Pentagon’s top acquisition official talks innovation, sustainment with defense industry

By Beth Reece

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The United States’ technological superiority is being challenged, and the Department of Defense must start implementing new, innovative ideas to beat the competition, the Pentagon’s top acquisition official told military and industry officials Aug. 31 at the Defense Logistics Agency Land and Maritime Supplier Conference and Expo in Columbus, Ohio.

“Our adversaries and potential adversaries have had a very long time to study how the United States fights and what we use, what we rely upon for critical assets and then how to attack those assets,” said Frank Kendall, under secretary of defense for acquisition, technology and logistics.

Innovation is a key tenet of Better Buying Power 3.0, the department’s acquisition efficiency initiative. The problem isn’t a lack of innovative ideas within DoD, Kendall added, but the lack of resources to implement them and make them standard practice.

“We’re still trying to dig ourselves out of the readiness hole we put ourselves into in 2013 with sequestration,” he said. “We’ve been living in an area of flat budgets for some time, and the threat of sequestration is back.”

Recapitalizing America’s nuclear enterprise will also put a significant strain on the military’s financial accounts. Nuclear components such as intercontinental ballistic missiles are aging at a predictable pace and are in urgent need of replacement or refurbishing, Kendall said.

House and Senate provisions for the 2017 National Defense Authorization Act could also threaten defense budgets.

“The House basically wants to fund half the war and use the rest of the money to buy things. We’re all for buying things, but not without funding our people in combat and those who are supporting operations,” he said, adding that Senate provisions include a major reorganization of the Office of the Secretary of Defense and 25 percent reductions in the Senior Executive Service corps and general officer ranks.

All these challenges will require the department to continue using existing platforms, and industry will have to play a big role in equipment readiness, Kendall added. He asked industry representatives to continue reducing production times for repair parts. Several systems are currently down for maintenance or depot-level repair, and in some cases at least half the fleet needs critical parts.

“Time is money, and when we take an asset offline, it reduces our capability and combat power. That’s really unacceptable,” he said.

Much of DoD’s research and development budget goes toward finding solutions that enhance existing equipment. The goal is to ensure technology is efficient over product lifecycles, so modular designs and open architectures will become key elements in product development.

Kendall also highlighted several BBP 3.0 principles that will help acquisition professionals and industry improve lifecycle sustainment. While controlling costs is fundamental and the responsibility of everyone in the government, focus should also be on using the most effective contracting vehicle available. Contracting is not a one-size-fits all, he said.

“This is an area where we can be more innovative and creative so that our business deals are a win-win. The best business deals in my perspective are those where industry gives us more of what we want for less money, and industry makes more money in the process,” he continued.

The use of performance-based logistics, which makes suppliers responsible for equipment readiness, is now more common but must increase. PBL contracts are harder to implement and harder to outline, Kendall said, but typically lead to better results.

BBP is not and never has been a war on profit, he added. “We’ve been in a war against cost, and we will pay more profit to get lower cost. Profit is generally a small portion of what we pay for things.”

Kendall also boasted that cost growth among the department’s riskiest contracts is at a 35-year low.

DoD has pulled through some of the toughest budget constraints in history due to the hard work and dedication of acquisition professionals, such as those at DLA and its partners in industry, Kendall added.  

“The lives you save and the success you give the United States of providing peacekeeping around the world is really critical, and it is an accomplishment you can all be very proud of,” he said.

The under secretary also presented coins of excellence to Steve Rodocker, deputy director of DLA Land and Maritime’s Strategic Acquisition Programs Directorate, and Milton Lewis, DLA Land and Maritime acquisition executive.