Technology, Innovation, and Modern War – Class 16 – Acquisition & Sustainment – Ellen Lord

We just held our sixteenth session of our new national security class Technology, Innovation and Modern WarJoe FelterRaj Shah and I designed a class to examine the new military systems, operational concepts and doctrines that will emerge from 21st century technologies – Space, Cyber, AI & Machine Learning and Autonomy.

Today’s topic was Acquisition and Sustainment and Modern War.

Catch up with the class by reading our summaries of the previous fifteen classes here.

Some of the readings for this week included How the DOD Acquires Weapons Systems, The Planning, Programming and Budgeting Process, Acquisition Reform in the NDAA, Defense Primer on DOD Contractors, and on the Defense Industrial Base

Our guest speaker was the Honorable Ellen Lord the Under Secretary of Defense for Acquisition and Sustainment. She is responsible to the Secretary of Defense for acquisition; developmental testing; contract administration; logistics and materiel readiness; installations and environment; operational energy; chemical, biological, and nuclear weapons; the acquisition workforce; and the defense industrial base.

Prior to this appointment, Ms. Lord served as the President and Chief Executive Officer of Textron Systems Corporation, a subsidiary of Textron Inc. leading a multi-billion dollar business with a broad range of products and services supporting defense, homeland security, aerospace, infrastructure protection, and customers around the world.

I’ve extracted and paraphrased a few of Ellen Lords key insights and urge you to read the entire transcript here and watch her video.

Progress in Modernizing the Defense Acquisition System.
Everything we do here at the Department is under the framework of our National Defense Strategy, or NDS. Acquisition and sustainment is focused on supporting all three lines of the national defense strategy. So they are:

  1. restoring military readiness as we build a more lethal force
  2. expanding and strengthening alliances and partnerships.
  3. bringing business reform to the Department of Defense.

Strengthening Our Supply Chain
So under the first line of effort, lethality, we’re focused on addressing supply chain fragility. The nature of today’s near peer or peer to peer threat is not always kinetic. One of the ways our adversaries try to gain the advantage is by attacking our supply chain through methods like fraud, introduction of counterfeit materials, control of raw materials, cyber and intellectual property attacks, denying access to strategic materials and rare earth minerals. And finding ways basically to undermine our free market system.

The United States is reliant on a global supply chain for our goods, systems and services. In most instances, this is really very positive. We’re enriched by investments from other countries, which often helped to build infrastructure that supports a variety of industries. However, we really need to remain vigilant about reliance on adversarial countries, when it becomes to our defense industrial base, and our national security systems. Should our adversaries choose to restrict supplies, It’s really possible that the department would struggle to find, test, and qualify replacement sources if they even exist. So, the DODs report that we wrote in response to executive order 13806. The report came out in 2018, highlighted reliance on foreign suppliers, including China for critical materials such as rare earth elements and microelectronics.

For example, China has an 80% market share in rare earth elements, as well. As well as a significant market share in manufacturing value added rare earth containing goods, such as electric motors and consumer electronics. Rare earth elements are integral to the US military and to the national infrastructure and economy. They’re used in a wide variety of applications, ranging from guidance systems for missiles and space, space launch vehicles, to electric vehicles and sophisticated medical instrumentation.

Expanding and strengthening alliances and partnerships
In accordance with the second line of effort in the NDS, strengthening alliances, we’re actively working to better harness defense trade as a strategic tool to advance national security interests. We are tracking 37 initiatives across DOD focused on four main areas. Designing in exploitability early in programs. Facilitating technical release ability. Capturing market space versus Russia, for instance. And increasing industrial capacity.

And in addition to strengthening our interoperability with allies and partners. Reforms in each of these areas will strengthen the foreign military sales process. It will enhance the defense industrial bases global competitiveness, and it will increase our supply chain export capability. As we move into fiscal year 2021, an effort we call defense trade modernization will help implement both DOD as well as interagency process to streamline and allow the US to more rapidly export technology in order to drive this interoperability because we don’t fight alone when we fight. As well as to sustain our domestic industrial base.

Business Reform – The 5000 Series
In support of the NDS’s third line of effort, reform. Our organization is committed to enabling an acquisition environment designed to deliver warfighting capability at the speed of relevance, versus one that’s defined by bureaucracy. One of my team’s most significant accomplishments has been rewriting what we call the 5000 series.– the overarching policy on DOD acquisition that focuses on what I call creative compliance. So that acquisition professionals can design acquisition strategies that minimize risk.

The 5000 rewrite achieves that objective by decomposing a large policy document into six clear and separate pathways that we call the adaptive acquisition framework or AAD. Each pathway is tailored to the unique characteristics of the capability being acquired. The six pathways include urgent capability acquisition, middle tier of acquisition, major capability acquisition, software acquisition, defense business systems, and acquisition of services.

The software acquisition pathway is the newest pathway in the adaptive acquisition framework. Given that software is central to every major DOD mission and system, we need to acquire and deliver software with much greater speed, agility, and cyber security. The software pathways built on commercial principles that really enable innovation and rapid delivery in response to conditions of uncertainty. We have rapidly changing user needs; we’ve got disruptive technologies and threats on the battlefield. The policy tailors, as well as streamlines acquisition and requirements, processes, reviews and documents- to adopt a modern development practice, like agile and DevOps, or DevSecOps.

It’s a substantial departure from the department’s usual way of doing business, by removing procedural bottlenecks and regulatory bureaucracy. Programs are really pushed to embrace the goal of delivering capabilities on a much faster cycle time in one year or less, while emphasizing and ensuring cyber security.

Cybersecurity is Integral
One of the subordinate functional areas is cybersecurity, which is a foundational aspect of any acquisition that cannot be traded for cost, schedule or performance. To ensure cyber security is also foundational for our partners in industry, the department created the Cybersecurity Maturity Model certification, which we call CMMC. It’s scalable, auditable and repeatable. A cybersecurity standard that industry partners will be required to obtain, depending on the level of cybersecurity required in a specific contract.

This morning, the cyber security model certification DFARS rule, and we live by the Defense Federal Acquisition Regulation standards was posted on the US Federal registry as an interim rule. The public’s going to be able to comment on the rule for 60 days. And then at the end of the 60-day period, the rule will go into effect. Therefore, it will require all DOD contracts by October 21, 2025, a five year span, to have some level of CMMC. Now, I think of this as we think of ISO quality. The same kind of idea.

Risk Management Tools
The department launched a pilot program with commercial risk management tools. The one we use is called Exigers DDIQ. To really assist with rapidly identifying reputable vendors and vetting the sources of their supplies. We need to know who is in our supply chain, who the beneficial owner is. Not just that we’re dealing with a shell company. So this tool is fed in to our department’s ADVANA analytics platform. And we’re able to provide supply chain illumination that is now essential to the department’s execution of all US Defense production act authorities. To be able to make sure we increase capacity and throughput in our supply chain. To make sure that we not only help the Department of Defense, but we work with all of our partners to acquire vital personal protective equipment and medical supplies in response to COVID-19.

Our enhanced understanding and rapid vetting of the supply chain has helped mitigate the award of fraudulent contracts to opportunists. And there are many, many out there. Ensuring the effective use of the CARES Act funding we’ve received from Congress.

What do you consider your most important reforms initiated under your leadership today?
One is the fact that we have made acquisition much simpler to understand and use. In terms of instead of having this big book that you read through and use it like a pilot’s checklist. We now have the acquisition process, broken into different pieces that can be adapted.

Out of all of those pieces, I think the most significant accomplishment is the software pathway. We’ve basically said, our major weapon systems are hardware enabled, but they’re software defined. And we need to make sure we continually evolve that software, from development, to production to sustainment. it’s all a continuum. And we actually are really excited to have been able to work with the hill with Congress to define some pathfinder projects for a software Color of Money. Because previously, we spent so much time on administrivia. But very important administrivia, to make sure we were legally compliant with colors of money. This is going to be able to unleash our business processes to keep up with technical innovation.

What do you what are the biggest challenges and opportunities going forward for further reform?
I think it’s really communicating both with industry, to understand middle-tier acquisition, how we no longer need clearly defined requirements. We can basically try to define a capability and see the art of the possible. To make sure that industry understands how they can work with contracting professionals to get on contract. And then also to teach our contracting workforce, what we have for capability and really unleash them to innovate.

I always think that technical innovation is way sexier and easier to do for all the obvious reasons than business Innovation. Because people are afraid, they’re going to break the law and go to jail or be hauled up in front of the news. Or get pulled up onto the hill for a hearing which can be lots of fun. What we have to do is show that our acquisition professionals, our business professionals, can make a huge difference to the warfighter. No kidding, they can get capability in warfighters hands much more quickly.

Many argue that maintaining our technology edge, it’s less about technology and more about the speed in which it can be identified and deployed. Would you agree with this assessment?
How do you quickly apply it to the warfighting gaps we have? My whole team works very closely with the Vice Chairman of the Joint Chiefs of Staff, General Hyten. His responsibility through the JROC is to define requirements for the warfighter.

My responsibility through our acquisition process is to get it there quickly. And the challenges is the valley of death we have between development of cool technical things and applying them in a way that the warfighter can use them. So we like to work on the art of the possible. How do we get going? How do we enable that technical collaboration to meet the needs of the warfighter?

How would your organization increase collaboration between industry and government, especially at the startup and small company level?
Most of our innovation comes from small businesses. It’s absolutely vital to us at Department of Defense. So I believe regardless of where you work, and what your mission is, everything comes down to communication. So early on, I knew that my team could only communicate and meet with so many people. So I decided we would use the industry associations as our force multiplier. To echo and amplify what messages we have. But just as importantly, if not more importantly, for us to listen to what industry needs.

So what we do is, I bring about 15 people, and we’re doing this virtually now, just as well as we did it in person, quarterly, working with three industry associations. They pulled together about 15 or so CEOs. They develop the agenda. I bring our service acquisition leads, I bring a number of A&S individuals, and we talk with industry about what their challenges are. What they’re doing. I also bring the big primes in one company, once a month. With their senior leadership team, my senior leadership team, again, service acquisition representatives, and we talk about the issues.

What’s changed in how you’re preparing our acquisition professionals for these new ways of doing business?
We used to lock them down at the Defense Acquisition University for two or three weeks and put our finger on the transmit button and lecture in what I’d call like a 30, 40-year-old way. We’ve changed that. We’ve been totally virtual since March. But more importantly, we do lots of podcasts, we are instead of taking the very what I consider dry policy, we do interviews with the program executive officers with program managers and get them to tell stories about the acquisition problems they’ve had. And how they’ve used some of the authorities we have. Because again, I want that creative compliance. People are so worried about doing something wrong, that they rather do nothing at all. Which isn’t helping us.

So it’s very different in terms of a lot of real time presentations. A lot of podcasts, a lot of self-service type of work. We also actually licensed from TED Talks, what we call TEDx DAU. And so we just finished with our second round of TED talks on Defense Acquisition. And it’s kind of acquisition at the edge.

How is the purchase of new weapon systems technologies is coordinated with the development of new doctrine or new operational concepts?
The NDS tells us that we are pivoting from violent extremist organizations, to peer-to-peer threats, that we see around the second island chain with China. So what we have to do is change our warfighting capability. We are working very closely with the Joint Staff and the services as we develop that new doctrine. It’s something we do on weekly meetings with the SecDef. Dynamic force employment for instance. We are deploying ships, aircraft, that just show up different places a little bit more surprisingly.

What we’re doing is listening to that voice of the customer, the Warfighter about what are the electronic warfare capabilities they need. What are the all-domain command and control that they need, now that we are truly an interoperable force?. And we’re working closely with the Joint Staff through the JROC with General Hyten. I So it’s taking that technology and applying it where needed with lots of cycles, lots of iterations, back and forth.

Do you think Anduril’s model where a company develops a product on their own dime and then sells it to the DOD versus DOD funds the development is the future of defense tech procurement?
I think there is very much a place for the Anduril type model, as well as the traditional companies, I think we need a whole spectrum. Because a company is not going to build an aircraft carrier or a fighter jet or a large satellite on their own. It’s just too complex, too cumbersome. But smaller options, I think are very much what we want to see. We want to see those developments. We want to get them in the hands of the warfighter as soon as possible.

That’s where we’re using Other Transaction Authorities to get going on that. That’s what DIU does. We’re using middle tier of acquisition to rapidly field prototypes and new production..

How does the DOD ensure operational security and its acquisitions when there’s such a vast range in diversity of corporate contributors to the national security ecosystem?
OPSWC, as we call it is incredibly important. On one hand, one of my prime focus areas has been cybersecurity of the defense industrial base. That’s why we rolled out CMMC, it’s like ISO is to quality, it will be for cyber security.

So that was huge, making sure that the infrastructure of companies are adequately protected. And again, scaling. it’s different, if we buy combat gear, you know, boots, or clothing, versus if we’re buying a fighter jet. You need a different level of security. But also, what we’re doing with our new 5000 rewrite, one of the functional areas was cybersecurity. We are writing in cyber security standards to how you design new systems.

We also spend an enormous amount of time with NSA and Cybercom. With exquisite intelligence we get on what adversaries are trying to do to our weapon systems. And we are going back and continuing to harden the already fielded systems. We are we have new KPPS, if you will, for designing in the cybersecurity of the new systems. And then of course, we are looking at mergers and acquisitions.

I spend quite a bit of my time on with the Committee on Foreign investment in the US, CFIUS, which was firmed up by FIRRMA. But bottom line, we when there is a national security threat can block transactions acquisitions, and now with FIRRMA we can block acquisition of real estate adjacent to critical national security spots, and we can also intervene in JV’s.

Some students in our class that that aspire to public service.  Any thoughts on advice and recommendations how they might approach this?
I was 33 years in industry, before coming into government. And this government job is by far the most fascinating job I’ve had. I was very fortunate to do some things in industry that I’m proud of, and I think were significant, but there is just so much you can do in government.

So on a fundamental level, I would say connect with people. We have rather Byzantine hiring processes. I didn’t even know that USA Jobs existed before I came on to the federal government. But that’s where we advertise all of our jobs. But you have to connect with people. And you need to talk about what you’re interested in doing. Reach out to someone currently in government and talk a little bit about what generally they’re interested in what they would like to do. Because you don’t know what you don’t know. But you’ve got to start a conversation.

I will tell you, you’re never going to make a lot of money working in government, however, you particularly at junior levels will be exposed to so, so, so much more than you could be in the same amount of time in industry. And I’d say a one-to-three-year stint would be incredibly enriching for your background, regardless of what you do with the balance of your career. I fantasize about getting people back in for one to two years that perhaps served for seven to 10 years, then went out to industry. I would just love to get some logisticians from Southwest or a trucking company or Amazon to come and work with us. Because what we do at the Defense Logistics Agency, it’s eye watering. It’s just unbelievable. So I’d say communication, communication, communication.

I grew up my father was a lawyer, he served in the army in World War Two. But we never talked about what it was to serve. And not only is it really incredible to be part of something much bigger than just you, it’s amazing how much impact you can have, and how much you can see and learn.

Read the transcript of Ellen Lord’s talk and watch the video below.

If you can’t see the video click here.

Lessons Learned

  • The 5000 series is the DODs the policy on acquisition – how they buy things
    • We’ve strengthened our supply chain, expanded our alliances and partnerships and we reformed the 5000 series
    • Added a path to acquire software
    • Built cybersecurity compliance into acquisition
  • These reforms have made working with the government much simpler to understand

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