What is portfolio management and how can it speed up defense tech insertion

Jerry McGinn and I joined Vago Muradian on the Defense and Aerospace report to discuss our recent webinar event with James Ruocco, Katie Wheelbarger, and Elaine McCusker [video] discussing our report on execution flexibility and the valley of death. Here’s one segment, and I’ll forego the indentation:

Vago Muradian: What were key takeaways because there are a lot of people listening to this who are looking at this valley [of death] and saying it’s getting no smaller nor shallower.

Eric Lofgren: For me, the idea of moving towards portfolio management to help delegate decisions down so that you can inject new types of technologies quicker into this requirements, budgeting, acquisition cycle. So getting away from that reliance on prediction where you have to define the cost-schedule-technical. So we talked portfolio management. DoD has a directive on capability [portfolio] management and they’re using that to make resourcing decisions in the budget by finding capability gaps. Often they are tied to these wargames, or simulation exercises, so you’re seeing those pop up. USD R&E has one from Heidi Shyu’s office, the Marines started one, you have the Space Warfighting Analysis Cell.

So what’s the point of all this? There’s debates on what is a portfolio, the different types of portfolios? Everyone has their own idea. There’s an acquisition community that likes to organize around platforms, like air vehicles and ships. That’s the traditional way we do things. The joint staff and operators like to look at capabilities that cut across platforms, like battlespace awareness, logistics, and force application. R&E has their technology areas. You can look at them by domain — air, land, sea, space, cyber, maybe even EW. Then there’s more difficult types of portfolios that move away from inputs towards kill chains — connecting sensors and effectors. Mission threads or challenges like how do you defend Taiwan from a seaborne invasion.

You can imagine we have all these program elements and programs. A lot of them are multi-mission. They map up to all these different portfolios in all these different ways. The real question is, how do we use those portfolios to provide better transparency and insight to folks in Congress, OSD, and otherwise, but also be able to move fast because the current system, as everyone is well aware, it takes years to get a requirements, years to get funding, and maybe even a year or two to get on contract in the acquisition process. No longer can we wait 5, 6, 7 years to start thinking about moving to a new technology or solutions.

A lot of these new things that are needed, like networks for joint all-domain command and control, they exist. The technologies exist, coming from the commercial sector many of them. Technology maturation and risk reduction is not needed. It’s getting them into the force, and buying them at scale when they work, and having a mechanism to delegate those decisions and move fast.

Be sure to listen to the whole thing! While we’re on this topic, I would be remiss to leave out the idea that the real fundamental portfolio is the program management and program executive offices. These organizations are the real hub of acquisition, as Nick Sinai recognized in an excellent Fed Scoop article:

The Department should provide incentives for acquisition professionals inside the PEO portfolios to buy emerging tech for integration into existing programs. Winning technologies should be able to scale across different programs — what is known as “portfolio management” — even programs that comprise a number of different traditional defense contractors. Imagine the impact that would result from technology companies competing to become a “capability of record” for the DoD, rather than owning a smaller piece of a single program of record.

While making PMs and PEOs organic portfolios and managers of “capabilities of record,” rather than managers of a bunch of stovepiped line items, is directionally correct DoD needs to start making incremental change now. That probably looks like giving each PM or PEO a significant tech insertion budget line by consolidating other activities and releasing them from some of the hang-ups on requirements and new starts.

Many of the programs DoD will have to fight in 2027 already exist — they need to be put on faster cycles to stay current with the latest software, sensors, communications, ordnance, and other capabilities.