Under Secretary of Defense for Research and Engineering Heidi Shyu recently outlined the Pentagon’s critical technology areas. Not surprisingly, 11 of the 14 are heavily commercial areas such as biotechnology, artificial intelligence, quantum science and advanced materials.
The Department of Defense’s increased engagement with commercial companies in recent years clearly demonstrates the critical role these and other technologies will play in future military systems. Unfortunately, DoD has struggled to adopt commercial technology at scale, in large part due to its industrial-age acquisition practices.
Defense Secretary Lloyd Austin acknowledged this in his remarks at December’s Reagan National Defense Forum when he noted the department “has to do better” at helping innovative companies cross the valley of death from “inception to prototype to adoption.”
Indeed, DoD must do better. To ensure strategic advantage against adversaries like Russia and China, the Pentagon needs an acquisition system that innovates, iterates and scales to develop and field effective military capabilities. This is true for commercial or dual-use technologies, but it’s also critical for the major defense programs that use software and advanced technologies to create the next generation of ships, vehicles and aircraft.
Getting to this objective end state requires first and foremost a change in mindset, a paradigm shift. At the Center for Government Contracting, we call this mindset Acquisition Next.
Defense acquisition today is optimized for the assembly lines of the industrial age, developing programs to build platforms and acquire services based on precisely designed military-specific requirements. Meanwhile, the broader economic system has entered the digital age.
Modern engineering and business practices have dramatically accelerated the product development cycle. Commodity production has been replaced by software, data and product design — intangible capital that requires knowledge labor. For example, in 1970, most of the value of a newspaper was in the paper, ink and printing equipment. By the 1990s, the news moved online, but firms still had to own servers. By the 2010s, almost the entire tech stack was virtualized. The largest and most innovative firms today are software natives.
For the Department of Defense to keep pace, it needs to adopt approaches based on modularity and iteration as opposed to linearity and prediction. We looked for this approach in a year-long study of real-world programs. Interviews with more than 75 government and industry professionals from a variety of backgrounds offered evidence that a paradigm shift is already underway.
Importantly, we focused on practices that can be undertaken today and do not require any changes in authority and regulations. Congress has given DoD numerous new and expanded authorities in recent years and DoD has been actively pursuing innovative approaches through initiatives such as the Adaptive Acquisition Framework. Moreover, there is actually a tremendous amount of flexibility in the much-maligned Federal Acquisition Regulation.
Our final report suggests a way to implement the Acquisition Next mindset through a series of “plays” or leading practices in defense acquisition programs. The first three apply at the total program level:
- Requirements. Focus on short statements of outcomes to increase flexibility in solution design and create a stakeholder process for requirements iteration over time.
- Market research. Develop an organizational capability for continuously engaging with industry to identify technologies and vendors that can increase program value.
- Master the baseline. Determine which system elements are technically separable and pursue traditional contracting approaches for technologies with slower cycle times while faster moving applications receive modular contracts.
These practices enable the second group of three plays, which are suited to contracts with software intensive content:
- Agile work statements. Separate technical direction from contract requirements and use a living roadmap adjusted to the product backlog and user feedback.
- Modular Contracts. Start with broad and flexible solicitations, then transition to multiple-award contract vehicles with recurring task orders and streamlined procedures.
- ·Intellectual Property. Rather than focus on specific standards, influence a microservices architecture with rights to interfaces and operational data.
Taking an Acquisition Next approach can help government programs become leaders in innovation again.
Many of these practices are being used in programs today, but widespread adoption will help drive culture change across the acquisition community. All that’s required is top cover from leadership and support up and down the chain of command.
While there is a need for structural reform in defense budgeting, our playbook demonstrates the flexibility in today’s authorities and regulations. To accelerate the next generation of military capabilities, we need to adopt an Acquisition Next mindset focused on modularity, speed, iteration, competition. Let’s get rolling.
Jerry McGinn is executive director of the Center for Government Contracting in George Mason’s School of Business and a former senior DoD acquisition official.
