Hill To Kendall On New Acquisition Laws: Nice But…

WASHINGTON: Congressional reaction to the first tranche of proposed new acquisition laws from the Pentagon’s acquisition czar, Frank Kendall, is unenthusiastic. Kendall and Rep. Mac Thornberry, chairman of the House Armed Services Committee, have separately worked on a range of legislative and policy acquisition fixes for much of the last year. We haven’t heard much from either side about them until recently. Kendall’s proposals are really the first concrete measures, unless you count his Better Buying Power work, which is really separate from this. “While these provisions are designed to cut down on some of the paperwork churn within the Department, they do not address the primary acquisition issues that should concern the Department – declining competitiveness in the defense industry, accountability for results, and how to access the necessary commercial innovation needed to implement any Third Offset Strategy,” one congressional aide says in an email. A second congressional aide described the proposed legislation as helpful but not groundbreaking, adding that the Senate might well take umbrage with some of the provisions because they could be seen as reducing the ability of Congress to practice oversight. They are pretty tightly focused. Here’s how Kendall described them to reporters t the House Armed Services Committee hearing he testified before last week. “The intent of the legislative proposals in general is just to simplify the lives of our program managers and to give them a more comprehensive, coherent body of law,” adding that the effect would be to “get rid of a couple of documents” that “have very little utility to anybody.” Also, the new rules would “clarify the roles of the milestone decision authorities,” among other things. One Pentagon official told me Kendall drafted these primarily to help his workforce focus on things that matter. Bottom line for Kendall: “To the uninitiated, they don’t sound all that exciting, but if you’re out there and you have to live by these rules, they’re going to make a big difference.” Here are the new proposals: Legislative Initiative Summary Overview: The Legislative Initiative is a component of the larger Department of Defense (DoD) acquisition improvement effort known as Better Buying Power. The Legislative Initiative is focused on streamlining statutory requirements imposed on acquisition Program Managers which have accumulated in layers over the last several years while retaining the underlying statutory principles. A team of subject matter experts from the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L), the military services, and other Office of the Secretary of Defense (OSD) organizations are concentrating on the two broad areas of streamlining: reducing the documentation burden in DoD’s acquisition process and reducing the number of forums performing program oversight on acquisition programs. The department is closely engaged with the House and Senate Armed Services Committees on this effort and has solicited input from industry. The legislative proposals are proposed for inclusion in the Fiscal Year (FY) 2016 National Defense Authorization Act (NDAA). Methodology: The team conducted in-depth case studies on several large acquisition programs across DoD that received recent reviews at major program milestones. The Legislative Initiative assessed the development, staffing, and approval of over 40 documents (regulatory and statutory) required at milestone reviews for major defense acquisition programs. Many of these documents contained duplicative and redundant information and did little to assist the Program Manager in executing the acquisition program or developing the acquisition strategy. If enacted, the goal of these proposals is to reduce the number of required stand-alone documents for major programs by 50%, as reflected in Department of Defense Instruction (DoDI) 5000.02, the DoD regulation that governs the Defense Acquisition System. Desired Effects Support tailoring of the defense acquisition process – thereby focusing decision on key issues and risks in each program; Reduce redundant and unnecessary documentation burdens on the Program Manager responsible for demonstrating that the program is eligible for approval by department officials; Consolidate related statutory requirements in a coherent manner within foundational statutory provisions; and Relying on data from the annual report, “Performance of the Defense Acquisition System”, refocus statutory requirements on a broader set of risks common in acquisition programs while placing a stronger emphasis on sound planning and risk reduction. Summary of Legislative Proposals “Modification to Requirements Relating to Determination of Contract Type for Major Development Programs” Current law, section 818 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364), requires the Milestone Decision Authority (MDA), the official within the department designated with the overall responsibility and authority for acquisition decisions, to select the type of contract for the development phase of an acquisition program. The current language only lists two types of contracts: cost-type contract, in which allowable costs are reimbursed, and fixed-price contracts in which the government pays a set amount, which is not dependent on the amount of time or resources expended by the vendor. The current statute imposes a requirement to justify the use of cost-type contracts, which are presumed to lead to cost growth in programs.In 2014, the department published a report, “Performance of the Defense Acquisition System”, that analyzed performance-based data on major acquisition programs. This study revealed that cost growth was common in both fixed price and cost-type contracts used in the development of new warfighting capabilities. Moreover, it confirmed that alternate contract types using incentives — to include Fixed-Price Incentive Fee contracts in which the government and the vendor share risk based on an agreed target cost – are best at controlling costs. This proposal expands the selection of contract types to include incentive-type contracts, and provides more general guidance to the MDA regarding the selection of contract type. Regardless of which is used, the proposal requires that contract types must be justified as appropriate to address the specific risks inherent in the acquisition program under consideration. “Repeal of Requirement for Stand-Alone Manpower Estimates for Major Defense Acquisition Programs” Manpower costs are an important consideration in the development and fielding of new warfighting capabilities. Typically, these estimates are incorporated in the cost estimates used to assess the overall cost of an acquisition program. Current law, section 2434 of title 10, United States Code, requires the separate consideration of manpower estimates in addition to these overall program cost estimate, which results in the staffing of parallel reports and redundant documentation.This proposal would eliminate the requirement for consideration by the Secretary of Defense of a stand-alone manpower estimate. Instead, the proposal clarifies statutory language to require the inclusion of manpower costs as part of the independent estimate of life-cycle cost. In anticipation of one program’s Full Rate Production decision in 2013, the service incurred 143 days to staff and approve a Manpower Estimate Report, a process separate from the cost estimation used to inform the department’s decision. In preparation for another program’s Milestone C Defense Acquisition Board (DAB) in 2012, the Service spent 153 days to develop and 365 days to staff a Manpower Estimate Report. The staffing process for the report continued months after the detailed manpower estimates had already been incorporated within the Cost Analysis Requirements Description, a document used to generate the program’s Independent Cost Estimate. In short, the report was staffed after the information was already used for the intended purpose. “Revision of Milestone Decision Authority Responsibilities for Major Defense Acquisition Programs” Sections 2366a and 2366b of title 10, United States Code, currently establish a certification requirement for the Department official serving as the MDA. These requirements impose specific considerations that must be factored prior to a determination that an acquisition program should proceed to successive milestones. As written, the requirements of 2366a and 2366b call for the MDA to certify specific findings prior to milestone approval. This proposal replaces the exiting certification requirements with a broader set of considerations that more comprehensively describe key risks in acquisition programs. The current statute imposes a redundant documentation requirement for many programs, calling for separate certification on a host of “checklist” items required by other documents and processes. For example, the milestone certification process at Milestone B requires Program Managers to separately develop and staff documentation certifying that the system has a valid military requirement approved by the Joint Requirements Oversight Council and that proper lifecycle sustainment planning was conducted for the system, to include corrosion prevention and mitigation planning. These certifications, and the processes they engender, already duplicate analysis required in other complementary processes. A valid requirement is already necessary for a Milestone B decision and full lifecycle sustainment planning is already detailed in the program’s Life-Cycle Sustainment Plan (LCSP), a separate document. One service reported that the Milestone A certification process for a program required eight pages of text, developed over 14 days, with 180 days of total staffing time. Another Service reported that the milestone certification process generally takes 7.5 months of total staffing time for required documentation that reproduces information elsewhere required in the process. The revised certification process in our proposal refocuses statutory language on broad risks in acquisition programs and establishes these considerations as the responsibility of the Milestone Decision Authority in making program decisions. This approach eliminates significant duplicative staffing processes and documentation while preserving a mechanism for required notification to Congress of such decisions. “Streamlining Requirements Relating to Defense Business Systems” Section 2222 of title 10, United States Code, outlines responsibilities for the management, architecture, accountability, and modernization of defense business systems. As currently written, responsibility for the management of business systems is divided between the CMO, the USD(AT&L, and the CIO, often with blurred lines and overlapping authorities. This “regime overlap” results in incredible bureaucratic burdens for PMs responsible for the development of business systems while diluting and confusing the responsibilities of the DCMO, USD(AT&L), and CIO. The proposal amends section 2222 to clarify the responsibilities for the management of defense business systems – reducing the overlap between the acquisition and business systems regime and aligns with the approach undertaken by Congress in the FY15 NDAA. The proposal, also, increases the threshold for a covered business system from $1M over the future-years defense program (FYDP) to $5M (“in excess of the threshold established for the use of simplified acquisition procedures pursuant to section 2304(g)(1)(B)”) over the FYDP. “Revision to Life-Cycle Management and Product Support Requirements” This proposal consolidates various logistics and sustainment related statutory provisions in to the existing section 2337 of title 10, United States Code. Currently, logistics and sustainment requirements are disbursed throughout various sections of statute and legislation. Comprehensive life-cycle sustainment planning and management remains a critical necessity for all DoD programs.The proposal to consolidate specific requirements in Title 10 complements efforts to streamline the Milestone certification requirements and ensure that such considerations are properly reflected in acquisition strategies and Life-Cycle Sustainment Plans. “Acquisition Strategy Required for Each Major Defense Acquisition Program” Our review of program case studies consistently showed that the acquisition strategy is the most important document developed and used by Program Managers. It is a comprehensive document describing the approach for acquiring the system developed, produced and fielded. It identifies key risks in all phases of the acquisition process and identifies strategies to mitigate or retire those risks. Current law does not require an acquisition strategy, though in practice, this document comprehensively addresses most specific program considerations identified in existing law. This proposal adds a statutory requirement for DoD major defense acquisition programs to maintain an acquisition strategy and consolidates various related statutory provisions. Currently, a number of provisions require content in an undefined (in statute) acquisition strategy. By codifying the existence of the acquisition strategy and consolidating the various requirements, our proposal facilitates streamlining of other documentation requirements, to include some that are eliminated in other proposals. “Revision to Requirements Relating to Risk Reduction in Development of Major Defense Acquisition Programs” Section 203 of the Weapon System Acquisition Reform Act of 2009 currently requires the department to utilize competitive prototyping prior to Milestone B approval of the development phase in an acquisition program. This requirement was developed to address a concern regarding the reliance on immature technologies in past acquisition programs that experienced cost growth and failed to meet projected schedule goals. Programs that do not employ competitive prototypes to address these risks are currently required to apply for a waiver that calls for a cost-benefit analysis and reporting to Congress. In practice, budget constraints have led to fewer “new start” developmental programs. Many acquisition programs seek to upgrade existing systems to meet additional requirements and do not employ as many novel, untested technologies. Full prototyping of a system may not be cost-effective in these programs. Moreover, the current statute does not address other measures designed to address technological maturity and attendant risks in acquisition programs, to include modeling and simulation, systems engineering, use of multiple designs approaches, and subsystem prototyping, e.g., prototyping of components. The proposed language provides greater flexibility to the PM and the MDA to tailor their approach to fit the product being acquired – moving from a single prescriptive requirement to assess competitive prototyping, to a set of guidelines that addresses a broader set of approaches to programmatic and technical risk reduction. In addition, the elimination of a complex waiver process for all developmental programs will further streamline the documentation requirements imposed on Program Managers. One Service reported that the waiver process for a program, which entered the acquisition process at Milestone B, required six months to staff and approve.

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