Webinar #6: DoD Acquisition Opportunities

DoD acquisition opportunities with guest Bill Greenwalt

DoD acquisition expert, Bill Greenwalt, discusses his Congressional Staff work that helped make Other Transaction Authority contracting available for all programs of record within DoD and also delivered the Covid-19 vaccine in record time.

Also, please take a look at Bill’s recent Hudson Institute paper — Competing in Time: Ensuring Capability Advantage and Mission Success through Adaptable Resource Allocation. This paper addresses the budget process “elephant in the room” for U.S. Military capability over time.

“The keystone of the Department of Defense’s institutional architecture is not acquisition, but rather the budgeting process. This governs its ability to allocate funding to achieve national security objectives, links together requirements and spending, sets the calendar of the department, controls changes to investment priority, and serves as the mechanism for Congress to exercise its constitutionally granted appropriations powers. While there have been dozens of acquisition reform efforts, the budgeting process has been nearly untouched since 1961.”

Webinar Transcript

Marv: [00:00:02] Ok, Bill, we want to thank you for being our guest speaker with us today, and we’re looking forward to speaking with you about all of your acquisition experience and the things you’ve been doing through your illustrious career. And because I wouldn’t get it right please start by giving us a little bit of background on your career and then we can go from there.

Bill: [00:00:21] Sure. Happy to do so. I’ve started off an acquisition back in the 80s with the what was then called the the General Accounting Office. And through a number of years there, I eventually was able to land a job up on Capitol Hill with Senator Bill Cohen in the early 90s. And there I worked on what’s called the Federal Acquisition Streamlining Act and the Clinger Cohen Act. I stayed up there, the Governmental Affairs Committee, for several years, ultimately with chairman at the time, Fred Thompson, and then made my way over to the Senate Armed Services Committee all the time doing general government management issues, acquisition issues, budget issues, personnel, information technology and so on. I I left the Armed Services Committee to go to the Pentagon to be the deputy undersecretary of defense for industrial policy, a position that is changed in name and function for the last 50 years. After that, I got some industry experience, went back to the House Appropriations Committee on their investigation side, did some, did a stint at the think tanks. And then in twenty fifteen, Senator McCain asked me to come back to the Armed Services Committee to essentially reform acquisition to make us competitive against China and to bring in non-traditional defense contractors in their industrial base. I did that for for several years and eventually was able to retire from the government. And I am now consulting and still trying to keep us competitive with China.

Marv: [00:02:05] That’s outstanding. Well, having been in the acquisition business for 50 years and struggling with all those policies and things you can do from those Pentagon positions, I feel that the work that you were helping spearhead with this other transaction authority contracting is the biggest potential improvement to acquisition I’ve ever seen, that there isn’t still a lot of bureaucratic issues that reside. So can you tell us a little bit about how you got into that line of thinking and working for sure?

Bill: [00:02:34] It actually I mean, other transactions goes all the way back in history to the Space Act with NASA. And that’s actually an interesting point to hold on and we’ll come back to it. When I came to the Hill, we were trying to figure out a way of how to bring in commercial innovation. This is in the 90s. And so we created an alternative acquisition system called Far Twelve Commercial out of procurement. It was the failure of commercial of procurement, the the inability to actually incentivize the commercial sector to do more than just providing commercial products to the department, but to actually innovate on behalf of the department that we started trying to figure out a way how to take the old other transactions authority and beef it up. And the reality is that’s taken about 30 years in the Department of Defense and it really wouldn’t have happened except for Senator John McCain, who essentially was having conversations with with Elon Musk and learning about how NASA, using the Space Act and using other transactions, was able to open up the aperture and created really an alternative non-traditional capability in space launch. And when I came up there, that’s what he wanted me to do, is to figure out how can we create a thousand space X’s in the Department of Defense using this type of authority. So we massaged it. We changed it. We created a a cradle to grave other transactions, alternative contracting and acquisition system. And that’s what we have today.

Marv: [00:04:11] Jim, I know you had some experience recently with OTAs, do you want to comment about what you’re seeing?

Jim: [00:04:17] Yeah, you know, first I want to make a comment. I started a company in nineteen ninety seven and I purposely started it as a far apart 12 company because I didn’t want to get into DCA. And I, you know, I was I was a believer of the acquisition streamlining act of nineteen ninety five. But I will tell you I was a small business, I had more large prime contractors basically say, well you can’t do this because you’re not you’re not a commercial company. And I had to like prove that I was doing commercial work, but it was almost like I was a threat to the you know, the various integrators and support ceder contractors are out there. So it was it was very frustrating. Fast forward, I’m currently at KBR, which we were primarily a company called Santori back last year. And we bought a company and a couple of years ago called Kord Technologies out of Huntsville. And they have been very successful. I would say the Army is is doing great things with the rapid critical capabilities office of the Army, Fut. Command and General Neal Thoroughgood, where they’re using OTUS. What I would say is probably something that people should see what they’re doing and use as a perfect example, how they’re taking a larger opportunity, a larger problem. And instead of taking six to eight years to solve it, they’re solving it in two to three years.

Marv: [00:05:39] So, Bill, in my own experience here with the Navy, these folks in the NAV or system center here in system command down here in San Diego, I spearheaded the yota around this organization before anybody really realized that the bill had been passed and that it was in the it was in the authorization. And so educating them to how to do that was a long, slow road. But they eventually sort of got on and tried to do it. But then, of course, the antibodies came out. So immediately what happened is, you know, you don’t need a contracting officer to do other opas. These folks made a contracting officer the requirement and it goes on and on. And what I find is that these program management leaders, for whatever reason, over the over their current careers of 20, 30 years, they basically bow down to the lawyers and the contracting officers and do whatever they tell them to do, independent of what they think they need for their program. How does that reflect on what you guys went through and have been thinking about this stuff?

Bill: [00:06:44] I mean, really, we saw a sea change in the 1980s. And ever since that time, the power of program managers has been dissipated into practically nothing. And the the you know, at one time the program manager led the the office and the supporting units actually supported them rather than taking their own power and driving solutions. So so, yeah, this is this is something and one of the things I wanted to do and I wasn’t able to do before I left was to really focus in this program manager, contracting officer slash legal slash other stovepipe relationships and really try to figure out how to empower the program manager again, because unfortunately, each of the stovepipes is maximizing their power to the detriment of national security.

Marv: [00:07:39] Well, one of the things that has been a theme of mine for a while, just because I lived through the whole transition between before and after Goldwater Nichols is as I reflect on the Navy, I can’t speak to the Air Force and the Army’s programs very much, although I was a little bit involved with the futures program for the Army. But but as I reflect on it, I don’t think the Navy has done a good job of building any large acquisition program, be it a ship like Elks or Zouma or the aircraft like the F-35 since Goldwater Nichols in any efficient or effective kind of way. In other words, they never meet cost, performance or schedule as opposed to Wayne Meyer, who built the Aegis fleet, never missed a performance and schedule and and had the support of Congress because of that ability.

Bill: [00:08:29] Yeah, I think they’re the. The Navy has and actually say Doddy to to a to a large degree has taken on a. Pretty much embracing the ideology of prediction, of linear thinking, of the compliance mentality, of checking the boxes in so many different areas, that it’s lost sight of innovation, it’s lost sight of time. And I think time is probably the most important factor in acquisition that we’ve just given up on. And because of that, there’s this this alternative reality of trying to predict in a 15 to 20 year timeframe, they’re never going to make it. They can predict in a shorter period of time. And that’s why people can come in when they do it right and come into there and meet their predictive milestones. But but we’ve lost touch with that and lost the ability to it’s kind of it’s ironic. It’s the desire to be risk averse is actually leading to worse acquisition outcomes.

Jim: [00:09:36] So so, Bill, do you see I mean, obviously, Senator McCain past is there somebody driving voters to where maybe we come to a situation where they mandate specific programs to use votes because we’re seeing a lot of our IFIs come around, like asking what kind of procurement we should use, what kind of contract vehicle we should use. And obviously, if a company has a large Mac or a large BPA, they’re going to push the vehicle they already have, as opposed to saying, hey, let’s use an otter. And, you know, that’s question one. And then question two, we’ve seen that even a large, nontraditional company can own a traditional company. And I just wonder how long that’s going to stay relevant, because at some point somebody is going to complain, like, how can a big company own a nontraditional. So I just wonder if you could address those two questions.

Bill: [00:10:33] Yeah, no, I think I think the department getting back to the fact that McCain is no longer here is a key and frankly, a difficult obstacle for us to deal with. There is no leadership out there in the department or in the Congress that is driving this to the degree that he did and understands the relationship between the need for an alternative system to innovate. And so because the knowledge base is not so great in the political side, both in the on the Hill and in the administration, there’s a danger that those traditional ways of doing business are going to crop up again. And the easiest roads to go is exactly that is to go with a traditional contractor we’ve always gone with to go to traditional vehicles to essentially not innovate because we don’t want to deal with those new crazy people out in Austin or Boston or Silicon Valley. So if there’s a there’s a desire to do that. And and so it’s going to take leadership and frankly, a culture change. We talk about that later to try to achieve that. The second issue there, they’re going to be some real I mean, they’re going to be some mistakes made in other transactions, no doubt about it. But the other but the the concern why we defined the ability of a big traditional to own a non-traditional was so they didn’t destroy it. So their culture didn’t take one of these non-traditional companies and make it a compliant traditional contractor and just destroy its ability to innovate. So that is in the law. I know there are some people can have kind of scratch your head about that, but that’s that’s really the reality. And the hope down the line is that we can allow the traditional to become freer and become more like the nontraditional community. Then, frankly, what we have today, which is a compliance based, risk averse industrial base, which provides monopoly services to the Department of Defense.

Marv: [00:12:44] So to your point, about time lines creeping the way out, one of my observations has always been that program managers who stay three or four years arguably never complete more than a small percentage of the work that it takes to build these 20, 25 year programs, as opposed to when we had a Widmaier that sat there for 13 years and went from original concept to two chips on the line. And the same thing can be said for Rickover. The same thing can be said for Wallack on the cruise missiles. I mean, he goes on and on. Right. But we today never have anybody that sits in an office long enough to be responsible for anything, nor are they ever held responsible for anything. And I don’t know how we turn that around or what can be done about that.

Bill: [00:13:30] Well, I’ll I’ll I’ll take us back in history. You know, when Rickover was just starting, how many submarine classes came out in the nineteen fifties, you know, we were deploying new submarine. In a new class, submarines in less than three to five years for destroying everything in less than three to five years, our whole acquisition system was revolved around time and getting capability out to the warfighter. And we went to a sea change in the nineteen sixties and seventies that that that created a new budget system, acquisition system requirements system, contracting system that changed all of that. So I’m going to throw out something pretty radical, which is now is in statute, which is to essentially focus acquisition systems not on twenty, twenty five years of fact. That’s that’s our problem. We need to focus that the systems on to your systems, on three your systems, on five year systems, and then then then figure out how to to augment them as well as we go forward. So the mid tier acquisition authority, which essentially goes around the requirements for the acquisition five thousand system, is designed exactly to do that and and to show you how successful it can be, a time based manner married up to other transactions, which essentially goes around the contracting system. All you have to do is look at the fact that our freedom is coming up very quickly because we’ve got vaccines. Why do we have vaccines? Because we had a innovative program that dealt with time and was married up to do these other transactions authority plus Defense Production Act authority, emergency authorities to drive innovation as quickly as possible. That’s what we need to do. And if we start thinking in twenty four, twenty five year cycles again, the Chinese are going to come out innervates five cycles while we’re figuring out what we’re going to do.

Marv: [00:15:26] Well, to your point, you mentioned SpaceX earlier, I find myself completely fascinated by what Elon Musk and SpaceX has accomplished, because you and I probably both remember that we always had to spend ten to fifteen thousand dollars per pound to put anything in space through all those years that we run all those contracts to build new rockets and new boosters. And he comes along. He’s already putting men in the space station for a thousand dollars a pound and 60 satellites at a time to populate his sterling satellites. And his and his starship is postulated to put stuff in space for twenty five dollars a pound. I mean, that’s like you and I go into the grocery store for twenty five dollars a pound. It’s just totally amazing to me that we can even do that. And unfortunately, he didn’t get involved in anything that had to do with the government.

Bill: [00:16:12] And he’s well, but he did essentially the NASA, you know, created a no to for him to to provide launch as a service and gave them the financial backing so he could actually do that. And so he of the only conversation I’ve ever had with him was about OTUS. And he was one of the most knowledgeable CEOs. This is back in 2005, 2006 on OTUS than anyone I’ve ever talked to. Then before that, and since he got it, he got to that this rule change allowed him to innovate. And the benefits of this think about this. NASA came out and said if we were to do this traditionally, it would have been it would have cost nine times what we did. So in others, he did this for 10 percent on the dollar to to to produce Phalcon and all and the losses. So when you start thinking about that, that means there’s 90 percent of what we do is in bureaucracy and compliance and disincentives to the to the traditional industrial base. We’ve got to figure out how to incentivize more people like Elon Musk to do what he did because it can be done. And even more important, it’s not radical. He went back to the model that essentially was the nineteen late nineteen fifties DOD model. And so I think that’s that’s where we have to we also have to go back to the future to get to become more competitive space for results.

Marv: [00:17:53] I didn’t know that. Go ahead, Jim.

Jim: [00:17:54] Oh. I just I have heard some discussion about taking the venture capital Silicon Valley mindset. Right. And put more VC mentality into the acquisition world where I think you mentioned it early. I don’t do an SBIR where you have three years to deliver, four years to deliver a solution. You have a year to show something or a minimum viable, viable product in a year. And if you don’t, you’re going to lose your funding. Right. And again, a different mindset, different culture change. But that’s kind of how the VC world works, right? You have to you have to show stuff to get to get another round of funding.

Marv: [00:18:33] Even mentioned, you get to the really my favorite part about OTES is its prototypes. It’s all about prototypes. All the government has to do is ask for anybody who can do a prototype of a particular area as opposed to us messing around with formalized requirements that go back and forth, back and forth. And the contractors don’t get them right or do get them right. And that is a big wrong argument. If you just say build something as a prototype and then. Okay, allows you to take it to sole source if it works, that’s phenomenal.

Bill: [00:19:02] And that goes back again to our history and frankly, the history of Silicon Valley. You know, Silicon Valley came out of the Department of Defense in the 50s and 60s. And at that time, the department I mean, all these big programs, the new classes, the new ICBM’s, the new concept stuff, these were all prototypes. They were operational prototypes, but they were basically build me something that works that can be operationally effective. And that is the the what we did. And when the department destroyed this department and Congress both destroyed this innovation system, who was left to carry it on. But Silicon Valley and the same type of prototyping mentality, the same type of time-based mentality, the ability to fund things that if they don’t work, cut them off and move on to the next one. That was DOD’s culture that no longer exists, but it does still exist in Silicon Valley. And so I think that’s where the department has to come back to and it has to come back to its roots because they were really good at it. They were did exactly that. Operational prototypes, capability, get it out of the field and then improve upon it. And that’s exactly what Silicon Valley does. Prototype prototype version ABCDE and move out until they have something that’s really, really a.

Marv: [00:20:26] Yeah, even to the point that Microsoft let us be their prototype users all the time. So let’s go back to the Goldwater Nichols again for a second. You obviously spent a good portion of your career on the political side. I’ve spent some of my career on that side. And so one of my complaints about the Goldwater Nichols is when we moved to the decision authority for programs from the operational mission side, like we had when we were building Aegis, for example, over to the new Goldwater Nichols Atmel Acquisition Authority in the early days of the services, then what we did is we tied to the vagaries and the mess nations of politics to those decision processes. And then in the process, we put massive processes in place that caused 100 before he could get any decision brief on any program. So that seems to me to be one of the negatives of what Goldwater Nichols did. And and it’s also creating the antibodies that are preventing them from moving into this prototype world the way you guys have authorized it.

Bill: [00:21:31] Goldwater, Nichols and the Packard Commission were the culmination of centralized planning, our planning system in DOD and we haven’t gone away from that. But the origins of that centralized planning system was what was PBS? It was McNamara bringing in the idea that we can predict it was systems analysis, the idea that we can predict over long periods of time. And and and because of that, you know, when Packer came in, he just created this and Goldwater created the system that optimized the centrally planned system that has completely not based on time. And that’s the system we live in. So so, yes, we have to figure out a way to decentralize, to allow tolerance for failure, to essentially start thinking not linearly, but but orthogonality or almost like a quantum based static thinking of of different ways and different relationships and will be encouraged to fail. But if we fail at a lower level, that’s OK, because that’s exactly what the D.C. guys, the 20 million dollar prototype doesn’t work. Big deal. You know, I got five other guys I’m investing in. You know, it’s a little worse when you got one hundred million dollars in it. But still you can you can do well.

Marv: [00:22:51] That’s what dorper was about, too.

Bill: [00:22:53] Oh, absolutely. And DARPA was also the test case that other transactions, as they were able to do in the nineteen nineties and lay the groundwork for the best practices on how to do these type of prototyping type things. The problem we had and that’s what we faced and in the mid two thousand is there was no where were these things to go to create these wonderful operational prototypes? You want to build more of them and you got to put it in the traditional contracting system, the traditional acquisition system and so on. And these things just died. And so that’s why we created a pathway to allow those type of DARPA prototypes to make it into production.

Marv: [00:23:36] So we’re sort of getting closer to our time line. As I I’m going to ask you, if you were the secretary of defense tomorrow, what would you do to help make some of these changes occur?

Bill: [00:23:49] I would focus on what we can achieve in the next three to five years and focus all my efforts on that. In other words, if if if we’ve got production lines, I would run them and keep them going, because that’s that’s capability we need to compete against China. But on innovation, I would essentially use these authorities, other transactions, Minteer completely bypass the current system and incentivize as much innovation, as much capability as we could possibly get in the next five years because we’re going to need it.

Marv: [00:24:24] So how do you quell the antibodies in those departments that aren’t being used very well

Bill: [00:24:31] And that’s and that’s the problem, you’re going to have to you’re going to have to create a leadership that continuously follows up and you’re going to empower leaders down the line. And frankly, I think most important people to empower is the program managers. We just I mean, that’s the one thing Pacard got right. Get good people, give them authority and hold them accountable. And the accountability, what you’re going to try to hold them accountable for is getting the capabilities of the warfighter as quickly as possible. That is operationally useful and effective and based on empowering them and then spending your time and spending all the political time. Cutting through all of those barriers, and he’s going to have to reach across in the Congress and make this argument that these authorities are useful and need to be need to be used and effectively used, because while these are authorization type languages, the appropriators are still stuck in nineteen sixty three. And because of that, there’s going to have to be a relationship change between the department and the appropriators to make this succeed.

Jim: [00:25:42] Can we call it the Greenwald Act?

Bill: [00:25:46] I’d rather have someone some you know, Senator Reid Eilts. He can take credit for it or Senator Shelby. I don’t care.

Marv: [00:25:53] One other point on the program managers. I’d like your thoughts on what I see with these program managers to the point we already made. They don’t stay in the job long enough to get very much done in order to be held accountable and to know, at least in this never world. And most of the Navy that I know of, they’ve formalized assistant program manager or principal assistant program managers. So effectively the program managers become mini CEOs and they’re basically managing the process and talking to the the sponsors on the Hill or in the aftermath to let the apemen be the program managers. But the program but the APS do not have Title 10 authority to be program managers, and the system has gotten very skewed because of that. I don’t know if you see that the same way.

Bill: [00:26:42] No, I do. I think I think 10 year program manager is huge. We tried to mandate a longer tenure. We got so much pushback on that. I think there’s a lot of lessons learned in the career of Eric over the first 10 years were probably the most innovative and best things we can get from people. And that’s the type of thing we should we should get longer tenures like that. But but later, years on, Rickover became more centralized management and kind of created some of the problems we have today. So there might be a sweet spot from zero to 10 years. And after that, you might need to kind of move them on. So we shall see. But it’s but it’s definitely not two years or three years.

Marv: [00:27:22] But if we really do try Botha’s, then 10 years would give you enough time to really put some. You’d have a system and a co-production.

Bill: [00:27:30] You can put three things up, know three versions of whatever it is you’re doing. So that’s that’s the hope. But that’s going to require a major culture change and lots of leadership to to to drive that change.

Marv: [00:27:44] So, Jim, do you have any more questions for Bill before we let

Jim: [00:27:47] Him go back? No, no, it’s just been fantastic. I would like to say let’s do a follow up and maybe three or six months and see if anything’s changed,

Bill: [00:27:55] Hopefully for the good.

Jim: [00:27:57] Yes, I think you’ll see some I think hopefully we’ll see some good examples in the next six to six months to a year.

Bill: [00:28:05] I just think that anyone looking at how we innovated with the vaccines is just got to see. We should just apply that to so much that the government does, particularly in national security. There are authorities we can use. We just have to use them and it requires leadership and a threat pulled together. Well, we have the threat. We have the authorities. The issue is, do we have the leadership that is actually going to encourage and and have the backs of those who are taking essentially risk and taking initiative to innovate?

Marv: [00:28:41] Actually, I want to make one other comment. You remind me of why you’re talking to George Foreman, George Friedman’s most recent book about how we can change the world, a strategic military capability, and talking about the military and the government. He made the point that I thought was fascinating. He said what we should do to the entire federal government is treat them the way we treat our operational forces, which is operate by commander’s intent. So if the commander’s intent is to to do whatever it is for the mission and everybody below him knows, you interpret that the best you can and do the best you can, independent of whatever the other rules are. He thinks that that act actually could be brought into the rest of the federal government and change people from the very rigid bureaucratic processes to processes that would adapt to the commander’s intent.

Bill: [00:29:31] And in the acquisition world and the budgeting world, we need to bring the commanders in and give them a greater say. So maybe the one thing that needs to be done from Goldwater, Nichols, is to do just that, is that to bring this divide that we have and bring them back together, but also ensuring that commanders are not just thinking of 12 months, but are thinking of three to five years or longer.

Marv: [00:29:58] So what are you doing now, Bill, to help us keep moving on?

Bill: [00:30:02] Well, I’m I’m over at the American Enterprise Institute, AEI writing. I just recently did a report and I’ll recommend it to anybody who wants to read on this further. It’s unfortunately like a sixty five page report with a guy from former TARP, a guy named Dan Pat called Competing in time. And there we essentially look at the history of acquisition and the need for budget budget reform. So, yeah, I don’t think tanking. I’m advising anybody who wants to listen to me and just keep trying to figure out a way to implement all of I think, these really great authorities that are out there that we need to use quickly to compete against our adversaries.

Marv: [00:30:50] That’s phenomenal. Well, I’d be happy to put a link if there’s a possible link for that into the sure website when we post this note. And I want to thank you for spending the time. And I thought the discussion was fascinating and useful and good. And it’s great to talk to those who have been able to make all this possible today. So thank you very much.

Jim: [00:31:14] Thanks, Bill, for what you do. Appreciate it.

Bill: [00:31:16] Glad to be here, Jim. Marv, thanks so much.