Does DoD not actually want startups to win programs of record?

Here’s the excellent Steve Blank on the Village’s Solarpunk podcast, Rebuilding the Department of Defense.

Everyone’s talking about the PPBE — Planning, Programming, Budgeting, Execution. In the time it takes the paperwork to go from one end of the Pentagon to the other is about two to three years, just the first part of the cycle. Remember, startups or scaleups ship two or three products in that time. We could be delivering thousands of things to warfighters while we’re still pushing paperwork in the Pentagon. Somehow, that’s acceptable.

Steve says it’ll take way to long to get any real reform out of the PPBE system. He argues that DoD needs a new organizational structure on the side that is oriented toward integrating commercial technology to fieldable systems. This organization should hire different people, use different processes, and so forth.

Perhaps that was Steve’s realistic take — the system can’t be reformed by itself. It will require some big overhaul from the outside like Goldwater Nichols or to build something separate on the side. But at the beginning he also said the ideal state was for an ambidextrous organization, one that can execute and manage risks while also innovating and taking risks. He points to SpaceX as a good example.

I would like to think that buying commands that include dedicated labs and Program Executive Offices can generate an ambidextrous organization. Having several of these throughout DoD creates the tugs and pulls of competition that generates value/price signals. Reform the systems from within because the people are good, their incentives are just misaligned until both authority and responsibility are delegated.

Easier said than done, hence the “realistic” take to start something outside the system in a big way. Here’s more from Steve:

Remember why this is hard. I keep going back to the primes and their lobbying. For a prime contractor, over your dead body do you want this to happen, because you entire business model is based on — think about it, Tesla software can be updated overnight. In a military system, that’s a new contract for a couple hundred million dollars. What do you mean you want me to push an upgrade? There goes my revenue and business model. What do you mean you want me to deliver capabilities to the battlefield or space? I want you to buy this thing, not buy the service.

 

… It explains why DIU can’t get past a $30 million budget and Mike Brown resigned out of frustration. Why would anyone want it to succeed in DoD? Everything it is trying to bring in competes with a prime. In fact there is no schedule or budget or dollars behind it. And it shouldn’t be in R&E, it should be in A&S. Just as a thought, I think the whole org chart is inverted. A&S and R&E should be working for DIU. Think about that. Now you have a model for what we’re trying to accomplish.

While I have some sympathy for that argument, I don’t think the primes are the real problem. (To be fair, Steve also says the primes have an important role to play.) The primes respond to the requirements and regulations of DoD.

More to the point, lobbyists are not needed to sway Congress (particularly appropriators) from nixing agile methods of allocating resources. It’s not necessarily that they are “bought” by the primes. They have an honest disbelief that DoD will actually field useable systems under these innovative or nontraditional means. They’ve been burned in the past, and so they’re only comfortable with the full funding requirements and other documentation that have been used since PPBE was created more than 50 years ago. It’s unfortunate that these requirements also make it impossible for startups to succeed.

Back to Steve:

… The bottom-line to me is that DoD doesn’t want to have any new startups to have programs of record. It’s a big idea. Why? Because again the DoD budget is a zero sum game. If you give new entrants programs of record its taking away money from incumbents… The entire system is designed for you not to succeed. That’s a pretty honest take on how DoD is organized today.

Let that sink in for a moment when you consider a new age of strategic competition with China.