THE BETTER BUSINESS OF GOVERNMENT REFORMING PROCUREMENT POLICY & CULTURE NOVEMBER 2016 NORM AUGUSTINE, TOM DAVIS & BART GORDON PROJECT CO-CHAIRS The Center for the Study of the Presidency and Congress, founded in 1965, is a nonprofit, nonpartisan 501(c)(3) organization. The Center’s mission is to utilize the lessons of history to address the challenges of today; serve as a strategic honest broker for discussions with leaders from government, the private sector, and the policy community; and to educate the next generation of leaders through the Presidential and International Fellows Program. THE BETTER BUSINESS OF GOVERNMENT: REFORMING PROCUREMENT POLICY & CULTURE November 2016 Copyright © 2016 CENTER FOR THE STUDY OF THE PRESIDENCY & CONGRESS All rights reserved. No portion of this report may be reproduced, by any process or technique, without the express written consent of the publisher. Published in the United States of America. Selected Cover Imagery Courtesy of the U.S. Department of Defense & National Institutes of Health 601 Thirteenth Street, NW – Suite 1050N Washington, D.C. 20005 Phone: 202-872-9800 Fax: 202-872-9811 www.thePresidency.org Copyright © 2016 All rights reserved THE BETTER BUSINESS OF GOVERNMENT: REFORMING PROCUREMENT POLICY & CULTURE PROJECT CHAIRS THE HONORABLE THE HONORABLE THE HONORABLE NORM AUGUSTINE TOM DAVIS BART GORDON PROJECT DIRECTORS MAXMILLIAN ANGERHOLZER III DAN MAHAFFEE LEAD RESEARCHER MADELINE VALE WASHINGTON, D.C. NOVEMBER 2016 TABLE OF CONTENTS INTRODUCTION ......................................................................................................................................... 1 EXECUTIVE SUMMARY ............................................................................................................................... 3 An Unnecessarily Complicated System ..................................................................................................................... 3 A “Culture-First” Approach ....................................................................................................................................... 4 Today’s Politics & the Procurement Environment ..................................................................................................... 7 The Pace of Innovation vs. the Pace of Procurement ................................................................................................ 8 PRIORITY RECOMMENDATIONS .............................................................................................................. 10 CHANGING THE “PROCUREMENT CULTURE” ......................................................................................... 14 A “Four Pillar” Approach to Procurement Culture .................................................................................................. 14 Policy ......................................................................................................................................................................................... 14 Process ....................................................................................................................................................................................... 15 People ........................................................................................................................................................................................ 16 Politics ........................................................................................................................................................................................ 18 LESSONS OF INNOVATIVE PROCUREMENT PROGRAMS ........................................................................ 19 Current Culture & the Lessons of War ..................................................................................................................... 19 Innovation Case Studies .......................................................................................................................................... 19 DARPA ....................................................................................................................................................................................... 20 Skunk Works .............................................................................................................................................................................. 22 In-Q-Tel ...................................................................................................................................................................................... 25 United States Special Operations Command ............................................................................................................................ 26 ARPA-E ...................................................................................................................................................................................... 27 Veterans Affairs Center for Innovation (VACI) ............................................................................................................................ 28 The United States Digital Service .............................................................................................................................................. 30 BEYOND THE BELTWAY: INNOVATION HUBS & PROCUREMENT REFORM ........................................... 31 Boston, Massachusetts ............................................................................................................................................ 32 Huntsville, Alabama ................................................................................................................................................. 33 APPLYING NEW PROCUREMENT MODELS TO INNOVATIVE MISSIONS ................................................. 37 The Growing Health Care Mission ........................................................................................................................... 37 Information Technology in Government ................................................................................................................. 38 Meeting Current & Future Technological Needs ...................................................................................................................... 39 “Nunn-McCurdy” for IT ............................................................................................................................................................. 40 THE REFORM PROCESS ............................................................................................................................ 42 Historical Lessons .................................................................................................................................................... 42 The Current Political Environment ........................................................................................................................... 43 Current Reform Efforts ............................................................................................................................................. 44 The Role of the Executive Branch .............................................................................................................................................. 44 The Role of Congress ................................................................................................................................................................ 45 H.R. 1232 ................................................................................................................................................................................... 46 H.R. 1597 ................................................................................................................................................................................... 47 2016 NDAA ............................................................................................................................................................................... 48 H.R. 4741 ................................................................................................................................................................................... 49 2017 NDAA ............................................................................................................................................................................... 50 REPORT CONCLUSIONS & OBSERVATIONS ............................................................................................ 51 Overall ....................................................................................................................................................................................... 51 Executive Branch & Federal Agencies ....................................................................................................................................... 52 Congress .................................................................................................................................................................................... 53 FINAL CONCLUSION ................................................................................................................................ 59 ACKNOWLEDGEMENTS ........................................................................................................................... 60 CSPC BOARD OF TRUSTEES ....................................................................................................................