University Affiliated Research Centers: Revolutionizing Acquisitions
Steve Waugh
Acquisition has been getting slower, more expensive, and increasingly risk averse. Strategic competitors of the United States such as Russia and China cannot outpace American innovation, so they are forced to fast-follow and embrace risky, disruptive technologies but are unencumbered by 200 years of acquisition regulation.
Sustained evolution of acquisition and logistics is necessary because our nation’s life depends on it. The National Security Strategy acknowledges that China and Russia challenge American power, steal intellectual property and seek to replace U.S. leadership on the global stage. They have been matching our quality while beating us in speed to fleet, and quantity.
In 2017, Congress mandated the creation of a Chief Management Officer with the mission of managing the business operations of the Department of Defense (DoD), and that position is the Number 3 in the DoD. The former Office of the Under Secretary Defense for Acquisition, Technology, and Logistics was divided. Acquisition and Sustainment was set up along with co-equal Research and Engineering within the Office of the Secretary of Defense. Strategic Goal 3 of the National Defense Business Operations Plan is to reform business practices for greater performance and affordability.
The new Adaptive Acquisition Framework, with its provision of six possible pathways will certainly make changes at the macro level of the acquisition strategy. But it will not alter the thousands of processes that iteratively and recursively feed them (e.g., the source selection process). To whom can DoD turn for help?
If we are to “identify more savings to put back into lethality” as the Secretary of Defense has directed, we must acknowledge that engineering a 5 percent improvement in cost or schedule is as important as engineering a 5 percent performance improvement in precision or range. However, it is difficult for a DoD agency or program to get world-class expertise to research business process or supply chain improvement because of the strictures in contracting services or buying products; it almost never happens. By virtue of its isolated regulatory environment, the largest industrial process in human history is sheltered from commercial advances in business process and logistics—WalMart can hire the best business researchers, quicker than can the DoD.
Main Points
- Acquisition is slow and expensive.
- Adaptive Acquisition Framework is a partial fix.
- Sustained evolution is necessary.
- How similarly important problems were solved.
- How a potential solution might work (with supporting examples and data).
- Recommended Solution (and its evaluation, sustainment, and budget).
Assign It an Appropriate Importance
Acquisition and Sustainment processes can be improved if given the same attention as engineering the material solutions. Improvement in acquisition business processes are more likely to replicate across the DoD and federal government because they are more generally applicable and unclassified. Such improvements come through evolving and modernizing simple, deck-plate level DoD business processes, not just by changing the Federal Acquisition Regulations (FAR). One approach is to establish a nonprofit research organization within a university or college to provide and maintain essential research, engineering and/or development capabilities in a long-term strategic relationship with DoD. This organization could provide responsive, cutting-edge researchers, and practitioners to DoD agencies, offices, and programs to advise on business and sustainment practices without conflict of interest. It could be capable of diagnosing problems or designing and prototyping solutions, but strictly prohibited from competing with industry for production or service contracts that provide those solutions. Conveniently, University Affiliated Research Centers (UARCs) can be chartered for this express purpose.
A Business Research Lab affiliated with an educational institution ... will be rapidly available to any program, office, or agency that desires help and welcomes the expertise (therefore likely to implement its recommendations).
Section 835 of the National Defense Authorization Act for Fiscal Year 2020 directs the establishment of an acquisition research organization within a civilian college or university to provide academic analyses and policy alternatives for innovation in defense acquisition policies and practices. It might be focused more on the Executive Branch levels of policy and legislation—and not deck-plate business processes, logistics, or training.
Programs bring a UARC into an engineering problem when it is so complex or so high risk that it is beyond the experience of anyone in the program office, or when data rights and licensing issues are less problematic compared to industry solutions. The Pentagon regularly asks UARCs to perform Analyses of Alternatives partly because of their independence from the systems commands and program offices. The government calls on UARCs when its own labs and/or their support contractors cannot do the job—at least within the specified time or other constraints.
Industry constantly is leveraging the latest research on business intelligence (BI) and business process management (BPM), deploying advanced tools to continue accelerating and outpace the competition. Staying the same in Logistics and Supply Chain Management (LSCM) is a sure road to failure at UPS when Amazon Prime is deploying its own delivery fleet. The finance industry considers it mandatory to invest in Governance, Risk and Compliance (GRC) systems to avoid complex regulatory and legal complications. Can commanders track aircraft engines as well as the pizzas they order online? How much time and money could be saved making travel claims 1 percent easier and/or accurate?
DoD employees need to become familiar with BI or GRC as terms, as well as the associated tools. DoD is changing policy at the top, but adaptation at the ground level is slow. The mere existence of blue ribbon panels like the Section 809 Panel proves that the problem exists, but the number of times that such boards have had no effect is remarkable: Five years ago, such a panel titled its report, “This Time Must Be Different.” Congressionally mandated panels of distinguished executives are impressive, but by virtue of their very nature have little effect. The conclusions are profound, the recommendations serious, but impossible for any one person, program, or office to implement.
In 1940, the United States faced an existential threat from Germany and Japan, particularly in the form of powerful air forces that our Services were ill-equipped to shoot down. The Office of Scientific Research and Development mobilized the nation’s engineers and scientists, and the Navy assigned that problem to a Carnegie Institute physicist, Merle Tuve, who built a small team of scientists and engineers that managed to put a proximity fuse (that detonates when close to but not in direct contact with the target) in an anti-aircraft shell in a matter of months. Tuve’s team was administered by the Johns Hopkins University (JHU) and became the Applied Physics Laboratory (APL). The air-burst fuse data rights were owned by the Navy and licensed to industry for mass production. They became a UARC focused on solving critical problems quickly, with executable results—not replacing government labs or displacing industry. By augmenting government laboratory capabilities, engaging academia and industry, UARCs serve as an enduring national resource for independent analysis and innovation.
What They Are, How They Work
DoD has 14 UARCs, each chartered to provide technical excellence in unique disciplines that do not overlap, such as the Georgia Tech Research Institute Applied Systems Laboratory (GTRI) that develops high-tech missile sensors, while the University of Southern California Institute for Creative Technology (USCICT) develops hardware and software for virtual reality immersion. UARC staff are objective subject-matter experts and leading researchers in their fields. They are answerable only to the DoD and the public interest, so these independent and highly experienced practitioners can be trusted advisors and honest brokers in performing essential research for the DoD. Researchers at the University of Maryland (UMD) will not compete with Raytheon or Booz-Allen.
UARCs are alert to evolution with comprehensive expertise in their chartered area. They are given broad access to government information and maintain deep core knowledge in their operational areas. UARCs must maintain their independent and objective nature, unlike a profit-motivated service or product contractor. UARCs offer quick response to government needs: Sole-source authority allows agencies, offices, and programs to get them on contract in just weeks, if not days. That same contract limits their actions to temporary analysis or development and specifically precludes production and contract service support. The UARC contract requires them to be free of organizational and personal conflicts of interest, thus able to assess government and contractor information (prime and support, sensitive, and proprietary).
UARCs do not compete for contracts against industry; they only perform research, development, and prototyping. JHU built a prototype spacecraft for satellite navigation, but not the constellation of five. Because UARCs must only do work they are chartered for, they generally do not use subcontracts. The government cannot contract with Penn State to pass the work to KPMG International. The UARC must protect classified and proprietary information in order to support inherently government functions.
Examples
The oldest, JHU/APL, has eight chartered competencies from submarines to spacecraft. After inventing the VT proximity fuse, APL developed guided missiles, phased array radar, battle management systems, sonars, and more. APL is building a nuclear quadcopter for NASA to explore Titan, a moon of Saturn.
The Stevens Institute of Technology (SIT) Systems Engineering Research Center (SERC) is chartered for research in systems engineering, systems architecting, and open systems standards. It is focused on trusted systems (cyber security), systems engineering transformation, human capital development, and enterprise systems of systems.
The UMD Center for Advanced Study of Language has four competencies: foreign language, linguistics, critical thinking, and sharing of information. The list goes on. The 14 UARCs have 82 distinct competencies. No UARC is chartered to do business or logistics research into practical BPM or LSCM applications.
Data
Textbooks on business process management cite a Gartner research note that 80 percent of companies conducting BPM projects see a return on investment greater than 15 percent. The survey of 20 companies showed that 95 percent of the companies experienced 90 percent success improving processes, and all successful projects returned at least 10 percent. Organizations with an identified BPM center of excellence achieved a return on investment that was 5 times greater than average. Similarly, a 2002 text on SCM described a “supply chain revolution and a related logistical renaissance,” but a Vietnam veteran would feel completely at home in a modern depot repair facility. The depot repair cost for a T-44 Pegasus training aircraft actually exceeds the price of a new plane (which is why there are no civilian depots, just repair and overhaul). Conversely, the same vet would be surprised to see every artisan in a guitar factory using Microsoft Dynamics at the work bench.
Closer than 10 miles from the Pentagon, the UMD Business School alone has 13 centers of excellence that cover the gamut from complexity in business, digital innovation, global business, to analytics and data science. All are directly applicable to DoD operations. An organization can collect and focus such research onto practical DoD problems, not only understanding the research and having experience applying it but also bringing these experts to bear—only for as long as necessary to solve the problem.
DoD expenditure on BPM/LSCM research is almost non-existent and very difficult to justify in a Joint Capabilities Integration and Development System/Planning, Programming, Budgeting Systems environment. Corporations know and research shows there is a positive and significant relationship between BI system implementation effectiveness and key business analytics (BA). But few people in DoD acquisition could define either BI or BA—they just know that source selection takes too long.
Solution
DoD should establish a research organization within a university or college with identified core competencies of BPM and LSCM to provide essential engineering, research, and/or development capabilities through a long-term, strategic relationship with DoD. This can enable enduring improvement through evolutionary change at the lowest levels that propagates organically if it succeeds. Available to any level of program, office, or agency, it will define and prototype necessary change (not implement, produce, or compete).
A Business Research Lab affiliated with an educational institution with one of the finest business schools will be a trusted agent for DoD. With a sole source task-order contract, it will be rapidly available to any program, office, or agency that desires help and welcomes the expertise (and therefore likely to implement its recommendations). With a tightly focused charter, this UARC would not duplicate existing competencies or conflict with industry.
Scoping the charter to BPM and LSCM can help find or create an entity that DoD can become aware of and employ. If we can identify existing work to characterize as BPM/LSCM research, this will clear the path to establish a new charter and spin off a new lab. Or, we can identify a college or university to establish such a lab and slowly develop the $6 million in annual sole source tasks necessary to warrant designation, or take several years to compete it outright.
Staffing a UARC is the responsibility of the lab, not the government. DoD incurs no risk nor obligation to use this staff, as opposed to the entirely different federally funded research and development centers’ mandated and funded personnel. UARC’s employ world-class researchers (often Ph.D.’s) and practitioners, with either recent operational experience or remarkable academic backgrounds. One of the benefits of a UARC is its ability to bring experts to bear on a task only as much as necessary, often part-time and for months or perhaps only for weeks. Contrasted with contract service support where the government is forced to hire staff full time for years, it is higher cost by the hour but considerably less over the time of the contract. A new lab would be wise to structure itself with the intent of having few permanent staff and maximum access to researchers and practitioners on a part-time, ad hoc basis to selectively engage scholars at institutions around the country.
Evaluation
Evaluating such a BPM and LSCM lab should consider its effect on BPM and LSCM metrics. The supply chain operations reference model (SCOR) is a management tool used to address, improve, and communicate supply chain management decisions, and a lab’s ability to affect these metrics would be measurable and reportable. BPM research is replete with performance metrics that a lab could measure and report its contribution to DoD mission accomplishment, even on a micro scale. Ultimately, after a statistically significant period, economic analysis should allow estimation of improved program success. If the new lab cannot report measurable impact, it could be shuttered at no additional cost to the DoD.
If we can identify existing work to characterize as BPM/ LSCM research, this will clear the path to establish a new charter and spin off a new Lab.
Sustainment
The educational institution and the government make a mutual commitment to a long-term, strategic relationship when they establish such a lab. DoD agencies are encouraged to use UARCs, and collaborate as needed to define and prioritize their work so that it is responsive to DoD priorities. But DoD is not obligated to sustain it: The UARC must find its own work.
Budget
UARCs are sometimes budgeted by programs when they can forecast the need for specific expertise, but are more often engaged with redirected funds when a critical problem emerges. PMs frequently list a lab by name in budget requests. Offices within systems commands do as well, but less frequently. Any Component or DoD agency can Military Interdepartmental Purchase Request (MIPR) funds to the sponsor of the contract. The lab is bound by the FAR and Defense Federal Acquisition Regulation Supplements like any other entity.
Revolutionary change in business process usually fails. Evolutionary changes that are small and diverse can blossom and spread organically if effective. Evolution is only possible if DoD enables easy access at the lowest levels to cutting-edge experts without lengthy (and profit-driven) contract support service. This is how we can change from the bottom-up, rather than a blue ribbon panel requiring Congress to change the FAR. The United States can avoid losing the next war with slow, unresponsive acquisition and logistics to a more agile, less regulated competitor. We can beat emerging powers at agility—our business entrepreneurs do so regularly. We can save taxpayer dollars. Let’s bring the DoD into the 21st century with scientific management tools built after the Internet arrived on cell phones. We can make the DoD the best place to work with cutting-edge BPM and LSCM resources. Our government servants can feel like NASA in the 1960s: an organizational culture driving broad change.
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WAUGH is the acting chief scientist of an engineering group at a University Affiliated Research Center. He served 20 years in the Marine Corps as an AV-8B pilot, rising to the rank of lieutenant colonel and deputy program executive officer at NAVAIR (Naval Air Systems Command). He holds a bachelor of science degree in Aerospace Engineering from the U.S. Naval Academy, an MBA in Technology Management from the University of Phoenix, and is a candidate for a Doctor of Business Administration degree at the University of Maryland Global Campus. He was a member of the Maryland State Senate in 2014-2018.
The author can be contacted at [email protected].
The views expressed in this article are those of the author alone and not the Department of Defense. Reproduction or reposting of articles from Defense Acquisition magazine should credit the authors and the magazine.
