In my first post of this series, “Innovation, Interrupted,” I covered how the definition of requirements needs to be fixed if the DoD is going to have any chance of acquisition reform. Specifically, the current acquisition process does not take into account that the DoD, in many technologies, such as tactical radios, no longer controls the tech performance curves. For tactical radios, this curve is driven by a commercial dynamic that seeks to deliver first-to-market at the best price for a given capability. The commercial sector doesn’t have time to wait for continually changing requirements and restart its development process.
Truly fixing how the department acquires technology means not only fixing the requirements process, but also selecting the right acquisition strategy and having a mandate for success from all stakeholders, which is the focus of this post.
The services need to be able to pursue competitive acquisition strategies
Many observers of the DoD’s acquisition “machine” have noted that the traditional military-industrial base has shrunk and contracts aren’t garnering as many bids as they have in the past.
Senator John McCain (R-AZ) said it best during his remarks on the Senate floor in May: “In my view, it is no coincidence that the period of remarkably poor performance among our largest weapons procurement programs has coincided with a dramatic contraction in the industrial base, due in large part to consolidation among the nation’s top-tier contractors. For this reason, the DoD must structure into its strategies to acquire major systems true competition – not fake competition…”
To increase true competition—competition that spurs innovation and drives down costs—commercial companies need incentives to compete for government contracts. Today’s “perfect storm” of lowest price technically acceptable contracts, multi-year acquisition processes (sometime stretching for over a decade), and cumbersome bidding processes, provide disincentives for commercial companies to invest their own R&D dollars into developing a product for government use.
By contrast, Non-Developmental Item (NDI) acquisitions are a win-win for government and industry. NDI acquisitions are not new, but are largely underutilized in government contracting today. The government creates an “NDI Marketplace” in three steps: definition of an operational capability for a military system to be acquired; rigorous operational test and evaluation of vendor offerings; and competitive, timely procurement of systems.
In an NDI procurement, vendors invest up-front in R&D to develop systems to meet the government’s needs. The government invests only in testing and evaluation. It is essential, however, that the government creates opportunities for operational testing. Currently, the Army creates such opportunities through its innovative Network Integration Evaluations (NIEs) held every spring and fall. The DoD as a whole should consider a joint approach to operational testing to enhance the opportunity for the Services to leverage each other’s acquisition efforts. The DoD should also consider applying a portion of the R&D savings in NDI procurement to offset the costs of operational exercises that will help validate a product’s effectiveness and suitability for use by the warfighter.
Successful NDI vendors recoup their R&D investment through sales to the US government, sales to international military customers, and potentially, sales of modified systems to non-military customers, thereby enabling the company to invest again in the next generation of innovation for its customers.
We must work together
A leadership commitment by all is necessary to make the vision for acquisition reform a reality. Congress, the DOD, and industry all need to play a part, as we all seek the right balance that keeps the military properly resourced and outfitted. Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L) established Better Buying Power 3.0 for this very need for all parties to collaborate on acquisition.
Empowering the services to pursue competitive acquisition strategies and supporting their budgeting decisions, along with fixing the requirements process and gaining a commitment from all stakeholders, will result in a better use of resources and a military that has the innovation it needs for success.
