I was pleased to have the John Whitley join me on the Acquisition Talk podcast to discuss digital transformation, the potential for “as a service” business practices to bypass the valley of death, and deeper issues of program analysis and strategic planning. John was recently the acting Secretary of the Army in 2021, Army Comptroller before that, and acting Director of OSD Cost Assessment and Program Evaluation (CAPE). He’s also had past experience in FFRDCs, other agencies, teaching at universities, and started out on the operational side as an Army Ranger.
Download the full-text transcripts
During the episode, John argues that digital transformation is affecting programs at all stages of their lifecycle. For example, the UH-60 Blackhawks are using digital twins to improve upgrades and maintenance. The newer CH-53K Super Stallions are integrating digital manufacturing processes, such as digitizing the work instructions on the wrenches to the individual torque specifications for all 11,800 parts. Then you have the Future Vertical Lift program which will start with an unbroken digital thread from the development process.
Digital transformation matters because it accelerates modernization of the force more generally, but it also enables new business practices. Software is abstracting a lot of hardware or assets that companies and people used to buy, own, and operate themselves. These products are becoming services that can be bought on demand. Server farms are abstracting to the cloud, vehicles are abstracting to Uber, your DVD set is abstracting into streaming services.
And that’s where “as a service” purchasing comes into play. As John explained:
Now, as a service purchasing, you’re taking advantage of innovation that’s occurring out in the private sector instead of the traditional process of DoD design, own, build, operate where they say, all right, I need a new satellite system that does X. So I’m gonna spend 10 years designing it. I’m gonna spend 10 years developing it. I’m gonna spend 10 years deploying it and then I’m gonna use it and own it for 10 years. Oh, by the way, it’s already out of date.
Everybody’s throwing up satellites right now. Everybody is innovating in what satellites can see, what satellites can do. Let’s piggyback on that. We don’t have to design build own and operate everything. Some things we do need to, but a lot of things we don’t.
… One of the examples I thought would be one of the last places you could go would be tanker aircraft. But the Navy’s actually doing that with a company that is providing tanker aircraft in CONUS [Continental United States] for training missions as a service. So I don’t know where the lines are. The lines are gonna be different in different capability areas.
John explained the relationship between the potential for “as a service” purchasing, the valley of death, and the PPBE process. One of the challenges of acquisition agility is that money is in the RDT&E and Procurement accounts, “which are very specific accounts to the individual programs.”
However, rather than thinking about it as buying a fixed asset that will be available or not available, “as a service” purchasing gives operators the ability to use more flexible Operations & Maintenance accounts to dynamically buy services that meet mission needs without the capital investment. After all, it is the capital investment that creates the risk and long timelines to achieving an official Program of Record. Here’s John:
When you move the “as a service” purchasing, you’re actually moving from Procurement and RDT&E to O&M funding. O&M funding is much more flexible and much more able to move around in year of execution. So I see these things as complementary. It’s not so much that we need the PPBE commission to develop a new process to enable “as a service” purchasing. My recommendation to them is that they embrace as a service purchasing as part of their reforms.
Dynamic allocation of resources still requires strategic planning and direction to make sure that important capabilities are available and missions accomplished. This is one of the priorities for John. He finds that strategic direction, such as through the Defense Planning Guidance, is lacking in its ability to affect the services’ program build.
While the 2018 National Defense Strategy realigned priorities to peer competitors, there was potentially a breakdown in the translation from the strategy to programming — and programming dictates what is actually done in acquisition. As Peter Levine put it to me on a past episode, the services can “cherry pick” their existing programs to match the NDS rather than make the hard tradeoffs.
During John’s time in Army leadership with Mark Esper, they ran a “Night Court” process to realign the Army’s budget to the NDS where strategic direction from OSD had been lacking. “The Army said, I’m not getting the guidance that would direct this at a strategic level, so I’m gonna do it myself.” In the first POM cycle, $25 billion was realigned across modernization programs, and roughly $12 billion the second cycle as diminishing returns started to set in.
Be sure to listen to the entire episode because there’s a lot more of interest. In one part, we discuss the role of analysis and historical data in decision-making, and with that in mind I’ll leave you with a quote from John:
What’s one of the dominant assumptions guiding budget formulation and strategic planning in the Department today? It’s that a war fight in the Pacific will primarily be in the Naval and Air domains. We fought three wars in the Pacific in the last a hundred years. All three were predominantly ground campaigns.
Thanks John Whitley!
I’d like to thank John for joining me on the Acquisition Talk podcast. It was a real treat to speak with him and get insights on issues surrounding PPBE reform. Be sure to read his recent article in Breaking Defense: Digital transformation is a key to maintaining US overmatch again China, Russia. Our friends at the Hudson Institute also had a great discussion with John focusing on JADC2: A Conversation With Acting Army Secretary John Whitley. You can also catch him on a CNAS panel in 2021, US Army’s Strategic Priorities, and most definitely you should check out his participation in a Heritage event hosted by the excellent Fred Bartels: How to Reform DoD’s PPBE Process.
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