REPORT TO CONGRESS ON CHIEF OF STAFF OF THE ARMY ACQUISITION AUTHORITIES. March 2016

Transcription

1 REPORT TO CONGRESS ON CHIEF OF STAFF OF THE ARMY ACQUISITION AUTHORITIES March 2016 In Response to Section 801 of the National Defense Authorization Act for Fiscal Year 2016 Pub. L The estimated cost of this report or study for the Department of Defense is approximately $153,000 for the 2016 Fiscal Year. This includes $0 in expenses and $153,000 in DoD labor. Generated on 2016Jan29 RefID: 9-E16C4A1

2 Table of Contents INTRODUCTION... 3 Purpose of this Report... 3 Section I. Status of Army Acquisition... 4 Section II. Actions Based on New Authorities... 4 A. Army Requirements Oversight Council... 5 B. Experimentation and Prototyping... 5 C. Sustainment... 6 D. Army Rapid Capabilities Office... 6 E. First Principles for Measuring Acquisition Outputs... 6 Section III. Recommendations for New Authorities... 7 A. De layering Oversight... 7 B. Enhanced Talent Management... 8 C. Major Automated Information Systems... 8 D. Protest Relief... 8 E. Funding Flexibility... 9 F. Test and Evaluation... 9 G. Outreach to Industry H. Funding Stability I. Sustained Commitment to Acquisition Reform SUMMARY

3 Purpose of this Report INTRODUCTION This report responds to the requirements of Section 801 of Public Law This section, reprinted below, directs the Chief of Staff, Army to report on the results of a review of acquisition related authorities, to include the following: An Act To authorize appropriations for fiscal year 2016 for military activities of the Department of Defense, for military construction, and for defense activities of the Department of Energy, to prescribe military personnel strengths for such fiscal year, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, * * * * * * * SEC REQUIRED REVIEW OF ACQUISITION-RELATED FUNCTIONS OF THE CHIEFS OF STAFF OF THE ARMED FORCES. (a) REVIEW REQUIRED. The Chief of Staff of the Army, the Chief of Naval Operations, the Chief of Staff of the Air Force, and the Commandant of the Marine Corps shall conduct a review of their current individual authorities provided in sections 3033, 5033, 8033, and 5043 of title 10, United States Code, and other relevant statutes and regulations related to defense acquisitions for the purpose of developing such recommendations as the Chief concerned or the Commandant considers necessary to further or advance the role of the Chief concerned or the Commandant in the development of requirements, acquisition processes, and the associated budget practices of the Department of Defense. (b) REPORTS. Not later than March 1, 2016, the Chief of Staff of the Army, the Chief of Naval Operations, the Chief of Staff of the Air Force, and the Commandant of the Marine Corps shall each submit to the congressional defense committees a report containing, at a minimum, the following: (1) The recommendations developed by the Chief concerned or the Commandant under subsection (a) and other results of the review conducted under such subsection. (2) The actions the Chief concerned or the Commandant is taking, if any, within the Chief s or Commandant s existing authority to implement such recommendations. 3

4 Section I. Status of Army Acquisition With rapidly proliferating technology, a myriad of new threats, and decreasing budgets, it is essential that we provide our Soldiers the equipment they need to defend our Nation. The changes in the 2016 National Defense Authorization Act (NDAA) are a good start, and we appreciate the support of Congress. The complexity and bureaucracy of the acquisition process translates into unnecessary costs and lengthy program timelines. Increased timelines lead to programs with stale requirements that become out of date and late to need. The acquisition enterprise, under the current construct, has often failed to maintain the advantage our Soldiers deserve and need to maintain overmatch. The industrial might of the United States has traditionally been central to our ability to produce the equipment and technology necessary to dominate any adversary. It is becoming increasingly clear that we operate in a changing world where technology evolves at an exponential rate, proliferates, and becomes more affordable to both state and non state adversaries. Private industry, not the Department of Defense, now drives the majority of innovative technological change. We are in a race with our adversaries to harness and field the best military applications of product innovations. In the future, we cannot count on long periods of technological monopoly or overmatch. Therefore, it is more important than ever that we quickly adapt our acquisition processes to rapidly exploit every opportunity. We simply must be more agile. Additionally, traditional suppliers have attempted to maintain competitive market positions. This has resulted in reduced competitiveness, increased sustainment costs, reduced interoperability, escalating software costs, protracted timelines, consolidations, and more contract protests. Non traditional and small vendors who perform in the high tech sector have been reticent to engage in the defense industry due to the relatively small benefits and over complicated administrative requirements. Training and expertise alone cannot solve these issues. New tools and processes will be essential to the effort. Determining what systems should be developed to support the national military strategy requires extensive and iterative prototyping to allow for refinement of requirements without excessive risk or requirements creep within programs. This type of prototyping requires resources for activities that may not result in programmatic end states. It is necessary to have the ability to risk failure quickly and relatively cheaply to enable rapid learning and agility. This is similar to high tech industries processes that allows the military leadership and end user to evaluate technologies prior to commitment to a full program where their strengths and weaknesses are only realized in operational testing or fielding. Given the authorities granted in the 2016 NDAA, outlined below are several actions I am taking to improve the Army Acquisition system. Section II. Actions Based on New Authorities Shortly after becoming Chief, I directed an assessment of previous acquisition legislation, historical organizational changes, and acquisition reform studies. In addition to leveraging internal expertise, we initiated dialogue with U.S. Special Operations Command and the other Services to incorporate proven best practices. I am personally leading the effort to identify opportunities to improve Army acquisition. 4

5 A. Army Requirements Oversight Council One large change I made immediately is to reinvigorate the Army Requirements Oversight Council (AROC) to ensure the Army s acquisition system remains customer focused. I am using this forum to implement my new authorities regarding my participation in Milestone A and B decisions for Major Defense Acquisition Programs, Selected Acquisition Reports, and approval of proposed Configuration Steering Board changes that could have an adverse impact on program cost or schedule. Additionally, I am working with the Secretary to expand my role across other acquisition decisions and programs, which do not meet the Major Defense Acquisition Program threshold (ex. concurrence in cost, schedule, technical feasibility, and performance tradeoffs in conjunction with Milestone C decisions and acquisition category (ACAT) II and III authorities consistent with 2016 NDAA intent on MDAPs). This expansion of the AROC process ensures that I, as the Chief of Staff, provide leadership to the process while the voice of the customer permeates throughout all of the Army s acquisition activities. The AROC forum is where I provide priorities, vision, intent, and approve requirements for the Army s modernization program throughout the acquisition lifecycle of required capabilities. Similarly, I changed the membership from being staff centric to command centric. The Commanding General of Forces Command represents the operational Army and the Soldiers that will ultimately use the equipment; the Commanding General of Training and Doctrine Command represents our training base and requirements recommended for future capabilities; the Commanding General of Army Materiel Command represents our logistics functions to both implement and sustain acquisition systems. To better ensure Cyber resiliency in everything we do, the Commanding General of Army Cyber Command will also participate along with the Commanding General of our Army Test and Evaluation Command who will ensure we get immediate and actionable feedback from ongoing testing. Finally, because prototyping and technology maturation are key to my efforts, we have also added the Commanding General of our Research, Development, and Engineering Command. It is my intent for the new AROC to serve as the hub for enabling collaboration across the requirements, resourcing, and acquisition communities; establishing priorities to balance resources and requirements; and enforcing accountability. The ultimate purpose of the AROC is to ensure that the Warfighter receives the right capability in the timeframe that makes it useful on the battlefield and within cost. B. Experimentation and Prototyping The Army will increase the use of early prototyping. Experimentation is critical for a holistic and indepth understanding of how a materiel solution might be used and ultimately integrated to overcome a capability gap. We must clearly articulate the standard for success, with each effort, to ensure clarity of purpose and to preclude waste. While there is risk and the Army could occasionally fail, learning from these failures early is much less costly than having much larger failures later in the process. Additionally, I believe the risk of early prototyping is worth the potential benefit of ultimate long term payoff. Unfortunately, there are inhibitors to this approach and the Army offers some legislative changes for consideration that enable greater agility on the front end by incentivizing or protecting experimentation before the establishment of a formal program of record (see Section III). We have already started moving out on this new path. We are exploring options that will provide mobile protected firepower capabilities (e.g., Light Armored Vehicle) to defeat armored threats for our Infantry Brigade Combat Teams. Under our Ground Mobility Program, we are experimenting with the use of light and highly mobile platforms for operational use with our early entry airborne forces. We are 5

6 increasing the lethality of our Stryker platform, with your assistance, in order to get capability to Europe as quickly as possible; we intend to accelerate the procurement of the Armored Multi Purpose Vehicle to get a replacement for the M113 to Europe this decade; we are seeking to integrate active protection systems on our Bradley, Stryker, and Abrams platforms; and we are going to use our Tank and Automotive Research, Development, and Engineering Center to build prototypes of our Mobile Protected Firepower, in collaboration with the 82nd Airborne, so that this new program is built from the beginning with Soldier input and reduced risk. Taken together, these actions represent a cultural shift, potentially cutting years off the process of getting capabilities to our Soldiers and doing it at a reduced cost. C. Sustainment The sustainment costs associated with a weapons system typically are more expensive than its development and procurement costs; Government Accountability Office (GAO) estimates this number to be up to 70 percent of total system lifecycle costs. This drives two challenges that I am seeking to reconcile now. First, given that sustainment is such a large cost factor, I want to strengthen existing Army policies regarding sustainment analysis done during the development of acquisition strategies. This will ensure that Army Materiel Command and the Army G 4 inputs are adequate and fully assessed prior to submission for final approval of an acquisition strategy. This is critical to ensure our programs are affordable across their lifecycle. Second, I will work with the Secretary of the Army to better define the management transitions across a system s lifecycle and the role of the secretariat in the execution of sustainment. Current Army regulations charge the Assistant Secretary of the Army for Acquisition, Logistics, and Technology to be responsible for supervising logistics, including acquisition fielding, sustainment and disposal logistics management, and administering life cycle logistics support planning and execution. The Army considers logistics execution to be an operation. While recognizing the role of the secretariat, I will seek to ensure that I have adequate authorities across the entire lifecycle. D. Army Rapid Capabilities Office I am committed to developing a Rapid Capability Office similar to what currently exists in the Air Force to address emerging threats and technologies. Much of the framework for this office will likely be shaped by the directives in paragraph 804 in the 2016 National Defense Authorization Act which directs the Department of Defense to establish guidance for middle tier acquisition. The Army will work closely with both the Office of the Secretary of Defense (OSD) and the Joint Staff to develop policy that will enable the efforts of this new office. However, certain inhibitors exist that, if reconciled through legislation, could further enhance rapid acquisition (see Section III). E. First Principles for Measuring Acquisition Outputs I have developed a framework to measure our programs of record. These first principles, used to assess new programs and the acquisition system s support to these programs, are: Put Soldiers first right equipment at the right time to fight and win. 6

7 Maintain technological relevance remain ahead of adversaries. Provide resources and mandate affordability people and funding aligned to a program and consider the full range of lifecycle costs to ensure sustainability. Hold people accountable for results program has empowered leaders and appropriately defined requirements, timelines, cost, and metrics. Integrate doctrine, organization, training, materiel, leadership, personnel, and facilities informed and synchronized. Ensure technological feasibility industry informed feedback. Drive cost effectiveness avoid waste, push down cost. Section III. Recommendations for New Authorities Acquisition Reform is a significant and complex initiative. It will likely take some years to completely reform DOD and Army systems. As noted earlier, the 2016 National Defense Authorization Act is a great step in the right direction to align the authorities and responsibilities of the Service Chiefs. The Army is vigorously implementing these changes now. However, to further enhance my role and advance the principles for both acquisition reform and measuring programs of record, I believe additional authorities are needed. The following sections identify a number of areas where the Congress can further the reform efforts already underway. A. De layering Oversight Major defense acquisition programs have multiple layers of oversight, often leading to long cycle times for staffing, reviews, and decision making. Much of this oversight resides in the echeloned nature of the department and has been reinforced in previous legislation (e.g. Goldwater Nichols). To fix accountability, decision making authority should reside where accountability is expected in this case, with the Services. The 2016 NDAA made significant progress on this and gave the Services milestone decision authority for programs unless the programs are joint or OSD special interest. However, authority for technology readiness level certification, testing determination, independent cost assessment (ICE), and analysis of alternative approval remain with OSD. The Army should have responsibility for certifying technology levels as part of the acquisition process. The Army Research, Development, and Engineering Command and program executive offices have extensive knowledge about their programs, industry capabilities, and technology maturity. Having this expertise makes them well situated to best certify technology readiness levels prior to Milestone B and assess testing risk. The responsible Service should also have responsibility for cost estimation supported by the validation of a third party and reported where appropriate to Congress. As the Services are responsible for making tradeoffs, they should also have control over the methodologies, assumptions, and level of rigor necessary to make decisions. Similarly, giving the respective Service full oversight of their analysis of alternatives associated with their programs would also go further toward aligning decision authority with the responsible party. The Service, as the decision making authority, should have the responsibility for deciding what analysis needs to be done and when that analysis is adequate to inform their decision making. 7

8 Finally, the Army should have full responsibility for the test plan for the programs which it has decision authority. If accountability is to be fixed at the Service level, then the Service should be able to make the final decision on the level of testing necessary, based on operational employment and risk management. It should be noted that this does not eliminate the oversight role residing in OSD. The oversight role need not equate to decision making authority; decision authority and accountability need to be consolidated, while oversight responsibilities remain separate. OSD oversight could be maintained by submitting assessments to both the Service Secretary and Secretary of Defense, independent of the decision authority. The decision authority would ultimately be accountable for the decisions that he or she made to the Service Secretary and Secretary of Defense in light of any oversight assessments. B. Enhanced Talent Management While the 2016 NDAA directs the Services to implement dual tracking to ensure acquisition professionals remain closely linked to the operational force, which they support, I recommend that the Congress allow the Army to implement an Enhanced Talent Management program. The Army s Enhanced Talent Management program would meet the same intent as dual tracking while allowing the Army greater flexibility to ensure an optimal matching of talented professionals to job opportunities. C. Major Automated Information Systems The 2016 NDAA was silent regarding major automated information systems (MAIS). MAIS programs account for almost 10 percent of Army acquisition programs. A legislative change that extends Army authorities to MAIS programs would ensure I have a role in decisions on Army acquisition programs for equipment and software. D. Protest Relief Protests disrupt procurements. Currently, an unsuccessful contractor can file their bid protest with the contracting agency, the GAO, or the United States Court of Federal Claims (COFC). Because the time limits allowed to bring a protest are different in these venues, a contractor can get several bites at the protest apple. Routinely, the Army is forced to halt all action on a procurement during the bid protest, which adds further delay and costs to the program. A legislative change that provides relief from the disruption caused by protests would make the acquisition system more responsive. 28 U.S.C should be amended to change the time limit for filing a bid protest with the COFC, so that it matches the time limit for filing a bid protest with the GAO. Agencies would not have to litigate repetitive protests and protesters would still receive an expeditious, yet fair resolution of their bid protest. Another necessary legislative change is to lessen the requirements to override Competition in Contracting Act (CICA) stays. Currently, performance of any contract protested at GAO can be automatically stayed under the CICA and the agency must stop all work. For a pre award protest, an agency can override this automatic stay only if it can show urgent and compelling circumstances which significantly affect the best interests of the U.S. that will not permit waiting for GAO to issue a decision on the protest. In the case of a post award protest, an agency can override the automatic stay if either the performance of the contract is in the best interests of the U.S. or the same urgent and compelling 8

9 standard already noted. A lesser standard that accounts for the exercise of sound and reasoned discretion would allow federal agencies to move forward on the procurement of sensitive and needed items, while maintaining the unsuccessful offeror s right to have their bid protest resolved by GAO. E. Funding Flexibility Additional funding flexibility would enable greater agility in the acquisition process. The acquisition process as a whole would be improved if funding were better protected for additional prototyping and experimentation as well as the ability to rapidly acquire emerging technologies or address emerging threats. The current budget process makes it difficult to seize these types of opportunities as funding plans are developed nearly two years prior to execution. Several measures could make funding more flexible, thereby enabling greater agility in the acquisition decision cycle. The Army would benefit from an account or appropriation dedicated to experimentation and prototyping that would promote discovery while not being overly constrained by a prescriptive end state. This would allow the Army to leverage emerging technologies, generate prototypes, experiment with those prototypes, develop new and relevant concepts of operation based on new technologies, wargame those concepts and technologies against a representative threat, and develop well informed requirements. This concept would be furthered if the Army had the ability to transfer funds into this account as new opportunities arose. The Congress should consider combining research, development, test, and evaluation (RDT&E) funding with procurement appropriations, or establishing capability based program element lines within a capability area such as Ground Combat Vehicles or Army Aviation. Either of these initiatives provide the Army with greater flexibility to make execution year adjustments, allow program managers to exploit new technologies, and improve the Army s negotiating positions with industry. Permitting the transfer of funds between RDT&E and procurement without Congressional approval would have a similar effect on the Army s acquisition agility. The Congress should consider raising the "below threshold reprogramming" limit to $50 million for both RDT&E and procurement appropriations. Current reprogramming thresholds are $10 million for RDT&E and $20 million for procurement (or 20 percent of the program base amount, whichever is less). This would allow the Army to make agile adjustments in response to unanticipated changes. F. Test and Evaluation As the 2016 NDAA states, the Service Chiefs and Secretaries are customers of the acquisition system. However, we have no input on the level of testing risk we are willing accept, nor do we have the opportunity to comment on our satisfaction with the annual operational test and evaluation results submitted by the Director of Operational Test and Evaluation (DOT&E). Testing is essential to ensure safety and assess program performance. However, over testing can add significant delays in schedules and increase cost. Additionally, the Army s plan to increase prototyping and experimentation can be leveraged to reduce testing requirements, and in effect reducing program timelines and cost. Notwithstanding the request for decision authority in testing, a legislative change providing the Services authority for testing waivers should be considered. Explicit waiver authorities for the Secretary and myself would provide the ability to balance cost, schedule, and risk in testing while striking a balance between Service testing and external oversight. 9

10 Similarly, Title 10 establishes DOT&E s oversight authority regarding operational test and evaluation. It also provides that Director, DOT&E may communicate his views on the scope of testing necessary to the SECDEF or Deputy SECDEF without obtaining the approval or concurrent of any other official within the Department of Defense. The Congress should consider amending the legislation to require the Service Secretaries and the Chiefs to concur on the level of testing proposed by DOT&E. In addition, DOT&E prepares an annual report summarizing the operational test and evaluation activities of the DOD during the preceding fiscal year. Neither the Service Chiefs nor Secretaries are afforded an opportunity to comment on the findings of the report. This effectively cuts us, the customer, out of the process by precluding us from providing feedback on our satisfaction with program performance during operational testing. Thus, Title 10 should be amended to require DOT&E to submit their annual report to Congress, SECDEF, USD (AT&L), and the Services (Service Secretaries and Chiefs of the Services). Further, amend legislation to allow the Service Chiefs and Secretaries the right to comment on the annual report that the Director, DOT&E submits to Congress similar to the GAO process. G. Outreach to Industry There are two noteworthy problems with industry engagement. First, non traditional industries are reluctant to enter the defense sector because they are reticent to embrace the bureaucracy and complexity surrounding acquisition and contracting. The most innovative companies are often the smallest and cannot afford the cost and time it takes to understand the bureaucracy, comply with complex law, or wait out a protest. Second, the Army is often risk averse and fears accusations of preferential treatment. If the cutting edge innovations of U.S. companies are to be effectively tapped and utilized for defense systems, it must become easier for the entire industrial base to work with the government and we must appropriately incentivize program offices and other Army entities to collaborate with industry. Given the complexities involved and the significant potential benefit, Congress should establish a commission to reduce the barriers, both real and perceived, which limit dialogue. The commission would assess the challenges from both the Department and industry perspectives, and produce actionable recommendations including estimates of the cost, risks, benefits, and implementation time for each recommendation, which could be included in future legislation. H. Funding Stability A recurring contribution to acquisition challenges is the stability of funding. Continuing resolutions typically impede the progress of individual acquisition programs. The most consequential are the restrictions against new starts and limitations based on the previous year s funding levels. As programs are being initiated or developed, the funding levels are expected to increase and the limitations not only cause delays, they contribute to increased costs. Congress should consider ways to provide greater funding stability for acquisition programs and relax the scrutiny of first year obligation rates. Program managers are often forced to use or lose money well before it is set to expire. By reducing the risk to funding based on first year obligation rates, program managers would make better decisions and industry would not be able to leverage fiscal management practices against the Department. It would also give the Army more flexibility to address emerging threats and opportunities. 10

11 I. Sustained Commitment to Acquisition Reform I have implemented several changes towards improving Army acquisition and will aggressively continue our improvement efforts in accordance with the 2016 NDAA. These changes are only an initial step on the path of incremental acquisition reforms. However, the system itself designed, built, and refined over many decades, rarely with a holistic intent, and with origins from a different era still remains exceedingly complex. Although the 2016 NDAA changes and the recommendations in this report all seek to rectify inefficiencies, one possible alternative would be for the Congress to appoint a commission to take a more comprehensive look at acquisition reform. The process would benefit from a holistic review without the inconsistencies germane to incremental change and influence of isolated interests. SUMMARY The Army looks forward to working with OSD, the Joint Staff, and the Congress to tackle the challenges associated with Defense acquisition. The language in the 2016 NDAA brings the Army one step closer to fielding the capabilities our Soldiers need in a timely and efficient manner. In this document, I have provided an overview of actions the Army is taking to improve the requirements, acquisition, and budgeting systems. I also identified areas for your consideration to further acquisition reform. However, the Army will continue to assess areas for improvement within existing authorities and develop further recommendations. 11