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HomeAbout DLANewsNews Article View

# Annual Report Shows Progress in Acquisition

By Cheryl Pellerin

Data-driven acquisition and procurementpolicies are creating savings in production and development programs, lowering large-programcosts and moving contract costs and management in positive directions, theDefense Department’s acquisition chief said this morning.

Frank Kendall, undersecretary of defensefor acquisition, technology and logistics, discussed his third annualPerformance of the Defense Acquisition System report during a DoD acquisitionevent hosted here by Defense One.

“I believe in using data toinform policy, ... so what I've been trying to do for the last several years ishave a more data-driven set of acquisition policies,” Kendall said in hiskeynote remarks.

In 2010, Kendall, working withthen-acquisition undersecretary Ash Carter, created the first version of BetterBuying Power, the implementation of best practices to strengthen thedepartment's buying power and improve industry productivity.

**Better Buying Power**

From 2009 to 2011, Carter, nowdefense secretary, was undersecretary of defense for acquisition, technologyand logistics with responsibility for DoD’s procurement reform and innovationagenda.

“Together we had put together acell ... [whose work] was responsible for a lot of the data” represented in the report, Kendallsaid.

“We’ve grown that body of workevery year, and I think we've gotten to the point after several years ofputting policies in place [and] trying to learn from what we've done that someresults are starting to ... suggest we're headed in the right direction,” headded.

The acquisition chief also gave credit to the thousands ofpeople in government and industry who are making possible the progress documentedin the report.

**Acquisition Trenches**

Also this year, Kendall’s office is publishing a Compendium of ProgramManager Assessments -- individual reports of program managers from majorprograms -- “to give the community, in Washington in particular, achance to look at what real life in the trenches of acquisition is like,” Kendallsaid.

During his remarks, Kendall went throughseveral charts from the report and commented on the department’s progress inseveral areas. Referring to a chart on production, Kendall called the positivetrend a “pretty good estimator of what's actually happening in unit costs in our programs,” andadded that the department is better at predicting how production will go thanit is at predicting how development will go.

“There's less uncertainty, and you see that reflected inresults, which are much better [for production] than they are for development,”he said.

Kendall said the focus ondevelopment distracts from other things that matter in acquisition. “Productionand sustainment are where almost all the money is in defense acquisition,” headded.

**‘Should-Cost’ Management**

In large part because of a Better BuyingPower initiative called “should-cost management,” cost growth on major programsgenerally is at or better than historical levels, Kendall said.

For example, he added, more programs areshowing savings relative to initial baselines than in the past, major programcost growth in two-year increments has a downward trend, and contractors formajor programs are doing a better job of meeting their contract cost targets.

Should-cost management is separate from budgeting numbers,Kendall noted.

“The idea is to do better thanthe budget, and we're seeing some significant improvements here. This isstatistically significant data that shows that the fraction of our programs indevelopment showing savings has gone up pretty significantly,” he said,adding that the report shows similar results for production.

**Encouraging Trends**

“I think that can be attributed,at least in large part, to our change in emphasis throughout the workforce onshould-cost and the idea that it's our job to get costs down, not just to stayunder our budget or even just to spend the budget,” Kendall said.

Addressing competition, or thepercentage of DoD awards that are competitive, Kendall said he’s encouraged bythe trend in the last year but “worried about what the budget climate in fiscalyear 2016 is going to do to us.”

When budgets get tight and thedepartment is spending less money, there are fewer opportunities to competecontracts, Kendall said. He noted that the Obama administration has emphasizedsmall business, and added that he would like to see more Defense Departmentcontracts go to small businesses.

“In general, I think we're atleast holding the line there, and more recently moving in the right direction,”he said.

(Follow Cheryl Pellerin on Twitter: @PellerinDoDNews)

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## Related Biographies

Frank Kendall

## Related Links

Performance of the Defense Acquisition System, 2015 Annual Report

2015 Compendium of Annual Program Manager Assessments

Better Buying PowerBBPBBP 3.0