Programs that aren’t meeting cost and schedule will be in trouble when the Pentagon releases its leaner budget for next year, the Air Force’s top acquisition official said Friday.

David Van Buren, the Air Force’s acquisition executive, didn’t name any specific programs that will be scaled back or cancelled as a result of the budget cutbacks expected to be announced in February. But he said when the fiscal year 2013 spending plan is released it will be clear to industry and observers that the Pentagon is taking a more incremental approach to acquisition, and putting a premium on performance.

“As in real estate you look at location, location, location, I can tell you that what we’re looking for now is performance, performance, performance,” Van Buren told an AFCEA Northern Virginia crowd Friday afternoon. “The budget for fiscal 2013 did not look kindly on non-performing programs. That’s the message out of this. If you get out of the gate, you perform, things are going to be pretty solid. But nonperforming programs are going to suffer here in the way we go forward.”

Also, Van Buren said, industry should expect to see a more distributed strategy to the way the Air Force allocates funding for acquisition programs. In the current year’s budget, he said, the Air Force’s top ten most expensive programs accounted for almost half of its spending. He said that won’t be the case next year.

“This whole budget activity is driving what I’ll call incrementalism,” he said. “And that incrementalism is looking at our requirements, looking at our research and development, and how we transition that research and development activity. Not just putting it on the shelf for perpetuity, but looking at productize that in the future. How we execute our acquisition strategies, from better business deals to how we look at spending the taxpayer dollar as if it was our own has really taken over the building right now.”

Van Buren said he thinks the Air Force has gotten a lot better in recent years about specifying its requirements to industry, and conducting fair and transparent competitions. He said the most recent acquisition for a new aerial refueling tanker was a prime example.

Another Air Force acquisition priority, he said, is to increase the distribution of contract funds to small businesses. Van Buren said there’s good news and bad news on that front: Most of the service’s major commands are far exceeding the Air Force’s overall 17 percent small business goal, with some of them awarding more than half of their contracts to small businesses. But he said those commands aren’t where the real money is. It’s in the big spending organizations like Air Force Space Command and Air Force Materiel Command.

“The problem there is that most of those programs are very large,” he said. “Satellites, freighters, rockets, bombers. A lot of small businesses aren’t in those markets. So we’re trying to do our best to look at debundling activities and other approaches which will get us up. We have a challenge. If we don’t do anything, we’re going to slip down into an unsatisfactory situation.”

One area where the Air Force plans to allocate a healthy chunk of small business spending is on its upcoming NETCENTS 2 contracts for information technology modernization. It’s the follow-on to the current NETCENTS contract vehicles, which the Air Force has had to extend several times because of delays in making awards on the new set of multiple award procurements, which are worth up to $24 billion dollars.

But Van Buren promised this year is finally the year.

“You can say this thing was delayed and delayed and delayed,” he said. “But the reason why is that there were so many people who bid on these programs that it was just a huge task for (Air Force Electronic Systems Command) to go through and do the careful source selection they’ve been working on. They really have spend the time on trying to give everyone a fair shake in this program.”

Van Buren said the Air Force expects up to $11 billion dollars out of the overall $24 billion to go to small businesses. Among other things, NETCENTS 2 will give the Air Force access to outside help as it tries to break down its stovepiped IT systems and build a coherent network enterprise.

“What we had was a wide distribution of little nooks and crannies and little programs that didn’t interconnect in a major architecture,” he said. “It didn’t matter whether it was IT or cyber or battlefield surveillance. We’ve redirected the MITRE Corporation into a more architectural and system engineering organization to try to get into that. I hope we can move as fast as you would want into that, and away from buying bits and pieces and hoping or wishing that they would all connect together.”

He said the Air Force still faces that disjointed IT problem with its enterprise resource planning systems. Van Buren the service’s earlier efforts with regard to ERP’s weren’t very thoughtful, attempting to take a big bang approach rather than implementing functionality in an incremental way.

But he says the ERP failures weren’t all the Air Force’s fault.

“The performance of ERP systems is not good,” he said. “But that says something about the industrial base. I think for industry, there’s a little bit of looking in the mirror here. I think some of this is looking introspectively about how to get this done, because we need a new system. We’re maintaining or sustaining something on the order of 250 different systems for logistics support. That’s tough stuff, you know?”

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