My unfulfilled ambition prior to leaving the Pentagon, where I served as undersecretary for acquisition, technology and logistics, was to launch a fourth round of acquisition improvement initiatives focused on the sustainment phase of program life cycles (where the bulk of costs are realized) and the sustainment enterprise in general. Sustainment was one of two areas that I recommended to my successor, Ellen Lord, for major efforts at improvement (the other was modernizing Department of Defense enterprise software development).
The three rounds of Better Buying Power, implemented from 2010 to 2016, included many initiatives focused on sustainment, including in general a large number focused on more effective management of all contracting for services, and specifically items such as increased use of performance-based logistics contract incentives and improved management of intellectual property rights — so as to provide for competition during sustainment.
What might Better Buying Power 4.0 have added to the list, and what might any sustainment improvement effort, however labeled, consist of? Here are a few ideas — and some cautionary considerations.
The key to reducing costs and improving productivity is the application of emerging technologies to DoD sustainment and logistics. We are at the early stage of revolutionary changes that will profoundly affect society, including how goods and services are produced and delivered. The technologies include: automation, big-data analysis, adaptive manufacturing, ubiquitous interconnected sensors (internet of things) and others. The maturity and the implications of the emerging technologies are becoming clearer quickly, although much remains to be discovered and the potential for new applications is endless. Adaptive manufacturing, or 3-D printing, for example, has moved light years since 2012 when I announced that the team from Youngstown, Ohio, was the winner of the National Additive Manufacturing Innovation Institute competition. Similarly, we are just seeing the beginnings of the transition to autonomous vehicle delivery systems, but this is now obviously the route we will follow.
Just in time, inventory management has been around for decades, but the big-data analytical tools and the explosion of connected information sources needed to take logistics and sustainment to a whole new level are ready for widespread use. None of this is invisible to the Department of Defense, and the current leadership is taking steps in the right direction, but there are obstacles to progress. They should be confronted and eliminated, or reduced.
The application of emerging technologies to sustainment and logistics will happen quickly in the commercial world where the forces of competition ruthlessly demand efficiency, where time to market is critical to establishing a winning position and where there are fewer structural obstacles to innovation. The DoD, on the other hand, moves at the pace of budget appropriations, must comply with and implement an overwhelming set of statuary directions in its business procedures, has to live with unstable funding and within capital investment constraints, cannot cease operations for a transition period, and must overcome cultural and institutional resistance to change.
While daunting, all of these concerns can be addressed. Leadership (in Congress, the Defense Department and industry) can accelerate the application of emerging technology to defense sustainment and logistics. I would offer those leaders three observations as they take on these challenges:
- Beware of unintended consequences.
- Provide adequate, upfront investment.
- Carefully consider the difference between wartime and peacetime sustainment requirements.
Unintended consequences lurk in many seemingly attractive areas of innovation — defense business practices included. One route to bringing commercial technology into defense logistics is analogous to the use of the other transaction authority, or OTA, for new product development. An exception from procurement rules that would make this easier to do is an attractive concept and should be pursued, but with some caution. Commercial sustainment contract vehicles should be examined as a way to bring new sources for logistic support and new technology into the department; but my expectation is that commercial contract vehicles, to the extent they are standardized, will not meet all the Department of Defense’s needs, including some critical needs.
Established defense contractors know their customers and their needs well; nontraditional contractors do not. Commercial contracts are often written by the seller, with protecting the seller’s interests foremost in mind. Government contracts are written by the buyer, with protecting the government’s interests foremost in mind. Considering the department’s long-term, as well as short-term, needs should also be an important part of any business deal. All of this argues for a degree of care and perhaps for traditional and nontraditional contractors to work together, as they often do today when a commercially based product or service is acquired by the government. Getting to some government-standardized, commercially based templates for business deals outside the normal government constraints, as with OTAs, should be the first step. Once that is in hand, several pilot contracts should be implemented as a learning exercise. Recent events have demonstrated some of the pitfalls of rushing into commercial-like contracts.
Upfront investments are almost always required to achieve significant efficiency improvements in any business function. This is certainly true for defense sustainment and logistics. While the department has frequently been criticized, especially in the information technology area, for not being a faster adaptor of modernization, the underlying problem has not been the knowledge of the opportunity or the willingness to change — it has been the lack of the necessary investment capital. The department keeps old computers and old business systems (and old weapons systems in configurations that could be upgraded) because within all the competing priorities, these investments fall below the line after paying our troops, training them, deploying them as needed and buying more modern weapons at a minimum rate. Congress compounds this problem by taking cuts that assume or direct efficiencies, while providing no upfront resources to implement those efficiencies.
A good example is the recent attempt to slash defense agencies that provide critical functions, all in the name of assumed efficiencies. The department should identify the sustainment investments with the strongest business case and ask Congress to fund them. Congress should find a way to support these high-payoff initiatives, including the needed upfront investments, without penalizing the department.
It is a truism that war and peace are not the same, but this is particularly important when considering efficiencies in logistics and sustainment. The Department of Defense has relied heavily on forward-deployed contractors in the years since 9/11. That dependency works well in conducting counterinsurgency campaigns from relatively secure forward bases. It may not work so well in other types of conflict. Large scale conventional conflict is fortunately not the norm, but the mission of the Defense Department is to be ready for and if necessary conduct warfare. While this fact should not completely dissuade us from initiatives that improve peacetime sustainment performance, it should also inform any changes that we make. When called upon in extremis, the sustainment and logistics enterprise must be ready to meet the challenge.
While I’m sure that the Better Buying Power label will not be used again anytime soon, I’m also sure that the quest for improvement in all aspects of defense acquisition will continue. Getting more for our national security investments is every American’s goal, and I deeply hope that the thoughts I have expressed here will help that process move forward.
I applaud the ongoing efforts by all the dedicated people, in government and in industry, who work to that end every day.
Frank Kendall served under President Barack Obama and Secretary of Defense Ash Carter as the under secretary of defense for acquisition, technology and logistics.