I hosted a panel event with the the newly named Baroni Center for Government Contracting to discuss our recent report on how funding flexibility can help bridge the valley of death in defense acquisition. The discussion was republished to the Acquisition Talk podcast for your listening convenience. I was pleased to have insights from three leaders in this space:
- James Ruocco, Director of Air Platforms and Weapons, in the Office of the Assistant Secretary of Defense for Acquisition;
- Katie Wheelbarger, Vice President of Global Program Support at Lockheed Martin; and
- Elaine McCusker, Senior Fellow at the American Enterprise Institute and former Acting Undersecretary of Defense (Comptroller).
Download the full-text transcripts
Tons of great audience questions throughout. The discussion ranged across some key topics including:
- How the Department of Defense (DoD) is managing integrated acquisition portfolios to help drive decision making and close capability gaps
- Efforts by DoD to close gaps in joint all-domain command and control and quickly target specific instances of interoperability or kill chains such as connecting an F-35 sensor with a HIMARS firing solution
- Ideas to create flexible tech insertion lines, mitigate inefficiencies resulting from continuing resolutions, and increase transparency and trust between DoD and Congress
From AT&L to Portfolio Mgmt
Here’s Jim discussing how the Office of the Secretary of Death evolved into a portfolio view if acquisition management:
This organization has been on a bit of a journey since AT&L was dissolved in 2017. Moving from more of a focus on oversight and executing a serious acquisition program, reviews and defense acquisition boards or dabs to one that’s trying to look across portfolios to assess the health of things and whether we’re we’re assessing risks that then drive what the investments or divestments should be when we look across those portfolios.
This was emphasized in DoD Directive 7045.20, Capability Portfolio Management from 2008, updated in 2019, and currently under another rewrite to enable more timely tradeoffs. This generally looks like wargaming and simulation to inform capability gap analyses, when then allows OSD to help prioritize and deprioritize efforts through the issue paper process that results being made by senior leaders retlected in the President’s Decision Memorandums and President’s Budget Decisions. I talked a little bit about how portfolios are classified last week.
Budget policy is program policy is warfighting systems and concepts of operations.
Making Tradeoffs
Jim gives an example of his experience in the Navy and how that’s informing taking portfolio management to the next level with a competitive advantage pathfinder effort. It seeks to integrate across Requirements, PPBE, and Acquisition.
One of the things I led that effectively shaved two years off of delivering an advanced weapons capability, simply because we enabled a tech transition faster from DARPA to the Navy. It included some smart things in terms of agile acquisition planning and contracting rapidly.
But the real coup de grâce of the whole thing was being able to make smart portfolio trades. We looked within that portfolio for things that are doing similar things and said, ‘I’m gonna deprioritize that one and move those resources to something else.’ The trick is, unlike the flexibility you might have in 6.1, 6.2, 6.3 accounts [i.e., S&T funding], it gets a lot harder once you lock something in on a path and tell Congress is what we’re doing.
We had to actually do some extraordinary gymnastics with the Hill during the FY 2023 deliberations to get them to move things around. We were able to do some BTRs in FY 2022. We were able to fix things in PBR [President’s Budget Review] FY 2024 and out. It was FY 2023 that was a problem. We made it happen. The question is, how can we do that without going through those gymnastics case by case, but have more flexibility that the Congress would then buy into as well.
If we could sell them on the idea of I’ve got a set of portfolio PEs that allow me to make trades within the portfolio, as those portfolios are defined. In other words, you couldn’t trade off F-35 tails to go buy more bombs, for instance. That probably wouldn’t fly. But trading off more air-to-ground munitions like bombs for other air-to-ground munitions, maybe that’s something they could go for. Will Congress allow for that? I don’t know.
That’s a huge idea, and one that really harkens back to the pre-PPBE days where those trades could be made without further expression of legislation through Congress. As Jim said, DoD can often find a small below threshold reprogramming in the year of execution is something is really important and reprioritize outyear budgets. But there leaves a significant gap, projects cannot live off of BTRs.
Enabling Tech Transition
Katie Wheelbarger noted that even though Lockheed has been successful transitioning technology from IR&D into programs of record, there is still a major time penalty due to the process. It takes three to seven years to successfully transition a program. And then when the funding is ready there are contracting challenges like cost or pricing data requirements that can slow things down further, especially in a supply chain challenged environment.
One of the major points of transition is that for many areas like developing kill webs for JADC2, the outcome does not need extensive risk reduction efforts. Here’s Katie:
From our perspective, one of the challenges we are trying to work through with our government partners is the technology in many ways exists. It’s demonstrated, it’s been experimented, it’s tried at some level. I’m interested in Elaine may be expanding on a little bit when you talk about greater Combatant Command involvement in solving this problem. It feels like there’s a joint acquirer that can see that the technologies is exist now that has both the acquisition authority and the budget authority to just go and buy it, whether it’s by as a service or just as a whole.
That gets to a controversial subject over whether a Combatant Command should have acquisition authorities. SOCOM and to a lesser degree CYBERCOM have some authorities, but none of the geographic commands like INDOPACOM or EUCOM do (to my knowledge). I suppose that if you constructed a command-and-control system for INDOPACOM, it might not be compatible with STRATCOM or CENTCOM which may be involved in operations or theater planning.
Elaine suggested that the services or even COCOMs could be going off on their own all-domain command-and-control systems. The “joint” is getting lost. But the most useful thing for OSD is to have some funding so that when it discovered interoperability issues, it can pay the service to go fix it and verify compliance through testing. It could be some kind of withhold at the OSD level, like paying a tax, which is commonly done in the building.
Elaine’s Top Recommendations
Listen to the whole thing because Elaine painted a pretty great vision for the future of resourcing and oversight. I’ll just give a short bullet point summary of what she touched on in her opening statement.
- Buy outcomes vs platforms
- Cradle to grave portfolios, not on platforms
- Software is different from hardware
- Cannot predict the future
- Some 6.4 funding lines are already flexible, expand that
- Capture Expiring/cancelling funds
- Cannot further mitigate CR impacts, need change
And I have to agree with this last quote on portfolios: “Any changes we make to consolidate and group these [budget lines] is gonna be an improvement because it’s gonna give us more agility.”
Thanks Jim, Katie, and Elaine!
I’d like to thank James Ruocco, Katie Wheelbarger, and Elaine McCusker for joining us at the Baroni Center for Government Contracting. Katie was recently on a great webinar with Stacie Pettyjohn on the critical topic of the munitions industrial base and strategic investments. Elaine is a prolific writer on so many of these issues, so check out her AEI page, including Another Continuing Resolution? The Enemy Is Us and Defense Budget Transparency and the Cost of Military Capability.
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