Transcript

Department of Defense Press Briefing by Undersecretary of Defense for Acquisition and Sustainment Ellen M. Lord

Oct. 18, 2019
Ellen M. Lord, Undersecretary Of Defense For Acquisition And Sustainment

STAFF:  Good morning, ladies and gentlemen, thanks for joining us today.  This morning, Undersecretary of Defense for Acquisition and Sustainment Ellen Lord will provide an update on the department's acquisition reform and innovation efforts.

She'll have an opening statement and then we'll take your questions.  We do have a hard stop at 11:50, so please be respectful with your questions so everyone will have a chance.

Before we start, I do want to welcome back Mike Stone today, returning after three months of paternity leave.  Most importantly, great to hear the twins, the mom and you are doing well.

So, ma'am, over to you.

UNDERSECRETARY OF DEFENSE ELLEN M. LORD:  All right.

Thank you, Mike.

Good morning, ladies and gentlemen.  Thank you very much for being here.

Today, I'd like to provide a brief update on our acquisition policy reform goals and objectives, and then I'd like to talk to you about some efforts we are supporting in sustainment.  I'll close by talking about my upcoming trip to India and what I'd like to accomplish there.  Then I'd be happy to take your questions.

Last time we talked about acquisition reform and innovation and how we are reducing timelines and lowering costs to provide the best capabilities to our men and women in uniform, I also spoke about my six strategic goals and how the acquisition community and our reform efforts directly support the National Defense Strategy and our warfighters.

On acquisition policy, we're on the brink of some major changes.  

First, we're still on track to roll out the adaptive acquisition framework in December, which will be the most transformational acquisition policy change we've seen in decades.

We held our first training session in September at DAU with some of the most senior and influential members of the defense acquisition workforce.

This policy embraces the delegation of decision-making, tailoring program oversight to minimize unnecessary bureaucratic processes, and actively managing risk based on the unique characteristics of the capability being acquired.

Next, we are in the final stages of publishing the middle tier of acquisition policy.  This pathway enables program managers to prototype or field mature technology in an operational environment within five years.  We now have 50 middle-tier programs delivering military utility to warfighters years faster than the traditional acquisition system.  Of that total 50, 19 are Air Force, 11 Army, nine Navy, 10 USSOCOM and one DISA.

We will soon release an interim policy to drive modern software development across our DOD programs.  This policy development is based on the outstanding Defense Innovation Board Software Acquisition and Practices Report which many of you covered when we rolled it out in May.  The key tenets include:  simplifies the acquisition model to enable continuous integration and delivery of software capability on timelines relevant to the warfighter and end-user; involves end-user early and often in development process to ensure value; establishes the software acquisition pathway as the preferred path for acquisition and development of software-intensive systems; establishes framework to manage risk and enable successful software acquisition and development; and structures contracts around iterative delivery of capabilities instead of traditional products.

This week, we published our Intellectual Property Policy which establishes our intellectual property cadre.  They will develop DOD guidance, training and assistance to the whole-of-government effort to address protection of data rights, while we concurrently continue our defense against cyber-security threats that target U.S. intellectual property.

We are in the final stages of selecting our I.P. -- our I.P. cadre lead, with an offer in process and staffing up the cadre will take place over the next several months.  The OSD cadre will be small, and our intent is to have members advise, assist and provide resources to DOD components on I.P. matters at various stages of the lifecycle of the system.

Staying on cyber-security, we continue to diligently work to initiate and execute the Cyber-Security Maturity Model Certification Program, or CMMC, to secure the DOD supply chain.  The department continues to partner with Johns Hopkins Applied Physics Lab, Carnegie Mellon University Software Engineering Institute, and industry.

The CMMC is outlined for our program managers in DOD instruction 5000.CSA, the new adaptive acquisition framework.  The CMMC is also influencing program protection plans and DoDI 80 -- 8500.01 and 8510.01, which both focus on the protection of I.T. and information systems.

The CMMC establishes security as the foundation to acquisition and combines the various cyber-security standards into one unified standard.

In September, our team released the CMMC model version 0.4 for public comment.  We received over 2,000 comments, which are being reviewed and used to help tailor the final model.

CMMC version 0.6 will be released for public comment the first week of November this year.  This release will provide another opportunity for comments before the release of CMMC version 1.0.

The department will provide version 1.0 to the CMMC accreditation body in January 2020.  The request for information for the CMMC accreditation body is currently out and closes October 21, 2019.

We are looking to roll CMMC out in a strategic manner, and will focus on our critical programs and technologies.  The initial set of RFIs that will include the CMMC requirement are planned for release in June 2020, and their corresponding RFPs are planned for release in the fall of 2020.

We in the DOD will continue to work with the defense industrial base to ensure that the supply chain and the interested parties are informed, prepared and properly positioned.

Nuclear modernization remains DOD's highest priority mission.  Earlier this year, I briefed the Senate on nuclear modernization, helping ensure that the United States has a safe, secure, reliable and credible nuclear deterrent, now and in the future.  Delay is no longer an option.  Systems can no longer be cost-effectively life-extended.  We are very thankful for the bipartisan support.

On military housing, to improve the trust and accountability of our leadership to provide safe, healthy homes for our military families renting privatized housing, department and service leadership are finalizing a Military Housing Resident Bill of Rights, and a resident's responsibilities document.

We are planning for publication and implementation following the NDAA release.  The Senate NDAA bill included some very prescriptive requirements regarding these two documents.  We will ensure our documents are aligned with congressional guidance.

The bill of rights was based on input from military and veterans' service organizations, Congress, our housing privatization partners, as well as resident surveys.

On the PFAS Task Force, this remains a significant focus topic for the department.  Every service secretary and OSD leadership remains strongly engaged.

PFAS is a national issue, it's not just a Department of Defense issue.  It is a national issue and has to have a national solution to replace the standard firefighting foam.

That's not to undermine the responsibilities that we have in the Department of Defense, but it's simply to say we have to take a holistic look at what we're doing.

Let me be clear.  The department remains absolutely committed to the health and safety of our men and women in uniform, their families, and the communities in which they live.

Our first Trusted Capital event will be cosponsored with the Texas A&M University system on November 13th.  The focus for this event will be small unmanned aerial system/counter-unmanned aerial systems.

The university is hosting a website for participants to submit voluntary applications.  DASD Jen Santos is leading the effort with our university partner for this first venture day.

We are working to answer frequently asked questions on our website so that industry can understand and engage in this public-private partnership. 

On the Trusted Capital Marketplace Program, as I briefed you before, this is a public-private partnership that will convene trusted sources of private capital with innovative companies critical to the defense industrial base and national security.

As the F-35 fleet continues to grow, we're also growing our sustainment capabilities to ensure these aircraft are ready and capable.  Across the international partnership and around the world, the F-35 continues to show us why it is the most advanced, lethal and interoperable aircraft ever developed.

In INDOPACOM, we have a VMFA-122s, F-35Bs deployed aboard the USS America, providing a ready and capable force to ensure security and stability in the region.  Elsewhere, the U.S. Air Force is ready and engaged in security operations necessary to ensure stability within the CENTCOM theater.

Finally, our allies have made tremendous progress integrating the F-35 into their tactical air fleets, as demonstrated by recent deployments from the U.K. and Italy.

On F-35 production, we reached a handshake agreement with Lockheed Martin and continue to negotiate on the next F-35 lot buy for 478 aircraft.  I won't get into any specifics, but when it's official, we will do a press briefing right here to announce the details.

On Turkey and the F-35, there has been no change to return Turkey to the F-35 program.  The S-400 air defense system, which is incompatible with the F-35, remains in Turkey.  As I said previously, Turkey still makes 900 parts for the F-35 and will continue to do so until Turkey's F-35 supply chain responsibilities transfer at the end of March 2020.

I know there are questions on the executive order on Syria-related sanctions, but at this time we're working through those details, so I can't provide anything further.  We'll provide more information when we can.

So, I'd like to talk a little bit about our industry partnership.  

Secretary Esper conducted the first in a series of industry dinners on September 30th, 2019. Industry associations AIA, NDIA, PSC, National Association of Manufacturers and the U.S. Chamber of Commerce attended on behalf of industry for this first engagement.

The focus of the discussion was implementation of the National Defense Strategy; particularly how acquisition initiatives within the Department could improve business relations and reduce barriers for industry in supporting the NDS implementation.

Industry dinners in the coming months will focus on mid-tier suppliers, international partners, global telecommunications -- think competition with China -- and nuclear deterrence.

I continue to meet with our industry partners.  I meet one-on-one with CEOs on a monthly basis, jointly with major defense contractor leadership teams, as well as senior DOD and service representatives, and more broadly with the industry trade associations.

I continue to consistently meet with professional staff members and members outside of hearings to talk about programs, reforms and answers to their questions, in ongoing efforts to make sure we have a very open and transparent relationship with Congress.  I remain fully committed to consistent and timely engagements with Congress.

Next week I head to New Delhi to co-chair the Ninth India-U.S. Defense Technologies and Trade Initiative, or DTTI, group meeting with my co-chair, secretary for defense protection, Mr. Chandra.  As the U.S. Department of Defense lead for DTTI, I'm excited to continue working with our India major defense -- our Indian major defense partner.  The United States is committed to strengthening its partnership with India while furthering military-to-military relationships and cooperation.  Bilateral defense trade, essentially zero in 2008, will reach an estimated $18 billion later this year.

The U.S. government granted India Strategic Trade Authority Tier 1 designation last August, providing India with greater supply-chain efficiency by allowing U.S. companies to export a greater range of dual-use and high-technology items to India under streamlined processes.  This grants India the same authorization as NATO allies Japan, South Korea and Australia.  All of these examples show how the United States and India are working bilaterally and in cooperation with other like-minded partners to advance our shared vision for the Indo-Pacific.

In closing, it's regrettable that we are again under a continuing resolution.  CRs cause great damage to military readiness and disrupt our ability to modernize our strategic forces, including nuclear, for the future.  I strongly urge Congress to pass a defense appropriations and authorization bill now, so that we can move forward with the many important programs needed to ensure our readiness and deter our adversaries.  We at DOD are grateful for our Congress passing a two-year budget agreement that provides the budgetary certainty the department needs to implement the National Defense Strategy.

With that, I look forward to your questions.

STAFF:  Tony?

Q:  Yeah, a couple, one on India.

I was there last year when Mattis -- Secretary Mattis signed this COMCASA agreement.  Clumsy name, but since -- in the years since, have any weapons, programs been flowing to India under that -- that -- that were allowed under that agreement that previously were not?  There was a touchy electronic warfare types of things.

MS. LORD:  Absolutely.  I have to check on specifically what contracts have been signed, Tony, and what has flowed.  I will tell you that under Dr. Ajay Kumar, who used to be my peer in DTTI -- he was just essentially promoted to the equivalent of DEPSECDEF in India -- we really were able to move forward on a whole number of programs, and I'm hoping that coming out of this meeting, we can make some announcements about progress.  I personally have seen an uptick in the pace of movement in India, the willing to -- willingness to engage, and we truly are developing some new capabilities together for production in India, as well as to be produced here.

Q:  F-35 -- you -- you touch -- there are big milestones coming up supposedly in December, forward production.  That presupposes the I.T. -- the current combat testing, including simulation testing, is completed, the beyond LRIP report required by law is completed and the DCMA does a production readiness review.

MS. LORD:  Exactly.

Q:  Is that all going to happen by December, or is realistically, will this major milestone slip into next year?

MS. LORD:  We -- we actually just had signed out of the JPO earlier this week a program deviation report that documented expected schedule threshold breach in the milestone C full-rate production decision milestone of up to 13 months.

So what this is a result of -- and I follow this very carefully -- is the fact that we are not making as quick progress on the Joint Simulation Environment, integrating the F-35 into it.  It is a critical portion of IOT&E.  We work closely with Dr. Behler and at DOT&E.  They're making excellent progress out on the range with the F-35, but we need to do the work in the Joint Simulation Environment.

We have collectively decided that we need to get the JSE absolutely correct before we proceed.  So I'm going to make some decisions about when that full-rate production decision will be made, shortly, and I'll get back on that.

Q:  In English, though, the 13-month deviation means a milestone -- the full-rate production decision won't happen in December, but could happen in December of next year or January of 2021?

MS. LORD:  Potentially, potentially.  Yes.

So I will not be making that decision in December.

That being said, we're moving forward with the program.  The aircraft are performing exceptionally well and we're very excited about the progress, so it does not change what we're doing on the production line, what we're doing in terms of development or sustainment.

STAFF:  Barbara?

Q:  Ma'am, hi.

You mentioned that nuclear modernization -- modernization is now DOD's highest priority.  Staying in the public arena, which I know you have to, could you give us a little bit of your current thinking, in as much detail as you can, about why you call it the highest priority and what -- what those priorities are in that overall program?  What needs to be done?

MS. LORD:  I have been in this position since August 2017.  And for that entire time, the nuclear deterrent has been my highest priority, and it has been the department's highest priority, as the nuclear deterrent is absolutely critical to fulfill the National Defense Strategy.

So what we continue to do is monitor the development of ground-based strategic deterrent, the Columbia-class submarine, as well as a variety of other programs, the bomber, the B-21.  And what we are doing is ensuring that those programs deliver on time, because we have a zero margin, and they are critical in terms of having a variety of capabilities, some obvious, some not so obvious, to deter our adversaries.

Q:  Can I just follow up very quickly?

In terms of the current inventory of strategic weapons, what do you see as the priority in the current inventory for modernization and upgrade to keep the current inventory up to par until these other platforms can come in?

MS. LORD:  Because they all work together, I am focusing on all three of them to the same degree.  So I spend a lot of my time with the teams in the Navy working Columbia, with the Air Force on GBSD, and so forth.

Q:  Right.

I guess I meant the bombs, the weapons, the current ordnance that you have.  I believe there's probably a lot of upgrade and modernization going on in the current stock -- stockpile.

MS. LORD:  Ah, OK.  So, lexicon here.  I parse things into readiness, which is sustainment of the current capability.  And when we say modernization, I think of new capability.

So we continue with our current systems to make sure that they are 100 percent functional, that our silos are all performing.  We do checks on Minuteman-III on a routine basis.  We work with our subs all the time.  We make sure that our weapons are in the right place at the right time, ones that might be air-launched, for instance.

So we follow those in terms of sustainment extremely closely, and there's not one particular one that I am concerned about.  I watch them all very closely.

STAFF:  Carla?

Q:  Thank you, Ms. Lord, for doing this. 

On Chinese drone use in the military, we know that the last time -- or -- or a recent time you spoke with us, you said that we know that information from these drones is sent back to China, so it's not something that we can use.

So why is your office granting waivers to put these security risks into the hands of our special operators at the Air Force and in the Navy?

MS. LORD:  OK, so UAS -- the reason that we write some waivers for these is to have them used on ranges, in highly controlled conditions to test our counter-UAS capability so those are used as targets.  That -- those are the waivers that we are signing out.

I will say because of the Chinese flooding the market with low-priced DJI drones, for instance, our industrial base has eroded, we do not have much capability.  That's why our first trusted capital marketplace focus area is the small UAS market, to try to bring that back.

Q:  So just to confirm, none of these have been purchased or being used by our operators out in the field?

MS. LORD:  We are not authorizing utilization of Chinese drones out in the field.  We are using them for targets.

STAFF:  Lee?

Q:  Lee Hudson, Aviation Week.  So if the cease-fire in Syria doesn't hold and Congress moves forward with sanctions, can you say how much involvement Turkey has in the U.S. supply chain beyond the F-35?

MS. LORD:  So the president and the vice president I think have been pretty clear on where we are on Syria.  I will say from a sanction point of view, we are looking at the documents that were produced right now to understand exactly what that means to us, and we will wait to hear from the White House on where we are going further.

STAFF:  Tony?

Q:  Ma'am, on the 5002 rewrite, you mentioned the 5002SA, the adaptive acquisition framework coming out in December.  Can you give us a sense of how much shorter it's going to be, the clean sheet approach?  I mean, what -- what will it -- what will it be, for instance?  How much?

MS. LORD:  What we are doing is we're using the different architecture, if you will, for the document so that we have a base document that is basically the acquisition pathways and then we'll have separate reference documents on security, for instance, or cybersecurity would be a big part of that, as well as other types of security.

So I think orders of magnitude smaller is what we're talking about.

Q:  In what way can a defense contractor's life be expected to change as a result of the rewrite?

MS. LORD:  I think that they can partner with program offices to come up with shorter, faster pathways that are more efficient and less costly to actually administer these contracts.  So in other words, I'm looking for creative compliance from our acquisition professionals using the shortest, least expensive methodology.

I think a good example of that is using middle-tier acquisition for rapid prototyping, rapid production to get capabilities in the hands of warfighters, using service leadership authority for requirements, not having to go through the JCIDS process with the Joint Staff.

We also are clarifying how we're looking at software.  In the past we have constrained our contracting officers in terms of writing contracts for software, where we wanted to use Agile or DevOps because we didn't have a contracting vehicle that met those needs that allowed you essentially to develop, produce and sustain software code simultaneously.  So what we've done is we've bifurcated the hardware acquisition and we have a software pathway that addresses this so our systems essentially can be hardware-enabled, yet software-defined.  So what we are enabling the industry base to do is really use modern software practices with a contract vehicle that reflects that that doesn't constrain them having to worry about the colors of money.

STAFF:  John?

Q:  Thank you.

You mentioned the Trusted Capital Market event.  Are you able to provide any more details about that in terms of who's participating?  And also, just looking ahead to the future, do you have additional events like that planned, and can you say what capability sets they're focused on?

MS. LORD:  Yes.  To begin with, who is participating from industry, we will have, I think, about 75 slots open for industry, and then slots open for capital providers.  It will be on a first-come, first-serve basis.  A website is going up where people can sign up.  We could get back to you with the actual day that website is going live.  It's very shortly.  And then I think I referred, in my remarks, to the different areas that we were also looking at, so we'll get back and reiterate that for you.  But we talked about some communications, some 5G-types of things and a variety of others.

STAFF:  Mike?

Q:  Thanks.

So part of your -- you talked about international sales and international partnerships and engaging with them.  Part of your responsibility is for international sales.  Have there been other White House holds like there was on the Javelin sale?  And if so, how many?

MS. LORD:   I am not aware of any recent holds, and I'm giving you kind of a blank look because I don't -- I -- I don't think of the White House holds.  We typically think of State Department and we think of Congress, and so forth.  So I'm not sure, but we can certainly look into that.  Over what time frame, are you asking?

Q:  I guess back about -- about a year would be right back when the Javelin was originally let through by State, but then the FMF associated with it and the -- the -- the system itself to Ukraine was -- was held back.

Q:  May I amend that query and ask if you could provide an answer, since the Trump administration came into office, if the other journalist doesn't mind?  Would that be OK?

(CROSSTALK)

MS. LORD:  I don't think the other journalist minds.

STAFF:  Yeah.  And to be clear, so FMS is not DOD; it's State, so let's just be clear what you're asking.  If you're asking Defense support cooperation, yep, we can work that.  If you're asking everything, anything FMS, just making sure we all understand.  OK.

MS. LORD:  Yeah, we'll -- we'll take that for the record and get back to you.  I just don't have that off the top of my head.

STAFF:  OK, we're going to have to kind of start going, so no, you already had yours.

Aaron?

Q:  Thanks.

Just to clarify something, you said that the -- the plan is still for the Turkish working the F-35 taken over by the U.S. come March.  When will the companies be announced?  Will the companies be announced that will be taking up that work, and who's doing what?

MS. LORD:  That's really up to Lockheed Martin.

Q:  So Lockheed has the lead on that.

MS. LORD:  Yes. 

Q:  And then just -- just to quickly just check on one thing.  You said, I believe...

MS. LORD:  And Pratt & Whitney.  I'm sorry.  Pratt & Whitney, as well.

Q:  OK.  You called the -- the -- the 5000-2 the -- the most transformational acquisition policy change in years.  We've heard from many efforts in the past that change acquisition, they're all supposed to be very transformational.  What makes you confident this one's going to be able to really stick this time?

MS. LORD:  Because we have involved all of the services in the development of all of these policies, along with other stakeholders.  So it's been a very collaborative effort.  We have spoken with Congress all along about what we're doing and we have begun to train our acquisition workforce on it.

I think in the past, we haven't always coupled training of the workforce with changes put out in policy and it's incredibly important to me to make sure that we have an acquisition workforce that understands the policies, the instructions, the day-to-day implications of what we are doing.

So we are, at DAU, focusing modules on very specific areas that are critical to understand in terms of contracting.  For instance, we're going to digital engineering, we have to be able to address that in contracts.  We're going to Agile DevOps.

We are rolling out clauses for intellectual property, clauses for cybersecurity, we are having workshops where we're having PEOs and PMs go through what worked, what didn't work on their programs because I think we typically do not talk about what has not worked well in the past and then we doom others to repeat the mistake over and over again.

So not only are we coming up with new content to be delivered at the point of need, we are coming up with lots of different delivery mechanisms, doing podcasts, doing videos, doing on-site meetings.  So we also are encouraging industry to participate a lot more at DAU.  We've been having more and more industry lectures at DAU.

So we're really looking at the government-industry partnership, it's an ecosystem.  We need to have everyone educated.  It's been a key topic during the quarterly tri-association meetings we do with AIA, PSC and NDIA, where we bring CEOs in.  I usually bring about 15 different individuals from ANS, from R&E, from DCMA, DCAA, the services.

When we go to those meetings and we talk about the changes we are going to make and then what we've rolled out over the past 24 months are a lot of what I call listening sessions.  So CMMC's a perfect example of that.  Katie Arrington and her team have conducted numerous listening sessions where we say this is what we want to do, what do we need to do more of, less of, stop doing, start doing from your perspective?

So we've done lots of iterations, so it's almost like agile policy development, if you will.

STAFF:  Vivienne?

Q:  Thank you.  Vivienne Machi with Defense Daily.

I wanted to ask about the Open Skies recapitalization program.  What is the progress, how is that competition progressing in light of reports that the White House is planning to withdraw from the Open Skies treaty?

MS. LORD:  The program within the Air Force is continuing.  No change on that.

STAFF:  Marcus?

Q:  Ms. Lord, you -- you and a number of your predecessors have all talked about the need to have competition in major acquisition programs.  However, you have two multibillion dollar ones, the GBSD ICBM replacement for the Air Force and the Bradley replacement in the Army, which appear only to have one.

I was wondering what your reaction to those two issues are and what's -- what are you doing to ensure that you're going to get the best product at the -- at the best price for taxpayers when you only appear to have one bidder for each of those?

MS. LORD:  With GBSD, obviously the proposals are not in yet or the proposal, so nothing is finalized.  However, what we did on that competition is we put in language so that we have visibility, transparency in cost and pricing.  So we will be able to determine the value, if you will, of what's being delivered.

There are also multiple significant subsystems within GBSD, where there are multiple potential suppliers on the one team from Northrop Grumman who has gone public with that.

So the current program on GBSD has given us a lot of insight with both Boeing and Northrop Grumman.  We're using that information to better inform us going forward, but I think it was a well-written RFP that will give us the insight we need.

On the fighting vehicle, I'm just getting more involved in that one right now so I don't have quite as much insight but I know the Army is working on that.

Q:  Is that unusual, to get that much pricing data that you mentioned?  Is that not typical, to have the level of what you're asking for?

MS. LORD:  Well, I think it's, again, learning about looking at potential outcomes.  Typically, you wouldn't have clauses in a contract or an RFP when you think there are going to be multiple bidders, to be able to get as much insight because you would have that by virtue of the competition.  So I think it's, again, looking at how we are going about writing our contracts and learning.

STAFF:  OK, guys.  Sorry we've gone over just a little bit.

Ma'am, any closing remarks?

MS. LORD:  Thank you all very much for coming today and I look forward to continued conversation.