Philip Odeen’s Speech: Acquisition Reform Essential To Preserve U.S. Military Dominance

The following remarks were delivered by Philip Odeen, former Chairman, National Defense Panel, at a November 13 Lexington Institute event on Capitol Hill.

Almost every year, the Hill or the Pentagon offers a new reform agenda. Yet few would argue that the acquisition system is more effective today than it was at the time of the Packard Commission in the 1980s or Secretary Perry’s initiatives in the 1990s. Other speakers today have outlined the many reasons for this unfortunate situation.

Let me note a few factors challenging the acquisition system, then I will turn my attention to the Department of Defense’s (DoD) efforts to reach out to the commercial, advanced technology world.

First, there is a lack of clear lines of authority and accountability. To use a cliché, “too many cooks spoil the broth.” You must know who is in charge and that person must be held accountable for the results, whether a success or failure.

Second, incentives are misaligned. Affordability is not incentivized. The focus is on getting the program on-contract and to keep the dollars flowing.

Third, Major programs are seldom started off right. Cost and schedules are unrealistic, technology is immature, and there is excessive concurrency. This leads to change orders, delays, and cost growth.

Finally, Operational requirements are poorly defined and performance expectations are unrealistic. Lacking these, getting a great outcome is problematic and again more change orders and cost growth.

Given the above, it should be no surprise that most major programs disappoint at best and many fail outright.

Let me now focus on another major challenge to the acquisition system – DoD’s limited ability to tap into the leading technology of our commercial sector and that of our allies. It is widely accepted that DoD lags the private sector in many technologies critical to the capabilities of our combat forces. Areas where the commercial sector dominates and DoD struggles to exploit the technology, include communications, robotics, big data, innovative cyber solutions, and many more. This is a major problem for defense today and will be compounded over time.

There are, of course, areas where DoD has leading technology, primarily in military unique areas such as nuclear propulsion, integrated air defense systems, stealth, and supersonic aircraft. But even these areas would benefit from better connectivity with the commercial sector.

The intelligence community has had success in tapping into commercial innovations in several areas of technology. Its vehicle, In-Q-Tel, has been a clear success, though in relatively narrowly focused areas. In-Q-Tel serves a unique set of customers. They tend to be more open to new ideas, less risk adverse and, given the nature of their mission, are protected from excessive oversight or criticism. Other parts of DoD are considering adopting an In-Q-Tel-type organization. This may work, but the reasons it was successful in the intelligence community will be hard to duplicate in bureaucratic military departments.

Secretary Carter’s Silicon Valley initiative, to give DoD an effective presence in that critical area, has promise. It is still very early, and we all hope it will be a success. But let me suggest some reasons to temper our euphoria.

• Small, innovative companies do not trust DoD and see far more downside than upside in working with DoD.

• Tales of DoD’s bureaucracy and concerns about ITAR and lost intellectual property are legion. Moreover, most of these companies have adequate access to capital, and if they are successful, the commercial market, including international customers, will dwarf any business DoD can provide. They do not want to put this potential at risk.

• If the DoD is to exploit non-traditional suppliers, and especially small fast moving technology companies, streamlined commercial-like acquisition policies will be essential. The FAR contains most of the needed authorities; they simply are seldom used.

• DoD’s acquisition workforce has great difficulty dealing with this type of supplier. They are poorly trained in the use of fast track, flexible policies. Moreover, this workforce is, understandably, risk-adverse and being innovative is seen as risky.

• DoD’s technical workforce, primarily in its labs, will need to be involved if these commercial technologies are to be integrated into weapons and equipment. This workforce has aged and atrophied, and has only had modest infusions of young staff with the latest skills, experience and ways of thinking.

I am sorry to be so negative, as I am hopeful the new initiatives will succeed. I am encouraged by the passion and energy Secretary Carter is giving this initiative. If he has the time to sustain this effort, and he can elicit the unqualified support of other parts of the DoD leadership, this initiative can make a difference.

It will not succeed with business as usual. A senior person, with the full support of the Secretary and USD/AT&L will need to be deeply and continuously involved. The full flexibility of the FAR must be exercised and when bureaucratic roadblocks appear, they must be removed.

If this is done and clear signs emerge that the Silicon Valley initiative is succeeding, DoD should consider broadening the effort by tapping into other leading geographic areas of commercial technology, as northern California is dominate in only a few areas of technology. Other centers of leading technology include the Boston area to tap into the hot bed of work in such areas as robotics and big data, and San Diego, the leading area for biotechnology research. Let me close on this more hopeful thought.