I was pleased to have an impressive trio from MITRE join me on the Acquisition Talk podcast to discuss the future of acquisition reform. Dan Ward, Pete Modigliani, and Matt MacGregor have been in on the ground floor of the Department’s implementation of the Adaptive Acquisition Framework, which has been hailed as the “most transformational change to acquisition policy in decades.” With six tailorable pathways, programs can potentially cut years of paperwork for software and rapid prototyping efforts.
While there is certainly more effectiveness to squeeze out of the AAF, my guests are looking ahead to other elements of the “big A” acquisition systems that will need change to support the ideals of the Adaptive Acquisition Framework. For example, rapid prototyping efforts using the Middle Tier pathway don’t have to use the JCIDS requirements process, but they still need a process that could take up to a year. Then it takes another two or more years to line up the funds to get started. These processes create barriers to programs being run with speed, thrift, and simplicity.
Requirements, budgeting, oversight, and workforce provide the next frontier of acquisition reform. Last year, MITRE released an excellent report that outlined enterprise-level requirements and a proposal for an Adaptive Requirements Framework. This year, they released another report called Five-by-Five which took that even further into an Adaptive Budgeting Framework and implementation of portfolio management.
These management issues are critical because, as Pete argued, “the industrial age bureaucracy poses the biggest threat to our ability to win future wars.” I appreciate their specific recommendations in requirements and budgeting because, as Dan warned, “the status quo appears inevitable when viable alternatives are not readily visible.”
The acquisition community needs to raise the awareness around these issues. DoD doesn’t have a technology problem, but a technology adoption problem. These are institutional problems. I recommend you read their papers [here, here]. I also blogged on them (requirements, budgeting).
The fact that there’s an apparent consensus about the poor state of United States defense acquisition — industrial consolidation, shrinking inventories, cycles of reform, cost and schedule growth, slothful adoption of cloud, AI/ML, and other commercial technologies — emboldens adversaries to challenge US interests. This makes war more likely. If a major conflict should then start, nothing would appear more important from our future perspective then having surmounted barriers to improvement as early as possible.
Military Investments
While DoD is not a business, there is much that can be learned from the business world. It is unfortunate that DoD often regards itself as so “unique” that it puts up measures that force companies to either create a government-only business unit or choose which market to stay in.
One of the biggest effects DoD has on its suppliers is its tendency to choose a single-best solution to major weapon systems. While the intention is to eliminate redundant spending and take advantage of economies of scale, it also creates a “winner-take-all” environment. However, economists and investors have long known that diversification is a winning strategy. Here’s Dan:
A guy named Harry Markowitz won the Nobel prize in economics in 1990 for his work on modern portfolio theory. And my favorite thing about it is you can summarize Nobel prize, winning economics in a single sentence.
He basically did the math to prove that and here we go, don’t put all your eggs in one basket. That’s his whole point. For the more nuanced, single sentence summary of his work, he said a diverse portfolio of smaller investments is the optimal way to maximize your return for a given level of risk.
And so it makes sense why Dan likes to focus on speed, thrift, and simplicity because it gives you more bites at the apple — allowing you to learn at a much faster pace and course correct.
Yet the way DoD focuses on program stovepipes, it creates multiple years of requirements and funding analyses. As Pete argued, the bureaucracy amortizes these costs by building major systems that take 10 years.
Requirements
One of the interesting things about the new acquisition pathways like Software and Middle Tier is that they were exempted from the burdensome JCIDS requirements process, but it didn’t spell out what the services were supposed to do instead. I asked Pete what the “new” requirements process looked like:
It was a pretty comical. When you’re given an exemption from something, sometimes the muscle memory — sometimes the bureaucracy — just defaults back to doing something that looks a lot like the bureaucratic process you are given the exemption.
He commented that one service created a “mini-JCIDS process.” Often what happens in these processes is that the user of a legacy system asks for the same thing but 25% better, rather than exploring the technology tradespace and experimenting with new CONOPS.
For the Software Acquisition Pathway, which Pete is supporting in A&S, they are creating a User Needs Statement process. He describes it a little:
It’s trying to capture the high level need from the operational perspective, [while] lower-level details will be spelled out in roadmaps and backlogs in close coordination with the user and the senior sponsor.
That process allows for iteration on specific product features and aligns with commercial development processes. The next step that has yet to be tackled is the PPBE process — how software efforts get funded.
Funding
Portfolio management was really at the heart of their Five-by-Five paper. And regardless of flexibilities in requirements or acquisition, nothing gets done without the money. Here’s Matt:
I think the hardest challenge for the department, both with internal politics and external politics, is going to be embracing the idea of portfolio budgets.
Ultimately, what this looks like is consolidating program elements into portfolios and providing flexibility to move funds between lower level programs or start new ones. The concept requires empowering responsible leaders at the right level to make timely decisions. Here’s Matt again:
I don’t believe that acquisition leaders actually feel empowered to pursue an opportunity. For sure they’re not empowered because they don’t even have the authority to it in many cases. They’re not entrusted to say, ‘You are a general officer. You’ve been confirmed by the Senate. You’re a designated program executive officer. You have 25 years of experience. Here are the things that we need you to solve. We need you to provide the capabilities to support these operational plans.’
With portfolio management, emphasis then moves from locking-down future plans to evaluating decisions actually made and connecting them to strategic plans on a more continuous basis. This has major implications for how oversight is done. Listen to the podcast for the whole thing!
Thanks Dan, Pete, and Matt!
I’d like to thank Dan Ward, Pete Modigliani, and Matt MacGregor for joining me on the Acquisition Talk podcast. Read their papers, Modernizing DoD Requirements and Five-by-Five. I summarized some of the Five-by-Five recommendations in this short video on budget reform, and we discussed it further here. You should be subscribed to MITRE’s Acquisition in the Digital Age blog, which includes the post we discussed Pentagon Wars 2020. Check out the Adaptive Acquisition Framework website, my previous podcast with Dan Ward, and a software acquisition webinar with Pete Modigliani.
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