U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

i 

89–508 2015

[H.A.S.C. No. 113–115] 

DEFENSE REFORM: EMPOWERING 

SUCCESS IN ACQUISITION 

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JULY 10, 2014 
(II) 

COMMITTEE ON ARMED SERVICES 

ONE HUNDRED THIRTEENTH CONGRESS

HOWARD P. ‘‘BUCK’’ MCKEON, California, Chairman 

MAC THORNBERRY, Texas 

WALTER B. JONES, North Carolina 

J. RANDY FORBES, Virginia 

JEFF MILLER, Florida 

JOE WILSON, South Carolina 

FRANK A. LOBIONDO, New Jersey 

ROB BISHOP, Utah 

MICHAEL R. TURNER, Ohio 

JOHN KLINE, Minnesota 

MIKE ROGERS, Alabama 

TRENT FRANKS, Arizona 

BILL SHUSTER, Pennsylvania 

K. MICHAEL CONAWAY, Texas 

DOUG LAMBORN, Colorado 

ROBERT J. WITTMAN, Virginia 

DUNCAN HUNTER, California 

JOHN FLEMING, Louisiana 

MIKE COFFMAN, Colorado 

E. SCOTT RIGELL, Virginia 

CHRISTOPHER P. GIBSON, New York 

VICKY HARTZLER, Missouri 

JOSEPH J. HECK, Nevada 

JON RUNYAN, New Jersey 

AUSTIN SCOTT, Georgia 

STEVEN M. PALAZZO, Mississippi 

MO BROOKS, Alabama 

RICHARD B. NUGENT, Florida 

KRISTI L. NOEM, South Dakota 

PAUL COOK, California 

JIM BRIDENSTINE, Oklahoma 

BRAD R. WENSTRUP, Ohio 

JACKIE WALORSKI, Indiana 

BRADLEY BYRNE, Alabama 

ADAM SMITH, Washington 

LORETTA SANCHEZ, California 

MIKE MCINTYRE, North Carolina 

ROBERT A. BRADY, Pennsylvania 

SUSAN A. DAVIS, California 

JAMES R. LANGEVIN, Rhode Island 

RICK LARSEN, Washington 

JIM COOPER, Tennessee 

MADELEINE Z. BORDALLO, Guam 

JOE COURTNEY, Connecticut 

DAVID LOEBSACK, Iowa 

NIKI TSONGAS, Massachusetts 

JOHN GARAMENDI, California 

HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia 

COLLEEN W. HANABUSA, Hawaii 

JACKIE SPEIER, California 

RON BARBER, Arizona 

ANDRE ́ CARSON, Indiana 

CAROL SHEA-PORTER, New Hampshire 

DANIEL B. MAFFEI, New York 

DEREK KILMER, Washington 

JOAQUIN CASTRO, Texas 

TAMMY DUCKWORTH, Illinois 

SCOTT H. PETERS, California 

WILLIAM L. ENYART, Illinois 

PETE P. GALLEGO, Texas 

MARC A. VEASEY, Texas 

TULSI GABBARD, Hawaii 

ROBERT L. SIMMONS II, Staff Director 

LYNN WILLIAMS, Professional Staff Member 

SPENCER JOHNSON, Counsel 

AARON FALK, Clerk 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2014 

Page 

HEARING: 

Thursday, July 10, 2014, Defense Reform: Empowering Success in Acquisition ........................................................................................................................ 1 

APPENDIX: 

Thursday, July 10, 2014 .......................................................................................... 43 

THURSDAY, JULY 10, 2014 

DEFENSE REFORM: EMPOWERING SUCCESS IN ACQUISITION 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

McKeon, Hon. Howard P. ‘‘Buck,’’ a Representative from California, Chairman, Committee on Armed Services .................................................................. 1 

Smith, Hon. Adam, a Representative from Washington, Ranking Member, 

Committee on Armed Services ............................................................................ 2 

WITNESSES 

Barna, Stephanie, Acting Assistant Secretary of Defense for Readiness and 

Force Management, U.S. Department of Defense ............................................. 5 

Kendall, Hon. Frank, Under Secretary of Defense for Acquisition, Technology 

and Logistics, U.S. Department of Defense ....................................................... 3 

APPENDIX 

PREPARED STATEMENTS: 

Barna, Stephanie .............................................................................................. 60 

Kendall, Hon. Frank ......................................................................................... 50 

McKeon, Hon. Howard P. ‘‘Buck’’ .................................................................... 47 

Smith, Hon. Adam ............................................................................................ 48 

DOCUMENTS SUBMITTED FOR THE RECORD: 

[There were no Documents submitted.] 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Ms. Bordallo ...................................................................................................... 75 

Mr. Thornberry ................................................................................................. 75 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Mr. Cook ............................................................................................................ 86 

Mr. Kilmer ........................................................................................................ 84 

Mr. Maffei ......................................................................................................... 84 

Mr. McKeon ....................................................................................................... 79 

Mr. Shuster ....................................................................................................... 82 

Ms. Speier ......................................................................................................... 83 

Mr. Thornberry ................................................................................................. 80 

Ms. Tsongas ...................................................................................................... 82 

Mrs. Walorski ................................................................................................... 87 

(1) 

DEFENSE REFORM: EMPOWERING SUCCESS 

IN ACQUISITION 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, Washington, DC, Thursday, July 10, 2014. 

The committee met, pursuant to call, at 10:06 a.m., in room 

2118, Rayburn House Office Building, Hon. Howard P. ‘‘Buck’’ 

McKeon (chairman of the committee) presiding. 

OPENING STATEMENT OF HON. HOWARD P. ‘‘BUCK’’ MCKEON, 

A REPRESENTATIVE FROM CALIFORNIA, CHAIRMAN, COMMITTEE ON ARMED SERVICES 

The CHAIRMAN. Committee will come to order. Good morning. I 

would like to welcome you and give a warm welcome to our witnesses here today. We have the Honorable Frank Kendall, Under 

Secretary of Defense for Acquisition, Technology and Logistics, and 

Ms. Stephanie Barna, Acting Assistant Secretary of Defense for 

Readiness and Force Management. 

I want to thank both of you for your flexibility in scheduling this 

hearing. I know we have gone through several iterations of the 

schedule, and I appreciate you and your staff working with us on 

these changes. 

This is a very important hearing, and your knowledge and perspectives are essential to our reform initiative. This is the fourth 

hearing we have scheduled as part of the committee’s long-term defense reform effort. Thus far, we have reviewed past reform efforts, 

discussed challenges and opportunities, and examined case studies 

that highlight the strengths and weaknesses of the acquisition 

process. We have sought to understand the root causes behind why, 

after decades of various reform efforts, many DOD [Department of 

Defense] acquisition programs still run over cost and behind schedule, delivering less capability to the warfighter. 

However, today we have heard only from outside experts. While 

we appreciate and value their input, today is our first opportunity 

to discuss these issues with the Department of Defense officials 

and to better understand the Department’s recent efforts to improve productivity and outcomes related to acquisitions. 

A key theme that has emerged from previous hearings is that 

you cannot affect the acquisition system if you don’t affect the people. We hear it referred to as a need for cultural change, professionalism of the workforce, or personal accountability. This is why 

we are grateful to have both Secretary Kendall and Ms. Barna here 

to look at acquisition reform holistically and to examine the issues 

related to the recruitment, development, and retention of our military and civilian workforce. 
2 

Again, I thank both of you for being here today and look forward 

to your testimony and to the question and answers that we will 

have an opportunity to move this process forward. 

Mr. Smith. 

[The prepared statement of Mr. McKeon can be found in the Appendix on page 47.] 

STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM 

WASHINGTON, RANKING MEMBER, COMMITTEE ON ARMED 

SERVICES 

Mr. SMITH. Thank you, Mr. Chairman. I, too, want to thank our 

witnesses. 

Mr. Kendall, Ms. Barna, thank you for being here. Thank you for 

your work in the Pentagon on these and many other very difficult 

issues. 

I think this is a very, very important hearing. On the other hand, 

people look at acquisition reform and they say, yes, we have done 

that a dozen times. It is the holy grail. And I think a certain cynicism gets bred into that. And I hope in this hearing we can remove 

some of that cynicism, because there is no question that we can do 

better, and there is no question that whatever efforts have come in 

the past, we have learned a lot of lessons in the last decade. I think 

there are many ways, and I know, Mr. Kendall, you and I have 

spoken about this, that we can clean up and improve the acquisition process. 

And we simply have to. I mean, there has been a number of reasons for that, but the two that stand out, over the course of the last 

13 years we have had a lot of very expensive mistakes in the area 

of acquisition reform. Those costs are difficult to bear at any time. 

But the second big reason why we have to get this right is now 

that our budgets are undeniably shrinking, nobody is debating 

that—well, I guess the proper way to put it is we are going to have 

less money to spend than we thought we were going to have. You 

can debate about what is growth and what is not growth. But without question, if you went back to 2010 and projected out to what 

we were going to spend over the course of the next 10, 12 years 

in the Department of Defense, it is a lot less now. So we have to 

be smarter, we have to figure that out. 

At the same time, we have arguably started more programs than 

we can afford to finish even if we had the 2010 money. So as we 

make choices going forward we are going to have to be much 

smarter about it. 

And the things that I am most particularly interested in, as with 

all things—great thing about politics, it is very easy to describe the 

problem. If I had a wish, that would be my sole responsibility as 

a Member of Congress, just describe the problem, leave the solutions to somebody else. But the solutions are going to be the key. 

The problem I think everyone here is very good at describing, too 

many requirements, too many people in charge, the requirements 

change, they move around, we go for too much. We see something 

on a computer screen, we think we can make it work, and we wind 

up going for something that is impossible to achieve. With an ode 

to the movie, I refer to this as the ‘‘sharks with fricking laser 

beams attached to them’’ problem. You can envision that, but try-
3 

ing to achieve it winds up taking you down, down a very, very long 

rabbit hole. 

But the thing I think I am most interested in is the layers of personnel, because I think if there is an overarching concern that I 

hear back from industry is they are very, very aggressively regulated. You go out to a place where industry is making anything, the 

F–35, and there are dozens, if not hundreds of regulators there 

watching their every move. So you have got a lot of that. 

And then also you have the layers of program managers. I heard 

Senator McCain complain about a program that didn’t work out, 

basically going back in to look at it, there were five program managers in 18 months. So who was accountable? Answer: Nobody. 

There are so many people who have a say in it, but at the end of 

the day nobody is responsible. How can we better empower the 

workforce and then hold them accountable, for good or for ill? If 

they do the job well, terrific; if they don’t, we can hold that person 

accountable. But these multiple layers not only lead to the requirements problem, because every one of those layers is going to have 

a slightly different way of looking at it, and then it gets changed, 

rearranged, and makes it very, very difficult to stay on track, but 

then also you lack the accountability. 

But I think, more importantly, to put a positive spin on this, you 

rob yourself of the talent and expertise of your personnel, because 

if that personnel knows at the end of the day that he or she isn’t 

really in charge, it undermines their desire to say, okay, I am going 

for fix this, I am going to make this work. 

So I really want to empower our personnel over at the acquisition shop, figure out how to give them greater authority, greater 

responsibility, and work our way around that. So despite what we 

have heard before about acquisition reform always being out there, 

I think some real positive changes can be made. Look forward to 

working with you to do that and hearing from you today about how 

we can get started. 

So thank you, Mr. Chairman. I yield back. 

[The prepared statement of Mr. Smith can be found in the Appendix on page 48.] 

The CHAIRMAN. Thank you. 

Mr. Secretary. 

STATEMENT OF HON. FRANK KENDALL, UNDER SECRETARY 

OF DEFENSE FOR ACQUISITION, TECHNOLOGY AND LOGISTICS, U.S. DEPARTMENT OF DEFENSE 

Secretary KENDALL. Thank you, Chairman McKeon. I have a 

short opening statement, and Ms. Barna has one also. 

The CHAIRMAN. Is your mike on? 

Secretary KENDALL. Thank you, Mr. Chairman. I have a short 

opening statement, and Ms. Barna has one also. And then we will 

be delighted to take your questions. 

Chairman McKeon, Ranking Member Smith, committee members, thank you for the opportunity to discuss the measures the Department of Defense is taking to improve the productivity and performance of defense acquisition activities with an emphasis on the 

acquisition workforce. 
4 

I want to begin by expressing my appreciation for the work this 

committee has done in this area. Statutes like the IMPROVE Act 

[Implementing Management for Performance and Related Reforms 

to Obtain Value in Every Acquisition Act of 2010], Defense Acquisition Workforce Development Fund authorization, and the Weapon 

Systems Acquisition Reform Act are very beneficial to the Department and the Nation. I am also very appreciative of the opportunity to work with Congressman Thornberry on his ongoing acquisition reform initiatives. Frankly, it is extremely refreshing and encouraging to be able to work across both sides of the aisle and both 

sides of the Hill on an issue on which we all fully agree, the need 

to improve the effectiveness and productivity of our acquisition system. 

My written testimony has more detail, and I ask it be admitted 

to the record. 

The CHAIRMAN. Without objection, both of your written testimonies will be included in the record. So ordered. 

Secretary KENDALL. Thank you, Mr. Chairman. 

I have spent most of my professional life in defense acquisition, 

either on the government side or in industry, a period of about 40 

years. During that time, I have seen any number of attempts to improve defense acquisition. My view is that many of the things we 

have tried have had little discernable impact. The evidence, in 

terms of major program costs and schedule slips, shows very little 

statistical change. 

I am tempted to draw three conclusions from that fact. The first 

is that fixing defense acquisition isn’t as easy as a lot of people 

seem to think it is. The second possibility is we have not been patient enough or sufficiently tenacious with acquisition policies. We 

don’t always leave policies in place long enough to find out if they 

work or not. The frequent rotation of leadership, particularly political appointees and career military people, makes it hard to sustain 

initiatives long enough to determine if they are succeeding or not. 

The third conclusion I am tempted to draw is that maybe we 

have been focusing too much on the wrong things. Defense acquisition is a human endeavor, and my view is that we have focused too 

much on organizational structures, processes, compliance with policy, and oversight mechanisms, and not enough on providing people 

with the skills and incentives they need to succeed. I think the 

committee’s emphasis today is very well chosen, and I am going to 

echo Congressman Smith’s remarks in that regard. 

The approach I am taking is the one that Dr. Carter and I decided upon 4 years ago when he was under secretary and I was his 

principal deputy. We introduced the first set of what we called Better Buying Power initiatives. This is an approach of continuous incremental improvement based on pragmatism and evidence. I can 

report to you today that after 4 years, I believe we are seeing 

changes for the better, and I am encouraged that organizations like 

the GAO [Government Accountability Office] agree with that conclusion. 

Acquisition of a new cutting-edge weapon system is a complex 

job. It requires getting every one of hundreds of decisions right in 

an environment where the real incentives systems are not always 

aligned with the goal of increased efficiency. This is particularly 
5 

true in the current budgetary situation, where there is great uncertainty about future budgets and planning is excessively difficult. 

The Better Buying Power approach identifies areas of acquisition 

where the greatest good can be achieved and tries to attack those 

opportunities. As we learn from our experience, we periodically 

make adjustments and bring in new ideas. We reject ideas that 

don’t work. 

My approach is, again, a pragmatic, incremental approach that 

spans actions like setting affordability caps to constrain program 

costs, bottoms-up should-cost estimates, and management goals to 

force cost-reduction initiatives, strong contractual incentives, creation of competitive pressures wherever possible, a new emphasis 

on the acquisition of contracted services, and a focus on the professionalism in the Department’s acquisition workforce. 

This is hard, detailed work. It takes time, constancy of purpose, 

and tenacity to be effective. But I don’t believe there is any other 

way to achieve lasting improvement. 

Embedded in this process of continuous improvement on multiple 

fronts there are some important cultural changes I am trying to 

implement. The academic business literature suggests that two 

things are necessary to effect major change in an organization: a 

period of 4 or 5 years of sustained commitment by senior leadership and a crisis. I am trying to supply the leadership, and the 

budget situation is supplying the crisis. 

The first cultural change is to move our workforce from a culture 

that values spending over controlling cost. In government, the 

built-in incentive system is to spend one’s budget so that funds are 

not rescinded or reduced in subsequent budgets. Many of the Better Buying Power initiatives are intended to reverse this situation. 

The other cultural change is to move the government workforce 

away from a check the box, or school solution approach to acquisition, to one based on professionalism, sound business and technical 

analysis, and, most of all, critical thinking. The vast array of product and service types the Department buys makes this a necessity. 

One-size-fits-all rules are not the right answer to our acquisition 

problems and cannot substitute for the effective professional judgments that are needed for success in defense acquisition. 

I do believe we are making progress, but I also believe we have 

ample room for additional improvement. And with your support I 

am determined to build upon the progress we have made. I look 

forward to your questions. 

[The prepared statement of Secretary Kendall can be found in 

the Appendix on page 50.] 

The CHAIRMAN. Thank you. 

Ms. Barna. 

STATEMENT OF STEPHANIE BARNA, ACTING ASSISTANT SECRETARY OF DEFENSE FOR READINESS AND FORCE MANAGEMENT, U.S. DEPARTMENT OF DEFENSE 

Ms. BARNA. Chairman McKeon and Ranking Member Smith, distinguished members of the committee, good morning. I appreciate 

the opportunity to be with you here today, together with Under 

Secretary Kendall, to discuss empowering success in defense acquisition, with a focus on the Department of Defense acquisition work-
6 

force. As the Acting Assistant Secretary of Defense for Readiness 

and Force Management, I report directly to the Under Secretary of 

Defense for Personnel and Readiness and serve as her principal advisor on all matters relating to military and civilian personnel policy, readiness of the force, and total force planning and requirements. 

The defense acquisition workforce is responsible for equipping 

and sustaining the world’s most capable, powerful, and respected 

military force. The Office of the Under Secretary of Defense for 

Personnel and Readiness shares Under Secretary Kendall’s view 

that, at its core, defense acquisition is a human endeavor, that the 

development and management of a highly skilled professional acquisition workforce, both military and civilian, is inextricably 

linked with the success of our acquisition program. 

Congress has vested broad functions and duties in Secretary 

Kendall with respect to his leadership of the acquisition workforce, 

but it is the Under Secretary of Defense for Personal and Readiness who is responsible for the civilian and military personnel policies and guidelines, the human resources tools that facilitate Secretary Kendall’s efforts. 

In 2009, with the help and support of Congress, DOD embarked 

on a comprehensive and ultimately very successful initiative to recapitalize its acquisition workforce. In 5 years, we have added almost 20,000 new civilian employees to our acquisition cadre, which 

presently totals 135,000 civilian personnel, or about 90 percent of 

our acquisition workforce writ large. 

The military component of our acquisition workforce also increased during this period, from approximately 14,500 members in 

fiscal year 2009 to slightly more than 16,000 in the second quarter 

of fiscal year 2014. The military comprises about 10 percent of our 

acquisition workforce. 

Today our civilian employees and military members together 

comprise an acquisition workforce that is 151,000 members strong. 

And although the program management of major defense weapon 

programs is what first may come to mind when thinking about 

what the acquisition workforce does, the requirements brought to 

bear on this community are legion. They are significantly more diverse. They encompass at least 14 different career fields, including 

contracting for both goods and services, engineering, information 

technology, lifecycle logistics, testing and evaluation, auditing, to 

name but a few. 

The fiscal challenges, shifting operational requirements, the current budget instability deriving from sequestration, years of pay 

freezes, furloughs, military end strength reductions, and the requirement for commensurate reductions in our civilian workforce, 

more than a decade of conflict, inevitably all of these things have 

affected the acquisition workforce as they have the Department’s 

workforce as a whole. 

If one believes, as I know Secretary Kendall does and as I do, 

that our people, civilian and military, are the strength of our Department and its components, it is then of paramount importance 

to our national security that we continue to focus on improving the 

professionalism of the acquisition workforce. 
7 

Personnel and Readiness views the Office of the Under Secretary 

of Defense for Acquisition, Logistics and Technology as both our 

partner in this endeavor and as a valued customer of our services. 

In this vein, we will first continue to work very closely with the acquisition community to promote awareness of the variety of human 

resources tools at its disposal. These are the tools essential to recruit, assess, educate, train, develop, incentivize, and hold accountable those persons serving in acquisition positions. 

Second, the personnel community will do all in its power to enable ready access to these tools to ensure that the acquisition functional community can leverage the special human resource authorities and flexibilities that Congress has authorized us to employ. 

And finally, should new tools or new policies or processes be required to meet the challenges, we will work side by side with the 

acquisition community to develop and tailor these new tools to 

their unique needs. In short, the acquisition and personnel communities are working together and will continue to work together to 

ensure that the Department of Defense maintains a highly qualified and professional acquisition workforce. 

Mr. Chairman, this concludes my statement. I thank you and the 

members of this committee for your interest in and commitment to 

the professionalism of the defense acquisition workforce, and I look 

forward to taking your questions. Thank you. 

[The prepared statement of Ms. Barna can be found in the Appendix on page 60.] 

The CHAIRMAN. Thank you very much. 

In one of his last acts as Deputy Secretary of Defense, Ash 

Carter signed a memo that put in place a DOD instruction designed to streamline the acquisition process. As I understand it, 

this new instruction was intended to, and I quote, ‘‘create an acquisition policy environment that will achieve greater efficiency and 

productivity in defense spending and effectively implement the Department’s Better Buying Power initiatives.’’ 

Secretary Kendall, how is this effort being implemented in the 

Department? What sort of results should we expect? What obstacles are in your way as you work with Congress, industry, and 

other stakeholders to improve the acquisition process? 

Secretary KENDALL. Mr. Chairman, I think that the directive you 

are referring to applies to the rapid acquisition process used for urgent needs for combat operations, primarily, but also where there 

is an imminent threat. And essentially what Dr. Carter was doing 

was establishing more formally within the Department something 

we have been doing for some time. 

There is a body called the Warfighter Senior Integration Group 

that I now chair, that Dr. Carter used to chair, which basically 

brings together the key leadership of the Department across the 

Department to essentially meet on roughly a monthly basis now 

and make quick decisions about our programs that are urgently 

needed for operations in theater. It has been very successful. We 

have been doing this for several years. So we institutionalized it 

with that directive. We are trying to institutionalize this so we 

don’t lose that capability going forward. As we wind down operations in Afghanistan, we need to be able within the Department 
8 

to do that sort of thing without having to recreate it from whole 

cloth. So we are continuing that. 

I don’t know that we need any assistance from the Congress at 

this time with doing that. I think we have the tools generally that 

we need. But let me take it for the record, see if there is anything 

else that we need that would help us with that. 

[The information referred to was not available at the time of 

printing.] 

The CHAIRMAN. Thank you. 

Ms. Barna, I know that you are new to the job, and it is important that you are here with us today. We appreciate it. 

What recommendations do you have for the committee on how 

we strengthen the acquisition workforce? And, in your view, are 

there military or civilian personnel policies that are obstacles to 

what the Secretary is trying to achieve? 

Ms. BARNA. Sir, I have no recommendations at the present time. 

Certainly, there are obstacles in many regards. But we believe that 

those are obstacles that we can work through at the Department 

level. And, again, I believe that the partnership that we have with 

the Acquisition Corps to examine those obstacles and to address 

them together is probably the most fruitful way to move forward. 

The CHAIRMAN. Thank you. 

You know, I was mentioning a little bit before the meeting, before we started, to Secretary Kendall that while I am sure none of 

us here in Congress now had any problems that we have created, 

but maybe others have. But I think that over the years we pass 

a bill every year, and I am sure we have unintentionally put together some regulations or we have written laws that then the regulations were written to comply with those laws that have made 

your jobs harder. And I think probably in going forward in the bills 

that you all do in future years, that probably would be something 

that we should keep at the foremost, is if we require a report, is 

somebody going to read it? In all well-intentioned things, are we 

looking at the end of the road? Is this going to make things better 

or harder? And start with ourselves here in Congress. 

I know you are working in the Department to try to do these 

things. And this is something that we are working on together, and 

it has been done and tried before, and it is a huge job. But if we 

look at it as not a project that we are just going to finish in a year 

or two and then it is all good and from then on we will always do 

everything just perfectly, I think if we look at it more as in this 

cultural change, that we change our culture here in the committee 

also, that we try to keep this kind of relationship going, that as an 

ongoing thing every year we look at ways that we can improve the 

process. 

Because I don’t know that you ever quite achieve perfection, but 

if we can be constantly moving toward that, that would be the ultimate, I think, that we could come up with in this project. And I 

am hopeful that that will be the end result of these hearings and 

the process we work together, that we create the culture that every 

year we are going to strive to do things a little bit better and eliminate obstacles and things that are put in your way. 

Mr. Smith. 

Mr. SMITH. Thank you, Mr. Chairman. 
9 

Just sort of two areas of questions. One, one of the things that 

we really focus on is how can we make quicker decisions. The process drags out, and you can pick your favorite program and walk 

through the number of years that it has taken and all the different 

decision points and everything that is involved in it that has really 

dragged out the process. I mean, just the length of that creates 

cost. But also the more time you have to look at something, the 

more likely you are to add something, subtract something, then add 

it again and subtract it again and complicate it. 

I am struck by the fact the people who are building the newest 

carrier, the Ford, accused of cost overrun, they said, look, if we 

were building the same ship that we bid on, we would be right on 

budget. And I have had people confirm that. That may be slightly 

off. But basically everything that has changed since they took that 

contract is what has driven the cost up by $2 billion. 

Just to give you one example, and I am curious why we can’t do 

this differently, and that is the Expeditionary Fighting Vehicle 

[EFV]. Now, we know the first part of that story, classic tale of too 

many requirements. That is my sharks and laser beams thing, in 

reality. But the second part of the story is once that program was 

killed, the Marine Corps has gone out and identified amphibious 

vehicles that are made now, I think it was, like, four of them by 

four different companies, they have tested them and they have said 

any one of these is good enough for where we want to go. 

Now, in a better universe—these four things have been made, 

they exist—the Marine Corps could go out there and say, okay, we 

have tested them. I want that one. All right? And we are done. 

They buy how much ever they buy and they move forward. 

That is not going to happen, because you got to send out an RFP 

[request for proposal], and inevitably in that RFP they are going 

to go, we like that one, but what if you put this on it? 

And I guess I will just ask a wide-open-ended question. Isn’t 

there some way that we can get to the point where we can buy 

more off the shelf, more directly, empower people to say—and, look, 

I admit a couple things. Number one, it might not be perfect. There 

might be something that you might say that down the line, well, 

I wish we would have had that. But that is true no matter what 

you do, and at least this would save money. 

Second, there is a risk, if you put that type of power, of conflict 

of interest, of somebody favoring one client over another for one 

reason or not. But if that happens, we have accountability measures, first of all. Second of all, it happens anyway. I mean, I hate 

to keep citing this example for obvious parochial reasons, but people tried to bribe procurement officials on the tanker deal back in 

2004. And they went to jail. Okay. And that is the way it should 

be. 

Then we come back along and say, well, we have to people-proof 

the system so that nobody can ever be bribed again. Well, good luck 

with that. Meanwhile, you just dragged it all out and made it more 

difficult. 

So why can’t we just tell the Marine Corps, okay, you are in 

charge. There are the four vehicles, pick the one you want, and 

let’s buy it? 
10 

Secretary KENDALL. That is a great question. My familiarity with 

the EFV goes back to about 1993, I think, when I saw the demonstration of the prototype at Pax River, the planing armored vehicle that was the first version. You are right, we were ambitious, 

overly ambitious in our requirements. Budgetary situations 

changed. I think the Marine Corps rightly recognized it could not 

afford that vehicle. And we went into a requirements generation 

cycle, analysis cycle, and that basic requirement just resurfaced, as 

what the Marines desire. We had already determined that was 

unaffordable. I think the Commandant made exactly the right decision when he decided to change the acquisition strategy and go 

with essentially an off-the-shelf solution, as you alluded. So I think 

we are headed in the right general direction here. 

Let me comment on the process of source selection. I often marvel at the differences between the government acting as a purchaser and private industry. In private industry, you are spending 

your own money; if you screw it up, you screw it up. There is no 

appeal by the people who didn’t win, say, hey, you weren’t fair to 

me. There is no such metric that is applied. 

But when we are spending public money, we are spending the 

taxpayers’ money, there is a high standard of fairness to those who 

can bid and there is a high policy interest in having competition, 

which leads to us doing an RFP and so on. 

So we are working our way through that one now. But basically 

I think we have got the right overall approach. I am aware of the 

risk that we would put a bunch of requirements in that would 

bring it back more in the direction of a traditional system, and we 

don’t want to do. 

Mr. SMITH. What is the prediction? Okay, so those vehicles are 

out there. When are we going to buy one? You know, how many 

years is it going to be before, with the process in place, before we 

actually have that vehicle for the Marine Corps? 

Secretary KENDALL. I don’t recall the schedule. I will get you 

that for the record. 

[The information referred to was not available at the time of 

printing.] 

Secretary KENDALL. It is going to take us a lot to go through the 

source selection process. Obviously, there is a time associated with 

just getting the RFPs out, doing the evaluation, picking the winner. 

We think that people can generally deliver prototypes to us very 

quickly because these are vehicles that are reasonably mature with 

whatever modifications we end up asking for. 

For one thing, we are going to have to put our own communication suites on these vehicles. That is a necessity. We have to do 

that. Then there are questions about the armaments and so on, 

and perhaps other modifications. 

I share your concerns, though, about going in the wrong direction 

of using requirements to stretch out and increase the costs for a 

very small marginal return on this program. So we will be looking 

at that very closely. 

Mr. SMITH. The second area I want to explore, if we could—and 

I will use the SpaceX, United Launch area as an example—is, one, 

the value of competition; and, two, the value of expanding the number of potential contractors out there. That one of the problems is, 
11 

particularly with technology and services—and I think my staff 

gave me, it is, like, 52 percent of what we acquire now is services 

as opposed to actual hardware—there are a lot of smaller companies that could be very good at that, but they look at the Pentagon 

bureaucracy and go ‘‘yee-ah’’ and walk away. It is hard to move 

people forward. 

Now, in the case of the United Launch Alliance [ULA], we have 

had very expensive launch vehicles for a very long time. And I understand the argument. The argument has been made to me that 

competition would be bad here because we can’t afford the infrastructures for two people to make these things. I am reluctant to 

agree with that argument. 

And yet we have got this 10-year contract. We don’t seem to be 

as encouraging of competition in this area as I would think we 

should be, without skipping into the details. You know, we have 

given United Launch Alliance, and I have heard arguments, a 10- 

year, 5-year contract, is it 80 vehicles, I don’t know. 

But at any rate, they have gotten a pretty substantial amount 

when there is a competitor on the horizon there that could potentially give us the competition that would drive down price. And it 

does not seem to be being well received at the Pentagon. 

Now, it could be they have looked at it and said, we don’t think 

you are going to be able to make what we need. I don’t know. 

Seems like they can. But it also seems like there is an incumbent 

bias there that is robbing us in some instances of the innovation 

of the sort of new companies and new technologies. 

If you could comment both specifically and broadly on that. 

Secretary KENDALL. Sure. Well, first of all, I completely agree 

with you about competition. Competition is the single most effective thing we can do to drive cost down. 

Mr. SMITH. Right. 

Secretary KENDALL. And my personal motivation on the—and I 

think the Air Force’s as well—on the ELV [Expendable Launch Vehicle] situation has been to try to get competition as quickly and 

as much as we can. So we work through the manifest of launches. 

Let me give you a little bit of background here. And the decision 

to go with a certain number what we call cores, rocket engines basically, for the existing incumbent was based on their ability and 

no one else’s ability to do those launches. That was the original decision criteria. 

So everything we thought we could compete we put into the competition category. It was 14 of those at the time. Since then, because of a combination of budget changes and increased lifetime of 

some of our satellites, some of those launches have slipped. We still 

are going to compete them, we are just going to compete them later 

than we had originally intended. 

We have also, once we went on contract with ULA for a certain 

number of cores, we basically were in a position of having to fulfill 

our side of that contract. So one launch, I think, is moved into the 

ULA basket because of that, because of a cancellation. 

But we are committed to competition here. And there is no, I 

think, desire by anybody to keep new entrants out. That said, we 

are also very concerned about mission assurance. We have had a 
12 

very large number of successful launches, and it is very expensive 

to dump a satellite, a billion-dollar satellite in the ocean. 

Mr. SMITH. And have it not work. 

Secretary KENDALL. So we want to have reasonable assurance 

that new entrants are going to have the capability to deliver with 

high reliability. So we are going through that process. We have 

been aggressive about bringing—SpaceX is the one that is currently going through the process—about bringing SpaceX in. 

When I did the decision memorandum on this over a year or so 

ago, I guess, the guidance I put out was let’s go ahead and let people compete if they are on the path to certification. Let them put 

a bid in—— 

Mr. SMITH. Right. This is the problem. It is a long-term thing. 

They are saying, we are going to be ready to compete, but now 10 

years you have locked us out. So 3 years from now we are ready 

to compete. 

Secretary KENDALL. Locked them out is not really the intent. The 

intent is to do launches with ULA that only ULA can do, with the 

exception I mentioned because of changes in the manifest and 

changes in the schedule, which is on the margins. 

So I share your commitment to competition. That is what we are 

trying to do. And I believe we have moved in that direction as aggressively, pretty much, as we could. 

Mr. SMITH. And one last—this is really more of a comment than 

a question—on the subject of competition. And this is stated or 

asked out of my respect for Doug Roach. On the competition issue 

we up here took a whole lot of grief on the second engine. Is there 

anybody over at the Pentagon now F–35-wise who is wishing they 

had a second engine? 

Secretary KENDALL. I don’t think so. The problem we have right 

now, we have had two or three issues with the engines come out 

of the development program, is the type of thing we would have 

likely encountered with any engine in development. Secretary 

Gates years ago made a decision that we could not afford the development costs and the capitalization costs associated with a second 

engine. It was based on the economic analysis at the time. I think 

it was the right decision at the time. It doesn’t really benefit us to 

look back in hindsight. 

I am a huge advocate for competition. But unfortunately for the 

Department, in any number of areas—you mentioned carrier earlier—we can’t have competition because we simply can’t afford it. 

There is an upfront cost associated with it. So one of the things I 

have tried to do is where we can’t have direct competition is at 

least create the threat of loss of business in some way so that there 

is a competitive environment, so some of the competitive pressures 

are there. 

Interestingly, in the ELV case we were able just with the threat 

of future new entrants to substantially drive down the price we 

were paying for that core contract, that multiyear contract that we 

just talked about, that block buy. So it is successful. Competition 

works. It is just that we can’t always afford it. 

Mr. SMITH. Understood. Actually, a lot of us up here took a lot 

of grief. We have mentioned a lot of things that Congress does 

wrong. I think a lot of times Congress also puts pressure on the 
13 

Pentagon in a good way. Whenever people say, well, the Department of Defense has said that they don’t want this, who is Congress to say otherwise? And it is like, okay, why don’t we shut us 

down and let the Department of Defense do whatever they want to 

do? We are supposed to exercise oversight. And every once in a 

while we are right. So we are going to keep exercising that oversight. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Mr. Thornberry. 

Mr. THORNBERRY. Thank you, Mr. Chairman. 

Thank you both for being here. And in all the conversations one 

has on this topic, I think the thing on which there is universal 

agreement is that people are the key. And recruiting, keeping good 

people, giving them the authority to do their job, and then having 

the accountability for that is the most important part of this. And 

obviously your two organizations working together is a key part of 

that. And finding a way to get to yes, rather than finding excuses 

on why things can’t be done, I think is critical. And if laws get in 

the way, we want to hear that. 

Mr. Kendall, I appreciate all of the work that we have been able 

to start together. The one comment I would make from your written testimony is, I am really glad you all are working on a legislative initiative. I hope we can exchange ideas as we go along rather 

than wait till the budget comes up next year, which may be too late 

for our process. I mean, we don’t have to have all the t’s crossed 

and the i’s dotted, but through the fall and so forth, as we come 

up with ideas, we want to run them past you, and I hope that 

works both ways. 

Secretary KENDALL. Absolutely, Congressman Thornberry. I 

think Andrew Hunter, who is leading this effort for me, he is a 

former committee staff member, and I think he is in conversations 

with your staff and the committee staff on this routinely. And we 

are going to continue that. I think it is, as I mentioned earlier, the 

cooperation I think is terrific, and very happy to work with the 

committee on this. 

Mr. THORNBERRY. Well, I appreciate that. 

Ms. Barna, as I said, everybody agrees people are the key. If you 

are in industry, there are tools that they have to use, like bonuses 

and so forth, to encourage behavior and decisionmaking that they 

want to see. You talked about this a little bit, or some, in your 

written testimony. But if you are a civilian program manager today 

in the Department of Defense, what are the tools that the supervisor or the system has to encourage or to reward good performance? 

Ms. BARNA. Sir, the system has a plethora of tools that we can 

use. And when I look at the statistics, the acquisition community 

is using them well and using them often. In the case of someone 

who already is employed, we have relocation bonuses that will 

allow someone to move to a new location if they wished and serve 

in a new duty position. We have retention bonuses. 

And, again, the acquisition community uses these frequently 

with—and again, I will put in a pitch for the continuation of the 

Defense Acquisition Workforce Development Fund [DAWDF]—has 
14 

been able to use those because of their commitment and your commitment to funding the DAWDF. 

Another tool that we see frequently is the student loan repayment program. Under that program, a program manager can be 

paid a student loan repayment of up to $10,000 per year, up to 

$60,000 over the life of the employee. That accounts for about 40 

percent of the incentives that the acquisition workforce is paying 

in the last year, 40 percent. 

And then there are the more intangible sort of rewards that come 

from working in an important mission, contributing to the national 

security, working with people who are like-minded, the ability to 

serve in unique and interesting places and to do unique and interesting work. 

Mr. THORNBERRY. I agree with you on the intangible. Of course, 

the sooner you can see the fruits of your labor come to be, there 

is more reward there. 

But just one question. On the student loan repayment, is that a 

judgment call that the supervisor makes about whether someone is 

doing a good enough job to get that? Or is it more of an automatic 

thing? 

Ms. BARNA. It is actually a judgment call. It is used very frequently. Again, we have a number of graduates coming out of 

schools with great amounts of debt. And so this is also an incentive 

to recruit. 

Mr. THORNBERRY. What percentage of the acquisition workforce 

hired in the last 10 years would you say gets the student loan repayment? 

Ms. BARNA. I will have to take that for the record, sir, and come 

with the accurate amount. 

[The information referred to can be found in the Appendix on 

page 75.] 

Ms. BARNA. But right now, 40 percent of the incentives that are 

paid in the corps involve student loan repayment. It is very effective. 

Mr. THORNBERRY. Well, I would be interested in following up 

with your office for some more statistics so that I can at least understand how often some of these tools are used and on whom and 

in what circumstances. 

Ms. BARNA. I am happy to provide that information, sir. 

Mr. THORNBERRY. I appreciate it. 

Thank you, Chairman. 

The CHAIRMAN. Thank you. 

Mr. Kilmer. 

Mr. KILMER. Thank you, Mr. Chairman. 

Thank you both for being here. 

My first question is to Secretary Kendall. Before we get acquisition professionals to make smart decisions, we need to provide 

them with the means to execute acquisition programs, and under 

Better Buying Power 2.0 advocated for the achievement of affordable programs and implementation of a system of investment planning. 

With that in mind, I am interested in understanding your 

thoughts on how the Department will plan to fully support the 

Ohio Replacement Program and the SCN [Shipbuilding and Con-
15 

version, Navy] budget as a whole. This committee offered the National Strategic Deterrence Fund as a solution. I am sure you know 

the most recent 30-year shipbuilding plan says the Navy cannot afford to do it all. 

In the spirit of acquisition reform, I was hoping you could speak 

a bit about how we can best protect the investment in our undersea 

nuclear deterrent and in other shipbuilding programs. 

Secretary KENDALL. We have an affordability issue as we enter 

the 2020s in general. The Ohio replacement is a big part of that. 

It is not the only piece of it. The strategic deterrent across the 

board, the bomber, ICBM [intercontintental ballistic missile], and 

the SSBN [ballistic missile submarine] all need to be replaced in 

about the same timeframe. 

That is not the only place in the budget where we have a problem like this. What we have been trying to do under Better Buying 

Power is discipline our programmers and service leadership really 

to look long term at the lifecycle of their products that they are trying to buy so that we avoid starting things that we can’t afford in 

the future. 

We have had reasonable success with that. But that doesn’t get 

us out of the problem of all those things that we need to buy out 

in the 2020-ish timeframe. I don’t know how we are going to solve 

that problem, but we are going to have to solve it somehow if we 

are going to have the force structure that we need. 

Mr. KILMER. I also want to ask a bit about the subject that Mr. 

Smith mentioned of commercial kind of off-the-shelf solutions. 

There was a feature story in Government Executive this week 

called ‘‘Daring Deal.’’ And the focus was on how the IC [Intelligence 

Community] is leveraging a leading commercial cloud provider, in 

this case it was Amazon, to build a community cloud for the Intelligence Community based on the utility model. 

We also know the Navy is already utilizing commercial cloud to 

move level 1 and 2 workloads to a commercial solution. Civilian 

agencies, like HHS [Health and Human Services], are even moving 

sensitive but unclassified workloads to commercial cloud. But up to 

this point the Defense Department has been lagging in that category, particularly for levels 3 through 5 data. 

Could you talk to the committee about how the DOD as part of 

the overall defense acquisition reform effort is going to better leverage commercial cloud technologies, both in the short and the long 

term? And also can you speak to the Pentagon’s plan to use commercial service providers to build a community cloud for classified 

data? 

Secretary KENDALL. I am going to have to take that for the 

record. 

[The information referred to was not available at the time of 

printing.] 

Secretary KENDALL. But in our major what I would call IT [information technology] infrastructure projects, and I am thinking right 

now of the Navy’s Next-Generation, for example, we are using essentially commercial products. Now, whether we are using a commercial cloud which merges defense data with nondefense data in 

a storage facility, for example, which is really what we are talking 
16 

about I think here, I don’t know the answer to that question or how 

much that solution implemented that. 

We do have, obviously, privacy issues, we have security issues 

that we have to ensure are enforced. So if a commercial cloud can 

meet those requirements and there are economic advantages to it, 

I don’t think I would have any objection to going that way. But I 

am going to have to take for the record where we are in terms of 

exploring that and implementing it. 

Mr. KILMER. With the time I have permitting, Secretary Barna, 

professional education is obviously an important aspect of preparing our acquisition workforce, both in terms of their ability to 

develop realistic requirements and buy what we need. 

I think one of the values of the Better Buying Power initiative 

is that it asks acquisition professionals to think. To what extent 

does the Defense Acquisition University use case studies to educate 

its students on best practices and lesson learned and the rationale 

behind the curriculum? And how are we empowering our acquisition professionals to make good decisions? 

Secretary KENDALL. Congressman, if I could take that one. We 

do use case studies extensively at the Defense Acquisition University, and I have encouraged the new president to use them more. 

My business school training kind of, I didn’t go to Harvard, but I 

kind of follow the Harvard model. I think case studies are a great 

learning tool. They do help people with critical thinking. They 

teach principles at the same time. But they force people to confront 

problems and address them. And we have no shortage of case studies historically at the Defense Department that we can use to help 

our learning process. 

Mr. KILMER. Thank you. 

Thank you. I yield back. 

The CHAIRMAN. Thank you. 

Mr. Forbes. 

Mr. FORBES. Thank you, Mr. Chairman. Thank you for holding 

this hearing. I also want to thank Mr. Thornberry for his work in 

this area, and it is an important area for us to get right. 

And thank both of you for your service to our country and for 

being here today. 

For as long as I have been in Congress, whenever I go to any facility anywhere, the base commander is always telling me the same 

thing. They say that oftentimes when they have a need, it is the 

small or medium-sized businesses that can go from idea to deployment utilization the quickest. But they get so frustrated with the 

acquisition process that they just walk away and they don’t do it, 

and they use the bigger companies. 

When I talk to the smaller or medium-sized companies, what 

they are enormously frustrated with is if they see a need that is 

out there and they make investment in that need, they feel like 

when they come up with that idea that everybody recognizes is 

very important and novel, that they have no way of really protecting the idea for themselves because it is taken away from them 

and given to a larger company. And I hear this over and over 

again. 

If I could put an ink pen in both of your hands and say, write 

for the chairman the number one thing we could do as a committee 
17 

to help on either one of those problems, what would you tell us we 

could do? 

Secretary KENDALL. I am not sure what procedural things we 

could change that would help small businesses in the way that you 

describe, in terms of barriers to entry because of government rules 

and regulations. And by the way, I share your views on small businesses. They are incredibly important contributors to the Department. And we have worked extensively over the last few years to 

try to increase their involvement with the Department. 

And the Federal Government, overall, for the first time, I think, 

ever, met its small business goals last year in terms of percentage 

of business going to small businesses. Defense Department didn’t 

quite meet its, but I think we are on track to do better this year. 

I am very hopeful about our performance there. So we have 

reached out to small business a great deal. 

There are barriers to entry because doing business with the government is a little bit different. We have a lot of things in place 

to kind of educate and inform small businesses about what it takes 

and how to get into government business. I meet on about a monthly basis with all of our small business leaders, and this is one of 

the subjects that we routinely discuss. 

The protection of intellectual property. I do hear from small businesses concerns and fears, often, particularly startups for new technologies, that if they share their ideas with big firms, that the big 

firms will steal their ideas. We need to protect that intellectual 

property. They need to establish those rights and then need to protect them. And the government is very happy work with them to 

do that. 

Also, the other thing I hear mostly from small businesses is that 

they are brought into a proposal, to strengthen a proposal, with a 

major firm, and then when the business is actually awarded they 

don’t get the business. That is another issue that we are working. 

I want to make the comment finally on this topic that the single 

best thing that Congress can do for us in terms of small businesses 

is to stabilize the budget. The uncertainty we have right now about 

how much budget we are going to have and the cuts we are going 

to take potentially under sequestration I think are going to fall disproportionately on small businesses, because they are going to hit 

our service contractors, which is where a lot of small businesses 

are, it is going to hit a lot of our smaller suppliers very hard. 

So I would urge you and I would urge the entire Congress to get 

the specter of sequestration off of our backs, because—— 

Mr. FORBES. Could I ask you one more thing, just because my 

time is running out. But I appreciate that. What specifically could 

we do or should we do to leverage modeling and simulation in the 

early stages of acquisition to ensure mission or operational relevance for new capabilities and continued mission operational relevance of existing capabilities? 

Secretary KENDALL. I think that is an area where we need to do 

some building. I was out of the Defense Department for about 15 

years and came back 4 years ago, and I was struck by how much 

our capability to do modeling and simulation to support decisionmaking about programs and so on had atrophied. We have been 
18 

working on the margins to restore that. I think we need do more 

there. 

I have an initiative with the Defense Advanced Research Projects 

Agency that I was briefed on yesterday, and they highlighted that. 

It is one of the critical needs they have, to help us sort out our requirements and determine what really makes sense from an operational requirements perspective. 

So I share your concern. I think we need to do more there. It is 

just, again, in the environment that we are in it is incredibly difficult to add resources to any specific area because we are taking 

so much away from so many areas. 

Mr. FORBES. We would love to work with you on that and try to 

help it. 

And, Mr. Chairman, thank you. And I yield back the balance of 

my time. 

The CHAIRMAN. Thank you. 

Ms. Speier. 

Ms. SPEIER. Mr. Chairman, thank you. 

And thank you both for being here today. 

Secretary Kendall, I think you said all the right things in your 

opening statement. I believe that you are committed to Better Buying Power and that we have got to change the culture from spending whatever is in the budget for fear that you are going to lose 

it the next year. I think that is a phenomenon that we have really 

got to address throughout government. 

But I am deeply troubled by the fact that 25 years ago we were complaining about $600 toilet seats and $8,500 coffee urns, and the 

truth of the matter is, we are still dealing with those same issues 

today. And I want to focus on spare parts in particular. And the 

Inspector General report that was just released this week looking 

exclusively at Bell Helicopters and the sole-source commercial contract for spare parts. 

This particular part that they take note of should cost about $409, and we paid about $3,500 per part for this, and we bought 

116 of them, costing us $367,000. The report suggests that because 

it is a sole-source contract that, in fact, the analysts are not relying 

on the kind of data they should be relying on in order to determine 

whether or not it is a fair price or not. And so we continue to have 

the same problems. 

And I want to know what you think you are going to do to 

change an Inspector General report so we don’t get another one 

like this. 

Secretary KENDALL. This is an ongoing and difficult problem to 

address. Let me explain why. It is a question partly of capacity. We 

buy hundreds of thousands of parts, and the workforce that does 

that has to go establish that they have a reasonable price for those 

parts. And the workforce has a limited size. They only have so 

much capacity. My director of pricing has worked very hard with 

this community and DLA, Defense Logistics Agency, which does a 

lot of this, has worked very hard, Admiral Harnitchek there has 

worked very hard on this. 

The standard that we have for a lot of these parts is one that 

applies to commercial parts, or what we call commercial ‘‘of a type’’ 

parts. We have an ongoing dialogue with industry on this. Because 
19 

our policy right now is fairly flexible, it says that the government 

can rely on commercially established prices for commercial products or commercial ‘‘of a type’’ products, but if there is a question 

about that price, then we can ask for anything up to certified cost 

and pricing data, which is a very high requirement for people to 

meet and which commercial companies normally are not in a position to provide. So that puts a burden on industry. 

And we talked earlier about barriers to commercial companies 

trying to get into the DOD and sell things to us. And I have had 

companies, large companies who do a lot of commercial aerospace 

work, for example, say they will walk away from DOD business if 

they are forced to put certified cost and pricing data on all their 

commercial products. It is just too big a burden for them, and the 

business isn’t worth it to them. 

So it cuts both ways here. What happens, unfortunately—— 

Ms. SPEIER. So tell us how to fix it. 

Secretary KENDALL. What we have to do I think is, first of all, 

increase our capacity. We have to use auditing tools. We have to 

do sampling to try to catch as much of the fraud, if you will. I think 

what you describe is basically fraud. Someone who is charging us 

10 times what something costs is not doing—— 

Ms. SPEIER. Okay. But here is the problem. It is fraud, and we 

will continue to do business with Bell Helicopter, and they will continue to rip us off. Correct? 

Secretary KENDALL. What we have to do is hold them accountable for the thing you just described, and they can pay the penalty 

that is appropriate for that. 

There will be audits based on—I just got the report—but based 

on the report that I have, we will be auditing an awful lot of what 

they do to us to see how widespread this is. And if it is an isolated 

case, that is one thing. But if it is systemic, that is a much bigger 

deal. 

Ms. SPEIER. Will you then report back to us? 

Secretary KENDALL. Absolutely. 

[The information referred to was not available at the time of 

printing.] 

Ms. SPEIER. All right. Let me ask you about the F–35 engine. Do 

you believe, based on what you have learned so far, that it 

stemmed from an isolated incident or was it a systemic engine 

flaw? 

Secretary KENDALL. I don’t want to get ahead of the safety evaluation process. I have gotten some reports on where we are on 

that. We have inspected all of the existing engines that are in service. We have not found, as far as I know, anything that suggests 

the type of problem that we think caused this failure. 

So we are examining the actual engine that did fail, the parts of 

it that we have, to try to determine what caused the failure. We 

really want to get at the root cause of this to determine exactly 

what caused it. I, as a political appointee, don’t want to get involved in or influence the safety process that the safety professionals and the airworthiness professionals need to conduct. 

So we will get to the bottom of this. We will do the right things 

technically to get to the bottom of this, and then we will take the 

right action. But safety of flight is a primary consideration here, 
20 

and that is what is going to govern us. So I don’t want to get ahead 

of that process. 

From what I know now, I will go this far, there is a growing body 

of evidence that this may have been an individual situation, not a 

systemic one. But we don’t know that for certain at this point in 

time. And until we do have real good technical answers on this, I 

don’t want to get ahead of the process. 

Ms. SPEIER. Thank you. My time is up. 

The CHAIRMAN. Thank you. 

Mr. Wilson. 

Mr. WILSON. Thank you, Mr. Chairman. 

I want to thank you and Vice Chairman Mac Thornberry for your 

leadership on these issues as we work to improve the system. 

And both Secretaries, thank you all for being here today. I note 

that you are concerned and want to make changes. 

And I appreciate Ms. Speier’s questions, and join with her expressing concern. And I just am so hopeful that changes can be 

made. I am particularly concerned about the Department of Defense, how they acquire information, IT, technology systems. The 

concern is that we waste money on systems like the Air Force’s Expeditionary Combat Support System that was canceled after $1.2 

billion was invested and nothing was produced. But we also have 

competing IT systems within the services that do not speak to one 

another. And this causes waste. 

In the most recent example, the DOD destroyed $1.2 billion in 

ammunition because DOD’s inventory systems cannot share data 

effectively. That is $2.4 billion in waste. How can we analyze both 

of these examples to avoid waste in the future? 

Secretary KENDALL. Congressman, I am familiar with the first 

issue, dealing with the Air Force. I am not familiar with the ammunition issue. Let me address IT in general, because the phrase 

‘‘IT’’ is incredibly broad. It applies, actually, to a large number of 

the things that we do. It applies to the infrastructure that we buy 

that supports our networks, the clouds that were referred to earlier, this data storage capability, the communications capability 

and the processing capability, which is largely commercial products 

that we buy. It also applies to the business systems, which is what 

the system that you talked about earlier was, the ECSS system, 

Expeditionary Combat Support System, for the Air Force. So there 

what we do is we acquire largely commercial products that are 

used for commercial-like processes, paying personnel, logistics support, and so on. And we adopt them to the military’s needs, to meet 

the military’s requirements. So there is a lot of work done to do 

that. And then we field them basically while we are still operating 

the legacy system that we have to make sure that they are running 

before we shut off the system we already have. We have to do 

changes as we go in process. Then to the national security IT systems, the battle command and control systems, and then there are 

the embedded IT that we buy that is in all of our weapons systems. 

So IT covers a huge amount of ground. 

Let me focus on what I think is the heart of your question, which 

is the business systems and the networks that they run on. Okay. 

I have recently brought those business systems more under my 

control. And I am working closely with the new CIO [Chief Infor-
21 

mation Officer], Terry Halvorsen, on the infrastructure, which he 

is more responsible for. I think we can do a lot better in this area. 

One of the things we have to do is build up a greater body, again 

coming back to people, we need professionals in this area. Business 

systems are somewhat unique. IT infrastructure is somewhat 

unique. And we need people who really understand these areas 

technically, both in terms of how they work, but also how to acquire them and how to transition them. We also need to do a better 

job across the Department of homogenizing our requirements. And 

the CIO is well into this with what we call the JIE, Joint Information Environment effort, which was started a couple of years ago 

now, which is doing things like consolidating databases in Europe, 

for example. And there is a roadmap for how we are going to get 

there. 

So we are tackling this problem. We would like to make a larger 

investment in this area so that we can move faster in this area, 

but it is very difficult to do that in the current climate. 

Mr. WILSON. So, clearly, you are looking at the Air Force problem 

and learning from that and making changes. And I will be getting 

information to you relative to the ammunition. 

Another issue, of course, is the traditional one. This one is the 

intelligence system, the Distributed Common Ground System. And 

there is a concern among the military of an inability for this system to work, when in fact if you were to go and acquire a commercial, off-the-shelf system, it would work. And in fact, the FBI [Federal Bureau of Investigation], CIA [Central Intelligence Agency], 

DEA [Drug Enforcement Administration], NSA [National Security 

Agency] have been using commercial systems as opposed to what 

DOD is pursuing. Are you looking into this? 

Secretary KENDALL. Yeah, I am familiar with that case. It is an 

Army program that I have seen in the field. I have actually seen 

both the commercial system and the Army system in the field being 

used in an operational command. The two systems bring different 

virtues to the table, basically. You are referring to Palantir is the 

commercial system. Palantir is very good at some things, it is a 

more intuitive system. And a lot of our operators who are not essentially career intelligence people like it because of its intuitiveness and easiest to work with. 

DCGS–A [Distributed Common Ground Systems–Army] on the 

other hand brings an awful lot of other capabilities that our intelligence analysts need. And I believe the Army is working to bring 

the Palantir-like technology into DCGS–A. 

Mr. WILSON. As I conclude, I, in my military service, worked 

with SenGuard, and it was just a disaster when I could use my cell 

phone. And so I was at the National Training Center at Fort Irwin, 

and gosh, please look into commercial, off-the-shelf systems. Thank 

you. 

Secretary KENDALL. We are moving very much in that direction 

for tactical radios. We are doing commercial acquisition for tactical 

radios now. 

The CHAIRMAN. Thank you. Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. 

First, Secretary Kendall, can you give us examples of the flip 

side of the acquisition problem? That is, the Department of Defense 
22 

having to buy things that you no longer want to buy? And what 

would be on that list? 

Secretary KENDALL. Well, there were a number of things that, 

unfortunately, this committee did not approve that we sent up. A 

lot of cost-saving measures that—I know BRAC [Base Closure and 

Realignment] is very unpopular, but that is one of the things we 

tried to do. We tried to do some things with compensation that we 

really need to do. Compensation cost growth is excessive for us. 

We did some efficiency things with Navy cruisers that we think 

were a very smart management approach to how we manage that 

part of the force structure. Take them out of service, take the people out for a while, do the modernization, then bring them back in. 

We think that was a wise thing to do. The F–18 E, F, G models 

of the F–18, unfortunately, that production line is going to come to 

an end at some point. We are not going to keep buying those airplanes forever. And when we did our priorities, even though the 

Navy has asserted that there is a need for additional, we need an 

awful lot of things we can’t afford right now. So that is another example. And I probably could give you some more for the record if 

I went back and took a look at it. 

Mr. LARSEN. I thought you might have examples. 

I think it is sort of the flip side of this argument as well. There 

are changes that we ought to make in how we buy things. There 

are also changes in what we ought to be buying and what we ought 

not to be buying. And maybe we can look at that. 

I want to underscore Mr. Kilmer’s comments about commercial 

cloud services and really hope that you will look hard at whether 

the Department itself has the kind of skills, abilities, knowledge, 

to either create, recreate, or if you are going to end up with a similar kind of situation that Mr. Smith has brought up about the— 

I understand the laser sharks, I wasn’t here for that comment, but 

I can certainly understand it—that is the Department doing something and just keep adding and adding and adding on top of something that is already easily available that you can use without too 

many changes, and pretty soon you have something that is wholly 

unworkable. 

Finally, this isn’t an indictment of the acquisition workforce, and 

I don’t mean it this way, but before sequestration, before pay 

freezes, before budget uncertainty, we had acquisition problems. So 

those aren’t necessarily—those are important that you have to deal 

with, but I don’t see that as necessarily—they may be part of the 

solution set, but it is not the solution, because we were having 

those issues in the 2000s, when there was certainly no budget uncertainty in the Department of Defense. There was in fact way too 

much money being spent, and there was no discipline in how it was 

being spent. Little discipline in how it was being spent, I should 

say. Certainly, again, there was a lot of certainty. There weren’t 

pay freezes, and we didn’t have sequestration. 

So, given that context, what would you say about the workforce 

itself? If you could be more objective in terms of taking out some 

of those issues, what would be specific to what we can do about the 

workforce itself? 

Secretary KENDALL. I think flexibility in managing the workforce 

is important to us. Ms. Barna mentioned some of the tools that we 
23 

have that we are using. The AcqDemo [Army Acquisition Demonstration Project] personnel management system basically is a 

good tool that we would like to expand on and appreciate the increased authorization of that. But we would like to have it permanently available to us. We would like to expand it. A lot of what 

we need to do with our force is cultural, and it is chain of command 

management throughout the structure. It is not just in the acquisition side of the house where I am, but also the services and their 

personnel management practices. We need to make it clearer how 

important acquisition people are to us, how valued they are. We 

need to reward them for what they do, acknowledge its importance. 

We need to reinforce the criticality of those jobs and set high standards for those people that are well recognized and appreciated. We 

want people to aspire to take leadership positions in acquisition 

and to feel that they have accomplished something when they get 

to one of those positions. 

We are looking at our own qualification requirements, and we 

are strengthening them. We have a system that is statutory that 

I don’t think needs to be modified particularly but that I think has 

become somewhat inflated over time. It has become sort of a checkthe-box thing to get to a certain level of acquisition certification. 

And we want to move beyond that. We want that to be meaningful. 

So we are doing a number of things in that area. We are trying 

to recognize professionally people who are top performers so we 

hold those people up and what they have done as the standards of 

what we expect of people. So there are a lot of things that are just 

leadership things that we can do that I think are kind of foremost 

there. And that, again, takes time. You have to build that over 

time. 

Now, there is a lot, obviously, in this area that I think we are 

doing already. I just think we can do more. And the things you 

mentioned, I take your point that we had acquisition problems far 

before we had pay freezes and furloughs and sequestration and so 

on. That is true. But those things are compounding our problem 

with recruiting and retention. We are using DAWDF very effectively. That is one of the tools that we have. We have an awful lot 

of our workforce that is going to be retiring in the next few years. 

And we really need to build up the middle of the workforce, in particular, its expertise. So we need help doing that. 

Mr. LARSEN. That is fair. 

Thank you, Mr. Chairman. 

Mr. THORNBERRY [presiding]. Mr. Wittman. 

Mr. WITTMAN. Thank you, Mr. Chairman. 

Secretary Kendall, Ms. Barna, thanks for joining us today. 

Secretary Kendall, if you look at what Congress has done in the 

past about major defense acquisition programs, the focus has been 

on research and development and production. 

Secretary KENDALL. Yes. 

Mr. WITTMAN. But if you look at the costs associated with the 

lifecycle of those programs, 70 percent is in sustainment. Can you 

tell me, are sustainment costs looked at upfront in the development 

of major acquisition programs? And if not, what can be done to reform the programs so we look at those lifecycle costs and so we 
24 

truly get to the best value when we are making decisions about 

these major acquisition programs? 

Secretary KENDALL. That is a great point. We focus, partly because it is so visible, and because they tend to be rather dramatic 

sometimes, on overruns in development, which is the riskiest part 

of all of our programs. On the average, our systems overrun by 

about 30 percent in development, and only overrun by about 10 

percent in production because that is easier to forget. And the 30 

percent number is driven by a few outliers that are very dramatic 

cases that we focus on. But development is only 10 percent of the 

lifecycle costs of most of our programs. As you say, half of the cost 

is in sustainment, it is in paying to keep it in service and do all 

the logistics. When we establish affordability caps on programs, 

what I am doing is establishing a cap for production and a cap for 

sustainment. So the sustainment considerations are forced into the 

design process early. We are also requiring—we have been doing 

this for a couple of years now—reliability growth curves. So that 

as programs come through development, they demonstrate the reliability that we need for them when they are fielded. And we don’t 

trade those things away trying to keep schedule or to keep performance high, other metrics. So there is a strong focus on 

sustainment. It is also an area of service contracting that we are 

focusing on, particularly maintenance and use of techniques, like 

performance-based logistics, as a tool to try to drive out costs. We 

are trying to implement that more broadly, and we are also looking 

for other best practices to use in sustainment. 

Mr. WITTMAN. Looking also at what Congress has done over the 

past 25 years in another realm, and that is changing the laws as 

it relates to acquisition, much of that churn results in different 

legal frameworks that both folks within the acquisition community 

and the contracting community look at and then respond accordingly. That also changes the dynamic about how decisions are being 

made. Is there something that Congress can do, not to complicate 

that by another law, but to simplify that, to make things more determinable by both acquisition professionals, the acquisition community, and by contractors to where we get away from this churn 

and this act-react sort of dynamic that we find ourselves in? 

Secretary KENDALL. Absolutely. I share your observation. That is 

what my team, led by Andrew Hunter, is working on with Congressman Thornberry and his people, to try to address exactly that 

issue. When I rewrote DOD 5002, the document that governs the 

acquisition process, there is a section in there which is essentially 

tables of compliance requirements, almost all statutory. And it 

struck me, as I looked at page after page after page of very dense 

requirements, the kind of nightmare world in which our programs 

managers have to live. Now, many of those statutes that have created what has led to those tables were very well intended and had 

a good solid purpose behind them. What we need to do, though, is 

simplify and rationalize that body of law so it is more coherent, so 

it is logical, so it is consistent. And that is a fundamental task that 

we are working on right now. 

Mr. WITTMAN. Another element of what we look at within acquisition, and that is consistency in decisionmaking. And that is about 

people, and making sure, too, that we have the same people in 
25 

place through the decisionmaking process of a program. Can you 

tell me how do you better align tenure with individuals, both in the 

civilian side but also in the uniform side to make sure that there 

is consistency there? Because we have seen in the past—we don’t 

have to reinvent the wheel—we have seen in the past where we 

have had successful programs there has been continuity in individuals, in decisionmaking there where we aren’t back and forth with 

one person that has gone down one track, and then a new person 

is in, they have to relearn or go down a different track, and then 

we have this uncertainty or back and forth. How do you address 

that with tenured individuals, both in the civilian side and in the 

uniform side, through the lifecycle of the program? 

Secretary KENDALL. Another great point. We have looked at the 

data on tenure and tried to correlate it to program results. And we 

don’t see a high correlation. But I believe intuitively that it matters. I believe more strongly that the quality of the leadership matters a great deal. The change that I have made that I think is important is that what I am asking our program managers to do, our 

product services to do, is to assign program managers a few 

months before a major decision starting a phase so that they are 

there and they have basically ownership of that decision. But they 

stay in place after that decision for the next few years so they are 

responsible for executing the program that they said was executable. So that they are held accountable for the performance, not 

just getting the decision. Because there is a tendency in our system 

to look at getting to milestone approval or getting the contract 

awarded as success. That is not success. Success is delivering the 

product on cost and schedule and time and to meet the performance requirements. And I want our program managers held accountable for that. 

The other thing I have done is, I have been doing this for 4 years 

now, I put the names of the chain of command in each acquisition 

decision memorandum. The service acquisition executive, of course, 

I assign them. The program executive officer and the program 

manager. So there is a permanent record of who came in and said 

this is an executable program that we can go do. And I want that 

on the record so that that is there forever. So those steps I think 

will help hold people accountable and will help us measure as part 

of that overall cultural change. What do we really want to hold 

people responsible for? What is success? And what are the incentives to people in terms of how they do their jobs? 

Mr. WITTMAN. Thank you, Mr. Chairman. 

Mr. THORNBERRY. Thank you. 

Ms. Duckworth. 

Ms. DUCKWORTH. Thank you, Mr. Chairman. 

Mr. Secretary, I, too, agree that small businesses are a real engine for the economy and can really help with innovation. I appreciate your comments on some of the things that we can do here in 

Congress to help small businesses. But I have to tell you that I 

have small businesses in my district that are still struggling. I 

have one business that does advanced hearing protection, Etymotic 

Research, and they have been waiting over 2 years, almost 3 years 

now, simply for an NSN [National Stock Number] number. And 

they keep being told that they are just weeks away from getting 
26 

an NSN number, even though they have potential military units 

that are interested in testing out their product. And because they 

don’t have the resources of a large corporation, they just keep going 

through the grind. And that I think is what wears down these 

small businesses who don’t have the capacity. So if there is something we can do to work on that, that would be very helpful. 

Secretary KENDALL. If you give me the information, we will look 

into it and see what we can do for that specific case. But I think, 

in general, we will take a look at the backlog for that area and see 

if there is anything that we can do about that. 

Ms. DUCKWORTH. That would be great. I think that NSN number, there is a real backlog there for businesses trying to get those 

numbers. 

Secretary KENDALL. I think it gets to the issue I talked about 

earlier, which was the capacity right now in the workforce. But we 

will take it on and see what we can do to be more efficient. 

Ms. DUCKWORTH. Great. Thank you. 

I also would like to talk with you about the office for Cost Assessment and Program Evaluation, the CAPE. I think that it is 

doing a great job in terms of taking an increasingly forward position assessing acquisition programs and level of costs and looking 

at scheduled risk in the programs. Is there any way of leveraging 

the CAPE analysis so that it can be used to build risk mitigation 

into programs? Because they don’t generally take public stands on 

programs, nor do they offer feedback to industry. And I just think 

that their programmatic assessments, if it were available to industry, could really help industry understand the analysis and to address the risks and concerns earlier in the programs before issues 

arise. Is this something that could be done? 

Secretary KENDALL. CAPE does independent cost analysis primarily. It looks at the realism of the costs and the service projections. And I rely on them very heavily for that. The cost estimates 

that have been coming from the services, it is a little bit surprising 

to me, given my experience years ago, are generally very consistent 

with CAPE’s today. There are only a few percent differences in 

most cases. That analysis is very valuable to us. CAPE has a huge 

cost database they use as—a historical database they use as a basis 

for that. Some of that information is proprietary, I believe, so we 

would have a hard time sharing that. 

On the risk of execution, I rely more heavily on my own system 

engineering office and developmental test office to look at those 

issues, and my research and engineering assistant secretary to look 

at the technical risks of the programs. 

We try to communicate with the services certainly. I think communication goes through the industry about where we see the risk 

and where we see adjustments needed in programs because of that. 

I recently added a year of testing, essentially, to one of the programs that came before me recently because I thought there was 

too much concurrency in the program. I am not sure—you make a 

good point in terms of getting lessons learned out to the broader 

community. Let me take that one, and I will think about what we 

can do to do more of that. I think, communication—we talk about 

case studies at DAU [Defense Acquisition University]. That is one 
27 

vehicle we have. But I think, in general, we can put out more on 

why we are doing what we are doing and what is leading to it. 

The PARC organization that works for me, the Program Assessment Root Cause analysis organization, does do analysis of NunnMcCurdys. And as part of my annual report in the performance of 

the acquisition system provide data on their assessments and 

where they are seeing root cause issues. So that is one vehicle that 

we have. I might be able to add additional data from CAPE to that 

volume as well. That would be one way to do it. Let me take that 

on and see what I can do, because it is an interesting idea. 

Ms. DUCKWORTH. Great. Thank you. My final question is back to 

the F–35. I know you can’t talk about—I absolutely understand the 

process, the safety review that has to happen with the engines. But 

can you address a little bit the issue with reports that the F–35 

is now actually damaging runways? Certain types of runways that 

are not especially reinforced? And which would then reduce its capacity to be forward deployed on certain surface areas. Which really takes away one of the advantages of the design of the aircraft. 

Secretary KENDALL. Yeah. I think the issue you are referring to, 

I believe it is, let me take it for the record to give you a good answer, but what I think you are referring to is the heating that 

comes from the STOVL [Short Take-Off/Vertical Landing] variant 

when the nozzles are oriented down, so the exhaust goes down onto 

the runway. That was a concern originally on carrier decks. And 

we discovered that we could handle that. That was all right for us. 

But I am not sure how much of a problem it is for normal tarmac, 

for normal runways or concrete runways. Let me take that one on 

and see how much of an issue it is there. I don’t know the answer 

to your question. 

Ms. DUCKWORTH. There was a recent report that came out said 

that unless it was a specially reinforced tarmac or runway, that it 

would not be useful. 

Secretary KENDALL. I think there may be some operational limitations on how we can use the STOVL variant on standard runway 

surfaces. Let me check on that one. 

[The information referred to was not available at the time of 

printing.] 

Ms. DUCKWORTH. Thank you. 

Thank you, Mr. Chairman. 

Mr. THORNBERRY. Thank you. 

Mr. Hunter. 

Mr. HUNTER. Thank you, Mr. Chairman. 

Mr. Secretary, first question is about an icebreaker. I chair the 

Coast Guard and Maritime Subcommittee on the Transportation 

Committee. We are talking about icebreakers, which we don’t have 

one. In the Coast Guard, we talk about a whole-of-government approach, we talk about the Arctic, the Antarctic, and they have no 

answer. Because of the way the CBO [Congressional Budget Office] 

scores a lease, it is a billion dollars scored upfront, and frankly, I 

don’t think the Coast Guard or Homeland Security is capable of 

going through the acquisition process because it is just newer. They 

haven’t been around as long as the Navy and the DOD. I think it 

is going to be, have to be a DOD effort. I am just curious what your 
28 

take is on getting an American icebreaker, which we don’t have 

right now. 

Secretary KENDALL. I have not looked at that. I would be happy 

to take it for the record and try to get you an answer. 

[The information referred to was not available at the time of 

printing.] 

Mr. HUNTER. Okay. I am just curious. Thank you. Because a lot 

of the problems with it are technical, the way it is scored. And 

there needs to be a whole-of-government approach as opposed to 

the Coast Guard’s entire budget would be the icebreaker, literally. 

Secretary KENDALL. We run into that sort of issue fairly often, 

where CBO scoring rules or OMB [Office of Management and 

Budget] scoring rules make it difficult for us to do things which 

look like good business from just a business perspective. I think 

that is one of the things on that list apparently. Let me take a look 

at it and see if I can get anything back to you. 

Mr. HUNTER. Thank you. 

Next thing, I guess it is kind of the same question. When it 

comes to commercial-off-the-shelf products and DOD still requiring 

the business to disclose its cost accounting of how they come up 

with what they are selling to you for when it is a commercial product that they have to compete on the open market. You talk about 

competition, the competition is there in the open market. That is 

what brings the cost down. DOD is not going to drive the cost down 

further than the market does. So let’s talk specifically, if you don’t 

mind, about the ITEP, the Improved Turbine Engine Program, 

something like that, where it is a commercial product, but it seems 

really hard to get it going because there is only one or two companies that have it right now, that have a good improved engine program going. But they are not being bought right now because DOD 

wants to compete it. And the problem is there aren’t any other 

companies that do it. Does that make sense? There is two questions 

there in one. 

Secretary KENDALL. Yeah. If there is an off-the-shelf product that 

meets our requirements. We would have to assess—normally what 

we do is we would do an analysis of the business environment. 

Mr. HUNTER. Let’s just say you have a kid—a kid—a young person, let’s say, in their late 20s that doesn’t have any industry experience, that is out of school, got their master’s in business, and you 

try to make them replicate what really smart folks that work for 

a really big company do to assess what their cost is and find out 

if you are getting a good deal. It is really hard to do. In fact, it is 

impossible to do. And it is turning off the folks that would be supplying you with good stuff that is done competitively and cheaply 

because of the open market. 

Secretary KENDALL. That is the issue we talked about earlier. 

What cuts against that is things like the Bell Helicopter issue that 

was brought up earlier where we had paid multiple times the price 

we should have paid for a product. And it is the $600 hammer 

issue, right. So when one of those occurs, it is a very public event. 

The Department is chastised for it. And so we are asked, because 

of that, to go impose tighter controls on the costs and prices we are 

paying. When something is truly commercial, purely a commercial 

product, and it is out there in the market and it is widely sold to 
29 

a lot of people, then that competitive market is efficient at setting 

the price. Where we get into trouble is things that are kind of on 

the margins, where there may be a modified commercial product, 

or where, even though it may be sold through a GSA [General 

Services Administration] catalog, it is really unique to say—we had 

an incident a couple years with an Apache helicopter oil drip pan, 

where we were paying an excessive amount; as it turned out, it 

made it onto 60 Minutes. So somebody should have realized that 

that was not really a commercial product and asked a few more 

questions about what the basis was for the price to go get at that. 

We didn’t until we were embarrassed by that fact, just as we are 

probably going to be embarrassed by what Bell has done and some 

of their pricing. So we have got to strike the right balance between 

relying on what are asserted to be commercial prices and doing due 

diligence to make sure we are getting a fair and reasonable price. 

That is what we are trying to strike, is the right balance there. 

Mr. HUNTER. Okay. It is going to be hard to ask free companies. 

I guess if they want to do business with you, they are going to have 

to disclose their stuff. I guess they just won’t do business with you. 

Secretary KENDALL. It depends on their products. If their products do have a well-established commercial basis, we should be 

fine. If there is none—— 

Mr. HUNTER. If it is a new product of which that company is the 

very first one to innovate and create it, then you don’t have any 

cost basis to go against. Let me ask one last question. 

Secretary KENDALL. Then what we need is some way to determine it is a fair and reasonable price. It doesn’t have to be fully 

certified cost and pricing data. But we need some way to have a 

reasonable assurance that it is a fair price. That is what we have. 

That is the criteria. 

Mr. HUNTER. Thank you. 

My time is up. I yield back. 

Mr. THORNBERRY. Ms. Bordallo. 

Ms. BORDALLO. Thank you very much, Mr. Chairman. 

Secretary Kendall and Secretary Barna, thank you for being with 

us this morning. Thank you for your service. This committee has 

been a strong supporter of the inventory of contract services because it is integral to the implementation of a robust total force 

management policy, which depends in large part on the Department’s capability to more intelligently manage its acquisition of 

services. 

GAO determined that to improve the Department’s capability 

there needed to be a dedicated office resourced to develop and implement a common inventory system and associated business processes among the military components and defense agencies for contract services management specifically modeled after the Army’s 

system, as this committee has long recommended. 

Now, earlier this year, GAO reported that the Department approved plans to establish a dedicated office within Personnel and 

Readiness to support these implementation efforts. But I understand the office’s roles and responsibilities and how it will be 

staffed have not been fully determined. So my question, Secretary 

Kendall, when will this office be up and running? 
30 

Secretary KENDALL. Congresswoman, I ask my colleague to answer that one. That falls under her area. 

Ms. BORDALLO. Secretary Barna. 

Ms. BARNA. Yes, ma’am. We are working on the staffing and the 

structure of the office as we speak. I think our next meeting on the 

issue is this coming Tuesday. This is certainly a matter about 

which we have great interest, and we understand the committee’s 

interest and the GAO’s interest. 

We are working on the enterprise contractor manpower requirements assessment, which I believe is the data tool to which you are 

referring. It is the data tool that will actually fuel and feed the inventory of contracted services. So we are very aware of the interest. 

We are very aware of the laws and regulations that have been 

passed in this regard, and we have been moving out to implement 

it. 

Ms. BORDALLO. Madam Secretary, we have been discussing this 

for some time. Do you have a final date on when it will be fully 

implemented? 

Ms. BARNA. I don’t have a final date. We do have the money in 

next year’s budget to actually bring on board in P&R [Personnel 

and Readiness] the six personnel slots. And adding personnel slots 

to the Department at this particular time is a very difficult, challenging thing. But we do have the money and the personnel authorizations effective in fiscal year 2015. 

Ms. BORDALLO. So you don’t have an approximate timeframe 

or—— 

Ms. BARNA. I do not yet, I am sorry. I can go back and take a 

look at exactly where we are and provide you some additional information. But I don’t have an exact timeframe. 

[The information referred to can be found in the Appendix on 

page 75.] 

Ms. BORDALLO. Thank you. Thank you very much. 

I yield back, Mr. Chair. 

Mr. THORNBERRY. I appreciate the gentlelady bringing this up. It 

has been in the works for a long time. 

Mr. Bridenstine. 

Mr. BRIDENSTINE. Thank you, Mr. Chairman. 

Mr. Kendall, I wanted to ask you about the way we go about purchasing satellite communications, specifically commercial satellite 

communications [COMSATCOM], which we have been purchasing 

in mass volumes for about 13 years now as things in the world 

have required us to do. We currently still buy COMSATCOM on 

the spot market, 1-year contracts, very inefficient, very expensive. 

Of course, this committee in the 2014 NDAA [National Defense Authorization Act] required your office to put forth a strategy to get 

to multiyear procurement to make things more efficient. Can you 

share with us where you are on that and how things are going? 

Secretary KENDALL. I tasked my Assistant Secretary for Acquisition, Katrina McFarland, to work with the CIO on this issue. And 

it came to my attention originally because of one of our business 

board advisory board studies. So I think we are very close to having a proposal. I have not been briefed to the final product yet. I 

am told they are ready to brief me. So, hopefully within the next 
31 

few weeks, we should have a position on this that we can talk to 

you about. 

Mr. BRIDENSTINE. One of the challenges that I have heard is we 

are purchasing COMSATCOM with OCO [Overseas Contingency 

Operations] dollars, which are year to year. So it makes it impossible really to do multiyear procurement when you don’t know next 

year what the OCO money is going to look like. 

Secretary KENDALL. That is largely to support, obviously, the 

wars in Afghanistan. 

Mr. BRIDENSTINE. Right. 

Secretary KENDALL. And I think it is an appropriate use of OCO 

to do that. 

The issue I think we have run into in part is one that came up 

earlier, which was how we score. If we cut a multiyear business 

deal, how is that scored? Which is unfortunate, because I think our 

process and our bureaucracy is getting in the way of us trying to 

do the smart thing from a business perspective, and we shouldn’t 

allow that to happen. 

Mr. BRIDENSTINE. I agree with you that this is appropriate for 

support for the wars in Iraq and Afghanistan. The question is we 

know that there is going to be a demand for commercial satellite 

communications, you know, 5 years from now, 10 years from now, 

in this region of the world. We know there is a baseline. Can we 

define that and can we count on you to come up with a definition 

of what that is? 

Secretary KENDALL. That is what I am trying to get out of the 

work that has been going on. We have a certain baseline that we 

buy to. We have some organic capability, obviously. And then, of 

course, the spot market, as you mentioned, is expensive. So we can 

forecast our needs with some confidence, we ought to be able to acquire some capability with a better business deal than the ones we 

are currently cutting. There might be some much smaller but still 

residual need to use the spot market occasionally, but I would like 

to reduce the amount that we are relying on that. I think we are 

in agreement on the goal here. It is just a question of how we get 

there. 

Mr. BRIDENSTINE. If we do come up with that baseline, can we 

move it out of OCO funding and move it into some kind of programmatic funding? 

Secretary KENDALL. I don’t know the answer to that. Let me take 

that one for the record. 

[The information referred to was not available at the time of 

printing.] 

Mr. BRIDENSTINE. Okay. 

Secretary KENDALL. I don’t have an answer for you right now. 

Mr. BRIDENSTINE. Okay. Great. I appreciate you doing that. 

Some other questions. I wanted to talk to you about some of the 

interoperability issues. As somebody who has spent a lot of time in 

these parts of the world and relied on satellite communications, 

when we purchase commercial satellite communications from the 

commercial sector and then we have MILSATCOM [military satellite communications] for the military sector, and they use different bandwidths, they use different waveforms, some are secure, 

some are insecure, encryption, anti-jam, all the different types of 
32 

things that go into each system, now we have some devices that 

are usable with some satellites and other devices that are not usable with the same satellites. We have a real interoperability issue, 

which goes to my point, which is it seems to me we have to get to 

a place—right now we have DISA [Defense Information Systems 

Agency] purchasing COMSATCOM and we have got SMC [Space 

and Missile Systems Center] purchasing MILSATCOM. We have to 

get to a place where we have one agency responsible so that we can 

have this interoperability so we can actually maximize our efforts, 

maximize the ability of our warfighters to be effective. Can you address that? Is that an issue you guys have been looking at? 

Secretary KENDALL. Yeah, we have. It is kind of a shared responsibility between myself and the CIO. What we have done in the 

past is gone out and tried to put every possible waveform onto 

some of our radars. The JTRS [Joint Tactical Radio System] program, which you are probably familiar with, was an example of trying to spec every single waveform on every radio. I am exaggerating slightly, but not too much. And we had to back away from 

that for cost reasons. So then we got to, okay, what do different 

people at different levels really need, and what is the best way to 

provide it? So I think we made progress in that area, but I think 

we also probably have a lot more work do. 

Mr. BRIDENSTINE. Okay. One last question. I know I am out of 

time, Mr. Chairman, so we will just do this one for the record. But 

when it comes to hosted payloads for our satellites, we can leverage 

the commercial satellite industry in a major way when it comes to 

efficiencies, the efficiencies of the bus, the efficiencies of the truss 

structure, the launch, the ground support mechanisms. All these 

things the commercial satellite industry currently uses, we could 

leverage that to reduce the cost and increase the capacity for our 

warfighters in the satellite area. So if you could respond, your 

thoughts on that for the record, that would be great. 

Secretary KENDALL. Very briefly, I agree with you. We do that 

to a degree now, but I think we can do it more. And as we need 

higher resilience because of threat developments in the space control, I think we are going to want to diversify our assets in space 

more than they are today. And that is one way to do that. 

Mr. BRIDENSTINE. Roger that. Sir, I yield back. 

Mr. THORNBERRY. Thank you. 

Mr. Johnson. 

Mr. JOHNSON. Thank you. 

Mr. Kendall, a key tenet of acquisition reform should be the use 

of competition to drive down costs and increase customer service, 

which will create best value for the taxpayer. A heavy focus of acquisition reform should be placed on the way DOD buys its major 

weapon systems. Yet DOD’s fourth largest acquisition program, the 

space launch program, is a sole-source program. It appears that the 

Air Force has completely ignored your directives to introduce 

meaningful competition aggressively. And it appears that the Air 

Force has deferred meaningful competition for many years in the 

future by protecting its sole-source arrangement with the incumbent provider of space launch services. The current sole-source arrangement for launch services is a cost-plus arrangement, which 

has resulted in payments to the sole-source incumbent of in excess 
33 

of $6 billion. This means that the taxpayers pay ULA’s operating 

costs plus profits for its infrastructure and business operating expenses. Why was this program sole-sourced in the beginning? What 

factors justify continuing it as a sole source? Why are we doing it 

on a cost-plus basis, as opposed to a fixed-price basis? 

Secretary KENDALL. Congressman, first of all, I completely agree 

with you on competition. It is a basic tenet. And we are trying to 

have as much of it as possible, including the launch business. We 

are moving towards a more competitive environment as quickly as 

we can there. The situation with regard to ULA was originated several years ago. It is before my time. So I don’t know the reasons 

for the specific arrangements that were made several years ago. I 

think basically the conclusion that was reached was that there was 

inadequate business to sustain two providers and that the more efficient thing to do was to merge them and have one. In hindsight, 

one can obviously question that. 

Mr. JOHNSON. I mean, does that factor exist currently? 

Secretary KENDALL. Up to a point. Because we are reliant on 

ULA for certain launches. There is no competitor yet. And it will 

be some time before we have a competitor for some of those 

launches. SpaceX is coming along. There are other potential competitors coming along that need to go through the certification process. Our intent is to get them into competition as quickly as possible. We are going to be very soon releasing an RFP for our first 

competitive bids for launch. That is a fiscal year 2015 acquisition. 

Mr. JOHNSON. Now UAL does not—is not a sole-source provider 

of launch services for NASA [National Aeronautics and Space Administration], is it? 

Secretary KENDALL. I don’t honestly know the answer to that 

question. I don’t believe so. I think they use others that the U.S. 

military may not be able to use. 

Mr. JOHNSON. So NASA uses other launch providers. What about 

in the commercial sector? We have got all of these commercial satellites orbiting the Earth. Are they sole-sourced to UAL or are 

there competitors that handle those launches? 

Secretary KENDALL. I think it is a mix. I don’t know that ULA 

does any of the launches or not, frankly. 

Mr. JOHNSON. What would cause the DOD to not be able to utilize the services of other launch providers, who appear to be doing 

a great job, just as good as UAL, in launching for NASA and all 

of the other commercial vendors? 

Secretary KENDALL. There are two reasons that initially come to 

mind. One is security. Foreign providers of launch can be a security 

issue for us because many of our payloads are highly classified. 

Mr. JOHNSON. Well, now, currently, is it not a fact that we are 

using Russian rockets under the UAL sole-source agreement to 

launch DOD payloads? 

Secretary KENDALL. Yes. A Russian rocket engine is integrated 

into our Atlas launch vehicles. But basically, they provide us with 

that product and then we integrate it. And the Russians have no 

access to our payloads whatsoever. The other consideration I wanted to mention was mission assurance. We have had 70 successful 

launches, roughly, with ULA. And getting these multibillion dollar 

payloads successfully into orbit instead of into the ocean is a very 
34 

important consideration for us. So those are the two things that 

impact on our decision. 

Mr. JOHNSON. And the cost-plus contract as opposed to the fixedprice. 

Secretary KENDALL. The cost-plus for the services piece of it is 

because of the difficulty in predicting those costs because of 

changes to the manifest and so on. 

Mr. JOHNSON. I yield back. 

Mr. THORNBERRY. Mr. Rogers. 

Mr. ROGERS. Thank you, Mr. Chairman. 

Mr. Kendall, I wanted to follow up on the subject area that Mr. 

Bridenstine visited with you a few minutes ago, and that is this 

commercial satellite opportunities. As you are aware, I chair the 

Strategic Forces Subcommittee, and one of my concerns has been 

the inadequate number of satellite resources that we have. And I 

have had the chance to visit with the acquisition folks from the 

Navy, the Air Force, and the Army, and it always comes down to 

a scoring issue. Everybody recognizes, as you said a little while 

ago, it is good business to figure out a way to do these multiyear 

leases, and to do, as Mr. Bridenstine suggested, and that is that 

we piggyback on some of these commercial satellites for narrow opportunities or needs that we have. I do know, in March of 2013, 

you all announced a 90-day study on acquisition that might have 

addressed this. Do you know what came of that? 

Secretary KENDALL. I am sorry, sir. Which study was that? 

Mr. ROGERS. It was a 90-day study to address the acquisition of 

commercial satellites in March of 2013. And I didn’t—— 

Secretary KENDALL. That is the study I think that I asked Ms. 

McFarland and Teri Takai to conduct, which I mentioned earlier is 

I believe finished at this point essentially, and just hasn’t been 

briefed to me yet. 

Mr. ROGERS. Okay. Good. Well, what I would like to know is, 

aside from that study, you know, who is in charge of trying to address this? I think you recognized the need here, and that there is 

a smarter way to deal with it. And I ask this for this reason: You 

know, we have already done this in military housing very successfully. But it took statutory involvement. So I guess my question is, 

are you to the point to where you recognize that it needs to be done 

and whether or not we need to address CBO scoring statutorily, or 

what? 

Secretary KENDALL. Great question. Let me take it for the 

record. I don’t have the answer for you yet. But I do think there 

is a better way to do business. And we need to see what the obstacles are to doing that and see what we can do to remove them. So 

let me get back to you on that one for the record. 

[The information referred to was not available at the time of 

printing.] 

Mr. ROGERS. Who is in charge of this kind of thing? Is it General 

Polakowski? Is it you? Who is in charge of kind of—— 

Secretary KENDALL. Shared responsibility between the CIO, right 

now Terry Halvorsen, and myself. We have worked it jointly. 

Mr. ROGERS. Great. I appreciate that. I know it is very complex, 

but it is also very important that we start dealing with this. And 

the commercial side is getting really frustrated with us. And one 
35 

of the concerns I am seeing from them is they are recognizing their 

real growth and opportunity is in the private sector. They are moving away from a focus on the Defense Department. We need that 

partnership. You and I both know that we can’t do what we do in 

any realm of the defense infrastructure without the private sector’s 

involvement in a robust way. 

Last question. You know I have been frustrated with the NNSA 

[National Nuclear Security Administration]. And we have this committee that is working on NNSA reform. Can you shed some light 

on what you think we should do with NNSA, since you give them 

billions of dollars a year? 

Secretary KENDALL. That is a tough question. We work closely 

with NNSA, have a good cooperative relationship. I chair the Nuclear Weapons Council, which met yesterday actually, with the director of the NNSA and all the relevant DOD people involved. We 

oversee the nuclear weapons modernization program, the LEP [life 

extension] programs primarily. And we try to correlate them so 

that they are aligned with our platform programs. The problem we 

have had over the last few years has been that because of budget 

cuts largely, it has been sort of a moving target, and it has been 

hard to stabilize that program so we could execute it effectively. 

We have also been transferring resources from DOD, which started 

with Secretary Gates several years ago, to NNSA to kind of make 

up some of their budget shortfalls, which because of the way it happens is late in the budgeting process within the administration is 

very disruptive of our plans. 

We need a better way to do business. I know that the Augustine—Myers—Myers committee is working on that. I met with 

them recently to discuss where they are. And I think they are 

going to be coming forward with some findings soon. I hope they 

come up with something that rationalizes the way we do business 

here, because in my view the current situation is just not workable. 

Mr. ROGERS. Yeah. I agree. Fortunately, we have a good guy that 

has taken on leadership there, and I have a lot of confidence in 

him. 

But thank you for your presence, and know I am very serious 

about the public-private partnership on satellites and other things, 

and I look forward to hearing back from you on that. 

Thank you, Mr. Chairman, I yield back. 

Mr. THORNBERRY. Thank you. 

I have to say, Mr. Kendall, you have an amazing array of issues 

on your plate. Mr. Peters. 

Mr. PETERS. Thank you, Mr. Chairman. 

And thank you for holding the hearing today. And I just wanted 

to thank the witnesses for being here, and to acknowledge that we 

are in an interesting time for procurement with such innovation 

going on. And it strikes me that the foundational law, if I am not 

mistaken, is from 1990, which when I was in a law firm, we were 

arguing about whether we should put personal computers on each 

desk. So things have changed quite a bit, because you now have a 

personal computer in most pockets. And what struck me, too, is in 

visiting, I visited 50 or 60 companies in my district in my first term 

here in Congress, many of them are inventing military tech-
36 

nologies, communicating from areas where—in two areas where 

you didn’t think you could communicate. 

Cybersecurity and unmanned systems are really big in San 

Diego. And the problem you find across—you often come across is 

that the military doesn’t even know that this invention that they 

could use exists. So it is not going to be in the requirements contracts. And so the challenge I think is—I think satellites is one obvious answer. We have dealt with that somewhat, a little bit in the 

NDAA this year. Again, a company in my district had the same 

issue. The challenge is to take advantage of what the private sector 

is doing and the innovations that it is creating, and to empower a 

culture within the Department of Defense where people are willing 

to make the changes that are out there. 

And what I will say from my perspective is we would like to support a culture and a management where the right kind of mistakes 

are encouraged. And you won’t have me ever dragging someone in 

front of a hearing if they have made an honest mistake. I think 

what we should do in Congress is support that kind of appropriate 

risk taking and innovation within the Department that will ultimately match the great innovation that is happening out in the 

country and often in my own district. 

Thank you for being here. I look forward to working with you on 

these procurement reforms and hope we can have a productive 

partnership. 

Thank you, Mr. Chairman. I yield back. 

Secretary KENDALL. If I may, Mr. Chairman. 

I couldn’t agree with you more. And as I look forward over the 

next few years, the next iteration of Better Buying Power is going 

to be innovation and the movement of technology to the warfighter. 

We have been focusing for the last few years on business practices, 

on efficiency and productivity in general, and getting better business deals, and executing them effectively. I want us to turn toward focusing more on what we are providing for the warfighter 

and how we are getting technology into the warfighter’s hands. The 

last time I testified before this committee, I talked about my concerns for technological superiority. We need to move faster. It has 

come up a few times today. We also need to access technologies 

that we are not accessing today. So the next iteration of Better 

Buying Power, which I am starting to work on now, will be focused 

on and emphasizing that. So I am very in line with your thinking 

about that. Thank you. 

Mr. THORNBERRY. Let me go back over a few of the things we 

have talked about. But I want to start with Mr. Peters’ point, because I think it is really important. 

And I am struck, we have had so many conversations about satellites and other sorts of technology, that just emphasizes basically 

where we started today, and that is we have to have top-quality 

people trained and experienced to even understand the commercial 

business and the vast pace of change in order to make these decisions. And I think that a lot of what we talk about comes down to 

that judgment call. Sometimes it is not going to go well. But if you 

are learning something, you know, then maybe that is okay. If you 

are just trying to minimize the risk, then that is kind of where I 

think so much of the system is these days, at least as far as I hear. 
37 

And I don’t know if this is an analogous situation or not. I want 

to go back for a second to the Bell issue that Ms. Speier raised. I 

hadn’t heard about it before I came in here. But as I read the report, what they find is that the contracting officer automatically 

paid what DOD had previously paid for the spare part, and did not 

do the market analysis for how we might get it for a better deal. 

Mr. Kendall, is that your understanding of the bottom line of 

that? 

Secretary KENDALL. I have just seen the 1-page summary, but 

that is my understanding of what happened in this instance. As a 

very busy purchasing person is trying to go through things and 

focus his or her attention on all the different parts that they are 

trying to buy, one way to sort through them is to say, is there an 

already well-established price that I think I can rely on because 

somebody in the past determined that was a good price? We have 

to at least sample those to make sure that we are not consistently 

making mistakes there. But the new item, such as the one that 

came up later in the testimony, is the one where you want to focus 

your attention more because you didn’t have an established price. 

So when you have—I am not making excuses for anything here, by 

the way. 

Mr. THORNBERRY. I just want to flesh this out a little bit. 

Secretary KENDALL. And to your point about people making honest mistakes, I don’t know what happened here, I am not going to 

comment on the specific case. But if someone is doing their best, 

working extra hours, overtime, trying to get the things that the 

warfighter needs and makes that kind of a mistake, that is understandable. But if the company is trying to consistently overcharge 

us for something, that is not acceptable. 

Mr. THORNBERRY. Absolutely. 

Secretary KENDALL. We have to get at that. 

Mr. THORNBERRY. I think everybody is in complete agreement. I 

guess the point I am making is that we will be buying more and 

more commercial things. And so we need government folks who are 

familiar with not only the technology but the contracting practices, 

how all that works. 

Secretary KENDALL. Yeah. What we have established is a body 

of—many times the purchasing people don’t have the technical expertise to assess whether they can look at the product, they can 

look at the price, and if it is a $10 hammer, that is probably reasonable; if it is a $600 hammer, red flags should go up all over the 

place. But some things it is a lot harder than that to make an assessment. You have exotic materials potentially, you have an unusual design that is difficult to manufacture. We have put together 

teams of technical experts that our purchasing people can call on 

now when they have a question, if something raises a flag in their 

minds about is this really reasonable or not, do I have enough data, 

so they can get a better technical assessment about what that product should cost to get a determination as to whether it is reasonable or not. That can expedite the process, but it also gives them 

somebody to go to who has the right kind of relevant expertise to 

assess that object. 

Mr. THORNBERRY. And Ms. Barna, just on that topic, technical 

expertise, do you all keep any sort of statistics on the people who 
38 

are hired into the acquisition force and what sort of certifications, 

background, experience they have with information technology, for 

example? 

Ms. BARNA. Sir, we don’t maintain specific statistics in the personnel realm. That may be maintained in the acquisition realm 

with regard to certification of each individual that comes onboard. 

Mr. THORNBERRY. And just so I can understand, so a hiring decision is made by somebody to fill a vacancy—— 

Ms. BARNA. Yes, sir. 

Mr. THORNBERRY [continuing]. In the acquisition. They have got 

to then come to you to process it through the normal way. And I 

want to get to expedited way in just a second. And so your job basically is to go through that normal civil service process for a civilian 

that is—that somebody in either Mr. Kendall’s shop or one of the 

services wants to hire to do acquisitions. 

Ms. BARNA. We make the policy, sir, in P&R. Acquisition has 

servicing, human resources, personnel experts who actually would 

engage in that hiring process. And, of course, that process would 

rely extensively on what is called the crediting plan, which is created by the acquisition, the technological specialists who know particularly the capability that they are looking for from the person 

they are seeking to fill a particular position. 

Mr. THORNBERRY. Okay. And I realize this will be hard, but you 

all don’t really keep statistics on qualifications, experience, attributes of people who are brought into the system. 

Ms. BARNA. Not specifically to—— 

Mr. THORNBERRY. Along that line. 

Ms. BARNA. Yes, sir. 

Secretary KENDALL. Congressman Thornberry, we are doing that 

for good managers and people who take some of the key acquisition 

positions. I have been looking carefully at that, trying to understand whether we are getting the right kind of skill sets or not, and 

how that correlates to results in the field. But the hiring process 

in general is somewhat decentralized. I mean people—the immediate supervisor might make a selection with or without the support of a board. And then it goes to that person’s supervisor, I believe, and then to the human resources organization for whatever 

organization that is for final check. I think that is the general process we follow for hiring at whatever organization is doing the hiring. 

Mr. THORNBERRY. Let me pursue that for just a second, because 

Ms. Barna, in your testimony, you talk about the hiring flexibilities 

available Department-wide, including expedited hiring authority. 

Ms. BARNA. Yes, sir. 

Mr. THORNBERRY. So Mr. Kendall, how often does that help you 

all? 

Secretary KENDALL. There are a number of tools that we can use. 

We can use expedited hiring authority for certain specialties. I 

think that there is a statutory provision now that gives us some 

flexibility for scientists and engineers, which we are still implementing. We have cases like individual program augmentees that 

we can bring in from industry on a temporary basis, highly qualified experts we can bring in. So there are a number of tools like 

that we use as well. 
39 

Ms. BARNA. Sir, our statistics show that the acquisition corps is 

using the expedited hiring authority almost 40 percent of the time. 

Mr. THORNBERRY. Okay. Thank you. That is interesting. And the 

other thing you mentioned in your testimony is the Acquisition 

Demonstration project. And you say that you just submitted to 

OPM [Office of Personnel Management] a Federal Register notice. 

Can you explain if they approve that, what then will that allow? 

Ms. BARNA. That will essentially streamline the process of allowing new organizations to join the AcqDemo project as we call it. 

Previously, an individual organization that believed that AcqDemo 

could benefit, the way it was structured and operated, had to go 

through the process with human resources assistance of putting together their own Federal Register notice that would describe how 

they were going to compensate workers, how they were going to organize their particular pay structure, their particular grading 

structure. That was all done by the independent organization and 

then submitted separately to the Federal Register. What we hope 

to do with this common notice is streamline that process with a 

view to allowing organizations to join the AcqDemo project more 

easily. We have taken that tranche of work and done it for them. 

And as long as they are willing to comply with some rather flexible 

but general terms, they can move into the AcqDemo project without 

further delay. And we have identified that under the use of this 

Federal Register notice, we see almost an additional 40,000 employees, as many as 39 new organizations that will be able to join 

very quickly. 

Mr. THORNBERRY. Mr. Kendall, is this demonstration project, do 

you have an opinion on its value at this point? Is that something 

we need to look to expand or—— 

Secretary KENDALL. All the inputs I have on AcqDemo are positive. It is a system that people I think feel very positively about. 

And we have had a few years of experience with it right now. So, 

even though it is sort of on a pilot basis, I think we are far enough 

along to know that it is a solution that we are very comfortable 

with. 

Mr. THORNBERRY. Ms. Barna, you heard maybe a few minutes 

ago some conversation about tenure in a particular position, particularly a program manager and how long he or she stays in the 

job through the course of a program. If you are a civilian, under 

the civil service rules, is there any problem in leaving somebody in 

a program manager position 5 years, 7 years, to maintain some 

continuity of management? 

Ms. BARNA. Certainly, sir, from a personnel perspective there is 

not. There is a requirement under the law that at least every 5 

years there is an evaluation taken, particularly of individuals in 

critical acquisition positions, as to whether or not their continued 

presence in that position is in the best interest of the government 

and the individual. Of course, that gives management the opportunity to assess whether it is good to continue or whether perhaps 

another option is better. 

But from the civilian perspective, there is nothing on the personnel side. I would defer to Mr. Kendall as to whether there is 

something on the operational side that might weigh in favor of either answer. 
40 

Secretary KENDALL. In practice, what we find is a couple things. 

One is that civilians who become program managers and do it for 

a period of years and then are ready to move on to some other responsibilities, it is often hard to find that next position for them. 

They have groomed themselves to become a sensitive program executive officer, but those are all essentially military slots, and there 

are deputies often that these people can move into. So a career progression that takes someone and has become a program manager. 

Now, I think, frankly, that for an ACAT I [Acquisition Category], 

multibillion dollar program, becoming the program manager and 

staying in it until you retire isn’t a bad thing. If you are really good 

at it, that is what I want those people do, because I need really 

good program managers. That is one issue. 

The other issue that we encounter in practice is with senior executives and civil servants in general who are reluctant to move 

geographically. Our military people, it is part of their culture, they 

move routinely, it is what they do. But getting civil servants to 

move to take a position in another location can be a difficulty for 

us that gets in the way of putting talent where we really need it 

in some cases. 

Mr. THORNBERRY. But, Ms. Barna, I suspect that it is a very different situation with military program managers. Do you all monitor career progression for folks who do acquisition work and then 

how their career progresses after that? 

Ms. BARNA. Sir, we absolutely do, and we are very interested in 

that. Of course the law requires that they be essentially promoted 

at the same rate as other officers of the line, if you will. And our 

statistics show that, as to the grades of lieutenant colonel and colonel, in all of the services, with relative consistency over the last 5 

years, acquisition officers have been promoted at or above the averages for their compatriots in other professions. 

Mr. THORNBERRY. And then the question is, if it is deemed advisable to leave a military person in that position for a longer period 

of time than is the normal military rotation, what effect would that 

have on their promotion ability? I think it is important to know 

what is happening now, but as we kind of think about the other 

options, that is something that we will certainly want to stay on 

top of. 

Mr. Kendall, let me just finish up just with a couple thoughts 

that came to mind during the conversation. One is, going back actually to something the chairman said at the beginning, we pass 

a law with the best of intentions, and then sometimes there is no 

telling what is going to happen with it. 

So, for example, corrosion is a big deal for a lot of the systems. 

But as I understand it, you can correct me if you know differently, 

we passed some requirement on corrosion, the Department’s regulations make it apply to everything, including software. So now if 

you are going to go buy software, you have got to fill out some piece 

of paper that it is not going to rust. 

Secretary KENDALL. I actually am familiar with that. Because of 

a statute, I believe that the person in my office who is responsible 

for corrosion is a direct report to me. I have aligned that person 

and his staff with my system engineering office as part of specialty 
41 

engineering, because that is where it really belongs. But I do get 

monthly reports from him. 

And what you said I think may actually be true, that because of 

the way we have implemented this, it is laughable that software 

would have a corrosion requirement. I think I saw it, and it may 

have been in a business system came through. We do try to temper 

our practices with some degree of common sense, but occasionally 

that kind of thing gets by us, I am afraid. 

Mr. THORNBERRY. Well, it is kind of an extreme example of 

things that surely between the two bodies we can figure out to put 

some common sense into it. 

The other thing, this has stuck in my mind, somebody told me 

that a program manager is a lot like a bus driver, except every passenger on the bus has a brake and a steering wheel. And so the 

whole focus that we have talked about today is getting and keeping 

top-quality people in these key acquisition jobs. But then the next 

step is they have to have the authority to do the job. And if they 

don’t, that obviously makes it very difficult to get and keep topquality people. I mean, it is interrelated. 

There is not an easy answer for that. But it does strike me as 

a kind of a vivid metaphor for lots of people can stop it or change 

it, but there is not very many people who are responsible for making it happen at the end of the day. 

Secretary KENDALL. I agree with you. And I have tried to get my 

staff out of the program management business. And one of the Better Buying Power initiatives is to emphasize the chain of command, 

particularly the program manager. I think within the services 

there are some issues as well where a lot of people who have interest in the product want to affect how events unfold. But we need 

to have our program managers empowered and capable and held 

accountable. I think we are moving more in that direction. 

If I could pick up very briefly on something that came up earlier. 

The promotion rate for acquisition people is consistent with the 

promotion rate for nonacquisition people, but that promotion rate 

is very low, particularly when you go from, say, the O–6, the colonel or Navy captain level to one-star. And I have seen some of our 

most capable people basically forced to retire just at the peak of 

their performance. 

And I would like to work with you to find some way to keep 

those people around if they want to stick around and help the government, because that is an enormous amount of talent going out 

the door. There are a variety of ways we could do this. I could talk 

to you about it separately. But I think it is an area in which we 

could do some good. 

Mr. THORNBERRY. Good. Well, we need to because of what you 

said before. We have this demographic problem. Lots of people are 

about to retire, and there is a big hole in the middle. And so that 

is even more reason to keep on top-quality people. So we will definitely do that. 

You all have been generous with your time. We are past when 

we told you we would let you go. Thank you. It has been very helpful. And we look forward to continuing to work together. 

With that, the hearing is adjourned. 

[Whereupon, at 12:09 p.m., the committee was adjourned.] 

A P P E N D I X 

JULY 10, 2014 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

JULY 10, 2014 

(47) 
48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
59 
60 
61 
62 
63 
64 
65 
66 
67 
68 
69 
70 
71 
72 
WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

JULY 10, 2014 

(75) 

RESPONSE TO QUESTION SUBMITTED BY MR. THORNBERRY 

Ms. BARNA. In the last 10 years, there have been more than 230,000 DOD acquisition workforce employees. During this period, more than 9,100 student loan repayments were granted to more than 5,000 of these employees. By our calculation, approximately 2.2% of all acquisition employees benefitted from student loan repayments during the last 10 years. [See page 14.] 

RESPONSE TO QUESTION SUBMITTED BY MS. BORDALLO 

Ms. BARNA. The Department’s processes for the Inventory of Contracted Services 

(ICS), and subsequent reviews thereof, have shown marked improvement since the 

inception of the requirement in 2008. The Department is committed to continued 

improvement going forward. Although instantiations of the Enterprise-wide Contractor Manpower Reporting Application (ECMRA) are currently available for use 

by all DOD components, the Department cannot yet advise of the date certain on 

which an office dedicated to ECMRA enhancement will be established. The exact information technology requirements associated with this capability, the operational 

and administrative alignment of personnel, as well as the specific roles and responsibilities to be undertaken are undergoing thorough assessment. [See page 30.] 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

JULY 10, 2014 

(79) 

QUESTIONS SUBMITTED BY MR. MCKEON 

Mr. MCKEON. With all the oversight mechanisms in place, why does the system 

continue to routinely deliver weapon systems over cost and behind schedule? What 

steps should the Congress, the DOD and industry take to improve the DOD acquisition system? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. Why do decisionmakers accept cost estimates for weapon systems 

that are inaccurate and do not reflect the actual risks in the program? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. Historically, the Congress has focused on the R&D and production 

associated with major defense acquisition programs or other special interest programs related to national security. Sustainment, however, usually accounts for approximately 70 percent of the system’s total lifecycle cost, yet it typically receives 

little attention. Are the long-term sustainment costs adequately assessed during the 

development and procurement processes? How is this information factored into determining the feasibility and appropriateness of initiating a new acquisition program? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. This committee has long advocated for competition in defense acquisitions and we’ve passed many laws requiring it. Is the defense industrial base 

healthy enough to support competition and if not, what can be done to improve it? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. How does the 2-year budget cycle effect DOD acquisitions and planning? What suggestions do you have for how to mitigate some of the challenges of 

major technology development, production, and fielding with the current 2-year 

budget process? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. Previous acquisition reform efforts have put heavy focus on reforming the way we buy major weapon systems. What are your views on the way we 

contract for services? Is this an area we should consider as we look to try to improve 

the way the DOD does business? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. Do you have any suggested improvements to the requirements generation and validation process? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. What are the biggest challenges the Department faces in improving 

the professionalism of the acquisition workforce; in particular those supporting the 

acquisition of major weapon systems? [QFR #14, for cross-reference.] 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. Have there been signs of improvement with the program management of major defense acquisition programs? If so, what are the most prevalent 

signs or indicators? If not, why not and what additional steps should be taken? 

[QFR #15, for cross-reference.] 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. What steps is the Department taking to better align program manager tenure with DOD policy that indicates the tenure should be 4 years or through 

the completion of a development phase for major defense programs? [QFR #16, for 

cross-reference.] 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 
80 

Mr. MCKEON. What are the biggest challenges to aligning program manager tenure to the completion of the development phase? [QFR #17, for cross-reference.] 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. What steps could the Department and military services take to help 

deconflict the requirements for the career track for military officers in the acquisition field and their tenure on programs? [QFR #18, for cross-reference.] 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. What other steps or actions can be done to help keep officials in 

these position for longer periods of times? [QFR #19, for cross-reference.] 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MCKEON. What are the biggest challenges the Department faces in improving 

the professionalism of the acquisition workforce; in particular those supporting the 

acquisition of major weapon systems? 

Ms. BARNA. This issue does not fall under P&R’s purview. We believe AT&L is 

best suited to answer this question and we defer to their answer as stated in QFR 

#14. 

Mr. MCKEON. Have there been signs of improvement with the program management of major defense acquisition programs? If so, what are the most prevalent 

signs or indicators? If not, why not and what additional steps should be taken? 

Ms. BARNA. This issue does not fall under P&R’s purview. We believe AT&L is 

best suited to answer this question and we defer to their answer as stated in QFR 

#15. 

Mr. MCKEON. What steps is the Department taking to better align program manager tenure with DOD policy that indicates the tenure should be 4 years or through 

the completion of a development phase for major defense programs? 

Ms. BARNA. This issue does not fall under P&R’s purview. We believe AT&L is 

best suited to answer this question and we defer to their answer as stated in QFR 

#16. 

Mr. MCKEON. What are the biggest challenges to aligning program manager tenure to the completion of the development phase? 

Ms. BARNA. This issue does not fall under P&R’s purview. We believe AT&L is 

best suited to answer this question and we defer to their answer as stated in QFR 

#17. 

Mr. MCKEON. What steps could the Department and military services take to help 

deconflict the requirements for the career track for military officers in the acquisition field and their tenure on programs? 

Ms. BARNA. This issue does not fall under P&R’s purview. We believe AT&L is 

best suited to answer this question and we defer to their answer as stated in QFR 

#18. 

Mr. MCKEON. What other steps or actions can be done to help keep officials in 

these position for longer periods of times? 

Ms. BARNA. This issue does not fall under P&R’s purview. We believe AT&L is 

best suited to answer this question and we defer to their answer as stated in QFR 

#19. 

QUESTIONS SUBMITTED BY MR. THORNBERRY 

Mr. THORNBERRY. What challenges does the Department face in establishing a 

joint analysis capability to better protect and assess loss of controlled unclassified 

technical information from compromise by a determined adversary? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. THORNBERRY. What special authorities are provided to the development of the 

acquisition workforce (hiring, education, retention bonuses, etc.)? 

Ms. BARNA. In addition to hiring flexibilities available Department-wide, the acquisition community has an Expedited Hiring Authority (EHA) that allows the Secretary of Defense to recruit and appoint qualified persons directly to certain career 

field positions for which there exists a shortage of candidates or for which there is 

a critical need. Use of the authority requires public notice and application of veterans’ preference, whenever practicable. This authority is slated to expire on September 30, 2017. 

The DOD Civilian Acquisition Workforce Personnel Demonstration Project 

(AcqDemo) is an Office of Personnel Management Demonstration Project unique to 

the DOD civilian acquisition workforce, and was designed to provide an encouraging 
81 

environment that both promotes employee growth and development, and improves 

management’s ability and authority to manage the acquisition workforce effectively. 

To facilitate this environment, AcqDemo managers have been provided personnel 

management flexibilities in hiring and pay setting that allow their organizations 

competitively to seek and attract to Federal service highly qualified and talented 

candidates available within the marketplace. Key features of the AcqDemo project 

include streamlined hiring processes, pay bands, a simplified classification system, 

and a contribution-based compensation and appraisal system; these features both 

contribute to workforce development and contribute to the retention of talented employees with appropriate pay. In addition, the project offers delegated examining authority and modified term appointments, which provide organizations greater control over the hiring process. AcqDemo employees also have the ability to participate 

in sabbaticals, which offer additional training, education, and experience. 

As of January 29, 2014, there were approximately 16,254 employees in the DOD 

AcqDemo project. The Department recently submitted an omnibus Federal Register 

Notice (FRN) amendment to OPM which recommends establishment of the parameters for any interested and eligible DOD civilian acquisition organization to request 

approval to participate in the project. Once the FRN is published by OPM, populations meeting the requisite acquisition workforce criteria may request participation in the AcqDemo Project. At the present time, it is anticipated that ten additional organizations, representing approximately 9,355 employees, will meet eligibility criteria, and will be able to join AcqDemo once the FRN is published, raising 

the total population to more than 46,000 participants. The AcqDemo Project will 

continue seeking and promoting increased participation to the greatest extent practical. 

Despite extraordinary budget pressures, the Department continues to conduct 

three enterprise-wide development programs, which offer development opportunities 

for entry-, mid-, and senior-level personnel. Specifically, acquisition is one of three 

functional communities represented in the Defense Civilian Emerging Leader Program (DCELP); DCELP has graduated more than 140 future leaders from the acquisition community, and anticipate that an additional 70 will graduate in 2014. 

Like the rest of the Department, the acquisition community continues to use student loan repayment incentives, as well as recruitment, relocation, and retention 

(3R) incentives, as needed, to attract and retain a high quality workforce. 

Mr. THORNBERRY. Private industry has tools they can use to hire the best talent 

available and then reward that talent with performance-based incentives. You mentioned that the defense acquisition system has a plethora of tools to encourage or 

reward good performance, and you cited student loan repayments, relocation bonuses, and retention bonuses. You also mentioned intangible benefits such as working with like-minded people on an important mission, contributing to national security, and doing unique and interesting work in unique and interesting places. How 

do these benefits compare to industry compensation packages, especially regarding 

student loan repayments, relocation bonuses, and retention bonuses? Are the intangible benefits unique to government service, or can industry offer the same intangible benefits? Are there other tools you would use, if available, to lure and reward 

high-performing professionals into the acquisition workforce? 

Ms. BARNA. Student loan repayments, as well as recruitment, relocation and retention incentives are tools used to attract and retain mission critical talent for the 

Department. These incentives are used only in cases of critical need and management carefully considers the individual circumstances of each situation in deciding 

whether to offer such incentives to an individual employee. Of greater importance 

to the Department’s ability to attract and reward its workforce is the strength of 

our total rewards programs, including a generous benefits package, work-life benefits, the opportunity to pursue personal and professional development, ample career 

opportunities, and a broad spectrum of award and recognition programs. 

Although most employers can cite to some set of intangible rewards associated 

with joining their workforces, the Department of Defense is truly unique in this regard. Because of its critical mission and the often unique aspects of the work to be 

performed, the Department attracts professionals from a broad spectrum of backgrounds, with a diversity of experiences and expertise. The Department of Defense 

offers prospective employees an exceptional opportunity to work alongside other 

highly talented professionals in a challenging, mission-oriented environment. The 

Department’s combination of monetary and intangible rewards, available in the context of the unique employment experience it provides and the intrinsic rewards it 

offers, enables it to remain competitive and effective in attracting high-performing 

acquisition professionals. 
82 

QUESTIONS SUBMITTED BY MS. TSONGAS 

Ms. TSONGAS. The ability to rapidly assess needs and field new technologies is 

critical for IT and cyber. Many program managers and area experts discuss the need 

for ‘‘flexibility’’ beyond a traditional multi-year, sometimes multi-decade, weapon 

systems acquisition. However, when you start drilling down on what ‘‘flexibility’’ 

really means, there is not a lot of clarity. Can you describe what flexibility in Cyber/ 

IT acquisition means to you and what it looks like? In order to do these things, what 

types of authorities does the DOD need from Congress to realize that type of flexibility? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Ms. TSONGAS. I am constantly told that DOD needs to provide the right incentives 

for acquisitions personnel, just as you mentioned in your opening statement. Unfortunately this has been a common theme for many years. Nearly all of the major 

comprehensive DOD Acquisition reviews throughout the years have stated the exact 

same thing; DOD does not provide the right incentives to its acquisition workforce. 

What incentives can Congress or the Defense Department put in place that would 

strengthen the DOD’s acquisition system? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Ms. TSONGAS. Congress funds most acquisition programs one year at a time; however, DOD acquisition is planned for several years out and contracts often last for 

much more than a year. Thus, there are situations where we in Congress make decisions that completely disrupt the funding profile of a particular program, causing 

uncertainty for the program managers and the contractors. How much does this 

funding uncertainty affect the ability of Program Managers to effectively do their 

jobs? Would you suggest a different method for funding acquisition programs, such 

as multi-year appropriations for major programs? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Ms. TSONGAS. I am constantly told that DOD needs to provide the right incentives 

for acquisitions personnel, just as you mentioned in your opening statement. Unfortunately this has been a common theme for many years. Nearly all of the major 

comprehensive DOD Acquisition reviews throughout the years have stated the exact 

same thing; DOD does not provide the right incentives to its acquisition workforce. 

What incentives can Congress or the Defense Department put in place that would 

strengthen the DOD’s acquisition system? 

Ms. BARNA. The Department has a number of hiring flexibilities and incentives 

in place to assist it in competing for top talent in the current job market. However, 

we are continuously reviewing our authorities and programs to ensure that we have 

the right workforce planning and development strategies, and the authorities and 

flexibilities needed to recruit a highly qualified workforce. 

In addition to the hiring flexibilities available Department-wide, the acquisition 

community has an Expedited Hiring Authority for certain acquisition positions. This 

authority allows the Secretary of Defense to designate categories of acquisition career fields, in which a shortage of candidates exists or for which there is a critical 

need, and to streamline the hiring process for positions in those fields, subject to 

public notice and the principles of veteran’s preference. The Department may also 

use recruitment, relocation, and retention incentives, as needed, to attract, manage, 

and retain the civilian workforce. 

The Acquisition Demonstration (AcqDemo) Project, which currently covers more 

than 16,000 employees throughout the Department, features other simplified hiring, 

examining, and appointment flexibilities that provide participating organizations 

greater control over the hiring process. Under the AcqDemo Project, pay-banding, 

a simplified classification system, and a Contribution-based Compensation and Appraisal system also offer greater capability and flexibility, as necessary, to select, 

retain, develop, recognize, and reward employees for successful contributions to the 

acquisition mission. 

The Department greatly appreciates Congress’s support in making such flexibilities available in support of the acquisition workforce. 

QUESTIONS SUBMITTED BY MR. SHUSTER 

Mr. SHUSTER. Given the cost of bureaucratic requirements and regulations associated with the Department of Defense acquisition process, small or emerging businesses in the defense industry struggle to compete with the larger corporations who 

already benefit from the established acquisition resources. Does the Department of 
83 

Defense have any current initiatives or policies aimed at reducing the barriers that 

these small or emerging businesses face when competing for a defense contract? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. SHUSTER. We’ve heard multiple times that the ‘‘upfront cost of competition’’ 

can, at times, be the reason new competition does not surface. When considering the 

upfront cost of competition does the Department of Defense also consider the longterm benefits of competition and the incentives to keep costs down? If so, what are 

the determining factors to perform this cost-benefit analysis? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

QUESTIONS SUBMITTED BY MS. SPEIER 

Ms. SPEIER. The Department told Congress and the GAO in May that using the 

Enterprise-wide Contractor Manpower Reporting Application will improve its inventory and workforce management decisions. Is DOD ‘‘there yet’’ with the promised 

improvements for services contracts and workforce shaping, with a central oversight 

capability for this undertaking? By what date certain are you personally committed 

to having fully funded and in operation a dedicated office resourced to develop and 

implement a common system and associated business processes for contract services 

management, specifically modeled after the Army’s system? 

Ms. BARNA. The Department is steadfastly committed to improving visibility into, 

and accounting for, contracted services across the Department. This includes compliance with the information collection and review requirements associated with the 

statutorily-required Inventory of Contracted Services (ICS). The Department’s processes for the ICS, and subsequent reviews thereof, have shown marked improvement since the inception of the requirement in 2008. The Department is committed 

to further improvement going forward. Although instantiations of the Enterprisewide Contractor Manpower Reporting Application (ECMRA) is currently available 

for use by all DOD components, the Department cannot yet advise of the date certain on which an office dedicated to ECMRA enhancement will be established. The 

exact information technology requirements associated with this capability, the operational and administrative alignment of personnel, as well as the specific roles and 

responsibilities to be undertaken are undergoing thorough assessment, to ensure 

prudent expenditure of taxpayer dollars while providing necessary oversight with respect to the ICS. 

Ms. SPEIER. In May, GAO also reported that DOD would be collecting information 

on the level of individual organization’s use of the Reporting Application to compile 

its inventory for FY2013 which was just sent to the Hill. In line with prior commitments to Congress and the GAO—do you know what that level of reporting is? 

Ms. BARNA. The Department’s recently submitted FY13 Inventory of Contracted 

Services (ICS) was retrospective and reported on contracts executed/performed during FY13. All DOD Components reported data on contracted services as part of this 

submission. However, Departmental guidance to Components that directed the inclusion of the reporting requirements in performance work statements and statements of work for contractors to use the Enterprise-wide Contractor Manpower Reporting Application (ECMRA) to capture direct labor hours and associated costs, was 

signed in November 2012, after FY13 began. Because the guidance for inclusion of 

these contract reporting requirements was directed to be on a bilateral and prospective basis, many of the Department’s contracts were not subjected to the ECMRA 

reporting requirement during FY13. In compiling their respective FY13 ICS submissions, approximately half of the Components relied, in part and to varying degrees, 

on data collected directly from contractors via ECMRA in reporting contracted services. For those Components that did not rely on data collected from ECMRA for the 

FY13 ICS, it does not mean that they did not submit inventory data nor do it mean 

that ECMRA was not being utilized. 

Ms. SPEIER. Last year’s NDAA lauded the Army taking the lead in developing a 

Standardized Services Contract Approval Form process for determining whether to 

issue a new service contract or exercise a new option and directed the Department 

to model similar processes based on what the Army developed. What progress has 

been made to create a contracting checklist and when do you expect it to be used? 

By what date certain are you personally committed to having the Army’s contract 

approval checklist adopted and fully implemented Department-wide? 

Ms. BARNA. The Department is in the process of reviewing, streamlining, and 

standardizing a process for reporting on service contracts. The Department cannot 

yet advise of the date certain on which the form will be fully implemented for use 
84 

across the Department. We are committed to investing the time and effort associated with fully coordinating this form, or other commensurate process, and companion policy, with stakeholders across the Department, and to implementing the 

form, or process, in a manner wholly consistent with applicable statutes, regulations, and DOD policies and procedures. 

QUESTIONS SUBMITTED BY MR. MAFFEI 

Mr. MAFFEI. This Administration’s key defense reform efforts were the muchballyhooed Better Buying Power and Better Buying Power 2.0. Headline efforts in 

BBP 2.0 included ‘‘Employ appropriate contract types’’ and ‘‘Promote effective competition.’’ As you are aware, however, the United States Air Force just last year 

issued an $11 billion contract for 36 rocket engine cores that did not promote competition, effective or otherwise, nor, if rumor is to be believed, did it employ an appropriate contract type, as we are now hearing from the contractor that the price 

of the contract may increase. 

Could you explain how the Department reconciles its Better Buying Power initiatives with these ongoing activities? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MAFFEI. A key component of increasing competition, access to innovation, and 

cost controls is the allowance of new entrants to compete for defense contracts. However, even small, off-the-shelf competitions can require costly qualifications and certifications. Furthermore, new requirements can be added to protect incumbents. For 

instance, the Evolved Expendable Launch Vehicle program now requires new entrants to meet standards that were not applied to the incumbent contractor, something that delays implementation and raises costs. 

How will the Department regulate the qualification and certification practice to 

ensure that incumbents are not provided with unfair advantages? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MAFFEI. Major acquisition reform will follow in the footsteps of previous efforts, including Better Buying Power 2.0. A key theoretical concept of many of these 

prior efforts has been the continued integration and exploitation of commercial solutions into defense acquisitions. I think it’s fair to say, however, that practice has 

not always lived up to theory. We have seen multiple instances, ranging from information technology to the $70 billion dollar EELV program, in which commercial 

competitors have been excluded from contracts or delayed by red tape and bureaucratic indifference. How specifically did this happen with the EELV program and 

how will it be corrected moving forward? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. MAFFEI. The U.S. Air Force has claimed that the EELV ‘‘block buy’’ contract will save the Department $4.4 billion. GAO, however, has stated that the Department hasn’t been able to properly account for the program for years, and this year 

noted that the overall size of the contract ballooned from $34.3 billion to $70 billion. 

Furthermore, the block buy contractor is now hinting that it will have to increase 

the price of the contract if the Atlas V becomes unavailable. 

Given these developments, how much confidence do you have in the Air Force’s $4.4 billion claim? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

QUESTIONS SUBMITTED BY MR. KILMER 

Mr. KILMER. One of the most critical components of any acquisition, especially for 

cost reimbursement contracts and those for services, is oversight. Adequate oversight requires a knowledgeable and experienced workforce that has the time to analyze the contract requirements, the contractor’s performance, and any differences 

that may occur. Has the Department of Defense analyzed the workload of its contract specialists and contracting officers and determined that they have a workload 

that allows for adequate oversight? I am particularly concerned with the workloads 

of those 1102s in the Defense Contract Management Agency and the Defense Contract Audit Agency. What is the average workload for 1102s in each of these agencies? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 
85 

Mr. KILMER. Where is the Department in its effort to implement a portfolio management system to ensure adequate requirement definition across the various portfolios of services and products? Has a uniform chain of command been established 

throughout the Defense enterprise (services and agencies) outlining a coordinated 

opportunity for the department to collect and implement best practices and maximize the use of strategic sourcing? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. I understand that the Department is currently re-writing the DODI 

5000.02 and believe that such an effort could be beneficial to the acquisition of 

major defense weapons programs and major automated information systems. However, this only accounts for roughly 40% of the overall DOD budget. What efforts 

is the Department undertaking to address program management challenges for the 

smaller and more diverse set of acquisitions that constitute the other 60% of the 

Department’s budget? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. To what extent does the curriculum of the Defense Acquisition University include realistic problem-sets, real-life case studies, court opinions, and other 

forms of non-simplistic examples for its students? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. The Department of Defense is correctly working to minimize overclassification of requirements and acquisitions where necessary. However, a noticeable number of acquisitions are justifiably classified. How does the Department educate acquisition professionals in the art of conducting classified acquisitions? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. One thing this committee is trying to bring to the Department’s acquisition process is accountability. There are many regulations, statutory requirements, and existing contract provisions that the Department does not adhere to as 

strictly as it should. How can we ensure accountability inside the Department and 

how can our oversight role aid the Department in that effort? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. Procurement of information technology encompasses everything from 

major weapons program all the way to desktop solutions and mobile devices. When 

developing weapons systems there is usually no commercial comparison; however, 

many other information technology solutions not only have a commercial solution 

but are also contracted for differently in the private sector than in the Department 

of Defense. Knowing there isn’t a one-size-fits-all approach to IT procurement, how 

is the Department approaching these differences in order to provide the warfighter 

with the most secure and technologically advanced solution in an efficient manner? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. The current DOD Certification and Accreditation of software is a 

fragmented process between DOD Service components and is often not standardized 

for all vendors. This often results in delayed and inconsistent certification and accreditation of IT products, as much as 18 months to certify a product for deployment 

as I am told. What is the Department doing to streamline this process so there is 

one standard that incorporate a Service’s specific needs rather than separate processes for each and to standardize the requirements for all vendors? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. Please comment on the Department’s efforts to drive more cost savings and agility in DOD’s IT spend by transitioning to cloud computing services offered by the commercial sector? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. What acquisition and procurement policy changes are necessary over 

the next year to enable the broader adoption of ‘‘pay as you go’’ (OPEX vs. CAPEX) 

commercial cloud services throughout the DOD? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. Why aren’t government provided ‘‘cloud’’ services such as MilCloud 

being held to the same 3rd Party (3PAO) security evaluation processes as commercial Cloud Services Providers (i.e. FedRAMP)? If not, then would that make sense? 
86 

What changes can be made in DOD acquisition and procurement processes in the 

short term to address this? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. Will the Department of Defense utilize the Strategic Nuclear Deterrence Fund to meet Congressional intent or another means to ensure stability in 

the Ohio Replacement Program? If the Department will not utilize the Fund, what 

other mechanism will it use to satisfy the concern of the committee? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. Under Secretary Kendall, there was a featured story in Government 

Executive this week titled ‘‘Daring Deal’’ and the focus was on how the IC is 

leveraging a leading commercial cloud provider—Amazon—to build a community 

cloud for the Intelligence Community, based on the utility model of cloud (e.g. paying for storage and compute based on actual usage). 

Please tell this committee how DOD, as part of the overall defense acquisition reform effort, is going to better leverage commercial cloud technologies in both the 

short and long term? 

For example, the Navy is already utilizing commercial cloud services to move 

Level 1 and 2 workloads to Amazon; civilian agencies such as HHS are moving sensitive but unclassified workloads (such as PHI and PII information to commercial 

cloud), but the Defense Department has been lagging in that category, particularly 

for Level 3–5 data (sensitive but unclassified). Longer term, what about Level 6/classified data—what is the Pentagon’s plan to use commercial service providers to 

build a community cloud for that classified data? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mr. KILMER. The Department relies on the student loan repayment program to 

attract and maintain qualified acquisition professionals. What percent of acquisition 

professionals who apply for student loan repayment? What percent of percent of acquisition professionals who apply are awarded student loan repayment? 

Ms. BARNA. DOD use of the Student Loan Repayment Program (SLRP) as an incentive for early career civilian acquisition professionals increased significantly 

starting in 2009 in conjunction with DOD’s initiative to rebuild its acquisition workforce. From 2006 through 2008 an average of 425 student loan repayment incentives 

were approved each year. From 2009 through 2013 the use of SLRP incentives increased over threefold, to an average of 1,400 each year. While the latter years’ increase represents approximately 30 percent of early career gains, data indicates a 

shift to use of the incentive from new hires to use as a retention incentive for early 

career acquisition professionals with four to six years of service. 

Mr. KILMER. How did sequestration impact the Department’s ability to offer monetary incentives such as performance bonuses to acquisition professionals throughout the past few years? How is the Department going to safeguard this tool going 

into the next several years of sequestration level budget caps? 

Ms. BARNA. Budget uncertainty and spending reductions have significantly impacted use of monetary incentives. Sequestration and other actions to reduce spending resulted in a 52 percent reduction from FY12 to FY13 in monetary incentives 

for DOD civilian acquisition professionals. In FY 2012, 74,582 individual cash 

awards were made within the 136,714 civilian acquisition workforce members totaling $88,570,906. In FY 2013, 37,598 individual cash awards were made within the 

135,513 civilian members totaling $42,700,028. Subject to OMB limitations and 

available funding, DOD will continue to use its authorities to provide monetary incentives and at the same time explore additional ways to reward acquisition professionals. 

QUESTIONS SUBMITTED BY MR. COOK 

Mr. COOK. To date, the GAO has been unable to verify the Air Force’s claim of 

a $4.4 billion savings on a block buy contract for the EELV. GAO also noted an increase of over $35 billion to a total cost of $70 billion to the department. In the 

wake of this cost increase, the block buy contractor has indicated the unavailability 

of the Atlas V will cause even further cost increases. How much faith can we put 

in the Air Force’s claim of a $4.4 billion savings without independent verification, 

given these externalities? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 
87 

QUESTIONS SUBMITTED BY MRS. WALORSKI 

Mrs. WALORSKI. Previous acquisition reform efforts have put heavy focus on reforming the way we buy major weapon systems. What are your views on the way 

we contract for services? Is this an area we should consider as we look to try to 

improve the way the DOD does business? Do you see trust and communication between government and industry as a concern? 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mrs. WALORSKI. Congress established the Defense Acquisition Workforce Development Fund in order to grow and develop the DOD’s acquisition workforce. Is enough 

being done to motivate and incentivize high-quality young professionals not only to 

select acquisition as a career field, but also to stay in that field so that the nation 

benefits from their experience 10, 15, or even 20 years down the road? [QFR #53, 

for cross-reference.] 

Secretary KENDALL. [The information referred to was not available at the time of 

printing.] 

Mrs. WALORSKI. Congress established the Defense Acquisition Workforce Development Fund in order to grow and develop the DOD’s acquisition workforce. Is enough 

being done to motivate and incentivize high-quality young professionals not only to 

select acquisition as a career field, but also to stay in that field so that the nation 

benefits from their experience 10, 15, or even 20 years down the road? 

Ms. BARNA. This issue does not fall under P&R’s purview. We believe AT&L is 

best suited to answer this question and we defer to their answer as stated in QFR 

#53. 

Æ