A number of recent events, public comments, and disclosures of government policy documents indicate that the Trump Administration national security priorities will benefit the aerospace and defense industry.
by Dave Patterson
NOTE: The views expressed here are those of the author and do not necessarily represent or reflect the views of SMA, Inc.
Public statements by Under Secretary of Defense for Acquisition, Technology, and Logistics indicate an intention to streamline and compress the timelines for acquisition programs. The restructuring of the Chief Management Office having begun Phase I of four phases in October 2017 is consistent with and complementary to these intensions. Furthermore, the National Security Strategy, the pre-decisional draft of the Nuclear Posture Statement, and the National Defense Strategy portray common, consistent themes that describe threats to United States security in more urgent and pragmatic terms. These recent national security policy documents make clear the intention of the Trump Administration to have an integrated and internally consistent approach to address the broad array of near-term threats from traditional adversaries and competitors as well as recent rogue nations whose intentions are to put America’s interests at risk.
Key themes from the Administration on national security are:
- Threats are more real and imminent
- The Defense Department must increase the speed in fielding acquisition programs
- Strategy and a restructured Defense Department management must be integrated to achieve desired Defense Department end state
- Addressing threats will require short-term and focused investment
SMA clients have an opportunity to benefit by thinking about rapid fielding to address defined threats. Defense Department acquisition thinking will comport with the four themes above, moving away from, “we need a certain capability and fielding will take as long as it takes.”
Unified Security Strategy
Threats are Real and Imminent: Perhaps because the Trump Administration national security policy documents have been released in a narrow 45-day window, there is a greater perception of commonality of themes and integration of strategic thinking. Nonetheless, the National Security Strategy (NSS), the pre-decisional draft of the Nuclear Posture Review (NPR) and the National Defense Strategy (NDS) project a common set of themes that represent a realistic view of threats and a pragmatic approach to address those threats. All three of the documents make clear that the threats faced by the U.S. drive the narrative. The United States faces a much different world stage than the previous administration perceived. As President Trump explains in his cover letter for the NSS, “The United States faces an extraordinarily dangerous world, filled with a wide range of threats that have intensified in recent years.” The NPR in the Secretary of Defense’s preface talking about the nuclear threats we face described the threat this way, “This review comes at a critical moment in our nation’s history, for America confronts an international security situation that is more complex and demanding than any since the end of the Cold War. In this environment, it is not possible to delay modernization of our nuclear forces and remain faithful sentinels of our nation’s security and freedom for the next generation as well as our own.”
Secretary of Defense Mattis introduced the NDS in a speech at Johns Hopkins University, Paul H. Nitze School of Advanced International Studies, and spoke about the threat and America’s diminishing competitive edge. He stated that, “Our competitive edge has eroded in every domain of warfare—air, land, sea, space, and cyberspace. And it is continually eroding.” Elbridge A. Colby, deputy assistant secretary of defense for strategy and force development, in a briefing to the Pentagon press corps, perhaps made the most important statement regarding the three policy documents. Colby said, “The strategy will have significant implications for how he department shapes the force, develops the force, postures the force, uses the force.” General Joe Dunford, chairman of the Joint Chiefs of Staff, at the same briefing went on to emphasize, “I think if anybody knows Secretary Mattis or looks at his history, he’s not inclined to publish documents or give guidance that he doesn’t actually intend to execute.”
Increasing Speed of Fielding Acquisition Programs: For SMA clients, a critical component of the NDS is the continuing emphasis on “speed” in bringing capability to the war fighter. As the NDS includes as one of its Defense Objectives, “Continuously delivering performance with affordability and speed as we change Departmental mindset, culture, and management systems…” Additionally, as a significant part of the effort to achieve this defense objective, the Department of Defense intends to “Deliver performance and the speed of relevance.” The NDS acknowledges that, “Current processes are not responsive to need; the Department is over-optimized for exceptional performance at the expense of providing timely decisions, policies, and capabilities to the warfighters. Our response will be to prioritize speed of delivery, continuous adaptation, and frequent modular upgrades.” The message is clear to the aerospace and defense industry, “think time-to-field” where the capability you are delivering is timely and has the “speed of relevance” to the near-term threat, not a perceive requirement 30 years in the future.
The “need for speed” is not a desire of just the Pentagon’s defense strategy authors. Secretary Lord echoed these same acquisition policy positions. Her comments at the October AUSA are a very clear signal that she is intent on reducing the time programs take to field. Her first objective is to reduce the time it takes by 50% to go from requirement to request for information (RFI) to request for proposal (RFP). She said, “No kidding—we’re going to get there on that.” Secretary Lord has her work cut out for her. Research completed in August 2017 by SMA, Inc. revealed that of the 18 Major Defense Acquisition Programs (MDAPs) with an average value of $1.8 billion studied, 69 percent of acquisition programs’ award dates were missed by an average of 376 days. The longest period from initial estimate to actual award of a contract was 1,212 days. To be fair, the contract that drove the longest delay was the KC-46A Aerial Tanker which suffered fits and starts caused predominantly by a protest resolution and re-compete, only a few issues could be attributed to “self-inflicted.” Additionally, program leadership missed 93 percent of the RFP/Solicitation initial estimates for publication or release (more than nine out of ten) by an average of 260 days, and the longest period between initial estimate for RFP release milestones and actual release was 1,142 days. There is an upside. The government actually controls every aspect of the schedule and has it within its grasp to significantly reduce schedule timeframes.
Lord addressed her desire to control source selection schedule in December 2017 testimony before the Senate Armed Services Committee (page 42) that the Department will be implementing plans to reduce the time it takes between issuing an RFP to procuring a weapon system from two-and-a-half years to twelve months. In an exchange with Senator Rounds from South Dakota:
Senator Rounds: I am going to run out of time, but let me just ask one more time. What is the goal, in terms of—is there goal for cutting back acquisition times?
Ms. Lord: Twelve months for major programs.
Senator Rounds: From 2.5 years to 12 months?
Ms. Lord: Correct.
Senator Rounds: Okay.
More recently, I attended the 6 March 2018 McAleese/Credit Suisse Defense Programs Conference and increasing the speed of acquisition programs was a recurring theme in nearly every presentation. Perhaps the most encouraging presentation was that of Under Secretary of Defense for Research and Engineering, Dr. Michael Griffin. He opened his comments with his belief that Congress has given his office significant latitude to implement a “clean sheet” approach to his responsibilities and taking 16–17 years to field new systems is “utterly unacceptable.” His goal will be to develop and prove new technologies in three years. He identified one of the culprits in extended acquisition programs as the endless reviews to achieve low or no risk. That, he said, is not going to be the goal going forward under his leadership. It’s perfectly acceptable to “break hardware” during testing. “Hardware is cheap” compared to falling behind near peers in critical technology development. Responsibility and accountability will be pushed to the lowest level practical to move decisions quickly. Secretary Griffin, to illustrate the point, recounted that the Apollo Program went from President Kennedy’s challenge that the U.S. would put a man on the moon before the end of the decade to achieving that objective in less than eight years with an average age on the program of 29.
For the aerospace and defense industry, a focus on moving acquisition programs from concept to fielding quickly is good news.
Integrated Strategy and Restructured Management Emphasis: In August 2017, the Defense Department complied with congressional mandate to provide a report to Congress describing how the Department would implement the FY2017 National Defense Authorization Act direction to restructure the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics. The requirement was “to establish an Under Secretary of Defense (Research and Engineering) (USD(R&E)), an Under Secretary of Defense (Acquisition and Sustainment) (USD(A&S)), and a Chief Management Officer (CMO) within the Department of Defense (DoD), effective on February 1, 2018.” With establishing the new USD(R&E), USD(A&S) as well as the CMO the Defense Department management focus and emphasis is on “creating a more lethal and effective force by allowing the Department to reallocate resources from business operations to readiness and recapitalization of the combat force.”
As the report points out, “The two new Under Secretaries will exercise these authorities to determine and drive necessary changes to current acquisition processes, structure, and culture in accordance with the objectives outlined above, in support of the National Defense Strategy.” Additionally, the new organizational structure’s performance will be “guided by and measured against the National Defense Strategy.” Acquiring the technology and combat systems will require a new way of managing the DoD’s resources and that is where the restructured CMO contributes to the integrated and interdependent strategy. The CMO is charged with reducing or eliminating the “substantial redundancies, overlaps and inefficiencies in the Department’s organizations and processes.” The emphasis is on ridding the DoD of inefficiencies and a significant number of offices doing similar or the same things. Financial management, supply chain and logistics, as well as acquisition and procurement are emphasis areas of the restructured CMO. The outcome of more efficient and effective management and business operations is reduced cost over all and the ability to reallocate those savings into fielding weapon systems with greater capability in time to be a significant deterrence to would be adversaries or to influence the outcome in the U.S.’s favor on the battlefield.
Investments Key to Strategy Success: Though the FY2018 defense funding appropriation has run into the annual failure of Congress to pass a funding bill, the intention to increase the defense budget is clear, evidenced in the President’s FY2019 Budget Request for Defense and Congress’ plus-ups. Put simply, the DoD is putting its money where its “strategy mouth” is. In the aggregate, the FY2018 defense appropriations is roughly a ten percent increase over the FY2017 enacted funding bill and five percent more than the President’s budget request for FY2018. The most likely final FY2018 appropriations bill will show procurement, operations and maintenance, and research and development accounts for the Services received the biggest benefit in terms of recapitalization and readiness, as well as technology development and modernization. The increases over the FY2017 enacted funding were procurement 14.5 percent, operations and maintenance 14.7 percent, and research and development 18.9 percent.
The FY2019 President’s Budget Request for Defense (PB) continues the trend upward and shows support in key strategy areas. For example, the Minuteman III replacement Ground Based Strategic Deterrent shows a steady increase from FY2017, through FY2018 to FY2019 of $109.0M, $215.7M, and $345.0M respectively. Development and procurement of low-yield nuclear warheads is in the Future Year Defense Program (FYDP) and budgeted for $48.5M. This may not seem like much compared to major acquisition programs, but the majority of the money for the program is with the Department of Energy, where the National Nuclear Security Administration is requesting $15.1 billion in FY2019 to “modernize and restore the nuclear security enterprise aligned with the Nuclear Posture Review (NPR) and National Security Strategy.” This is an increase over the FY2018 request ($13.9 billion) of $1.2 billion or a 8.3 percent increase.
FY2019 PB for military end strength shows an increase of 56,600 over the FYDP for both active and reserve forces. If the axiom that the military equips ground forces and mans ships and aircraft, the increase in end strength includes 23,400 ground forces that will require equipment. Consequently, there should be a budget line increase for the Army and Marines over and above previous equipment procurement requests in subsequent year’s budget requests.
For the first time in many years there is a coordinated and integrated approach to strategy among the strategy documents and budget requests tied to the NSS, NPR and NDS. The defense industry can take some comfort in the attempt, at least, by the Administration to provide some predictability in terms of pulling a strategy thread through understanding the threats faced by the U.S.; the requirements that result from knowing the threat; and the capabilities necessary to satisfy the requirements and address the threat. As the aerospace and defense industry engages in developing capabilities to meet the needs of the Department of Defense, it will be in its best interest to believe and internalize the direction that the management of the Defense Department is heading. There will be great value placed on speed in acquiring and fielding capability, a willingness to take risk early in a program, and efficiency in reaching capability objectives. This is not business as usual.
 When the Under Secretary for Acquisition, Technology and Logistics organization split into the Under Secretary for Research and Engineering (USD(R&E)) and the Under Secretary for Acquisition and Sustainment, Secretary Ellen M. Lord assumed the duties of the Under Secretary for Acquisition and Sustainment and Dr. Michael Griffin became USD(R&E).
 The Nuclear Posture Review appears the January 11, 2017 edition of the Huffington Post. The article’s commentary is mostly hyperbole, inferences not in the posture review and of little value, but the full text is at the end of the article. It is a pre-decisional draft. The final version will be published by the Defense Department in February 2018.