The Pentagon’s latest guidance to the acquisition community under the Better Buying Power effort includes a long list of action items. But DoD’s top acquisition official says “thinking” is the most important one.

Frank Kendall, the undersecretary of Defense for acquisition, technology and logistics hopes that message rings through loud-and-clear in the implementation guidance he signed this week for Better Buying Power 2.0, the latest chapter in DoD’s attempt to improve the acquisition process.

“There’s a flavor that runs through it that says, ‘Here are the tools you need, and here’s the way you should be thinking about the problems you have to solve. But you have to solve them,'” he said. “You have to be professional and really understand what needs to be done.”

Kendall said DoD is trying to correct one of the unwelcome outcomes of the last version of Better Buying Power, its three-year-old project to get a better bang for defense dollars. He said too many managers interpreted the guidelines in the first edition of the effort as hard doctrine, or what Kendall called the “school solution” in the implementation memorandum to the acquisition workforce this week.

For example, the original guidance indicated a preference for more fixed-price contracts, so solicitations demanding those terms tended to proliferate throughout the DoD acquisition enterprise whether they were appropriate to the task or not.

“People have to know the right thing to do, and they have to have a system that supports them in doing it,” Kendall said in a roundtable session with reporters. “The [fixed price incentive fee item] was good guidance, but there’s a tendency in our system to say, ‘OK, that’s what they want us to do, so that’s all we’ll do now because that’s going to get whatever we want to do approved.’ So we’ve modified that. Now it tells people to use the right contract type for the job. That means there’s a burden on our professionals to figure out what that is, but we’ll give them guidance.”

Those contract type decisions fall under the banner of incentivizing productivity in the defense industry. Among other steps Kendall is directing in that area are:

• When it comes to best-value competitions, DoD components are being told to clearly communicate with industry what “value” actually means for a given contract. That includes providing objective data about how much more the government is willing to pay in order to obtain better performance.
• The memo also makes clear that acquisition managers should shy away from using “lowest-cost technically acceptable” competitions in situations where the government can’t objectively lay out the minimum standards it’s willing to accept, and it points out that that’s often the case in service contracts.
• It directs the implementation of a “superior supplier program” to publicly recognize contractors with good track records and offer them more favorable contract terms. The Navy will run a pilot program this year. If it’s successful, it will be expanded to the rest of DoD in 2014.

But Kendall said the most significant change in the new edition of Better Buying Power is its emphasis on the acquisition workforce. He said the initiative is mostly focused on improving the skills of that workforce, even as its size stays flat or declines somewhat in an uncertain budget environment.

“I can’t promise you that it’s going to stay flat if we take a cut. We grew the workforce by about 13,000 over the last few years, but my focus for the next few years is going to be on improving the quality of the people that we have,” he said. “We’ve brought a lot of junior people in, and they need to be developed. We’ve got a bathtub in terms of demographics. We have a lot of older people who are going to be retiring, and we need to make sure those people’s knowledge is retained as much as possible as they go out the door. All of the services and components are working on this together.”

Size of workforce needs to be stable

But Kendall said the size of the workforce does need to at least be somewhat stable.

“There have been some pretty big swings,” he said. “There was a philosophy in the 1990s that said that government didn’t need all this expertise, and that we should just give the money to industry and they’ll do fine. I don’t think that worked out too well. I think there’s a very pressing need for high-quality people in government if we’re going to do an effective job at acquisition. That’s why I’m emphasizing it so much.”

Kendall said he also wants acquisition professionals outside the Pentagon to feel more empowered to exercise judgment, since that’s where the majority of acquisition decisions are made. He said he is a firm believer in the chain of command that runs from DoD’s component acquisition executives to program executive officers and program managers.

“One of the things I noticed when I came back to government about three years ago was that the [Office of the Secretary of Defense] staff seemed to be doing a lot more supervising of that chain of command than I was comfortable with. We’ve taken a number of steps to reinforce the importance of the chain of command,” he said. “That’s not just the responsibility to make the decisions, it’s the accountability as well. One of the first steps I took was to start putting the name of the program manager, the program executive officer and the service acquisition executive on every acquisition decision memorandum. It’s to document that they brought that plan in and said they could execute it. There’s a permanent record.”

This week’s memo includes several steps designed to reduce the amount of time and paperwork managers spend briefing DoD leaders and getting approval for various phases of their programs.

While much of Better Buying Power is focused on incentivizing industry to deliver better outcomes without more money, Kendall said DoD likewise needs to do a better job of incentivizing the government workforce to make every dollar count.

“The idea is that the money has value, and you have to be very careful about how you spend it, especially in the current climate,” he said. “The system that we have says that. It’s always said you should spend money well, but the incentives that have been built in tend to not do that. Obligation rates are a key example of that. We punish people, effectively, for not spending their money. That’s not how you negotiate a good contract, and that should not be the metric. If somebody can return money to the department or buy additional product in their own program, that’s a good thing. Savings are a good thing.”

As a way to hammer that point home, every acquisition manager will have cost control considered as part of his or her performance evaluation by the end of this calendar year.

DoD acquisition process made easier

Over the longer term, Kendall said his office is about to begin an effort that will hopefully make the DoD acquisition process easier for government and industry program managers to navigate. In about a year, he hopes to be ready to send Congress a legislative proposal to eliminate some of the complications and bottlenecks that have been added to the process over the past several decades.

“I’m trying to get an initiative started to take all the body of law that’s been built up since Goldwater-Nichols in 1986 to provide a simpler, more coherent body of law that gives guidance for defense acquisition management,” he said. “Right now, when I look through the latest draft of [DoD Directive 5000.02], our directive on how we do acquisition, it’s a maze that a program manager has to work his way through to figure out what he has to comply with. I think we can do better.”

Kendall said he thinks such an effort would receive widespread support on Capitol Hill and also make it easier for the defense acquisition workforce to do what’s asked of it under Better Buying Power.

He said those workers are highly dedicated, but also highly challenged at the moment. Managers across the DoD workforce are scrambling to figure out how to make their programs work under sequestration. And those who are civilians are about to have their pay cut by 20 percent because of impending furloughs.

“We’re not treating our workforce very well. The reason for the furloughs is necessity,” he said. “We’re working on a reprogramming request to Congress that would try to relieve some of the shortfalls we still have in operation and maintenance, which is the major reason we have to do furloughs. I don’t know what we’re going to do ultimately. Our workforce is under a lot of stress right now after years of frozen pay, an inability to hire new staff, looking at furloughs. But that staff is performing incredibly well right now and we ought to all be proud of what they’re doing. What I’m doing with Better Buying Power is trying to give them more tools and help them do an even better job.”

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