Section 809 Panel Proposes Major Restructuring of Acquisition Programs

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An influential advisory group created to help streamline the Pentagon’s cumbersome acquisition system is calling for a major structural shift in the way that the department manages its projects.

The Section 809 Panel — established by Congress in the fiscal year 2016 National Defense Authorization Act — released a new report June 28 that proposes a new “enterprise capability portfolio management” structure to improve how the Pentagon acquires technology.

In the “Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations: Vol. 2,” the advisory group said: “The defense acquisition system requires greater speed and ability to be responsive in a dynamic environment. Changing from a program-centric management structure to a portfolio management structure would enable timely delivery of integrated capabilities.”

A number of other benefits would accrue from such a shift, the panel said, including a tighter alignment of acquisition, requirements and budget processes, greater flexibility and “potentially increased warfighter capability.”

It would also enable better analysis and integration of cross-cutting data and lead to more informed programmatic decision-making, it added.

“DoD’s separate decision-making processes do not enable an enterprise-wide view of existing and planned capabilities across military services and defense agencies to support timely and informed resource allocation decisions,” it said.

“In today’s environment of rapid technologic innovation … [this] jeopardizes DoD’s ability to meet national defense strategy objectives,” it added.

The requirements system should focus on capabilities needed to achieve strategic goals instead of “predefined materiel solutions,” the group said.

The report raised the prospect of replacing the traditional program executive officer role with that of a “portfolio acquisition executive,” and consolidating program element budgeting into one capability portfolio budget.

The panel plans to provide more specific recommendations related to enterprise capability portfolio management, portfolio execution, sustainment and requirements in its final Vol. 3 report which is slated to be released in January 2019.

The 500-plus page Vol. 2 report suggested other ways to improve Pentagon acquisitions.

It took aim at the hiring system for acquisition professionals, arguing that the existing framework “fails to support DoD’s efforts to address critical skills gaps through the hiring process. The hiring authorities must be streamlined and adapted.” Among the recommended changes, the report said the Defense Civilian Acquisition Workforce Personnel Demonstration Project should be made permanent and be applied to the entire acquisition community.

The Pentagon is trying to better leverage the commercial sector and make it easier for companies to do business with the Defense Department. However, firms have often complained about the difficulty of navigating the byzantine acquisition system. In that vein, the panel calls for simplifying commercial source selection.

“Despite numerous revisions to statutes and regulations, selecting sources for commercial products and services continues to take too long and involve unnecessarily complex procedures for buyers and sellers,” the report said.

Statutory changes should expand the applicability of the special streamlined acquisition procedures and update the requirement to publish notices to reflect current technology, the group said.

“Improving guidance in the [Federal Acquisition Regulation], emphasizing the use of simplified acquisition procedures, revising the FAR to make it easier to locate procedures for using simplified acquisition procedures for commercial products and services, and defining streamlining-related terms in the FAR would also simplify commercial selection,” it added.

The panel addressed shortcomings in services contracting, calling existing rules “outdated and inconsistent” as they apply to personal and non-personal services. It suggests scrapping the regulatory and statutory distinctions between the two types to give managers greater flexibility in determining how best to meet requirements.

The advisory group called for modifying and clarifying cost accounting standards to ease the burden for acquisition officials and industry. That includes raising the threshold for coverage and providing better guidance for how the standards apply to hybrid and indefinite delivery contracts.

Additional recommendations include exempting the Defense Department from the federal retail excise tax and reorganizing the Title 10 code.

“In the 60 years since Title 10 was enacted, the acquisition-related part of the code has expanded and the once organized structure now contains myriad note sections, making acquisition law challenging to navigate,” the group said.

The proposed revamping would entail repealing and redesignating certain sections, and creating a new part to make the code easier to understand.

The report noted that the panel is also fleshing out ways to implement the “dynamic marketplace” concept that it put forth in its Volume 1 report, which was released in January.

The concept is aimed at introducing transactional processes in the acquisition system that are similar to those found in the commercial market, such as the widespread use of market intelligence.

The group “has continued to examine the dynamic marketplace concept as an avenue for bold changes to the cost-centric and inflexible system used today that values process perfection over operational output,” the Vol. 2 report said.

The panel has narrowed the focus for applying the concept to three types of products: readily available items that can be purchased with no customization or can be purchased with customization that is part of the normal course of business; items readily available to the private sector but require customization to meet Defense Department needs; and defense-unique items or development.

“The Section 809 Panel is developing new processes that will expedite the procurement of readily available products and services, which if adopted, will subsume the existing commercial buying structure,” the report said.

“Aligning DoD procurement more closely with how the rest of the world buys these readily available products and services will require DoD, Congress, and especially the acquisition workforce to think about competition, transparency and pricing in a whole new paradigm,” it added.

The new processes are expected to be fleshed out in the panel’s final report.

While many advisory groups in Washington issue reports and recommendations that go nowhere, the Section 809 Panel has already demonstrated that its opinions carry weight. Many of its recommendations from previous reports have already made their way into the fiscal year 2018 National Defense Authorization Act, and into the House and Senate versions of the 2019 NDAA, noted Shayne Martin, director of external affairs for the panel. They include changes to the Pentagon’s commercial buying, small business strategy, audit and compliance practices, agile software development and the repeal of obsolete reporting requirement, he said in a statement.

“The ... Vol. 2 report to Congress contains a number of recommendations that, if adopted, will take significant steps to build a defense acquisition system that is more flexible and responsive to the needs of the warfighter," Martin said.

Topics: Defense Contracting, Defense Department, Acquisition Programs, Acquisition