Changes Coming to Defense Acquisitions

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At the beginning of August, the Defense Department issued its “Report to Congress Restructuring the Department of Defense, Acquisition, Technology and Logistics Organization and Chief Management Officer Organization,” which details its plan for reorganizing its acquisition regime.

The report was required by the Fiscal Year 2017 National Defense Authorization Act. It called for sweeping changes to the department’s acquisition organization.

Historically, the organization has been headed by the undersecretary of defense for acquisition, technology and logistics, the AT&L. The law replaces the AT&L in its entirety and instead establishes two undersecretaries with complementary roles: one for research and engineering and another for acquisition and sustainability. It also establishes a chief management officer.

The changes, which are effective Feb. 1, arise from the determination by NDAA conferees that “the technology and acquisition missions and cultures are distinct” and that the AT&L has historically been tasked with meeting contradictory objectives.

Going forward, the role has been split so that research and engineering can “take risks, press the technology envelope, test and experiment, and have the latitude to fail, as appropriate” while acquisition and sustainability can “focus on timely, cost-effective delivery and sustainment of products and services, and thus seek to minimize any risks to that objective.”

The report delineates the department’s plans and goals for implementing these changes and establishing the new positions. Its proposal provides charts depicting how the acquisition structure will be organized. Through the changes, the department intends to increase the speed with which it can develop its military capabilities and increase technical innovation, while reducing costs and streamlining acquisitions.

The research and engineering undersecretary’s duties include: serving as the department’s chief technology officer; establishing policies relating to research, engineering and technology development, prototyping and experimentation; and serving as an advisor to the secretary on these areas.

Research and engineering will head the research, technology and engineering strategy for the department, the report said.

The new role is organized around three major themes: a strategic analysis cell focused on analyzing U.S. capabilities as well as the capabilities and vulnerabilities of its enemies; understanding technological trends; and assessing possible threats and opportunities. The research and engineering organization will include an assistant secretary of defense for research and technology charged with setting the technical direction and investment strategy necessary for technical dominance on the battlefield.

There will be an assistant secretary of defense for advanced capabilities who will manage prototyping and experimentation of new technologies.

The undersecretary will have the authority to take on risks associated with technological development and will be “equipped with a suite of business tools that enable greater exploitation of the non-defense sector,” the report said. The department intends for research and engineering to be a lean organization staffed with subject matter experts.

While research and engineering is tasked with technical innovation, the undersecretary of defense for acquisition and sustainability will manage acquisition oversight and coordination with goals of streamlining the processes.

The report develops the NDAA’s requirement that the new undersecretary serve as the chief acquisition and sustainment officer, be responsible for all policies relating to acquisition and sustainment including “overseeing the modernization of nuclear forces and the development of capabilities to counter weapons of mass destruction,” and serve as the chairman and co-chairman of the Nuclear Weapons Council and the Council on Oversight of the National Leadership Command, Control and Communications System, respectively.

The report details that acquisition and sustainment will develop acquisition policy for weapon systems and services and will issue guidance regarding lifecycle acquisition and sustainment of the systems delivered to the warfighter. It establishes three assistant secretaries of defense under acquisition and sustainment: acquisition; sustainment; and nuclear, chemical and biological defense programs to meet help these goals.

With regard to the establishment of the chief management officer, the report envisions that the transition will be more gradual and anticipates that it will occur through “time-phased changes” initially converting the existing deputy chief management officer position to the chief management officer position and then gradually implementing reform.

The department also plans to eliminate several assistant secretaries and deputy assistant secretaries. It anticipates that completing the transition will take up to a year, although key leadership will be in place by Feb. 1.

The report predicts that the new organizations will work in tandem. Research and engineering will be encouraged to take risks developing technologies, with the freedom to fail “when appropriate.”

Subsequently, once solutions have “been identified and matured,” acquisition and sustainment can “minimize further risk, as necessary to ensure the needed capability is delivered and sustained in the most timely and cost-effective manner possible.” The report recognizes that challenges arise from the “different perspectives” of the organizations but plans to minimize the challenges through planning and communication.

The report also anticipates that the new structure will ensure that the United States addresses “the most pressing problem — restoring the technical overmatch of the U.S. armed forces.”

The new structure is significant in its attempt to increase the speed and efficiency of defense acquisitions while also allowing the department to take on more risk and encourage innovation.

The transition will not be without its challenges as the department is simultaneously required to reduce its size in management headquarters activities by 25 percent.

Jason N. Workmaster is of counsel and Julia Lippman is an associate at Covington & Burling LLP.

Topics: Defense Contracting, Defense Department