BUDGET MATTERS: LaPlante: Time to Prioritize Defense Production
Defense Dept. photo
Maybe it was the coffee. Maybe it was because he was speaking on the last panel on a Friday afternoon. Either way, Undersecretary of Defense for Acquisition and Sustainment William LaPlante seemed in a feisty mood when discussing acquisition reform and the big lesson of Ukraine: production matters.
“We, as a country, did our best to not do production in defense,” he said during the Nov. 4 George Mason and Defense Acquisition University Acquisition Next conference in Washington, D.C.
“Don’t go into production if you don’t have to. If you do, absolutely bring it down to the lowest number you can,” he said. “We all accepted the fact that just-in-time economy was the way to go.”
That approach has consequences for defense, he said. “You’re going to have a valley of death, by definition … because we don’t want to do production.”
And when you have a conflict like Ukraine that requires artillery by the shovel-load, you can’t meet the demand because what production there was for items like Stingers shut down years ago, he said.
“So, this is what we’ve got to stop, right? And we have to pay more attention to production,” he said.
For years, the emphasis has been on prototyping and experimentation, he said. New programs started — like the Defense Innovation Unit and Air Force Rapid Capabilities Office — to accelerate the development of new technology.
“That’s really good, but it doesn’t matter if it stays as a prototype,” he said. “So, I’m trying to get everybody to look at the next steps in these places.
“And I challenge all of you to ask about that. If somebody gives you a really cool, liquored-up story about a DIU or [other transaction authority], ask them when it’s going to production, ask them how many numbers … ask them all those questions because that’s what matters.”
So, how do you incentivize production of munitions? Put it in the request for proposals, he said.
“What matters is what’s in the RFP and who wins the source selection and what gets funded,” he said. “So, if we’re going to have surge production, we’re going to have to contract for it. It’s that simple.”
While they are still in the “sausage-making” phase, there are changes in the works, he said. “When people see that there are multi-year contracts coming along for munitions and we’re going to put production lines at higher capacity, and we’re going to pay for it, and we’re going to put it in the RFP, we’re going to award to it, they’ll pay attention.”
That will get industry to step up, he said. “Their job is to look at where we’re putting our money and try to capture it.”
In what almost seemed like a Lyndon Johnson-style “make them deny it” tactic, LaPlante said that Congress is going to deliver new authorities to the Defense Department.
“They’re going to give us multi-year authority, and they’re going to give us funding to really put into the industrial base,” he said. “And I’m talking billions of dollars into the industrial base and to fund these production lines. That I predict is going to happen, and it’s happening now.”
Given that the now lame duck Congress has yet to finalize a 2023 National Defense Authorization Act, let alone complete a budget appropriation, it remains to be seen what kind of boost defense production will see in fiscal year 2023, which has been operating under a continuing resolution since Oct. 1.
Another effort underway is the Commission on Planning, Programming, Budgeting and Execution Reform, LaPlante noted. The congressionally established panel is tasked with reviewing and recommending changes to the cumbersome defense budgeting process. The commission is due to deliver an interim report in September 2023.
LaPlante described the commission’s mandate as leveling the legs of the stool: acquisition, programming and requirements.
“Those three are owned, rightfully so, by totally different chains of command,” he said. “They’re not sequenced in time. When they are, when they do have a streamlined chain of command and they are sequenced in time, magic happens.”
That’s what entities like the Air Force Rapid Capabilities Office do, he said. The RCO owns all three legs of the stool and can quickly align the legs to move money to develop a capability.
“But that doesn’t scale, right?” he said. Hence, the commission has to “figure out a way to get those three legs to be much more agile and dealing with each other in the year of execution,” he said.
For example, a program cost estimate is developed — involving a certain amount of guesswork — before an acquisition strategy is fully developed, he said. The cost estimate is baked into the budget. Then, the acquisition strategy is revised and requires different funding levels and timing.
“Now that we have a good [acquisition] strategy, can we go back and change it? No, no, the budget closed,” he said. “That’s the PPBE process that has to be fixed right there.”
While he’s optimistic on congressional support for multi-year contracts, the flexibility to move money around as acquisition strategies evolve in a budget year is not likely to come from appropriators, he said.
“They’re up front about it. They want control,” he said. “What we view as flexibility [in] their view is lack of oversight control. So, I mean, good luck to the PPBE Commission.”