes the case?
Secretary Esper. Yes, the Army has the ability to analyze services
contract data and provide the results of that analysis to the Secretary
of Defense. I fully appreciate the importance of examining and
understanding past spending activities for services to identify trends
and buying behaviors, and to allow for efficient planning for future
services requirements. In fact, the Army is currently conducting spend
analysis as we migrate our service focus to implementation of category
management initiatives.
Secretary Geurts. Yes, DON utilizes the Federal Procurement Data
System-Next Generation (FPDS-NG), the official reporting system for the
Federal Government, to collect and report data on Contractual Services
obligations. We also conduct Service Requirements Review Boards for
every services acquisition requirement valued in excess of $150,000 to
provide oversight and to validate services acquisition requirements.
These reviews are chaired by Flag Officers or Senior Executives and
involve leadership reviews by the requirement owner(s) as well as the
acquisition and financial communities.
Secretary Wilson. As part of our acquisition leadership, the
Department of the Air Force has designated a Program Executive Officer
for the acquisition of services contracts greater than 100 million
dollars. This individual also serves as the Senior Services Manager,
providing strategic governance all for services contracts Air Force
wide.
Additionally, the Air Force conducts an annual Services Governance
Health Assessment to review mission owner requirements and ensure
organizations are efficient in their buying practices while meeting
their mission needs.
The Air Force makes great use of the Federal Procurement Data
System--Next Generation data tool to help gather contract trend data
for various services portfolios outlined by DOD. We also supplement the
data with internal authoritative systems to be able to address specific
areas. This information is used to make resourcing adjustments, where
appropriate, to leverage our buying power and identify strategic
sourcing opportunities for future procurements.
170. Senator Peters. Secretary Esper, Secretary Geurts, and
Secretary Wilson, will the data you provide to the Secretary include
information about the use of bridge contracts in your Department?
Secretary Esper. Yes, the services contract data the Army provides
to the Secretary of Defense will include information on the usage of
bridge contracts. The Army developed the capability to monitor the use
of bridge contracts through the Virtual Contracting Enterprise system
in fiscal year 2017.
Secretary Geurts. Yes, the DON has the capability to obtain
information about the DON's use of bridge contracts and can make this
data available to the Secretary of Defense.
Secretary Wilson. Through the use of the Federal Procurement Data
System--Next Generation tool, we can identify the majority of the
bridge contracts each year. There is a need to supplement this data and
we will work with the Office of the Secretary of Defense to determine
the appropriate level of fidelity and dollar thresholds required.
[all]