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The End of the Beginning
Prepared remarks Paul G. Kaminski, undersecretary of defense for acquisition and technology, Acquisition Reform Day, the Pentagon, Friday, May 31, 1996

Together, Congress and DoD can step up and continue to do something real for taxpayers and U.S. warfighters -- equip the armed forces with affordable tanks, ships and planes that are second to none.

 

Volume 11, Number 68

 

The End of the Beginning

Prepared remarks of Paul G. Kaminski, undersecretary of defense for acquisition and technology, at Acquisition Reform Day, the Pentagon, May 31, 1996.

Good morning everyone, and welcome. I want to thank you for

participating in the Department of Defense's Acquisition Reform

Day. ...

Today, across the entire department, thousands of

acquisition personnel are ceasing their normal operations and

joining in a departmentwide discussion of institutionalizing our

acquisition reform initiatives.

Throughout the acquisition community, commanders and

managers are meeting with their team members to discuss the

implementation of acquisition reform and to emphasize their

commitment to getting best value for the warfighter.

Here in the Pentagon, we are also taking a day to put down

our phones and push away from our desks and our in boxes so we

can focus on acquisition reform -- its past, its present and its

future.

We are at a point in our acquisition reform program that is

not too much different than the situation faced by Winston

Churchill during World War II when the U.S. entered the war. He

observed that "This is not the end, or even the beginning of the

end, but it is, I believe, the end of the beginning." When you

think about it, this is exactly where we are in our program of

acquisition reform and the reason why I've selected "The End of

the Beginning" as today's theme.

The department has begun to make substantial progress in

improving the way it procures equipment and services. Our success

is real and visible. Many programs are experiencing cost

avoidances and savings in the hundreds of millions [of dollars] -

- a few in the billions of dollars. We are stripping away the

onerous nonvalue-added documentation and procedures and now have

a foundation in place to move to 21st century business practices.

This is good news, but I have gotten the sense that due to

the pressures of our daily work schedules and the sheer

difficulty of communicating effectively across a broad and

diverse organization, we need to do a better job of communicating

and gaining a common vision of what we as a team can do to

accelerate implementation of our acquisition reforms across our

entire acquisition system -- from C-17s to socks, from major

defense acquisition programs to base procurement.

We need to be sure that the word is getting out to every

single member of our team. The message is too important not to be

heard. That's why Emmett Paige, the assistant secretary of

defense for C3I [command, control, communications and

intelligence], and I called for the acquisition community to

observe today as Acquisition Reform Day. Our departmentwide

discussion today will be along three distinct but related

communication paths.

The first communication path is top-down. The goal is to

have the department's acquisition leadership publicize the policy

changes and many important acquisition reform initiatives now

under way. Executives, commanders and managers throughout the

acquisition community must take responsibility to ensure that

their personnel are aware of the acquisition reform initiatives

and their part in implementing them. It is important to

communicate that we mean what we say and then back that up with

out actions -- to not only talk the talk, but walk the walk.

The second path is horizontal. The goal here is to have our

program managers, contracting officers, logisticians, financial

analysts and other career professionals share with each other

their lessons learned, best practices and front line wisdom.

There have been many truly significant accomplishments. I ask you

to crow a little to your peers -- share what has worked and

recognize outstanding performers on your team in the presence of

peers.

And the third path is bottom-up. The goal here is to have

the department's acquisition work force -- the practitioners in

the field -- communicate new ideas up the chain of command. We

need feedback from you and all of our people on what's working,

what's not and what needs improvement. We also need to know what

barriers to effective implementation still exist and what your

recommendations are to overcome these barriers.

I want everyone to use both their internal management chains

and the Defense Acquisition University's Acquisition Reform

Communications Center to provide us feedback. We have provided

feedback forms in your information packages. I want to support

you, to empower you to do your job better -- but I need your

ideas to do so.

Today, the department's acquisition community joins together

to take stock of its collective efforts to improve its processes

and procedures. You need to realize that each of you can make a

difference.

I am very proud of your accomplishments thus far in

acquisition reform. The energy, dedication and commitment that

everyone in the department has brought to acquisition reform is a

real tribute to the professionalism of our acquisition community.

It also shows what we can do when we work together as a team

dedicated to a common goal.

Indeed, one of the key factors in our success has been our

ability to work together in teams. Process action teams have been

the foundation of our efforts. Our PATs have worked as integrated

teams representing important interests across the department and

industry to develop solutions that aren't just smart but are also

achievable.

We have teamed with the Congress to enact landmark statutory

reforms. With the passage of the Federal Acquisition Streamlining

Act of 1994, the Federal Acquisition Reform Act of 1996 and the

Information Technology Act of 1996, the department has been able

to take three huge steps toward becoming a world-class buyer.

Now, working with the Office of Federal Procurement Policy, the

department is fully implementing these groundbreaking statutes.

Some of the key statutory reforms include:

 

  • Providing greater opportunities for streamlining by setting the simplified acquisition threshold at $100,000;
  • Giving the department greater flexibility in implementing the Truth in Negotiations Act so that we can use our judgment in
    deciding where it is really necessary to obtain cost or pricing
    data;
  • Expanding the definition of commercial items and making it easier to buy commercial items; and
  • Repealing the Brooks Act, which will significantly streamline the acquisition of automated information systems.

The Congress and the Department of Defense have been talking

about acquisition reform for a very long time. More importantly,

we are together now doing something about implementing real

reforms -- as a team.

But there is still a lot more to do.

We need to provide additional Title 10 statutory waivers for

the defense acquisition pilot programs -- eventually we need to

change the statutes and make the reforms permanent. We need

relief from provisions restricting defense contractors from

supporting operational tests. We need a dual-use applications

program -- one that is whole and viable -- to help the department

leverage commercial technologies.

The reprogramming thresholds have not changed in over 20

years. We need to restore the original balance by doubling the $4

million and $10 million thresholds for reprogrammings within

RDT&E [research, development, testing and evaluation] and

procurement accounts respectively. And we need additional

flexibility to manage our financial affairs -- why not give

program managers some relief from the existing "color of money"

restrictions between appropriations?

The Congress is continuing to provide the department with

additional flexibility. Both the House and Senate authorizing

committees, for example, are giving favorable consideration to

extending the Section 845 "Other Transactions" authority for the

Defense [Advanced] Research Projects Agency to 1999 and providing

this authority to the secretaries of the military departments as

well.

Together, the Congress and our team can continue to step up

and do something real for the American taxpayer and our

warfighters -- equip U.S. forces with affordable tanks, ships and

planes that are second to none.

Reform of military specifications and standards is another

landmark achievement. We have literally turned the entire milspec

[military specifications] world on its head. In the past, program

managers had to seek waivers to use commercial specifications.

Today, the shoe is on the other foot -- anyone who wants to use a

military specification must obtain a waiver.

Another important reform is the Single Process Initiative.

Today, in many of our contractor's facilities, the contractor

will have one manufacturing process for its commercial customers

and perhaps several different ones imposed by various DoD

programs. The Single Process Initiative deals with this problem

by reducing the number of different processes and relying on

commercial practices as much as possible. Our objectives are one,

save money; two, obtain a better product; and three, foster a

more competitive industry.

So far, we have received over 100 concept papers from 41

contractors proposing to modify 177 processes. We have modified

34 processes at four different contractors. In one single block

change with Raytheon, we affected 884 contracts at 16 separate

facilities!

Another important initiative is our effort to streamline and

simplify acquisition oversight procedures. Historically, the

department's oversight processes have been very burdensome, with

the result that many of our program managers have spent more time

dealing with the administrative hassles of the oversight process

than actually managing their programs.

Today, we have instituted a new approach, based on

integrated product teams. This approach facilitates identifying

and resolving issues in a more timely manner. The key change is a

move from after-the-fact oversight to early-and-continuous

insight.

Yes, this insight approach is still relatively new, but we

are starting to see results. For example, we have dramatically

reduced the time from the day of the Defense Acquisition Board

meeting to the signing of the acquisition decision memorandum,

which averaged about 23 days in 1994, to about two days.

Also, because our early-and-continuous insight process is

helping resolve major issues, I have been able to cancel numerous

formal Defense Acquisition Board meetings. Since there were no

issues, there was no need for a formal meeting. Last year, 26 DAB

meetings were scheduled to occur, but I only had to convene eight

of them.

The rewrite of the department's 5000-series acquisition

regulations is an excellent example of what integrated teams can

achieve. On March 15, 1996, the secretary of defense approved the

new policy and procedures, which are contained in DoD Directive

5000.1 and DoD Regulation 5000.2-R. The new regulations implement

changes in the way the Pentagon has traditionally done business,

including:

 

  • Commercial practices and products are given special emphasis;
  • Cost is treated as an independent -- not a dependent -- variable;
  • Program managers and other acquisition personnel are empowered to use their professional judgment;
  • Over 30 separate policy memos and report formats are canceled; and
  • The new policy documents themselves are almost 90 percent shorter than the old ones.

I have read the new regulations. I must admit that I tried

many times to read the old 5000 documents without much success.

These new documents are key to institutionalizing fundamental

change in the defense acquisition process and are a visible

symbol of the department's acquisition reform efforts. It is

important that each of you are aware of this new institutional

foundation -- a foundation of policy documents and available

training and support materials.

Now that we have an institutional base in place, we are

beginning to see the benefits of acquisition reforms. The

evidence is still mostly anecdotal, but we are seeing savings on

major programs like the Joint Direct Attack Munition, the C-17

and the SMART-T [Secure, Mobile, Anti-jam Reliable Terminal], and

on thousands of small purchases of items like T-shirts and socks.

The Joint Direct Attack Munition, or JDAM, program provides

a good illustration of the savings possible by switching from the

old ways to the new ways of doing business. A couple of years

ago, the department set out to convert tens of thousands of

"dumb" gravity bombs into "smart" bombs that could be accurately

guided. The key to doing this was to build a kit for each bomb

that could receive navigation signals from existing global

positioning system satellites. We started the program the old way

and estimated in 1993 that we could get the cost of each JDAM

modification kit down to about $40,000 by the time we converted

our 40,000th unit.

Without the benefit of these reforms, we started the program

by sending out a request for proposal that contained a 137-page

work statement and 87 military specifications. Last year, we sent

out a new request for proposal. This time, we sent out a two-page

performance specification -- two pages about what we wanted the

system to do, not how the contractor should go about doing it.

And this time, we had no requirement for any military-unique

specifications or standards.

As a result, we signed a contract early this year for JDAM

kits that cost $18,000 each -- starting with the first unit, not

the 40,000th. When you are buying over 80,000 such kits, that

amounts to a major savings -- approximately $2.9 billion, or

about 50 percent of the original program cost. Those savings have

now been applied to the department's pressing modernization

priorities in the president's fiscal year 1997 budget request.

The department has been able to put tangible procurement

reform into play on major programs like JDAM and on thousands of

smaller purchases like T-shirts, socks and Navy Chukka shoes. By

scrapping the military specification for T-shirts and socks, the

Defense Logistics Agency is now buying brand-name commercial

undershirts and socks for military clothing sales stores --

offering superior quality at 10 to 20 percent discounts.

I want to conclude by thanking all of you again for your

dedication and asking for your commitment to acquisition reform.

...

 

 

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