Focusing Transition 2021

DBB FY 21-01 Observations and recommendations chosen to assist the 2021 Presidential Transition Team at the Department of Defense

November 5, 2020

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This publication, DBB FY21-01, is a product of the Defense Business Board.

The Defense Business Board is a Federal Advisory Committee established by the Secretary of Defense in accordance with the provisions of the Federal Advisory Committee Act (FACA) of 1972 (5 U.S.C., Appendix, as amended) and 41 C.F.R. § 102-3.50(d), to provide independent advice and recommendations on best business practices to improve the overall management of the Department of Defense. The content and recommendations contained in this report do not represent the official position of the Department of Defense.

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CONTENTS

INTRODUCTION

CHAPTER 1: THE STRATEGIC IMPERATIVE FOR TRANSFORMATION • Global National Security Risks • Domestic Fiscal Pressures • Failure of Past DoD Reforms to Achieve Transformation

CHAPTER 2: WHAT DOES THIS MEAN FOR DoD? • Domestic U.S. Challenges • Department Challenges • DoD Management and Overhead Challenges

CHAPTER 3: REGAINING MANAGERIAL EXPERTISE • DoD Organization and Cultural Trends • Conclusions

CHAPTER 4: ITEMS REQUIRING IMMEDIATE ATTENTION • First Actions • The National Security and National Defense Strategies • Dealing with Crisis • DoD’s Unique Management Challenges • Build The Strongest Defense Team • Selection Criteria And Position Pairings • Develop Meaningful Selection Criteria For The Key Positions • Deputy Secretary of Defense • Under Secretary of Defense Comptroller/Chief Financial Officer • Under Secretary of Defense for Personnel and Readiness • Under Secretaries of Defense for Acquisition and Sustainment and Research and Engineering • Service Secretaries (Army, Navy, and Air Force) • Search For The Best Talent • On-Boarding New Appointees

CHAPTER 5: ORGANIZING THE DEPARTMENT FOR SUSTAINED CHANGE • Improve the Speed, Relevance, and Effectiveness of the Defense Business Enterprise • Focus The Secretary’s Time on the Highest Priority Strategic Objectives • Track Performance To Improve Accountability • Align the Services and DAFA to the Secretary’s Agenda • Creating a Business Transformation Culture

CHAPTER 6: NECESSITIES FOR A SUCCESSFUL LEGACY • Creating a risk taking culture to foster innovation • Create a Culture of Innovation • Building A Talent Bench

CLOSING COMMENT

APPENDIX A – SUMMARY OF RECOMMENDATIONS APPENDIX B – LIST OF FIGURES APPENDIX C – RELATED DEFENSE BUSINESS BOARD PRODUCTS APPENDIX D – BIOGRAPHIES - DEFENSE BUSINESS BOARD MEMBERS

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The Defense Business Board is pleased to provide Focusing Transition 2021, containing observations and recommendations chosen to assist the 2021 Presidential Transition Team at the Department of Defense. Our undertaking addresses distinct issues impacting the Department:

 The strategic imperative for transformation  Items requiring immediate attention, in particular strategic guidance  Obstacles that could hamper long-term transformation  Organizing the Department for transformation  Necessities for a successful legacy

We begin by focusing on the enormous global threats and domestic challenges that the Pentagon leadership team must manage. These drive the need to identify a team with the specific skills and backgrounds, prepared by the Transition Team to execute as soon as the President takes office. We then identify key enterprise-level topics and a series of recommended actions, all of which are designed to improve the performance of the Department:

 Strengthen the role of the Deputy Secretary as the Chief Operating Officer.  Provide direct, focused support to the Deputy Secretary for enterprise-wide transformational change.  Significantly alter the institutionalized, risk-averse culture by making speed of execution and cost consciousness valued commodities in an innovation driven, results oriented mindset.  Reduce the layers and breadth of the decision making processes and increase accountability by tracking performance.  Address the escalating size and cost of the Fourth Estate.  Address the unsustainable cost of personnel and benefits.

The recommendations offered are intended to assist the Secretary of Defense in establishing/ maintaining a strong leadership team that can better organize and manage the Department to successfully face the myriad of challenges, both current and future.

The Defense Business Board Members submit this document for your consideration.

Michael J. Bayer Chairman, Defense Business Board

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INTRODUCTION

The Secretary of Defense must be ready on January 20th to implement an overall strategic vision for the Department that aligns with the President’s national security strategy priority goals. In addition, as history has shown, the Secretary and the Administration must be prepared for the likelihood of a national or global crisis within the first 270 days.

Therefore, to reduce the organizational risk associated with a transfer, or continuation, of power, detailed transition planning, well before the 2021 inauguration, is crucial for the next Administration in providing continuity of effort in regard to national security.

The 2018 National Defense Strategy focused the Department on Great Power competition with China and Russia as the central dynamic for sizing, shaping, and employing America’s military. However, constrained budgets, unanticipated demands, capability gaps, and other risks threaten the Department’s ability to fulfill the central goals of the current National Defense Strategy (NDS). Adding in increasing domestic fiscal pressures, the economic disruption caused by COVID-19, and failure of past Department reforms to achieve transformation, the situation is approaching critical mass.

While the international, domestic, and the Department of Defense’s (DoD) internal issues are wide ranging and pose various levels of threat to America’s national security, only through enterprise-wide, systemic, long lasting transformation might the Department free the resources needed for the recapitalization and modernization necessary to improve readiness to face the oncoming storm that is China.

Since the end of the Cold War, throughout the decade of the peace dividend, and over a decade and a half of pursuing Counter Terrorism, the enterprise level of the DoD and its command, headquarters, and administrative support structure has grown in scope and complexity while the size of the warfighting force has shrunk. This underscores why the Department needs strong coherent management and a rationalized structure to prevail in Great Power competition.

The DoD once led the U.S. and the world in management innovation. It still can, through the judicious selection of individuals who will focus on improving the speed, relevance, and effectiveness of the entire defense business enterprise

The Department is the Nation’s largest enterprise, possessing such an important public trust that it cannot afford, either literally or figuratively, any fiscal irresponsibility. It must work towards creating a business transformation culture through streamlining organizational constructs and breaking cultural trends. Talent is a critical tool/weapon in today’s highly competitive space and DoD must begin the fostering of a risk taking culture as an important aspect in enabling innovation, while building a talent bench to draw upon.

It is a truism that the top leaders drive the kind of change necessary to steer the proper course for the rest and thereby achieve strategic vision. This DoD leadership team is especially critical, given the Department’s ongoing worldwide challenges and the urgent need to prepare and invest effectively in a time of Great Power competition.

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FOCUSING TRANSITION 2021 1. THE STRATEGIC IMPERATIVE FOR TRANSFORMATION

The 2018 National Defense Strategy focused the Department on Great Power competition with China and Russia as the central dynamic for sizing, shaping, and employing America’s military. However, constrained budgets, unanticipated demands, capability gaps, and other risks threaten the Department’s ability to fulfill the central goals of the NDS, such as defeating one major-power rival while maintaining deterrence in other regions.

The world is amid a technological paradigm shift derived from an information revolution that is transforming virtually every aspect of human endeavor. That revolution has played a considerable role in facilitating the emergence of China as an international peer competitor to America, pursuing its goal of global dominance. Coupled with the reemergence of Russia as a regional power, this new paradigm has created a competitive situation the United States has not faced since the early years of the Cold War.

The technology shift, enabling capabilities previously unimaginable, has permanently altered the conduct of operations and war. To address these challenges, every entity in the DoD must perform at the highest levels of efficiency, from warfighting units to support functions, to include the military, government employees, and contractors. Thus, Congress and DoD leadership has placed a high priority on managerial and business process reforms fundamental to successful implement of the National Defense Strategy and protection of the Nation. Managerial and business process reform is not a new challenge for the Department. The DoD has struggled over decades to deliver efficiencies in its complex and widespread business operations. However, as the sole global power, there had been little impetus to radically change. Now, no longer the sole global power, the DoD must effect enterprise-wide transformation as essential to the Department for it to maintain relevance in a new global security paradigm.

The continued inability of the Department to either effect substantive reform or achieve transformation does not obviate the current imperative of achieving savings and efficiencies. However, the recognition of Great Power competition has altered the imperative beyond simple reform, to enterprise-wide transformation, as well as adjusting the benchmarks for determining its achievement. It is no longer sufficient for DoD’s business operations to match the productivity and cost control of top U.S. logistics, health care, retail, finance, human resources, information technology, and other global operations. Great Power competition demands that DoD’s outputs must strive to be better, faster, cheaper than those of the current pacing threat — China. Achieving significant progress in effectiveness and efficiency has passed beyond any statutory mandate; improving efficacy and re-directing capital within existing budgetary constraints is now an overriding existential mandate.

The world has changed. America is no longer the sole superpower

The realities of this Great Power competition, coupled with constrained U.S. government and national security budgets, drives the urgency for sustained enterprise-wide transformation in many business functions and organization of the DoD.

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What does “transformation” mean in this context? For DoD, transformation must be defined as making substantive and sustained changes in the size, structure, policies, processes, practices, technologies, and culture to significantly improve the economy, efficiency, and effectiveness of the total Defense effort. Transformation goes far beyond reform or mere cost cutting exercises. While much more difficult to achieve, true transformation can result in larger reductions in costs and improvements over time so resources can be redirected to strengthen military readiness and invest in the modernization of a more lethal force. Only true enterprise-wide transformation will enable DoD to:

 Sustain a force of sufficient size and mass that achieves dominance across the domains  Enable the recapitalization of crucial strategic U.S. capabilities  Advance development of critical technologies For the past several decades the rationale for the Department’s efforts to achieve effectiveness and efficiency was the formulaic expression to be “good stewards of the taxpayer’s dollar.” The benchmarks chosen were close at hand, obvious, and easy to implement. There were DoD comparable private sector activities in the private sector in medical services, logistics, education, retail, and senior-level management. So too was the goal: comparable Departmental activities were structured to meet or exceed the cost, speed or performance of similar U.S. private sector activities. Nonetheless, the DoD, more often than not, struggled to achieve desired efficiencies and generally failed to institute sufficient effectiveness throughout its complex and varied global operations. Part of the blame can be laid at the feet of a hidebound bureaucratic culture, one more and more interested in adhering to the status quo than in achieving results.

This multi-decade inability to achieve system-wide efficiencies has taken even greater importance within the fiscal consequences of a highly likely future of flat-lined defense budgets, in best case scenarios. In some cases this will impose constraints on DoD’s ability to keep pace in Great Power competition, and even limit the ability to outpace them. This is aggravated by the increasing speed of technological advancements, many of them requiring the Department to respond rapidly. Success can only be achieved by discarding expensive, but now outdated capabilities, or to develop new ones that leap ahead of those emerging in rival arsenals. The fiscal implications of the current coronavirus disease 2019 (COVID-19) pandemic has added an additional degree of uncertainty into the equation.

Improving organizational and operational efficacy to free up capital within existing warfighting and support budgets is no longer merely “wise stewardship,” it is absolutely essential if America is to maintain its military edge against the pacing threat of China, whose economy is destined to grow faster and larger than our own. It is the only way DoD will have the ability to reinvest sufficient resources in modernization, readiness, and enhanced capabilities necessary to meet current and future threats. It is important to note that normal “budget cut drills,” although involving very tough choices, are not transformative and will not address the pacing threat.

It is therefore a vital national security imperative to effect widespread, holistic, and complete transformation of DoD’s plethora of business processes in order to redirect resources to compete against China. To not do so critically jeopardizes America’s dominant global position, and the potential to relegate the United States to a near peer status power.

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There are three major areas that should be of utmost concern for the Secretary: • Current National Security Risks • Domestic Fiscal Pressures • Failure of Past DoD Reforms to Achieve Transformation

Global National Security Risks

• China is now a peer threat economically (#1 Gross Domestic Product (GDP) in Purchasing Power Parity (PPP)), diplomatically (#1 in international embassies), militarily (#2-3 and rising), • China has already passed U.S. GDP based on PPP and the gap is widening. • In addition, considering PPP and the dramatic difference in the cost to maintain an all-volunteer military force versus conscription, as in China and Russia, China already has more purchasing power for military use than the U.S. • China’s hyper competitively informed industrial capacity has outstripped the U.S. and the CCP controls a range of state-owned enterprises that it can mobilize, direct, and focus at will. • Culturally, the Chinese Communist Party (CCP) has successfully leveraged on China’s five millennia of history to motivate its citizens towards achieving its 2049 goals.1 • The U.S. has become overly reliant on China for a range of key materials (e.g., prescription drugs, rare earth metals, etc.). • Beijing has infiltrated U.S. corporations, manipulated government policy, influenced our society, and stealthily undermined academic institutions. • Russia’s development of new weapons (e.g., hypersonic missiles) and regional encroachment • Emerging competitor alliances to counter the U.S. on a global basis (e.g., China, Russia, Iran, North Korea, and Africa). • U.S. traditional Alliances (e.g., Philippines, Thailand) have been eroded. • America has not established key security alliances in the Indo-Pacific region (e.g., Vietnam, Malaysia). • There are other emerging threats and competitive spaces (e.g., Biological, Cyberspace, Space).

Domestic Fiscal Pressures

• Increasing Debt/GDP that has been exacerbated by the added costs incurred responding to COVID-19 and the related contraction of the economy. The trillions of dollars spent as a response to the pandemic, combined with related economic contraction, is likely to result in public debt/GDP rising from 80% to 110% in 2020/21. This approximates the U.S. debt burden at the end of WWII. • Due to the above, and the likely increased demands for accelerating the growth of non-defense discretionary and mandatory spending (e.g., Social Security, Medicare/Medicaid, Interest on the

1 China’s “Two Centennial Goals.” First, China will build a “moderately prosperous society” by doubling its 2010 per capita GDP to $10,000 by 2021, when it celebrates the 100th anniversary of the Chinese Communist Party. Second, it will become a “fully developed, rich, and powerful” nation by the 100th anniversary of the People's Republic in 2049. If China reaches the first goal — which it is on course to do — the IMF estimates that its economy will be 40 percent larger than that of the U.S. (measured in PPP). If China meets the second target by 2049, its economy will be triple America's. NOT FOR RELEASE 1-3

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debt, etc.), the pressure to reduce defense budgets — already projected to be flat over the next Future Years Defense Program (FYDP) — will be even greater.

Failure of Past DoD Reforms to Achieve Transformation

• There has been continued adverse growth in “tooth-to-tail”2 ratios and in Defense-wide spending, particularly within the Defense Agencies and DoD Field Activities (DAFA), which is constraining the allocation of funds needed for technology development and modernization tied to executing the NDS. Traditional budget cut drills, while important and successful, are not reversing this trend and are not transformational. • For more than a decade DoD has failed to mitigate six direct Government Accountability Office (GAO) “High Risk” areas and seven government-wide High Risk areas. Nor has it implemented enterprise-wide business transformation that reflects enduring changes in the size, structure, policies, processes, practices, and technologies to improve the economics, efficiency, and effectiveness of major activities within the Department. • Public health preparedness will likely soon be added to the GAO High Risk assessment as a result of COVID-19. The DoD will not be immune from sharing a large burden of those costs, particularly as it relates to force resilience.

Besides the changing trends noted, which necessitate critical transformation in the DoD, there are also potential emerging missions that loom in the near future: The Department will increasingly be drawn into biological response issues with bioterrorism a strong possibility. All the hotspot nuclear issues remain, but given not just COVID-19, but previous SARS and MERS outbreaks, the Department may have its mission expanded. Potentially there could be an expansion of the DoD mission to take on more domestic security and humanitarian goals. There are also issues with space warfare and governance and new forms of autonomous technologies built on an AI foundation that will stretch the Department’s historical comparative advantages over near peer rivals, but now set it behind even secondary and tertiary competitors.

While the international, domestic, and DoD’s internal issues are wide ranging and pose various levels of threat to America’s national security only through enterprise-wide, systemic, long lasting transformation might the Department free the resources needed for the recapitalization and modernization necessary to improve readiness to face the oncoming storm that is China.

2 “Tooth-to-tail” typically refers to the ratio between the number of supply, support, or logistical personnel (tail) it takes to support combat forces (tooth), often expressed as 1:##, the 1 being the” tooth.” In modern expeditionary warfare, the variety of personnel who serve in units or elements whose primary mission is not to fight the enemy has grown to include such personnel as those operating life support functions at bases, reporting events for service publications, those serving in headquarters elements at levels removed from the likelihood of direct combat action, and contractors. While both "tooth" and "tail" personnel may find themselves in combat or other life- threatening situations, "tooth" personnel are those whose sole or primary function is to directly engage with and destroy the enemy. The ratio is not a specific measure, but rather a general indication of the actual military might in relation to the resources devoted to supply, upkeep, and logistics. NOT FOR RELEASE 1-4

FOCUSING TRANSITION 2021 2. WHAT DOES THIS MEAN FOR DoD?

Since the end of the Cold War, throughout the decade of the Peace Dividend and the decade and a half of pursuing Counter Terrorism, the enterprise level of the DoD and its command, headquarters, and administrative support structure has grown in scope and complexity while the size of the warfighting force has shrunk. This underscores the Department’s need for strong coherent management and a rationalized structure for a return to Great Power competition.

Great Power competition requires a very different organization from the post-Cold War construct. The last true Departmental transformation was the Goldwater-Nichols Act Defense Reorganization Act of 1986 (Goldwater-Nichols), which greatly improved civilian control of the military, provided for clear and concise military advice by designating the Chairman of the Joint Chiefs (CJCS) as the senior military advisor, and enhanced the power of — and streamlined the chain of command of — the combatant commanders.

Goldwater-Nichols achieved many necessary reforms in the operational chain of command of the U.S. military establishment. However, the Pentagon’s management “chain of command” has not had a similar reform or transformation. If America is going to prevail in the current Great Power competition, the management side of DoD requires its own transformation. This has been the heart of the demand for systematic enterprise reform. The “lost decade” of this call unanswered, adds to the urgency of the recommendations contained herein.

Domestic U.S. Challenges

Since 1960 the DoD’s total annual budget has grown at a rate, far exceeding any of our Allies. But now, the DoD is facing a lengthy period of flat budgets, as indicated by OMB and DoD leaders, and increasing fiscal pressure — mainly from growing, record deficits. As the following figures show, in the coming decade the majority of future spending growth will be in the mandatory programs that comprise the major elements of the social safety net (Figure 2-1).

Simultaneously, growing national debt (Figure 2-2) will increase debt servicing expenses pressuring defense discretionary spending. The paradox is that although current defense spending is at near record highs in real terms, it is at or near a historic low measured as a percentage of GDP (Figure 2-3). There is a clear need to improve efficiency within limited defense resources, and to aggressively benchmark against rival Great Power competitors. The currently projected DoD discretionary funding levels are insufficient to successfully implement the NDS, with its required 3-5% real growth rates of increase.

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Figure 2-1: Mandatory Spending1

Figure 2-2: Debt Held by the Public (% of GDP) before Covid-192

1 Committee for a Responsible Federal Budget, http://www.crfb.org/papers/chartbook-americas-budget-outlook/ 2 Peter G. Peterson Foundation https://www.pgpf.org/chart-archive/0010_federal-debt-proj from the Congressional Budget Office, The Budget and Economic Outlook: 2020; and Office of Management and Budget Historical Tables, Budget of the United States Government Fiscal Year 2021, February 2020.

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Figure 2-3: Defense Spending as % of GDP before Covid-193

Despite desires to the contrary, going forward additional spending, economic contraction, and significantly increased public debt/GDP resulting from COVID-19-related spending, will serve to dramatically increase the pressure on discretionary spending, including the defense budget.

Because of these pressures, over the next decade, the U.S. “Gentlemen, we are out of defense budget is unlikely to meet the operational needs money; now we have to outlined by the NDS owing to a combination of political, fiscal, think.” and internal pressures: ~ Sir Winston Churchill

• The defense budget has been subjected to nearly a decade of delayed and unpredictable funding in the form of Congressional Continuing Resolution (CRs). • Repeated failures by the Congress to pass regular and sustained budgets has hindered the Pentagon’s ability to effectively allocate resources and plan over the long term. • Growing partisanship and ideological polarization — within and between both major parties in Congress —makes consensus on federal spending priorities hard to achieve. Lawmakers are likely to continue reaching political compromises over America’s national defense at the expense of its strategic objectives.

3 See The FY2021 U.S. Defense Budget Request: A Dysfunctional Set of Strategic Blunders, Center for Strategic and International Studies, Washington, DC, pg. 10 (2020), and Defense Budget Overview, Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, Department of Defense, pg. 1-13 (2020).

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• America faces growing deficits and rising levels of public debt; political action to rectify these challenges has so far been sluggish. If current trends persist, a shrinking portion of the federal budget will be available for defense, constraining defense budgets into the future. • Above-inflation growth in key accounts within the defense budget — such as operations and maintenance — will leave the Pentagon with fewer resources to grow the military and acquire new weapons systems. Every year it becomes more expensive to maintain the same sized or smaller military.

With flat budgets, it is absolutely critical the Department get more “bang for the buck” and do so by “reforming a Department to make sure our finite resources are directed toward our highest priorities.”4

Department Challenges

The DoD leadership has repeatedly indicated that the Department needs 3-5% real growth on an annual basis in order to fully implement the NDS. However, the administration has submitted a FY21 budget that is “flat,” and OMB projections also indicate flat future years spending for the foreseeable future. This was prior to the Covid-19 pandemic and the resultant pressures on defense spending. This means that DoD will be unable to cover even inflation in the coming years creating a significant shortfall and a strategy – resources gap.

• The wars of the past two decades have placed a premium on enhanced pursuit of modernization and the pursuit of cutting-edge high technology. • The cost growth in health care, logistics support, and information technology continue to consume an ever-increasing portion of the DoD budget. • The increasing cost of major weapons systems including the life-cycle cost of their sustainability. • Organizations are frequently created within DoD, but rarely are organizations disestablished altogether. • Those organizations disestablished are merely spread to other elements without an actual decrease in mission or personnel, this trend will remain a growing burden.

The Defense budget has also been subjected to nearly a decade of delayed and unpredictable funding (CRs) not to mention sequesters. “[W]e need Congress to Repeated failures by Congress to pass regular and sustained budgets grant us the authorities have hindered the Pentagon’s ability to effectively plan and then required to maintain an allocate resources accordingly over the long term. edge over our adversaries in every war fighting domain, to America faces growing deficits and rising levels of public debt, and include space.” political action to rectify these challenges has so far been sluggish. If current trends persist, a shrinking portion of the federal budget ~ Secretary of Defense Mark Esper, will be available for defense, constraining budget top lines into the 7 December, 2019 future.

4 Secretary of Defense memorandum: “Message to the Force -Reform through Focused Prioritization,” January 2, 2020.

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Above-inflation growth in key accounts within the defense budget — such as operations and maintenance and personnel costs and benefits — will also leave the Pentagon with fewer resources to modernize the military and pursue the high technology the NDS requires. Every year it becomes more expensive to maintain the same sized military.

In an effort to summarize these challenges, back in 2009 the GAO created a “High Risk List” of items threatening DoD’s ability to meet its future missions. A recent review by the GAO showed that many decade-old concerns still exist while new ones have been added as shown in Figure 2-4.

Figure 2-4: GAO High Risk List for DoD

DoD Management and Overhead Challenges

While the overall DoD budget has nearly doubled over the past twenty years, so too has the cost for Defense-Wide (DW) operations in terms of budget and manpower (civilian/military/contractor). During this period, the DW cost of operations as a percentage of the total DoD budget has grown from ~8% in FY01 to more than 17% by FY20.

The DW community has grown into a big business. DW spending has increased almost five times above the levels seen in the early 1990’s, up over $100B — and the $100 billion is not the all-in costs of DW as there is a significant amount of classified spending and contractor spending (Figure 2-5). The last two years show a slight decline from the overall high and currently stands projected at 17.9%. But again, this is not the all-in costs, which are substantially higher than 17%. There are good reasons for some increases, but this entire area needs a highly focused review.

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Figure 2-5: Defense-wide Spending FY90 – FY205

The DoD divides its overall spending into two broad categories: forces and infrastructure. In addition to headquarters activities, other non-warfighting activities, when included, represent 43.7% of the total force. This 43.7% infrastructure applied to the total DoD funding line for FY20 equals an infrastructure expense of $309.4B. That $309B places DoD Infrastructure at #56 on the list of world-wide country rankings by annual GDP if it were measured as a national economy (Figure 2-6). What the Department needs to accurately know is the similar infrastructure costs for the pacing competitor (China), easily remedied with a thorough industrial base net assessment.

Figure 2-6: Size of DoD Infrastructure6

5 See DBB FY20-01 The Chief Management Officer of the Department of Defense: An Assessment, pg. 30 (2020). 6 Ibid, pg. 31.

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From 1958 to 2018 the number of DAFA grew from two to twenty-eight (Figure 2-7) — a sizeable growth. In FY19, DAFA accounted for $115.5B of the spending by year-end, 16.8% of the total DoD budget. Again these totals do not include the classified intelligence spending.

Figure 2-7: Growth of DAFA 1952-20187

DAFA growth has also been mirrored by overall Defense-wide expenditures on infrastructure (Figure 2- 8).

Figure 2-8: Defense-wide Infrastructure8

7 Ibid. 8 Source data using the Defense Manpower Requirements Report Fiscal Year 2020, Office of the Assistant Secretary of Defense for Manpower & Reserve Affairs, Total Force Manpower & Resources Directorate (2019).

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The largest category of Defense-wide infrastructure aligns with Training at 25%, with Force Installations at 15%, Departmental Management and Central Logistics at 12%, and Acquisition at 10%. Similar activities and costs are obviously born by peer competitors, but without net assessment metrics it is impossible to determine the comparative efficiency of U.S. expenditures. A variety of smaller categories range in size from 1% to 7% of the total.

All the above contributes to the Department’s unsustainable “tail” costs. As Figure 2-9 shows the United States has by far the longest “tail” of any industrialized nation, and is well behind China in that respect.

Figure 2-9: Industrialized Nations’ % Tooth-to-Tail Ratio9

9 See Gebicke, S., & Magid, S. Lessons from around the world: Benchmarking performance in defense [Special issue: Defense]. McKinsey on Government, Spring(5) (2010).

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The administration also needs to look critically at the DoD governance structure, demanding a more streamlined organizational management structure, yet still successfully implements the administration’s national security priorities and the NDS. While the Secretary of Defense (SecDef) has a weekly meeting with all his senior leaders on the implementation of the NDS adopted in 2018, the multiple governance structures beneath the SecDef (other than the Deputy’s Management Action Group (DMAG), the Joint Requirements Oversight Council (JROC), the Defense Acquisition Board (DAB), and CJCS “the Tank”) have not been updated to deal with the new NDS. The number of such senior governance groups now exceeds 50. These governance bodies consume significant amounts of leadership time often creating a mountain of paper directives that again have not been rationalized or updated in recent years. These bureaucratic layers serve only to add to the administrative burden the Department must deal with and a lack of clear goals, outcomes for which individuals are accountable, and a plan on how to use the results from each governance group weakens their effectiveness and reduces senior official engagement.

Since 2018, focus on strategy implementation has increased and evolved into a stable battle rhythm through the SecDef Weekly Priorities Review (SWPR) and NDS-I. The DMAG remains the primary management and resource allocation integration body, while the Tank remains the primary forum to integrate "best military advice" on matters related to the Joint Force.

Below SecDef, Deputy Secretary of Defense (DepSecDef), and CJCS-levels, however, there are large number of governance bodies and supporting tiers. These bodies require significant time and effort. Most pre-date the NDS and are optimized towards prosecuting the Global War on Terrorism (GWOT) and the pre-Budget Control Act (BCA) regime — not competing with China. Again, there is no holistic net assessment of Chinese economic and industrial capabilities with which to compare the level of similar effort and cost undertaken by Great Power rivals.

The governing directive for these groups, DoDD 5105.79 "Senior Governance Councils," was last updated in 2008.

Governance: Quick Facts Multiple guidance documents complicate governance. Total Number of Governance Bodies: 50+ Relationships between governance bodies, major processes, • SD, DSD, or CJCS-level: 5+ and their guidance documents, are usually unclear, often • PSA or 4-star: 26+ conflicting, and always evolving. Even the staffing time • CFT or TF: 17+ associated with guidance documents is significant. According Total Hours/Year (est.): >1K+ to DoD, there are over 2,000 documents totaling over fifty Average Date of Establishment: -2009 million words. This does not imply streamlined or clear Guidance Docs: Quick Facts NSS + NOS + NMS + UCP + CPG + governance. DPG + JSCP = 1K+ pgs • DoDDs: 309 • DTMs: 31 The Administration should direct the SecDef to overhaul and • DoDls: 872 • CJCSls: 180 update the existing governance system to maximize • Specified tasks to CCMDs: 10K+ implementation of the NDS, especially regarding Great Power • Totals: -2K docs. 50 million+ words competition with China. Failure to integrate and effectively use these governance bodies reduces the sense of urgency with which groups complete their work and deliver products/results that can be operationalized and implemented. A thorough examination need be

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FOCUSING TRANSITION 2021 made to determine to what purpose all these different groups serve in strengthening senior leader decision making and mission effectiveness of the Department.

The following recommendations are offered:

1. The Administration should direct the Secretary to increase the scope of the Defense Wide review with the aim to significantly reduce and/or consolidate the DAFA, and reign in DW spending. 2. The Administration should look critically at the DoD governance structure, demanding a more reduced, streamlined, and responsive organizational management structure. 3. The Administration should direct the Secretary to overhaul and update the Fourth Estate and instituting performance metrics which focus each entity’s efforts on Great Power competition, specifically in regards to China. 4. The Department must seriously examine its infrastructure and overhead costs with an eye towards significantly reducing it, to “sharpen the teeth” while “shortening the tail.”

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3. REGAINING MANAGERIAL EXPERTISE

The DoD once led the U.S. and the world in management innovation. With breakthroughs such as computer-based inventory systems to the first containerized shipping, the DoD defined the state of managerial art and science in the 1970s and throughout the 1990s. Sadly, it has lost this preeminence in best management practices. To regain the edge in this expertise, the solutions are far more nuanced than simply creating organizations and issuing directives. DoD will need managerial skills infused from far more than the defense industrial base; it must try to reach those with leadership expertise from the information, economic and financial, biological and other sectors.

An exchange of private sector industry personnel to engage in assignments within DoD would enhance the effort to cultivate workforce talent. The recruiting, developing, and retaining of a high-quality civilian workforce is essential for warfighting success. Defense industry personnel exchange programs, which include both military and civilians, can facilitate the retention and development of the DoD workforce by assisting the ability of our warfighters and the Department workforce to integrate innovative technologies, upgrade capabilities, adapt warfighting approaches, and change business practices to achieve mission success. While the creativity and talent of American military members is DoD’s greatest enduring strength, it can be further enhanced through the appropriate engagement, application, and exercise of skills gained from private sector industry practices.

However, the crushing weight of culture and regulatory restrictions prevents those entering the Department from the private sector from acting with the same agility and flexibility they have in the private corporate sector. It stifles initiative and innovation within the Department workforce as well.

The statutory/regulatory/oversight frameworks under which DoD operates, not to mention its cultural barriers, need to change significantly to enable this necessary flexibility. This underscores the need for both Congress and the Department to critically identify and examine those statutory or non-statutory changes that serve to inhibit the accession of talent that will enhance the Department’s managerial agility and flexibility. For over a decade DBB studies have addressed this need.1

If DoD is to successfully respond to a changing and evolving national security environment it must accomplish three tasks:

1. Achieve a coherent and appropriate organizational direction and culture; 2. Acquire innovative leadership at all levels; and 3. Revise and realign key organizational focus toward addressing specific high-priority areas for improved decision making and innovative leadership. Congress and DoD should immediately develop a comprehensive and effective program which allows private sector industry expertise to engage in term assignments within DoD in order for them to

1 See DBB FY10-8 Enhancing the Department’s Management Capabilities; DBB FY11-1 A Culture of Savings: Implementing Behavior Change in DoD; DBB FY12-4 Public-Private Collaborations in the Department of Defense; DBB FY13-3 Applying Best Business Practices from Corporate Performance Management to DoD; DBB FY14-1 Implementing Best Practices for Major Business Processes in the Department of Defense; DBB FY14-2 Innovation: Attracting and Retaining the Best of the Private Sector; DBB FY15-2 Fostering an Innovative Culture Through Corporate Engagement and Partnership; DBB FY16-1 Innovative Culture, Part II: Virtual Consultancies – Engaging Talent; DBB FY16-3 An Assessment on the Creation of an Under Secretary of Defense for Business Management & Information; DBB FY16-4 Selecting Senior Acquisition Officials; DBB FY17-4 Implications of Technology on the Future Workforce; DBB FY18-1 Fully Burdened and Life Cycle Costs of the Workforce; DBB FY19-1 Defense Acquisition Industry-Government Exchange. NOT FOR RELEASE 3-1

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demonstrate and import modern, cutting-edge management processes and technologies. Similarly, it is necessary to allow military and civilians in the Department meaningful exchanges with private industry in order for them to be individually exposed to modern, cutting-edge management processes and innovative thinking and technologies at work.

A modern, agile, information-advantaged Department should look to the private sector to more effectively use data and information, not simply assemble or manage it. This will require a different and highly skilled civilian workforce. To reap the benefits from introducing new skills to complement the current DoD civilian workforce expertise with information experts, data scientists, computer programmers, and basic science researchers and engineers, will require close cooperation with private industry. The Department would benefit from exchange programs that explore streamlined, non- traditional pathways for bringing critical skills into play, expanding access to outside expertise, and devising new public-private partnerships to work with small companies, start-ups, and universities.

Success, whether economic or military, no longer necessarily goes to the nation that develops a new technology first, but rather to the country that better integrates it and adapts it to its way of prosecuting conflict, whether through kinetic or non-kinetic means. Currently the Department is insufficiently responsive to this need; DoD is over-burdened with outmoded practices, policies, and procedures; and not optimized for exceptional performance. Efforts to prioritize speed of decision-making, constant adaptation, and frequent process upgrades would benefit greatly from more robust Industry- Government exchange programs. In contrast, the private sector, driven by competitive necessity learned to eliminate cumbersome approval chains, wasteful applications of resources in uncompetitive space, or overly risk-averse thinking which impeded corporate survival. Requiring the same today, the DoD should shed its outdated management practices and structures by integrating insights available from the exchange of private sector industry personnel. The exchange of defense as well as non-defense industry personnel will provide rich organizational expertise to allow for the rapid identification of structures that hinder substantial increases in lethality or performance, thereby allowing service secretaries and agency heads to consolidate, eliminate, or restructure as needed.2

Better management begins with effective financial stewardship and will drive budget discipline and affordability to achieve solvency. Through the exchange of industry personnel, the Department will improve its prospects of achieving full auditability of all its operations while improving its financial processes, systems, and tools needed to understand, manage, and improve cost. Leveraging the exchange of industry personnel will allow DoD to continue to scale operations to drive greater efficiency in procurement of materiel and services, while consolidating and streamlining contracts in areas such as logistics, information technology, and support services. Private industry expertise can improve efforts towards reducing management overhead, the size of headquarters staff, reducing or eliminating duplicative organizations, and creating more efficient systems for managing human resources, finance,

2 However, not all best private sector practices can readily be leveraged internal to DoD and there are other leading management practices in public sector organizations that could be effectively implemented; however, when recommendations on management practices have been offered the DoD by GAO, OMB, and others such as think tanks, the Department has taken a risk-averse status quo posture and has not mandated substantive changes. Those which are taken have at times been confusing and contradictory to other directives. There are practices in the private sector which, if operationalized in the Department without effective leadership, culture change, and accountability would be a process, paperwork, and burdensome cost exercise. An example is trying to make the Department a balanced scorecard type organization.

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health services, travel, and supplies.3 However, until there are substantive changes in the number of financial management systems that are not integrated and removed from the Department’s numerous operating silos, such as the Services and DAFA, and reducing the various types of exceptions to working capital funds, then all the private sector financial management expertise in the world is not going to eliminate burdensome and costly bureaucratic systems that reward individual rice bowls and specialization.

The exchange of defense and non-defense industry personnel with the DoD will provide the expertise to streamline rapid, iterative approaches from development to fielding through the exposure to alternative approaches towards capability development which will reduce costs, technological obsolescence, and acquisition risk. The Department can leverage acquired expertise to realign incentives and reporting structures to increase speed of delivery, enable design tradeoffs in the requirements process, and utilize non-traditional suppliers. Private industry experience in prototyping and experimentation could be leveraged for defining those requirements utilizing commercial-off-the-shelf systems.4

The opposite exchange also has value. The Department’s technological advantage depends on a secure and healthy national security innovation base that is informed and acculturated whether with a traditional or non-traditional defense partner. An effective program allowing DoD personnel tours within industry would allow the Department to significantly inculcate its values, culture and vision into the C- suites of its most crucial partners.5

Because the accelerating pace of the threat and technological change, there is no substitute for increasing industry-government (two-way) exchanges. Improving industry-government exchanges is essential to ensuring the U.S. military is able to innovate at speed in order to sustain and build military advantage over other great powers. Well-intended but outdated rules and regulations currently make such exchange opportunities too infrequent, too limited, and too difficult to implement for the government. They also tend to be too time-consuming and costly for private sector participants.6

A comprehensive and well executed exchange of personnel from both defense and non-defense industry would be a major departure from previous practices and culture, yet will allow the Department and industry to more quickly respond to changes in the security environment and make it harder for global competitors to offset our systems. The DBB has highlighted this in several previous studies listed in Appendix C.

3 While the private sector has expertise, until there are substantive changes in the number of financial management systems that are not integrated and removed from DoD’s several operating silos, such as with many of the DAFA and all types of exceptions to the working capital funds, and changes to the CR, then all the private sector financial management expertise available is not going to eliminate burdensome and costly bureaucratic systems that reward individual rice bowls and specialization. Fragmentation is the enemy of the good when it comes to DoD financial management. 4 While most private sector officials will not want to move to the federal government for very long or take the significant pay cuts, they may be willing to ‘donate’ two years to a specific purpose. Many of the organizational issues in a complex organization like DoD have analogs at diverse firms with different and at times non-complementary product lines and markets. Attracting some of those “experts” is where a SecDef and DepSecDef should look for their top executives AND THEN work with a chief learning officer to institutionalize what works and doesn’t and why. However, this should not be a paperwork exercise that then creates entirely new structures seeking to collect and document information, actions and activities, and decisions. 5 It is necessary to be clear what values, culture, and vision should be integrated into the DoD C-suite. The Department must acknowledge who and what functions comprise the DoD C-Suite; particularly those OSD personnel and DAFA leaders who do not think they really are all part of the same leadership decision making team. 6 Examples of outdated rules and regulations are often a great input for executive level decision making if a business case rationale is offered for what to sunset/terminate and why.

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DoD Organization and Cultural Trends

Talent is a critical tool/weapon in today’s highly competitive space.

The private sector power balance has shifted in favor of the employee. Whereas traditional companies saw the power held by management and long-term managers, in today’s work place it’s the newer generations who are displacing the “Baby Boomer” generation and are wielding more and more individual power over their careers. This in part is due to the greater degree of information available coupled with a desire to have greater freedom and flexibility in the workplace.

These younger workers have less interest in longevity (a condition expanded by the demise of “pensions”) and are much more mobile in their careers. They understand their skill value in the work arena and are always looking for growth opportunities and experiences. The tech revolution has given them instant access to search for and find those opportunities if they are not offered by their present employer. These newly empowered employees are less a function of generational change and more a function of the current access to information. This is not a perception but a reality. Consider these realities:

• Median age at Activision is 28. • Half of IBM employees are under 30. • 76% of Goldman Sachs employees are under 30.

DoD seriously needs a representative share of this “A+” talent, but due to the antiquated hiring process, compensation rules, burdensome regulations, and an industrial age hiring mindset, attracting talent with the necessary skill sets is quite difficult. The “A+” talent in the technology arena gravitates towards Silicon Valley. Its business processes along with an entrenched culture are impeding the ability of DoD to acquire the quality skills it needs. In addition, its current culture is not providing the employee experience needed to keep quality people (length of onboarding, not having a computer the first day, no enterprise-wide education and training system to speak of).

A changing DoD environment requires an altered vision, culture and values. Having a supportive and fully engaged culture is particularly important to translating the vision and strategy (the NDS) into action. The strategy must be adopted by the organization’s multiple work cultures. Drawn from anthropology, culture refers to the relatively enduring set of values and norms that underlie a social system.7 Passed from one generation to the next, a culture is slow to develop and not readily amenable to change. Culture also operates on at least two levels. At the deeper and less visible level, it is constructed around the values shared by a group that persist when the group’s membership changes. If a group culture emphasizes security and predictability over risk-taking and innovation, substituting new values for old is a major effort. The sheer size of DoD has created countless subcultures, some of which are aligned on the overarching Department norms, values, and meaning there are others which work fervently against the interests of other subcultures and even the DoD’s overall culture.

7 See Burke, W. W., and Litwin, G.H. ‘A Causal Model of Organizational Performance and Change,’ Journal of Management, Vol 18, No 3 (1992).

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At the more visible level, culture represents the patterns of behavior that new employees are expected to adopt for doing work. Since participants are conscious of these cultural elements, they are somewhat more malleable than their less visible counterparts.8 Notwithstanding that some types of work require an in-person/in-the-workspace physical presence (such as classified work), there are lessons drawn from the new evolving normal about remote work, collaboration, use of space, and digital tools as a result of responses to COVID-19. This may be where there could be leveraged gains from acquiring or leasing the knowledge and expertise of younger workers.

Climate is often confused with culture. Culture refers to workers perception of how their leaders manage and how effectively their day-to-day colleagues work on the job. Climate is broader and affected by culture and represents an important piece of the behavioral approach to change. It is more volatile and temporal than culture.

The single most visible factor that distinguishes those major cultural changes that succeed from those that fail is the leadership at the top. Leaders give voice to the vision and strategy for change and motivate employees to participate in the process of transformation. They also serve as behavioral role-models for their followers.

If DoD-wide transformation is to succeed, current thinking must move beyond merely identifying a certain set of individual characteristics or training employees to lead. Effective leadership revolves around the kind of relationship top leaders have with their many constituencies. When these ties are characterized by effective communications, positive attributions, mutual respect, integrity, attention to customers and trust, good leadership is present.

To achieve needed enterprise-wide integration, civilian and military leaders must:

1. Articulate a vision coupled with a sense of urgency (burning platform). 2. Form a powerful guiding coalition. 3. Commit resources to crossover key processes and technologies. 4. Communicate values and goals up and down the organization. 5. Inculcate integrity throughout the organization. 6. Energize and empower others to make change happen. 7. Plan and create short-term wins. 8. Consolidate and institutionalize improvements and reform. 9. Possess the stamina to sustain changes across five or more years.

The DoD has three basic cultural work groups (excluding contractors who, while certainly having their own “corporate” culture, often may adopt the cultural aspects of the group they support) 9 who come together in the high-level policy arena: political appointees, career civilians, and military (active and

8 See Kotter, J.P., and Heskett, J.L. Corporate Culture and Performance. Free Press, New York (1992). Companies need to occupy a unique market share to survive in a highly competitive business world. One of the possibilities to create a unique market share is innovation. The study investigated the level of innovative work behavior, type of organizational culture and the relation between innovative work behavior and organizational culture. 9 The contractor cultural group, while fragmented, possesses a tremendous amount of ‘cultural power’ and should also be addressed by the Department, especially in light of the fact that they are at time engaged in more inherently governmental work than is often admitted and often by default serve as the organization’s institutional memory due to longevity of service within it.

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reserve components). Figure 3-1 shows some of the characteristics of these three distinct DoD work groups.

Figure 3-1 Characteristics of DoD Work Groups

The military represents the most flexible personnel system within DoD. Active duty military are available and on call twenty-four hours a day. There is no concept of compensatory overtime, or other accepted premises of employment. They carry their rank on their shoulders and can be placed in jobs one or two levels above their pay grade for indefinite periods, dismissed from a position or have duties assigned dependent upon performance, immediate need, or a superior’s determination.

Civil Service constitutes one of the most rule-bound personnel systems in the United States. Position descriptions define turf within the organization and carry the grade and attached pay. The increasing number of persons directly supervised provides an opportunity to protect one’s pay grade. Once an individual obtains status, various regulatory and legal protections dictate a careful sequence of lengthy administrative procedures to effect removal for cause, reduction-in-force, or downgrade in position. It is exceedingly difficult to remove someone due to poor performance and there is little if any flexibility to select specific personnel with required competencies. Instead, strict civil service rules must be followed protecting a long list of preferences, longevity and grade.

Career civil servants tend to be hired into one organization within DoD and never work anywhere else for their entire career. Accordingly, they tend to become rigid in their work performing their assigned job in the same way for sometimes twenty years or more.

This is not a criticism of the dedicated people in DoD, it’s an assertion that there are not enough of them! However, to win in the current environment they and the Nation critically need specific people and skill sets that the DoD cannot currently access, other than what it procures from contractors in terms of knowledge, expertise, experience, access to certain technologies, infrastructures, networks, and resources; all of which is why the DoD is the single biggest user of contractors in the federal government.

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While the military may often rapidly change in response to an evolving threat, more often than not the civil service structure does not change at any perceptible rate. The “frozen middle” (near the GS-15/SES- 1 level) are often so deeply entrenched in the bureaucracy and wedded to the status quo that they can often thwart any progressive evolution, a condition creating a larger chasm between civil service and the military. The military rotates its personnel very often (two to three years) and has broadening opportunities for career-long learning. Civil servants rarely move from their original organization, often remaining in the same office for decades. There is no incentive for continuing education (the Department offers it’s civilians no equivalent programs to the Service’s tuition assistance or GI Bill) and while such individuals are supposed to be providing DoD breadth and depth of subject matter expertise, they are actually falling behind and stagnating. They are not measured by innovative efforts, not encouraged to embrace it, and therefore instead of being our competitive edge they actually can be barriers to reform and transformational success.

Political appointees arrive on the scene via a Presidential appointment, either as Presidential appointments requiring Senate confirmation (PAS), Presidential appointments not requiring Senate confirmation (PA), Non-Career Senior Executive Service (SES), Confidential or Policymaking Positions (Schedule C or SC). All are managed under “excepted” civil service rules. The most senior appointees often have intermittent periods of public service and private sector experience, regularly rotating through what is called a “revolving door” between the two. Excepted service means their positions are vulnerable to dismissal or displacement. They have rank, but are well aware there is no guaranteed position they can expect to occupy until retirement. Most are driven by achievement, which may run counter to the embedded culture. They arrive with a vision of where they want to take the DoD establishment, but their ability to execute the vision may be severely constrained by a number of factors:

• The increasing barriers to recruit the most highly qualified individuals. • Lack of insider resources upon taking office. • Increasing length of time taken by the PAS confirmation process. • Short tenures in their positions (the career civil service simply waits them out). • Longevity of Career Civil Servants and senior deputies (SESs). • Enormous staying power of the organization’s risk-averse and change resistant culture.

Goldwater-Nichols was the last major organizational change strategy for DoD codified into law. There have been numerous smaller changes codified in National Defense Authorization Acts (NDAA); however, the lasting effects of Goldwater-Nichols show that an organization can be changed and changed radically through focused legislation. Changing social constructs, the dynamics of Great Power competition, rapid technology advances, and other interdependencies and innovations require another shift in the organizational structure of DoD be codified in some type of new defense reform act, or other alternatives to the current management structure that is not delivering sufficient change to the status quo.

Conclusions

Regaining the U.S. cost and process advantage is a national imperative with existential consequences and no time to waste.

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The Department must drastically reduce its overhead and greatly improve its business processes to provide the necessary savings and offsets to reallocate resources towards beating China by increasing readiness, modernizing the force, changing operations, taking advantage of technology, and thus greatly improving lethality.

This is only possible though a laser focus on eliminating outmoded processes and bureaucracy and instituting a results oriented culture possessing the right skillsets.

The benchmark needs to be competing with and besting China in every activity the Department undertakes as the very size of China along with its authoritarian structure provides it considerable advantage. It is not possible to pretend that this is just another big player. China is the biggest rival in the history of the world.

The following recommendations are offered:

1. The New Secretary’s Team needs to recruit the “best and the brightest” in transformation who can focus laser like on drastically reducing the DoD overhead bloat and greatly improve its business processes 2. The New Deputy Secretary must create a supportive and fully engaged culture which can translate the vision and strategy of the NDS into action. A single, unifying culture which must be embraced and adopted by the DoD’s multiple sub-cultures. 3. The New Deputy Secretary must create benchmarks focused on competing with and besting China in every activity the Department undertakes.

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The 2021 Administration must be ready to govern immediately upon taking office. This obvious statement belies the difficulty of operating short-handed, conducting the obligatory first 60 days of ceremonial obligations, interviewing and hiring a new team and supporting a President and his White House Staff’s transition to power. That and being prepared at any moment to respond to a national or international crisis combine for a challenging agenda.

Presidential transitions at the individual departmental level traditionally begin later than the government wide effort organized by the campaign, and the hand-off from them to the secretarial selectees can be challenging. Due to the typically short duration between a secretary’s selection and day one in office, days which include confirmation preparation and extensive Senate courtesy calls, there is precious little time to develop a plan for their term in office – what and how they want to accomplish in those crowded days. Therefore, it is imperative that the President’s Transition Team help them create that plan to actually deliver those policy choices and the associated week, month, quarter and year activity road maps for accomplishment. For emphasis, most administrations had clear ideas about what they wanted to accomplish, but suffered from the lack of specificity about how and when those were to be achieved, and by whom.1

First Actions

Over the past 20 years, the personnel aspect of DoD transitions have been fraught with inefficient processes, requiring many months to get the new team established and in place. In Great Power rivalry, the incoming team does not have the luxury of time. Therefore, the next DoD transition must begin early — long before January 20th — to avoid leadership gaps and unnecessary vulnerabilities to the Department and Nation.2

It’s hard to ignore the probability of a critical national security issue arising early in the next administration. Therefore, the Transition Team should establish and exercise the teaming and templates for any first 270 day crisis.

Upon selection, the SecDef’s agenda is quickly filled with financial compliance, preparing for Senate courtesy calls and hearings, and responding to the media – there is no question these initial responsibilities leave little time to develop and set an agenda. After confirmation, the SecDef begins to work with only a few hold-over team members from the outgoing Administration, who barely comprise the staff necessary to keep the Department running on course. So, a key output of the Transition Team is to ensure on January 21st there are sufficient people in place with the necessary background and executive competency to execute programs and missions. We cannot over emphasize the necessity of this early planning – very early detail planning.

1 See https://ourpublicservice.org/our-work/presidential-transition/ and https://presidentialtransition.org/ 2 See https://www.ualberta.ca/china-institute/about/people/senior-fellows/margaret-mccuaig-johnston.html Also see https://www.macdonaldlaurier.ca/former-senior-government-official-calls-tougher-approach-china-mli-commentary/ NOT FOR RELEASE 4-1

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Intense scrutiny will surround the new team with the electorate expecting immediate concrete outputs from the new government. The intentions, and even the efforts, of the new team are not enough to satisfy expectations – this can only be done by solid execution of a short list of pre-determined goals and objectives. The incoming team must apply strategies to drive a results-oriented transition – using specific outcome metrics (dates, dollars, etc.) to shape the entire team’s performance goals. Converting a mandate to actual governance change is almost impossible without defined top to bottom expectations and agreed to metrics to drive performance. Those specifics should be later monitored by quarterly performance reviews conducted by the Vice President and annually by the President.

The selection process for each of the Department’s senior officials should be informed by the President’s goals, objectives, and resource constraints. Upfront, the President should get agreement on those expectations from each cabinet candidate (quantified and delivery date specific).

The following recommendations are offered:

The next Administration must be ready to govern immediately upon taking office and respond to any national crisis. To prepare we recommend that the new Administration:

1. Invest the time in transition to specify the administration’s overarching goals for the Department, the resulting policy outputs expected, and detailed leadership implementation activities down to the deputy assistant secretary of defense (DASD) level necessary to achieve them. 2. Establish cabinet level performance expectations upfront and review each agency’s transition team’s plans for alignment. 3. Prepare and practice the interagency processes necessary to respond shorthanded to a likely first 270 day crisis.

The National Security and National Defense Strategies

The NSS and NDS are vital strategic documents necessary to inform, guide, and drive both the Nation and the Department, as well as inform the National Military Strategy. Most often, a newly elected Administration focuses exclusively on crafting an all new President’s Budget (PB) for submission during the first week of February after the Inauguration. While the PB certainly is a key submission, if the Department does not receive clear strategic guidance upon which to build new Program Objective Memoranda (POM) and budget estimate submission (BES), it will use the last one it had, whether that came from the previous administration or George Washington. POM and BES formulation is based on strategic guidance, reflecting the Administration’s national security vision and goals. Without such updated guidance, the POMs and BESs being produced at this very moment will reflect the outgoing Administration’s direction. Thus it is absolutely critical in the weeks after the election a new NSS and NDS are crafted and put into place to inform and drive the Department’s adjustment of the working POM and BES. It is not anticipated that either new document will take the Nation or the Department towards a radically new path; however, they absolutely must be ready from day one.

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The following recommendations are offered:

1. The Administration’s National Security team, to include the both the designees for Secretary and Under Secretary of Defense for Policy, must formulate and provide to the Department its strategic vision. While these NSS and NDS documents are essentially drafts, without the force of policy, they should be issued as soon as possible after the election to prepare for the Nation’s defense. 2. The Transition Team should look to ensuring the major components of the Department are informed of the draft NSS and NDS, making it clear the new Administration will enforce these strategic directions upon taking office. 3. The Department should look to these new course changes to adjust POM and BES submissions. 4. Immediately upon the new Administration taking office both the new NSS and NDS need be officially promulgated.

Dealing with Crisis

At noon on January the 20th 2021, the President-elect will be sworn in and assume the duties of President of the United States. While the President is feted with an Inaugural Parade and many formal balls, the SecDef immediately begins a day filled with briefings, staffing decisions, war-plan reviews, and meetings with the Chairman (CJCS) and Vice Chairman (VCJCS) of the Joint Chiefs of Staff (JCS) and the combatant commanders. That long day, and all those to follow, leave little time for the SecDef to set a strategic agenda. If there is to be one, it must be ready before day one. The only time to do that work is between the SecDef’s selection and the swearing-in ceremony.

The Secretary’s first days in office are further complicated by the fact that, in most previous transitions, there were many vacancies among the senior political appointees, leaving insufficient numbers of people in the Pentagon with statutory authority to make decisions and keep the Department operational and running on course. The outgoing Administration’s political appointees typically expect to be replaced and have for some time been preparing for life after the Pentagon. Without clear signals of intent from the Transition Team, many of the very best will have found jobs and departed before January 20th, leaving gaps in the Secretary’s leadership team.

Even as the new team ramps up, many past Secretaries have found themselves initially surrounded by more people with backgrounds focused on developing policy, than with the backgrounds in strong leadership and management; skills that are necessary to manage the Department. This is because the transition is most often built from the policy-experienced individuals that support the campaign issue teams. The managerial talent necessary to run the details of an enterprise the scope and scale of the Department are typically only sought later in the campaign or after the election.

Most importantly, based on history, it is likely the incoming team, however staffed, will be required to respond to its first serious crisis within 270 days post-inauguration (Figure 4-1).

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Figure 4-1. National Security Issues in the First 270 Days

President Donald Trump faced no significant national crises in the first 270 days in office. However, that being said, Trump’s significant national crisis came at the beginning of 2020 with the COVID-19 pandemic; arguably the greatest health and economic challenge to America since the Great Depression of the 1930s. Additionally, the significant threat China poses as a Great Power competitor is finally being admitted to by a presidential administration, albeit decades in the offing.

The following recommendations are offered:

1. The Transition Team should strive to recruit its senior management and policy appointees simultaneously and as early as possible, so as to have them confirmed and on the job as soon as possible. 2. The Transition Team should decide which members of the outgoing administration they wish to hold over or remain permanently. 3. The Transition Team should designate a Strategic Evaluation sub-team to consider the potential near-term likely challenges or crises and develop the plans of action necessary to counter them. 4. The Transition Team should prepare and exercise the Strategic Evaluation sub-team to respond to a crisis in the earliest days of the new Administration.

DoD’s Unique Management Challenges

The new Administration will face immediate geopolitical national security challenges due to the return of Great Power competition, ongoing global issues (i.e., Iran, North Korea, global terrorism, failing states, nuclear threats, cyber security, etc.), as well as developing longer term threats to national security, all in the face of the emergence of second and third order implications of the information technology revolution. These will be exasperated by both ongoing and long term COVID-19 issues.

Intense scrutiny will surround the new Defense team with the Nation expecting specific actions from the new Administration. It is difficult to over-emphasize the importance of being ready to operate on day one. This requires detailed and clear alignment between the Department’s new leadership and the NOT FOR RELEASE 4-4

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President’s objectives. The good intentions and best efforts of the new team are not enough to satisfy public expectations – that can only be done by the prompt articulation and subsequent execution of pre- determined goals and objectives immediately after election – through the issuing of an NSS and NDS.

These challenges are amplified in a world of shifting borders and allegiances, where nation states and their interests are at risk from decentralized and distributed centers of power. In that context, the SecDef will need to enumerate the national security threats by their frequency, concurrency, intensity, and complexity. Much thinking on these topics, not all of it good or necessarily aligned with the thoughts of the incoming Administration, resides in the leading minds on national security in industry, academia, and think tanks. The SecDef and the Transition Team should take full advantage of these valuable resources and, before taking office, within the onboarding activity, to receive briefings (both from within and outside the government) on their very best work. With the benefit of this information, the new OSD team can develop clear forward-looking strategies to deal with the current and expected national security challenges. Plans should also include the necessary institutional support required to successfully execute those strategies.

The following recommendations are offered:

1. The Transition Team should quickly convert the President elect’s priorities into national security and defense goals so the new Defense team clearly understands their objectives, and the in place Defense team can adjust their sights as well. 2. From those goals, the Transition Team should develop the top DoD objectives necessary to support implementation of the President’s top five national security goals. 3. The Transition Team should also reaffirm existing top level Departmental goals and priorities that will remain unchanged. 4. The Transition Team should assemble and confirm a sub-team of experienced executives and policy experts specifically aligned to the Secretary’s priorities and ensure they are prepared to execute aggressively on January 20, 2021.

Build the Strongest Defense Team

The incoming Administration must be ready to govern immediately upon taking office and to respond to any national or international crisis. Yet historically, incoming Secretaries have been forced to operate shorthanded for months without a complete team. Given the complexity of today’s Defense enterprise, with forces actively engaged in combat and support operations across the globe, it is simply untenable to run the Department for months without a competent and complete senior leadership team actively leading and managing it. It is imperative that the SecDef and the Transition Team move quickly to assemble a team of subordinates with the executive competency and expertise to execute programs and missions on the first day. This can only occur if it begins early in the Transition Team’s existence. This immediate start is necessary to avoid leadership gaps. Figure 4-2 shows the lag in senior leadership appointees assuming office in the transition between the Bush and Obama Administrations.

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Figure 4-2. DoD Presidential Appointees Bush 43 to Obama

Leadership transitions are not unique to government, global businesses also periodically face the task of leadership transition — whether through mergers or acquisitions, or other disruptive conditions. Consequently, those commercial transitions offer some valuable perspectives and lessons-learned for application within the Department.

In every business case, the new management team (including those to be held-over) is identified, briefed, and made ready to go before day one. A first 100-day plan is often used to drive focus and effect change. An on-boarding process for new team members is carefully planned and executed. That on- boarding begins with a clear focus on understanding the issues and challenges facing the organization. It is critically important for the Transition Team to invest a sufficient amount of time to build insights and context for each leader and align relationships within the senior leadership team.

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Political Transition Corporate Transition Insert several new senior leaders, one at a time, Insert one new leader into a large existing team over many months Usually an outside candidate Often an in-house candidate Initial focus is on “learning” the role/organization Initial focus is planning for execution Limited goals first year, Aggressive goals for the first 6 to 12 months Second tier leadership in for the duration (goal is 4 Second tier rotates regularly to prevent going “native” years) Gaining “control” is key Changing direction is key Transitions without sufficient succession planning Early, in-depth succession planning Many leaders replaced at the same time with those One leadership position replaced at a time often with from outside the organization promotion typically being from within Often focus is on one candidate at a time for Two to three candidates identified for each position No real internal vetting of external hires External hires carefully vetted New leaders receive special attention/offered the New leaders expected to "hit the ground running" services of executive coaches and industrial without formal executive training and support psychologists to settle into role New leader given clear show of support from top New leaders may not receive substantial support management Executive team stays in place during top leadership Leadership vacuum is created due to many top transition. New team is built slowly – over 3 to 12 leaders leaving simultaneously months On a set schedule (every 4 or 8 years) Unknown as to when a CEO is changing Figure 4-3. Brief Comparison of Political and Corporate Transitions

The transition of power in the Department is unlike that of any major corporation. As Figure 4-3 shows, there are many dissimilarities in the transition process. At DoD a senior leadership exodus often occurs between the November presidential election and the January inauguration, at times even without a change in presidential administrations. This creates both a leadership vacuum and insufficient succession planning. The majority of DoD’s senior leadership positions are filled with individuals selected by the White House, not by the SecDef. There are cases where a senior DoD leader may arrive in the Department with a view of making changes that may not be aligned with the SecDef’s vision, thus causing unnecessary friction.

The following recommendation is offered:

1. The Transition Team and Secretary should work to have, at a minimum, the following top 13 Presidential appointments prepared and confirmed to begin work immediately after the Inauguration on January 20th 2021:

Deputy Secretary of Defense (DepSecDef) Performance Improvement Officer (PIO) Under Secretary of Defense for Personnel and Readiness (USD(P&R)) Under Secretary of Defense for Research and Engineering (USD(R&E)) Under Secretary of Defense for Acquisition and Sustainment (USD(A&S)) Under Secretary of Defense Comptroller/Chief Financial Officer (USD(C)/CFO) Under Secretary of Defense for Policy (USD(P))

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Under Secretary of Defense for Intelligence (USD(I)) General Counsel of the Department of Defense (DoD GC) Secretary of the Navy (SecNav) Secretary of the Army (SecA) Secretary of the Air Force (SecAF) Assistant Secretary for Legislative Affairs (ASD(LA))

Selection Criteria and Position Pairings

Detailed below are the urgent and daunting management challenges that face the Department during an administration change over.

The most important appointments naturally are those of the SecDef and the DepSecDef. Their division of labor and complementary skills and personalities should be thought through carefully even before the search begins for both positions. When assessing the rest of the candidates for senior positions in the SecDef’s team, the Transition Team should consider how individual experience and qualifications will sum where there is a principle and a deputy in the same activity. Pairings such as between the SecDef and the DepSecDef, or the Under Secretaries for Acquisition and Sustainment (USD(A&S)) and Research and Engineering (USD(R&E)), should combine different personal and professional traits to create a unified set of skills that will achieve strategic synergy. Well done, these pairings reduce frictions and enhance management outcomes. The opportunity to develop material synergies in these pairs should not be overlooked when selecting candidates for the balance of PAS positions.

Most successful CEOs of large institutions focus their attention on maintaining a strategic direction for their company. They spend significant time ensuring that competent executives are selected for key positions, delegating authority and responsibility to them and holding them accountable for achieving desired results by establishing effective regular oversight reviews.3 This mirrors the key realm of the Secretary: focusing on the global strategic challenges facing the Nation’s security; selecting and mentoring the very best team of civilian and military leaders to populate the staffs, the military services, and the combatant commands; delegating the necessary authority and responsibility to deliver the President’s aspirations in outcomes; and enabling the management reviews necessary to hold leadership accountable for results.

Effective change management strategy impacts multiple resources and systems, and requires integration and coordination from the top down, especially during times of fiscal and resource constraint. It is therefore imperative that an organization the size of the Defense Department have a dedicated Chief Operating Officer to drive improvements in the performance and reliability of the supporting business operations. DoD’s DepSecDef is comparable to the Chief Operating Officer of a large, complex, highly decentralized global corporation.

3 See DBB FY05-2 Performance Based Management (2005); DBB FY06-2 Governance - Alignment and Configuration of Business Activities (2006); and DBB FY09-4 Focusing A Transition (2009). NOT FOR RELEASE 4-8

FOCUSING TRANSITION 2021 5. ORGANIZING THE DEPARTMENT FOR SUSTAINED CHANGE

Improve the Speed, Relevance, and Effectiveness of the Defense Business Enterprise

The nature of the Great Power military challenge to our national security has dramatically changed the game. This new challenge mandates that the Department’s warfighting enterprises must be fast, agile, efficient, effective, and responsive. For those enterprises to succeed, they must be supported by Departmental staffs and Fourth Estate and Service entities that mirror that speed, agility and responsiveness.

This will require the SecDef and the DepSecDef to make hard choices amongst the Department’s business resources. These choices will also demand tremendous and united political skill to gain the support of key constituencies: Congress and the military/civilian workforce. They should also take a hard look at reconfiguring the Department’s operations to drive down decision-making authority, empower subordinates, and reduce excessive layers and the accumulated bulk of oversight and management.

Speed must be a valued commodity if the Department’s business operations’ flexibility and agility are to be improved. In any leadership transition, business enterprise management systems and structure should be evaluated for speed, effectiveness, and currency. An optimal management model will anticipate and respond to key national security and management challenges and expand the Department’s organizational capacity, while being flexible enough to accommodate diverse leadership styles and approaches of the new Secretary. Recent independent reviews further reveal that DoD is at increased risk of not achieving its financial management improvement and audit readiness goals.1 The DepSecDef, assisted by the Department’s Performance Improvement Officer, should review and update management and information systems (finance, personnel, and logistics) with the goal of increasing speed of decision making and better cost estimating.

To run the Department more effectively and efficiently, the SecDef should detail in writing each senior leader’s key objectives and deliverables. Each senior leader’s progress on those objectives should be formally and regularly reviewed with rapid action taken when progress is off the mark or too slow. These reviews should be the province of the DepSecDef.

The following recommendations are offered:

1. The Secretary should clearly define the “Delegation of Authority and Accountability” for the Deputy Secretary as COO and Under Secretaries to establish speed, empowerment, and effectiveness metrics. 2. The Deputy Secretary should take an innovative, rigorous, continuous process improvement and accountability approach to transformation. This should include an ongoing process focused on enhancing performance and reducing costs. 3. The Deputy Secretary as COO should establish clear published objectives, targets and timelines for all functions and programs under scope.

1 See U.S. Government Accountability Office High-Risk Series (an update) GAO-15-290 (2015). NOT FOR RELEASE 5-1

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4. The Deputy Secretary as COO should establish monthly reports and reviews with each direct report to ensure progress in implementation of actions to achieve their set of objectives. 5. The Secretary and the Deputy Secretary as COO should meet quarterly with each Executive Level II to discuss progress toward transformation objectives and ensure accountability. 6. The Secretary and Deputy Secretary should meet quarterly with each Executive Level II & III PAS to discuss progress toward transformation objectives and ensure accountability.

Focus the Secretary of Defense’s Time on the Highest Priority Strategic Objectives

While there are vast differences between a CEO’s key outside relationships and those of the SecDef, there are important similarities. A CEO deals with the board of directors, shareholders, industry partners and the public. The SecDef must deal with Congress in oversight and the White House in execution. The SecDef must also ensure coordination with Cabinet peers such as State, Treasury, Energy, and Homeland Security, and deal with partner nations, and the public. Another key similarity in both roles lies in the significant time and energy required to focus outside the organization.

CEOs of major corporations spend the majority of their time communicating strategic priorities, building their teams, and ensuring alignment with all key elements and stakeholders outside of their organization. Similarly, these three important areas are an important focus of the SecDef. The DepSecDef should be empowered to run the day-to-day activities of the Department, freeing up the SecDef to focus on these broader roles.

It is critical that the entire enterprise knows and understands the Secretary’s strategic objectives. As soon as possible, the SecDef should articulate a vision for the Department and clearly delineate the resultant priorities and objectives. This should include assigning clear individual responsibilities and timelines for major initiatives. These should be routinely communicated through multiple channels, using the full array of communication tools and platforms to internal and external audiences of the Department. It should be followed up by rigorous analysis to ensure the message is being repeated in every subordinate’s messaging.

The following recommendations are offered:

1. The Secretary should regularly communicate strategic priorities and progress to the entire Department. 2. The Secretary should ensure subordinates are aligned and engaged on the strategic priorities and management focus.

Track Performance to Improve Accountability

The next SecDef will likely be faced with a constrained fiscal environment, thereby creating tremendous pressure to make strategic trade-offs. Managing the Department’s very large and complex organization with its conflicting internal and external interests, requires a performance-management process that

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cascades critical objectives down the organization, translates them into measurable metrics, and provides for periodic reports back for evaluation and feedback.2

Unfortunately, the Department management systems need to better define objectives and expectations, better align leaders and organizations according to management and budget responsibility, and better gauge progress by utilizing outcome-based metrics and feedback mechanisms.3

Organizations do best that which is measured. Stated differently, you can’t effectively manger what you don’t measure. High level policy goals are often the fundamental themes of transition white papers. Policy statements of “changing the culture” or “improving efficiency” are frequently part of thoughtful transition goals. The challenge for execution is to convert those papers to specific outcomes to be accomplished, by whom and by when. This information needs to be incorporated into a plan with appropriate metrics and milestones to measure progress and outcome-based results.

These measurements must be specific and actionable. They must be items upon which the senior leadership agrees are the necessary steps to meet the new administration’s goals. Vague goals or inputs measurements like “develop a plan” create imprecise expectations and are inadequate. The measurements must also be granular and rooted in desired outcomes. As COO, the DepSecDef must set milestones to ensure that senior leaders are on the right course and that their specific goals will be met. Dates need be set, and each success level needs to be defined.

With the right objectives and metrics measurements, accountability can be established in a healthy manner. Senior leadership and their direct reports should agree on the same metrics for success. Each leader should understand their part of the deliverables, their responsibility, and their scope of authority. Each leader should also have an annual performance plan.

Performance reviews are critical to achieving the vision, improving performance, and accomplishing the goals and objectives set forth by the SecDef.4 Unfortunately, at the most senior levels in the Department, formal performance evaluation has often been overlooked or not conducted particularly well (if at all). Putting such a system in place is a prime responsibility of the DepSecDef. Summary reports should be submitted to the Secretary at least on a quarterly basis on the progress against the Secretary’s key objectives.

The following recommendations are offered:

1. The Secretary should adopt a substantive performance management system (developed by the Deputy Secretary) and apply it to every senior PAS and key flag officers as an integral part of managing the Department. 2. The performance system should set clear and specific performance goals and objectives (outcomes sought) for both individuals and organizations, including an annual performance plan for each key senior political appointee.

2 See DBB FY09-4 Focusing a Transition (2009). 3 See DBB FY10-08 Enhancing the Department’s Management Capabilities (2010), as well as material on these management topics from the IBM Center for the Business of Government and the GAO. 4 See DBB FY13-03 Applying Best Business Practices from Corporate Performance Management to DoD (2013). NOT FOR RELEASE 5-3

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3. The Deputy Secretary should have regular reviews (at least quarterly) to assess achievements, challenges, risks, and performance (or lack of it) against plan. 4. The Deputy Secretary should require detailed metrics and the regular progress reporting necessary for success and should require recovery plans where progress falls short. 5. The Deputy Secretary should share successes, best practices and lessons learned across the organization. 6. The Department needs to develop an Executive Dashboard of key financial and performance indicators that, if not fully automated and accessible, would be made available to the Secretary and Deputy Secretary monthly.

Align the Services and DAFA to the Secretary of Defense’s Priorities

Unlike the corporate world, the SecDef doesn’t customarily get to select all of the Department’s leadership team. There are currently 60 PAS positions on the DoD executive schedule as set out in Figure 5-1.

Figure 5-1. DoD Presidentially appointed, Senate-approved Positions5

5 Chart provided by the Policy and Decision Support Directorate, Office of the Chief Management Officer. NOT FOR RELEASE 5-4

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While all these appointments are made at the recommendation of the SecDef, the decision to appoint rests solely with the President, subject to the influences of advisors and White House staff. By contrast, in the corporate world, the new CEO often has the broad latitude, with the support of the Board of Directors, to assemble a leadership team to meet specific goals and objectives.

The start of a new administration offers an opportunity for the SecDef to amass and focus the management talent necessary to ensure success. To that end, involving and actively cultivating alignment of the SecDef’s most senior direct reports from the outset can help lead to greater organizational effectiveness. To be most effective, the SecDef should fully engage all “direct reports” to accomplish the agenda, even while they remain otherwise decisively engaged in their titled roles.

Individual Services, DAFA, and headquarters organizations etc. have a natural tendency to want to protect their programs and people, often at the expense of Departmental goals. In a fiscally constrained environment, it will take the entire leadership team to drive the essential behaviors to be successful. Together, the leadership team will have to drive the necessary trade-offs between Department priorities and individual organizational desires. Collaboration inside and outside the Department is also vital for success. Congress, as well as industry, will only become important partners in achieving desired goals if the cultivation and sustainment of those relationships is a priority.

The SecDef’s investment of time early with the Service secretaries can sustain a true team relationship that will enable their focus and commitment in achieving the priorities and goals. Furthermore, hard decisions, particularly when there is overall budgetary pressure, tend to strain alignment and increase friction between the Service secretaries and the Office of the Secretary of Defense (OSD). The true senior leadership team spirit that exists at the onset of a new administration can quickly erode, enabling subordinate leaders to become overly focused on their component’s perspectives at the expense of alignment with the Secretary of Defense’s agenda.

The three Service secretaries properly aligned with the DepSecDef, can also be a key asset at solving Department-wide challenges by virtue of their own extensive expertise, enhanced by the analytical and management resources extant in their organizations. Much as the JCS collectively provide the most senior military advice to the Secretary and President on cross-cutting, political, and military issues, so could the Service secretaries provide the most senior management advice and actions for cross-cutting management and fiscal challenges.

The Fourth Estate and the DAFA comprise nearly twenty percent of the Department’s total budget. Beyond the scale of their consumption of scarce resources, they are a key enabler of the Department’s ability to project and exercise power. The Defense Business Board has often noted in its studies that the Department’s senior leadership has invested insufficient time and resources to adequately oversee these activities. It is essential that the DepSecDef ensure that the relevant incoming senior leadership understands their responsibilities and has a developed plan in hand to align their direction to the NDS and insure their subsequent oversight.

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The following recommendations are offered:

1. The Deputy Secretary should create an Executive Committee where the Service Secretaries engage biweekly on the Secretary’s agenda, enabling them to work collectively on assigned enterprise- wide problems. 2. The Secretary should direct the Deputy Secretary to conduct quarterly one-on-one performance sessions with the individual Service Secretaries and publicize organizational success within the Department. 3. The Secretary should direct the Deputy Secretary to conduct semiannual one-on-one performance sessions with key DAFA leadership, utilizing cascaded scorecards.

Creating a Business Transformation Culture

The DoD is the Nation’s largest enterprise, possessing such an important public trust that it cannot afford, either literally or figuratively, any fiscal irresponsibility. In many ways the Department behaves more like an economy than a corporation – it would be the 17th largest nation globally if its expenditures were gross national product.6 With over 1.3 million men and women on active duty, more than 700,000 civilian personnel, and approximately 600,000 contractors, the Department is the Nation's largest employer. Another 1.1 million serve in the National Guard and Reserve forces (Figure 5-2).

Figure 5-2: Total Military Force = Military Personnel and DoD Civilians7

6 See DBB FY09-4 Focusing a Transition (2009). 7 See 2018 Demographics – Profile of the Military Community, Office of the Deputy Assistant Secretary of Defense for Military Community and Family Policy (ODASD (MC&FP)). NOT FOR RELEASE 5-6

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Additionally, DoD supports nearly 1.6 million active component military family members and over a million reserve component family members (Figure 5-3). In addition, there are about 2 million military retirees and their family members who receive earned benefits.8 However, it is difficult for the Department to synchronize these elements and make effective trades, due to the lack of knowledge regarding their costs and value.9

Figure 5-3: Military Family Members10

Periods of unpredictability or fiscal constraint require business leaders to act quickly in taking critical steps to address their company’s challenges. While there are clear differences between the private and public sectors, successful leaders all share certain commonalities in their approaches – paramount of which is the establishment of strategic objectives that promote an innovative, continual performance enhancing and cost-elimination culture, while still meeting or exceeding mission requirements. Implementing a performance enhancement and cost-elimination culture will require that DoD identify and pursue every opportunity to innovate, economize and increase the efficiency and effectiveness of its business operations, both short and long-term, while at the same time maintaining military readiness and a capable civilian workforce.

Transparency is critical for management visibility and promotes accountability. Visibility of objectives, performance metrics and accountability is key to this. Driving processes, systems, and controls that improve accuracy, reliability, and reporting must be the basis of a cultural alignment amongst all of the

8 See http://www.defense.gov/About-DoD 9 See U.S. Government Accountability Office Defense Headquarters: Improved Data Needed to Better Identify Streamlining and Cost Savings Opportunities by Function GAO-16-286 (2016). 10 Defense Manpower Data Center Active Duty Military Family File (September 2018). NOT FOR RELEASE 5-7

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leadership stakeholders in audit readiness and sustained compliance. Cultural change must be at the heart of any effort to successfully achieve improvements in cost tracking and management, and sponsorship by senior leadership is essential to drive and sustain cultural change. The ability to plan for and control the major cost drivers in the Department is essential to avoiding budget overruns.

The Department’s leadership should define desired cost management behaviors and outcomes, incorporate them into the core competencies of relevant personnel and organizations, and use them as a performance benchmark – this is critical to tracking and sustaining real change.

The DepSecDef is the senior-most official responsible for acting as the Department’s business transformational change agent. The time allocation and focus necessary to affect sustainable cultural change requires the intense day-to-day focus of the PIO and DepSecDef. The USD(C)/CFO should highlight costs heretofore buried in larger accounts, in support of the DepSecDef and PIO’s efforts to rationalize DoD activities, as well as to enable the Department to produce audit quality financial statements, in conjunction with such rationalization.

The following recommendations are offered:

1. DoD should designate innovation as a core competency in the Department to institutionalize innovation in its culture and promotion criteria. 2. DoD should explicitly integrate innovation and productive internal consultancy into its talent- management practices to signal institutional value and staying power to the field. Organizations must be free to experiment, try different things, and to fail (and then evolve) in their own innovation initiatives. 3. DoD should develop and implement an Innovation Scorecard to measure progress and hold the Department and its leadership accountable. 4. DoD should designate an entity to support and facilitate efforts to help build the Department’s capacity for innovation through virtual consultancy. Its purpose would not be to dictate or control the process; but rather to assist in the flow of information and ideas between Innovators and current Program Managers. It would help provide “reach back support – tools, best practices, a network, and/or a portal to leadership and external consultancies.

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6. NECESSITIES FOR A SUCCESSFUL LEGACY

Creating a risk taking culture to foster innovation

Corporate graveyards are full of companies that countered an aggressive competitor by doubling down on the status quo. China is aggressively challenging U.S. national security and will only be countered by a wholesale discard of the status quo. This, like many things in defense, will not be easy. Mistakes and dead ends are often an essential part of the innovative learning necessary. Those outcomes and the individuals who created them must be celebrated and protected. To maintain the status quo of a zero- defects mentality reduces motivation and stifles innovation. Individuals will not feel empowered by their successes and only feel they are held accountable for failures.

The barriers to creating a risk taking culture to foster innovation will likely not be found at the warfighting “tip-of-the-spear,” it will more likely be hardest to inculcate at the enterprise level of the Department. At the enterprise level (headquarters staffs, the Combatant Commands, and the Services) the risks inherent to carefully groomed careers (careerism), long standing programs of record (institutionalization), or exquisitely fashioned budgets will be consequential. As a result, this shift can only be accomplished with the active and sustained support and engagement of the senior most leaders beginning with the Secretary of Defense. The Secretary must forcefully articulate both the need for this disruption and the consequences of the failure to act. Those messages must in turn inform assignment choices, promotions, and the resulting actions those chosen individuals make.

The following recommendations are offered:

1. The Secretary must clearly convey the existential importance of embracing risk to generate the necessary innovation to realize a return of expanded capability. a. The mandate needs to provide subordinates more ownership of their actions, which stimulates greater determination in carrying out their assignments. b. It must allow a great level of flexibility in adapting rapidly to changing or fluid situations, dealing with unforeseen problems, and exploiting fleeting opportunities. c. It must encourage initiative and creativity on the part of subordinates to greatly enhance motivation and morale. 2. The Secretary and Deputy Secretary must ensure individuals who embrace this mandate are protected from the current “zero defect” mentality that more often than not places retribution above innovation.1 3. The Deputy Secretary must seek leaders who embrace this mandate for key assignments.

1 Mission command is considered the principal method of command and control (C2) in the military. Its effectiveness is predicated on giving subordinates sufficient freedom to act so they can exercise initiative in the course of executing their assigned missions. The DoD’s deeply rooted zero tolerance for error, however, is incompatible with true mission command. For more than three decades, the zero- defect mentality has pervaded. Reversing these policies will require a cultural revolution in the way the entire Department thinks and acts.

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Create a Culture of Innovation

The Nation is facing a rapidly proliferating and diversifying portfolio of security threats coupled with an erosion of its former technological superiority at a time of significantly reduced resources due to fiscal constraints. These pressures demand cultural adaptation, one which values and rewards sound, innovative thought, facilitated by partnering with experts, outside the traditional ecosystem, in order to improve the speed of problem solving and enhancing the capabilities of the Department.

To compete in today’s information and technology based world the Department must significantly alter its institutionalized, risk-averse culture by making speed of execution and cost consciousness as valued commodities in an innovation driven, results oriented mindset. As the pace of global change continues to accelerate, the DoD needs to pursue innovative ways to sustain and advance military capability and superiority as well as transform its business operations.

However, the Department has many barriers, most of them cultural, that prevents it from engaging on the most pressing problems innovatively. Leaders must encourage and support innovative ideas and workforce engagement. The young men and women who serve the Nation, military and civilian, are generally innovative in spirit and motivated to take on some of the biggest challenges, but the bureaucracy and outdated policies often inhibit or even prevent it. Far too often outmoded promotion policies and industrial era leadership styles seek to enforce compliance rather than risk-taking or innovation. People become wedded to the process, not the results. To harness the innovation capability within the Department, the barriers that inhibit or prevent it must be removed.

The Department could also benefit greatly from an innovation network, where leaders can virtually post a problem or an idea and anyone across DoD can engage in a manner that unleashes their creative skills to solve it rapidly. Launching this kind of virtual consultancy program early to tackle a key Secretarial initiative would send a clear message to the workforce that leadership values its input and recognizes its important role in enabling innovation.

Another way the DoD can improve on expanding its innovative capital is through academic and corporate fellowship programs. There are three DoD programs that could benchmark current innovation integration efforts and provide useful data points for further growth and analysis. There are three programs that would serve to invigorate innovative thought within the Department:

The Leading Innovation Course, conducted by the Naval Post-Graduate School, is a two week course conducted away from normal duties and engages participants with high-power thinkers, C-suite leaders, and other groups outside their normal association.

The Secretary of Defense Corporate Fellows Program (SDCFP) was established as a long-term investment in transformation, the program currently selects 8-16 officers annually for a one year immersion in select organizations known for long-range planning, innovation, and implementation of new technologies.

External Fellowships. Business leaders have expressed interest in partnering with the Department including external fellowship programs. There are some existing authorities and opportunities

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FOCUSING TRANSITION 2021 throughout government to facilitate this, such as the Information Technology Exchange Program (ITEP) within the DoD Chief Information Office and the Presidential Innovation Fellows programs.

The following recommendations are offered:

1. Expand the Leading Innovation Program as a signature part of the Defense Innovation Initiative and provide it across the Department. a. Require all 1-star through 3-star flag officers and Senior Executive Service (SES) equivalents to attend a Leading Innovation Program. b. Develop additional venues similar to the Naval Post Graduate School, that offer courses away from military concentrated areas and taps into a wider cross-section of innovative organizations and thinkers. c. Select a highly capable, dual-role leader and facilitator for each location and delegate control of program design to them. d. Assign the Vice Chairman of the Joint Chiefs of Staff and the Service Vice Chiefs the responsibility to select officers and monitor assignment. Selection and timing of participants should be led by the Vice Chairman of the Joint Chiefs of Staff or by vice chiefs of the Services designated to monitor senior officer assignments. e. Assign the Under Secretary of Defense for Personnel and Readiness (USD(P&R)) the responsibility to select and monitor assignments for SES participants for those assigned to the Office of the Secretary of Defense, the Defense Activities and Agencies, and for those filling Service assignments. f. Appoint a Chief Learning Officer to provide overall coordination and to ensure the programs are properly staffed and resourced.

2. Secretary of Defense Corporate Fellows Program (SDCFP). Re-brand the SDCFP as the Secretary of Defense Fellowship (SDF) with personal sponsorship akin to that provided to Presidential Innovation Fellows. Reinvigorate the relationship with the Secretary of Defense, but assign oversight of program to the USD(P&R). a. Redefine the goals of the program to considerably expand it to include government civilians of equivalent career potential. b. Implement a “Fellow for Life” program, including a structured mentoring program to create a network of virtual consultants and trusted advisors (provides quick reach to experts with common experience and language, but diverse perspectives). c. Promote utilization by requiring an external tour to compete for General/ Flag officer or SES selection (legislative and service fellowships, training with industry, etc.). d. Assign USD(P&R) responsibility for establishing a small but capable team to strategically lead and manage the SDF program and expand the scope to include a wide portfolio of key partners while detailing Fellows to partnership building assignments at target companies and organizations. e. Develop SDF promotion guidance supporting external engagement tours like the Fellowship and collaborate with the Joint Staff to identify high-impact billets for Fellowship graduates. f. Direct the Joint Staff to identify and code high-impact billets for SDF graduates. g. Institute a cross-organizational network program to connect external engagement efforts with senior leader advisory groups including Combatant Commanders and Service Chief’s

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Advisory Groups, Defense Innovation Unit Experimental, the Office of Net Assessment, the Strategic Studies Groups, and Service Fellowships. h. Connect SDF Fellows with existing innovation, technology, academic, and business centers of excellence around the country.

3. External Fellowship Programs. a. Expand ITEP to bring senior experts into the Department for a “reverse Fellowship.” b. Include external Fellows under re-branded SDF to significantly expand the partnering power of the program. c. Deliberately distribute fellows across DoD’s many institutional and operational elements to serve as advisors and consultants. d. Assign traditional industrial base partners to warfighting commands; exposure to operational priorities, challenges, and leaders. e. Assign non-traditional partners to institutional staffs and Defense Agencies to expose them to business processes, challenges, and leaders.

Building a Talent Bench

To effectively tackle 21st Century strategic challenges, all levels of the incoming national security team must possess superior leadership skills, not just the senior most leaders. Like the private sector, the Department requires leaders garnered from both long serving employees (e.g. the proverbial “from mail room to CEO” type) and outsiders who bring fresh, new perspectives to the enterprise. The SecDef should invest the time to attract, retain, and motivate quality people for both career and political positions. This is particularly critical at the DASD, and special assistant levels. Many people filling these positions will become future leaders in national security at higher levels of responsibility.

While DoD was once a model for developing and training quality civilian political personnel, this is no longer the case. The need to improve and develop DoD’s political and civilian leadership management bench is even more glaring as DoD requirements continue to outpace available resources. The Secretary will need a plan for holistic development of these present and future managers if DoD is to meet the challenges it is expected to face for the foreseeable future. The day-to-day oversight of developing and implementing this plan should be vested with the USD(P&R).

Best practices within the private sector should be used to help improve DoD’s development and training of its mid- and junior political managers. For example, cross training and rotational assignments are a routine practice of most large companies (and for uniformed U.S. military personnel). High potential employees are identified and encouraged to work in multiple functions and/or segments of a company so that they will become effective leaders who can pull together multiple entities within a company to accomplish enterprise objectives. These high potential employees often also receive leadership and other specialized training and their career progress is routinely tracked by senior management, as development of future leaders is considered a senior management responsibility.

Industry takes measured steps to identify, develop, and improve managerial talent because most companies recognize that their future performance will be directly correlated to the quality of its managers. As a result, taking a holistic approach to manager development is a relatively standard

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practice in the private sector. Industry CEOs do this to develop and nurture managers for the long range success of their companies.

DoD needs to develop a plan to take a similar, holistic approach to educating and training managers in its civilian workforce and move away from models that do not encourage (or even worse, discourage) cross-training across an organization.

Another aspect of developing and improving managers in the private sector is a strict and direct correlation between performance and accountability. If a leader of a business unit in a company consistently does not meet the company’s performance requirements, they are typically replaced or reassigned. Relying solely on seniority for placement of managers is essentially unheard of in private industry, yet it remains a common and significant practice for the government’s civilian workforce.

The following recommendations are offered:

1. The Secretary should direct the USD(P&R) to lead an effort to increasing/improving the capabilities of DoD managers. 2. The USD(P&R) should establish a robust senior level mentoring program across DoD to identify, groom, and manage Department-wide “high-flyer managers” as future senior leaders to accelerate growth of existing and new talent. 3. The Deputy Secretary should establish a program to rotate junior civilian political and career management talent to new assignments every two years (like their military counterparts) and ensure a broad range of experiences to develop their managerial talent.

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The following recommendations are offered:

1. The Transition Team should be diligent in ensuring the leadership team is selected for their capacity to deliver results aligned with the Secretary’s priorities, and when relevant, appropriately paired, especially at the highest levels. 2. The Transition Team must understand the vastly different roles of the Secretary and Deputy Secretary to ensure the Deputy Secretary’s skills and background is properly aligned to the responsibilities as Chief Operating Officer and appropriately paired with the Secretary. Develop Meaningful Selection Criteria for Key Positions

The best administration transitions recognized that appointments to the DoD were not rewards to be parceled out but were in fact, very tough jobs with critical responsibilities to create specific and important national security outcomes. Thus, the Transition Team should establish an Executive Personnel sub-team focused on identifying individuals to fill senior leadership posts in OSD. This sub- team must begin by developing meaningful output criteria for each of the top jobs to ensure that the policy outcomes desired are within the competence and skills of the individuals on the talent lists. This is essential if the SecDef is to have the widest possible list of talent to draw from. This is achieved by proactively augmenting the long list of those seeking positions with aggressive outreach to talent otherwise on the sidelines that possesses important high-level leadership experience in both the private and public sector.

For the most senior positions, the listed individuals should have significant experience in leading large, organizations. They should be forward thinking and have experience navigating challenging political environments. They should be critical thinkers that exercise sound judgment when executing complex programs, and who have a bias towards action, coupled with a willingness to take calculated risks to achieve results. Ideally, most should have prior federal government and large corporation leadership experience, particularly in the case of the Service Secretaries, the Under Secretaries for Personnel and Readiness, Research and Engineering and Acquisition and Sustainment and the Chief Financial Officer/Comptroller.

The SecDef selectee must set the criteria for these critical leadership assignments and ultimately motivate and select quality people to serve in these key political positions. The Secretary’s commitment to the people side of the Department only begins with this, it will be crucial for the SecDef to maintain their loyalty and alignment beyond the opening months of the new administration, if the new team is to achieve results. Too often, the Service Secretaries (and other members of the Secretary’s team), “go native” and substitute priorities of the bureaucracies they manage to the detriment of those of the new SecDef. The SecDef must allocate a portion of their confirmation preparation time to personally focus the Transition Team’s plan to build, and on-board the senior leadership team.

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Deputy Secretary of Defense

The role of DepSecDef is not specifically defined in title 10. This lack of a statutory duty description has resulted in a wide variation of focus by those who have occupied this position in the past. In general, the emphasis has been on a very broad range of activities, sometimes driven by the desires of the Secretary, others by the proclivity of the person appointed. Historically, DepSecDefs have spent significant time away the Pentagon “filling in” for the SecDef or serving on behalf of the SecDef on matters requiring coordination with other agencies, international partners, or the White House and the National Security Council. The adverse consequence of this has been insufficient time for the DepSecDef to attend to the critical primary function of managing the Department. The DepSecDef really must be more internally focused as the COO and who truly operates as a COO, with the PIO, to effect enterprise-wide transformation.

When considering candidates for this second most senior position in the Department, the ideal model is one in which the SecDef is focused externally, as the Department’s CEO, while the DepSecDef is focused exclusively on internally managing the Department as its Chief Operating Officer (COO). In other words, there is a very “bright line” separating their areas of focus. Ideally, the DepSecDef should spend the minimum time “shadowing” the SecDef — or otherwise preparing to fill in for the SecDef at a moment’s notice. To truly manage the largest and most complex entity in Government there simply is no time in the DepSecDef’s day for those “shadow” functions and events which could be far more profitability undertaken by others at the Secretary’s direction. The responsibilities of the COO in an organization the size of the DoD demands a full-time focused effort.

In this model, the SecDef should strive to delegate to the DepSecDef only those matters relevant to the managing the institution and holding its leaders accountable. For matters outside of the Pentagon, the SecDef should delegate (and set the expectations accordingly with the White House or the Interagency) to the USD(P) who is naturally prepared for these fill-in tasks by their day-to-day responsibilities. Many matters of interagency coordination could be likewise delegated — so to the USD(P&R) for coordination with the Department of Veterans Affairs or to the USD(C)/CFO for interactions with the OMB and the GAO.

This redefinition of the role of the DepSecDef into DepSecDef and COO demands that the nominee for this position have had senior civil experience in the national security enterprise as well as deep experience in the management of large enterprises. This combination best serves with sufficient political insights and capacity to successfully translate policy and programmatic decisions into reality. The individual should have demonstrated proficiency with aligning resources to strategic initiatives and goals. They should have experience in creating and sustaining management systems required to lead a large enterprise, and the ability to drive the day-to-day operations of the organization — all typical roles and responsibilities of a corporate COO.

As Chief Operating Officer, the DepSecDef has dedicated resources to support these responsibilities, chief among them is the responsibility for:

• DoD strategic planning, performance management, and oversight • Successful implementation and oversight of defense business systems

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• Effective business portfolio management • Providing rapid and agile business solutions for the warfighter • Delivering the enterprise architecture, standards, and technology innovation • End-to-end business process optimization, integration, and alignment • Utilizing intelligence for effective decision-making

The DBB has recommended the current position of Chief Management Officer (CMO) be disestablished.4 That recommendation has been included in both the Senate and House FY22 NDAA language and therefore an alternative is required. The recommended alternative to replacing the CMO includes the DepSecDef as an enhanced COO.

Concept: The design principles that guided the development of this alternative are found at the bottom of Figure 4-4 below. Design principle One recognizes the DepSecDef as the singular integration point, which has proven to be an enduring strength of DoD. The “duality of leadership” of the Secretary and the DepSecDef is a battle-tested decision process that has been proven highly successful over time.

Design principle Two streamlines DoD transformation into a single individual with enhancements to make the outcomes as successful as possible, including the establishment of a Performance Improvement Office.

Design principle Three transfers and realigns other functions from the CMO to more appropriate PSA’s who have had these responsibilities as part of their normal portfolios such as USD(C) and CAPE, and in many respects are performing them now. It re-establishes the Director of Administration and Support to manage regulatory and compliance matters and manages the Pentagon reservation.

Design principle Four does not burden the person charged with doing business transformation with additional duties that would now be under the Director of Administration and Support such as the huge functions of the Washington Headquarters Service, the Pentagon Force Protection Agency, continuity of government, privacy and regulatory matters, and National Capital Region responsibilities.

Design principle five establishes a dedicated SecDef and DepSecDef governance integration office to ensure the SecDef’s priorities, including business transformation, are accomplished and driven through an updated, more focused, and streamlined governance structure in DoD. One cannot drive transformation through fifty governance structures and 2,000 documents as is the case today.

This approach requires insisting on the primacy of the DepSecDef for enterprise-wide responsibilities by emphasizing his role as COO:

• The DepSecDef empowered as an enhanced COO (returning the “CMO” hat to DepSecDef as COO). • Disestablish CMO position and organization, establish a Performance Improvement Officer and office focused on Business Transformation and Performance Improvement with task to assist DepSecDef in DW/DAFA management, particularly as the major DAFA review is underway.

4 See DBB FY20-01 The Chief Management Officer of the Department of Defense: An Assessment (2020). NOT FOR RELEASE 4-11

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• Distribute current CMO statutory responsibilities; divest CMO administrative and regulatory functions as per Alternative #1. • Increase/enhance analytical capabilities as they relate to management in OUSD(C), ODCAPE, PSAs, and the Joint Staff (JS) J-8 to support the DepSecDef’s COO role in business transformation and Fourth Estate/DAFA oversight. • Increase/enhance IT capabilities in CIO to support digital transformation. • Improve and update governance structures. • Relentlessly focus on sustaining the transformation effort – beyond cost reduction – generating enduring productivity increases and improvements.

Actions Required:

• Establish a Performance Improvement Officer with sole focus on business transformation, strategic management and performance improvement and DW/DAFA enterprise business operations with a 5- to 7-year term to facilitate attracting and retaining the necessary talent to affect transformational change.5 • Establish a Director of Administration and Support with a dedicated office to provide Strategic Integration, Governance, and Analysis support directly to the Secretary / Deputy Secretary. • Distribute current CMO statutory responsibilities as indicated above. • Rely on the (USD(P)) for most interagency policy matters.

Figure 4-4 depicts the recommended organizational construct.

5 See DBB FY16-03 An Assessment on the Creation of an Under Secretary of Defense for Business Management & Information (2016). NOT FOR RELEASE 4-12

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Figure 4-4: Deputy Secretary of Defense as an Enhanced COO

The following recommendations are offered:

1. The Secretary should significantly strengthen the Deputy Secretary’s position as the COO and fill the PIO position accordingly. 2. The PIO’s relentless focus should be sustaining a continuous transformation effort to reduce ongoing costs and not just one time costs, as well as generating increased productivity and improvements. The effort must be systematic, iterative, and continuous improvement. Single offerings at the altar of budget cuts should not be acceptable. 3. The Transition Team should seek a statute to create a non-political appointment for the PIO with a longer term to facilitate attracting and retaining the necessary talent to produce true transformational change. Under Secretary of Defense Comptroller/Chief Financial Officer

When considering candidates for USD(C)/CFO, the SecDef and Transition Team should ensure that the persons with the right types of skills are recruited for each related financial management position. The CFO role needs to be a much higher priority than the historical Comptroller role although both are important.

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In the business world, the role of the CFO is considered far more important than the comptroller. The CFO is often the third most senior person in the company after the CEO and the COO. While authorities and responsibilities vary in the corporate world, the CFO manages cash and adjusts dollar allocations to different accounts depending on spending rates. CFOs lead the exploitation of both financial and performance data to better manage the enterprise and shape it for better outcomes in the future.

In the Department, the comptroller “role” has traditionally had greater emphasis than that of the CFO “role”. Historically, the comptroller’s focus has been on developing the Department’s budget, getting it through Congress, and ensuring compliance with related appropriations legislation. Because of the importance of those actions, past comptrollers have been largely individuals with Hill experience, usually with the House or Senate Appropriations Committees. As a result, Comptrollers often had less understanding of, or interest in, broader-based financial management, in the true sense of the word. This includes the production of meaningful financial statements and clean audits, as well as the management and rationalization of financial and performance management systems. Importantly, the CFO in DoD will not have certain responsibilities that traditional CFO’s in the private sector retain (e.g., cash, investment and debt management, quarterly external financial reports, investor interface).

The CFO should come from the financial industry with a proven track record of financial management experience, which is critical for the efficient and credible management of the Department’s financial operations, internal control procedures and financial audit efforts. While the CFO would certainly benefit from some congressional experience, that gap can be mitigated by a strong principal deputy with relevant committee staff experience who is well-versed in legislative matters, including the budget and appropriations processes. This will be key though because most PASs in financial management positions without a direct knowledge of and appreciation for the complexities of the federal budget process have encountered difficulties executing the SecDef’s goals for financial management. This is also true across federal agencies and not DoD specific.

Finally, given the broad range of responsibilities and the increased importance of the CFO role, the position should be titled, Under Secretary of Defense Chief Financial Officer and that the DUSD(C) fill the role of comptroller.

The following recommendations are offered:

1. The position of USD(C)/CFO should be re-designated as Under Secretary of Defense Chief Financial Officer to better reflect the importance of the CFO role. 2. The official should be drawn from either from the financial industry (to include public accounting), or from persons with significant corporate CFO or comparable experience. a. The key skill set required is strategic financial management experience. b. Financial management is critical for the efficient and credible management of the Department’s finances and operations c. Some congressional experience would be helpful, but not critical. d. A strong principal deputy, well-versed in legislative matters, can be the essential complement for any lack of congressional experience on the part of the CFO.

Undersecretary of Defense for Personnel and Readiness

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The USD(P&R) has the policy oversight of roughly one-third of the DoD budget, comprising military pay and benefits, to include healthcare, housing, DoD schools, commissaries, and a myriad of military family support programs that are, and will likely continue to be, the single largest expense category for the Department. Not included in this 30% are about a million contractor personnel supporting the Department’s white collar work force, who are paid for out of Operations & Maintenance funding. Contractors act as a hidden workforce, as there is no accurate “head count,” and contractors may be used to supplant a capped government workforce. When contractor costs are added to the overall personnel bill it accounts for over 50% of DoD’s expenses. The rest of the Department’s PASs spend money remaining after the personnel bills are paid. Because of that, this position is the third most important political selection the Administration will make. This is an area of increasing costs relative to observed and measurable performance.

Sadly, for over a decade this position has suffered from profound turmoil, with nearly one new leader every year. Understanding the accumulated consequences of this turmoil is crucial for the Transition Team and must inform the selection of the next USD(P&R). The selectee for the position of USD(P&R), must work with the SecDef to set this office aright and reestablish its legitimacy within the Department. The candidate must possess the requisite political skills to institute the necessary policy changes in law and practice to effectively deal with the issue of increasing cost of the personnel accounts. This must be done to prevent the pending Department-wide erosion of modernization and operations and maintenance accounts. This erosion can only be deferred if the root cause, the rising cost of people and healthcare, is fixed. These two expenditures will bankrupt the Department unless serious changes are made.

These difficult challenges must be addressed by the new USD(P&R) and pursued with urgency, creativity, credibility, and above all, strong leadership to successfully over-ride often fierce resistance from veteran service organizations, military service organizations, and the Congress. Most importantly, the USD(P&R) cannot do it alone, the Service Secretaries and their military service Chiefs who have most of the people and cost, and who need the freed funds to invest in modernization and readiness, must be vocal partners if this is to succeed.

The SecDef must agree with this fundamentally re-thought approach to the USD(P&R)’s role and responsibilities and delegate the necessary lines of authority and accountability. The SecDef must empower the USD(P&R) to create a clear path for success in addressing the critical challenges inherent in transforming the size and cost of the workforce.

The following recommendations are offered:

1. The Secretary and Transition Team should seek candidates for USD(P&R) that are politically and managerially capable of altering the trajectory of the utilization, mix, and cost of DoD’s personnel. 2. The Secretary should invest sufficient personal time and commitment early in the Administration to enable the USD(P&R)’s plans and policies to become reality in time to free sufficient resources to enable the president’s national security agenda.

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3. The Secretary should ensure the entire senior leadership team — civilian and military — is fully prepared to actively and aggressively support the USD(P&R)’s plans and policies to accomplish this change. Under Secretaries of Defense for Acquisition and Sustainment and Research and Engineering The Nation is in the stages of global Great Power competition whose long-term outcomes will be determined, in part, by the ability of DoD to deliver cutting-edge innovation to its war fighters far faster than it has ever done. The Nation’s last peer competition was with a ponderous Soviet Union, advantaged in mass relative to the U.S. and its allies, but badly disadvantaged in innovation. Today’s pacing peer, China, is supra technically informed and hypercompetitive from decades of global experience in markets ranging from cutting edge information consumer goods to large scale commercial and industrial products.

For the current Great Power competition, the Department’s top acquisition and technology leadership is crucial. Because of this new paradigm, the Under Secretaries of Defense for Research and Engineering (USD(R&E)), and for Acquisition and Sustainment (USD(A&S)), must be capable of leading the Department’s innovation efforts and its acquisition enterprise including the defense industrial base. DoD’s acquisition enterprise is large, with thousands assigned to the offices of the relevant Under Secretaries, a condition requiring very agile leadership. The industrial base responsibilities demand a preference for individuals who also have substantial public company experience in the national security space.

Title 10 states that the ideal Research and Engineering (USD(R&E)) candidate should have, “an extensive technology, science, or engineering background and experience with managing complex or advanced technological programs.” This background should likely include familiarity with biology. In essence, the USD(R&E) should be very comfortable in the world of science and technology, be well known and highly respected in that domain, and capable of coordinating a widely dispersed technology and laboratory complex. As the DoD Chief Technology Officer, the USD(R&E) must be able to explain complex science and developmental issues to the SecDef and DepSecDef. The size of this Under Secretariat also requires a substantial managerial resume.6

Whereas the USD(R&E) must be capable of focusing on the pursuit and development of emerging technologies, the USD(A&S) must be capable of acquiring and fielding them. As stated in title 10, the USD(A&S) should, “be appointed from among persons who have an extensive system development, engineering, production, or management background and experience with managing complex programs.” In addition, the USD(A&S) must be attuned to the health and capacity of the defense industrial base, both the parts of it that reside in the public sector and those resident in the private

6 To include an in-depth understanding cost and schedule overruns, lock-in effects; proprietary challenges; weak and non-competitive markets; spiral development costs where hardware and software advances lag off-the shelf options; misalignment between service secretaries and their equipment and asset readiness goals and emerging threats and need for new forms of technological platforms that are more agile, modularized, and can be deployed on & with existing systems, etc. This is an area where a long-view, experience in developing partnerships and strengthening competition, and ability to change DoD’s risk averse, rule bound Federal Acquisition Regulations, culture requires serious leadership acumen. NOT FOR RELEASE 4-16

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sector. It is advisable that the individual appointed to this role have significant experience as a senior manager in the defense industrial base or be highly informed on its structure and capability.

The following recommendations are offered:

1. A Transition Team should work with the Secretary to identify a well-matched pair of candidates for the USD(A&S) and USD(R&E) positions. 2. A Transition Team should provide pairs that are capable of working closely together to deliver Department-wide leadership on technology and innovation while delivering acquisition excellence. 3. These two position are closely related and highly complementary; they must be filled by very capable and experienced individuals who come to their roles with an in-depth understanding of the acquisition and program-budget processes of the DoD. Service Secretaries (Army, Navy, and Air Force)

The military departments — Army, Navy and Air Force — are the line organizations of the Department and collectively manage the largest percentage of the DoD budgets; have the overwhelming number of military, civilian, and contractor personnel; and own the largest number of facilities, installations, and maintenance and repair facilities. Further, they have the largest share of the research and procurement budgets.

Everything and everyone in the military components are subject to the civilian authority, direction, and control of the Service secretaries who, in turn, are members of the SecDef’s enterprise team. These individuals are subject to the SecDef’s authority, direction and control. By statute, the Service secretaries are charged with organizing, training, equipping, supplying, mobilizing, demobilizing, and administering their individual departments. The uniformed military service chiefs are members of the Joints Chiefs of Staff and as such serve in an advisory capacity to the President and the SecDef. However, in their Service roles they do not have individual authority beyond what flows from their Service secretary.

The candidates chosen to lead and manage these large complex world-wide organizations must have a combination of national security experience, proven management and leadership skills associated with running high-tempo organizations, and decision-making skills based on sound analysis and good judgment. They must have both the respect of the senior military and the sustained ability to put the larger enterprise goals ahead of Service goals. They need to be strong communicators, both internally and externally.

The SecDef needs to specify an engagement model for the three individuals who will lead the five military Services. The Service secretaries have too often served as brand managers of their enterprise, focused on maximizing their Service’s share of Departmental resources. They should be, first and foremost, part of the SecDef’s senior management team, and leave the role of line managers to their respective military service chiefs. Another important SecDef decision is their term of service. The top private sector organizations regularly rotate their most senior line managers to broaden their development and to reinforce the importance of total enterprise focus. Too often in the history of the Department, the divisions between the Department and the Services have inhibited innovation or efficiency. These divisions are often advanced when senior leaders adopt parochial positions, opposing their peers or the

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OSD staff. Given that the majority of the Department’s other senior political appointees barely serve two years in their jobs, mandated rotations among the three Service secretaries would set perspective and bring a healthy, different focus their jobs. Such a rotation plan would also inculcate a national security “generalist” vice the traditional single military service-centric background for all the candidates.

The following recommendations are offered:

1. The highest priority tasks facing the Service secretaries is increasing their service’s commitment of effort and resources to Great Power competition while reducing the cost of the institutional enterprises 2. The Transition Team should seek individuals that are proven leaders, capable of putting Department priorities ahead of Service priorities. 3. The Secretary and Transition Team should work with the President and Congress to gain permission for the flexibility to rotate the Secretaries to a different military department on a two-year cycle.

Search for the Best Talent

The complexity of the Department and the challenges of today’s global rivalry demand leaders arrive with the skills, executive leadership, and competencies to tackle the Department’s toughest challenges. The Transition Team’s Executive Personnel sub-team is to search for the right talent (Figure 4-5). While there will be many excellent claimants for the top political positions, history has shown some of the best political appointees were not considering service at the time and were recruited.

Figure 4-5. Transition Team Compnents

The Transition Team’s task is to develop a framework to determine the skills and experience necessary to form the basis for selection of prospective candidates (Figure 4-6). The framework should clearly identify the desired values, necessary ethics, professional skills, and applicable competencies for each key position. Next, the Executive Personnel sub-team should expand the framework to add priorities, objectives, and outcomes for the organization, and then recruit and evaluate candidates based on that framework. Given the range of appointments within the DoD, candidates not selected for OSD -level positions may be excellent choices for Service-level positions. For example, candidates under consideration for USD(A&S), or USD(R&E) should also be considered for Service-level acquisition positions.

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Figure 4-6. Potential Sources for Recruiting Civilian Talent

The Transition Team needs to begin vetting potential appointees immediately after the election is decided, as it is often difficult and time-consuming to attract the best qualified candidates. The onerous nature of the Senate Armed Services Committee’s financial restrictions and the lengthy vetting process (i.e., financial and personal history forms, FBI background checks, and political clearance) all serve to dissuade individuals from accepting positions in the Department. Further complicating this, the Congressional confirmation process can be uncertain and drawn out. The Transition Team’s additional responsibility is shepherding the candidates throughout the process, expediting paperwork and overcoming a variety of hurdles.

The SecDef should strongly advocate for prioritizing Defense nominees in the clearance process ahead of those from other Executive Departments by requesting a larger percentage of the pre-cleared allocations available. By the measure of the Department’s proportion of the federal budget, it is not unreasonable to request a larger number of the available pre-cleared slots. Further, given the responsibility for national security, it would not be unreasonable for the Transition Team, in partnership with the National Security Council and Department of Homeland Security to present a well-crafted argument to the White House that as much as 15 percent of the top 100 pre-cleared PAS positions should go to DoD.

Even after pre-vetting, qualified candidates for the top leadership positions typically take another nearly 80 days to be confirmed and thus available to begin performing the duties of the position (Figure 4-7). Depending on the job responsibilities, it can take as much as 120 days to begin performing the duties of these top jobs. Consider the USD(P) in the chart below. These extended times of transition make it all the more important to consider retaining qualified “hold-overs” from the outgoing Administration to ensure capable talent resides in these key positions while the new Administration’s nominee waits to be confirmed.

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Figure 4-7. Nomination/Confirmation Timelines for Selected PAS Officials

The Executive Personnel sub-team must also focus on nominees for the second tranche of leaders, such as Director of the Cost Assessment and Program Evaluation (DCAPE); Service under secretaries; Director, Operational Test and Evaluation (DOT&E); deputy under secretaries (DUSD); Assistant Secretary of Defense for Legislative Affairs (ASD(LA)); and the Assistant to the Secretary of Defense for Public Affairs (ATSD(PA)).

It will also prove helpful to identify multiple candidates for key positions so that the SecDef has strong alternatives in the event problems arise during vetting that could disqualify a candidate, or if the lead candidate withdraws from consideration. It is far better to be prepared for a surprise situation than to have to rush for a replacement and not have time to properly think through the job position and required qualifications.

While searching for top-level talent, the Executive Personnel sub-team should be mindful of the importance of building a strong bench for the future. With the average length of service for PAS at slightly over two years, a large and talented team will be required to sustain the enterprise for the duration of an Administration. The SecDef will need to have many capable low and mid-level leaders that can be developed to assume more senior positions in the out-years.7

7 While probably not on the immediate radar of a new SecDef, this point is very important. The Transition Team needs to take lessons from history by taking a different approach in cultivating these individuals for higher level positions when the initial appointees cycle out of DoD between 18-24 months after arriving on the job. In this fashion the SecDef and DepSecDef will have a pipeline or a pool of individuals on hand. NOT FOR RELEASE 4-20

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The Transition Team should carefully consider the senior military assistants (SMA) that will be selected to serve a PAS. A “rightly paired” military assistant is a powerful asset for the new SecDef and all PASs in that the SMA can provide the critical operational perspective that helps the senior civilian leader understand context and make better-informed decisions.

Finally, to minimize the number of empty seats on day one, as previously stated, the Transition Team of a new Administration should develop an early a slate of potential “hold-over” candidates to assist the SecDef in the early days of the transition. “Hold-over” candidates are those members of the outgoing Administration who have well-executed their duties and are educated and familiar with the internal operation processes of the OSD and able to make trusted decisions during transition. It is important for the Transition Team to avoid only considering a hold-over candidate for the job they currently reside. Often, strong performers in one position are sufficiently capable of performing the duties of a different position and can be a significant help for the SecDef during the leadership vacuum that more often than not occurs in the first 180 days of a new Administration.

The following recommendations are offered:

1. The Transition Team should immediately establish an Executive Personnel sub-team to manage the job specification, recruiting, screening, and application processes. 2. The Secretary should provide the Transition Team with key guidance on the types of individuals to be sought and the priority of fill. 3. The Secretary should advocate to the President-elect for prioritizing the clearance of Defense nominees ahead of those of other Departments. 4. The Transition Team should develop a bench of future leaders and prepare succession plans early to ensure continuity throughout the Administration. On-Boarding New Appointees In transitions, candidates for jobs eventually become nominees and nominees eventually become Senate-confirmed appointees. Until recently, the Department used the interim between selection and assumption of the job to on-boarding appointees. The result has been a missed opportunity to prepare the new team members for what is likely the biggest job of their lifetime. Effective onboarding provides information, insights, context, and exposure to the senior leadership that can jump start the selectee’s effective engagement with their enterprise. The Transition Team must design, build, and resource its specific on-boarding process. The SecDef must allocate a portion of their confirmation preparation time to personally focus the Transition Team’s plan to build, and on-board the senior leadership team

The on-boarding program should be pre-constructed so that as soon as appointees have been selected their on boarding can begin. Even before arriving at the Department, the program should begin supplying information to the selected individuals. The program of instruction should provide the new leaders with a deep understanding of the priorities and programs of the Department. It should assist them in understanding their levers to power — the title 10 governance that connects the OSD, the JS, the Services, and the Combatant Commanders, their role, authority, and mission, the resources available to them to perform their duties, and how they can work effectively as a team to execute the SecDef’s agenda and the NDS. There should also be discussion on lessons learned from individuals who have

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The following recommendations are offered:

1. The Transition Team should build an on-boarding process well before November: a. A dedicated core team to run it until all PAS officials are in place b. Staffed with individuals who previously served, who are not seeking appointments c. Coordinating carefully with the legislative team supporting SASC confirmations 2. The on-boarding program should focus on: a. Background and context b. In-depth discussions with past and present officials c. Key issues requiring early attention/decisions 3. The Transition Team should outline key responsibilities of the positions: a. Functions and key roles/relationships b. Introductions to relevant senior career officials c. Introductions to relevant senior uniformed officers 4. The Transition Team should carefully select briefers: a. Deep institutional background and experience b. Independent, creative thinkers – military and civilian c. Looking across multiple administration policies/programs d. Illuminating past challenges and solutions

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APPENDIX A – SUMMARY OF RECOMMENDATIONS APPENDIX B – LIST OF FIGURES APPENDIX C – RELATED DEFENSE BUSINESS BOARD PRODUCTS APPENDIX D – BIOGRAPHIES - DEFENSE BUSINESS BOARD MEMBERS

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APPENDIX A – SUMMARY OF RECOMMENDATIONS

CHAPTER 2. WHAT DOES THIS MEAN FOR DoD? 1. The Administration should direct the Secretary of Defense to increase the scope of the Defense Wide review with the aim to significantly reduce and/or consolidate the DAFA, and reign in DW spending. 2. The Administration look critically at the DoD governance structure, demanding a more reduced, streamlined, and responsive DoD Management organizational management structure. and Overhead 3. The Administration should direct the Secretary of Defense to Challenges overhaul and update the Fourth Estate and instituting performance metrics which focus each entity’s efforts on Great Power competition, specifically in regards to China. 4. The Department must seriously examine its infrastructure and overhead costs with an eye towards significantly reducing it, to “sharpen the teeth” while “shortening the tail.” CHAPTER 3. REGAINING MANAGERIAL EXPERTISE 1. The New Secretary’s Team needs to recruit the “best and the brightest” in transformation who can focus laser like on drastically reducing the DoD overhead bloat and greatly improve its business processes Regaining 2. The New Deputy Secretary must create a supportive and fully Managerial engaged culture which can translate the vision and strategy of the Expertise NDS into action. A single, unifying culture which must be embraced and adopted by the DoD’s multiple sub-cultures. 3. The New Deputy Secretary must create benchmarks focused on competing with and besting China in every activity the Department undertakes. CHAPTER 4. ITEMS REQUIRING IMMEDIATE ATTENTION 1. Establish cabinet level performance expectations upfront and review each department’s transition team’s plans for alignment. 2. Invest the time in transition to specify the administration’s overarching goals, the resulting policy outputs and the detailed First Actions leadership implementation activities down to the deputy assistant secretary of defense (DASD) level necessary to achieve them. 3. Prepare and practice the interagency processes necessary to respond shorthanded to a likely first 270 day crisis.

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CHAPTER 4. ITEMS REQUIRING IMMEDIATE ATTENTION (Cont.) 1. The Administration’s National Security team, to include the both the designees for Secretary and Under Secretary of Defense for Policy, must formulate and provide to the Department its strategic vision. While these NSS and NDS documents are essentially drafts, without the force of policy, they should be issued as soon as possible after the The National Security election to prepare for the Nation’s defense. and 2. The Transition Team should look to ensuring the major components National Defense of the Department are informed of the draft NSS and NDS, making it Strategies clear the new Administration will enforce these strategic directions upon taking office. 3. The Department should look to these new course changes to adjust POM and BES submissions. 4. Immediately upon the new Administration taking office both the new NSS and NDS need be officially promulgated. 5. The Transition Team should decide which members of the outgoing administration they wish to hold over or remain permanently. 6. The Transition Team should strive to recruit its senior management and policy appointees simultaneously and as early as possible, so as to have them confirmed and on the job as soon as possible. Dealing with Crisis 7. The Transition Team should designate a Strategic Evaluation sub- team to consider the potential near-term likely challenges or crises and develop the plans of action necessary to counter them. 8. The Transition Team should prepare and exercise the Strategic Evaluation sub-team to respond to a crisis in the earliest days of the new Administration. 1. The Transition Team should quickly convert the President’s priorities into national security and defense goals so the new Defense team clearly understands their objectives. 2. From those goals, the Transition Team should develop the top DoD DoD’s Unique objectives necessary to support implementation of the President’s Management top five national security goals. Challenges 3. The Transition Team should also reaffirm existing top level Departmental goals and priorities that will remain unchanged. 4. The Transition Team should assemble and confirm a sub-team of experienced executives and policy experts specifically aligned to the Secretary’s priorities and ensure they are prepared to execute aggressively on January 20, 2021.

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CHAPTER 4. ITEMS REQUIRING IMMEDIATE ATTENTION (Cont.) 1. The Transition Team and Secretary should work to have, at a minimum, the following top 13 Presidential appointments prepared and confirmed to begin work immediately after the Inauguration on January 20th 2021:

Deputy Secretary of Defense (DepSecDef) Performance Improvement Officer (PIO) Under Secretary of Defense for Personnel and Readiness (USD(P&R)) Under Secretary of Defense for Research and Engineering Build the Strongest (USD(R&E)) Defense Team Under Secretary of Defense for Acquisition and Sustainment (USD(A&S)) Under Secretary of Defense Comptroller/Chief Financial Officer (USD(C)/CFO) Under Secretary of Defense for Policy (USD(P)) Under Secretary of Defense for Intelligence (USD(I)) General Counsel of the Department of Defense (DoD GC) Secretary of the Navy (SecNav) Secretary of the Army (SecA) Secretary of the Air Force (SecAF) Assistant Secretary for Legislative Affairs (ASD(LA)) 1. The Transition Team should be diligent in ensuring the leadership team is selected for their capacity to deliver results aligned with the Secretary’s priorities, and when relevant, appropriately paired, Selection Criteria and especially at the highest levels. Position Pairings 2. The Transition Team must understand the vastly different roles of the Secretary and Deputy Secretary to ensure the Deputy Secretary’s skills and background is properly aligned to the responsibilities as Chief Operating Officer and appropriately paired with the Secretary. 1. The Secretary should significantly strengthen the Deputy Secretary’s position as the COO and fill the PIO position accordingly. 2. The PIO’s relentless focus should be sustaining a continuous Develop Meaningful transformation effort to reduce ongoing costs and not just one time Selection Criteria costs, as well as generating increased productivity and improvements. The effort must be systematic, iterative, and Deputy Secretary continuous improvement. Single offerings at the altar of budget cuts of Defense should not be acceptable. 3. The Transition Team should seek a statute to create a non-political appointment for the PIO with a longer term to facilitate attracting and retaining the necessary talent to produce true transformational change.

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CHAPTER 4. ITEMS REQUIRING IMMEDIATE ATTENTION (Cont.) 1. The position of USD(C)/CFO should be re-designated as Under Secretary of Defense Chief Financial Officer to better reflect the importance of the CFO role. 2. The official should be drawn from either from the financial industry (to including public accounting), or from persons with significant Develop Meaningful corporate CFO or comparable experience. Selection Criteria a. The key skill set required is strategic financial management

experience. Under Secretary b. Financial management is critical for the efficient and credible of Defense management of the Department’s finances and operations Comptroller / Chief c. Some congressional experience would be helpful, but not Financial Officer critical. d. A strong principal deputy, well-versed in legislative matters, can be the essential complement for any lack of congressional experience on the part of the CFO.

1. The Secretary and Transition Team should seek candidates for USD(P&R) that are politically and managerially capable of altering the Develop Meaningful trajectory of the utilization, mix, and cost of DoD’s personnel. Selection Criteria 2. The Secretary should invest sufficient personal time and commitment early in the Administration to enable the USD(P&R)’s plans and Undersecretary of Defense policies to become reality in time to free sufficient resources to for enable the president’s national security agenda. Personnel and Readiness 3. The Secretary should ensure the entire senior leadership team — civilian and military — is fully prepared to actively and aggressively support the USD(P&R)’s plans and policies to accomplish this change. 1. A Transition Team should work with the Secretary to identify a well- Develop Meaningful matched pair of candidates for the USD(A&S) and USD(R&E) Selection Criteria positions. 2. A Transition Team should provide pairs that are capable of working Under Secretaries of closely together to deliver Department-wide leadership on Defense for technology and innovation while delivering acquisition excellence. Acquisition and 3. These two position are closely related and highly complementary; Sustainment & they must be filled by very capable and experienced individuals who Research and Engineering come to their roles with an in-depth understanding of the acquisition and program-budget processes of the DoD.

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CHAPTER 4. ITEMS REQUIRING IMMEDIATE ATTENTION (Cont.) 1. The highest priority tasks facing the Service secretaries is increasing Develop Meaningful their service’s commitment of effort and resources to Great Power Selection Criteria competition while reducing the cost of the institutional enterprises 2. The Transition Team should seek individuals that are proven leaders, Service Secretaries capable of putting Department priorities ahead of Service priorities. (Army, Navy, Air Force) 3. The Secretary and Transition Team should work with the President and Congress to gain permission for the flexibility to rotate the Secretaries to a different military department on a two-year cycle. 1. The Transition Team should immediately establish an Executive Personnel sub-team to manage the job specification, recruiting, screening, and application processes. 2. The Secretary should provide the Transition Team with key guidance Search For The Best Talent on the types of individuals to be sought and the priority of fill. 3. The Secretary should advocate to the President-elect for prioritizing the clearance of Defense nominees ahead of those of other Departments. 1. The Transition Team should build an on-boarding process well before November: a. A dedicated core team to run it until all PAS officials are in place b. Staffed with individuals who previously served, who are not seeking appointments c. Coordinating carefully with the legislative team supporting SASC confirmations 2. The on-boarding program should focus on: a. Background and context On-Boarding New b. In-depth discussions with past and present officials Appointees c. Key issues requiring early attention/decisions 3. The Transition Team should outline key responsibilities of the positions: a. Functions and key roles/relationships b. Introductions to relevant senior career officials c. Introductions to relevant senior uniformed officers 4. The Transition Team should carefully select briefers: a. Deep institutional background and experience b. Independent, creative thinkers – military and civilian c. Looking across multiple administration policies/programs d. Illuminating past challenges and solutions.

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CHAPTER 5. ORGANIZING THE DEPARTMENT FOR SUSTAINED CHANGE 1. The Secretary should clearly define the “Delegation of Authority and Accountability” for the Deputy Secretary/COO and Under Secretaries to establish speed, empowerment, and effectiveness metrics. 2. The Deputy Secretary should take an innovative, rigorous, continuous process improvement and accountability approach to transformation. This should include an ongoing process focused on enhancing performance and reducing costs. Improve the Speed, 3. The Deputy Secretary/COO should establish clear published Relevance, and Effectiveness objectives, targets and timelines for all functions and programs of the Defense Business under scope. Enterprise 4. The Deputy Secretary/COO should establish monthly reports and reviews with each direct report to ensure progress in implementation of actions to achieve their set of objectives. 5. The Secretary and the Deputy Secretary/COO should meet quarterly with each Executive Level II to discuss progress toward transformation objectives and ensure accountability. 6. The Secretary and Deputy Secretary should meet quarterly with each Executive Level II & III PAS to discuss progress toward transformation objectives and ensure accountability. Focus the Secretary of 1. The Secretary should regularly communicate strategic priorities and Defense’s Time on the progress to the entire Department. Highest Priority Strategic 2. The Secretary should ensure subordinates are aligned and engaged Objectives on the strategic priorities and management focus. 1. The Secretary should adopt a substantive performance management system (developed by the Deputy Secretary) and apply it to every senior PAS and key flag officers as an integral part of managing the Department. 2. The performance system should set clear and specific performance goals and objectives (outcomes sought) for both individuals and organizations, including an annual performance plan for each key senior political appointee. 3. The Deputy Secretary should have regular reviews (at least quarterly) Track Performance to to assess achievements, challenges, risks, and performance (or lack Improve Accountability of it) against plan. 4. The Deputy Secretary should require detailed metrics and the regular progress reporting necessary for success and should require recovery plans where progress falls short. 5. The Deputy Secretary should share successes, best practices and lessons learned across the organization. 6. The Department needs to develop an Executive Dashboard of key financial and performance indicators that, if not fully automated and accessible, would be made available to the Secretary and Deputy Secretary monthly. Not For Release A-6

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CHAPTER 5. ORGANIZING THE DEPARTMENT FOR SUSTAINED CHANGE (Cont.) 1. The Deputy Secretary should create an Executive Committee where the Service Secretaries engage biweekly on the Secretary’s agenda, enabling them to work collectively on assigned enterprise-wide problems. Align the Services and 2. The Secretary should direct the Deputy Secretary to conduct DAFA to the Secretary of quarterly one-on-one performance sessions with the individual Defense’s Priorities Service Secretaries and publicize organizational success within the

Department. 3. The Secretary should direct the Deputy Secretary to conduct semiannual one-on-one performance sessions with key DAFA leadership, utilizing cascaded scorecards. 1. DoD should designate innovation as a core competency in the Department to institutionalize innovation in its culture and promotion criteria. 2. DoD should explicitly integrate innovation and productive internal consultancy into its talent-management practices to signal institutional value and staying power to the field. Organizations must be free to experiment, try different things, and to fail (and then evolve) in their own innovation initiatives. Creating a Business 3. DoD should develop and implement an Innovation Scorecard to Transformation Culture measure progress and hold the Department and its leadership accountable. 4. DoD should designate an entity to support and facilitate efforts to help build the Department’s capacity for innovation through virtual consultancy. Its purpose would not be to dictate or control the process; but rather to assist in the flow of information and ideas between Innovators and current Program Managers. It would help provide “reach back support – tools, best practices, a network, and/or a portal to leadership and external consultancies.

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CHAPTER 6. NECESSITIES FOR A SUCCESSFUL LEGACY 1. The Secretary must clearly convey the existential importance of embracing risk to generate the necessary innovation to realize a return of expanded capability. a. The mandate needs to provide subordinates more ownership of their actions, which stimulates greater determination in carrying out their assignments. Creating a risk taking b. It must allow a great level of flexibility in adapting rapidly to culture to foster changing or fluid situations, dealing with unforeseen innovation problems, and exploiting fleeting opportunities. c. It must encourage initiative and creativity on the part of subordinates to greatly enhance motivation and morale. 2. The Secretary and Deputy must insure individuals who embrace this mandate are protected from the current “zero defect” mentality that more often than not places retribution above innovation. 3. The Deputy Secretary must seek leaders who embrace this mandate for key assignments. 1. Expand the Leading Innovation Program as a signature part of the Defense Innovation Initiative and provide it across the Department. a. Require all 1-star through 3-star flag officers and Senior Executive Service (SES) equivalents to attend a Leading Innovation Program. b. Develop additional venues similar to the Naval Post Graduate School, that offer courses away from military concentrated areas and taps into a wider cross-section of innovative organizations and thinkers. Create a Culture of c. Select a highly capable, dual-role leader and facilitator for each Innovation - 1 location and delegate control of program design to them. d. Assign the Vice Chairman of the Joint Chiefs of Staff and the Service Vice Chiefs the responsibility to select officers and monitor assignment. Selection and timing of participants should be led by the Vice Chairman of the Joint Chiefs of Staff or by vice chiefs of the Services designated to monitor senior officer assignments. e. Assign the Under Secretary of Defense for Personnel and Readiness (USD(P&R)) the responsibility to select and monitor assignments for SES participants for those assigned to the Office of the Secretary of Defense, the Defense Activities and Agencies, and for those filling Service assignments. f. Appoint a Chief Learning Officer to provide overall coordination and to ensure the programs are properly staffed and resourced.

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CHAPTER 6. NECESSITIES FOR A SUCCESSFUL LEGACY (Cont.) 2. Secretary of Defense Corporate Fellows Program (SDCFP). Re-brand the SDCFP as the Secretary of Defense Fellowship (SDF) with personal sponsorship akin to that provided to Presidential Innovation Fellows. Reinvigorate the relationship with the Secretary of Defense, but assign oversight of program to the USD(P&R). a. Redefine the goals of the program to considerably expand it to include government civilians of equivalent career potential. b. Implement a “Fellow for Life” program, including a structured mentoring program to create a network of virtual consultants and trusted advisors (provides quick reach to experts with common experience and language, but diverse perspectives). c. Promote utilization by requiring an external tour to compete for General/ Flag officer or SES selection (legislative and service fellowships, training with industry, etc.). d. Assign USD(P&R) responsibility for establishing a small but capable team to strategically lead and manage the SDF program Create a Culture of and expand the scope to include a wide portfolio of key partners Innovation - 2 while detailing Fellows to partnership building assignments at target companies and organizations. e. Develop SDF promotion guidance supporting external engagement tours like the Fellowship and collaborate with the Joint Staff to identify high-impact billets for Fellowship graduates. f. Direct the Joint Staff to identify and code high-impact billets for SDF graduates. g. Institute a cross-organizational network program to connect external engagement efforts with senior leader advisory groups including Combatant Commanders and Service Chief’s Advisory Groups, Defense Innovation Unit Experimental, the Office of Net Assessment, the Strategic Studies Groups, and Service Fellowships. h. Connect SDF Fellows with existing innovation, technology, academic, and business centers of excellence around the country.

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CHAPTER 6. NECESSITIES FOR A SUCCESSFUL LEGACY (Cont.) 3. External Fellowship Programs. a. Expand ITEP to bring senior experts into the Department for a “reverse Fellowship.” b. Include external Fellows under re-branded SDF to significantly expand the partnering power of the program. c. Deliberately distribute fellows across DoD’s many institutional Create a Culture of and operational elements to serve as advisors and consultants. Innovation - 3 d. Assign traditional industrial base partners to warfighting commands; exposure to operational priorities, challenges, and leaders. e. Assign non-traditional partners to institutional staffs and Defense Agencies to expose them to business processes, challenges, and leaders. 1. The Secretary should direct the USD(P&R) to lead an effort to increasing/improving the capabilities of DoD managers. 2. The USD(P&R) should establish a robust senior level mentoring program across DoD to identify, groom, and manage Department- wide “high-flyer managers” as future senior leaders to accelerate Building a Talent Bench growth of existing and new talent. 3. The Deputy Secretary should establish a program to rotate junior civilian political and career management talent to new assignments every two years (like their military counterparts) and ensure a broad range of experiences to develop their managerial talent.

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FOCUSING TRANSITION 2021 APPENDIX B – LIST OF FIGURES

Chapter 2. WHAT DOES THIS MEAN FOR DoD? Figure 2.1. Mandatory Spending Figure 2.2. Debt Held by the Public (% of GDP) before Covid-19 Figure 2-3. Defense Spending as % of GDP before Covid-19 Figure 2-4. GAO High Risk List for DoD Figure 2-5. Defense-wide Spending FY90 – FY20 Figure 2-6. Size of DoD Infrastructure Figure 2-7. Growth of DAFA 1952-2018 Figure 2-8. Defense-wide Infrastructure Figure 2-9. Industrialized Nations’ % Tooth-to-Tail Ratio

Chapter 3. : REGAINING MANAGERIAL EXPERTISE Figure 3-1. Characteristics of DoD Work Groups

Chapter 4. ITEMS REQUIRING IMMEDIATE ATTENTION Figure 4-1. National Security Issues in the First 270 Days Figure 4-2. DoD Presidential Appointees Bush 43 to Obama Figure 4-3. Brief Comparison of Political and Corporate Transitions Figure 4-4: Deputy Secretary of Defense as an Enhanced COO Figure 4-5. Transition Team Compnents Figure 4-6. Potential Sources for Recruiting Civilian Talent Figure 4-7. Nomination/Confirmation Timelines for Selected PAS Officials

Chapter 5. ORGANIZING THE DEPARTMENT FOR SUSTAINED CHANGE Figure 5-1. DoD Presidentially appointed, Senate-approved Positions Figure 5-2: Total Military Force = Military Personnel and DoD Civilians Figure 5-3: Military Family Members

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APPENDIX C – RELATED DEFENSE BUSINESS BOARD PRODUCTS

FY20-01 - DBB Assessment of the Chief Management Officer (2020) FY19-01 - Defense Acquisition Industry-Government Exchange (2019) FY18-01 - Fully Burdened and Lifecycle Costs of the Workforce (2018) FY17-04 - Implications of Technology on the Future Workforce (2017) FY17-03 - Logistics as a Competitive War Fighting Advantage (2017) FY16-5 - Focusing A Transition - Challenges Facing the New Administration (2016) FY16-04 - Selection of Senior Officials in the Acquisition Workforce (2016) FY16-03 - An Assessment on the Creation of an Under Secretary of Defense for Business Management and Information (2016) FY16-01 - Innovative Culture, Part II: Virtual Consultancies – Engaging Talent (2016) FY15-02 - Fostering an Innovative Culture Through Corporate Engagement and Partnership (2015) FY14-02 - Innovation: Attracting and Retaining the Best of the Private Sector (2014) FY14-01 - Implementing Best Business Practices for Major Business Processes in the Department of Defense (2014) FY13-03 - Applying Best Business Practices from Corporate Performance Management to DoD (2013) FY12-04 - Public-Private Collaboration in the Department of Defense (2012) FY12-01 - Information Technology Modernization (2012) FY11-08 - Corporate Downsizing Applications for DoD (2011) FY11-02 - Strategic Sourcing (2011) FY11-01 - A Culture of Savings: Implementing Behavior Change in DoD (2011) FY10-08 - Enhancing the Department’s Management Capabilities (2010) FY10-05 - Task Group on Assessing the Defense Industrial Base (2005) FY10-02 - Managing DoD Under Sustained Topline Pressures (2010) Reducing Overhead and Improving Business Operations (2010) FY09-4 - Focusing A Transition (2008) FY08-4 - Strengthening the DoD Enterprise Governance (2008) FY08-2 - Task Group Report on Tooth-to-Tail Analysis (2008) FY08-1 - Engaging U.S. Business in Support of National Security Objectives Task Group Report (2008) FY06-2 - Governance - Alignment and Configuration of Business Activities (2006) FY05-3 - Performance-Based Management Task Group (2005) FY05-2 - Business Management Modernization Program Task Group (2005) FY03-9 - Task Group on Increasing Diversity in DoD's Flag And Senior Executive Ranks (2004) FY03-7 - Next Steps on DoD Core Competency Review Task Group (2003) FY03-6 - Working Capital Fund Task Group (2003) FY03-4 - Supply Chain/Performance-Based Logistics Task Group (2003) FY03-3 - TRANSCOM-DLA Task Group (2003) FY03-2 - MBA Recruitment Task Group (2003) FY02-1 - Human Resources Task Group: Transforming Human Capital Management in the Defense Department’s Civilian Workforce (2002) FY02-1 - Human Resources Task Group: Human Resources IT Integration (2002)

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APPENDIX D – BIOGRAPHIES - DEFENSE BUSINESS BOARD MEMBERS

Michael Bayer, Chairman President and CEO, Dumbarton Strategies

Michael is the President of Dumbarton Strategies, LLC. He provides strategic advice informed by deep technical and geopolitical context to clients in the United States and Europe on matters of national security, aerospace, and energy.

He also serves as corporate director on the Boards of BEI Sensors, Waste Control Specialists, Inc., Beretta Holdings and NorthStar Group Services. His past director positions include Sprint Energy Services, APITech, ATAC, DOSS Aviation, EG&G, Duratek, Athena, Stratos Global, Dyncorp International, and Vangent Holding Corp.

The highest levels of government have frequently called upon Michael for his thoughtful analysis and sound advice. In 2019, Michael led the Navy’s Cybersecurity Readiness Review which illuminated organizational and management gaps that exposed the Navy’s and other Military Services’ most crucial capabilities to cyber threats. In 2018, after the tragic loss of life in the collisions of U.S.S. Fitzgerald and later, the U.S.S. McCain, Michael led the Navy’s Strategic Readiness Review which identified the leadership and institutional changes necessary to prevent future tragedies.

Michael has decades of service on government advisory boards. He is the Chairman of the Defense Business Board, an advisory resource for the Secretary of Defense comprised of corporate executives and other C-suite leaders who bring outside perspectives to the Department’s toughest management challenges. Michael is also a long-serving member of the Defense Science Board, which advises the Department on a wide-range of science and technology matters. Additionally, Michael serves on the Executive Committee of the National Defense Industrial Association, one of the top three major defense trade associations.

Michael’s previous advisory service includes; the Chief of Naval Operations Executive Panel, the Business Executives for National Security Advisory Board, the Sandia Laboratory’s National Security Advisory Panel, the Board of Visitors of the U.S. Military Academy, the Army Science Board (Chairman), the Naval War College Board of Visitors, the Secretary of the Air Force’s Advisory Group (Chairman), the Nuclear Weapons External Advisory Panel, and the U.S. European Command, Senior Advisory Group.

Michael holds a Juris Doctor in Law, a Masters of Business Administration, and a Bachelor of Science in International Economics.

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FOCUSING TRANSITION 2021 Steve Blank Adjunct Profess or, Engineering School at Stanford

Steve Blank is a Silicon Valley entrepreneur based in Pescadero, California, who spent the first two decades of this career as an executive then founder of eight technology startups, in enterprise software, semiconductors, supercomputers, consumer electronics, high performance graphics, video games and military intelligence.

Today, Mr. Blank is an Adjunct Professor at Stanford in the Engineering School and is a Senior Fellow of Innovation at Columbia University. He teaches Innovation, Entreprenuership and Lean Methodologies. His books on innovation (The Four Steps to the Epiphany and the Startup Owners Manual) has been credited with creating modern entrepreneurship methodologies.

Partnering with the National Science Foundation he developed the curriculum for commercializing research in the U.S. called the Innovation Corps (I-Corps), and later developed versions for the NIH and ARPA-E. The classes are now taught in 98 schools in the U.S.

Later, he worked with the National Security Agency to develop a version - I-Corps@NSA - for the intelligence community.

His next class - Hacking for Defense - allowed students in universities to work on real DoD problems and deliver solutions. With the support of DIU it is now offered in 30 universities.

Mr. Blank served in the U.S. Air Force 1972-1976, and was a public official in California serving on the Coastal Commission from 2007-2013.

Mr. Blank is known amongst entrepreneurs and students as one of "The Godfathers of Silicon Valley" His books, blog, and interviews are often referred to or featured in world news publications such as Reuters, the New York Times, Forbes, Inc., TechCrunch and The Wall Street Journal. Mr. Blank has hosted numerous sold-out speaking events and conferences about entrepreneurship and the customer development methodology.

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FOCUSING TRANSITION 2021 Christopher Burnham Chairman & CEO, Cambridge Global Capital

Mr. Burnham is the Chairman and Chief Executive Officer of Cambridge Global Capital, LLC, headquartered in Washington, D.C. He co-founded Cambridge after a distinguished career in government, diplomacy, banking, and private equity. He has served as Under Secretary General for Management of the United Nations, Under Secretary of State for Management (acting), Assistant Secretary of State for Resource Management and Chief Financial Officer of the U.S. Department of State, Treasurer of the State of Connecticut, and a three-term Member of the Connecticut House of Representatives where he was elected by his colleagues as Assistant Minority Leader after only one-term.

Mr. Burnham led reforms of the Connecticut Treasury including turning around the worst preforming state pension system in the nation, eliminating the $7 billion unfunded liability within the Connecticut workers compensation system, and modernization of the financial and reporting systems.

From 2006 to December 2012, Mr. Burnham was the Vice Chairman and Managing Director of Deutsche Asset Management where he co-founded and led Deutsche Bank’s direct private equity group, RREEF Capital Partners, the bank’s reentry into private equity after an eight-year absence. He also chaired Deutsche Bank’s asset management governance committee in Germany. Mr. Burnham is a globally recognized expert in the implementation of accountability and transparency, and the implementation of best practice in government, corporations, and inter-governmental organizations. Earlier in his career he worked as an investment banker in the public power and corporate group of First Boston, and at Advest.

A combat veteran of the United States Marine Corps (Reserve) who retired at the rank of Lieutenant Colonel, Mr. Burnham volunteered for active duty in 1990 and served as an infantry platoon commander in the Gulf War. He and his men were part of the lead Allied forces to reach and liberate Kuwait City.

Mr. Burnham studied national security policy at Georgetown’s National Security Studies Program, and is a graduate of Washington and Lee University, and Harvard University, where he earned an M.P.A. in 1990.

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Paul Dolan President, ATS Airframe Services

Paul Dolan is President, ATS Airframe Services. ATS provides a portfolio of complementary aviation related services worldwide, including airframe maintenance, component repair, asset management, replacement parts and engineering.

Paul joined ATS in February 2016. Prior to ATS, Paul served in several leadership positions with Chromalloy Gas Turbine, LLC, a portfolio company of THE CARLYE GROUP.

Paul served nine years in the U.S. Navy as an F/A-18 Strike Fighter Pilot and flew multiple missions in support of Operation Southern Watch in the Persian Gulf.

He holds an MBA from the Marshall School of Business at the University of Southern California, a M.S. in Aeronautical Engineering from the Georgia Institute of Technology, and a B.S. with distinction in Mechanical Engineering from the U.S. Naval Academy. Paul serves as a member of the Executive Council for Greater Seattle Partners and as Chair of the Executive Committee for the Economic Alliance of Snohomish County. Both organizations focus on Economic Development in the greater Seattle area.

Paul is a member of the DoD Defense Business Board providing private industry perspective and advice to the Secretary of Defense on business reform matters.

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FOCUSING TRANSITION 2021 Scott Dorn President, Dorn Consulting LLC

Scott is a native of Souderton, PA and graduated from Kutztown University in Kutztown, PA in 1979 with a B.S. in Business Administration. Upon graduation, he joined FMC Corporation’s Material Handling Division in their Sales Engineering Training Program. In 1983, he joined GE’s Customer Service & Distribution Operation overseeing facility operations in the Philadelphia region.

Scott worked for GE for more than 31 years. During his tenure he rose to the position of Managing Director, Global Operations Properties. In this role, Scott had responsibility for GE’s Real Estate Operation, Construction Project Services, Corporate Facility Operations and various other Support Services functions.

Scott and his team were responsible for providing strategic and tactical real estate solutions for GE’s businesses with more than 4,000 locations globally. Additionally, his team had operational responsibility for GE’s corporate headquarters’ buildings, and more than 250 pooled facilities globally.

Scott retired from GE in April 2014. He started Dorn Consulting in 2015 supporting Fortune 500 companies globally in transforming and streamlining real estate and facilities portfolios and organizations.

Scott has been a member of Kutztown University Foundation Board since October of 2014. He is currently the Vice President of the Board and serves on the Real Estate/Properties and Investment committees. He also serves on the Business School Advisory Board. He is a member of the International Facilities Management Association (IFMA), and CoreNet. Over the years, he has been a featured speaker and panelist on a variety of real estate and property topics.

Scott has been a PIAA high school wrestling official for more than 32 years. He has officiated numerous district, regional, state and national tournaments.

Scott, his wife, Debbie, and daughters, Rachael, Nichole and Kaitlyn have resided in Audubon, PA since 1997. His oldest daughter, Lauren resides in Oley, PA with her family.

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FOCUSING TRANSITION 2021 Christopher Gopal Strategic Advisor, Owen CX Group

Dr. Gopal has over 35 years of experience in global supply chain and operations strategy, execution, and technology in a career that has encompassed industry executive management and consulting. His experience has focused on innovating, structuring, improving, and managing supply chain operations, business processes, services, and technology use for leading global companies.

In the services arena, Dr. Gopal has built and run world-class professional services and consulting practices for major companies, consulted in supply chain strategy, management and technology with leading global companies, and has developed technology solutions, innovative new services in accelerated strategy and process design, and executive education programs for both large global and small companies.

Dr. Gopal has held executive positions at several leading companies, including VP, World Wide Operations and Services at Overland Storage, VP in World-Wide Operations at Dell Computer, Partner & Director of Global Supply Chain & Operations services at Ernst & Young Consulting, as well as executive VP positions at Unisys and SAIC. His consulting clients have included prominent global companies across a range of industries, and he has served as an executive and consultant for several major companies and consultancies.

Dr. Gopal is a recognized thought leader in the field of global supply chain & operations. He is the co- author of three books, the latest being "Supercharging Supply Chains: Creating Shareholder Value through Operations Excellence" John Wiley & Sons; (Now published in Japanese), has authored several articles and is an invited speaker at numerous international business conferences for Business Week, Defense Logistics Agency, the Harvard Business Review, the Milken Institute Global Forum and the Council for Supply Chain Management Professionals, among others. He has been nominated to the SC Digest 2020 “Supply Chain Gurus” panel, and was also a member of the 2015-2019 panels.

Dr. Gopal currently is a strategic advisor to OCX Cognition, a company that consults and develops software to integrate and organize the Integrated Supply Chain and Customer Life Cycle Experience. Chris consults with companies in supply chain & operations, risk mitigation, e-business, technology and solutions development. He teaches at the University of California San Diego and the University of Southern California. Chris serves on the Advisory Board of the Global Supply Chain Management Center at the University of Southern California.

Mr. Gopal holds a Ph.D. in Business from the University of Southern California, an MBA from the Cranfield School of Management, UK, and a B.Sc. in Physics, Science and Mathematics from Bangalore University, India.

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FOCUSING TRANSITION 2021 Paul Madera Managing Director, Meritech Capital Partners

Paul Madera is a graduate of the USAF Academy and is currently Managing Director at Meritech Capital Partners, a $3.1 billion venture capital fund he co-founded in 1999. He currently invests in private technology companies in the SaaS, storage, e-commerce, financial, and medical device sectors.

He began his career in finance as an investment banker with Morgan Stanley & Co. in New York. Before entering the private sector, he served in the United States Air Force as an F-16 Instructor Pilot based in South Korea, Spain, and Utah. He also spent a tour at the Pentagon as a member of the Air Force Liaison Office where he interfaced with Senate and House Armed Services Committees.

Paul holds an M.B.A. from the Stanford Graduate School of Business and B.S. in Political Science from United States Air Force Academy.

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FOCUSING TRANSITION 2021 Michael McCloskey CEO, Select Milk Producers

Mike McCloskey is Co-Founder and CEO of Select Milk Producers, the sixth largest milk cooperative in the country. He is also Chairman of the Board for Fair Oaks Farms, the nation’s largest agritourism destination located in Northwest Indiana. Dr. McCloskey’s home dairy is Prairie’s Edge Dairy Farms, also in Northwest Indiana, which milks 15,000 cows living in free- stall barns and is recognized as being the leading sustainable dairy in the U.S. from many perspectives. Prairie’s Edge Dairy Farms harvest their cow manure and through digesters create more than enough electricity to power all of their farms as well as creating bio-based CNG to fuel 42 milk trucks and thus displacing 2 million gallons of diesel use annually. Prairie’s Edge Dairy Farms opened one of the largest and most state of the art robotic milking dairy farms in the world in February of 2019.

Dr. McCloskey has been instrumental in creating proprietary value-added dairy products, patented milk processing & dispensing systems which have led to the creation of fairlife, a dairy-based health and wellness company, which is now solely owned by The Coca Cola Company. fairlife’s products range from fairlife milk, a higher protein, lower sugar, lactose free milk targeted to families to Core Power, a specially formulated athletic drink to Greek yogurt to food service products. Dr. McCloskey now serves as Chairman of the Board of the fairlife company.

Dr. McCloskey founded and serves as the acting Chairman of Southwest Cheese Company, a joint venture between Glanbia Foods, Dairy Farmers of America and Select Milk Producers. In 2005, Southwest Cheese Company opened as $230 million cheese plant located in Clovis, New Mexico. It employs 260 people, receives 10 million pounds of milk per day and annually produces 250 million pounds of cheese. It is the largest cheddar cheese plant in the world.

Dr. McCloskey was awarded his Doctorate of Veterinary Medicine in 1976 from the University of Mexico, after which he completed a two year post-doctoral residency in Dairy Production Medicine at the University of California, School of Veterinary Medicine, in Davis, California. He is still the only Resident to have received the Resident of the Year Award for two consecutive years. Mike was also awarded an honorary Doctorate in Business by the Graziadio School of Business at Pepperdine University for his leadership and business acumen.

Dr. McCloskey is a Board Member and Officer of the National Milk Producers Federation, Chairman of the Sustainability Initiative of the Innovation Center of US Dairy, and is the recipient of the Alumni Achievement Award from the University of California School of Veterinary Medicine.

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FOCUSING TRANSITION 2021 John O’Connor Chairman, J.H. Whitney Investment Management, LLC

Mr. John O’Connor is Chairman and Chief Executive Officer of J.H. Whitney Investment Management, LLC (an alternative investment firm), a position he has held since January 2005, and Chief Executive Officer of Whitney Strategic Services, LLC (a provider of global economic advisory services to the US Department of Defense).

From January 2009 through March 2011, he served as Chief Executive Officer of Tactronics Holdings, LLC (a Whitney Capital Partners portfolio holding company that provided tactical integrated electronic systems to U.S. and foreign military customers as well as the composite armor solutions for military vehicles through its Armostruxx division).

Previously, Mr. O’Connor was Chairman of JP Morgan Alternative Asset Management, Inc. (part of the investment manager arm of JP Morgan) and an Executive Partner of JP Morgan Partners (a private equity firm). He was also a member of the Risk Management Committee of JP Morgan Chase, which was responsible for policy formulation and oversight of all market and credit risk taking activities globally.

Mr. O’Connor earned a bachelor’s degree in economics from Tulane University and a master’s degree in business administration from Columbia University Graduate School of Business.

Mr. O’Connor is a member of the Board of Directors at Boon Logic, Inc. (a privately held developer of real-time unsupervised machine learning solutions), Sequoia Holdings Inc. (a provider of engineering and cloud orchestration services to the national security sector). He also serves on the advisory boards of American Friends of the Clock Tower Fund, Avenue Impact Strategies, Chart National Capital, Global Guardian, LLC, Grayson-Jockey Club Research Foundation and New York Green Bank.

Mr. O’Connor is also Chairman of the American Friends of the Clock Tower Fund and Treasurer of the UK Game Conservancy and Wildlife Trust. Olin director since January 2006; he is a member of the Audit Committee and the Directors and Corporate Governance Committee.

Mr. O’Connor serves as a member of the Department of Defense Business Board.

Mr. O’Connor’s hedge fund, investment banking and National Security experience allow him to contribute broad financial and global expertise

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FOCUSING TRANSITION 2021

Dina Powell McCormick Goldman Sachs

Dina Powell McCormick serves on the Management Committee at Goldman Sachs. She rejoined Goldman Sachs in 2018 as a partner in the Investment Banking Division.

Prior to rejoining the firm, Dina served as U.S. Deputy National Security Advisor for Strategy to President Donald Trump from 2017 to 2018. She was also an Assistant to the President and Senior Counselor for Economic Initiatives.

Dina initially joined the Goldman Sachs in 2007 as a managing director and was named partner in 2010. During her 10 years at the firm, she led the Impact Investing business and the Environmental Markets Group, which creates market-based opportunities and solutions to drive sustainable economic development and environmental progress. As head of the Impact Investing business, she was responsible for deploying more than $5 billion in loans and equity investments to revitalize under-served communities.

Dina was also president of The Goldman Sachs Foundation, overseeing the firm’s programs to drive economic growth and opportunity. Dina developed two major initiatives: “10,000 Women” and “10,000 Small Businesses” - programs that provide business education and access to capital to women and small businesses, respectively. She also led the firm’s employee engagement platform, including Goldman Sachs Gives, a donor-advised fund that supports nonprofit organizations.

Earlier in her career, Dina served in the President George W. Bush administration as Assistant Secretary of State for Educational and Cultural Affairs, Deputy Undersecretary of State for Public Affairs and Public Diplomacy, and as an Assistant to the President for Presidential Personnel.

Since 2018, Dina has been a member of the DoD Defense Business Board providing private industry perspective and advice to the Secretary of Defense on business reform matters.

Dina graduated from the University of Texas with honors with a bachelor's degree in Humanities from its College of Liberal Arts. She is currently a non-resident Senior Fellow at the Future of Diplomacy Project at Harvard Kennedy School’s Belfer Center for Science and International Affairs.

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FOCUSING TRANSITION 2021 Arnold Punaro Major General, U.S. Marine Corps, (Retired) CEO, The Punaro Group, LLC

Arnold Punaro is chief executive officer of The Punaro Group, LLC, a Washington-based firm he founded in 2010 specializing in federal budget and market analysis, business strategy and capture, acquisition due diligence, government relations, communications, sensitive operations, business risk analysis and compliance, and crisis management. He consults for a broad array of Fortune 100 companies and has been recognized by Defense News as one of the 100 most influential individuals in U.S. Defense.

In November 2015, Mr. Punaro completed a four-year term, first as Vice- Chairman, then as Chairman of the National Defense Industrial Association, the country’s largest defense industry association with over 1,700 corporate and 90,000 individual members. As NDIA Chairman Emeritus, he served as Chair of the Nominating and Governance Committee from 2015 to 2018. He began a new two-year term as Vice-Chairman in October 2018 and will serve again as Chairman beginning in October 2020.

He is Chairman of the Reserve Forces Policy Board, which serves as an independent advisor to the Secretary of Defense on Reserve and National Guard matters.

He served on the Defense Business Board (DBB) as a founding member at its inception in 2002 until 2013. He resumed serving on the DBB in 2015. From 2005 to 2008, he was the Chairman of the Independent Commission on the National Guard and Reserves. He also served as a task force member for the U.S. Special Envoy for Middle East Regional Security in 2008, a Commissioner on the Independent Commission on the Iraqi Security Force in 2007, Deputy Executive Director of the U.S. Commission on National Security/21st Century from 1998 to 2001, and chaired the Defense Reform Task Force for Secretary of Defense William Cohen in 1997.

He has a Masters of Arts degree from the University of Georgia and a Masters of Arts degree from Georgetown University, the latter in national security studies. He was on the Adjunct Faculty of the Walsh School of Foreign Service at Georgetown University for ten years where he taught an annual graduate level course entitled "National Security Decision Making."

He is the author of the book, On War and Politics: The Battlefield Inside Washington’s Beltway that was published by the Naval Institute Press in October 2016. He is completing his second book, The Ever- Shrinking Fighting Force, to be published in spring 2020.

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FOCUSING TRANSITION 2021 Kiron Skinner Taube Professor of International Relations & Politics Carnegie Mellon University

Kiron Skinner is the Taube Professor of International Relations and Politics and a member of the Artificial Intelligence faculty community at Carnegie Mellon University (CMU). She is the W. Glenn Campbell Research Fellow at Stanford University’s Hoover Institution and a Visiting Fellow at the Heritage Foundation. She is the author/editor of seven books, two of which (Reagan, In His Own Hand and Reagan, A Life in Letters) were New York Times best sellers. The Strategy of Campaigning: Lessons from Ronald Reagan and Boris Yeltsin, coauthored with Serhiy Kudelia, Bruce Bueno de Mesquita, and Condoleezza Rice, was excerpted on the opinion page of the New York Times on September 15, 2007.

Professor Skinner was the Director of the Office of Policy Planning at the U.S. Department of State and Senior Advisor to the Secretary of State from September 2018 to August 2019. As Director, she reengaged the Department in red-team exercises on regional conflicts and fostered transatlantic partnerships through numerous strategic dialogues, including the first-ever Policy Planners Summit for NATO, held in April 2019.

At various points in the past twenty years, Professor Skinner has served on the US Defense Department’s Defense Policy Board, the Chief of Naval Operations’ Executive Panel, the National Academies’ Committee on Behavioral and Social Science Research to Improve Intelligence Analysis for National Security, and the National Security Education Board.

Professor Skinner holds MA and PhD degrees in political science from Harvard University and undergraduate degrees from Spelman College and Sacramento City College. She has an honorary doctor of laws degree from Molloy College, Long Island.

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FOCUSING TRANSITION 2021 David Van Slyke Dean of the Maxwell School of Citizenship and Public Affairs at Syracuse University

David M. Van Slyke is Dean of the Maxwell School of Citizenship and Public Affairs at Syracuse University and the Louis A. Bantle Chair in Business- Government Policy. Prior to becoming Dean in July 2016, Mr. Van Slyke was Associate Dean and Chair of Maxwell’s department of public administration and international affairs, home to the country’s #1 ranked graduate degree in public affairs. He is a tenured, full professor of the Maxwell School and the College of Arts and Sciences and a two-time recipient of the Birkhead- Burkhead Award and Professorship for Teaching Excellence.

Mr. Van Slyke is a leading international expert on public-private partnerships, public sector contracting and contract management, and policy implementation. He is Director and Fellow of the National Academy of Public Administration, a co-editor of the Journal of Public Administration Research and Theory and the Journal of Strategic Contracting and Negotiation. He also sits on the editorial boards of several top-ranked public affairs journals. He has provided expert guidance to the Office of Management and Budget, the Government Accountability Office, the U.S. Coast Guard, and the World Bank. As part of his work and research he has worked extensively with senior leaders in government, nonprofit and business organizations in China, India, Peru, Singapore, Thailand and many other countries through the Maxwell School’s Executive Education program.

Mr. Van Slyke’s most recent book, Complex Contracting: Government Purchasing in the Wake of the U.S. Coast Guard's Deepwater Program (Cambridge University Press, 2013) is the recipient of the American Society for Public Administration Section on Research Best Book Award for 2014 and honorable mention for the Public and Nonprofit Section of the Academy of Management best book award for 2016. He is winner of the 2015 Distinguished Alumnus in Public Administration and Policy award from the Rockefeller College of Public Affairs and Policy and the 2007 Beryl Radin Award for Best Article published in the Journal of Public Administration Research and Theory.

Mr. Van Slyke earned a Ph.D. in public administration and policy from the Rockefeller College of Public Affairs and Policy at the University at Albany, State University of New York. Prior to becoming an academic, he worked in the private, public and nonprofit sectors.

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FOCUSING TRANSITION 2021 Atul Vashistha Founder & Chairman, Neo Group

Recognized internationally as one of the leading experts on global business services, sourcing and risk, Atul was named to Consulting Magazine’s “Top 25 Most Influential Consultants” and “Top 6 IT Powerbrokers.” Globalization Today recognized Atul as an “Industry Most Influential Powerhouse 25,” and Near Shore Americas recognized him as one of the “Power 50.” In 2018, Atul was inducted into the prestigious IAOP Hall of Fame and named one of the “Top 10 CEOs of the Year” by Industry Era Magazine for 2019. Shared Assessments recognized Atul in 2018 with its Evangelist Award. NeoGroup, a company founded by Atul in 1999, was recognized by IAOP in 2019 as a “Best of the World’s Best Outsourcing Advisor”. Additionally, in 2019, Enterprise Security Magazine recognized Supply Wisdom, also founded by Atul, as a “Top 10 Risk Management Service Provider”. Atul is the author of three books: Globalization Wisdom, Outsourcing Wisdom and The Offshore Nation.

Media and Wall Street analysts at CNN, ABC, CNBC, Wells Fargo, Goldman Sachs, Fortune, Forbes, Business Week, Wall Street Journal, Investor’s Business Daily, Economist, CIO, CFO and other global organizations seek Atul’s expert opinion. Atul continues to be a vocal proponent of globalization and has taken on the critics, such as Lou Dobbs, on his former “Exporting America” segment on CNN. He is also a frequent contributor to magazines such as Fortune, CFO, WSJ, and Business Finance. Atul writes ongoing columns for Global Business Services.

Atul also serves on the Boards of Zemoga, LatAm Council, Shared Assessments, and IAOP as a founding member. Atul is a Former Chair of YPO Norcal and is a current YPO Gold Suncoast member. He also supports numerous economic and youth development and corporate social responsibility initiatives such as Echoing Green, World Education Foundation, One Girl and Jnana Mandira. Neo celebrated its 20th year in business in May of 2019.

Atul and his firms are redefining how nations, corporations and individuals can leverage the globalization of talent and automation mega-trends to build better futures for all.

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FOCUSING TRANSITION 2021

David Venlet Vice Admiral, U. S. Navy (Retired) President Chemring Sensors and Electronic Systems

David is President of Chemring Sensors and Electronic Systems. He serves as a proxy board member and Government Security Committee Chairman for Top Aces Corp, providing modern adversary air training for US military Services, and is a member of the Defense Business Board advising the US Se cretary of Defense. David is also a board member of the non-profit Jill’s House that provides respite care for children with intellectual disabilities. In his acquisition career on active duty he managed the largest and most complex defense procurement program, the F-35 Joint Strike Fighter. Asked to lead the program when it was facing possible cancellation by Congress he worked with a joint government and industry team that stabilized performance in test and production. With transparency and realism in high-risk communications, he restored trust in the program by the US and numerous partner nations.

He led a 24,000 person $30B organization, Naval Air Systems Command, providing engineering, test, logistics, contracting, financial and program management support for Department of the Navy aviation acquisition. NAVAIR provided sustainment for over 3,000 aircraft and unmanned vehicles, enabling global aviation operations by the Navy and Marine Corps.

David is a retired Vice Admiral, U.S. Navy. He led large complex organizations and programs at the executive management level for 10 years as a flag officer. His career in defense acquisition covered 22 years and he flew F-14 Tomcats in fleet operations.

He is a graduate of the U.S. Naval Academy, Naval Postgraduate School and US Naval Test Pilot School. David is a member of the National Association of Corporate Directors, the Society of Experimental Test Pilots and in 2018 completed the MIT certificate course in Architecture and Systems Engineering.

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FOCUSING TRANSITION 2021 David Walker Distinguished Visiting Professor (Crowe Chair) - USNA Former U.S. Comptroller General

Mr. Walker is currently the Distinguished Visiting Professor (William J. Crowe Chair) at the U.S. Naval Academy where he teaches the Economics of National Security. Previously, he served as a Senior Strategic Advisor for PwC’s Public Sector Practice (now Guidehouse). Mr. Walker was the Founder, President and CEO of the Comeback America Initiative (CAI). He promotes fiscal responsibility and sustainability by engaging the public and assisting key policymakers on a non-partisan basis to help achieve solutions to America’s federal, state and local fiscal imbalances.

Prior to founding CAI, Mr. Walker served as the first President and CEO of the Peter G. Peterson Foundation that promotes fiscal responsibility. He served as the seventh Comptroller General of the United States and head of the U.S. Government Accountability Office (GAO) for almost ten years (1998- 2008). Mr. Walker’s appointment as Comptroller General was one of his three presidential appointments each by different Presidents (i.e., Reagan, Bush 41, and Clinton) during his 16 years of total federal service. He has over 20 years of private sector experience, including approximately 10 years as a Partner and Global Managing Director of the Human Capital Services Practice for Arthur Andersen LLP. His initial private sector experience was with Price Waterhouse & Co., Coopers & Lybrand and Source Services Corporation.

Mr. Walker is a non-practicing CPA who has a B.S. in Accounting from Jacksonville University, an SMG Certificate from the JFK School of Government at Harvard University, a Capstone Certificate from the National War College, and four honorary doctorate degrees from American University, Bryant University, Jacksonville University and Lincoln Memorial University. He has won numerous national and international leadership, professional, and public service awards, including top awards from two heads of state (i.e., Austria and Indonesia) and two U.S. Cabinet Secretaries (i.e., Defense and Labor), the top award for his CPA profession (i.e., AICPA Gold Medal), and the first and only Alexander Hamilton Award for economic and fiscal policy leadership from the Center for the Study of the Presidency and the Congress.

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FOCUSING TRANSITION 2021 Maggie Wilderotter

Maggie Wilderotter is a seasoned executive who, as CEO, has led both Fortune 500 companies and start-ups in her career. In addition, she has extensive Board leadership serving on over 35 public company and 14 private company Boards of Directors.

Today, Mrs. Wilderotter serves on the public boards of Costco Wholesale Corporation, Hewlett Packard Enterprise, Cadence Design Systems, Lyft and is Board Chair at DocuSign. She serves on the private board of Tanium as well as a number of non-profit organizations. Mrs. Wilderotter is also a Senior Advisor to the Blackstone Group, Okta, and Atairos Private Equity.

Mrs. Wilderotter was Chief Executive Officer of Frontier Communications from November, 2004 to April, 2015, and then Executive Chairman of the company until April, 2016. During her tenure with Frontier, the company grew from a regional telephone company with customer revenues of less than $1 billion to a national broadband, voice and video provider with operations in 29 states and annualized revenues in excess of $10 billion.

Previously, Mrs. Wilderotter was Senior Vice President of Global Business Strategy and ran the Worldwide Public Sector at Microsoft. Before this, she was President and CEO of Wink Communications Inc., Executive Vice President of National Operations for AT&T Wireless Services Inc., Chief Executive Officer of AT&T's Aviation Communications Division, and a Senior Vice President of McCaw Cellular Communications Inc.

Mrs. Wilderotter previously served on the President's National Security Telecommunications Advisory Committee (NSTAC) as both Vice Chairman and Chairman during her 4-year tenure ending in 2014. Mrs. Wilderotter also served until January, 2017 on the President’s special Commission responsible for a recommendation report to the new President of the United States on Enhancing National Cybersecurity. Mrs. Wilderotter holds a bachelor's degree in economics from the College of the Holy Cross. She has been awarded an Honorary Doctor of Engineering degree from the Stevens Institute of Technology and an Honorary Doctor of Laws degree from the University of Rochester.

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Defense Business Board 1155 Defense Pentagon Room 5B1088A Washington, DC 20301-1155 571-256-0835

http://dbb.defense.gov/

Jennifer S. Hill, Executive Director Webster E. Bridges, Deputy Director Steven M. Cruddas, Office Manager