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American Forces Press Service

Acquisitions Chief Outlines Streamlined Processes

By Donna Miles
American Forces Press Service

WASHINGTON, March 15, 2007 – As the Defense Department works to simplify its acquisitions processes, it can borrow best practices from business, but also must factor in variables businesses simply don’t have to deal with, the Pentagon’s acquisitions chief told reporters here yesterday.

Ken Kreig, undersecretary of defense for acquisition, technology and logistics, told reporters people often ask him, “Why don’t you run this like a company?”

“First of all, no company would be this large (and) complex and try to structure this way,” Kreig said. DoD is the largest, most complex organization in the world, owning more than 600,000 buildings in 146 countries, and with assets and liabilities that exceed those of WalMart, Exxon, Ford and IBM combined, defense officials noted.

But the differences go beyond mere scale, Kreig said. “No company would try to manage this level of risk. No company would try to surge and reduce like the Defense Department tries to do. And so managing it just like a company is hard,” he said.

For-profit companies also have a concrete way to measure their efforts, based on the bottom line, Kreig said. That’s not as simple within DoD, he noted, where effectiveness is measured not by numbers on a spread sheet, but by capability.

“At the end of the day, what we do in the Defense Department is provide capability to warfighters. … Whether they’re engaged in war or whether they’re engaged in peacetime operations, like the tsunami, we provide them capability,” Kreig said. “They take all the capability and they do amazing things with it.”

Another big difference between how DoD and the private sector do business boils down to their ability to get across-the-board agreement to an initiative and sticking with it to ensure it succeeds, he said.

“In the private sector, if you make a decision to invest capital, particularly a sizeable decision to invest capital, that goes all the way to the chairman and probably to the board if it’s a reasonable amount,” he said. Everyone within the company — directors of the manufacturing, marketing, sales, finance and other departments — agrees to the decision and commits to making it work.

Not so in the government, he said, where a tremendous number of stakeholders often work toward contradictory goals, and year-to-year budget fluctuations can derail an initiative before it’s able to bear fruit.

Despite these challenges, Kreig said he’s confident efforts under way to improve DoD’s acquisition processes are having a direct impact on warfighters while making more effective use of taxpayer dollars.

These initiatives, detailed in the newly released Defense Acquisition Transformation Report to Congress, aim to make acquisition systems more effective, efficient and responsive to warfighter needs, he said.

The report, sent to Congress last month, describes the departmentwide drive to transform enterprisewide acquisition processes, systems and management structures. It notes the basic strategic choice it boils down to: How DoD determines which assets and investments will best provide warfighter capability.

Kreig outlined seven basic goals DoD’s acquisition transformation initiatives aim to achieve:

-- A top-quality work force that’s critical to disciplined, accountable and ethical acquisition process;

-- DoD’s core values, policy objectives, joint capability needs and resources, all focused together to reducing risk and provide predictable schedules and cost;

-- An acquisition system that’s able to respond to combat commanders with product-ready capabilities, on time and on cost;

-- Realistic, cost-effective plans and programs essential to preserving flexible and responsive options;

-- An environment within DoD that encourages industry to create and sustain reliable and cost-effective industrial capabilities sufficient to meet the department’s strategic objectives; and

-- Efficient and effective acquisition performance, achieved through effective structure and integration of efforts within the department and fewer layers of authority.

Defense Secretary Robert M. Gates told the Senate during his confirmation hearing in December he will continue to champion acquisition reforms under way within DoD. “I will seek to balance the acquisition and operational testing processes between reducing costs and accelerating schedules,” he told the panel.

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