The conventional wisdom is that the defense acquisition system is very risk averse. I don’t think that’s right and I don’t think we’re risk averse. Regardless of what you think about the DDG-1000 program, how it was conceived or evolved or where it is now, it did not lack for technical risk at any point. If you look at the Ford-class carriers today, they are managing a significant amount of technical risk.
That was Mark Vandroff on the Acquisition Talk podcast.
One theory is that individuals in the acquisition process are only risk averse within their own careers. They don’t make decisions without reference to standard regulations, processes, and within the bounds of other bureaucratic decisions.
The government acquisition workforce may seem to also avoid staying in one competency for too long, for fear of not getting the breadth of experience necessary to reach the top management slots. Staying in one program or assignment too long can be damaging also because you will be there to receive blame if things go wrong and costs grow. Frequent emigration from a job maintains a plausible level of deniability.
Of course, that is not true in all cases, and the characterization could be unfair. But this seems to be an aspect of the prevailing consensus.
At the aggregate level, however, the risk-averse decisions of individuals aggregate to a highly risky posture for the Department. And it’s not a good kind of risk; it is the compounding of risks and the suppression of errors — or the sinking of additional funds into existing errors. It is easier for an official starting a new program to acquiesce to concessions from each layer of approval than stand their ground.
Consider the risk-taking that Admiral Rickover and Colonel Boyd took in their careers to create effective programs. They ignored the widely held perception that you don’t want to “rock the boat” too much at the start of a program. Indeed, it is difficult to influence a new program start because of bureaucratic layering (meaning, no one’s career is at risk because responsibility for outcomes cannot be traced to anyone specifically).
Once the program gets started, then it’s too late to change, because the costs of those changes are made to seem astronomical, not just in terms of engineering but also in terms of gathering approval.
At the aggregate level, we have programs that pursue too many immature technologies and integrate them onto a brand new platforms. We have concurrency between R&D and production activities. We have systems inventoried without proper operational testing. These are risky propositions that the DOD takes all the time, yet no one in the process intends them. They are the result of risk-aversion within the career of individuals.
Another aspect of this line of thinking is that the downside of risk-taking within one’s career far outweigh the upside. This concept was introduced by Adam Smith, later rediscovered by Daniel Kahneman, that we are more harmed by a loss than we benefited by a symmetric gain. Moreover, the gains to successful risk-taking in the Department of Defense are relatively small in terms of monetary reward or career advancement.
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