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Improving “Big A” Acquisition through Integrated Portfolio Management

This is part 2 of a four-part interview series with Section 809 Panel’s Chair, Dave Drabkin who talks with Integrity about the urgent and important need to improve Defense (and Federal) Acquisition.  To read part 1, please click here.

I’d like to circle back to something I heard you say earlier.  So, the scope of the legal regulatory process areas covered by the panel across the so-called “big A” acquisition governance landscape includes requirements, acquisition, resource management, and the integration among those governance processes. In terms of executing the panel’s charter and deriving the findings and recommendations, did you assemble the teams according to those governance areas?

Actually, the teams that we broke into initially were based upon several months’ worth of thought, deliberation, and consideration of the areas that we thought we should look at. First, of course, we identified an approach that complied with the panel’s statutory obligation.

We looked at multiple areas that required fixing, including major systems acquisition and procurement. Team five looked at what were the characteristics of successful major systems acquisitions and how we might replicate those characteristics. We did look at the requirements process beginning with the identification of a requirement. Although, we agreed at the very beginning that about 90% of the problem with acquisitions were the result of the requirements process, we did not make recommendations to change the requirements process, in no small part because it is not within the control of the acquisition process itself. The acquisition process begins in the main, once a requirement has been identified, approved, and funded.

Yes, root causes of acquisition life cycle management risks and issues are often related to requirements management.  The panel recommended a capability-based portfolio management approach to improve resource allocation/management.  Do you think the panel’s capability-based portfolio management recommendations could also help with improving requirements?

Well, when we got to the identification of a major system and its acquisition, we observed that our current process manages capabilities in stovepipes, rarely grouping them together in terms of the capabilities they provide the warfighter. Grouping them as capabilities would allow DoD to take advantage of the flexibility both for the program and for the satisfaction of the warfighter’s use of those things. For example, if you focus on capabilities like air dominance– if you want to dominate the air space, there are a number of different tools that you can employ to dominate the air space. You obviously have fighter aircraft. You can have missiles. You can have radars. You can have a whole variety of tools, which employed together would give you the capability of air dominance. And it could be that if you manage it by capabilities, you may be able to manage more holistically or synergistically. One of our colleagues pointed out that, “If you manage your stock portfolio one stock at a time, you are not going to be as successful as when you group those stocks based upon their place in the market and how they perform to give you an overall better performance. You must have that flexibility to shift your investments and your focus based upon how the market itself is performing or changing needs and requirements.” Leveraging the capabilities of a variety of tools, as opposed to individual tools, gives the warfighter greater capability – the whole is greater than the sum of its parts.

So greater flexibility is one of the aims of capability portfolio management, whether it’s flexibility in reallocating platforms or sub capabilities to meet emerging priorities, extending funding envelopes, or having the flexibility for more reprogramming.

Funding is only one aspect of the inflexibility of our current system and requires greater flexibility in order to keep from being technically outmatched. Funding is only one aspect of the problem of not valuing time, but it’s certainly an important aspect of it. We’re currently operating in an environment where our funding flexibilities haven’t been updated since the 1960s. It has not even been updated based solely on inflation. We’re still operating on 1960s numbers, unadjusted for inflation. Recognizing that Congress has a legitimate interest in managing how the department spends money but also recognizing that Congress’s legitimate oversight of those funding issues ought to be adjusted periodically for inflation, we made recommendations to increase thresholds for funding capabilities just based on adjustments for inflation since the numbers were established.

Interesting, so the actual dollar figure threshold, which the department has flexibility to reprogram without going back to Congress for permission has not been adjusted since the 1960s?

I mean, the program values that we deal with today, of course, are different than program values that existed in the 1960s. In fact, some of the programs that were subjected to those thresholds don’t even exist anymore. But the thresholds themselves, which give the secretary’s discretion to reprogram monies without having to go obtain congressional approval, those dollar thresholds have not been adjusted since the 1960s. And we discussed that in greater detail in the report and recommendations.

With capability portfolio management recommendation, I recall there were two recommendations, one of which was more structural, talking about the execution level portfolios, and the other focused on department-level joint portfolios.

Right. We proposed two levels of portfolios.  One at the OSD level, which is really supposed to try to look across the department at all the capabilities and try to share information and manage capabilities at that 50,000 foot-level. And then, the actual execution of those various capabilities at the service level, which is what they call the execution portfolio. This approach is consistent with the direction that the department has been going in for a number of years now. It is also represents what is going on in the private sector.

Do you think that proposed structure reinforces the trend around jointness?

Well, it’s not really jointness because the execution is service by service. The overall management is done at the OSD level, but the actual management is done at the service level.

Interesting, so there’s service-specific component and a department-level component that coordinates at the 50,000-foot level, and that in some cases, there could be joint applications there.

And there are some notable examples of that. Of course, the F35 is a notable example. I’m not sure how many will agree that it’s a successful joint effort at this point in time, but it’s clearly an example of it.

Within the defense sector or civilian sectors, have you seen any specific organizations getting out ahead on the Panel’s capability portfolio management recommendations?

Well, the Air Force is certainly moving out, to the extent they can without statutory authority, to try and manage capabilities. And for that matter, the Army and the Navy are as well, perhaps not at the same pace, or as broadly as the Air Force. And so along those lines, we’re proposing giving them more freedom to manage capabilities than they currently have.

I think that the portfolio management recommendations were timely, based on factors such as recent GAO reports on portfolio management.

Yeah. We’ll see. I think it makes sense. It’s just a question of leadership and how effective that leadership is.

Stay tuned for Part 3 of Integrity’s interview with Dave Drabkin.