Acquisition

Pentagon teeing up nine programs to test new ‘color of money’ for software development

The pilot programs follow a Defense Innovation Board study that found the Pentagon's current spending restrictions routinely "doom" software development efforts...

Jared Serbu@jserbuWFED

March 4, 2020 7:40 am

3 min read

Of all the challenges the Defense Department faces in buying and building software, the rules that govern how it pays for it are widely-considered one of the biggest. And Defense officials think they have a plan to convince Congress to finally change them.

The Pentagon is lining up a series of nine acquisition programs it wants to use as test cases to prove out the concept of using a new Congressional appropriations category that’s specific to software. They would let those programs break free from the “color of money” strictures that were originally designed for military hardware, but make little sense in the context of the agile software development model DoD aspires to embrace.

Ellen Lord, the undersecretary of Defense for acquisition and sustainment, said DoD plans to announce the programs it’s nominating for the software appropriations pilot “soon.” Assuming Congress gives the okay, the department would start implementing the new funding line for those programs as soon as next fiscal year.

“It’s a very, very significant move, structurally, in how we get money,” she told attendees at the annual WEST 2020 conference in San Diego this week. “But I think we will begin to see results almost instantaneously, because the administrative burden of making sure you are charging the right development number, the right production number, the right sustainment number, slows things down. And we know with coding, we’re getting feedback constantly. We want people to literally be able to update systems on the fly.”

The nine programs DoD is teeing up for the pilot will be a mix of software-intensive weapons systems and IT business systems across the military services and Defense agencies. Congressional appropriators would need to approve the idea of allocating funds into software-dedicated accounts before the department could proceed.

But if the pilots prove DoD’s theory — that a single software appropriation will lead to faster development at less cost — the department plans to go back to Capitol Hill to ask for a permanent change that will put most of its software spending in the new appropriations category.

The Pentagon’s approach is in line with one of the ten key recommendations the Defense Innovation Board made last year in a sweeping study on the military’s software development shortcomings.

Read more: Defense News

In its final report, the board said the current “color of money” restrictions routinely “doom” DoD’s software projects.

“The separation of software development into research, development, test and evaluation (RDT&E), procurement, and operations & maintenance (O&M) appropriations — and the use of cost-based triggers within each acquisition category — causes delays and places artificial limitations on the program management office’s ability to quickly meet changing needs, resulting in increased lifetime cost of software and slower deployment,” board members wrote. “Modern (“agile”) approaches used in commercial software development will result in faster deployment and significant cost savings.”

However, since the traditional way of applying funding to acquisition programs is well-engrained in the Defense bureaucracy, Lord said the department decided it was wise to start with a relative handful of programs see how well the concept would work before asking for wholesale changes in how Congress spends money on software.

She said the pilots will continue for several years, but that DoD hopes it will be able to show results that convince Congress to make broader changes to software appropriations within “a year or two.”

“We’re not sure we have it absolutely right. But that’s the whole reason we want to get out there and practice this new behavior to make sure we can tailor it to get it right, and I think it will pay off,” Lord said. “If we all believe this is the right thing to do … where we can all work together is to have industry and industry associations echoing and amplifying why this would be helpful. It’s a powerful thing when the department and industry have the exact same objectives, and can clearly articulate that to staffers and members on the Hill.”