For the past two years, Frank Kendall, the undersecretary of Defense for acquisition, technology and logistics, has been publishing a detailed report called Performance of the Defense Acquisition System. And while it’s been praised by students of acquisition reform as a rich data source, it’s not yet achieved Kendall’s ultimate objective: Explaining which policies tend to lead to cost and schedule growth and which ones keep programs on track.

But Kendall says the next volume, due out in a few months, may finally provide some convincing answers. And it might not be about policy at all. The strongest correlations he’s found so far are between cost growth in programs and whether DoD’s budget is growing or shrinking at any given time.

“It is by far the greatest factor. It explains, statistically, about 70 percent of the cost growth in production,” Kendall told a meeting of the National Defense Industrial Association last week. “When budgets are tight, the programs that get approved in that environment have about 30 percent cost growth. The programs that get approved when budgets are not tight have 10 percent cost growth. It’s a factor-of-three difference. It’s not about program manager tenure, it’s not about our regulations, it’s not about the types of contracts we write. So what happens when budgets are tight that makes such a huge difference in the cost of our programs?”

Kendall says he has a team working to analyze the data further in hopes of answering that question in the next annual report. But in the meantime, he has some theories, many of which are based on the notion that people in both government and industry become unrealistic optimists when budgets get squeezed.

“Part of it is that people don’t want to let go of their programs,” Kendall said. “So they talk themselves into taking more risk. They fund more aggressively in the budget: instead of taking things out and killing programs, they keep them in and convince themselves they can do them cheaper, which they can’t. And instead of killing R&D programs, you stretch them out — a lot — and when you do that, you’re carrying a lot of overhead, your team is not as stable, your requirements are probably not stable, and there are a lot of bad things that can come from that.”

Similarly, Kendall says, with defense firms chasing fewer contract dollars, companies tend to bid more aggressively and make proposals that they can’t always execute for the agreed-upon price.

“I’ve sat in rooms with CEOs and looked at bids, and there’s always a point in the process where the CEO says, ‘I think we can do a little bit better here. Let’s bring our bid down by another 5 percent.’ When money’s tight, things become must-wins. You have to win bids if you’re going to stay in business.”

The genesis for the new look at budget climate was a study conducted last year by David McNicol of the Center for Defense Analyses. He examined five different “regimes” of acquisition policy changes between 1970 and 2007, looking for correlations between policy and cost growth. Instead, he found budget correlations. Some of the more recent numbers are the most striking: in the spending drawdown from 1997-2001, large programs outspent their original estimates by an average of 51 percent. When budgets bounced back between 2001 and 2007, cost growth fell to 10 percent.

If Kendall’s team does reach some convincing conclusions about why budgets drive cost growth — and that there’s causation here, not just correlation — the next obvious question is what to do about it, other than to simply add money to procurement and R&D budgets. It will be interesting to see if the next report offers some suggestions.

In case any current security clearance holders have not gotten the message that the current administration really, really dislikes media leaks, it was made more explicit this month in a new policy document from the Office of the Director of National Intelligence.

The new guidance on polygraph tests in the intelligence community — first pointed out by Steve Aftergood of the Federation of American Scientists — incorporates new references to the government’s move toward continuous evaluation, and pays special attention to the use of polygraphs for vetting clearance holders against counterintelligence concerns such as espionage, terrorism or unauthorized disclosures.

The document tells polygraph examiners to take special care to let their interviewees know that some disclosures are protected under law — like those to members of Congress.

But it also tells examiners that they should clearly communicate to their subjects that they’ll be grilled about any disclosures they might have made in the past to an “unauthorized recipient” — and in multiple places in the document, “any member of the media” is called out as the only specific example of such a person.

I can’t imagine that any intelligence professional is even slightly confused about whether anyone in my line of work is, legally speaking, an “authorized recipient of classified information”. Just like their next-door neighbors and spouses, we are not, unless we have active security clearances and a valid need-to-know.

Any IC employee who’s made such a disclosure in the past has done so with the courage of their convictions, knowing the risks they’re taking. Without judging whether any of those particular disclosures were right or wrong, this feels like yet another subtle signal to government employees that anyone who leaks anything to the media will get special attention.

But, digressing from my own thin-skinned parochial concerns, it’s difficult to discern from the document itself whether polygraphs themselves — already pretty controversial — will or won’t play a greater role in the intelligence community’s security clearance process.

The ODNI leaves the decision about whether to use polygraphs in the hands of individual IC agency heads, but also sets out policies that seem to suggest polygraphs are valuable. The guidance states an employee could be subject to “additional review” or a clearance denial if they decline to take the test or are uncooperative with questions. And if examiners glean information that suggests the interviewee has broken a state or federal law, they’re required to report it to the relevant authorities.

There are, however, exceptions. In keeping with the assurances on the widely- used SF-86 form all clearance seekers have to submit, they can’t be prosecuted for admitting they’ve used drugs in the past.

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T he Pentagon is already working on changes to federal acquisition rules that would require stepped-up notification procedures when private companies hosting DoD data have their systems penetrated by hackers.

But the department evidently feels a sense of urgency about those rules when it comes to its still-emerging use of cloud computing. On Feb. 8, DoD published a class deviation — a sparsely-used procedure that lets the department implement regulatory changes immediately — telling all of its contracting officers that if they are purchasing anything remotely resembling cloud computing services, they must follow new procedures the DoD CIO laid out last month in its new security requirements guide for cloud computing.

The changes are primarily intended to make sure that outside companies are adequately protecting government data — and, if a breach occurs, that they notify DoD right away.

Last year’s breach of the IT systems at security clearance processor United States Investigative Services, in which data on up to 25,000 DHS workers was stolen, was an “eye-opening experience,” said David Devries, the principal deputy DoD CIO.

“What we found out there was that a lot of the agreements we had in place did not protect either the federal side of the house or the industry partner,” he said. “So our acquisition folks signed out a temporary stop-gap until we can get new procedures put into the Federal Acquisition Regulation. They realize that this is so critical that we’ve got to get this thing put out now.”

In a previous edition of the notebook, I reported that the Pentagon was embarking on a new review of the department’s use of lowest-price technically acceptable (LPTA) contract awards.

That notebook item was based on remarks by Randall Culpepper, the Air Force’s top official for services acquisition, who had told an industry conference: “Frank Kendall has put me in charge of a team that is basically charged with the responsibility of looking at the use of LPTA throughout the department,” and went on at length to explain why.

It seemed like a pretty clear-cut statement at the time, and I continue to believe I reported Culpepper’s remarks accurately, but procurement officials in the Office of the Secretary of Defense contend we put much too fine a point on things by referring to a “new review” of LPTA in the headline.

It’s a somewhat sensitive subject in the building, because while many members of industry view LPTA as a symbol of everything wrong with Defense acquisition, the department’s procurement leaders firmly believe that the technique is only being used where it’s appropriate — and like to point to a recent GAO report that largely backs up their position. So the mere suggestion that they might reexamine that stance is something they’d like to avoid.

“We’re not looking to actually add some new capability to measure on an action-by- action basis how often we use LPTA or not. We have not gone into the (Federal Procurement Data System) to change the coding so we can collect that data or anything like that,” Dick Ginman, the director of defense procurement and acquisition policy told me in a recent interview.

Ginman said that as part of Better Buying Power 3.0, DoD is refining its definitions of “technically acceptable,” but that the effort doesn’t entail a new attempt to gather data on existing use of LPTA per se.

“The fact is that this has been sampled by GAO, and they’re welcome to come in and sample us again,” Shay Assad, the director of defense pricing told me. “It’s just not something that we see as a problem. We’re not going to apologize for making price important, but we think there’s enough evidence to dispel the myth that we’re demanding that our people use LPTA techniques when they shouldn’t be. The data just doesn’t say we’re doing what some people say we’re doing.”

So what did Culpepper mean when he said he was leading a team to look at LPTA? Assad and Ginman weren’t certain during our interview, but after some coordination, the Pentagon eventually sent a statement, which we reprint below in full:

“BBP 3.0 initiatives are broken down and have a multi-service team working to scope each initiative. Mr. Culpepper is leading two of the teams under Improve Tradecraft in Acquisition of Services — specifically Improve the effectiveness and productivity of contracted engineering and technical services and Improve requirements definition.

A fter having gotten a partial, two-year reprieve from sequestration, the original caps Congress set for the Defense Department in the Budget Control Act (BCA) are scheduled to go back into effect in October. So beyond simply repeating the assertion that the current defense strategy won’t work at that funding level, the Pentagon will seek to draw a clear picture of exactly how the spending cuts would affect the discrete programs members of Congress care about.

The tactic has been tried before, noted Mike McCord, DoD’s comptroller and chief financial officer. The department released a 36-page report last year detailing sequestration’s potential impacts on the 2015 budget, but it got almost no attention on Capitol Hill, since the two-year Ryan-Murray agreement had already solved the problem for fiscal 2015.

“We will in all likelihood submit a similar document this time with similar levels of detail, and it may engender more discussion this year just because sequester is a real possibility this year, unlike last year,” McCord told a small group of reporters. “We also need to show the new secretary a draft document like that and see if that’s the right way to handle it. But hopefully we’ll also be able to talk about in terms of how it affects mission output, not just in terms of what it means to a particular base or whether there’s a furlough.”

A specific sequestration impacts report could also carry more weight this year because it would be the Pentagon’s only written explanation of how it would handle BCA-level cuts. Last year, the department prepared and submitted what amounted to two budgets — one at the President’s requested funding level, and one that assumed DoD would have to live under the original caps.

“We discussed and rejected doing that again many months ago,” McCord said. “Because it’s an enormous workload for our people to produce an alternative budget. We believe in the budget we submitted. If Congress doesn’t support it, we may be forced to participate in some kind of alternative, but at this time we don’t have a back-up plan.”

McCord said the DoD financial management workforce’s lives have gotten slightly easier over the last couple years, in part because they only built one budget this time, and because they haven’t been put on involuntary furlough lately.

“2013 was kind of a low-water mark of badness in terms of having the threat of sequester, then the actual sequester, then the shutdown. And then we moved more money around than we ever have trying to fix the worst aspects of the sequester,” he said. “We have gotten a little better since then because the level of budget pandemonium is definitely down right now, but our workforce has also continued to shrink, because we’re ‘overhead’ in terms of Secretary Hagel’s order to reduce headquarters staff, so we’re part of that 20 percent cut. I think the military services’ workforces are pretty close to right-sized, but anytime you ask for some extra work, you do hear some concerns from them about how hard we’re working the workforce already.”

Among the other impacts of sequestration, McCord said a return to the BCA caps would doom any plan to re-categorize spending in DoD’s overseas contingency operations (OCO) budget and place it in the base budget.

OMB has told DoD, the State Department and the intelligence community to draw up a plan to move OCO money into the base budget by the end of this year.

OCO has been a convenient budget tool for both DoD and Congress over the last several years, because the overseas account is not subject to the budget caps, so it’s tended to become home to a host of spending initiatives that have a questionable relationship with the wars in Afghanistan and Iraq.

But the BCA puts a firm cap on DoD’s base budget: $499 billion. If it stays in place, there’s simply no room to move current OCO spending into it.

“We’re developing a database of what’s in OCO today based on what we submitted in 2015 and 2016, and we’ll use that to examine further so we can submit a proposal this fall that can be vetted within at least the executive branch so we can guide the 2017 budget,” McCord said. “But none of this is possible if sequestration is not dealt with. This effort would have to fall by the wayside.”

One more piece of Army news (and yes, I realize the notebook happens to be tilted heavily toward the Army this week): The service’s ambitious plan to replace its legacy communications circuits with an everything-over-IP infrastructure that can handle voice, video, chat and lots of other collaboration tools looks like it’s going to be delayed.

As recently as November, the Army had planned to issue an industry solicitation that would deliver UC as a service during fiscal year 2015, and make an award in 2016. The Army’s program executive office for enterprise information systems (PEO-EIS) now says it doesn’t plan to even release an RFP until 2016.

Since 2014, the Army has been conducting research into the commercial UC market (where the acronym stands for unified communications, though DoD still insists on calling it “unified capabilities”), including through two requests for information and an industry day.

“What we got from that was that we still have a lot of homework to do,” said Jeremy Hiers, the PEO-EIS project director for enterprise services. “The questions include whether we want one vendor to do all the capabilities or whether we want a mix of vendors and how we balance declining budgets and make tradeoff decisions in what we want to buy. But probably one of the most challenging is what it means to buy UC as a service. Is it something the Army’s going to build and we’ll find from another service provider within the government, or are we going to go and buy a turnkey-type solution from industry?”

But the Army doesn’t want anyone to get the idea that UC is on the back burner. It still featured prominently as a top priority in the updated IT campaign plan the Army issued last week.

That’s because the service sees UC not just as a way to improve collaboration and get rid of a lot of legacy (and costly) point-to-point phone circuits, but as the next logical step in a culture change that started with the Army’s decision to take on email as an enterprise- wide initiative, instead of letting each military post do their own thing.

“It’s our next major hurdle after consolidating data centers and moving apps to the cloud,” said Robert Ferrell, the Army’s chief information officer.

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The Army Force Generation process, more commonly known to acronym aficionados as ARFORGEN, is on its way out — apparently as a casualty of reduced force structure.

The change is significant. ARFORGEN has been the main underpinning of how the Army thinks about how its soldiers should train, deploy and return home since it was first implemented in 2006. ARFORGEN organized the service into a tiered readiness cycle made up of three “pools” of forces, units that were fully ready to deploy, those who were actively training as units, bringing in new personnel and integrating new equipment and units that had just returned from combat and were reintegrating with their families and catching up on individual training and education.

That last phase of ARFORGEN named above, known as the “reset” phase, will be lopped off in favor of a new two-phase system that Army officials are still designing, said Maj. Gen. Gary Cheek, the Army’s assistant deputy chief of staff for operations and plans (G-3/5/7).

“It’s not really desirable. In many ways, it was a good feature for soldiers returning from conflict to have a period of reset and then rebuild that unit toward the next mission,” Cheek told the annual Army IT day hosted by AFCEA Northern Virginia last week. “It worked well for our conflicts in Iraq and Afghanistan when we had a very high demand for forces, but it’s just not practical for us to maintain a reset period with a much smaller army and many fewer brigade combat teams.”

To supplant ARFORGEN, Army is working on what Cheek termed a “sustainable readiness model.” It’s still a work in progress, he cautioned, but the end result will probably resemble what the Army used before it introduced ARFORGEN, compressing the reset and training periods into a single, shorter phase.

“For people who remember the Army of the 1990s, it’s probably going to look a lot like that,” Cheek said. “We’re going to charge our commanders to do the best they can to keep their readiness as high as they can throughout the period. When they return from a deployment, we may see a drop in readiness, but our expectation is that those commanders will get after it as fast as they can.”

The changes are mostly driven by the constraints declining budgets have placed on the Army’s size. Leaders are currently holding “listening sessions” at bases around the country as they draw up plans to reshape their force structure into smaller, lighter formations. The Army is already planning to draw down to a size of 450,000 soldiers by fiscal 2017 — 40,000 fewer than it will have at the end of this year.

But since virtually all of those reductions will come from bases in the continental U.S., the Army is convening the community meetings with the going-in prospect that the budget outcome over the next several years will be on the darker side of all the possible scenarios; sequestration will continue in full force for several more years, and the Army will have to shrink to 420,000 troops.

“We don’t want to have to go back and do this all over again,” Cheek said.

E nergy has been a hot topic within DoD for the last several years, with each of the military services pledging to reduce their overall consumption and get at least 20 percent of their energy from renewable sources by 2020.

On the consumption front, something seems to be going right. A Thursday report from the Energy Information Administration noted that DoD’s energy use in 2013 was the best it’s been since 1975 — the first year the Energy Department started keeping records on agencies’ consumption. And while DoD is still by far the government’s largest energy user, its overall share of the federal energy bill also fell from 87 percent in 1975 to 78 percent in 2013.

In fairness, 1975 was probably a bit of an aberration — it was the final year of the Vietnam War, and the military doubtlessly consumed an above-average amount of fuel in the redeployment of U.S. forces following the fall of Saigon that April. But the EIA report, which counts both DoD’s liquid fuel and electric consumption on bases, shows a steady and consistent decline over the past 45 years, both in absolute terms and as a share of the governmentwide total.

“In addition to the drawdown of military operations in Iraq and Afghanistan over the past few years, several initiatives undertaken by the federal government have contributed to the decline in DoD’s installation energy usage,” wrote Rebecca George, an EIA analyst who authored the new policy brief. “The Energy Independence and Security Act passed in 2007 included goals to reduce energy intensity in federal buildings. In FY 2013, DoD lowered energy intensity in its facilities by 17 percent compared to an FY 2003 baseline. Another provision in the same bill mandated a reduction in petroleum consumption in noncombat vehicles, and, as of FY 2013, DoD reduced petroleum consumption by 27 percent from an FY 2005 baseline.”

The numbers seem to point to bona fide reductions resulting from policy decisions and more energy-efficient technologies, not just fluctuations based on with how busy the military is.

Among the factors, EIA cited the military services’ efforts to start producing renewable energy at the locations where it’s needed instead of hauling liquid fuel over long distances, along with significant efforts to start monitoring and actively managing the electricity use at each individual building. Until recently, most bases had just one electric meter on their premises: the one at the front gate.

A s part of a major public health campaign called the “performance triad,” the Army wants its soldiers to have healthy exercise, nutrition and sleep routines.

But interestingly, it’s the sleep part of the “triad” that’s most worrisome to Lt. Gen. Patricia Horoho, the Army’s surgeon general. Speaking with a small group of reporters at the Pentagon Friday, she noted with concern that the average soldier gets about six hours a sleep each night compared with eight hours 30 years ago, and pointed to medical studies that indicate a sustained six-hour sleep schedule dulls an average person’s cognitive functions by 20 percent, and is roughly equivalent to a 0.08 percent blood alcohol concentration.

So Horoho said she’s been working to persuade the Army’s senior leadership of the importance of sleep, and leaders up to and including Gen. Ray Odierno, the Army Chief of Staff have gotten the message started changing their behavior.

“I brief all of our new general officers, brigade commanders and battalion commanders, and what I tell them is, ‘The Army selected you to be a strategic leader. If you are cognitively impaired by 20 percent, you may be a decent manager, but you’re not a strategic leader,'” she said. “This is a culture change we need to make. It’s going to take a while to get away from the idea that sleep is something we can give up and start critically asking ourselves whether it’s worth the health outcomes.”

Horoho argued it’s also the Army’s business to make sure the sure the rank-and- file get enough rest, not just because of the physical health consequences of inadequate sleep. She thinks better sleep would also help mitigate behavioral health issues like post-traumatic stress and reduce domestic violence.

“And we would never allow an intoxicated soldier in our formations,” she said. “Why would we let a soldier in our formations with sleep deprivation? Why would we have bus drivers driving our children that are sleep deprived? Why would you have someone practicing surgery if they’re sleep deprived? I think focusing on sleep is the most important thing our nation can do right now, so that’s why we’re tackling it.”

Specifically, the service is building “sleep hygiene” into its Comprehensive Soldier and Family Fitness program, using some methods that are, shall we say, unorthodox for a military culture: alternative medicine, yoga, acupuncture and mindfulness training.

“We’re also teaching the importance of things like looking around your bedroom to see how many blinking lights are around to interrupt your sleep — the average American has six to seven,” she said. “We’re educating our soldiers and family members about the importance of a cool dark room, and going to bed and waking up at a set time so you have a consistent pattern, decreasing caffeine and other stimulants before you go to sleep.”

In some corners of the Army, the sleep campaign is more than a mere suggestion. Horoho pointed to one battalion commander in Alaska who has implemented sleep hygiene for his entire battalion to help mitigate the health effects of a dark northern winter.

Also, the Army has built sleep hygiene practices into its free Performance Triad app for the iPhone and Android. It gives tailored sleep suggestions for people who perform various roles in the Army, including ways to “bank” sleep ahead of time if a soldier knows his or her duties are going to get in the way of a decent night’s rest.

“We shared the research with our soldiers that your brain is more active when you’re asleep than when you’re awake, and you need to clean out those toxins,” Horoho said.

W ith apologies to readers who’ve already gotten the word via Federal News Radio’s various email lists and social media reminders, we wanted to reiterate that the Defense Information Systems Agency’s top cybersecurity official, Mark Orndorff, will join us for both a radio interview and a live online chat this week.

Orndorff, who will retire at the end of this week, spent the last several months refashioning DoD’s approach to cybersecurity so that it’s more accepting of risk in certain areas — the idea being that the department needs to focus its limited energy on protecting the assets that are most critical to its missions.

The radio interview airs Monday at 9 a.m. Eastern Standard Time. Listen live on 1500 AM if you’re here the D.C. area, or online. If you’d like to join us for the live Q&A, Tuesday at 11 a.m. EST, you can register here.