Dr. Carter's Memorandum: Better Buying Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending (Implications for the Logistics & Materiel Readiness Community)
As I shared with you in my September 26th blog, USD AT&L issued sweeping efficiencies-related Guidance in his 14 Sep 10 "Memorandum for Acquisition Professionals" along with directive memoranda to several key staff elements (the Guidance memo, press conference video & additional information related to the initiatives available at https://dap.dau.mil/Pages/NewsCenter.aspx?aid=108). The question members of the DoD Logistics & Materiel Readiness (L&MR) community in general, and the Life Cycle Logistics career field in particular may be wondering is “so how does this affect me“? Or perhaps more importantly, “how can our community and my organization contribute to helping the department achieve these important efficiency initiatives?” I encourage you to look more closely at the five major areas and 23 principal actions Dr Carter outlined in his memo. Three in particular stand out as having the most in the way of applicability to our community, and are centered around the first three major initiatives, namely: Target Affordability and Control Cost Growth, Incentivize Productivity & Innovation in Industry, and Promote Real Competition.
The first is clear and compelling: to mandate affordability as a requirement under the “Target Affordability and Control Cost Growth” area, including “at Milestone A set affordability target as a Key Performance Parameter (KPP)” and “at Milestone B establish engineering trades showing how each key design feature affects the target cost.” A few comments: regarding the Milestone A affordability target, while not currently a KPP, weapon system cost is already a JROC-approved Key System Attribute (KSA). The Department views cost in general, and life cycle cost (or total ownership cost) in particular as critically important to delivering the affordability and efficiency goals outlined in the memo. A cost KPP, particularly if focused on life cycle cost would clearly convey the importance the DoD places on this aspect, and coupled with Section 805 of Public Law 111-84, would strengthen the Department’s Life Cycle Management policies still further. For the Milestone B action, engineering trades are already a fact of life, and reiterating the consideration of (life cycle) cost when making these trades would reaffirm the continued importance of optimizing both readiness and cost. While requiring more expertise in the area of life cycle cost estimating by life cycle logisticians, this is very good news for our community, and offers a great deal of potential for cost savings and long-term weapon system cost containment.
The second, to “Incentivize Productivity & Innovation in Industry” has been successfully demonstrated in a variety of Performance Based Life Cycle Product Support (PBL) arrangements over the last decade. Building on the many successes already achieved, the goal to “reward contractors for successful supply chain and indirect expense management” is both important and achievable. Leveraging best industry practices, and rewarding our industry partners in the area of successful supply chain management are but two of the many benefits of well-crafted, well-implemented outcome based product support strategies. Many such initiatives are already in development or are being refined under the auspices of the DoD Product Support Assessment implementation effort. This momentum should and needs to continue!
The third, to “promote real competition” by “removing obstacles to competition”, and in particular to “require open system architectures and set rules for acquisition of technical data rights” will likely prove to be important as well. DoD Directive 5000.01 states, “A modular open-systems approach shall be employed, where feasible”, and DoD Instruction 5000.02, Enclosure 12, paragraph 8, already directs the use of open systems design across the acquisition life cycle (“Program managers shall employ a Modular Open Systems Approach (MOSA) to design for affordable change, enable evolutionary acquisition, and rapidly field affordable systems that are interoperable in the joint battle space.”), thus the Department has already indicated both in policy and practice that open systems are important. The Defense Acquisition Guidebook also provides additional insights in paragraphs 18.104.22.168, 22.214.171.124, Para 4.4.11., and 5.3.1., among many others. It will be interesting to see how the guidance could and will evolve to strengthen the department’s commitment to the strategy. Technical data rights will also be interesting to watch. Extensive information and guidance are already available (including the requirement for a Data Management Strategy (DMS)) in 10 USC 2320, DoD Instruction 5000.02, Enclosure 12, paragraph 9, the DFARS and the Defense Acquisition Guidebook paragraphs 2.2.14 and 126.96.36.199), although some would say existing requirements are not stringent enough to mandate purchase of all data rights by the government, while others would say that even if industry were willing or even compelled to convey these right, government program offices may not necessarily be able to afford them when operating in a resource constrained environment with numerous competing priorities. Is long-term “access” verses “purchase” of data rights the right answer? Would it achieve the competition objectives Dr Carter has outlined? Would “setting rules for acquisition” include mandating acquisition? Could we afford it? Is current guidance related to data management strategies sufficient? Many would argue no. For long-term organic sustainment of weapon systems and enhancement of competition, however, this is a topic which very appropriately belongs on this list of measures to consider.
These, among others, will have direct bearing on, and require the enthusiastic support and collective expertise of the Life Cycle Logistics community to assist the DoD in achieving the efficiencies, affordability, and cost savings the department is seeking. I encourage you all to re-read Dr Carter’s memo, and to think about how they could, would and should apply to you and your organization.
What do you think? Agree? Disagree? Does this make sense? What have I overlooked? What else could or should be done?