Defense Department Releases Acquisitions Performance Report

http://www.defense.gov/news/newsarticle.aspx?id=122473

Defense Department Releases Acquisitions Performance Report
By Claudette Roulo
American Forces Press Service

WASHINGTON, June 13, 2014 – The Defense Department’s top acquisitions official today announced the release of a second annual review of the work the department is doing to improve acquisition outcomes.

The process is one of continuous improvement, Frank Kendall, the undersecretary of defense for acquisition, technology and logistics told reporters in a briefing at the Pentagon.

The report provides a review of the efficacy of incentives in improving costs and performance as well as updating earlier analyses with more recent data.

“About two years ago, I introduced the second set of Better Buying Power initiatives,” Kendall said. “We called it Better Buying Power 2.0, and it's timely to update that and think about where we're going to go from here. A lot happens in an evolutionary fashion all the time.”

The primary obstacle to a more efficient acquisition process is uncertainty over future defense budgets, Kendall said.

“And that's driven by the threat of sequestration,” he added.

Improving the professionalism of the acquisitions workforce also will improve efficiency, the undersecretary said.

Kendall went on to highlight some of the ways the review found the acquisitions workforce is making significant progress toward the seven goals of Better Buying Power 2.0.

In seeking to achieve affordable programs, the programs were asked to set affordability targets. Most -- about 30 -- of the acquisition Category One programs now have affordability targets, he said.

“They are being added as programs come through the acquisition system at various steps in their life cycle, and we're in the process of enforcing those,” Kendall told reporters.

Nearly all 30 programs are within those caps, Kendall said, and the two or three exceptions are “very, very close.”

The report shows that incentive-type contracts are working as the department seeks to fulfill the second goal of BBP 2.0: controlling costs throughout the acquisition life cycle.

“The news that's not quite as encouraging is we don't always employ those incentives as effectively as we could,” the undersecretary said. In some cases, they're not effective at all, while in others, they appear to be counterproductive, he acknowledged.

“So, we've got to look at that carefully and try to do better there,” Kendall said. One thing that his office is looking at is improving incentives for using a wider variety of contract types to ensure the contract matches up with the project, he said.

“Under the previous edition of Better Buying Power, there was a sense that we had to use certain types of contract all the time,” the undersecretary said. “I think we've done a lot to educate the workforce and train the workforce to be thoughtful and creative and think critically about the right type of contract to use and the right incentives to put in place.”

Kendall said the acquisitions corps also will begin recognizing companies that are performing well.

“We tried to do this under Better Buying Power 1.0, [but] we were not able to work our way through all the bureaucracy and the difficulties of how do you do this,” he explained. “So, rather than introducing the DOD-wide system at that time, we decided to give the Navy the opportunity to do a pilot program in that area. … So over the last year or so, we've been working on that.”

The Army soon will adopt the Navy’s methodology, Kendall said, noting that within a year the services will publish results identifying their superior suppliers.

Declining budgets have reduced opportunities to promote more effective competition, the fifth goal of BBP 2.0, he said. “But there are enough opportunities still there that I think we can do better,” the undersecretary added.

Kendall said the area with the greatest opportunity for improvement is BBP 2.0’s sixth goal: improving tradecraft in the acquisition of services.

“Defense acquisition is complicated and varying,” the undersecretary wrote in his foreword to the report. “There are no simple ‘schoolhouse’ solutions that should be mandated absent the particulars of each acquisition in question. These findings do, however, inform our individual program decisions and provide fresh insights into what generally works in what circumstances and why. This is critical to improving our performance: We must empower, encourage, and train our workforce to think -- not dictate a cookbook that workforce members blindly follow.”

“In these times of extreme budget pressures and uncertainty, combined with evolving and increasing national security threats, particularly threats to our technological superiority, improving the performance of the defense acquisition system is essential for the DOD,” Kendall wrote. “We must ensure that our acquisition professionals have the knowledge they need to incentivize industry and to control cost, schedule, and performance. This report is one of many steps we are taking to achieve that goal.”