By Mr. Steve StarkSeptember 27, 2016
The Hon. Frank Kendall isn't especially fond of the term "acquisition reform." He thinks it "conveys the impression there's some dramatic shift that's going to make things fundamentally different. I don't think there's any such thing."
Kendall, undersecretary of defense for acquisition, technology and logistics (USD(AT&L)), vastly prefers "acquisition improvement," he said during an Aug. 16 interview with Army AL&T following his keynote address at the third U.S. Army Innovation Summit, at the College of William & Mary in Williamsburg, Virginia. The series of summits is hosted by the U.S. Army Materiel Command.
Kendall's wide-ranging and occasionally funny keynote centered on the successes of Better Buying Power (BBP), launched in 2010, and where its initiatives still need to go. For Kendall, BBP is acquisition improvement, and it's having a real impact. DOD is enjoying a 35-year low in cost growth for major contracts, Kendall said in his presentation. Part of that is a result of the should-cost initiative, which he said is playing a big role in controlling costs. "Things have been getting better" since the rollout of BBP, "and in a rather significant way," he said. Not only that, "We've done all this without affecting the profit of industry."
Still, "acquisition reform" is in the air, with the passage of bills by the U.S. House of Representatives and the Senate as part of their respective versions of the National Defense Authorization Act (NDAA) for Fiscal Year 2017. But the kind of reform that Congress is proposing isn't what Kendall is after.
"There are a great many things wrong with the Senate bill," he said. "There's the one thing that's very wrong with the House bill," which is that it shifts $18 billion out of overseas contingency operations and into the base budget for DOD. That proposed action has prompted a veto threat from President Obama.
The next step is for House and Senate conferees to reconcile differences between the two bills, then for Congress to pass the compromise version. "Then we'll see if there's a veto or not," Kendall said. Given that the presidential election complicates the politics in a big way, it is anyone's guess when the FY17 NDAA might land on the president's desk in any case, he acknowledged.
"We'll see what happens in the election, because I don't know that we'll get a bill even until after the election," which could change the prospects for acquisition reform fundamentally, Kendall said. "We've always had an NDAA, but if there were ever a year when not having an NDAA looked like a realistic prospect … this is probably that year."
AN ENGINEERING SOLUTION
Kendall has served in both Democratic and Republican administrations. He is an engineer, a teacher, a lawyer and a manager, and he knows a thing or two about the military, acquisition, program management, government and statute. He graduated from the United States Military Academy at West Point, where he has also taught, and spent 10 years on active duty, ultimately retiring as a lieutenant colonel after a stint in the Army Reserve. In all, he has more than 40 years of experience in engineering, management, defense acquisition and national security affairs in private industry, government and the military, according to his official biography.
In addition to a bachelor of science degree from West Point and a master's in aerospace engineering from the California Institute of Technology, Kendall has an MBA from the C.W. Post Center of Long Island University and a juris doctor degree from Georgetown University Law Center.
It's clear that he approaches acquisition improvement from the methodical, problem-solving perspective of an engineer, but also from the thoughtfully considered perspective of a professor urging his students to think outside the box. He understands that acquisition is "full of complexity, it's full of difficult and tough problems to solve," as he said in his keynote. That's largely because, in his view, DOD does so many different things with so many different variables that there is no single right answer, no textbook formula. Acquisition programs have to be tailored to the product being acquired, and the managers of those programs have to think along those lines.
Although Kendall is far too much the lawyer and diplomat to say so, he can leave a listener with the distinct impression that he thinks that "our board of directors, the Congress," is to some degree wasting its time with acquisition reform, if not just plain getting in the way.
During his keynote, he said that Sen. John McCain, R--Ariz., and former Sen. Carl Levin, D--Mich., before he retired from the Senate in 2015, "asked for inputs from a lot of people on the acquisition system and how to make it better. One of the things I said was, 'Stop writing rules.' " The system, and the systems it procures, are just too complex for Congress to try to micromanage them, Kendall said. "We do a huge variety of different things. Sometimes we are going to take a lot of risk because the urgency is high and we really want to go fast and we don't mind wasting money along the way. Other times, we want to take a more deliberate process because you want to get a better product and be sure of that."
The BBP initiatives are the means to that end. For Kendall, improving acquisition is akin to continuous quality improvement in manufacturing. "You attack the most common, important defects first, and you solve those first," he said. "Then you … move on to the next round of things." Do that enough, and processes get streamlined and become more efficient.
Kendall said he'd been asked more than once "whether I was more of a revolutionary or evolutionary leader, and I thought about that--and the answer was, 'I'm more evolutionary, but I'm going to stick around until I'm revolutionary by the time
I'm done.' That's what I've tried to do." Taken as a whole, he said, "in a way, that's reform, but it's the accumulation of a lot of little things by an awful lot of people that lead to large-scale improvement by the time you're done."
A GUIDE TO HELP YOU THINK
The April 24, 2013, implementation directive accompanying BBP 2.0 is tagged, "A Guide to Help You Think," which is a theme Kendall comes back to again and again: Think.
In his keynote at the summit, he said, "In my 45-odd years in the military and defense acquisition, I have lived through a lot of cycles of what's called, usually, acquisition reform." While it has taken on different flavors over the years, he said, "generally speaking, fads have not worked."
"I will tell this community and any other community that there is no magic that's going to remarkably transform acquisition. What it takes to make things better is professional people, hard work and a willingness to challenge assumptions and a willingness to go back and look at the data and understand what's really happening. It's a very difficult, incremental process."
BBP is acquisition reform at the operational level, and the kind of improvement that Kendall and Secretary of Defense Ash Carter, his boss and predecessor as USD(AT&L), most want to see in order to meet the challenges that DOD faces. Congress, he said, keeps wanting "to replay the same experiments."
But that misses the point. "I think the basics about how to do a program are understood," he said. "What we need to do is just hone our craft and become better at it. So, what we've been doing for the past several years, in the Better Buying Power initiatives in particular, is to address a number of areas that we thought we could improve, learn from that experience and then kind of move on to the next round of things." Improvement has emerged from that work and from other experiences, Kendall said.
TAILOR AND CHALLENGE
Like the engineer he is, rather than going for magic solutions, Kendall looks at the massive layers of rules that make up the Defense Federal Acquisition Regulation as obstacles for which it is possible to engineer solutions. In that context, fixed rules are too constraining, he believes.
One of the methods he wants "my acquisition people" to use in all programs is tailoring. What he means by that is simple. It comes back again to "think," he said in the interview. "I emphasized tailoring--I wrote it myself--in [DOD Instruction] 5000.02 [Operation of the Defense Acquisition System] extensively. I must have put the word in there 150 times." (A search of the document turned up slightly fewer than 50 appearances.) In reading about tailoring in 5000.02 and listening to Kendall, it seems clear that what he wants program managers to do is figure out how to make the rules work in their favor, not to follow them without thinking. For Kendall, the key is critical thinking.
Tailoring is about "structuring a program in the best way to deliver that program. And if it's a service contract, it's structuring the business deal for the service contract and the best way to get whatever the government is trying to achieve."
As if addressing the risk-averse, Kendall said, "There is enormous encouragement at the top. We do do a conscious process of tailoring documentation requirements for people coming through for milestone decisions, but the tailoring I'm really most interested in is the program structure itself--what risk mitigation is needed, if any, and what decision points are needed, and how that's logically structured together. How things are set up with industry, so we don't have things that don't have value for us, for example."
So, the next generation of Meals, Ready to Eat doesn't need the same kind of structure, oversight, testing, evaluation and so forth as the next-generation fighter jet. The risks are entirely different. Engineers need to be supervising engineers, for example, because if a program manager doesn't fundamentally understand the stakes, risks or requirements of a program, the government can end up purchasing something that, even if it may be the latest and greatest tech whiz-bangery, does not fulfill the government's purpose.
Tailoring has to be within the rules but, Kendall emphasized, "a lot of things can be waived." He wants managers to decide if something should be waived--and then ask for the waiver.
Misunderstandings about tailoring, he said, "may have to do with some of the OSD [Office of the Secretary of Defense] staff, who kind of like to do things by the book, sometimes. What I've done there recently is put a requirement on them that, if they raise an issue with a service, they have to tell the service--and me--whether they think [the issue is] something they consider to be essentially a DAB issue--a Defense Acquisition Board issue. If it's not, the service has the discretion to address it or not. If it is, then I have to agree that it is, and the service would have to address it by the time we make the decision."
This tendency of some acquisition professionals--both civilian and military--to maintain a knee-jerk adherence to the rules and rely too much on one-size-fits-all schoolbook solutions clearly rankles Kendall. He understands where it comes from, though, in what he described as a very difficult time for acquisition professionals. They "work in a very difficult environment," he said. "They're constantly criticized by a lot of outside stakeholders who don't understand what they do at all."
In presenting the last of his 10 BBP principles during his keynote (see sidebar), he said, "How many times have you heard somebody say, 'That's really stupid, but that's what they say we have to do, so I'm going to do it?' … What I encourage people in the acquisition community to do is: Don't do that. If you see something that's stupid, it probably is stupid. … Raise the flag that there's something wrong."
OPERATOR AS REFORMER
For Kendall, much of the urgency of acquisition reform at the legislative level should be about money, and less about the operation of the defense acquisition system. Improvement in acquisition will happen best at the operator level--project and product managers, contracting officers and engineers--because those are the people who know what needs fixing, and in many cases are fixing it.
If there is something that really needs reforming other than DOD's lack of money, in Kendall's view, it is the country's seriously eroded technological advantage. In his keynote, he talked about the first and second offsets, and the unprecedented technological superiority of the U.S. in the 1950s, '70s and '90s. "We don't have that anymore," he said. "We're much more in an even game, if you will, with the globalization of technology."
He is not the only one who sees this as a big problem and to say, "We need a way to restore dominance." That would be the third offset, even if whatever that finally may be is still open to discussion. The armed forces face a wide range of challenges with a wide range of characteristics, and "we're asking our military to be able to do a lot of different things simultaneously--different theaters, different types of threats … counterterrorism campaigns up to major warfare against near-peer competitors in different types of domain-dominated theaters," Kendall noted.
Addressing those threats and getting the kind of innovation that the United States needs costs money. For Kendall, it also requires re-examining how DOD does its job. "Given what's happened in the world, we really do need to examine the way we do business and whether we've got it fundamentally right or not," he said, adding, "I think there are some indications … that we need to make some changes."
The technologies used in the first Gulf War and elsewhere at that time were developed in the 1970s. "Twenty-five years is a long time in terms of technology and the application of technology to operations," Kendall said. "Think about 25-year increments starting with about 1865 and how much warfare changed in each of those increments. It's pretty dramatic, and here we are, 25 years after the first Gulf War, with largely the same operational concepts, and we've modernized, we've improved to a certain degree, but we really haven't fundamentally changed. … Others have been working very hard to figure out how to defeat us since then."
It's much easier, Kendall said in his keynote, for countries that have lost to re-examine what they're doing and to change. "It's harder for countries who have been very successful," he said.
Getting back to the people at the top of his list of BBP principles, Kendall said in his presentation, "If you wanted to do something easy, you shouldn't have gone into defense acquisition. It's full of complexity, it's full of difficult and tough problems to solve."
Part of his concern for people--the professionals who keep Army acquisition going--has to do with the Army in particular. "I have some concerns, quite frankly, about the Army, about the sustainment of your workforce as you go through what for all of us is a very stressing time--keeping your engineering talent pool up, keeping your contracting talent pool up, keeping your program management talent pool up, the various professions that are critical to the success of bringing your programs in. … Those are the people that make all the difference in the world," he said.
"My themes for 2016 are, first of all, sustain the momentum, and second of all, keep your sense of humor, because there are some things going on that require one--to either be very, very frustrated or keep your sense of humor."
Whatever Congress does, whatever the election brings, it's a sure bet that Kendall will keep motoring forward with his own version of acquisition improvement. Eventually, if he has his way, his evolution of the process will become a revolution--that's just what he said he will do.
BETTER BUYING POWER PRINCIPLES
Kendall began his keynote at the third U.S. Army Innovation Summit with a list of better buying power principles. "I kept getting briefings from people who would tell me, 'Sir, I'm doing better buying power here. I'm following Better Buying Power principles,' " he said. "And because I'd never put out any better buying power principles, I thought that was interesting, and I'd ask them what they were.
"Most of the time, people didn't know. But they were following them. They were sure they were following them. And most of the time they probably were. But I thought it might be useful to actually write some down."
At the very top of the list, he said, is the importance of people. Although that's not at the top of the list of Better Buying Power initiatives "for a variety of historical reasons," it tops of the list of principles, because that's where people belong.
PRINCIPLE 1: People matter most; we can never be too professional or too competent.
PRINCIPLE 2: Data should drive policy.
PRINCIPLE 3: Critical thinking is necessary for success; fixed rules are too constraining.
PRINCIPLE 4: Controlling life cycle cost is one of our jobs; staying on budget isn't enough.
PRINCIPLE 5: Continuous improvement will be more effective than radical change.
PRINCIPLE 6: Incentives work--we get what we reward.
PRINCIPLE 7: Competition, and the threat of competition, is the most effective incentive.
PRINCIPLE 8: Defense acquisition is a team sport.
PRINCIPLE 9: Our technological superiority is at risk, and we must respond.
PRINCIPLE 10: We should have the courage to challenge bad policy.
This article will be printed in the October -- December 2016 issue of Army AL&T magazine.