Introduction: Existential Threats?
This is an article about existential threats. Or I should say, this is an article about one of the biggest existential threats that the Department of Defense faces today. The future holds many unknowns for DoD. We find ourselves in a period of heightened tensions across multiple oceans with both China and Russia. However, arguably neither country poses an existential threat to the United States; nor, dare I say do we to them. The existential threat we face comes from within. The DOD’s acquisitions system, which is also directly impacted by inefficiencies inherent in our government’s budgeting and appropriations processes, has long been broken and is crippling our ability to be agile in ever-dynamic domains. The DDG-1000, littoral combat ship, and F-35 programs have been in the headlines as programs that have run afoul on spending and scope issues. The DOD’s “weapon system acquisition, financial management, business systems modernization, and approach to business transformation” were all listed on the Government Accountability Office’s (GAO) high- risk list for 2019. The most recent carrier overhaul is (many) millions of dollars in the red due to growth work and delay. Acquiring new, more lethal weapons, such as an improvement to the lightweight torpedo, takes over a decade. If you find “existential threat” too dramatic, the late Senator John McCain said, “our broken defense acquisition system is a clear and present danger to the national security of the United States.” The country’s defense is in a bad way.
This article briefly discusses several things: acquisitions, ways to fix the system, and the most promising of those solutions.
Acquisitions 101: À la dumb aviator
As someone who despises and detests computer-based training, I will admit: Defense Acquisition University’s (DAU) Acquisitions 101 is quite good. I won’t spend too much time mirroring their curriculum; however, to have a frank discussion, we need to be at least slightly informed.
Acquisitions is complicated and it is mandated that way by law. While the body of law is large, the two main directive documents are the DoD Directive 5000.01 and 5000.02. The former outlines the policies that govern acquisitions for the military. The latter is the foundational instruction for how the acquisition system operates. The two provide an outline for the basic acquisitions process.
There are five basic phases that comprise the DoD acquisitions process. The first is “materiel solution analysis.” An initial capabilities document’s acceptance starts this process. To exit this phase, milestone A must be reached. Milestone A is the “risk-reduction decision” that says yes, we are willing to take on this product and dole out the resources needed to see this technology through and mitigate any risks that need addressing before we go all in on production. With a draft capability development document in hand, the product moves to the “technology maturation and risk reduction stage.” At this point, the game becomes prototyping. This allows technologies to grow to sufficient maturation, eventually leading to full-blown systems development. This is in part how operational requirements for the given system/product are acquired. To move to the third state (engineering and manufacturing development), the produce must satisfy milestone B, which is the “development decision”—when a contract has been awarded to the firm(s) that will build the product to the specifications outlined through the capability development document.
So, if I’m in acquisitions, I write a document that outlines the kind of stuff I want. I conduct an analysis of said stuff, selecting the best ideas and commit to getting that stuff (now product) to where it will need to be to support production. I get firms to make prototype-bids and award the contract to the most promising one for phase four, which is the “production and deployment cycle.” To get to here, we must reach the often-referenced milestone C. The milestone decision authority (MDA—the person who approves a product through the acquisition phases) looks at things such as environmental issues, cost, and general compliance with DoD strategy. If all checks out, passing milestone C leads the DoD to take the product into production (first low rate initial production [LRIP], then, full rate production [FRP]). LRIP allows a small number of the systems to be produced “just to be sure” before the product is in full swing. At this point, the system is in full operation and enters the final phase, which is known as “operations and support.” This encompasses the longest portion of a product’s life through the acquisitions process, from initial operational capability to full operational capability. It is also the most expensive phase.
Figure 1 shows the acquisition cycle in basic form, taken from DAU.
99 Problems | Well …the top three.
There are multiple issues with how the current acquisitions system operates—enough that there is space to discuss only what one may consider the top three. The first relates to the regulatory system writ large. Some commentators contend that the system is so broken that it is better to “zero-base” the entire acquisitions process. As this line of thought goes, there is an immense sense of oversight and a fundamental lack of trust in how the system has operated. It is process vice outcome-driven and has resulted in the DoD being a less than stellar customer in the private sector. This is in part why so much talent has retreated from the defense sector into the private domain.
The second issue stems from single points of failure in firms and perhaps a few strategic missteps. In an interesting piece, Stoller and Kunce contend that DoD has mistakenly moved to a point where it no longer can readily create equipment needed for various aspects of defense. Due largely in part to capital dealings in the financial realm (as well as statutory requirements to purchase material from U.S. sources who may subcontract external to the United States), the United States now relies on countries such as China to generate various metals for assets as important as aircraft carriers. Further, Stoller and Kunce note that the DoD’s supply chain is imperiled, having as few as one to two domestic producers for various items. They claim that this includes “everything from chaff to flares to high voltage cables, fittings for ships, valves, key inputs for satellites and missiles, and even material for tents.” If that was not enough cause for concern, companies like TransDigm have bought up smaller manufacturers of products needed by the DoD to hold them essentially at ransom by gargantuan markups. While these instances are about ten years old (though note: alleged issues surrounding tech company L3 come from as late as 2017), it leaves one wondering: what are we doing about the DoD’s broken industrial base?
Lastly, the track record of getting assets through the acquisition’s pipeline has not been stellar in terms of budget or cost. In addition to the littoral combat ship, DDG 1000, and F-35 JSF program delays, the Hawkeye and Global Hawk programs came out 41 and 70 months late, respectively. Military satellite systems have taken over twice as long to go through the acquisitions cycle as their civilian counterparts. Modifying requirements of ACAT I programs results in an average increase of R&D costs of 75 percent according to the AT Kearney firm.
Solutions | Acquisition’s Unsung Success Story
In 2018, the DOD created the Office of the Under Secretary of Defense for Acquisition and Sustainment (OUSD[A&S]). While it is a relatively new office, small scale change is starting to occur. Still, any major legislation changes will take time. What are we supposed to do in the meantime?
As we transition to that question, we need to discuss the P-8A acquisition program, or as it was known initially, the Multi-mission Maritime Aircraft (MMA). The MMA effort began in 1997 to replace the aging (I prefer venerable) P-3C Orion aircraft. Boeing was awarded the contract in June 2004 to militarize a Boeing 737. Fast forward to now. Recall the Hawkeye and Global Hawk that had a time delivery delta of 41 and 70 months? The P-8A was delivered on time in 160 months. Moreover, this was a relatively new airframe and mission suite for the Navy, unlike the Hawkeye (certainly not as clear a jump from Lockheed to Boeing). It essentially hit milestones B and C, Initial Operational Test & Evaluation (IOT&E), initial operational capability, and FRP on time. What about cost? Comparing the original baseline to the current estimate in terms of base-year dollars, the program acquisition unit cost decreased .96 percent and average unit procurement cost decreased by 10.35 percent. Essentially, on time and underbudget. That is not to say that aircrews did not have to wrestle with some growing pains. VP-16 took the P-8A on her maiden voyage to Japan. It is perhaps more so a testament to the aircrews that it was such a successful deployment than the aircraft; however, it performed (mostly) as advertised. So, how did the Navy and MMA team do it, and how do we do it again?
Lessons Learned | The P-8A Poseidon
The National Defense Business Institute (NDBI) at the University of Tennessee did an in-depth study of the P-8A acquisition program (ironically at the behest of the U.S. Air Force). As the numbers above suggest, they note that the program successfully was able to stay on schedule and relatively on cost (within 5 percent in the given time frame). But how?
As NDBI notes, there were several actions that set the program up for success. The program:
- Endeavored to evaluate and mature requirements prior to milestone B (development decision)
- Leveraged contractor teams in forging requirements and identifying those that incurred risk
- Identified risk areas early and addressed them accordingly
- Tracked program schedule and performance at the task level
- Prioritized open communication between the program and contractor teams
Some of these are somewhat explanatory, but let’s discuss a few of the more involved topics in further detail.
Maturing Requirements prior to Development
Strategically, this is perhaps one of the more brilliant moves. Maturing requirements before development leads to program stability. There is little to no pickup game regarding requirements while transitioning to LRIP. Further, this allows the program office to strategically pursue an evolutionary approach to integrate requirements. Pursuing evolutionary acquisitions is a huge win. The P-8A had a “baseline,” “increment 2,” and a future “increment 3” release. This enabled the program to get the baseline to the squadrons on time, allowing any potential software/requirement shifts to be pushed to increment 2 or 3. Conversely, the issue with all or nothing is that if the vehicle, weapon, etc. runs into issues with emergent requirements through the cycle, brakes must be pumped on the entire process.
Taking the time to mature the requirements and not just bite off on emergent technology also paid dividends in realistic cost estimates. Historical data was also leveraged on many of these key activities in production which helped to refine the estimate. Embedding cost estimator in the contracting teams also allowed a direct communications line from those who were dealing with tasks directly, to the people who would be determining what the final price tag would be.
Tracking a Program at the Task Level and Metrics
Project management is the new vogue skill and vocabulary word in the military. Being able to track a time-phased budget or workflow at the task level in a work-breakdown structured model is essential for success. Simply black boxing more general stages of production does not give one the granularity needed to quickly identify emerging critical path tasks (a true Gantt chart is a living document). Being able to track execution at the task level enables decision makers to home in on problems while they are still in the process of becoming problems.
On this note, both the contractor teams and program officer were using the same data as they measured performance, which allows for a uniformity of metrics. Project management may be everything, but metrics make project management. Metrics allow us to gauge progress, but they also must drive behavior. If they do not, then you have no way to truly predict how your budget and schedule are panning out (i.e. you have lost control of your project). Metrics that do not translate to all the stakeholders are thus meaningless. By ensuring that everyone was using the same data and had weekly meetings to talk about said data, metrics could take on the required meaning for all parties concerned. While some may consider this common sense, literature points to both an ill-defined scope (read: requirements for acquisition) and a lack of consistent data and reporting as major issues for project management.
Conclusion
The slightly lighthearted phrasing and comments aside, the military acquisitions issues are a big deal. A thought experiment that is useful is to ask, “What did it take to sustain World War II? Could we do that now?” The industrial base as we have known it no longer exists in the United States. We also have a problem with making acquisitions agile, simply due to the nature of the regulations and laws.
While this article is not meant to serve as a maritime aviation lovefest, this process worked exceedingly well in a realm that normally is not surrounded by success. DoD needs to capitalize on what was done right.
- Evolutionary acquisitions ought to be the new standard in the DoD acquisitions process
- Sound project management training should be a requirement for anyone in the acquisitions process
If we can jump start those two things, then we at least have a fighting chance against what Senator McCain forewarned.
Endnotes
[1] Service level financial management decisions and congressional appropriations often are not privy to how they affect the acquisitions system as a whole. It is also worth noting that decisions in the Program Objective Memorandum (POM) process that are made in the name of “affordability” often have unforeseen, negative consequences at the program/project level.
[2] Valerie Insinna, “The Pentagon Is Battling the Clock to Fix Serious, Unreported F-35 Problems,” Defense News,
13 June 2019, www.defensenews.com/air/2019/06/12/the-pentagon-is-battling-the-clock-to-fix-
serious-unreported-f-35-problems; Ronald O’Rourke, “Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress,” Congressional Research Service, 18 June 2019, fas.org/sgp/crs/weapons/RL32109.pdf; Ronald O’Rourke, “Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress,” Congressional Research Service, 18 June 2019, fas.org/sgp/crs/weapons/RL32109.pdf; Sebastien Roblin, “The Navy’s Zumwalt-Class ‘Stealth’ Destroyer Has One Big Problem.” The National Interest, The Center for the National Interest, 17 Jan. 2019, nationalinterest.org/blog/buzz/navys-zumwalt-class-stealth-destroyer-has-one-big-problem-41807.
[3] “High-Risk Series: Substantial Efforts Needed to Achieve Greater Progress on High-Risk Areas,” U.S. Government Accountability Office (U.S. GAO), 6 March 2019, www.gao.gov/products/GAO-19-157sp#summary.
[4] Scott Chandler, “Rethinking Defense Acquisition: Zero-Base the Regulations,” War on the Rocks, 6 January 2017, warontherocks.com/2017/01/rethinking-defense-acquisition-zero-base-the-regulations/.
[5] The next three paragraphs lean on the information found in DAU’s Acquisition 101 digital course, which may be accessed by visiting https://identity.dau.edu/EmpowerIDWebIdPForms/Login/VirtualCampus. Figure 1 also is based on the process illustration that is found in this course.
[6] The CDD is tied to a specific capability that satisfies some (or all) type of identified requirement or capability gap. It gets further developed in the second acquisition phase. It is one of the most crucial documents in the acquisitions cycle, outlining system attributes as well as providing a framework by which the capability is assessed as “fitting the bill.” A CDD for a given system must be validated prior to getting to milestone B. To this end, the system in part derives its operational requirements through both this document and thus this phase.
[7] Scott Chandler, “Rethinking Defense Acquisition: Zero-Base the Regulations,” War on the Rocks, 6 January 2017, warontherocks.com/2017/01/rethinking-defense-acquisition-zero-base-the-regulations/.
[8] Matt Stoller and Lucas Kunce, “America’s Monopoly Crisis Hits the Military, ” The American Conservative, 27 June 2019, www.theamericanconservative.com/articles/americas-monopoly-crisis-hits-the-military/.
[9] Stoller and Kunce. Note that interestingly enough the GAO actually took the DoD’s supply chain management off of the high-risk list. See GAO-19-157SP for further details.
[10] Stoller and Kunce.
[11] Randall Garber, and Arash Ateshkadi, “ The Value of Time for the Department of Defense,” AT Kearney, www.atkearney.com/aerospace-defense/article?%2Fa%2Fthe-value-of-time-for-the-department-of-defense.
[12] Ibid.
[13] Ibid. “ACAT I” is the top acquisition category for programs. It is reserved for major defense acquisition programs that cost between just shy of 500 million dollars and just shy of 3 billion dollars.
[14] Aaron Mehta, “The Pentagon’s Acquisition Office Is Gone. Here’s What the next 120 Days Bring,” Defense News, 2 February 2018, www.defensenews.com/pentagon/2018/02/01/the-pentagons-acquisition-office-is-gone-heres-what-the-next-120-days-bring/;
Office of the Under Secretary of Defense for Acquisition & Sustainment OUSD(A&S),” Office of the Under Secretary of Defense for Acquisition & Sustainment OUSD(A&S), www.acq.osd.mil/.
[15] Jen Choi, “Does the US Still Lead the Way in Defense Acquisition Innovation?” Military.com, 1 March 2019, www.military.com/daily-news/2019/03/01/does-us-still-lead-way-defense-acquisition-innovation.html.
[16] Craig Nickol, “MMA – The Early Days 1997-2003,” December 2005. **THIS WAS AN INTERNAL PMA DOCUMENT…NOT REALLY SURE WHAT ELSE TO SAY OTHER THAN IT WAS AN INTERNAL DOCUMENT**
[17] Randall Garber, and Arash Ateshkadi, “The Value of Time for the Department of Defense,” AT Kearney, www.atkearney.com/aerospace-defense/article?%2Fa%2Fthe-value-of-time-for-the-department-of-defense.
[18] United States, PMA-290; and James Darden. “Acquisition Program Baseline (APB): P-8A.” Acquisition Program Baseline (APB): P-8A, DoD, 2018. For our friends that are jive with acquisitions, our language should be a bit more nuanced. Meeting scheduled parameters is done through looking at the date of the acquisition decision memorandum (ADM), vice the actual dates of the milestones themselves. I also say “essentially” because there were external factors at play that had minor implications for certain timelines. For instance, OIPT was minorly delayed due to sequestration. Concerning the IOC, there were country clearance issues for the aircraft that caused a minor delay. Neither delay were a breach to the IOC threshold date in the acquisition program baseline (APB).
[19] United States, PMA-290; and CAPT Tony Rossi, “Selected Acquisition Report (SAR): P-8A.” Acquisition Program Baseline (APB): P-8A, DoD, 2018. Many thanks to Bill Vaughan for not only for clarifying acquisition definitions for this discussion, but also for his help in acquiring the data.
[20] In the spirit of full disclosure… not including the Advanced Airborne Sensor (AAS) MILCON…but that is its own sensor. I’m talking about the initial platform.
[1] National Defense Business Institute, “MDAP Lessons Learned: P-8A Poseidon”; NDBI, 2010, MDAP Lessons Learned: P-8A Poseidon.
[21] Ibid. The following section describes several items that are captured in the NDBI report, to include “maturing requirements prior to development” and “tracking a program at the task level.”
[22] “Weapon Systems Annual Assessment.” (STAA) – Policy Briefs & Reports – EPTA Network, April 2018, eptanetwork.org/database/policy-briefs-reports/1534-gao-2018-weapon-systems-annual-assessment-knowledge-gaps-pose-risks-to-sustaining-recent-positive-trends-highlights-of-report-no-gao-18-360sp-apr-2018.
[23] Evolutionary is different from “incremental,” in the eyes of the DoD. Evolutionary acquisition uses a ‘spiral approach’ that in part harnesses future improvements that have requirements that are TBD. The DoD has been using an incremental approach, where requirements are known. The risk is that with unknown requirements come unknown costs and schedules (and of course, the DoD acquisition process relies on known costs and schedules). But, we gain agility through evolutionary acquisition. In the next fight, we need agility. We will not win a war with yesterday’s technology that we get in five years. All this said, I admit that what I am arguing for is not in the current strategy.
[24] Metrics also allow for correcting deficiencies within a program. The P-8 program vested a lot of effort in resolving deficiencies during Test and Evaluation (T&E). These corrections (Part 1 or Part 2 Deficiency Corrections for you acquisition gurus out there) were largely software related and the program. Parallel to the metrics was a software roadmap that was maintained that identified where software corrections were included in the software builds. Going back to evolutionary acquisitions and the beauty of increments, this schedule wass tied to software updates in support of Increments 2 & 3. These best practices work in concert.
[25] RAND’s “Gaps in Business Acumen and Knowledge of Industry within the Defense Acquisition Workforce” published in 2019 is a good starting point for an acquisitions training syllabus.
