2014 – Crenshaw Consulting Associates

December 21, 2014January 30, 2023

GASP!!! Petroleum Products in the Water.

I couldn’t help but chuckle as I followed the saga of “petroleum products” in the Shaw and Logan Circle areas of DC over the past few days. Those of you who have lived on a Navy ship (especially carriers) know exactly what I mean. Who among us hasn’t turned on the shower and basked in the smell of JP5 (Jet fuel used by Navy aircraft……basically expensive kerosene)? Heck, there was always a hint of kerosene in the water. This is the principal reason that internal parasites are not a problem for Sailors……the hint of kerosene eliminates them. (When I was a young lad growing up in the backwoods of Alabama, the standard remedy for worms was a teaspoon of kerosene. Check out the link) I’m sure there are a variety of other benefits, but I’m too lazy to look them up. Back to the JP5 laced water. We didn’t complain because we were glad to have water. By the way, for you youngsters, there was no such thing as bottled water back then. In the days before the all nuclear carrier fleet, ships were all too frequently put on “water hours” to conserve fresh water. Priority of water usage was First to the boilers, second to food, third to washing airplanes and finally to the crew for showers. The way in which ships made fresh water back then was by distilling fresh water from seawater using the “Flash Evaporators.” Even graduate engineering students had a hard time figuring out how those things worked ( and frequently they didn’t….hence “water hours”). In fact, Chief Engineers would mortgage their souls for an individual who knew how to make the damned things work…They were usually some salty petty officer who had done nothing all his life but coddle and coax fresh water out of the mysterious machines. These guys were the original “Scottie”, capable of performing all sorts of miracles with baling wire and silly putty . We were always told that JP5 was in the water because during flight operations the carrier tended to stay in the same general area seeking the wind, and consequently we would crisscross the wake and suck up all the flotsam, jetsam, sewage, dumped fuel and who knows what else. It was also rumored that salt peter was put in the water (I’ll let you figure out why).

Other related issues also come to mind…Navy Showers. Because water was scarce, one was required to take a Navy shower. Here’s how to take a Navy Shower:

Find shower with hot water
Alternatively find shower with any water
Dampen body with greasy water
Soap up all your parts
If water still available, rinse. Otherwise search for shower with water (preferably hot)
Wipe soapy residue from body with towel

The alternative to a Navy shower was a “Hollywood” shower…..In order to luxuriate in a Hollywood shower, one had to do some prior planning and smuggle a regular shower head onboard. Showers normally had a handheld jobber with a button one pressed to unleash a fine water mist. These didn’t work too well because often there wasn’t enough water pressure to make the blasted things work. Anyway, in order to enjoy a true Hollywood shower, one would remove the standard issue shower head and replace with the regular shower head, and assuming there was water, you could splash away…..At least until the Master at Arms (also know as the XO spies) caught you. On one ship I was on, if the Master at Arms caught you taking a Hollywood shower, you had to carry around a rubber duck until you caught someone else taking a Hollywood….which you could then transfer to the most recent offender. I not too sure that the Navy still polices the showers, so this is probably not a problem now….In fact with unlimited amounts of nuclear power, reverse osmosis water plants and the like, I’m guessing water isn’t that much of a problem any more….

Enough of that. Maybe on another slow news day I’ll write about more quirks of my past Navy life.

Anyway, here’s wishing you all the happiest of Holiday Seasons and a prosperous New Year.

Lou

December 12, 2014December 12, 2014

Premade Decisions: Why Bother?

I have written about the Navy’s Littoral Combat Ship kerfuffle before. The recent “non-decision” by outgoing SECDEF Hagel concerning the fate of the LCS fleet has prompted me to write again on the subject. For those you you who haven’t followed this “crisis of our own making,” my previous musing, Rethinking LCS, provides some background which I will not repeat here. But I know it’s a hassle to click on the link, so here’s the Cliff Notes version:

LCS concept was for affordable, brown water vessel with modular capabilities to fulfill the presence mission in key locations around the globe.
LCS modular concept meant that not all missions could be done at once, keeping costs lower and enhancing adaptability for new missions.
LCS was not designed as a front-line warship, bristling with armament, but was configured to protect itself in most likely operating areas.
Navy bought two designs, hoping to down-select, but alas, since the only decisions that are generally (or admirably, if you prefer in this case) made in the Pentagon are pre-decided, the decision was made to not decide and buy both forever.
Elements in DoD leadership decided LCS didn’t have enough firepower and was vulnerable and directed the Navy to explore alternatives.
Navy commissioned a big study to scratch the OSD itch.
All breathlessly awaited the Uber-SECRET study results, knowing the Unter-SECRET answer: Navy can’t afford anything else…….(shhhhhhhh don’t tell anyone!!!!!!)

Screen-Shot-2014-12-11-at-4.08.53-PM

I found these slides in an article by the US Naval Institute and they are attributed to the US Navy, however I couldn’t find them on the Navy website.

So that brings us to the big pre-made decision by SECDEF, after consulting, conferring and otherwise hobnobbing with the Pentagon cognoscenti. (Who are the cognoscenti you ask? Read SECDEF’s statement and find out.) And the decision was:

Drum Roll Please

……stay with two LCS designs, bump them up a bit (maybe $53 or $61 Mil or so) and move on. I think the only one surprised by the answer may have been SECDEF himself! Otherwise, why bother? I shudder to think about the amount of money and time spent on this study which had only one answer. I haven’t seen the actual study, but from what I’ve read about it, no stone was left unturned (apparently 192 stones to be exact). Option after option considered, analyzed, pondered, etc……..by those who already knew there was only one answer……we can’t afford anything else, nor can we afford the time required to start the acquisition process all over again. The answer was pre-decided. My guess is most of the changes announced would have been made anyway.

These pre-decided decisions are common in the Pentagon, but all too often staffs are forced to do the kabuki dance to give an air of legitimacy to them. Those in disagreement get to say their peace and then dismissed as “having an input”, even though no one was really listening. I recall this vividly while working on budget end-game around the 2006 timeframe. The Service programmers (three star resource folks) would be herded down to OSD about an hour before SECDEF was to receive a decision briefing on an issue, shown the slides prepared for him and then dismissed. I barely had enough time to run back to the Vice Chief to brief him on what I had seen, let alone provide him with any analysis of what OSD had pre-decided. Of course, if the Vice Chief were to raise an objection during the SECDEF briefing, the OSD Poobahs would announce,” Your folks have seen this and nothing was said.”

The point of this little tirade is that we waste money on these types of exercises all the time. I think about all the good we could have done for our wounded warriors with the money we wasted on this study. I think about all the time consumed by some very smart people who could have been working on something really important…how to deal with sequestration, how to keep the technological edge, how to fix our broken nuclear infrastructure…and any number of other problems.

Why does the Pentagon continue to do this? I suggest it’s because they have an endless supply of people and money. No one pays for people, they just have them. No one has to justify the cost of doing such a study because cost is not an issue. If I had done that in my civilian P&L life, I would have been shown the door. I had to spend my money and time on things that mattered and contributed to the bottom line. Since there’s no bottom line at DoD, everything tends to become equally important. Once on the Joint Staff I remember a staff briefing one day when the two topics discussed were the reduction of the nuclear arsenal by 50% and the Joint Staff savings bond campaign. We spent the same amount of time on each…in the end it was decided we should brief the Deputy Director daily on the savings bond campaign and as needed for the nuclear issue.

I think we need a study on studies.

November 12, 2014

One for the Price of Three!

Only in the DoD acquisition world would this sound like a good deal! But before we cast too many arrows at the acquisition community, I must admit the idea is mine. I developed this idea over the course of years of working in the Bizarro World of DoD ship financing. You remember Bizarro? Bizarro It’s the world where everything is backwards….the name of the bizarro world planet is Htrae (so clever!) and the world is square. As I recall, it was featured occasionally in Superman comics in the 1960’s. One of the mottos in Bizarro World was ” Us do opposite of all earthly things.” Bizarro bonds were a hot item on Htrae because they were “guaranteed to lose money.” So I don’t think it’s a huge stretch to make the analogy here.

As I learned during my time as Chief Resources and Requirements Officer for the Navy, the normal things you learned about economics don’t necessarily hold true when it comes to buying ships. My initial experience was during my first year on the job. We were working on balancing the budget and were about $400 Million off. The staff proposed that we slide the purchase of a ship we were buying for the Army called the LMSR (contrary to popular belief, the Army moves primarily by sea, not air). The price tag was about $400 Million and the staff had determined that we could stand to slide it a year. “Sounds good to me!” I answered, happy at the prospect of putting a bow on the $130 Billion Navy budget and delivering it to OSD just in time for Thanksgiving. By the way, that’s how you make sure that you don’t get rejected right away…..Submit something just prior to a big holiday so no one is around to grade your work. This rule works in a variety of scenarios:

DoD generally drops significant RFPs just before holidays to force contractors to work feverishly at the expense of their families to get the proposal complete by some arbitrary deadline (which generally gets extended anyway).
The Congress always passes bills at the eleventh hour before big holidays, in hopes that the particulars will escape the media. What’s more interesting? The details of the CR passed the day before Thanksgiving or the press conference where the President pardons the turkey? Or maybe the 3 minute spot on the evening news which shows the neighbor’s Christmas lights display of 100,000 watts, synchronized to “All About That Bass.” I vote for the turkey pardon and the light show!!!!!(and sadly, so do most)
Controversial changes to Federal Register seem to always drop the day before a holiday in hopes that no one will notice.
My favorite, RFP’s released with 5 days to respond…(a favorite way to make sure the desired contractor wins)

Anyway, I’m sure you have your own sea story that would make mine look minor. But back to the LMSR caper……

USNS Bob Hope A few days after the decision was made, the staff came back and noted that since we slid the ship a year, it’s going to cost more…..I don’t remember how much, but it was around $100 Million or so. “Really?” I commented. ‘Oh, yes,” came the reply, ” money will cost more the next year, we have shipyard loading issues that we will have to pay for, the cost of steel is going up, blah, blah blah.” So I began to understand that the economics of shipbuilding were different. I formulated The Shipbuilding Entropy Rule: “Nothing ever costs less. NO matter what you do, it will always cost more.” You buy less, they cost more. You cancel the buy, you still have to pay the overhead. You remove capability, it costs more to redo drawings. Its all very counter-intuitive. This became very clear to me during the following year’s budget build when the staff came back and said “We made a mistake. We have to move the LMSR back to the original purchase year.” “Fine,” I replied, “No harm, no foul.” Sensing it wasn’t “Fine“, based on the furtive glances between the staffers (an admiral sees a lot of those looks in the Pentagon) I asked “What’s wrong?” Turns out, if we moved the ship back into the original purchase year, it added another $100 Million to the cost! Whadakknow? We essentially did nothing and paid $200 Million not to do it! That, my friends, is Bizarro accounting!

Anyway I could go on and on about this, but I want to get to the reason I chose the title of this article, One for the Price of Three.

The DDG-1000 (AKA CG(X), Arsenal Ship, Zumwalt Destroyer, DD21, DD(X), etc) was originally intended to have a buy of around 32 ships or so. USS Zumwalt They became so expensive and the requirements bounced around so much, we began advertising it as a fire support ship vital to the survival of the Marines during amphibious assaults. As such, we only needed about 10-12, just enough to support the number of amphibious ready groups (ARGS) we had at the time. The Marines were happy about that, even though they preferred to have 2 per ARG. I even went over to the Hill with my Marine counterpart extolling the virtues of the DDG-21 as the perfect fire support ship for the Marines. But once the Marines realized that the cost of the ship was so high that it would probably limit the amount of other stuff they could buy, they dropped it like a hot potato…..they would much rather have the 360 V-22’s than 24 DD(X)’s. So in the space of about a month we changed our tune from”vital” to “not so vital.” Now that they are $3 Billion a copy, we are only building 3 of them and I’m not sure there’s a real requirement out there. As my Grandmother said when she got her first taste of champagne in one of those dinky champagne flutes at my son’s baptism, “That’s not enough to wet my whistle.” So it is with DDG-1000 IMHO. The real requirement as far as I can tell is to have something for Bath Iron Works to build ( they will build all three) so they can stay in business in order to address industrial base concerns. Hence the title of the article.

I propose instead of spending $9 Billion for 3 ships we don’t need, why not pay the shipyard to build it, take it apart and then build it again? It keeps them busy. The Navy doesn’t have to shoulder the Operations and Maintenance costs necessary to support a ship class of 3 ships, and we don’t have rustle up the personnel and training facilities which must be specially developed on this one-of-a-kind weapons systems. Heck, we will save money by doing that! Of course, this idea only works on Bizarro World.

That, by the way, is how Bizarro JosBanks works too. You pick out one suit and pay for three!

What a world, what a world!

November 6, 2014November 6, 2014

Leading and Following

I always hesitate to comment on such matters, but after reading the article by the Associated Press regarding the relief of 16 Air Force officers involved in some fashion with nuclear weapons I decided I would offer a few thoughts. My nose was already tweeked this morning after watching the “victory” speech by Virginia Senate candidate Mark Warner (as I write this, the race is still not decided, by the way) in which he says something about how the voters of Virginia have spoken and put him in the Senate…well, (very) slightly over half the voters in Virginia thought he was the best candidate…..I would be careful about yakking about mandates and the like with only a few votes more than the other guy. To me the mandate is to be just as diligent about representing the other half of the Virginia voters as he is in representing the half that voted for him. But as soon as he gets back on the Senate floor, he will do what all politicians do…..follow his leader. So it occurred to me that in general, politicians are followers, not leaders. They follow the will of their party, they follow the polls, they follow the money. Very few of them actually lead. Heck, even Speaker Boehner is as much a follower (to desires of tea party interests and the like) as is a leader. And don’t get me wrong, I’m OK with that. They are supposed to be followers, aren’t they?……following the will of the people they represent. They also tend to make lots of mischief when they “lead”.

In the military we expect everyone to be a leader to some extent and as one gets more senior, our expectations of them as a leader grow. I’ve been to a few leadership seminars in my day and I know all the various combinations and permutations of this concept:

Leaders lead
A good leader knows how to be a good follower
Lead, follow or get out of the way
The scenery only changes for the lead dog of the pack
Servant leadership….A good leader is a servant to all
It’s good to be the King
All glory is fleeting (One of Gen. Patton’s favorite sayings)*

*( Or if you prefer, Napoleon’s take: Glory is fleeting, but obscurity is forever!)

And as a Three Star in the Pentagon I was always reminded that no matter how high and mighty you think you might be, there’s always someone above you to whose tune you must dance! In the end, everyone works for somebody, don’t they?

Fish Back to the nuke thing. One thing I knew as an Attack Squadron Commanding Officer: The quickest way to be relieved without question was to score anything other than an outstanding on nuke inspections. Consequently, I put my absolute best officers and enlisted personnel in those positions. I assume the same is true in the Air Force, so that the absolute best must be assigned nuclear positions. In that business, there is no room for error. Obviously some house cleaning was needed and the Air Force leadership did what they had to do.

The Navy also frequently makes the news for relieving various leaders for all sorts of reasons. I liked the way a former boss of mine, Admiral Vern Clark, used to answer questions about excessive reliefs of Commanding Officers. He said the Navy sets the bar high for its Commanding Officers, holds them absolutely accountable for not only their own actions, but the actions of all under his/her command, and we make no apologies for that. Amen.

Leadership is about accountability…accountability to your seniors, accountability to those who work for you and those who you work with. All too frequently politicians tend to be accountable to the wrong people or things….big money donors, party leadership, special interest groups, etc. That’s another reason why they don’t necessarily make good leaders. (Yes there are some notable exceptions and I am not suggesting that ALL politicians are not good leaders, but work with me here!)

So I propose that accountability is why we are blessed with so many good leaders in our Armed Forces. So next time you read about someone in the military being held accountable, you should say to yourself, “That’s a good thing.”

But…..problems arise when the “followers” become the leaders….either because of their control of the purse strings or worse, because they fill a void left by leaders more interested in following than leading. Civilian control of our military is one of the fundamental principles of our democracy and I wholly endorse the concept. Nothing distresses me more than when I hear someone from the Hill say that if our military wants it, then it must be good. After all, militaries fight great wars but they are not all that great at making policy. They are only one of the instruments of national power (economic, diplomatic, informational, and military) that the US can bring to bear. All too often they tend to discount the value of other types of power because investments in them take money away from Defense coffers. To be fair here, there is a great deal of writing on the use of other instruments of power in military doctrine, but I submit it is mostly theoretical and when money is at stake, all the rhetoric goes out the window. According to our Constitution, our political masters are the ones to make those judgments. But our military also has an obligation to make sure their best advice is given to the “deciders.” Once they make a decision, the military’s job is to salute smartly and carry out the decisions.

It is a fine line, and I have the greatest respect for those in senior leadership positions who have the moxie to advise what they believe, not what they think their political masters believe. It can cost a career. Look what happened to Army Chief of Staff General Shinseki when he disagreed with Secretary of Defense Rumsfeld on the number of troops required to tame Iraq (in the end the General was right, but never played the “I told you so” card)? He was shown the door to the River Entrance at the Pentagon! Can we ever really succeed in Syria without putting some number of troops on the ground? Will Afghanistan implode if we pull all our troops out? Can we still have the world’s most capable military with sequestration? I admire those who give sincere, apolitical answers to these questions. But then again they are leaders! Beware those who do otherwise.

October 14, 2014October 14, 2014

Reforming Acquisition Reform

There has been a lot of static on the net lately concerning acquisition reform. Two notable recent arrivals on the scene have been all the buzz around the Beltway: First, the release of Better Buying Power (BBP) 3.0, Under Secretary of Defense (AT&L) Frank Kendall’s reincarnation of BBP 1.0 (originally issued by Ash Carter when AT&L, and later BBP 2.0 by Mr.Kendall). DoD Cart Second was the publishing of a report by the Senate Permanent Subcommittee on Investigations, Chaired by Senator Levin, with Senator McCain as the Ranking Member. The report, entitled “Defense Acquisition Reform: Where Do We Go From Here?, is a collection of essays by 30 experts in the Defense acquisition world about how to improve or reform defense acquisition of things (and to a small degree, services).

Better Buying Power 3.0

One of the things I like most about the concept of the Better Buying Series is the iterative process in improving its focus. After letting BBP 1.0 run for a while, corrections were needed as the result of some unintended consequences (like an irrational focus on lowest price, technically acceptable contracts) and need for clarification of some of the elements. BBP 2.0 did just that, directing that more care must be given in defining what is “technically acceptable” for example. Now, BBP 3.0 has come out to further tweak the elements of BBP. A couple of previous elements were eliminated because they were considered complete:

Institute a system to measure the cost performance of programs and institutions and to assess the effectiveness of acquisition policies
Assign senior managers for acquisition of services

There were some carry overs as well, mostly with refined language. I won’t list them all here, but the ones that I think represent the most significant change are:

A recognition that capability must be considered in evaluating cost by changing the focus from “Control Costs Throughout the Product Lifecycle” to “Achieve Dominant Capabilities while Controlling Lifecycle Costs”
Expanding focus on incentivizing productivity and innovation by breaking out into separate areas with following additions:
- Increase prototyping and experimentation
- Emphasize tech insertion and refresh in program planning
- Use of modular, open architecture systems
- Provide tech requirements to industry early
Increasing ability of acquisition leaders to understand and mitigate technical risk.
Increased support for Science, Technology, Engineering and Mathematics (STEM) education

Here’s a link to the BBP 3.0 overview. All in all I think it represents a good step forward in the BBP series and will certainly help in trying to understand all the things going on in the world of acquisition reform……..BUT,

Many of the themes that emerged in the second recent arrival, the Senate study (Complete study can be found here) were not really addressed in the BBP 3.0 document. To be fair, the report had yet to be released prior to putting BBP 3.0 on the street, but I would have hoped for more overlap.

The Senate report pulled out four overarching themes from the musings of the 30 experts contributing to the report:

A cultural change is needed in the acquisition workforce, including more effective incentives
Training and recruiting of the acquisition workforce must be improved
Realistic requirements definition are critical
Accountability and leadership throughout product life-cycle needs improvement

The report also makes two observations which I will quote here:

“First, among all those factors that have been identified as contributing to dysfunction in the defense acquisition system, cultural change is among both the most important and the least amenable to legislation and policy changes. It is, rather, a function of leadership throughout the chain-of-command and an incentive structure that threads through both the government contracting and acquisition workforce and industry that assigns a premium to cost-control and the timely delivery of needed capability.

Second, continued “sequestration” of the DOD’s budgets will undermine any savings that could be achieved through even the most successful acquisition reform.”

Well, to me that says, 1. It’s more of a DoD problem than a legislative problem and 2. sequestration will nullify ( or at least severely impact) all acquisition reform efforts. The last thing we need is even more regulation in the acquisition process. I would offer that in my opinion sequestration is not necessarily the enemy here. I still think we have too much waste in DoD, too many pork barrel projects, too many pet projects and too many cooks in the kitchen. What is the enemy is the uncertainty in the budget process over the last several years….Continuing Resolutions, multiple budgets, Overseas Contingency Funds abuse and a foolish focus on equity in Service budgets have all undermined our ability to reform how we buy things. In the end, it is a indeed a legislative problem….The failure to pass budgets on time, regardless of the funding levels. Life would be so much easier and efficient in DoD acquisition with regular and predictable budgets, passed in a timely fashion and accurately executed.

One final observation: I would like to see the Senate produce a similar document on acquisition reform, but using 30 PRACTITIONERS of acquisition at the grass roots level: Project Managers, PEOs, and Contracting Officers. A view from the top is always useful, but without a view from the bottom we will never really fix what is wrong with acquisition culture. They are the ones that make up the culture, not the poobahs at the top. A little more focus on them would be helpful…I’m not sure that after a contacting officer reads BBP 3.0 they will do anything different.

September 9, 2014September 9, 2014

“Where you stand, depends on where you sit.” Miles Law and related Maxims

I attended an evening affair recently with a well respected leader who reminded me that the old maximum “Where you stand, depends on where you sit” was actually memorialized by Rufus Miles of Princeton University back in the 70’s. Anyone who has ever been in a bureaucracy knows exactly what he means. I myself am a slave to Miles Law. And not only when I was lurking around the bureaucracy of the Pentagon, but even afterwards in my second career. It’s not a bad thing, by the way. In fact, if you are to be a loyal member of any organization, you will be dealing with the outcomes of the Miles Law. I recall my first job on the OPNAV staff as the Deputy N81 (Assessments). At various meetings in the Pentagon the inevitable “What are they thinking in the Fleet?”, was heard time and time again. We were sure they just didn’t understand the problems we were dealing with and their solutions seemed untenable. Then I got back to the Fleet, and at just about every meeting I would hear, “What are they thinking in the Pentagon?” And so it goes. The point is ones perspective is always shaped by the environment, business or otherwise. Once I retired from active duty and become a “contractor”, within a matter of a few months I just couldn’t figure out what my former colleagues in the Pentagon could be doing….They should be doing it our way!!!!

So remember when you are in the next meeting where you think your organization has the market cornered on the thinking on some issue, there are others out there just as passionate (and probably just as right) as you are. Where you stand indeed depends on where you sit. Realizing that might make things go a little smoother.

Now for the six maxims related to Miles Law. As you read them, I think you will find that they offer some invaluable insights into how to deal with your superiors and those who work with and for you.

Maxim #2. The responsibility of every manager exceeds his authority, and if he tries to increase his authority to equal his responsibility, he is likely to diminish both. The lesson here is don’t worry too much about matching power with responsibility. It’s the way the system is designed and if you attempt to twiddle with it, you are asking for trouble.

Maxim #3. Managers at any level think they can make better decisions than either their superiors or their subordinates; most managers, therefore seek maximum delegations from their superiors and make minimum delegations to their subordinates. As a leader, you will be pulled in many directions and in order to be effective, you must delegate….the trick is knowing your people and their capabilities so you can delegate the right things to the right people and keep you focus on what you should be focused upon.

Maxim #4: Serving more than one master is neither improper nor unusually difficult if the servant can get a prompt resolution when the masters disagree. Boy can I relate to this one…In the military, we are often “Dual Hatted” or holding down more than one job with more than one boss. In fact, even with one job you can easily find yourself with more than one boss. Keeping #4 in mind will help you in managing the expectations of both (maybe even several) bosses. Communicate early and often with your bosses and make sure they all have the same version of the truth!

Maxim #5. Since managers are usually better talkers than listeners, subordinates need courage and tenacity to make their bosses hear what they do not want to hear. My observations are that managers have a monopoly on talking without listening. Force yourself to listen…you will be surprised at what you hear. This is true no matter the circumstances; whether you are on a cold call with a prospective client, or sitting in a community association meeting. Too much talk, talk, talk…My advice………listen for a change.

Maxim #6: Being two-faced–one face for superiors and one face for subordinates– is not a vice but a virtue for a program manager if he or she presents his or her two faces openly and candidly. I have no idea what this means, but it sure sound profound.

Maxim #7: Dissatisfaction with services tends to rise rapidly when the provider of the services becomes bureaucratically bigger, more remote , and less flexible, even if costs are somewhat lower. Of all the maxims, this is one which is applicable in almost anything when it comes to bureaucracies, or even companies. You have to constantly keep yourself in tune with your clients….refer to Maxim #5….., listening to what they have to say. Be vigilant that your organization is not morphing into the ubiquitous “Self Licking Ice Cream Cone”, existing not for providing services to clients, but for its own pleasure. By the way, by far, my article on Self Licking Ice Cream Cones is and continues to be the number one article people view when visiting my web site.

So there they are…I thought it worth putting to paper because I think they are things that leaders need to be aware of as they go about leading from day-to-day. If nothing else, I’ll bet each and every one of you Govies reading this have experience in all of these (even #6, whatever it means)

If you would like to read the famous paper by Professor Miles, here is a link to a site that will allow you to purchase a copy ($25).

September 4, 2014September 4, 2014

Plugging the DFAS Dam

I saw a reprint of an article done by Reuters the other day entitled “Special Report: The Pentagon’s doctored ledgers conceal epic waste” and even though it’s almost a year old, I think it still applies. DFAS Leak height= In just a few days, all the big accounting firms that do business with DoD will be submitting proposals to conduct audits of the the Army, Navy and Air Force Statements of Budgetary Activity (SBA)……that’s a high level balance sheet that has little applicability to the actual management of anything. Experience in auditing the Marine Corps proved that trying to do anything else was futile. One just has to read the Reuters article on “Plugs” to see just how daunting a task auditing any of the services really is. Inventing phantom ledger entries or “plugs” to explain away imbalances in the “goes-intas” and the “goes-outtas” is apparently the norm at the Defense Finance and Accounting Service. What’s a little disturbing about this whole audit thing, is that many of these sins will go unexamined because they do not necessarily impact the SBA. See my article “DoD Audit: Is the cure worse than the disease?” for the details about just what the SBA is all about.

In fairness, I think the article’s title is misleading in that I doubt if the motivation behind plugging in numbers is a desire to conceal waste, but rather it’s the normal way of balancing the books in order to satisfy the Treasury Department. The real motivation is to keep the heat off oneself ……does that sound familiar? Think about recent VA scandal…..I doubt if the real motivation was to make sure deserving veterans didn’t get appointments, but it was done to keep the front office happy. Never mind that the green eye shades at Treasury are apparently more interested in balancing the numbers as opposed to the reliability of the numbers used to balance (a la VA!). It’s been going on for years, so that’s a good indication that nobody cares. Unlike the VA however, the DFAS guys were caught and still nobody cares!

But we do care these days about getting the DoD auditable. And the Pentagon’s efforts to get to auditability have been extensive and expensive, with some modest results. Take a look at the USMC……their SBA has passed audit scrutiny for two years running now. Some months ago I wrote an article on the USMC audit, “Hall of Heroes and Auditors“, which is worth reviewing for context for what follows.

I support the efforts of DoD to get auditable, but only in so far as those efforts are done for the right reasons….not to keep the front office happy, but to make sure DoD is properly accounting for dollars….When they say “We don’t have money for pay raises”, or “Retiree health care is costing us too much,” or “We have to furlough employees,” are they using data from the system that “plugs” in nonexistent dollars to satisfy the front office? Who knows if the numbers they are quoting are accurate, given the evidence that the numbers are inherently inaccurate! My point is DoD audits are only interesting science projects for green eyeshades if we are only auditing things that don’t matter. SBA audits are interesting, but not compelling. We must follow on and audit all the other aspects of DoD financial accounting and property, plant and equipment inventories. That’s the plan (I think), but after DoD has spent collectively over $200 Million just to get to SBA audit, will they have the fortitude to go further into the things that really matter? Will Congress let them? Will the operational pressures in an very unstable, terrorist filled world trump mundane administrative exercises like audits? Roulette height= Stay tuned, but I think with sequestration about to raise its head once again, the President under pressure to mount military responses to multiple spots around the globe, and political stalemate in the Congress, betting on continued funding for DoD audits is at best like wagering on red or black at the roulette wheel at Trump Towers in Atlantic City (ooppppsss, it’s out of business, so how about The Nugget in Las Vegas?).

So don’t get too worked up and break out the champagne if it turns out the the service SBA’s pass audit ( they are likely to do so because of the limited scope and usefulness). Instead remember:

It’s only the SBA, a very limited look into DoD finances.
No one uses the SBA to manage anything.
It only looks at one year…Past sins are ignored.
DFAS is still using plugs to balance the books.
It may be done by the cheapest bidder (As a stockholder, would you want the firm you have your life savings in to use the cheapest auditor?).
Because all the audits are being done at the same time, chances are all the firms will be battling for manpower and may not be hiring the most competent auditors (assuming they hire auditors). We may even have to open up an auditor refugee camp to handle the influx of auditors to the Beltway.

So to sum it all up, I wholeheartedly support ensuring the DoD manages it funds effectively, efficiently and accurately. I’m not sure an audit of the SBA does any of those things. Victory is not a clean opinion on the SBA, it’s a clean opinion on the whole enchilada.

PS: Please do not reverse the order of this article’s title, no matter how applicable it may seem 😉

August 26, 2014August 26, 2014

Sewing Machines and DoD Acquisition

I saw an interesting article this morning on the NDIA Blog site which said Secretary Frank Kendall, the Under Secretary of Defense for Acquisition, Technology and Logistics USD(AT&L), was unhappy that DoD did not meet the goal for having more competition for defense-related contracts. Singer328 height= I’m not surprised at that because given the irrational focus of DoD on vendor profits, they have managed to make bidding on defense contracts so unattractive that fewer and fewer companies are making the effort to bid. In my view, it’s not just one reason:

There are less contractors out there to bid
DoD rules and regulations limit profitability on contracts (only the big guys can survive at the margins expeced by DoD)
FAR requirements are so onerous (and increasing) that it’s too expensive to bid on many contracts
FAR requirement are so onerous that it’s too risky to bid on many contracts
The specter of having DCAA establish a parasitic site in your corporate HQ to monitor your finances is too distasteful
Uncertainty of funding streams, including the ability of DoD to cancel any contract for any (or no) reason
Too many ID/IQ contracts in order to avoid protests. They are just beauty contests.

I think I will stop at those seven for now, but there are more. What’s fascinating to me is that these reasons are ignored as DoD attempts to develop a fix for limited competition. The DoD solution is to increase regulation, increase reporting frequency (so the bad news comes more quickly I suppose), and continue to monkey around with contractor profits, even on fixed-price contracts. The best way, is to reduce the number of requirements, like those cited above, and let natural instincts and market forces drive competition.

In order to have more bidders, it must become more attractive to bid!

Hello? Did i just say that? Why isn’t the leadership focused on how to make bidding and working on government contracts more attractive? Can it be that simple? I think the answer is yes.

So what does the sewing machine have to do will all of this? This past weekend, the lovely Mrs. Crenshaw volunteered to do a little sewing to get one of our granddaughter’s uniforms ready for school. In order to do this, she needed her sewing machine liberated from the darkest recesses of the attic. I felt like I was in the basement of the Smithsonian as I rummaged throughout the boxes of brass plaques accumulated over the 32 years of my naval career (I’m not allowed to display them). I found a medal I received from the Russians, a box of challenge coins, some old text books from the Naval Academy (why I still have a book on differential equations is beyond me), and various other flotsam and jetsam accumulated over 40+ year of marriage. I finally found the sewing machine, Singer Syle-o-Matic Model 328 (now listed on E Bay as “vintage”). Setting it up after many years of disuse was challenging. It’s a mystery to me why sewing machines work anyway, much like the DoD acquisition process. I started fiddling around with the upper thread tension, adjusting the needle alignment, resetting the timing, changing the motor belt, tweaking the bobbin tension, etc. Before you know it, I had adjusted just about everything on that machine and I had no idea of what the original settings (which worked fine the last time we used it) were. I should have left it alone, done some basic maintenance (a drop of oil perhaps) and let it do its thing. But NOOOOOOOoo! I had to fiddle around with every possible adjustable part and got it so far out of whack that the only option was to go back to basics and take it to a professional. Now it works just fine. I think the same is true in the world of DoD acquisition We have monkeyed around with so many parts that we have lost sight of the original settings—-namely good, old-fashioned competition, unhindered by excessive regulation or government meddling in corporate finances. Why not turn over the management of corporate finances to the professionals (that would be corporate leadership) and let them do what they do best, COMPETE!

DoD ACquisiton

So my suggestion on how to increase comptetion is simple: make it more attractive to bid. One does this by eliminating the barriers to bidding, not by adding more.. Take a look at my seven reasons above. If we focused on fixing those, I guarantee you there would be more competition. In the end, the government would get better value for the dollars it spends, not just cheap, mediocre work for which the government is becoming increasingly famous (or infamous, I suppose).

August 19, 2014August 19, 2014

The Devil is in the DoD-tails

A few weeks ago, Secretary of Defense Hagel published his list of six focus areas for the coming year. Here’s his list: focus

Focus on institutional reform.
Re-evaluate our military’s force planning construct.
Prepare for a prolonged military readiness challenge.
Protecting investments in emerging military capabilities
Achieve balance
Personnel and compensation policy

Really? That’s what he’s focusing on? You probably haven’t heard much about this list because it is sooooo uninspiring. If this isn’t bureaucratic gobbledygook, I don’t know what is. Do you think these are his real priorities, or just the same type of feel-good rhetoric that his staff regularly generates. Ask yourself what the really big issues facing the DoD today are and see if this list scratches the itch. Let’s look at the priorities:

Focus on institutional reform. The subheadings under this priority are reform and reshape our entire defense enterprise, direct more resources to military readiness and capabilities, and make organizations flatter and more responsive. So what are the metrics to use to determine is progress is bring made? As far as I can tell, this focus area should be part of the regular drumbeat of DoD, not some special focus area, implying that we will look at it, fix it and move on. Does he serious think that he is going to reshape the entire defense enterprise? Into what? And does he really mean to direct more resources into readiness, or just cut spending in other areas, only so they can become focus area next year? This one just leaves me uninspired and wondering exactly what we are reforming?

Re-evaluate our military’s force planning construct. This one includes the classic example of Pentagon-speak, namely force planning construct. In the interest of clarity, I believe he means develop a different way to decide how big the Army, Navy, Air Force and Marine Corps needs to be. “Challenge assumptions” is a key part of this focus area. When have you not been to some type of business course where they didn’t say “Challenge the Assumptions?” Exactly what assumptions will we be challenging, who will challenge them and by what process will we evaluate the accuracy and efficacy of the assumptions? In my experience, DoD did a pretty good job translating the National Security Strategy into what wars and other missions we were supposed to be prepared for, turning that into war plans and then figuring out how many forces we needed to execute the plans. The problem was always with the front end in defining what the military would be expected to do. It always turned out to be too expensive. When I first started paying attention to the war fighting expectations I was a policy wonk on the Joint Staff. Back then we were supposed to fight and win two wars simultaneously. That proved so expensive that we had to change it to win one war, while holding our own in another, swinging forces to the the second war once we triumphed in the first. That, too, became too expensive, so we changed to win two wars, but one of them would be the war on terror. Frankly, I’m just not sure what the overarching strategy is these days, but I think it can be found in the 2014 QDR (see QDArghhhhhh). This is what it says: “U.S. forces could defeat a regional adversary in a large-scale multi-phased campaign, and deny the objectives of – or impose unacceptable costs on – another aggressor in another region,” whatever that means.

Prepare for a prolonged military readiness challenge. This is Pentagon-speak for figure out how to do more with less.

Protecting investments in emerging military capabilities. Not sure why this requires the continued focus of SECDEF. Can’t he just say make sure we have enough money in R&D accounts? By the way, here is where the grand plan is not to spend more DoD dollars in R&D, but push off the expense of R&D to industry. That’s not going to work as long as DoD keeps putting pressure on industry to lower profit margins…..Let’s see. I’m a Captain of industry; What’s my priority for where to put the profits I make? 1) Shareholders, 2) capital improvements, 3)cash reserves, 4) corporate jet 5)R&D. Hmmmmm what am I going to cut first when my profits drop????

Achieve balance I guess this is the old “tooth-to-tail” argument that Secretary Rumsfeld was fond of. How much redundancy do we need? How much forcible entry capability do we need? HOw many forces do we station overseas? How many fighters do we need and who gets them? and on and on. We’ve tried this before and the Services resisted any balancing initiatives that left them with less.

Personnel and compensation policy The crux of this priority is to figure out how to have a world-class military force while implementing the lowest price, technically acceptable personnel and compensation schemes. That hasn’t worked so well in the acquisition world and I doubt it will work any better as a personnel policy. This is one I agree that’s needed, but not in its current fashion.

None of these priorities are necessarily bad or wrong, but they are lacking the detail necessary to figure out if they will really make a difference. Is there someone tracking these priorities and providing monthly updates on progress. None of these items are terribly original either. We have all heard these things time and time again. I can remember tackling the issue of balance way back in 1990 with the AC/RC study done by the Joint Staff. I would rather see a list of 5 really vexing issues facing the department and put a concentrated effort into fixing them. The current list has no sense of urgency and just seems like business as usual to me. They are so big, just about everything winds up in a focus area. Why not focus on specific issues?

“OK, Smart guy. What would your priorities be?” you are asking. Here is my list:

Make JSF affordable (It’s costing us big time and we will never cut it!)
Rightsize the force, paying attention to Army and Marine Corps (Admit that they are both too big and fix it and stop worrying about hurting feelings)
Develop a sustainable personnel compensation and benefits system by 2017(put together a comprehensive package and stop focusing on the margins)
Accelerate and complete Service transition to ERPs, institute direct treasury disbursement and eliminate DFAS (It’s the 21st Century! Why doesn’t DoD join it with the rest of us?)
Eliminate Department dependence on OCO by 2017. (said another way, produce one budget……..incorporate sequestration and stop pounding people into the dirt developing budgets which are dead on arrival)

July 18, 2014July 18, 2014

Small Business Risks and Aerodynamics 101

I had the honor to participate on a panel recently at an event sponsored by the Reston Chamber of Commerce focused on the challenges faced by small businesses as they become “big” businesses. It was titled, “Breaking the Barrier: Launching Government Contracting Businesses Through the Small Business Threshold.” We discussed a variety of challenges faced by small businesses as they become successful and graduate into the “regular size” world of competition. LoverD a good topic for you small business owners to consider because the Small Business Administration cites unexpected growth as a major reason for small business failure. This is something that CCA has focused on as we developed our market strategy. Take a look at some of my thought on “Breaking the Barrier” on this web site in the Small Business Transition tab. I won’t rehash it here, but in a nutshell, as your business grows and is facing the loss of advantages of being small, you have to think about things differently. That’s what “Breaking the Barrier” is all about……thinking about your business 2 or 3 years from now. As a small business owner the temptation to remain focused on the current task order or the next deliverable is powerful, but you have to pull yourself above the fray and think about the future. That’s hard to do!

I like analogies and being an aviator I frequently rely on my aviation experience to explain things. That’s why I think comparing the small-to-large transition as breaking the sound barrier is appropriate on several accounts.

First of all, breaking the sound barrier just doesn’t happen. It required countless amounts of energy, money, blood, sweat and tears to get Chuck Yeager to nose through the Mach 1.0 barrier in the Bell X-1. It also took some sophistication because we discovered that more power was not the answer in breaking the sound barrier. Turns out something called the Area Rule is the key to supersonic flight. The Area Rule basically states that in order to go supersonic, an airplane ‘s fuselage must be shaped like a Coke bottle. Who knew? I flew the venerable A-6 Intruder and no matter how hard we tried ( and believe me we tried) we could not hit “the Number.” Breaking the small business barrier also requires more that just “more power (contracts).” It requires the owner to look at his/her business in a different way. How do I need to look when I become a $50 Million business? I guarantee you it’s different from how you look now.

Next, one wants to blast through the sound barrier as fast as possible. Airplanes can do screwy things in the trans-sonic phase of flight. Controls act funny, engines sputter, sonic booms scare the bejesus out of the “earth-lubbers.” In short, it’s not a good place to be or stay. So when flying supersonic aircraft, pilots tend to want to blast through it and not deal with all the goofy things that happen….And guess what? The same is true for the small business owner as the dreaded revenue limit is approached. You don’t want to hang around at that limit….either stay below it or blast thorough it, but don’t hover around it.

Someone asked about the risks associated with transitioning from small to not-small and I think the risks can best be described as a stall in aviation terms. When flying, stalls are bad, especially when near the ground. Just look at what happened to Asiana Airlines Flight 214 at San Francisco….they ran out of airspeed and stalled straight into the seawall. So here’s my take:

Small businesses sometime stall when approaching the applicable revenue limits for the same reasons airplanes do:

Lost of lift
Loss of power
Too much drag
Too much turbulence

Loss of Lift. As a newly joined member to the “not small” club you will lose some of the factors that gave your small business “lift.” The big primes will no longer be seeking you out in order to satisfy demographic requirements or take advantage of your lower rates. You are now on your own and must do the seeking yourself. There are also no set-asides for formerly small businesses. That perk has vaporized, forcing you to go toe-to-toe with the big guys. You have to anticipate that loss of lift in your business plan as you contemplate life as a “not small” business.

Loss of Power. Power in the business world is what drives your business forward. That power comes from the strength of your pipeline and the relationships you have. Small businesses tend to not pay attention to pipelines, lead qualifications and where to focus business. As you become bigger, you have to focus your attention on what will power you through the barrier, and that means re-thinking your market strategy, tailoring a pipeline process that supports it and developing a process that allows you to focus limited resources on what matters most. The value of relationships in the marketplace can not be over-stated. As a small business, chances are you had a pretty small universe of contacts because you didn’t need to spend a lot of time figuring out whose team you were going to be on. Your probably have a go-to prime (perhaps even a mentor-protoge relationship) and you don’t have to go shopping around for primes. Now you are the prime in many cases and if you don’t have a robust contact file, you just might be SOL (technical term).

Too Much Drag. There are many factors which can be a drag on your business’ profitability. I submit the most significant ones are:

Doing too many things. In my experience, many small businesses are a “mile wide and an inch deep” because they have tended to try and be all things to all people in order to avoid turning down opportunities. At my old firm we had just a handful of NAICS codes, but many times when I look at a small business they may have a dozen or more. That’s not going to hack it when you are no longer small. You are going to have to figure out what three of four things you are going to focus on and let the others go.
Overhead increases. As you get bigger more and more overhead begins to drag your profitability down. You have to bring on people to handle the tasks you used to do yourself….finance people, proposal people, people people…All of these put a drag on your ability to blast through the barrier. A wise owner will think ahead and develop a plan to accommodate theses requirement. You may not have to hire people. Why not outsource your finance function for a while? do you really need to buy a very expensive software bundle to handle your finances or could you go to the cloud? These are all things you need to think about before you get to the barrier, not after.
People. Another drag on your business can be having the wrong people doing the wrong things. They were hired for one purpose, but as contracts changed they were repurposed. This may or may not be a good thing. Small businesses tend to hang on to people too long and as an owner you need to constantly evaluate your personnel situation. The last thing you want is inadequate or mediocre staffing as you blast through the barrier.
Lack of process. The final drag can be the lack of repeatable processes within your organization to handle the transition to big business. The pipeline discussion above applies here.

Too Much Turbulence. The final reason you might stall is too much turbulence over your lifting surfaces. Turbulence in your business can come from many sources. The competitive environment can overwhelm some firms if they are not expecting it. Proposals become more difficult to write. You are not just completing a couple of sections for some prime, you have to write it all. That can be a real disruption if not properly managed. Remember that you are now in the wake turbulence of the large company business development machine and that most likely, wherever you go they have already been. I can tell you from experience that the last thing you want to do in your little airplane is to land in the wake of jumbo jet. You will find yourself in the BD wake all the time and need to plan for it, or avoid it all together.

Horizon that’s my pitch for the day. Think about your business in aviation terms and anticipate the risks that are out there just waiting for you. They can be predicted, avoided or dealt with. But only if you go in with eyes open and scanning on the horizon. As the proud owner of a successful small business about to become large, your scan needs to move to the horizon of your business not right in front of your nose. If you aren’t scanning the horizon then you are a candidate for failure.