Neglected Nightmares and Forgotten Dreams

I know.  I know.  You are asking what can this article possibly be about? Well, it’s all about the DoD budget (the Dream) and sequestration (the Nightmare).  I’ve been talking to a few budget folks over the past week and asking how is this year compared to others in terms of pain.  The universal answer has been “Not so bad this year.”  But soon all our dreams of finally getting some sanity in the budget process will give way to the nightmarish and forgotten process known as Sequestration.  It’s been quite a journey to get to where the DoD budget is today.  Despite all the dire warning about sequestration, all seems to be well for now.  There’s some squeaking from the fringes about cuts to force structure, BRAC, pay and benefit cuts, rising health care costs,  etc.  There are still some struggles going in within the Navy about how many carriers and other combatants the Navy can afford.  The Air Force is struggling to make ends meet by removing the A-10 from the battlefield, and the Army and Marine Corps are wrestling with end-strength reductions.  Seems like a normal day in DC.  I mentioned it’s been quite a journey to get here, and an improbable one at that.  Let’s just review the history in case visiting Aliens would like a quick briefing (Do you think they would believe it?) or you want to explain it to your grandchildren.

August  2011.  The President signed the Budget Control Act of 2011.  The debt ceiling debate was in full swing but the BCA saved the day ( or so we thought).  It did a few things:

  • Raised the debt ceiling to $14.694 Trillion (bumped up another $500 Billion in Oct 2011)
  • Cut spending for 10 years by about $917 Billion, roughly half for DoD
  • Set up the Congressional “Super Committee” to find another $1.2 Trillion in cuts over 10 years.  If they were unable to do so by December 2011, than a series of mandatory cuts would kick in.
  • Required a vote on a Balanced Budget Amendment (which failed)
  • Monkeyed around with graduate and professional student loans, although it increased funding for Pell Grants

December 2011.  Oooops.  The “Super Committee flopped” so the arbitrary cuts demanded by sequestration loomed for next year’s budget.

February 2012.  DoD Budget for 2013 ignores sequestration.

December 2012.  DoD finally starts planning for possible 2013 spending reductions demanded by sequestration.

January 1, 2013.  The American Taxpayer Relief Act of 2012 delays sequestration to March 1, 2013, and cuts some of the sequestration caps.

March 2013.  Continuing Resolution funds Government till end of September 2013

October 1-16, 2013.  Government Shuts down.

October 16, 2013.  Congress passes the Continuing Appropriations Act, 2014 which funded the Government through February 2014 (actually it extended the debt ceiling limit)

December 26, 2013.  President signs the Bipartisan Budget Act of 2013 which restored $45 Billion of sequestration cuts in 2014 and $11 Billion in 2015 by adding sequestration cuts to 2022 and 2023.

It this any way to run a railroad?  No wonder nothing works right and everything the government does costs more.  There’s no stability to allow for any sort of long-range plan.  But you all know that.  The point of all this is that through a series of improbable event, we have managed to kludge together funding to keep the US in business (such as it is).  But there’s nothing in the works that I know of to fix 2016, the budget that being build right now in the Pentagon.  And just like a scene out of Ground Hog Day, DoD is putting together a budget that ignores sequestration.  Here’s a chart right out of the DoD 2015 Budget Briefing.  Notice that there is no mention of sequestration (except to exclude it). DoD FY15 Budget Proposal Summary   Now here’s a rough chart (I’m sure the numbers are off slightly) of what sequestration funding levels are relative to the DoD budget.  Notice it’s $115 Billion out of round through 2019.  That’s how much money the Pentagon is stuffing into the budget over sequestration spending levels. DoD_Sequester_Comparison The only point of this little tale is to impress upon you how important it is that we get this fixed.  We can’t keep grinding our people into the dirt with endless budget drills which make no sense.  There are three possible strategies to deal with the situation IMHO:

  1. Business as usual. The politicians will fix it just like last time.  (The Hope gambit and our current vector)
  2. Force DoD to plan for Sequestration in 2016 and beyond. (The Defeatist gambit)
  3. 1 and 2 (The “Probably what’s happening in the Pentagon, but no one will admit it” gambit)

Where do I come down?…..What the heck….let’s go for number 1.  It worked last time and the politicians always fix it in the end, no matter how much pain gets inflicted in the process. And so it goes………..

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Acquisition: Practitioners vs. Pontificators

DoD Acquisition Process

The DoD Process Simplified

I ran across an article from the National Defense Industrial Association (NDIA) the other day by Sandra Erwin on Congressional frustration on how the Pentagon buys things.  Not being satisfied with the progress being made by the DoD Acquisition guru’s, Congress has decided that more legislation is needed to fix things (Really? Congress is going to fix something?).  The Congress has asked nine of the industry associations around the Beltway to provide comments on how to make it better, with inputs due in July.  I belong to several of those and I’m glad the Congress is asking for industry input, although I hope they remember that asking the people who make money as a result of inefficiencies is just one side of the argument. I think significant progress has been made since then Under Secretary of Defense for Acquisition, Technology and Acquisition (USD(AT&L)) Ash Carter launched his “Better Buying Power Initiative” in September of 2010. In his memo to acquisition professionals he provided a roadmap to improving acquisition within DoD.  He focused on five areas of interest:

  1. Target Affordability and Control Cost Growth
  2. Incentivize Productivity and Innovation in Industry
  3. Promote Real Competition
  4. Improve Tradecraft in Services Acquisition
  5. Reduce Non-Productive Processes and Bureaucracy

Details of this can be found at this link if you are interested.  All these are worthy goals, and they have made a difference.  A recent GAO report found that some progress was being made, but that cost and schedule growth remain significant; 39 percent of fiscal 2012 programs have had unit cost growth of 25 percent or more. The amount of money in the DoD acquisition pipeline is staggering;  86 major defense acquisition programs  estimated to cost a total of $1.6 trillion according to GAO. If you have any questions about a specific program click here.

Besides the modest, if not marginal, improvements in acquisitions, some not so nice things happened as well.  As is often the case in large bureaucracies, what the big guys at the top are saying and what the little guys in the field are hearing frequently don’t jive.  That was the case with the Better Buying Power Initiative.

Dr. Carter said “Increase the use of Fixed Price Incentive Fee contract type where appropriate…”, but the dudes in the field heard “More Fixed Price contracts, less Cost Plus Fixed Fee and Time and Materials contracts.”  Contracting officers were suddenly burdened with having to provide extensive justification for any non-Fixed Price contract.  Since they were busy enough, the Contracting Officers would rather just go with the flow and issue fixed price contracts, even though the work was not appropriate for them.  The words “where appropriate” were overlooked.  In the end, it wound up costing more money.  Here’s why.  When a contractor agrees to a fixed price contract, the contractor is assuming all of the risk.  Suppose the job was improperly scoped by the Government, or suppose a software glitch pops up that takes time (and money) to fix.  All those unexpected expenses are absorbed by the contractor.  Consequently, Fixed Price contracts tend to be more expensive in order to cover the risk.  This was certainly the case in my former life when a long-time client came to me and said, “The Boss says we have to do a Fixed Price contract” this year and it can only be for one year at a time.  This was not what the customer wanted, but the customer was at the mercy of the acquisition folks.  The work we were doing at the time was rather unpredictable and my team was never quite sure from day-to-day what they may be tasked with next.  In order to be responsive, it was a Time and Materials (T&M) contract, which allowed us to flex to the client’s requirements.  But with a fixed price contract, I was not able to flex without a contract modification (and that takes time and money).  I told the client that if we were going to do a fixed price contract, I would have to increase the price and that I would not be as flexible in doing new work.  That fell on deaf ears because it was going to be such a hassle to justify anything other than a fixed price contract.

Here’s another example.  Dr. Carter says “Promote Real Competition”, but the  folks in the field heard, “Use Lowest Price, Technically Acceptable (LPTA)” evaluation criteria for source selection.”  This caused all kinds of price wars in the community and the Government was feeling smug about how much money they were saving, but…………Turns out many Requests for Proposals were poorly written with vague and overly broad technical requirements, so that just about any old company with the resources to put together a proposal could win the contract.  And they bid ridiculously low rates, so in the end they were unable to deliver and customers began to fall back to other contact vehicles to get the work done, or just didn’t do the work.  I think it’s a little too early to actually get to the real statistics about how many customers are really satisfied with the results of LPTA winning vendors but the Congress should find out before attempting to come up with more legislation.

The current USD(AT&L), Frank Kendall,  issued an update to the original Better Buying Power, known around town as Better Buying Power 2.0.  In it Mr. Kendall says:

  1. Achieve Affordable Programs
  2. Control Costs Throughout the Product Lifecycle
  3. Incentivize Productivity & Innovation in Industry and Government
  4. Eliminate Unproductive Processes and Bureaucracy
  5. Promote Effective Competition
  6. Improve Tradecraft in Acquisition of Services
  7. Improve the Professionalism of the Total Acquisition Workforce

The result has been a much greater focus on costs of acquiring the systems and a recognition that perhaps the LPTA pendulum was swinging just a little too far over.  As in the original BBP, those in the field had some different interpretations about expectations from the top.  One of the initiatives within the Incentivize Productivity goals was to “Align profitability more tightly with Department goals.”  This translated into government auditors deciding they need to closely scrutinize contractors books to ensure vendor were not making “excessive profits,” even on fixed price work.  I just don’t think that’s in the government’s lane. If they are so concerned about profit margins, then why not issue Cost Plus Fixed Fee contracts where the Government essentially controls corporate profits?   Thus,  despite all their good, it seems to me a few fundamental flaws in the acquisition system have not been addressed in BBP or BBP 2.0:

  • There is still a lack of coordination and cooperation between those who generate requirements, those who pay to satisfy the requirements and those who buy the stuff with the money they are given.
  • There is still a disconnect between contracting officers and the customers for whom they buy products and services.
  • There is still a disconnect between what the leadership in the Pentagon says and what the people in the field do.
  • The uncertainties of funding from year to year drive programs to their most expensive procurement options.
  • Certain key programs get a “pass” from all the rhetoric about performance, affordability and life-cycle costs, overshadowing all of the progress made to reform acquisition. The top 10 acquisition programs still account for 65% of all the acquisitions according to the GAO.  The Joint Strike Fighter is 25% of all DoD acquisition alone!

So in the end, I doubt very much if legislation will fix the problem.  Four feet of  stacked up Federal Acquisition Regulations and Defense Federal Acquisition Regulations are not going to be much affected by another thousand pages or so of legislation.  Check out the recent testimony of Dr. Paul Francis, the Managing Director of Acquisitions and Sourcing Management at GAO.  He has some very practical steps on how to improve the process. In addition to those steps, I would like to see DoD actually evaluate each program on its own merit, not on investment levels or political support or not simply press on with a poor program because they managed (mismanaged is probably the better word here) to get into a position where there is no alternative.  It would also be nice if the people who are actually charged with executing the acquisition system at lower levels could have a say in how to make things better.  There’s too much Top Down and not enough Bottom Up built into the process in my humble opinion.  What if we asked the practitioners to come up with a series of reforms instead of the pontificators?

 

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Beware the Cyberwock

JabberwockyIn a previous article, Cyber-Too Big Not To Fail, I provided some comments on the recently signed Improving Cybersecurity and Resilience through Acquisition .  This document lists six recommendations for doing just that.  As I mentioned in the article, it’s very hard for a “cyber-outsider” to understand much of what it is saying (which is part of the problem IMHO).  It does however prioritize the recommendations and pushes for tackling Recommendation 4 as a first step.  Recommendation 4 is this: Institute a Federal Acquisition Cyber Risk Management Strategy.  Here is a link to the draft of the plan to implement Recommendation 4.  I had a chance the other day to have a look at a draft document which is in support of implementing Recommendation 4 entitled “Appendix I, Category Definition, Prioritization, and Overlays.”

This document is trying to show how Federal dollars are spent on cybersecurity and then provides a proposed structure on how to characterize the types of cyber acquisitions, based on Product and Service Codes.  I just have to provide a quote to demonstrate just how confusing documents like this are to me (and I suspect to most of us non-geeks). Here it is,”..[This document]..is intended to provide a starting point for the collaborative, stakeholder-centric development of a method for categorizing similar types of acquisition that achieves the goals of recommendation number four…..”  Can anyone tell me what the heck a “collaborative, stakeholder-centric development” means? (Now’s a good time to review my article on Self-Licking Ice Cream Cones.)  I know it’s a complex subject, but geez-louise can we at least use plain English?  It seems to me before we start diving into the pool we ought to see how deep the water is.  By that I mean, I strongly believe that we should spend some time first developing a set of principles to guide us through the process.  These principles should be simple, easily understood and brief.  Once we get the principles right, all the other stuff is easy.  So you heard it here first: Crenshaw’s Cyber Acquisition Guiding Principles.

 

  1. Government and Corporate data must be protected.
  2. Access to data must be controlled at all times.
  3. Risk to Government and Contractors should be considered.
  4. How the information is being used is as important as what hardware is being used to handle the information.
  5. Rules must be consistent with existing rules and regulations to minimize confusion.
  6. Leverage existing rules and regulations before inventing new ones.
  7. Rules must be executable by all, from  the smallest 8A, SDVOSB, Hub Zone firms to world-wide corporations.
  8. Contracting Officers must have enough knowledge in cyber to make reasonable judgments when drafting RFPs
  9. Rules and Regulations must be verifiable with reasonable effort and minimum time (In other words, no 5 year long DCAA audits)
  10. Incident response responsibilities must be clear and incentivized.

OK.  Now that we understand that, perhaps we can get down to putting something on paper that we can work with, not “a collaborative, stakeholder-centric approach”, whatever that means?

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Bric-a-BRAC

birc-a-bracThere’s lots of hot air blowing about on the subject of Base Realignment and Closure (BRAC) inside the Beltway.  I thought I put a few points out there as food for thought.  First of all, a quick explanation of the BRAC process is in order (Here’s a link to the 2005 BRAC web page).  BRAC is the process by which the Defense Department determines what US bases and facilities are no longer needed or facilities which should be repurposed, obtains Congressional approval to close those bases and goes about closing the bases  The determination process is done secretly within each Service based on criteria set in advance by OSD and the Services.   The Service data is then forwarded to OSD where the lists are “modified” to accommodate the desires of the OSD staff and SECDEF.  This list is then presented to an independent BRAC Commission.  The commissioners are appointed by the President, in consultation with the Congress.  The BRAC staff reviews the recommendations, conducts field visits and hearings around the country, and then the Commission produces a list of base closures.  This list is given to the President for review and approval who then forwards the list to Congress.  Congress has 45 days to vote “all or none” (no modifications allowed) on the recommendations.  If they do nothing, the recommendations become law and DoD has six years to close or realign the bases on the list.  In past BRACs the DoD has done a variety of disposal actions, including Federal real property  made available by public benefit conveyances for airport, education, and homeless assistance; federal transfers to native American tribes; economic development conveyances to local redevelopment authorities; and public sales.

Communities spend vast amount of money and effort preparing for BRAC, making sure the contributions to the local economy from local bases are well known, lobbying the Hill and Pentagon and generally stirring up dust in an attempt to “BRAC-Proof” their bases. That’s a big reason why the process is kept under wraps until released to the Commission.

The Defense Department says it needs BRAC to rid itself of excess infrastructure in order to reduce costs.  The big question is rather or not BRAC closures actually achieve the projected savings.  That’s a tough question because there is a fair amount of conflicting data out there.  The DoD uses a model (critics say it’s flawed and inaccurate) called COBRA (Cost of Base Realignment Actions) that projects closure costs and the modeling results are generally used for racking and stacking the recommendations. To my knowledge, the model has never be compared to actual costs in order to validate its results (partly because I doubt if the real costs are known). I just don’t know enough about it to have an opinion either way, but given that determining costs is involved I tend to agree with the critics.

There have been several problems related to BRAC which have limited savings or increased costs:

  • Environmental Clean up costs are often underestimated negating the savings anticipated.
  • Turnover from DoD to the receiving locality or other governmental agency has not progressed smoothly.
  • Unsafe building must be demolished before turnover
  • Local communities not prepared to accept the property and ensure security.

I just read today that the Navy’s Treasure Island Facility, BRACed in 1993, is now scheduled for radiation testing because high levels of radioactivity have been detected in the housing areas. YIKES!

The CNO has said that the Navy does not need another round of BRAC , but the Army and the Air Force maintain that it’s needed.  The Army’s position is certainly understandable  given the  personnel reductions they are facing.

Although great pains were taken to “de-politicize” the BRAC process, politics inevitably creep in.  Take for instance the Portsmouth Naval Shipyard located in Defense Committee Heavy New England.  Its main purpose was to refuel nuclear submarines.  The Navy’s newest version, the Virginia-class is designed to last 30 years without refueling.  The last of the submarines requiring refueling are long gone, but when the Navy tried to close it, the fan was clogged by politics and it was removed from the list.

So keep an eye out in the  Defense Budget debate over the next few months.  To Bric-a-BRAC?  That is the question.

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The DoD Budget Deli: One Slice of Salami, Please.

There were several good articles in the papers regarding the DoD budget over the weekend. The Washington Post had a good one that provided a pretty good summary.  As an old Intruder guy I have to point out that the article notes the cancellation of the A6 Intruder, with a nifty link to some information on the Venerable Intruder. It’s not often one gets to scoop the vast reporting resources of the WaPo so here goes:A6 Intruder
Dear WaPo Editorial Board,

The Intruder was retired on 28 February 1997 and most of them are either in an underwater reef of the coast of St. Augustine (known as Intruder Reef), collecting dust at Davis-Monthan AFB or residing on a stick at some NAS front gate.  It is hard to believe  you confused the handsome, sleek Intruder with the Warthog, but to ensure future OpEds are factually accurate, I offer my services (at the standard rate!).

OK, that’s off my chest!  Back to the 21st Century. The Post article was entitled  “A  Defense Budget Based on Hope” and outlines some disconnects between rhetoric and reality.  As those of you non-military folks who read my musing know:  Hope is not a strategy, and that is just as true in the budget world as it is in the tactical world.  To be sure the building of the DoD budget is a complex spider web of interconnecting elements, each of which is generally independent of most others.  Each element is likely to have an evangelist associated with it (Congress, Combatant Commander, Contractor, Administration, Special Interest Group, Service Chief or Secretary, etc.) and each evangelist has some varying degree of  veto power.  Most decisions, especially the big ones, require consensus, so you can imagine how difficult it is to make  cuts to any one program.  That’s why the preferred method of budget cutting is the tried and true salami slice.  By the way, sequestration was just a salami slice, albeit a big one.  One of DoD’s points when countering sequestration was they weren’t allowed to make the decisions.  I contend that even if Congress had just handed DoD an undefined cut, given the decision making rules, in the end, DoD would have sliced the salami, just in a different way.  It’s the only thing that works because the “salami slice” method requires no accountability, affects all programs equally, doesn’t usually kill anything and makes all equally unhappy.  The art to surviving “Salami Slice” budgeting is to demonstrate that your program is so critical to national defense that it should be exempted  (usually personnel, health care, etc).  In the Navy, these were described as “Flagship Programs.”  Not only were Flagship Programs exempt from cuts, you generally had to plus them up.  Of course, all exemptions do is off-load a larger part of the bill to those programs who were not smart enough to come up with a reason for exemption.

As one of the old Dinosaurs, I was accused of always reverting back to the Salami Slice, despite the well-meaning intentions of all to make the budget process all about informed choices, analysis and supporting the strategy.  I tried but failed.  In the end the people who cried loudest about being allowed to make choices were unable to do so.  As the Head Miller of the Budget Grist Mill, I was required to grind whatever grist the mill required to submit the budget on-time (which is no longer apparently the case).  That required a trip to the deli, slicing the salami and living with unhappy people ever after. All in a day’s work.  Bob’s your uncle.  That’s that!!!!!!!

By the way, this isn’t what I wanted to write about today, but I got lost in the salami thing, so bear with me.  Tomorrow’s topic: Budget Risk and How I Learned to Love It.

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Top Shoe! General Powell was Right!

I was very pleased to see a piece in San Diego Union-Tribune this morning about the establishment Ship Turn a Top Gun-type school for our Surface Warriors.  VADM Tom Copeland, Commander of Naval Surface Forces established  “Top Shoe” (my term, not his) to foster a generation of young surface warriors who really know their craft, not just their weapons systems.  For those outside of the Navy, there are a few terms which you should probably know. Aviators are know as  “Brown Shoes” because they wore brown shoes with their working uniforms and their aviation green dress uniform (which was reserved for aviation only).   Aviators commonly referred to the Surface Lou's Photo Warfare community as “Black Shoes” because they  wore the traditional black shoes with everything, including their pajamas.  They also seemed to have penchant for wearing those thick plastic, black-framed eye glasses that no self-respecting Brown Shoe  would be caught dead in.  Over the years, aviators tended to drop the Black from the equation and generally used the term “Shoes” to describe their beloved surface counterparts.  I don’t know what’s happened in the last few years with aviator uniforms, but I know the Aviation Greens are gone and thankfully, so are the black glasses.

When I was on the Joint Staff during the time that General Powell was the Chairman of the Joint Chiefs, I remember receiving bits of wisdom on the occasions that I happened to be in a meeting with him.  There are the famous 13 rules for leaders ( in any position, military or otherwise) that General Powell is known for and worth repeating here:

  1. It ain’t as bad as you think.  It will look better tomorrow.
  2. Get mad, then get over it. (my personal favorite)
  3. Avoid having your ego so close to your position that when your position fails, your ego goes with it.
  4. It can be done.
  5. Be careful what you choose: you may get it.
  6. Don’t let adverse facts stand in the way of a good decision.
  7. You can’t make someone else’s decisions.  You shouldn’t let someone else make yours.
  8. Check the small things.
  9. Share credit.
  10. Remain calm.  Be kind.
  11. Have a vision. Be demanding.
  12. Don’t take counsel of your fears or naysayers.
  13. Perpetual optimism is a force multiplier.

I also seem to recall a few others that didn’t get so well publicized.  I can’t vouch for their authenticity, but with all due respect to one of my greatest role models, I have always attributed these two to the good General as well.

  1. There are no rumors in the Pentagon.  Sooner or later everything comes true.
  2. There’s nothing new in the Pentagon.  It’s all been seen before.

The establishment of the “Top Shoe” school reminds me of the second unofficial rule.  As a young lad I was very lucky to be assigned to a “Black Shoe” staff as one of the few aviators aboard (back then it was called a Cruisier-Destroyer Group) and  part of my training was to attend the dreaded Tactical Action Officer School (TAO).  It was the most intense six weeks of training I have ever experienced.  But when I graduated, I knew just about everything about operating the combat systems, the threat, tactics and the logistics of running combat operations.  In my mind it was a “Top Gun” for Surface Warriors.  Over the years I think that TAO training was scaled back in favor of more technical subjects.  With the  establishment of the new school it appears the emphasis is back and I think it’s a great idea. Let’s hope it doesn’t fall prey to the budget axe.

But remember…with all due respect to my surface buddies……..there’s nothing like launching from a carrier, zipping around at Mach 1, turning and burning against a worthy adversary, and winning the fight (Fox 2, You’re Dead!).  And after all that, you still have to come back and land your 20 ton machine of death on a pitching and rolling deck before you can brag about your victory in the ready room. That’s Top Gun!!!!!

 

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$40 Billion: One Million at a Time?

As I was reading the morning news, I saw a piece in The Hill about SECNAV Mabus’ comments regarding the savings associated with “scrubbing” the $ 40 Billion or so the Navy spends on service contracts.  Service contracts can be just about anything from feeding Sailors in the chow hall to fixing the leaky toilets at the 4 Star’s headquarters building.  SECNAV says “We know we can save significant amounts of money just by setting up things like contract courts, which require … contracting officers to come in every year and justify the contracts.”  I don’t know about you, but I don’t think “scrubbing” every service contract, every year sounds like a way to save money.  Given the thousands of service contracts the Navy has, it would take an army (should I say Navy?) of contracting officers to  review and reissue these contracts.  I suppose I should say we already have a fair number of contracting officers so we would need more than the army we already have.  Each contract soaks up hundreds of man-hours to prepare, vet and issue on the government side, and just as many hours to prepare proposals in response from the contractor’s side.  That doesn’t sound like a very efficient way to administer service contracts…..one year at a time, one contract at a time?  I don’t think so.  Reissuing contracts year-to-year is a sure way to increase costs and increase the workload on an already overworked acquisition force.  Why would SECNAV say that?  It’s because the evil “Contractors” are easy targets and it’s a great way to deflect scrutiny away from the real issues, like the shipbuilding plan or the cost of maintaining 11 carriers, etc.  Here’s a plan: Focus less on individual contracts and focus more on how to administer them more efficiently and how to get the requirements generation process fixed.

The requirements process for service-related contracts doesn’t have to be that hard.  When the decision was made to “privatize” many of the mundane and non-warfighting related service tasks, the die was cast. The powers that be have decided that the people who stepped in to do those jobs (contractors) are one of the reason the Services can’t get their budget house in order.  Not so, I contend.  Service contractors are now an integral part of the military, performing those tasks that are  seen as part of the “tail” in the tooth-to-tail debate former SECDEF Rumsfeld initiated.  If you are not tooth, you are a candidate for a service contract.  I don’t think the average Joe in middle America has an appreciation for all the things these contractors do……Feeding Midshipmen at the Naval Academy, providing medical care for dependents, servicing and maintaining aircraft in the training commands, sailing our Military Sea Lift Command ships (yep, they are contractors), fixing leaky faucets, and building our warships!  They are all contractors.  And as mentioned by SECNAV, they cut the grass too!  But despite the intuitive feeling that it doesn’t have to be hard to know what the requirements are, it can be very hard to actually determine requirements.  Take for instance the maintenance of our bases…..mowing the grass, landscaping the entrance at the front gate, emptying the dumpsters, etc.  I recall that the Navy had a great system for determining how much “base maintenance” was needed.  It was an elaborate system of service levels, with each level being defined in minute detail….in the case of base maintenance, Level 4 might be mowing the grass once a week, emptying the dumpsters twice a week and fixing up the entrance at the front gate a couple of times a year.  Level 2, on the other hand, might be mowing the grass once a month, emptying the dumpsters when they were overflowing and never sprucing up the commissary parking lot.  Each level had a cost associated with it.  I recall during a budget session one year that the decision was made to go with Level 2.  Sound good?  We all thought so until the CNO make his first base visit of the year………Guess what?  When he got back there was a big dust up because the grass hadn’t been mowed in weeks, the dumpsters were full and the Commissary parking lot looked like the back lot of a disaster movie.  Lesson learned.   While it’s easy to talk about reductions in services, especially those related to quality of life, in practice it is difficult to live with the consequences.  So rather than get wrapped around the axle of rethinking the requirements every year, going through the machinations of issuing yearly Requests for Proposals, requiring vendors to produce proposals in response and spend lots and lots of money on both sides in the process, why don’t we figure out a way to get the requirements correct once and for all, issue efficient, multi-year contracts and put precious executive attention on the things that really matter, like how many ships the Navy needs, and how to pay for them.  That’s where the Secretary adds value, not in determining how often to mow the grass.

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Stealth works in the Budget Too!

First thing: Yesterday’s blog on Shared Services fell flat on the website with only a handful of hits.  I take it the world of Shared Services is not so hot on the list of “interesting” topics.  But there’s still a lot of money to be saved there.  In fact, I would contend that there’s a lot of money floating around in areas that most people don’t find so interesting.  It’s the uninteresting that ironically is the most interesting in terms of budget cutting.  They escape scrutiny during the year-to-year  budget battles, floundering in cash. The big programs which matter, act like a Black Hole, sucking up more and more money with less and less light escaping.  On the other side of the coin, the programs with marginal dollars become the darling of the Pentagon budget cutters.  It’s ooh  so easy to cut a Billion or so from the commissary subsidy program, but try and take $10 Million from the JSF and the fan starts getting hit with “not-so-nice stuff.”  With leaders unwilling to take on the issues that really matter and foolishly focusing instead on the margins, I would suggest that they take a look at the “stealth” portions of the budget, those areas with relatively large dollars, but never targeted for cuts.  Forcing agencies into a shared service environment is one of those areas. (There, I said it and I promise never to write another word on Shared Services!).  When looking at these stealthy programs, there’s virtually no risk of offending a large defense corporation, a Congressman or Senator, or even another Service because they have no constituency.  When I did the budget for the Navy I used to think that out of the $130 Billion or so under my control, every Million had a evangelist waiting in the wings to mount the pulpit and extoll the value of their million over the remaining 129,999 million.

How about the family of Defense Working Capital Funds (WCF) and Revolving Funds?  These funds exist  in the shadows, out of public scrutiny, but with lots of dollars associated with them.  For those of you not familiar with working capital funds I suppose you could relate them to petty cash, or “Walking Around” money.  It’s the corpus of operating cash the Department uses to pay  bills day-to-day.  Here’s a link to short list of many of the DoD funds and what’s in them.  In simple terms, when  Organization A provides a service or item to Organization B, it uses the WCF funds to pay their costs and they bill Organization B, using rates set at the beginning of the year.  A takes money from the WCF and B pays it back (at least in theory).  How much money is in these accounts you ask?  North of $100 Billion…..Yep, that’s correct…$100 Billion!!  That’s roughly 20 per cent of the budget.  One of the reasons there’s so much money in these funds is the requirement to carry 7-10 days of cash on-hand.  In this age of electronic accounting, ERPs and near-perfect connectivity I can’t for the life of me figure out why it has to be so much.  Most of these WCFs have their own accounting systems (Darn! I said I wasn’t going to mention Shared Services again).  To be fair, these funds are as close to being run like a commercial business as anything in DoD, and individually they are generally well managed.  But there’s not a lot of cross-talk, the rates don’t generally reflect the real costs of good and services and they are sometimes used as a cash cow to buy just about anything.

So the next time you hear the DoD poobahs whining about the cost of  benefits, people, etc.,  why not ask them about the Working Capital Funds and what they are doing to trim them back.  I’ll bet you they will have to take that question for the record!  Not in their scan because it’s stealthy money, they don’t understand how it works and would rather slash the margins because of their inability to slash the big ticket items.

 

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Blaming the innocent and rewarding the guilty!

When I was a young, steely-eyed Naval Flight Officer attending the U.S. Naval Test Pilot School with no apparent fear of death, one of the classes I took was in project management.  I have always remembered the day we talked about the phases of any project:

  1. Elation—“This is gonna be fun!”
  2. Concern—“This is turning out to be harder than I thought”
  3. Confusion–“I have no idea what I’m supposed to be doing”
  4. Terror–” If I don’t get this done, my career is over!”
  5. Laying Low –“Someone is gonna be blamed for this” (sometimes known as Search for the Guilty)
  6. Relief–“Too bad they blamed Joe…He was the only bright spot on the project.  At least it’s not me.” (Blaming of the innocent)
  7. Dismay–“I can’t believe Fred got promoted as a result of this lousy project.” (Promotion of the uninvolved)

This little parable was triggered by a commercial I heard on the radio this morning.  It was one of those commercials one only hears in DC, always during commute hours.  You know them….It’s always one of the big defense hardware manufacturers extolling the virtues of their system.  It’s especially prevalent right now since the budget is being rolled out.  I don’t know about you, but do you think anyone who is in a position to make a decision really listens to that pablum?  The big boys and girls that matter in the decision chain are all driven to work and are sitting in the back seat of the big black Town Car or Navigator trying to finish up all the paperwork they took home last night, but didn’t get to.  The same thing is true on the Metro. Do you think any of them are riding the Metro?   The closer you get to the Pentagon, the more you see all those very expensive posters about some plane, ship, tank, bomb, missile, …you name it!  I just can’t figure out why they spend all that money on that stuff.  My advice to clients is that if you hear one of those commercials or see one of those posters, the subject  is likely in trouble either within DoD or on the Hill.

So take the example of Boeing advertising the F/A-18 and P-8 aircraft.  Their claim is that they are both being delivered under budget and on-time.  That may or may not be true, but in my opinion they are both among the best managed and best value weapons systems ever delivered to the DoD.  One thing’s for sure, you don’t hear that claim for the JSF.  Remember, that’s the program that is 6 years behind and $163 Billion over budget.  Who was the big winner in the DoD budget for 2015?  The JSF, of course.  And who was the big loser? The F/A-18.  Talk about rewarding the guilty and punishing the innocent!

So my recommendation to Boeing is change the commercial, stressing how much money the F/A-18 costs and how woefully behind schedule it is.  Then people will take note and pour money into the program.  There’s an old saying in my house: “The sick get sicker, and the healthy usually wind up catching whatever it is the sick have and get sick too!”

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Cyber: Too Big Not To Fail

I admit that I am not much of a cyber-techie.  I do know a little about computers though. When Microsoft announced they were  not supporting Windows XT a while back, I had a bit of a cyber-rebellion because I refuse to spend anymore money on Mircrosoft Operating Systems, which I assume, much like the NSA, report your every keystroke and video back to some central repository for “troubleshooting.”  Right….But I instead elected to move to linux.  I’ve not noticed a degradation in what I can do, don’t have to worry about virus checkers and internet security programs that slow my system down….and all for FREE!  Sometimes the simpler solutions are the best.  I think we have so many problems with IT implementations and cyberattacks because they are so complicated and intricately interwoven that it is impossible for those who make decisions to understand what they are deciding.  Unlike my previous post on the JSF (Too Big to Fail), the cybersecurity and IT world is just the opposite: Too big not to Fail!” It’s just too complicated and the consequences are too dire to trust decisions in the Information and Communications Technology (ICT) world.  (See, you are already behind, it’s no longer IT and Cyber, it’s ICT) Come on, get with it!

I received a briefing yesterday  on a report recently completed by the GSA and DoD entitled, Improving Cybersecurity and Resilience through Acquisition.” It’s signed by Frank Kendall from DoD and Dan Tangherlini of GSA. I’ve read through it a few times and I swear I still can’t make heads of tails out of it, and I very much doubt that the signees did either. The report is about increasing the use of cybersecurity standards in Federal acquisitions. Keep in mind there are similar standards for National Security Systems, so I assume they are so unique that they need their own (there’s always an exception isn’t it?) They make six recommendations in no particular order of priority:

  1. Institute Baseline Cybersecurity Requirements as a Condition of Contract Award for Appropriate Acquisitions
  2. Address Cybersecurity in Relevant Training
  3. Develop Common Cybersecurity Definitions for Federal Acquisitions
  4. Institute a Federal Acquisition Cyber Risk Management Strategy
  5. Include a Requirement to Purchase from Original Equipment Manufacturers, Their Authorized Resellers,  or Other “Trusted Sources” Whenever Available, in Appropriate Acquisitions
  6. Increase Government Accountability for Cyber Risk Management

I don’t know about you, but I don’t feel any better after reading them than before!  Heck, the wording is so complicated and full of Pentagon-speak I can’t figure out what they mean.  To be fair there are explanatory paragraphs written in the same cyber-jargon that most decision makers in the Pentagon are not likely to understand. It’s fine for the techies to toss all those words around, but wouldn’t it be better when stuff like this is released to the public it would be in the Cybersecurity for Dummies format? At least have the techies who wrote it sign it.

This all flows from the Cyber Stone Tablet, “Framework for Improving Critical Infrastructure Cybersecurity” , done by NIST and released last week. Like most bureaucratic products it’s steeped in organization, tiers, overlays, constructs, phases and interrelated touch-points.  I dare you to understand it!  I’ve seen this before.  Remember the Office of Business Transformation?  They spent so much time developing papers and frameworks and touching those interrelated points that they forgot to do anything.  It was all about organization not about doing.  I see this cyber mess going  down the same path..lots of organization and logical interrelationships with countless coordination meetings between Governing Councils.

How would I do it?

  1. Put one person in charge-the Cyber Czar (even though we don’t like Putin very much)
  2. Listen to the techies, but not be controlled by them
  3. Get buy-in from top leadership that no one is exempt from our policies and regulations
  4. Stop admiring the problem and start doing visible, effective steps to fix the problem
  5. Insist that the Cyber Czar has the authority and the money to reward the stars and punish the evildoers. (nothing gets done without control of the money in this town)
  6. Make it mandatory for all!

 I cringe when I see words like  “this is a living document” and “Use of this voluntary Framework is the next step to improve the cybersecurity of our Nation’s critical infrastructure.” We need action verbs and Proper nouns in this framework

Without those steps, the whole schmegegge will flop because It’s Too Big Not To Fail

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