Getting Acquisition Right

GETTING DEFENSE ACQUISITION RIGHT The Honorable Frank Kendall Published by the Defense Acquisition University Press Fort Belvoir, Virginia Table of Contents viii Acknowledgments 1 Introduction 3 Chapter One: Getting Policy Right 39 Chapter Two: Building Professionalism in the Acquisition Workforce 65 Chapter Three: Managing Technical Complexity 93 Chapter Four: Working With Industry 127 Chapter Five: Responding to External Forces and Events 179 Chapter Six: Measuring Progress in Improving Acquisition 203 Conclusion i Getting Defense Acquisition Right Articles From Defense AT&L Magazine 10 “Better Buying Power Principles—What Are They?,” January-February 2016 15 “Original Better Buying Power—David Packard Acquisition Rules 1971,” May-June 2013 21 “The Challenges We Face—And How We Will Meet Them,” November-December 2012 25 “Innovation in the Defense Acquisition Enterprise,” November-December 2015 32 “Real Acquisition Reform (or Improvement) Must Come From Within,” May-June 2016 41 “What Does It Mean To Be ‘a Defense Acquisition Professional’?,” March-April 2014 44 “Ethics and Acquisition Professionalism—It Is All About Trust,” September-October 2014 49 “Program Manager Assessments—Professionalism Personified,” July-August 2015 53 “Improving Acquisition From Within—Suggestions From Our PEOs,” July-August 2016 62 “What Really Matters In Defense Acquisition,” January-February 2016 71 “The Optimal Program Structure,” July-August 2012 73 “Risk and Risk Mitigation—Don’t Be a Spectator,” January-February 2015 79 “The Trouble With TRLs (With Thanks to Gene Roddenberry and David Gerrold),” September-October 2013 89 “Manufacturing Innovation and Technological Superiority,” September-October 2016 100 “Our Relationship With Industry,” November-December 2013 104 “Use of Fixed-Price Incentive Firm (FPIF) Contracts in Develop ment and Production,” March-April, 2013 109 “DoD Use of Commercial Acquisition Practices—When They Apply and When They Do Not,” September-October 2015 ii Table of Contents 114 “Tying Profit to Performance—A Valuable Tool, But Use With Good Judgment,” May-June 2015 121 “Getting ‘Best Value’ For the Warfighter and the Taxpayer,” March-April 2015 142 “Moving Forward,” January-February 2013 144 “What Lies Ahead,” July-August 2013 149 “Protecting the Future,” May-June 2014 153 “Technological Superiority and Better Buying Power 3.0,” November-December 2014 156 “Our Theme for 2016—Sustaining Momentum,” March-April 2016 174 “When and When Not to Accelerate Acquisitions,” November-December 2016 189 “Better Buying Power—A Progress Assessment,” July-August 2014 207 “Adventures in Defense Acquisition,” January-February 2017 Article from The ITEA Journal 82 “Perspectives on Developmental Test and Evaluation,” March 2013 Figures and Tables 6 Figure 1. Better Buying Power 1.0 6 Figure 2. Better Buying Power 2.0 7 Figure 3. Better Buying Power 3.0 179 Figure 4. Contract Cost Growth on Highest Risk (Major) Programs 181 Figure 5. Profits of the Six Largest DoD Primes 182 Figure 6. Percent of Major Programs With Cost Reductions 183 Figure 7. Major Programs Crossing Critical Congressional Cost-Growth Thresholds iii Getting Defense Acquisition Right 184 Table 1. Root Causes for Major Programs Crossing Critical Con gressional Cost-Growth Thresholds or Other Major Problems 185 Figure 8. Planned Length of Active Development Contracts for Major Programs 186 Figure 9. Planned Major Information System Development Time 186 Figure 10. Contract Schedule Growth on Highest Risk (Major) Program 187 Figure 11. Cost Growth on Highest Risk (Major) Programs Started in Different Budget Climates E-mails, Correspondence and Statements 4 Under Secretary Frank Kendall’s Memorandum for the Acquisi tion Workforce, Jan. 7, 2015 67 Kendall E-Mail about 2016 Program Executive Officer Assessment 96 Kendall Statement on Consolidation in the Defense Industry, Sep tember 30, 2015 97 Joint Statement of the Department of Justice and the Federal Trade Commission on Preserving Competition in the Defense Industry, autumn of 2015 128 Kendall letter to Senator John McCain, June 13, 2014 133 Kendall Memorandum on “Department of Defense Management of Unobligated Funds; Obligated Rate Tenets,” September 10, 2012 136 Kendall E-Mail to Acquisition, Technology, and Logistics person nel titled “Guidance During FY13 Sequestration and Furloughs,” July 9, 2013 163 Kendall Letter to Service Secretaries and Chiefs on Defense Ac quisition 200 Foreword from the Fourth Annual Report on the Performance of the Defense Acquisition System, October 24, 2016 iv Dedicated to all the professionals, in the military, government, and industry, who create and sustain the products our military depends upon to keep us free and secure, And to Beth, Scott, Eric, and James, for the sacrifices they have made so that I could make my very limited contributions to that effort. v Getting Defense Acquisition Right FRANK KENDALL Under Secretary of Defense for Acquisition, Technology, and Logistics Frank Kendall was confirmed by the U.S. Senate in May 2012 as the Under Secretary of Defense for Ac quisition, Technology, and Logis tics. In that position, he has been responsible to the Secretary of De fense for all matters pertaining to acquisition; research and engineer ing; developmental testing; contract administration; logistics and mate riel readiness; installations and environment; operational energy; chemi cal, biological, and nuclear weapons; the acquisition workforce; and the de fense industrial base. He is the leader of the Department of Defense (DoD) efforts to increase the DoD’s buying power and improve the performance of the defense acquisition enterprise. Prior to this appointment, he served from March 2010–May 2012 as the Principal Deputy Under Secretary and also as the Acting Under Secretary. Mr. Kendall has more than 45 years of experience in engineering, manage ment, defense acquisition, and national security affairs in private industry, government, and the military. He has been a consultant to defense indus try firms, nonprofit research organizations, and the DoD in the areas of strategic planning, engineering management, and technology assessment. Mr. Kendall formerly was Vice President of Engineering for Raytheon Company, where he was responsible for directing the management of the company’s engineering functions and internal research and development. Before joining the administration, Mr. Kendall was a managing partner at Renaissance Strategic Advisors, a Virginia-based aerospace and defense sector consulting firm. In addition, Mr. Kendall is an attorney and has been active in the field of human rights, working primarily on a pro bono basis. Within government, Mr. Kendall held the position of Director of Tacti cal Warfare Programs in the Office of the Secretary of Defense and the position of Assistant Deputy Under Secretary of Defense for Strategic De fense Systems. Mr. Kendall is a former member of the Army Science Board and the Defense Intelligence Agency’s Science and Technology Advisory Board and he has been a consultant to the Defense Science Board and a vi Frank Kendall Biography Senior Advisor to the Center for Strategic and International Studies. Mr. Kendall also spent 10 years on active duty with the Army serving in Ger many, teaching Engineering at West Point and holding research and devel opment positions. Over the course of his public-service career, Mr. Kendall was awarded the following federal civilian awards: The Defense Distinguished Public Service Award, Defense Distinguished Civilian Service Medal, the Secre tary of Defense Meritorious Civilian Service Medal, the Presidential Rank Award of Distinguished Executive (Senior Executive Service), the Presi dential Rank Award of Meritorious Executive (Senior Executive Service), and the Army Commander’s Award for Civilian Service. He also holds the following military awards from the U.S. Army: the Meritorious Service Medal with oak leaf cluster, Army Commendation Medal, and National Defense Service Medal. Mr. Kendall is a Distinguished Graduate of the U.S. Military Academy at West Point, as well as an Army War College graduate, and holds a mas ter’s degree in Aerospace Engineering from the California Institute of Technology, a master’s degree in business administration degree from the C.W. Post Center of Long Island University, and a juris doctorate from the Georgetown University Law Center. vii Acknowledgments I would like to acknowledge the many operational, government acquisi tion, and industry professionals who contributed to the content of this vol ume through more than 45 years of experience, collaborative discussion and idea sharing. I am particularly indebted to the support of the Service Acquisition Executives and the entire AT&L staff, particularly my Deputy, the Honorable Alan Estevez, who all played an important role in the cre ation of the articles included in this volume. Many thanks go out to the Ac quisition Policy Analysis Center Team led by Dr. Phil Anton who brought data and analysis to the world of acquisition policy. Thanks also to CAPT Dan Mackin, my Military Assistant, who served as my advisor and editor in-chief, assisted by President Jim Woolsey and the fine team at the Defense Acquisition University. viii Introduction “There are two ways of spreading light: to be the candle or the mirror that reflects it.” —Edith Wharton For most of my adult life, a span of over 45 years, I have worked on some aspect of the operation, development, production, and support of Ameri can weapon systems.

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