Transcript

Ellen M. Lord, Undersecretary of Defense for Acquisition and Sustainment, Briefs Media at the Pentagon

Aug. 20, 2020
Ellen M. Lord, Undersecretary Of Defense For Acquisition And Sustainment

STAFF: Good morning, everybody, thank you for joining us today. Today, Ms. Ellen Lord, the Undersecretary of Defense for Acquisition and Sustainment, will provide an update on A&S business and then take some questions.

We do have a hard stop of noon today so we'll get to as many questions as possible. For those of you on the phone, just a reminder, if you could please put it on mute, that way we won't get any feedback. And with that, I will turn it over to Ms. Lord.

ELLEN M. LORD: Thank you. Good morning, ladies and gentlemen. I'd like to talk to you about a new report that was recently delivered to Congress and then I'd also like to provide a few updates on our COVID-19 response, as well as some other department business.

Yesterday, we sent the F.Y. '19 NDAA Section 868 report to Congress. It's titled “Implementation of Defense Science Board Report Recommendations, Design and Acquisition of Software for Defense Systems.” The report provides a summary of initiatives and actions that have been implemented in response to the February 2018 Defense Science Board report.

Additionally, several attachments are included with the report, which are policy and guidance documents that we've developed over the last year to enable program managers and PEOs to adopt modern software development practices. This work is embodied in documents and links included in folders for those of you here today in person, and for those of you on the phone we will e-mail you after the briefing. 

I would like to highlight five areas. 

One, the software acquisition pathway. This policy is a component of the adaptive acquisition framework. Our goal with this pathway is to simplify the acquisition model to enable continuous integration and delivery of software capabilities to support the warfighter.

The pilot programs for BA 8 software and digital technology funding are the second area. With the Comptroller, we are working on another significant pathfinder program for the creation of Budget Activity 8, or we call it BA 8, under the Research, Technology, Development and Engineering title.

With congressional approval in the F.Y. '21 NDAA, this would consolidate funding for a small number of ongoing programs under a single appropriation, or color of money, for software and digital technology. This pilot effort will evaluate the efficacy of a single funding category for software and digital technology.

Three, the DOD Enterprise DevSecOps Reference Design. This was first introduced in the 2019 Digital Modernization Strategy. The department outlined numerous goals and objectives to improve information technology to increase our military advantage across all spectrums.

One of the goals identified was to pursue the use of software development, Dev, security, Sec, and operations, Ops, or DevSecOps, as a software development methodology. The use of this commercial best practice will support the department's efforts to be maximally responsive to emerging software capability needs and threats, as well as to ensure better utilization of cloud environments and artificial intelligence.

Four, the development of enterprise DevSecOp offerings. This is a joint effort of the Chief Information Officer, A&S and the services, focused on bringing automated software, tools, services and standards to DOD programs so that programs can create, deploy and operate software applications in a secure, flexible and interoperable manner on a much faster pace, which is responsive to warfighter needs.

Five, the software workforce working group progress. Started in 2019, this is an example of collaboration with the services. We are currently working across government agencies to establish a software civilian career field with OPM and working on an innovative training and workforce development initiative.

So changing subjects a bit here, on Tuesday of this week, I visited Tinker Air Force Base and was able to discuss Air Force software initiatives with the 76th Software Engineering Group. 

Part of the Air Force Sustainment Center's software enterprise, the group provides DOD with capabilities for operational flight programs, support, jet engine test and training and simulation systems. 

Jordan Gillis, our ASD for sustainment and our DOD chief housing officer, joined me during the visit to discuss the Military Housing Privatization Initiative with both residents and a housing provider. Senator Inhofe joined us for a military housing discussion, as well as a wide-ranging dialogue on other Tinker initiatives. 

While there, I was also able to tour multiple depot activities with a particular focus on the F-35 engine or the F-135, their maintenance and repair activities. 

Next week, I plan to visit the F-35 Joint Simulation Environment, or JSE, at the Pax River Naval Air Station. 

Moving on to other business, I think many of you are tracking Section 889(b) of the F.Y. 2019 National Defense Authorization Act, NDAA, and the recent waiver granted by ODNI. 

Section 889(b) prohibits the federal government from procuring any equipment, system or service produced by Huawei Technologies Company, the ZTE Corporation, and three other Chinese companies. This interim rule, published on July 9, is located on the Federal Register website and went into effect Thursday, August 13th. 

We fully support the intent of the prohibition, and we are working to ensure the rule results in the removal of these products from our supply chain. 

Defense Acquisition University posted a Continuous Learning training module on August 8. It targets the acquisition community, covering requirements described in the FAR, implementation guidance, exceptions, and waiver processes, reporting requirements and how the rule will be enforced. 

The waiver was granted temporarily by ODNI. It's only in effect until September 30th in order to provide time to review the full details of the rule implementation using additional information from DOD. 

The waiver covers items that are considered low-risk to national security such as food, clothing, maintenance services, construction materials that are not electronic, and numerous other items that ODNI has identified as commodities, low-risk commodities. 

The waiver received is not for our major weapons systems or any support activity related to them. The short-term waiver is important so that end-of-fiscal-year activity will not be impacted. We are balancing warfighter readiness and completing end-of-year purchases to avoid issues with expiring funds with rule implementation for the next 45 days. DOD is not seeking a broader waiver request at this time. 

As we eliminate Chinese telecommunications equipment form our supply chain, we know that there are challenges for our industry partners, but we are pleased to see the defense industrial base stepping up smartly. This is the right thing for our national security. 

We're pleased to see the efforts of our major primes in being proactive to eliminate the prohibited equipment, and we continue to remain in constant dialogue. We will keep you updated as we move forward. 

So now, turning to an update on our response to COVID-19. I remain very proud of all the work done by those in A&S. Since the outbreak, DOD has partnered with HHS to invest nearly $630 million in expanding the domestic industrial base for medical resource suppliers. 

Some examples of our efforts in this area include $279 million to increase N95 respirator mask production by nearly 100 million units per month by January 2021; $127 million to increase production of swabs by 65 million units per month for testing kits; $138 million to advance syringe technology and production of over 45 million units per month in support of the U.S. vaccine development strategy; $22.4 million to increase domestic glove manufacturing by 450 million units annually; and, $35 million to increase domestic manufacturing of COVID testing kits by 10 million tests per month by 2021 -- February 2021. 

Through assisted acquisition, DOD continues to support HHS efforts to lead the interagency in replenishment of the Strategic National Stockpile and distribution of supplies to states, territories and nursing homes to respond to the coronavirus outbreak. 

To support domestic industrial base expansion for critical medical resources, DOD recently solicited input from industry through our commercial solutions opening in the areas of N95 and surgical masks, PPE, pharmaceuticals, and screening and diagnostic capabilities. 

The Joint Acquisition Task Force -- or JATF -- is reviewing the responses and will continue working with HHS to determine the areas of most effective government investment to support on-shoring of domestic manufacturing for medical resources. 

We are also working to transition current JATF operations into an enduring policy and oversight office within the A&S Joint Rapid Acquisition Cell that will facilitate current and future DOD acquisition support to interagency partners. 

So thank you for allowing me to discuss these issues with you, and I welcome your questions. 

STAFF: All right, we will start on the phone, if we could go to Tony Capaccio of Bloomberg? 

Q: Hi, Ms. Lord. On the joint strike fighters and the joint simulation environment visit that you're taking, how concerned are you given the delay in the testing until December that the threshold date for full reproduction, March of 2021, will have to be delayed? And how serious are the issues down there with the simulation environment? Is it all COVID-related or are there technical issues also that are delaying things? 

MS. LORD: So I am confident that we are going to meet the March date. We have the entire government industry team focused on that. There have been setbacks within the JSE from COVID. It is a very close working environment. The team, very quickly, moved out to follow all CDC guidelines to make sure we had a safe working environment. They readjusted. We have operations there at least six days a week, if not, seven days a week and almost 24 hours, so COVID has been significant. We are also working through, just, the tactical maturation of simulating these threats and it's an iterative process. The reason I am going up there next week with Bob Behler, our director of OT&E, is to understand exactly where we are, make sure the team has all the resources they need, and I look forward to continued progress. 

STAFF: All right, we'll come back to the room. Barbara?

Q: On the F-35 for the UAE. I know you having traveled in the region late last year, talked about the publically. Can you as thoroughly as possible, bring us up to date where it stands right down to the best of your understanding? Is selling the F-35 to the UAE currently, actively on the table? Is the department involved in the discussions that Jared Kushner had with the UAE? Did you provide technical experts, technical parts of that briefing? What's your sense of what's next on all of this? 

MS. LORD: So I need to defer for all the questions on F-35 sales to the UAE to the State Department. However, I will say, I've spent quite a bit of time in the region over the years in this role actively talking about F-16 upgrades, that has been an ongoing discussion that DSCA and the Air Force have worked on, but I need to ask you to go back to the State Department. Thank you.

STAFF: Moving back to the phones, let’s go to Scott Maucione, Federal News.

Q: Hi, thanks for doing this. I was just curious about the JATF becoming a permanent role. Would that continue -- as it continues in its permanent role, would only work in a medical capacity, or would you expand that to work on other weapon systems and other rapid capabilities for anything. 

MS. LORD: OK, a point of clarification, what we are doing is, we are taking all of our learnings from what we've done with the JATF and we are reducing that to a playbook that can respond to any type of federal emergency where acquisition and sustainment support is needed. So it could support another pandemic, but it could respond to other types of federal disasters as well. 

We've stood up the Joint Rapid Acquisition Cell years ago to support the war fighter downrange and in fact, I chair biweekly meetings with our forces both in Iraq and Afghanistan where we have a secure VTC and we talk to those downrange, those at CENTCOM and so forth, and talk about what are those urgent needs. We have a mechanism or framework, a small staff that supports that, it's a great effort that reaches out to the services and all different components within OSD. 

What we are looking to do is to have that core group be ready to standup and support federal emergencies augmented as we have augmented the JATF. We actually are looking at transitioning what the JATF has been doing back to HHS and FEMA later this fall on so that they can develop the enduring capability to make -- to take care of their medical supply chain. 

So a lot of that -- a lot of conversation going on right now with Secretary Azar to enable that. We will be dispersing those individuals that have specifically been working on the JATF later this fall back to other functions, but we will maintain the capability to rapidly reconstitute the capability if needed. 

STAFF: Next question, Tony Bertuca, Inside Defense. 

Q: Yes, Ms. Lord, thank you very much for doing this. My question goes to the white paper the Pentagon sent to Congress identifying $11 billion cost that came from COVID, impacting around 106,000 jobs. Can -- can you tell us why the defense contractors need that funding now, as supplemental emergency funds, because there is debate in Congress about it and some senior Democrats have likened it to a blank check to defense contractors. What do you make of that assertion and why does this money need to go to defense contract? 

MS. LORD:  Well, I don't write blank checks. What this is, is work that our acquisition group has done working with our entire supply chain to understand the one-time costs that were incurred due to employees being on sick leave because of COVID, not being able to come to work because they worked either at government installations that were shut down, or their own work areas were shut down and they couldn't telework; for instance if they were doing classified work. 

It pertains to the one-time costs of rearranging manufacturing floors, to make sure that those businesses were in compliance with CDC guidelines. It talks about going through and doing deep cleanings to allow workforce to come back. 

What we are looking for is the one-time cost, and this is very, very, clearly delineated as to what is allowable and what is not allowable. Our DPC team has outlined this and put guidance out so that that money does not come out of the services and the actual hardware being delivered to the warfighter so that we do not incur a hit to readiness. 

Our number one obligation is to make sure we stand ready. We do not want to impact readiness and our modernization efforts. So, this is for a very clearly defined period of time and we are looking at getting past that. So it doesn’t eat into the budgets we have to basically produce services and weapon systems for the war fighter. 

STAFF: Moving on, if we could get Mike Stone from Reuters.

Q: Thanks very much, thanks for doing this, Ms. Lord. During your tenure, you've been able to move out quickly with an F-35 sale to Poland, that was a very rapid sales process. Given what you learned from the Poland case, if you had to do that case again from a standing start, how fast do you think you get to an LOA?

MS. LORD: We’re talking about in general here, I believe, and I will say that Secretary Esper has as a key initiative, defense trade modernization, because we want to support our partners and allies with U.S. equipment for a variety of reasons. One, to be interoperable, and secondly, to support our domestic defense industrial base to make up for the lumpiness, if you will, in U.S. acquisition. We also want to deny our adversaries, such as Russia, the ability to generate revenue and develop interoperability across the globe, as well.

I think the Poland effort really shows what happens when all the agencies, such as DSCA and other DOD components, work very closely with State Department and so forth. So I think the six month time frame is a very good bogey.

STAFF: All right. Lee Hudson, Aviation Weekly?

Q: Thanks for doing this. I was hoping you could give us more detail about how today's announcement that five small UAS configurations are available to the U.S. government and how that's related? Is it DPA Title 3 investment from July that supported the small UAS industrial base?

MS. LORD: OK so the Blue UAS, as it's called, goes back a couple years. There's been an initiative, especially between A&S and the Army. DIU has facilitated a lot of this but we looked at the fact that basically DJI from China had decimated our industrial base for small UAVs, quadcopters and so forth through pricing that was sub-cost and so forth.

So what we wanted to do was come up with government standards that clearly indicated what was acceptable in terms of design and performance to meet department needs. We've come up with that blueprint, if you will, through a series of different fly offs and different efforts and now we have a series of companies that can produce this so that we, at the DOD and hopefully more broadly commercially, can support our domestic industrial base.

So I will go back and look at that particular investment we had with the DPA Title 3 because I cannot recall specifically what part of this that enabled and Lee, we'll take that one. Jessica will get back to you on that but I will tell you that I think this was a fantastic initiative that leveraged the S&T community, it leveraged our operators and it leveraged our ability as a department to reach out to the commercial industrial base to say "yes, you can do work with DOD" and we want you to do work with us, we want to be fast, we want to be inexpensive and we want to be responsive to the warfighter needs.

STAFF: OK. Jeff from Task & Purpose?

Q: Thank you. Regardless of what happens in November, Pentagon's budget cuts are likely. So I'm wondering how much would the Defense Department save if it canceled the F-35 program? Thank you.

MS. LORD: That is an impossible question to answer at this moment because there is warfighting capability required to meet our O plans and we would - we have a tac/air mix to be able to do that. So if you cancel the F-35, the question is what backfills for that capability? That costs something, as well.

I think, as you know, we are in the midst of developing our budget request right now and the question of the mix of fourth, fifth and sixth gen aircraft is one that is being debated right now.

STAFF: All right. And we have time for one more question so let's go to Jackson Barett of FedScoop.

Q: Hi, thank you. Could you provide us an update on the cybersecurity maturity model certification rollout? Do you have any anticipated delays and have you executed the no-cost contracts with the CMMC accreditation body yet?

MS. LORD: So we are moving forward very crisply with CMMC. We think it's absolutely critical to make sure our defense industrial base has the cybersecurity technology required to understand truly how cyber secure we are.

I will double check but I believe we have executed that contract but I will talk with Katie Arrington and Jessica can get back to you later this afternoon. And I don't anticipate any delays, just to be very clear on that.

Q: All right. I - I have a quick question... 

STAFF: Oh, sure, we'll go back to the room since that was a quick answer.

Q: Theresa with Newsy, thank you for taking my question. You had mentioned earlier in regards to COVID the different amounts of money that you're using for distribution. My understanding was that the military won't necessarily be distributing the different supplies. So is a lot of that money going to contractors to distribute those syringes and the masks or - kind of how is that funding being allocated?

MS. LORD: The money I was talking about is twofold. One is assisted acquisition to HHS to actually put PPE, pharmaceuticals, other things on contract, and then there's a separate amount, that we have used CARES Act funding and DPA Title 3 to invest in increased capacity and throughput so that we have greater ability to generate domestically all of these different items.

When you talk about distribution, that's a separate and distinct question. Right now, we have not put money into distribution, so to speak. Right now, we are under discussions as to how and if DOD is part of vaccine distribution but we are assisting.

I think as you know, we have Admiral Polowczyk working with HHS and FEMA on the supply chain. A large part of what he does is look at the demand signal generated by the states and local areas and we've put this control tower into place where we assist HHS and FEMA with analyzing the demand signal and helping to determine where to distribute, where the greatest need is, so it's almost like a typical ERP system you would have in a manufacturing plant. We continue to advise and assist on the mechanism to do that.

(CROSS-TALK)

Q: Can I just have half a second, I know we're coming up on time. I want to follow up on something you - you just said. Can - is there any way you can bring us up to date on what the thinking is right now about DOD's role -- potential role in future vaccine distribution and that logistical effort to do it? Have you come - have - have you ... 

MS. LORD: That's under discussion right now, so no conclusions ... 

Q: What are the key points that are under discussion if there's no - not the answers but the questions you're asking yourselves?

MS. LORD: What will the distribution pattern be and what will be the mechanisms for that in terms of how it is distributed, by what means and so forth? So under whose direction and whose resources?

Q: Is it just pretty much thought that the military -- the department would have to take a leading role in distribution since -- since -- since it would be such a significant effort?

MS. LORD: Unclear right now.

Q: Thank you.

STAFF: Thanks everybody.

MS. LORD: Thank you.