Middle-Tier of Acquisition is under serious threat unless oversight can think differently

Here’s an update on Middle-Tier of Acquisition (MTA) authorities and how they are facing serious backlash from oversight. MTAs, of course, provide DoD rapid prototyping and rapid fielding pathways, which allow them to side-step the JCIDS requirements process as well as the 5000-series acquisition process. Below is an overview chart of MTAs provided by ASD Acquisition on July 20, 2022.

You’ll note that 19 of the 102 MTA efforts require a Selected Acquisition Report, which makes them the size/complexity of a Major Defense Acquisition Program. That seems to be one of the gripes from oversight, that very large programs like Next Gen OPIR are using a pathway that has “Middle-Tier” in the name. That has opened the doorway to a number of other concerns which amount to this: MTAs aren’t being managed like traditional MDAPs, therefore it is bad and must start providing the artifacts of MDAPs.

DoDI 5000.80 was released on December 30, 2019 and brought back in many requirements from the 5000-series to MTAs, including sustainment plans, test strategies, cybersecurity, risk assessments, cost estimates, and more. No exception was made for earned value management or cost and software data reporting. Service-specific requirements processes have also been built up.

Congress has been adding to the dilution of MTAs. In the Senate Appropriations Committee Defense FY 2021 explanatory statement, it was required that DoD leadership provide additional information for all “prototyping or accelerated acquisition authorities.” It included “rationale for each selected acquisition strategy, as well as a cost estimate and contracting strategy.” Moreover, it required the services to “certify full funding of the acquisition strategies,” as well as DOT&E to certify test strategies and risk assessments.

They literally said their concern was “a lack of standard acquisition information.” But the problem is that the standard acquisition information has not led to positive outcomes, and Congress has failed to provide oversight in the past that resulted in improved performance. As Rep. Seth Moulton (D-MA) said, “the truth of the matter is that the current system doesn’t really give us the oversight that we need anyway. We’re sort of circling the drain with this system.”

For FY 2023, it seems that at least the Air Force has not fully-funded the MTA programs through the Future Years’ Defense Program as requested by Appropriators. Air Force provided a standard notation for several of their MTA programs in the budget justification documents. The standard notation appears: “The Department of the Air Force is assessing all options to address the funding shortfalls for MTA programs including additional funding in a future budget request, performance trades based on technical maturity, or transition to alternative pathways.”

I think there is a major problem of inconsistent policy. The FY 2016 NDAA clearly recognized the failures of traditional MDAP policies to result in advanced and affordable systems. The SASC said the “Committee’s primary concern is that acquisition reform is needed immediately to preserve US technological and military dominance… our broken defense acquisition system is a clear and present danger to the national security.” The Section 804 statute says:

“The program manager of a defense streamlined program shall be authorized, in coordination with the users of the equipment and capability to be acquired and the test community, to make trade-offs among life-cycle costs, requirements, and schedule to meet the goals of the program.”

If the program manager can make tradeoffs, then imposing strict cost-schedule-technical baselines and reporting requirements is contrary to original intent. Not only that, it is contrary to empirical evidence of what actually works in both the commercial sector and international mega-projects.

With that being said, there’s a new Breaking Defense article out on MTAs, Speed vs. Oversight: Middle Tier of Acquisition Draw Lawmakers Concern. It finds the SASC’s FY 2023 NDAA report required cost, test, and transition plans be developed within one year of starting. The article goes on to quote me:

Eric Lofgren, a defense acquisition specialist at George Mason University, told Breaking Defense that “GAO and OSD [the Office of the Secretary of Defense] seem to be struggling with how to baseline and conduct oversight of these programs.”

The issue, he explained, is how to ensure proper oversight without re-creating the red tape that MTAs were designed to avoid in order to speed development.

“Congress and other oversight stakeholders will need transparency and some measure of control over these MTA efforts that evolve over time. If they cannot rely on Acquisition Program Baselines to measure cost growth, then what is the method of oversight in a dynamic, innovative world?” Lofgren wrote in his daily acquisition blog back in April.

If you read that blog post, you’ll find recommendations for how oversight can improve and be made compatible with MTA’s philosophy of optionality and opportunism. It is not that MTAs have to bend the knee to traditional practices to suit oversight.

If every MTA program was destined for complete success within a defined timeline, with every transition path outlined, then what is the difference with a traditional MDAP? The point is that information will be learned along the way, and managers will have to react to that. Some MTAs will fail, others may take unexpected twists, and others deliver 100x value.

Oversight can be accomplished over these types of dynamic programs. Harry Truman, for example, during his time in Congress in World War II, understood he couldn’t bring the war effort to a halt by heavy-handed oversight. Instead, it investigated specific programs, founds instances of abuse or even criminality, and conducted hundreds of very detailed hearings.

The Truman Committee was invaluable, but it did not perform oversight by white-listing or approving every program, contract, and activity that could occur. Instead, it black-listed programs and contractors discovered to be doing the wrong thing. This means understanding the reality of the program, not its paper documentation. Oversight by walking around, not by sitting in an ivory tower requesting standard reports.

If the traditional acquisition system is one of the greatest threats to national security — and it is — and any attempt to reform the acquisition system is blocked by oversight’s dependence on industrial era metrics like cost growth — and this appears to be true — then the current style of oversight is a threat to national security. Let that sink in for a minute.

Luckily, we can look to the history of oversight prior to the 1960s for a different model, one that was based on empirical evidence rather than opinions and plans. In the early 1970s, the GAO turned from analyzing cost accounting records to a “cost-benefit analyzer.” That was a dramatic mistake because a cost-benefit analysis is not the real world, and often corrupts game-winning decisions. For more background on the history and opportunities of defense oversight, see my recent NPS paper.

What we’ve seen over the last few years is how reform policies wither away even though the threat from peer adversaries has dramatically increased. I’m sure we’ll see the principles resurrected by the next generation of policy makers who forgot what happened.

The fear is that a major conflict will erupt before real acquisition change occurs. If and when that happens, there will not be a disciplined method for oversight of accelerated programs. No one will care about full-funding or sustainment plans when the shooting starts. Look at the MRAP, and then imagine hundreds of MRAP-like programs at the same time. Oversight must change now or find itself broken when it matters most.