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STATEMENT BY
EDWARD C. "PETE" ALDRIDGE, JR.
UNDER SECRETARY OF DEFENSE
(ACQUISITION, TECHNOLOGY, & LOGISTICS)

BEFORE THE
HOUSE ARMED SERVICE COMMITTEE
UNITED STATES HOUSE OF REPRESENTATIVES

CONCERNING
OVERVIEW OF THE DEPARTMENT OF DEFENSE
ACQUISITION PROGRAMS, REFORM AND WORKFORCE

APRIL 1, 2003

 

Chairman Hunter, Congressman Skelton, Members of the Committee:

Thank you for the opportunity to appear before you and discuss the President's 2004 Acquisition Programs, Reform and Workforce for the Department of Defense.  We have made great progress in addressing barriers to efficient acquisition.  I thank the Committee for its assistance in the creation of a professional acquisition corps, as well as for its support for pilot programs and other transaction authorities to speed the fielding of state of the art technology and better equipment to our warfighters.

Our current national security situation once again reveals a truth often forgotten during times of peace - that the most important duty of government is the protection of its citizens.  The support this Committee has demonstrated for our men and women in uniform honors that covenant.  The successes of my office in our ongoing quest for excellence in defense acquisition are a measure of our attempts to honor the same covenant.

We made two types of decisions with this budget.  First we are investing in the future - rebuilding those systems that offer a return for future capability and increasing investments in joint and transformational technologies.  Second we are stopping investment in the old or marginal systems -- reducing investments in the present to realign for the future - while still preserving and improving the lot for our people and their families and where they work and live.

The Defense budget request includes $61.8 billion for Research, Development, Test, and Evaluation (RDT&E) - a $7.9 billion increase over FY 2003.  It also requests $72.7 billion for procurement, a $4.0 billion increase over FY 2003.

The Fiscal Year 2004 Budget increases transformation technologies and capabilities.    The Department continued and enhanced our investment in the Army's Future Combat System (FCS), the Army's Objective Force ground combat system which includes both manned and unmanned ground vehicles and dismounted soldier systems;  in procurement of Stryker vehicles, the family of medium armored vehicles that is the backbone of the Army's Interim Force; and in development of the Comanche, the Army's Objective Force Armed Reconnaissance and Attack Helicopter.  The Department is investing in additional technologies and capabilities in the CVN-21, the next generation aircraft carrier, and in the DD(X), one of the next generation family of major surface combatants.  The President's budget continues to develop and will begin to field the Joint Strike Fighter, a family of low observable strike fighter aircraft for the United States Air Force, Navy, Marine Corps and the United Kingdom's Royal Navy and Royal Air Force, in addition to those of numerous other international partners.  The Department also continues investment in the F/A-22, the next-generation air dominance fighter to counter emerging worldwide threats.  In addition, funding was enhanced for Unmanned Aerial Vehicle (UAV) capability, such as that for Global Hawk to match platforms with sensors, and for continued procurement of smart weapons.  

The Department also increased funding in several major defense acquisition programs to maintain schedules and to achieve realistic cost estimates.

An area that directly enables transformation is science and technology.  In our FY 2004 request, the Department's Science and Technology program grows to $10.2 billion, with almost the entire program directly supporting transformation capabilities.  The program is focused on a number of transformational capabilities, including a new capability that I would like to highlight, the National Aerospace Initiative (NAI).  It consists of research and development in hypersonic flight technology and other aerospace technologies.  NAI could develop a Mach 12 system by 2012, and is one cornerstone of our transformation.

I said earlier we stopped investment in some systems.  Resources are finite, so we accepted risk in certain areas.  The department terminated investment in older systems and programs with only marginal contribution to the future capabilities we seek.  We terminated 24 Army systems and programs, e.g., Crusader, Abrams upgrades, Bradley upgrades, ATACMS BAT, MLRS conversion and restructured 24 systems e.g., Medium Tactical Vehicles, Battle Command Systems, and Javelin.  We accelerated the retirement of 26 Navy ships and 259 aircraft.  For the Air Force, we accelerated the retirement of 113 fighter and 115 mobility and tanker aircraft. 

As to my ongoing efforts to pursue Acquisition Excellence, in the past year we have been quite successful pursuing the five goals I established at the beginning of this administration.  These goals were directly derived from those established by Secretary Rumsfeld for the Department as a whole.  These goals are:  improve the credibility and effectiveness of the acquisition and logistics support process; revitalize the quality and morale of the Acquisition Technology & Logistics workforce, improve the health of the defense industrial base; rationalize the weapon systems and infrastructure with our defense strategy; and initiate high leverage technologies to create warfighting capabilities and strategies of the future.

Toward these goals, I've restructured the Defense Acquisition Board, and designated evolutionary acquisition and spiral development as the preferred approach.  The opposite side of that coin must be the proper pricing of programs, which I have insisted upon.  I have also approved a new process for the acquisition of services by DoD, mandated interoperability at program initiation, institutionalized the use of "Technology Readiness Assessments", consolidated and improved our acquisition education ("Electronic Distance Learning"), developed a comprehensive Future Logistics Enterprise, made changes to improve the health of the defense industrial base, instituted a new profit policy, increased Progress Payment schedules, eliminated inappropriate R&D cost sharing, encouraged non-traditional commercial companies to do business with DoD,  accelerated the close-out of over-aged contracts, and exploited the enormous potential of Advanced Concept Technology Demonstrations (ACTDs).

Of course, we still have many things to accomplish.  We need to further eliminate inappropriate "management" functions and marginal activities, continue to devolve functions that can be better accomplished elsewhere, further reduce acquisition cycle times, continue to minimize program risks, enhance program stability, continue to stress keeping costs under control, further establish a clear vision by which our logistics will better support our operational requirements, and accelerate the Flow of Technology to the Warfighter with a vibrant and robust research program.

I believe that increased use of evolutionary acquisition and spiral development is the key to reducing the acquisition cycle time.  I have designated Evolutionary Acquisition and spiral development as our preferred strategy for fielding operationally useful and supportable military capabilities.  They deliver advanced technology to the warfighter as rapidly as possible-with the explicit intent of delivering improved or updated capability in the future.  Evolutionary Acquisition success depends on the consistent and continuous definition of requirements, and the maturation of technologies that lead to disciplined development and production of systems that provide increasing capability to the right materiel solution.  Achieving the optimum benefit from Evolutionary Acquisition and spiral development requires early and frequent collaboration between the user, tester, and developer.  We have been implementing evolutionary acquisition and spiral development over the past year and have instituted it in some of our major programs. Several examples of our evolutionary programs that will transform the battlefield are:

• The Future Combat System, a system-of-systems of aerial and ground, manned and unmanned combat vehicles linked via a command and control network.

• The DD(X) program which will continue development of a suite of technologies to be applied to the whole family of 21^st century surface combatants, including: littoral combat ship, DDX destroyer and CGX cruiser.

• The new aircraft carrier, CVN-21, whose innovations include an enhanced flight deck, a new nuclear power plant, allowance for future technologies, and reduced manning;

• The Joint Strike Fighter (JSF) Program which will develop a family of strike aircraft, capitalizing on commonality and modularity to maximize affordability ; and

• Unmanned Aerial Vehicles, such as Global Hawk, where we continue to add new and upgraded capabilities.

The Acquisition Policy improvement initiatives we are pursuing internally will make a tremendous difference.  The first of these is the complete rewrite of the DoD 5000 series of documents. Over the last year we have been taking a hard look at our acquisition policies and we determined last fall that the old policies were much too prescriptive.  We concluded that they required revision to create an acquisition policy environment that fosters efficiency, flexibility, creativity, and innovation.  Consequently, we cancelled those policies and issued interim guidance while we completed the final policies.  I have also worked with the Joint Staff as they revise the policies concerning the requirements definition process.  Our goal is to harmonize these processes and reduce the friction associated with unrealistic requirements or processes previously geared to produce the "100% solution", when an 85% solution could be achieved much faster without significant risk to the customer - the warfighter.

The final policies will shortly be published.  They will take a long step toward achieving my objective by giving our senior acquisition decision makers much greater authority to tailor program strategies to fit the needs of their program; by placing greater emphasis on evolutionary acquisition as the preferred strategy for rapidly acquiring advanced warfighting capability; and by giving Program Managers the flexibility to be creative and efficient in the way they apply policy to their programs.  

The flexibility that we have built in to these streamlined policies reflects the confidence I have in our highly talented workforce and in the dramatic improvements we have made to our acquisition education system.

I don't want to leave you with the impression that we are done.  For as long as I hold this office, I will continue to aggressively pursue the development and implementation of new policies that will ease the burdens on our managers while producing stable, affordable and well managed programs that serve the needs of our warfighters. 

The Department recently started another major transformation initiative to improve the acquisition process by dramatically changing the Defense Federal Acquisition Regulation Supplement (DFARS) and the processes we use to create and maintain it.   The DFARS is nearly 20 years old and is about 1400 pages long.  The last major review of this regulation was done in the late 80s. We've already determined that about 60% of the DFARS is driven by internal policies and procedures and not by statute or Federal policies.  Our regulatory processes have been in place since the early 50s and take far too long to implement needed changes to policy and guidance.  As part of the Department's overall transformation goals, we are taking a hard, new look at the purpose and content of the DFARS.

We chartered a task force under the direction of the Director of Defense Procurement and Acquisition Policy to identify changes to procurement policies, procedures, processes and authorities and submit proposals to me by early May.  The task force will also identify opportunities for legislative change for consideration by the Administration to possibly propose to the Congress in the FY 05 legislative cycle.  We will remove or dramatically change parts of the regulation if we determine that doing so would improve and strengthen the efficiency and effectiveness of acquisition processes, reduce unnecessary costs and administrative burdens for Government and industry, and create an environment that fosters creative solutions to the unique challenges that face our acquisition workforce.  Similarly we will retain those policies and processes that today, ensure adequate internal controls, implement our stewardship responsibilities to the taxpayer or maintain fundamental principles of integrity and fairness in our business relationships with industry. 

We are aggressively challenging the acquisition community, including industry and the general public, to participate by proposing opportunities for change. We have contacted a broad range of industry associations that are already considering how they can provide input to the task force efforts.  There is significant potential benefit to reducing regulatory burdens.  Our main focus is to improve our processes and add value.  However, we are on a clear path to reduce regulatory burdens under this initiative.

The Acquisition Workforce initiatives must be focused, as President Bush stated in a speech to government employees on July 10, 2002:

"We must be able to get the right people, in the right place, at the right time, with the right pay.  We need to be able to reward excellence and ensure accountability for individual performance."

In order to get the right people in the right place at the right time, we have been conducting human capital strategic planning and are using the authorities in the Acquisition Workforce Demonstration.

We began the human capital strategic planning effort two years ago, concentrating on developing a process and methodology.  We are beginning to see the Services embrace that process and use it.  So, this year we are concentrating on two key functional components of our workforce - systems engineers and logisticians.  We are working with the functional leads for those two career fields to describe a desired future end state.  We are also working with the workforce managers in each Service and the key Defense Agencies to look at current manpower, projected into the future, and how to move from where we are today to where we need to be.  We are also identifying the actions we need to close those gaps.  Human capital strategic planning is hard work, and we won't be where we want to be for another few years, but we've begun that process and it will pay dividends for us.

The Acquisition Workforce Demonstration also helps us get the right people at the right place at the right time, through its flexible personnel practices, but it also adds the element of right pay by linking pay to contribution to mission.  In the FY2003 National Defense Authorization Act, you provided us an extension of the Acquisition Workforce Demonstration project until 2012.  We appreciate that support.

I would emphasize one more element of the President's direction.  We need to have a workforce with the right skills.  The Defense Acquisition University (DAU) has been in the forefront of providing certification training to our AT&L workforce.  But, we have also recognized the need to move beyond certification training.  DAU has embraced a new performance learning model for training, upgrading their certification courses to include critical thinking and case studies, adding web-based continuous learning, providing on site support to our workforce from regional campuses, and offering web-based practitioner sharing of best practices and lessons learned.  DAU has done so well implementing their performance learning model that they have been accredited by the Council on Occupational Education and recognized by their peers by winning a Corporate University Best in Class (CUBIC) award for the Best Over All Corporate University in 2002.  DAU is now turning their attention to developing rapid training for emerging policies as a result of requests from the front-line.  You have been supporters of DAU, and we thank you for that.

I would now like to discuss in some detail the additional issues you identified as being of particular interest to you at this time. 

Future Combat Systems (FCS):

FCS is the Army's centerpiece of the objective force designed to succeed in any type of combat operation.  We invested $22.2 Billion, combined RDT&E and Procurement in the FYDP, and First Unit Equipped is planned for FY 2008.  FCS is a family of systems for the future Objective Force, to begin fielding in 2008.  It is designed to satisfy the Army's mandate to have a rapid, decisive capability to respond across the full spectrum of operations.  FCS brings an integrated network capability to the battlefield.

Stryker Brigade Combat Team (SBCT):

The Stryker is the Army's highest priority production combat vehicle program, which is currently being fielded as an interim system, while the FCS is being developed.  We invested $4.0 Billion, combined RDT&E and Procurement in the FYDP (for 1055 vehicles).  Stryker is significantly lighter and more transportable than existing tanks and armored vehicles, the Stryker fulfills an immediate requirement to equip a strategically deployable (C‑17/C‑5) and operationally deployable (C‑130) brigade.  In FY 2004, 301 Strykers will be procured to equip the 4^th SBCT.

Comanche:

Comanche will provide interface among the Joint Surveillance and Target Attack Radar system (JSTARS), Unmanned Aerial Vehicles (UAV) and other battlefield sensor systems; and Command and Control systems.  We invested $9.8 billion, combined RDT&E and Procurement in the FYDP, with First Unit Equipped planned for FY 2009.  The program is fully funded for the development, testing and production of 650 aircraft (73 in the FYDP).  The Army will incorporate Unmanned Aerial Vehicles into the Comanche mission.

Shipbuilding:

In this budget, the Department increases the number of new construction ships from five in FY 2003 to seven in FY 2004.  No year in the FYDP procures less than seven ships.  In FY 2004, the budget provides funding for procurement of one Virginia class submarine, three DDG-51 destroyers, one LPD 17, and two T-AKE auxiliary and cargo ammunition ships; advanced procurement for the CVN-21 aircraft carrier.  The total FY 2004 shipbuilding budget is $12.2 billion, an increase of $2.7 billion from FY 2003.  We invested $22.4 billion, combined RDT&E and Procurement in the FYDP for the VA Class Submarine program (9 boats procured during the FYDP); $14.3 billion, combined RDT&E and Procurement in the FYDP for the CVN-21 program (beginning with a new carrier in FY 2007 and a follow-on carrier to be purchased in FY 2011); and $16.1 billion, combined RDT&E and Procurement in the FYDP for the DD(X) (with the first hull funded in RDT&E in FY 2005 and seven additional hulls fully funded in the FYDP procurement accounts).

F/A-22:

Air Force continues to improve the F/A-22's avionics stability, flight test sorties, and production aircraft deliveries.  They have $29.4 billion, combined RDT&E and Procurement in the FYDP.  The procurement strategy is to "buy-to-budget", which allows the Air Force to buy more aircraft if they can reduce the unit cost.  For the current cost estimates, the Department expects to build 276 aircraft, with 168 during the FYDP, but the final determination will be made in the years to come.

I've talked about some of the things we could do on our own to transform this department -- to eliminate waste and duplication and to demonstrate greater respect for the taxpayer's dollars.  In the past several years, we have made significant progress.  We've reduced management headquarters staffs in the department by about 11 percent.  We have streamlined the acquisition process by getting rid of hundreds of pages of prescriptive rules and regulations, and allowing program managers - we hope - to be more innovative, flexible and creative.  We have eliminated onerous regulations that make it impossible or unattractive to do business with the Department of Defense, and to expand authority for competitive sourcing so we can get military and other personnel out of commercial tasks and back into the field.  There is really no reason, for example, that the Department of Defense should be in the business, as we are, of making eyeglasses.  The private sector, I suspect, makes them better and faster and possibly even cheaper.  These types of things need to change. 

However, in some cases we need your help to make needed changes.  This year we are proposing a series of changes to the acquisition statutes, some bolder than others.  These proposals address several kinds of problems.  Some address burdensome requirements, such as relief on contracting out expansion and contracting of support services for security and firefighting beyond that allowed in prior years.  We're also proposing several flexibility changes, starting with seeking management relief from moving funds within a program to provide management margin where it is needed.  We recognize the significance of some of the changes requested, but again seek a dialog to make the business of defense more efficient.  We are in the final stages of Administration clearance of some other proposals which we will share with you soon.

As the Secretary of Defense has said in his Town Hall meeting on March 6, "To truly bring DoD into the 21st century we need legislative help.  We are now working with Congress to fashion proposals that will help transform the department:  how we move money, how we manage people, how we buy weapons.  Final decisions on this package of legislative authorities have not been made.  We are currently in discussions with the Office of Management and Budget about them and we are still in a consultation process trying to make sure that we get it right"

Thank you, Mr. Chairman for the opportunity to testify before the Committee.  I would be happy to answer any questions you and the Members of the Committee may have.