[House Hearing, 111 Congress]
[From the U.S. Government Printing Office]
[H.A.S.C. No. 111-72]
COORDINATING REQUIREMENTS,
BUDGETS AND ACQUISITION:
HOW DOES IT AFFECT COSTS AND
ACQUISITION OUTCOMES?
__________
HEARING
BEFORE THE
PANEL ON DEFENSE ACQUISITION REFORM
OF THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
JUNE 3, 2009
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13
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PANEL ON DEFENSE ACQUISITION REFORM
ROBERT ANDREWS, New Jersey, Chairman
JIM COOPER, Tennessee K. MICHAEL CONAWAY, Texas
BRAD ELLSWORTH, Indiana DUNCAN HUNTER, California
JOE SESTAK, Pennsylvania MIKE COFFMAN, Colorado
Andrew Hunter, Professional Staff Member
John Wason, Professional Staff Member
Alicia Haley, Staff Assistant
C O N T E N T S
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CHRONOLOGICAL LIST OF HEARINGS
2009
Page
Hearing:
Wednesday, June 3, 2009, Coordinating Requirements, Budgets and
Acquisition: How Does It Affect Costs and Acquisition Outcomes? 1
Appendix:
Wednesday, June 3, 2009.......................................... 27
----------
WEDNESDAY, JUNE 3, 2009
COORDINATING REQUIREMENTS, BUDGETS AND ACQUISITION: HOW DOES IT AFFECT
COSTS AND ACQUISITION OUTCOMES?
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Andrews, Hon. Robert, a Representative from New Jersey, Chairman,
Panel on Defense Acquisition Reform............................ 1
WITNESSES
England, Hon. Gordon, Former Deputy Secretary of Defense, Former
Secretary of the Navy, and President, E6 Partners, LLC......... 4
Giambastiani, Adm. Edmund, USN (Retired), Former Vice Chairman of
the Joint Chiefs of Staff, and Chairman of the Board, Alenia,
North America.................................................. 5
Kadish, Lt. Gen. Ron, USAF (Retired), Former Director, Missile
Defense Agency, Former Chairman, Defense Acquisition
Performance Assessment, and Vice President, Booz Allen Hamilton 8
APPENDIX
Prepared Statements:
Andrews, Hon. Robert......................................... 31
Coffman, Hon. Mike, a Representative from Colorado, Panel on
Defense Acquisition Reform................................. 33
England, Hon. Gordon......................................... 36
Giambastiani, Adm. Edmund.................................... 46
Kadish, Lt. Gen. Ron......................................... 56
Documents Submitted for the Record:
The Defense Acquisition Performance Assessment Report,
January 2006............................................... 69
Witness Responses to Questions Asked During the Hearing:
Mr. Andrews.................................................. 227
Questions Submitted by Members Post Hearing:
[There were no Questions submitted post hearing.]
COORDINATING REQUIREMENTS, BUDGETS AND ACQUISITION: HOW DOES IT AFFECT
COSTS AND ACQUISITION OUTCOMES?
----------
House of Representatives,
Committee on Armed Services,
Defense Acquisition Reform Panel,
Washington, DC, Wednesday, June 3, 2009.
The panel met, pursuant to call, at 8:09 a.m., in room
2212, Rayburn House Office Building, Hon. Robert Andrews
(chairman of the panel) presiding.
OPENING STATEMENT OF HON. ROBERT ANDREWS, A REPRESENTATIVE FROM
NEW JERSEY, CHAIRMAN, PANEL ON DEFENSE ACQUISITION REFORM
Mr. Andrews. Ladies and gentlemen, with the permission of
the minority staff and their gracious cooperation, we are going
to begin. I wanted to welcome the witnesses and the members of
the public and the media to this morning's hearing, and I
wanted to begin by thanking my colleagues on this panel for
their diligent work and the efforts that led to the acquisition
reform legislation signed by the President 12 days ago.
This panel was empanelled a very brief period of time ago,
and each of the members on both the Republican and Democratic
side put in a significant amount of time in learning these
issues and made a very valuable contribution to that effort
which has now become law. I did want to express my appreciation
to the staff as well as the colleagues on the panel for their
hard work. Our work, as we see it, is only about 20 percent
done in that statute. Maybe a little less than that. But
obviously, we have a responsibility as the statute was
implemented to understand whether it is working or not and to
determine what that means. But by any definition, about 80
percent of the procurement done by the Department of Defense
(DOD) is not touched by the statute the President signed 12
days ago because it dealt with the major weapons system
exclusively, as this panel knows well, and as many members of
our panel know very well as well that about 60 percent of the
procurement done by the Department of Defense is services, not
goods.
And of the 40 percent that is hardware, major weapon
systems only make up a part of that, maybe about a half of
that. So there is a lot of work left to be done. The panel
began with a series of questions and the first question that we
started with was what set of metrics should exist or can exist
to properly measure the difference between what we are paying
for goods and services procured by the DOD and what the value
of those goods and services is.
The delta, if any, between what we are paying and what we
are getting. And after a series of hearings on that, we are now
ready to proceed to our next step which is to ask the next
question, what hypotheses are out there as to why that
difference exists? In other words, given the fact that the
evidence is rather clear that there is a gap between what we
pay and what we receive, what are the causes of that gap. Today
is the first in a series of hearings that will be structured
around the idea of a hypothesis as to what those causes are.
This morning, the hypothesis would be this: The gap between
what we pay and what we receive is, in some part, explainable
by the absence of effective coordination among the requirements
process, the procurement process and the budgeting process.
That when one looks at those three significant initiatives that
must be accomplished in the Department of Defense, there is
either little or no coordination on too many occasions.
Now there are exceptions to that rule. There have been many
instances where there has been very effective coordination. I
think the bulk of the evidence is that that is more a function
of the talents and commitment of the individuals that are
involved, not necessarily the administrative structure within
which they are working. One of the corollary hypotheses to this
is maybe it doesn't matter much what the administrative
structure is. It is entirely dependent upon the skills and
personalities of the people involved and that there are very
finite limits as to what we can do with manipulating an
administrative structure. That may well be the case.
But the general purpose of this morning's hearing is to
hear from three incredibly accomplished individuals with deep
experience and broad knowledge in this area to address this
hypothesis to the extent there is a lack of coordination among
the requirement setting process, the procurement process and
the budgeting process to what extent is this the cause we have
identified as the gap between what we pay and what we get.
After this morning's hearing we will proceed with a lot of
other hypotheses that people have suggested over the years and
try to evaluate those and come to some understanding as to what
combination of hypotheses make the most sense in meeting our
ultimate objective, which is to come up with a series of
legislative recommendations to try to make the system work
better. Pleased to be joined by our friend from Colorado, Mr.
Coffman, and I realize he just dashed in. But I would give him
the opportunity to make an opening statement if he so desires.
[The prepared statement of Mr. Andrews can be found in the
Appendix on page 30.]
Mr. Coffman. Thank you, Mr. Chairman. I will submit my
statement for the record after the meeting. But I appreciate
you all for coming here and look forward to your testimony.
[The prepared statement of Mr. Coffman can be found in the
Appendix on page 32.]
Mr. Andrews. Thank you very much, Mr. Coffman. And without
objection, opening statements from any other member of the
panel will be included in the record should they choose to
submit them. We appreciate the indulgence of the witnesses in
waiting and arriving. I am going to give very brief
biographical introductions, because each of you truly is a
person who needs no introduction around here. We mean that as a
compliment.
But very briefly, Mr. Gordon England is now President of E6
Partners, LLC, a firm specializing in international business.
As we well know, he has previously served as the 29th Deputy
Secretary of Defense. He also served as the 72nd and 73rd
Secretary of the Navy and the first Deputy Secretary of the
Department of Homeland Security. He is a native of Baltimore,
graduated from the University of Maryland in 1961, earned his
masters in business administration from the M.J. Neeley School
of Business at the Texas Christian University and has been a
leader in civic and charitable organizations as well as his
exemplary service to our country. Welcome, Secretary England.
Nice to have you back with us.
Secretary England. Chairman, thank you.
Mr. Andrews. The Admiral is next. The bio is here. Admiral
Edmund Giambastiani. Is that correct, Admiral?
Admiral Giambastiani. Yes, sir.
Mr. Andrews. I am from New Jersey. So I get a lot of
practice. It is a beautiful Italian name. He joined Alenia
North America, Inc., in January of 2008 as Chairman of the
Board of Directors. In addition, he serves as Director of SRA
International, Inc., Monster Worldwide, Inc., The Atlantic
Council of the United States, QinetiQ Group in the United
Kingdom. A career nuclear submarine officer, the Admiral
retired from active duty on October 1, 2007. In his last
assignment, he served as the Nation's 7th Vice Chairman of the
Joint Chiefs of Staff and its second highest ranking military
officer. He is a native of Canastota, New York. And he
graduated from the U.S. Naval Academy in 1970 with leadership
distinction. Welcome, Admiral. Thank you for your service.
Admiral Giambastiani. Thank you, chairman.
Mr. Andrews. And Lieutenant General Ronald Kadish is
presently the Vice President and the partner in the aerospace
marketing group for Booz Allen Hamilton, Inc. He joined that
firm on February 15, 2005. He has distinguished himself there
as panel Chairman of the Defense Acquisition Performance
Assessment, examining the strengths and deficiencies of the
current defense acquisition process. He has worked with us for
a very long time on this committee as the Director of the
Missile Defense Agency in the Office of the Secretary of
Defense. As director, General Kadish was the acquisition
executive for all ballistic missile defense systems and
programs. He entered the Air Force in 1970 after graduating
from the Reserve Officers' Training Corps (ROTC) program at St.
Joseph's University in Philadelphia. We had another St. Joe's
witness earlier. I said the hawk will never die to those
witnesses, right, General?
It is great to have you with us, gentlemen. We will start
with Secretary England. You know the rules well, that we ask
people to summarize their oral testimony in about--their
written testimony rather in about five minutes. Your written
statements in their entirety will be made a part of the record.
We try to maximize the amount of question time for the members
so we can get the benefit of your excellent work. So, Mr.
Secretary, you are on.
STATEMENT OF HON. GORDON ENGLAND, FORMER DEPUTY SECRETARY OF
DEFENSE, FORMER SECRETARY OF THE NAVY, AND PRESIDENT, E6
PARTNERS, LLC
Secretary England. So, first, Mr. Chairman, thanks for the
opportunity to come by again. First of all, I applaud you. You
have to be pretty brave to enter this arena as you know. In my
commercial days, I ran several Defense Science Board studies on
acquisition reform and probably served on another dozen over my
career. When I became the deputy, I had a group, in fact,
General Kadish was one of the leaders of that group to look at
the 123, I believe, prior formal studies on acquisition reform
and that didn't include all the work by think tanks and
everybody else in the Government Accountability Office (GAO)
and the Congress and so this is not new ground being plowed.
But that would tend to indicate that this is an extraordinarily
complex topic that you are about. And I would make just a
couple of recommendations and observations in terms of how you
might improve this process. Obviously requirements is key. I am
sure Admiral Giambastiani will have something to say about that
because he actually ran the organization in terms of
requirements.
I do believe there are some organizational changes that
were put in the Department frankly when I was there that are
hopefully beneficial to help tie together the requirements, the
budgeting, the acquisition, in fact, the operational end of
this business. We now have processes in place. I hope they are
still in place, specifically called the DAWG, which is the
Deputy's Advisory Working Group, which is all the senior
leadership, four-stars and civilian leadership met every week
several times a week, and literally went over every single
program, what the budget was, what was the performance, what
was the need, what were the requirements so we integrated this
across the department because programs are no longer operated
as individual programs.
They are now overarching capabilities. So then we also put
processes together to look across all of the programs in terms
of how did they all integrate, because frankly they all come
together at some point in time. So they have to be
synchronized. Everything has to be synchronized so that it all
works together when it comes together in terms of being fielded
because all of this is integrated some very high level and not
individual programs.
So I think some steps have been made to address that, but
this is a complex issue and that is one process that was tried
as a way to get better visibility and better ways of
controlling. In my statement, I made a few recommendations.
First of all, I will tell you, the system is very complex.
Counterintuitively, that means you want to give managers more
flexibility. The more complex the system, the more flexibility
you need, managers need. The trend is always the other way.
That is it gets more complex, we add layers of bureaucracy and
regulation and control and that makes it almost impossible to
run very complex programs. So the system today is way over-
burdened. It is over-burdened by the Department, it is over-
burdened by the Congress. As it becomes a more complex system,
we need to simplify it, otherwise managers won't be able to
operate.
But the other comment I will make is I think multi-years,
we have the wrong approach on multi-year contracts. Stability
is what counts in these programs, predictability in programs.
Today we have multi-years based on savings. But frankly, in my
view, that is the wrong criteria. Multi-year programs almost
always hit their targets year after year because there is a
long-term commitment of money to the program, people know what
the schedule is, they know what the requirements are, they can
rely on future years, companies can invest. So we look at
saving money. My own view is we should have more and more
multi-years on the basis of providing stability of programs so
cost doesn't grow. I mean, one approach is to look at cost
savings. The other approach is how do you put a structure in
place so that costs do not grow in the future. So I would turn
that process around.
My last comment would be--you mentioned metrics. I think
you need to decide what your objective is here. Not all things
are, ``going to come out with a perfect answer,'' just like our
international relations. You have to set what the objective is.
This is an extraordinarily complex process with many competing
interests and cross-currents that go in every day and every
year in industry, in government and the DOD and the military.
So you have to decide what is the plateau you are trying to
achieve in this. Because otherwise, I think if we are looking
to end up with this sort of perfect system, perfect meaning
manageable like--I almost said a car company, but that is
probably a bad example--but manageable like a commercial
product. You know, where we put out regular products on a
repetitive basis. It is never going to achieve that level of
performance because that is not the nature of what this
business is about.
So a few comments. My statement hopefully is clear in terms
of some observations and recommendations. But I would like to
engage in a discussion with the members.
[The prepared statement of Secretary England can be found
in the Appendix on page 35.]
Mr. Andrews. Thank you, Mr. Secretary. And we have had a
chance to read your testimony prior to this. We appreciate it
very much. And I appreciate you giving us a chance to expand
the question time, too. Admiral, welcome back. It is great to
have you with us again.
STATEMENT OF ADM. EDMUND GIAMBASTIANI, USN (RETIRED), FORMER
VICE CHAIRMAN OF THE JOINT CHIEFS OF STAFF, AND CHAIRMAN OF THE
BOARD, ALENIA, NORTH AMERICA
Admiral Giambastiani. Thank you, Chairman. And thanks to
you and all the members of the committee for inviting not only
me, but obviously this group to participate this morning in
this incredibly important hearing. I might just mention that
the fact that you have focused on, if you will, requirements,
budgets and acquisition is gratifying to me because recently,
over the last year, I have been helping the Secretary of the
Navy out in his advisory panel and my mantra frankly for a year
has been requirements, budgets and acquisition. But I would
tell you it has been integration of those as opposed to just
coordination of them. Coordination is that level that is very
helpful, but if you can integrate these and bring them to a
higher level, frankly, I found you are much more successful in
the long run. It also feels like old times again to be here
with these three individuals. Gordon didn't mention in, but--
and Ron may, but I will pre-empt here and just tell you the
last time the three of us appeared together in a hearing on
this very subject was September of 2005 before the Senate Armed
Services Committee.
We also had Ken Krieg at the time who was the new Under
Secretary. We were all--Gordon and I were new in our roles as
Ken Krieg was and Ron was working on that DAPA report, the
Defense Acquisition Performance Assessment. So it is old times
here this morning.
Let me make a few points here and you may hear a little bit
of repetition on the stability front on what Gordon talked
about. But first of all, as I said, I am very pleased that you
are covering this. A fundamental premise in my view to our
success is based on well informed risk management, a very
important thing, well-informed risk management. And I call the
requirements, if you will, the budget and acquisition portions
of this, the three legs of the stool. And I will refer to these
three legs and the integration of them repeatedly. But I would
emphasize with the three legs--there is three things that I
have always found important across all of them and that is
affordability, stability and simplicity. And let me just talk
about requirements for a couple of moments, and again, I will
summarize what I have got in my statement.
I have participated in these requirements generations,
frankly, since I was in my first commanding officer role in the
early 1980s, and then onwards throughout successive commands,
successive tours in the Pentagon and then in joint and allied
positions. In my opinion, at least 50 percent of getting a
program right is establishing realistic, sound, practical,
simple requirements up front and then, of course, sticking with
them.
Affordability, stability and simplicity, those three
factors are really important and executable set of requirements
for any procurement in my view. Let me talk just for a moment
on the affordability front. All too often, this word is
forgotten in the course of talking about this, the
affordability piece right up front. We need to give military
officers who are tasked with defining requirements more and
better insights into the cost drivers, the cost drivers in the
requirements they are defining.
Now, I just might mention this. I uniquely had a very good
relationship here with this gentleman next to me. He was a
wonderful man to work with, it is the Deputy Secretary. And I
might mention three processes that I spent a lot of time
working. And the first one he mentioned was the Deputy's
Advisory Working Group. What he didn't tell you is that he, as
the Deputy Secretary, went so far as to name me as the co-chair
of the Deputy's Advisory Working Group. This was very
important, once again, to bring the military side of the
equation and the civilian side to produce capabilities for our
service personnel together.
He did that early on and it was very important. So that
helped me work in the concept, in the resource side as a co-
chair of this group. Very important. The second thing,
obviously, I was the chairman of the Joint Requirements
Oversight Council (JROC) which sets military requirements. But
thirdly, and just as important, I served as the co-chair of the
Defense Acquisition Board. So those three things allowed me as
a senior military officer to work in all three legs of the
stool, if you will, in a line way. Very important.
In the recommendations I have made in panels to date--for
example, in the Secretary of Defense (SECDEF) advisory panel
with the Business Executives for National Security and the rest
is to make sure that we, in fact, take senior military leaders
and allow them to be participating in a line functional way in
all three of these legs, so that I think it will help them make
better decisions, at least in my perspective, as a military
officer. Cost-driver-analysis, as I said, in these is very
important. And I can elaborate on that, and clearly my
statement does. But I borrowed most of the cost-driver-analysis
techniques from reviews I learned early on in the acquisition
process as a co-chairman of the Defense Acquisition Board, we
were looking at the Joint Tactical Radio System, JTRS, we were
looking at the National Polar-orbiting Operational
Environmental Satellite System. And frankly, we then introduced
and made it a requirement through a chairman instruction that
all of the services had to bring in cost drivers. Very
important.
On the stability front, it should be no news to anyone
sitting in this hearing, just as Gordon England has said, is
that setting unrealistic requirements during program definition
and subsequent requirements creeps are major causes of failing
programs. And let me just reiterate one important point here. I
believe that delivering 80 to 90 percent of a solution on time
with a life cycle maintenance plan allowing for further growth
is far superior to trying to go after a 100 or 120 percent
solution. Stabilizing requirements is tough. We all see how a
program could be better if we could incorporate the latest
technology or some additional capacity. Which leads me to my
last point of simplicity. We have done best, in my view, as I
said, by trying to be simple. I have given you a series of
examples in the written testimony. F-16, the series of the F-
16, the F/A-18 Super Hornet E/F/G, Los Angeles-class, Arleigh
Burke-class, Virginia-class submarine. These have all been
successful programs and are successful programs because we kept
simplicity, if you will, affordability, we kept that block
approach as we provided these capabilities. Funding stability
is incredibly important.
Gordon mentioned greater use of multi-year buys. I cannot
over-emphasize how this takes risk out of the industrial side
of the equation and takes risk out on the defense side. The
ability to plan ahead, the ability to invest in Research and
Development (R&D), the ability to invest in installation and
the rest is incredibly important. All those programs I cited
before in general had some type of multi-year or risk
management that really made them incredibly effective.
Lastly, budgets have no memories. It is something an old
Pentagon saying I learned very early on. In order to add memory
to the process of procurement, if you will, writ large across
our government, multi-year buys are important risk reduction
techniques to inject a memory into the budget.
One last point I will just make, and it is very important.
Again, I borrowed these from the acquisition side and they are
the introduction of technology readiness levels and
manufacturing readiness levels into the requirements generation
piece where you take these and lift them, if you will, from the
acquisition side. You bring them into the requirements
generation so you are not trying to shoot for the moon, you are
keeping it simple and reduce the risk on a program to make it,
if you will, more doable and make it more successful. The
healthy conversation to do all of this stuff between industry,
the civilian and military sides and with Congress is incredibly
important.
Thank you again for allowing me to introduce my written
testimony, chairman, and the members of the committee.
Recommendations regarding this three-legged stool if I could
leave you with one point, those three words, affordability,
stability and simplicity. Thank you.
Mr. Andrews. Thank you, Admiral very much.
[The prepared statement of Admiral Giambastiani can be
found in the Appendix on page 45.]
Mr. Andrews. Again, we have had the chance to review your
written testimony and look forward to questions. General
Kadish, welcome back. It is good to have you with us.
STATEMENT OF LT. GEN. RON KADISH, USAF (RETIRED), FORMER
DIRECTOR, MISSILE DEFENSE AGENCY, FORMER CHAIRMAN, DEFENSE
ACQUISITION PERFORMANCE ASSESSMENT, AND VICE PRESIDENT, BOOZ
ALLEN HAMILTON
General Kadish. It is great to be back, Mr. Chairman. I
spent a lot of time in this system and, quite frankly, have
been a victim of it at certain times. So I have a perspective
and Secretary England allowed me to spend some time on that
commission called DAPA, Defense Acquisition Performance
Assessment Group, to think about this even more. And my
statement has a lot of what the DAPA report came up with it is
not so much interesting for this group for the specific
recommendations as it is to describe the problem a little bit
more in detail and how we saw the issues that both Secretary
England and Admiral Giambastiani talked about. But there is
just a couple of points I would like to re-emphasize and I
would also recommend that if you would allow to have the DAPA
report in your record.
[The information referred to can be found in the Appendix
on page 67.]
Mr. Andrews. Without objection.
General Kadish. The first issue is it has never really been
clear to me when we looked at the system what the criteria for
success is and when we were dissatisfied with it. We talked a
little bit about the metrics and the value equation and that is
certainly an important aspect. But as you look in the history
where all these studies have been done, in fact, you can go
probably to the Civil War and earlier on some of these very
same issues, the fact of the matter might be that we need to
adjust our expectations a little bit in a sense of the outcomes
of this.
All of the hardware, if not most of the hardware and the
equipment we have put out of this system over many years have
given us a technological edge. So we shouldn't forget that.
There are thousands of people working out there every day to
make this happen and doing a very good job. Now, we see some of
the disasters, but I think that is more a function of the
difficulty of the job. These systems that we are talking about
and even the services, under very difficult circumstances in a
lot of cases, are difficult tasks, especially in a wartime
environment and in a peacetime environment when we faced the
Cold War, we produced some of the most technologically
sophisticated elements that the world has ever seen.
And the newest examples, you could go right down the list
from Unmanned Aerial Vehicles (UAVs) to some of the robotics
that we are doing today and especially in medical fields. It is
phenomenal what we have been able to accomplish. So we
shouldn't lose sight of that. But in the process of trying to
improve this system over many years, we have made it almost
unintelligibly complex to understand. And that complexity
drives a lot of what--the problems we see today. And I would
challenge anybody to, in one day's study, try to understand how
we actually do business in this area. And I think you might be
experiencing that yourselves in the sense that even people who
have spent careers like myself here, I still marvel at some of
the things that we have in our rule book that we just don't
necessarily understand.
So that complexity is an albatross around our expectations
for success. And it gets translated into lengthy schedules,
time that is out of control and that all translates into huge
cost expectations that are not met. However, the system is, if
you look at it, could be simply described. Requirements, budget
and acquisition and they need to somehow work together and on
the charts it looks pretty good. In addition to complexity,
we--because of the way we operate independent in each one of
those processes, we introduce instability and that is financial
instability--I don't think I have ever been if a program where
my budget didn't change every 12 to 18 months.
It is remarkable that the people we have out there doing
this every day can make this work still under the systems that
we impose on ourselves. And all for good reason. There are a
lot of heroes out there really making this work and I would
almost say in spite of the system. And we tend to, especially
at our level with Admiral Giambastiani and Secretary England,
work very hard at the top level and we could very easily see
that these things are solvable in the sense of making
requirements more simple.
And I will just take one example. We came up with a system
of key performance parameters not too many years ago and the
idea was very simple. If we could leave three to four or maybe
five key performance parameters and specify a system, we would
be satisfied with that system. And if we didn't, we would have
it come back and reevaluate whether we wanted that system.
Well, now, we have programs with 14, 15, 16 key performance
parameters, and each one of those key performance parameters
drives specifications in a tree like manner down to 2,500 to
3,000, to 10,000 specific specification requirements you have
got to make.
So the decisions that look very simple, coherent and
practical at the top of the pyramid get implemented through
this system and through a following of all the rules into very
complex and difficult tasks. The last point I would make in
summarizing my testimony is that there is a set of criteria--
and some questions you should challenge this hypothesis with
any procurement improvement idea that might be postulated.
And the first one would be: Will it reduce complexity? And
going back to the Admiral's idea of simplicity here. If it
increases the complexity of the system and it adds to the rule
book without something coming out, it ought to be challenged.
And other layers of oversight and management don't necessarily
improve the process. Second, will it be more--will it add
stability to the programs at all levels? The big ones we all
understand, but the smaller ones out there that people are
operating at the same--under the same rule book and having the
same challenges. So the stability idea where you can get a
decision and operate under it and only have a problem when you
cannot perform because the technology is too challenging or you
run into an obstacle and not the system coming back and saying
you are not spending your money fast enough so we have to take
half of it away for next year.
Okay. And the third one, and I think the final point I will
make is that we too often substitute costs for the real issue
here and that issue is time. The time value of the things that
we do is ignored in a lot of cases in decision making.
Schedules seem to be more of an afterthought and a desire
rather than a sense of urgency in the process. And time--and I
am talking about time to make decisions, to do budgets, as well
as to write specifications and do the drawings and those types
of things that make these systems work and perform the
services. The time value of this capability to the warfighter,
especially in wartime is incredibly important. And it is
similar to the time value of money concept, the dollar today is
worth more than the dollar tomorrow.
That is what I have been taught in the economics books. And
the same way with the time value of these systems and services.
Done today, they are cheaper, better than if we wait years.
Some technology requires more time. But we ought to focus more
on the time required to make the decisions and implement them
and hold people accountable for that and we will reduce the
costs.
And finally, this idea that I don't think process is going
to fix this problem. When we add process and improvements, we
tend to really add things and not take things away. And under
that approach, I think we will just increase complexity.
So I would be--I would advise a lot of caution in adding
things without asking the question what are you going to take
away to make these processes more integrated and less complex.
And at the end of the day, it is the people doing the job,
making more right decisions than wrong decisions that are going
to produce the outcome here. And it really does--it might
really come down to the fact that we can make the
administrative systems as good as we can make them in human
terms, but it is going to come down to people doing the job
every day. And we have got to select them right and we have got
to support them and make them perform and hold them
accountable. Thank you, Mr. Chairman.
[The prepared statement of General Kadish can be found in
the Appendix on page 55.]
Mr. Andrews. Thank you, General. I thank the panelists for
excellent presentations. We will begin with the question time.
I think it is fair to say that we have heard a consensus that
lack of coordination that we see in the requirements and
procurement and budget process is a result of too many rules
and too many attempts to fix the problem, which creates a sort
of archeological dig where there is one solution piled on top
of another, piled on top of another, piled on top of another
that worsens the problem. And that these add--to use the
General's criteria--they add complexity, they reduce stability
and they extend time, therefore adding to costs and adding to
complexity. Which starts the whole downward spiral all over.
I think I also hear a consensus that an expansion of multi-
year budgeting and therefore multi-year contracting authority
would be one way to address this problem. Because if you do a
multi-year contract, sort of by definition, assuming you have
got a cleaned up requirements process that goes more toward
that 80 percent solution, if you go the multi-year contracting,
almost by definition, the procurement and budgeting steps are
integrated because of the way you think about a multi-year
budget or contract.
Let me play devil's advocate for a moment. Isn't this
saying that systems that have produced dramatic cost overruns
are now going to buy more of it because we are going to do
three or four years' worth of budgeting instead of one and buy
three or four years' worth of mistakes instead of one? Doesn't
that take away the oversight function of the legislative branch
in a way that would be deleterious?
Secretary England. I guess, Mr. Chairman, I would say you
are obviously not going to put everything into a multi-year.
But right now we do very few programs and not just production.
I would actually look at development programs because when you
go to that multi-year, you basically freeze the requirements,
you know, what the dollars are, not only this year, but in out-
years, which you never know, because every program, other than
a multi-year is funded yearly. So you actually never know your
out-year funding. The contractor doesn't know the out-year
funding. Everybody gets a bite at this apple, in the services,
in the building, in the Congress. Right? So you still have to
be selective at this.
Mr. Andrews. What would be the criteria for that selection?
Which projects and systems would fall into the multi-year
basket and which wouldn't?
Secretary England. First, I say ones that are critical and
national importance I would always look to put in that basket
because I believe those----
Mr. Andrews. I don't say this to be facetious, but have you
ever heard somebody come in here and testify that something is
not of critical national importance? I don't mean to be
whimsical----
Secretary England. You are right. So obviously judgment
applies--and I am not sure that there is a formula for that
judgment. My only comment would be the formula in the past has
been a program that is reasonably stable and that you can
predict basically 10 or 15 percent cost savings. And I would
say that any program you can predict that if you actually want
to because the baseline is always unknown some extent. So I am
not sure it is a reasonable baseline anyway. And I would just
suggest when you look at the multi-years, don't look at it in
terms of savings, look at it in terms of stability achieved so
that you don't get the cost----
Mr. Andrews. Productivity.
Secretary England. Well, predictability. The budgets will
be in the out-years. Contractors can invest in improvements
because they know there is business in the out-years. I mean,
there is incentives in this system to perform better as opposed
to a year-by-year type process.
Mr. Andrews. As a follow-on to that to either of the--any
of the panelists, if the taxpayers are going to make a multi-
year budget and contract commitment, should there then be more
rigid standards from the contractors to have fewer overruns? In
other words, if we are giving you three or four years of
stability in a contract, should change orders and cost overruns
in the contract be much, much more rare as a quid pro quo?
Secretary England. There are fixed price contracts. Multi-
years are fixed price contracts. So we negotiate a fixed price
contract, and therefore every change has to go through a formal
change process and you immediately get control of changes and
contractors with the overrun, that is on them.
Mr. Andrews. I am aware of that, but of course, the fixed
price very often turns out to be a fictional aspiration, rather
than a legal reality. Shouldn't it be much more difficult to
get ahead of that fixed price contract? If we do a multi-year,
shouldn't there be a much, much heavier burden on the vendor to
come in and say you have got to go beyond the target that was
originally in the contract?
General Kadish. Can I----
Mr. Andrews. Yes.
General Kadish. I would like to make sure I understand
exactly what we are talking about in terms of the multi-year
because I think what Secretary England at least what I heard
was that he is introducing the concept for stability and maybe
for programs that we haven't done multi-years before. And your
question is how do you pick these and what value would you get
out of them. And I guess the way--one of the things that we
have a problem with in our system today is defining programs
and when they are a program. Okay? And it leads to a lot of
misunderstanding. Multi-years are most effective and have been
designed over the years for cost savings for programs that are
in deep production. They are actually putting hardware out,
whether it is rifles, or F-22s.
Mr. Andrews. Would you start sooner in the process than
that?
General Kadish. Those have been very effective if you go
back and look at them and C-17 and--there is a big track. Let
us postulate moving multi-years sooner in the development
context. If we had major programs that had mature technologies
but we are pushing a mature technology and not a new technology
and I will give you an example. We have been building airplanes
for 100 years. I would say that is my maturing technology. Now,
parts of those airplanes are really cutting edge, but overall,
airplanes are maturing technology. So if we had to postulate
that a development program--I hesitate to bring it up--but for
an airlift tanker, could be a multi-year development program if
the parameters for that were set properly.
On the other hand, in something like missile defense where
the technology is disruptive, new and challenging, it would be
very hard for me as a program manager to come to you and say
give me a multi-year and I will deliver this----
Mr. Andrews. It has gotten a lot harder in the last couple
of week, hasn't it?
General Kadish. On those situations, level the budgets
where you have the insight and the oversight to see what is
going on, where you don't have to--one of the difficulties we
have in our system today is that the system demands in all
three of those areas that the day you charter the program, you
have to put a cost estimate down on a piece of paper, even if
you are going to deliver it 20 years from now or 15 or 10----
Mr. Andrews. I appreciate that. Admiral, do you want to
jump in? I am going to stop so Mr. Coff--one point I want to
just interject--I would ask the staff to take a look at his
data. I am sure the GAO or someone has this. I am curious as to
the percentage of the cost overruns identified by the GAO which
I know are controversial, Mr. Secretary. But if you start from
that starting point, the percentage of those cost overruns that
flowed from multi-year versus non-multi-year contracts. It
would be interesting to see if there is any significant
difference. Admiral?
Admiral Giambastiani. If I could add just a couple of
points to what Secretary England and General Kadish have
brought up. Number one, dealing in multi-years for programs
that have mature technologies, stable requirements and the rest
are incredibly important. An example of these would be aircraft
programs. For example, when I was a resource director for the
Navy back in 2000, we went after multi-years to procure the
Super Hornet. We wanted to stabilize production. We had, if you
will, an aircraft that was fairly mature in its production and
we could stabilize it and move on. We do these things with
destroyers. We do them with submarines. Areas where we have
again stable requirements, we are not making massive changes
and we can see the benefits of the risk reduction methods that
we have used to go into them.
Requirements for programs that General Kadish talked about,
for example, on missile defense where you are dealing in very
high-leverage, high-risk, high-payoff technologies but you just
don't know if they are going to be successful or not, it is
incredibly difficult to go after a multi-year and I am the type
of person that would not suggest to you to do that. But if the
system is ruthless with, if you will, low-risk technologies and
the rest and you are ruthless in not allowing requirements to
change willy-nilly and you produce these things, you can do
upgrades in the future life of that platform, for example, or
vehicle or whatever you are building generally so that you can
put upgrades in later and later. And we have got just a bevy of
programs like this that have been incredibly successful that
have been multi-year buys. However, a multi-year by itself is
not going to be successful if you don't have the other
integrated components with it.
Mr. Andrews. Did you agree that integration is easier in a
multi-year context, though?
Admiral Giambastiani. It probably is, again, if you have
stability and simplicity in those three components that you
bring into the program.
Mr. Andrews. Mr. Coffman is recognized.
Mr. Coffman. Thank you, Mr. Chairman. Just a question about
changes in requirements in terms of being a cost driver.
Where--are those primarily because of the fact that in your
view, that it is an immature technology that is being developed
or is it from the military side of the House that maybe there
is a changing environment tactically in terms of threat
scenarios on a given weapon system? So there are changes in
requirements there. Where do you think the changes primarily
come from?
Admiral Giambastiani. There are a variety of ways to look
at requirements and let me give you an example of this. I am
going to use a real life example. Again, I will just pick the
Super Hornet. The Navy had just come out of a very, very bad
experience with the A-12 aircraft being cancelled. It was very
unsuccessful, it was a high-risk venture and there were a whole
variety of things on all of the reasons on why a program fails.
Many within the Naval aviation and Navy communities wanted to
build a more cutting-edge aircraft. But what happened is the
Navy got together and brought forward a fighter bomber, if you
will, based on some pretty proven technologies without over-
the-top requirements. In other words, we didn't double or
triple the range.
We didn't try to do things that were just so cutting edge
that it would be very high-risk and difficult to do. So
therefore you produced a good, solid aircraft, if you will,
based on solid requirements. If you try to extend yourself in
very high-risk ways and in different technologies, you are not
going to be able to produce a program, an aircraft, a ship or
whatever you are doing in an effective way because you are
working in these high-technology, high-risk areas that you
simply can't predict. That is the reason why you want to go
after, if you will, more mature technologies for these long-
term programs.
You do need to do programs that push the envelope, like
missile defense and others, but they are very different from
the types that we are talking about that could potentially give
you multi-years or if you will, stability.
General Kadish. I would like to add to that and take you
down a level because I think my experience is where we get into
trouble with requirements is not at the deliberative level that
the Admiral is talking about. There are sometimes we push a
range, payloads or something like that as a peak performance
priority that really gets in trouble. There are very few of
those and they are remarkably stable because people have taken
a deliberative approach.
Where I see we get in trouble is that when we start
translating those top level ideas or requirements into actual
specifications, our culture is and it is very much encouraged
that the people who are managing the program, go to the people
who will use this equipment or idea and say we could do it this
way or we could do it that way, which would you prefer? Or more
likely, they start looking at what we are doing and they say we
would rather do it this way. That is where you get the
proliferation of changes where something seemingly easy to do
in the first week of the design turns into a disaster as you
try to build it. And I can't give you a lot of examples of this
because it gets in the minutiae here to make it explainable.
But the process is geared to work with the future user and that
interaction at the lower levels tend to make the problem a lot
harder, although it is necessary at the same time. I am not
saying we shouldn't do that, but that is where we get into
trouble.
Admiral Giambastiani. Let me just add to this because I
think it is very important, I had a section originally in my--
but it got into the very technical minutiae level. But let me
just quickly tell you. Requirements are key performance
parameters that the JROC approves and controls day to day. As
General Kadish said, typically if we do a program right, they
don't change much and generally we are in pretty good shape
with them unless we proliferate the rest. The requirements he
is talking about are the next level down and the level below
them. They are called key system attributes and other things
below this. What happens with these requirements is the JROC
for example, assigns responsibility to the Air Force or some
other agency or service to control those. And I said it in my
testimony that requirements people have to be ruthless on
controlling these. And the reason why you have to be ruthless
on controlling them is because everybody comes up with up great
ideas and this is where change orders come from. They don't
always come from that. Sometimes there is a technical reason
why you really have to do it to make it work. But you try to
avoid all of these other change orders based on I have got a
really good idea and I want to insert this because I know it
will work better or we have been building this for a while and
I really think I have a better way to do it. This is--we found
in studies and you can get these from the joint staff, that a
vast majority of requirements level cost increases actually
came from this level of requirements change and they were done,
if you will, at a much lower level, day-to-day basis and there
is data on this and I know the joint staff, J8, can provide it
to you.
Secretary England. Another perspective, though, changing
requirements is not all bad. We tend to view it as bad. It is
actually--my view is we don't change them enough in a lot of
respects. Having been on the other side of this in the industry
and built a lot of products, F-16s and M1 tanks and every other
kind of system imaginable. At our level it is easy to talk, at
your level to talk about requirements up here. When you get
down to the contractor level there is volumes and pages and
great, great detail about this and over time they actually do
have to change because it is a reality of design and
production. You want them to change. Fact of the matter is
there is great reluctance to change any of this once the
contract is let because there is pressure on the system not to
make those changes.
So this is a more complex than just deciding the range. In
the reality, I would say the system is pretty rigid,
particularly going forward and that rigidity actually costs us
money as people struggle to meet requirements that are not
really germane to the ultimate utility. So it is not obviously
always the case, but that is still a dimension. It is not all
bad to change, quote, requirements as a program proceeds, and I
would say you have to have the flexibility to do that or else
you will have cost growth.
Admiral Giambastiani. And this is how you do block
upgrades, this is how you do the types of things for all those
programs I cited in the testimony. If you do them in a sensible
manner, you are going to get a really good product that over
the life cycle produces what this Nation needs.
Secretary England. Mr. Andrews is about people by the way.
I mean, look, you can have all these--at the end of the day, it
is somebody that understands the technology, the business.
These are people who exercise good judgment at various steps
along the way and you cannot replace that good judgment with
systems that you----
Mr. Andrews. I have no doubt about that.
Secretary England. I used to tell the Secretary, I would
take ten John Youngs over all the changes of the acquisition
system. An extraordinarily capable person is invaluable in this
system and that is true throughout the acquisition process.
Mr. Andrews. Mr. Coffman.
Mr. Coffman. Thank you, Mr. Chairman.
Mr. Andrews. Thank you. Mr. Cooper is recognized.
Mr. Cooper. Thank you, Mr. Chairman. General Kadish, you
mentioned that even with a lifetime of experience in dealing
with acquisition, occasionally you run across rules that you
didn't know about, make no apparent sense. Would you be willing
to go through these rule books with a red magic marker and try
to--pages, volumes?
Secretary England. It was done. There was a congressional--
there was a study group in the early 1990s that recommended
hundreds of changes, and I think some were made, but I don't
think many were.
General Kadish. To answer your question, I would love to do
that if I had the time. But what is interesting about the rule
books is that, to me, anyway, is that the more they change, the
more they stay the same in a lot of areas. You have got--you
have got the 5000 series regulations in the Department of
Defense that are the bibles for this type of stuff. And then
you have got the Federal Acquisition Regulations. All right?
And I will tell you if you start reading your contract and look
at the clauses that are put on contracts and how they all
operate, it is really difficult to understand why we do some of
these things. To eliminate them, I would like that challenge.
But----
Mr. Cooper. I am worried about the Tower of Babel effect
when we create a system that is so complex that nobody can
understand it. We were just joking prior to the hearing that
how many people actually read the weapons acquisition bill that
we just passed. Nobody.
General Kadish. I tried to.
Admiral Giambastiani. I tried to.
Mr. Cooper. This is an impenetrable thicket that is
almost--you challenged us, spend a day trying to figure out the
system. Nobody has a clue. So why don't we try simplification,
get back to basics? If it is people driven and if Secretary
England would love to have ten John Youngs--have we even gone
through the task of identifying--I think of them as, like, that
marvelous job foreman or the marvelous general contractor,
somebody who really knows what is going on and knows how to get
stuff done. If we identified folks with those skills that we
want to reward and perpetuate and grow more of them like that.
And then I see, like, U.S. Special Operations Command
(SOCOM) able to exempt it itself from lots of acquisition
regulations, gets the job done pretty well--maybe not with
super complex weapon systems, but shouldn't this be tried at
least on an experimental basis with some of the services, some
of the projects and just say maybe we don't need any of this
stuff?
General Kadish. Well, I think that idea is very interesting
because that is basically what happened to the Missile Defense
Agency, it got special authorities. Properly applied and
chosen, a team of people--and I do emphasize a team, not just
one individual--given the proper authorities would make better
decisions more rapidly than under normal circumstances. This
system is so big that it would be hard to do that carte
blanche, okay, because you are going to hire 30,000 new people
in the process and that might fix some things in terms of
numbers but it could create huge problems with more people
making--in the process making decisions to be unstable. But
choosing the organizational entity, projects, programs along
with this multi-year idea could have great benefit if you free
them from some of the issues.
Secretary England. Mr. Cooper, if I can add, though, the
Department has authorities. We can use commercial acquisition
rules, et cetera, and buy things. But you have to be really
brave to do that because you get criticized when you do that.
That is, you don't have the same amount of oversight, you don't
get the same amount of data, you don't get the high degree of
assurance. These are all trade-offs and risk, right? I mean,
this system, this layer exists because it gives comfort, right,
that no one is going to do anything wrong and there is a
certain degree of comfort that has been laid on. When you move
aside and do a commercial acquisition, you no longer have that
same degree of comfort. So I will tell you people in the
Department, my experience is, people will shy away from using
those authorities because you open yourself to severe, severe
criticism and in fact programs get stopped sometimes here in
the Congress because they don't have the quote sufficient
levels of oversight reporting. So this is a complex environment
we operate in with many stakeholders and many different
objectives that people are trying to achieve. And they don't
always come together in some coherent way.
Mr. Cooper. But, Mr. Secretary, aren't our services all
about bravery? Isn't sacrifice on the battlefield about life
and death? Then we have folks in the puzzle palace afraid of
stepping across a bureaucratic line in order to get the job
done because they might be criticized?
Secretary England. If you are a hero in combat. You get
promoted. If you are a hero in this arena, then you get demoted
or you don't get----
Mr. Cooper. Let us change the promotion system, let us
change the incentive structure so that you can be a hero. I
talked about identifying like you did the ten John Youngs, who
are these people, how can we reward them? Instead of them
fearing criticism, how can they be honored? Why don't we create
a system like that?
Secretary England. Fair enough, but we all have to do it
together. It is not just the Pentagon.
Mr. Cooper. That is why we are having hearings to explore
these topics. Admiral.
Admiral Giambastiani. Mr. Cooper, let me add something that
I have observed here over a number of years. Because of the
level of regulations you are all asking the right question, how
can we make this simpler. And that is the reason why you have a
guy like General Kadish that will say that is pretty attractive
if I had the time to do it. I would just say to you that I have
learned over the years since Goldwater-Nichols there is a lot
of good stuff that came out of Goldwater-Nichols, for example.
But one of the things that came out of this is that with all of
the joint requirements and, by the way, which I believe in
deeply, with regard to the joint requirements for operational
excellence, one of the things that has occurred is that there
is less likelihood of senior line officers, if you will, across
all of the services who have vast operational experience
existing in the acquisition community, in other words moving
back and forth.
And this long-term problem has created a level of
misunderstanding, if you will, in technical expertise. We keep
telling you people make the difference here, experienced people
make the difference. But if you can't have somebody that has
got good operational credentials and take hostages and put them
in the acquisition community and have them move back and forth,
it is very difficult, for example, in some cases for them to
truly understand some of these requirements level pieces that
are so important. Many of those really effective programs I
cited before were built under a system where people came up and
spent a significant amount of time in a variety of these
different communities and their experiences really paid great
benefits to the system. The question is how do you recreate
that, how do you get people who can go into the acquisition
side, how do you take hostages, if you will, and exchange them
between these different communities? That is one of the things
that some of us have spent some time trying to figure out how
to do this.
Secretary England. If I could focus this a little bit, Mr.
Chairman. I don't believe we are going to end up redoing the
acquisition system. This has been going on a long time. It
would seem to me the objective and what I would recommend are
one of the few things you know you can pass and get through the
Congress that would have a marked improvement. How can you
improve--how do you know you are going to improve and actually
not make it worse? It is a complex system. You always have that
problem, right? So what are the few things you can do and so I
would just try to address a few practical things. Give people
reserve because now every cent is accounted for, and if
something changes, you don't have the money to accommodate
whatever you need money for and that costs you ten dollars for
every dollar you don't have at the front end, it costs you ten
dollars. Make it feasible for people to have reserve. Make the
reprogramming easier. I mean, the thresholds are way too low
for the level of expenditure and the complexity of it. That is
part of the simplicity.
I mean, there are some things you can do to make this
system simpler, easier to operate within, without trying to
redo this whole system. And I would focus on three or four
things that you can get concurrence from the Department and the
Congress, and I keep doing this incrementally. The problem you
are going to have is if you try to make too big a change, I
keep telling people it is easy to destroy value and it is
extraordinarily hard to build value. So we didn't get here just
randomly. A lot of this was put into place for a reason. If we
start to dismantle it, we better understand the reasons and
make sure we are dismantling the right part of this because
some parts that you don't want to dismantle. So I would do this
on an incremental basis.
Every year I would work this, and every year I would get
people to address and I would keep making incremental changes,
and I would set my objective that way. So again, recommendation
is to get the specific--a few things everybody agrees on and
move forward rather than look at this whole thing because as
you can tell from his testimony, you can just stay enmeshed in
this detail and never get to the one or two few things that you
can really do to improve the system.
Mr. Andrews. Very good.
Secretary England. That is right.
Mr. Andrews. Thank you, Mr. Cooper.
Mr. Andrews. Mr. Ellsworth.
Mr. Ellsworth. Thank you, Mr. Chairman. Thank you for
holding this very informative hearing. Thank you, gentlemen. I
have become a little concerned. We know there is at least 120
prior studies that go back to the Civil War. I am glad we
assembled the group that is finally going to figure this thing
out and straighten it out. But that is our challenge. Most of
my questions were answered. I would ask one thing maybe for the
discussion of how much plays into, and I wouldn't want anybody
to take this wrong, that I don't want to give our troops
everything they need to do their job. How much of that plays
into this?
I can remember back in my days of law enforcement when we
would duct tape a flashlight to the barrel of our shotgun. It
would have been nice to have a built in flashlight in our
shotguns, but we didn't have that. How much of it is the cause
of this when someone in the field, someone says wouldn't it be
nice to have the switch on this side on the thumb instead of
the index finger or if this were in my left hand instead of my
right, or if this seat were a little more cushioned or how much
is it that we want to do everything we can for our troops on
the acquisitions that come out and I think it goes back to
those change orders and improvements. I don't have a problem
with that. But does that add to the problem of kind of we need
to give everything we can, whatever is even suggested. Is that
even--I think most of my questions were answered about adding
to and improving, but there is a play in there. There is wants
and needs and it is a good lesson between what we want and what
we need and sometimes you don't always get what you want, but
we definitely want to give you what you need. I am not sure the
question is in there.
Secretary England. It is in the eye of the beholder what
the value is. That is sort of the challenge always. There is
always many more things you can do in the Department of Defense
than you will ever have money for. No matter how much the
budget goes up, there will always be needs, unmet needs.
Because if you are a military person, obviously you want the
very best equipment or latest equipment, you want the switch on
the right side and frankly they should expect that. That said,
there are still limitations. There are boundaries you have to
work within. That is the trade-off that you keep making. And
that is an imperfect world. That is judgments by people between
the military, the civilians, the Congress who has an oversight
role.
I mean, everybody places judgments on this, frankly at the
end of the day, it sort of works pretty well. You know,
everybody has an input and it tends to balance out, right,
between the military, the civilian leadership, the
Administration, the Congress, I mean, all of this pushing and
shoving--I mean, it looks bad frankly, but I am not sure it
doesn't come out with best results you can get given all these
competing interests that come to bear on this so it is an ugly
process but I am not sure it is ever going to be a pretty
process because that is the nature of what we do and these are
all judgments. This isn't a black and white. This is almost in
every single case judgment calls by well-meaning people and
people disagree a lot of times.
Mr. Ellsworth. And that vendor that has to move that switch
from the right to the left or left to right, they have to
retool machines that adds to the price. Is that--you make that
determination--worth it versus armoring up a Humvee while the
guys in the field are catching shrapnel, let us do that, let us
do it quick, let us add panels, whatever we have to do. I can
see the difference there. But I agree with that. I think it is
an imperfect world. But that is kind of what we have to deal
with.
Secretary England. That is the world we are in and that is
the world we deal with.
Admiral Giambastiani. Let me give you a perspective from
somebody who has worn a uniform and been out and used this
stuff for a hell of a lot of my life. We have very, very
thoughtful and good people. And as Gordon said, you are always
going to have people making recommendations for changes. It
just is the way we train them. We tell them we want to do our
best and they expect the best from what they get. So the
question then is how can you incorporate and bring these things
to bear in a timely and useful manner so that they can use them
to do whatever--and accomplish the mission that they have at
hand. There has been a lot of discussion, for example, about a
peacetime procurement system and what you do in wartime and the
rest of it. Well, it makes a difference. When you have the
urgency of impact out there, you are going to modify what you
do on a peacetime basis. What is important today in wartime may
not be as important during peacetime unfortunately or vice
versa. So you modify processes and you modify the way you
deliver capability.
There is a whole variety of these joint rapid acquisition
programs. You do the things that make sense to deliver
capabilities and modify capabilities. And it is always going to
happen, but we train our people--the culture is you want better
and you are going to work for better, and hopefully we can
provide them with the tools that keep them safe and allow them
to effectively make their mission. That is pretty general. But
my comment is we always have to have during wartime a
willingness to also fail and maybe not get it right, because if
we are in a zero defect environment trying to protect these
people and allow them to accomplish their mission, then we have
got problems. How do you balance those and get that capability
out there?
General Kadish. I would add there is an element of trust
that we have. I have been on both sides. Operating and flying
airplanes and buying and developing things. And that trust of
the soldier, sailor, airman in the field, that they are going
to get the best from our country is something that is unspoken
but part of our culture. And I will just give you an example
from my own life.
I will never forget when I was in pilot training I had an
old combat instructor that was teaching me that day and I had
been very clever that morning and went out and bought a
flashlight because--a small one that I thought was kind of neat
because we were going to practice dark cockpit type stuff. And
we were walking to the airplane and I discarded my big
flashlight that was the traditional issued type of thing. And
he said what are you doing? I said I got this new flashlight.
He said you trust that at 30,000 feet. It works great on the
ground. I will take my Government Issued (GI). And that made an
impression on me because if we are going to put people in
harm's way, yes, we have resource issues, we make those trade-
offs every day. But that trust, we are going to give them the
best we know how to give them has got to be there.
Mr. Ellsworth. Thank you, Mr. Chairman. I yield back.
Mr. Andrews. Thank you, do any of the members have any
follow-up they would like to engage in at this time? Yes, Mr.
Cooper.
Mr. Cooper. Secretary England impressed me with his rousing
defense of the status quo. And I don't want to be a hopeless
idealist, but I also don't want to give up on making the system
better either. And surely there is some compromise between the
two and I realize there are plenty of obstacles, but surely
with your long tenure both in the private industry and as
Secretary, there are specific recommendations you can give us
that are deeper than more--a politician would call it a slush
fund--wiggle room, an extra $57 billion, here, there, whatever
the amount is to get the job done, smooth wrinkles. This is the
most massive bureaucracy probably in human history, it is the
least auditable of all government agencies, perhaps it has the
toughest job. But we are, you know, the most important military
force in the world. And it is so important for every troop and
for every citizen that we get this really right. So to me,
after your long experience, kind of waiting for more and deeper
advice.
Secretary England. What I recommend, Mr. Cooper, I don't
recommend the status quo. Everything can always be improved.
The Nation is at war. We are buying equipment. We are meeting
warfighter's needs. I only recommend that you do this
incrementally because you don't want to do something that is
also going to make it harder or harmful. So if they are in
complex system, I tend to go much more deliberate and so I
would take--I would decide what are those things that you can
identify and I would work with the Department on this, the
current Administration. I say what are those things that we can
make changes to that would immediately improve your operation
and I believe there are some things you can do that would be
embraced by everyone that would actually have a meaningful
effect on this. I mean, this is small things like reserves,
small things like reprogramming are very, very large. The
multi-year is very important. I think if you can--the National
Security Personnel System (NSPS) provides a whole personnel
system. It is important. It is hard to get people in the
acquisition arena, particularly civilians. We make it very
onerous. So if you can attack some of these issues that are
identified issues within the Department, you will move the ball
forward and you can do that quickly. I mean, you can do that,
in effect, what they are doing in the coming budget as opposed
to over a long budget. So I am just suggesting take a
deliberate approach on this, accomplish what you can accomplish
and don't get mired down in this whole system because this
whole system has been built up literally over at least 50
years.
Mr. Cooper. George Will had a famous column at one time in
which he quoted Mr. Hilton of Hilton Hotels who, when asked, I
think at a graduation speech, what his advice would be to
future generations. He summed it up succinctly and he said
please put the shower curtain inside the tub.
Mr. Andrews. Is this the person that raised Paris Hilton?
Mr. Cooper. Thank you, Mr. Chairman.
Mr. Andrews. Bizarre note. I did have--I meant my comment,
not yours. I did have one quick question if I could just ask
the panel. The Center for Strategic and International Studies
(CSIS) did a report and they made a recommendation which I am
going to read from. I just briefly want to ask the three of you
what you think of the recommendation. And frankly, you can
supplement your answer in writing if you would like. CSIS
recommends that we modify title 10 to require that all JROC
memoranda signed by either the chairman or vice chair of the
joint chiefs, the Joint Requirement Oversight Council
Memorandums (JROCMs), be provided to the Deputy Secretary of
Defense for his review. The Deputy Secretary could then issue
any JROCMs he approves as binding guidance to DOD components.
What do you think of that? Is that something we should do by
statute or not?
Secretary England. My question to title 10, do you give
title 10 authority to the vice chairman?
Mr. Andrews. No. Let me read it again. To the Deputy
Secretary. In other words, the Vice Chair and the Chair would
pass these draft memo up to the Deputy Secretary. He would then
or she would then have the authority to give them binding or
not to give them binding effect or modify. So what it would do
would be to institutionalize a role for the Deputy Secretary
that binds the services.
Secretary England. My first reaction would be--that is a
responsibility of Acquisition, Technology and Logistics (AT&L),
the Deputy would just literally go to the AT&L responsible
person because they have all of the everyday work in the
acquisition arena, they have the authority for acquisition. I
mean, my view being the Deputy, I would, at that point, have
gone to John Young or Ken Krieg and got their view on that
because they are dealing with that every day. Not the Deputy.
The Deputy does this, you know, sort of on an as needed as
required basis, not--I wouldn't put the Deputy in that role
frankly. I would put the AT&L. And I haven't thought about what
all the implications of that are.
Mr. Andrews. I would like you to think about that if you
could and then supplement your answer to the record if you have
time.
[The information referred to can be found in the Appendix
on page 225.]
Mr. Andrews. Admiral, what do you think?
Admiral Giambastiani. I would tell you that I think the
Deputy is the wrong person in that case. But I do think the
Under Secretary for Acquisition, Technology and Logistics is
the right person to be doing this. Now, recognizing you could
make this a legislative piece clearly that would be a big deal
because you were including a civilian in this military
requirements discussion, but it is one way to help integrate,
if you will, the system.
Now, what I would suggest to you is that I didn't make him
the co-chair, but I invited AT&L to every session of the
requirements, JROC pieces that I did for two years, and in
fact, AT&L attended everything. Ken Krieg personally as the
Under Secretary did not, but he always had a senior
representative there, and in fact, they did a lot of
preparation----
Mr. Andrews. The question is the difference between
attendance and authority.
Admiral Giambastiani. Correct. So what you have to think
about is if you are going to make the vice chairman, for
example, the co-chair of the Defense Acquisition Board, then
would it be reasonable to make the Under Secretary the co-
chairman of the JROC? And I don't think that is bad. If you go
back to the Packard commission, one of the things they talked
about was--I think it was called a Joint Requirements and
Management Board (JRMB). It was a joint requirements material
board or something that compromised mainly of military but also
brought some civilian expertise on the acquisition side into
it. I personally don't think it is a bad idea at all.
Mr. Andrews. General, what do you think?
General Kadish. Mr. Chairman, I, in fact, talked about it
to CSIS. I think if I am not mistaken and read it right, this
is a reflection of the fact that the only time those three
processes come together in the Department is at the Deputy
Secretary.
Mr. Andrews. I think that is right, yeah.
General Kadish. And because budget decision is really
resident there primarily because that is the one that usually
is the outlier in these decisions. So making it statutory might
be a good idea, but it could also be very problematic because
fundamentally, the Deputy Secretary and I hesitate to speak for
Secretary England here, because I never was one of those, but
it is a huge job to do these types of things. But the processes
are designed today to come together at that level.
Mr. Andrews. Yeah. I mean, I asked the question as an
agnostic. I read segments in the report and wondered what you
thought. The attraction of the idea is as the General says it
is the venue where these processes come together. And investing
the person who sits at that venue with some enforcement
authority has some attraction. On the other hand, it does speak
to the caution that all three of you have given us from
significant experience which adding new process may exacerbate
the problem it may not solve it. So upon further reflection, I
would like you to think about whether you think vesting some
person with that kind of authority coming off the JROC process
makes sense. And if so, whom would that person be?
Admiral Giambastiani. I can tell you, most military
personnel probably would not like that.
Mr. Andrews. Is that an argument for doing it or against
it?
Admiral Giambastiani. I am trying to tell you, you have to
integrate this. But, with all due respect to my Deputy
Secretary former shipmate here, I think the person who really
is vested in where all three of these come through, despite
what Ron has said to you, is the Secretary of Defense. Because
you have service secretaries and service chiefs in there and
that is where the ultimate authority for all three of these are
supposed to come together, and when you move it to a different
level, you change the overall dynamic here in a way sometimes
that is not good.
Mr. Andrews. You may actually deemphasize the importance of
it?
Admiral Giambastiani. Correct. So some that, though, is
very important.
Mr. Andrews. My question is whether a person should be
vested with the authority. And your position is maybe it should
be the SECDEF.
Admiral Giambastiani. The SECDEF is not going to go to
every JROC meeting because he sure doesn't have time for that.
But the point is, how do you get that done so he gets advice
properly?
Secretary England. Chairman Andrews, your original comment
about people and personalities. A lot of this is who makes
these decisions at any given time, frankly, because it varies
dramatically in terms of background and experience and
capabilities. So when you say----
Mr. Andrews. The Constitution would probably prohibit us
from mandating a certain person.
Secretary England. I would say what worked out well with
what Admiral Giambastiani said is that John Young is the
perfect person to do that. So, for all practical purposes, you
sort of achieved that when they were together in the offices,
because you want to get the requirements right. They were both
quite capable, the same reason I brought Ed in on the DAWG. So
personality goes a long way on this.
Mr. Andrews. I hear you. One of the recurring things in our
work, and we will wrap up with this, we think it is self-
evident that the talent of the individuals in these positions
and the nature of those individuals is central to any result.
But what we can do in the law and procedure is create a series
of incentives and disincentives that hopefully incent the more
desirable behavior and disincent the less desirable behavior.
And what we are trying to fumble through is to figure out in
this instance.
So I think in closing is if the hypothesis this morning is
that the gap between value and cost paid is in part
attributable to a lack of coordination among the requirement
and procurement and budgeting process, I think the answer is,
sure is, there is a significant problem. What we are trying to
do is figure out a way to create the right set of incentives
that would cause integration, the right set of disincentives
that would mitigate against disintegration, but do so hopefully
by going to Mr. Cooper's question, by taking things out of rule
books rather than putting them in, and by creating fewer levels
of oversight, more transparency, not more levels of oversight
and less transparency. That is a tall order, but I think that
summarizes what we are about.
Each of you has made a very significant contribution in
that effort this morning. We appreciate that. It is entirely
consistent with your lifelong contributions to our country in
this and other areas, for which we are very grateful, and we
thank you very much for your participation. The hearing is
adjourned.
[Whereupon, at 9:33 a.m., the panel was adjourned.]
=======================================================================
A P P E N D I X
June 3, 2009
=======================================================================
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PREPARED STATEMENTS SUBMITTED FOR THE RECORD
June 3, 2009
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?
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DOCUMENTS SUBMITTED FOR THE RECORD
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?
=======================================================================
WITNESS RESPONSES TO QUESTIONS ASKED DURING
THE HEARING
June 3, 2009
=======================================================================
RESPONSE TO QUESTION SUBMITTED BY MR. ANDREWS
Mr. England. The current system provides a series of checks and
balances, allowing appropriate military advice to be provided to the
civilian leadership while allowing the civilian leadership to define
strategy and allocate resources consistent with the President's policy
and budget priorities. There is a large staff which supports the JROC
in the requirements review and approval process. The Office of the
Deputy Secretary of Defense is not staffed for comprehensive review of
the JROC requirements. Further, the Deputy Secretary already must
address a broad spectrum of issues, and this additional workload would
be very difficult to manage within the Office of the Deputy Secretary
of Defense. As importantly, the current system established by the
Congress through Goldwater Nichols legislation provides checks and
balances in the systems while also allowing for independent military
advice to be provided to the Nation's civilian leadership. It may not
be appropriate for the Deputy Secretary of Defense to approve or
disapprove individual requirements sequentially. The Deputy Secretary
of Defense already indirectly provides a role in this process by
balancing the JROC requirements against the President's policy and
strategy objectives, making these decisions in the context of the
President's budget process. It is not clear that the process would be
improved by requiring the Deputy Secretary to personally approve JROC
memoranda. [See page 23.]
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