Kendall: Fixing Acquisition Requires Incremental Improvement

By Cheryl Pellerin

American Forces Press Service

WASHINGTON, April 30, 2014 – Improving defense acquisition is a long, hard, tedious job that demands attention to hundreds of factors, and the Defense Department is making continuous incremental improvement in areas where it can make the most progress, the Pentagon’s acquisition chief told a Senate panel today.

Frank Kendall, undersecretary of defense for acquisition, technology and logistics, appeared before the Senate Armed Services Committee, which convened to assess the impact of the Weapon Systems Acquisition Reform Act of 2009, or WSARA, and other measures, and to consider the need for more legislative improvements to the defense acquisition system.

“The approach I am taking is one that Dr. [Ash] Carter and I decided upon four years ago when he was undersecretary and I was his principal deputy, when we introduced the first set of what we called Better Buying Power initiatives,” Kendall told the panel.

Kendall described the Better Buying Power process as one of continuous, incremental improvement based on pragmatism, and evidence based on data.

“I could report to you today,” he added, “that after four years, I believe we are seeing changes for the better.”

Kendall said acquisition of a new cutting-edge weapon system is a complex job that takes getting every one of hundreds of decisions right in an environment where the real incentive systems are not always aligned with the goal of increased efficiency.

“This is particularly true in the current budgetary situation,” he said. “There is great uncertainty about future budgets, and planning is excessively difficult.”

The Better Buying Power approach tries to identify areas of acquisition where the greatest good can be achieved and to attack those opportunities, Kendall said. “As we learn from our experience, we periodically make adjustments and bring in new ideas,” he added.

Kendall said his team is pursuing many initiatives under the second iteration of Better Buying Power, or BBP 2.0, and he told the Senate panel a third iteration is on the horizon.

It is a pragmatic, incremental approach that spans actions such as setting affordability caps to constrain program cost and developing “should-cost” estimates, as well as a focus on the professionalism of the department's acquisition workforce, the creation of competitive pressures wherever possible, and a new emphasis on the acquisition of services as opposed to products, he told the panel.

In written testimony, Kendall explained that should-cost-based management challenges every manager of contracted work to identify opportunities for cost reduction, to set targets to achieve those reductions, and to work vigorously to achieve them.

“Managers at all levels should be requiring that these steps be taken and rewarding successful realization of cost savings,” he said. “I am seeing more of the desired behavior as time passes.”

Kendall said there is work to do in teaching managers the craft of using should-cost for smaller programs, but that overall, should-cost management “as a single measure alone, if fully implemented, will cause fundamental change in how we manage our funds.”

BBP 2.0 moved Kendall and his team in an incremental way from the set of model rules that characterized BBP 1.0 to recognition that in the complex world of defense acquisition, critical thinking by well informed and experienced acquisition professionals is the key to success, the undersecretary said.

“This is as equally true of the acquisition of contracted services for maintenance, facility support, information technology, or anything else we acquire from industry,” he added, “as it is for the various aspects of the large programs that we normally associate with defense acquisition.”

Kendall said BBP 2.0, labeled “A Guide to Help You Think,” is bookended by two critical areas -- affordability, and increasing the professionalism of the workforce, with middle sections on cost control, incentivizing industry and increasing competition, among others.

“This is hard, detailed work,” he told the panel. “It takes time, constancy of purpose and tenacity to be effective. But I don't believe there is any other way to achieve lasting improvement.”

The undersecretary said he is working to implement important cultural changes embedded on multiple fronts in the process of continuous improvement.

The academic business literature suggests that two things are needed to effect major change in an organization -- a period of four or five years of sustained commitment by senior leadership, and a crisis, Kendall observed.

“I'm trying to supply the leadership,” he said. “The budget situation is supplying the crisis.”

The first culture change would move the workforce from a culture that values spending over controlling cost, Kendall said.

“In government,” he said, “the built-in incentive system is to spend one's budget so funds are not rescinded or reduced in subsequent budgets.” Many of the Better Buying Power initiatives are intended to reverse this situation and force managers to focus on costs, he added.

A second cultural change is to move the government workforce away from a check-the-box approach to acquisition to one based on professionalism, sound business and technical analysis and, most of all, he said, critical thinking.

“I do believe we are making progress,” Kendall said, “but I also believe we have ample room for additional improvement. And with [the Senate Armed Services Committee’s] support, I am determined to build on the progress we’ve made.”