U.S. GOVERNMENT PUBLISHING OFFICE

30–987 PDF WASHINGTON : 2018

S. HRG. 115–296 

DEPARTMENT OF DEFENSE ACQUISITION REFORM 

EFFORTS 

HEARING 

BEFORE THE

COMMITTEE ON ARMED SERVICES 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

THURSDAY, DECEMBER 7, 2017 

Printed for the use of the Committee on Armed Services 

( 

Available via the World Wide Web: http://www.fdsys.gov/ 

COMMITTEE ON ARMED SERVICES 

JOHN MCCAIN, Arizona, Chairman 

JAMES M. INHOFE, Oklahoma 

ROGER F. WICKER, Mississippi 

DEB FISCHER, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

JONI ERNST, Iowa 

THOM TILLIS, North Carolina 

DAN SULLIVAN, Alaska 

DAVID PERDUE, Georgia 

TED CRUZ, Texas 

LINDSEY GRAHAM, South Carolina 

BEN SASSE, Nebraska 

LUTHER STRANGE, Alabama 

JACK REED, Rhode Island 

BILL NELSON, Florida 

CLAIRE MCCASKILL, Missouri 

JEANNE SHAHEEN, New Hampshire 

KIRSTEN E. GILLIBRAND, New York 

RICHARD BLUMENTHAL, Connecticut 

JOE DONNELLY, Indiana 

MAZIE K. HIRONO, Hawaii 

TIM KAINE, Virginia 

ANGUS S. KING, JR., Maine 

MARTIN HEINRICH, New Mexico 

ELIZABETH WARREN, Massachusetts 

GARY C. PETERS, Michigan 

CHRISTIAN D. BROSE, Staff Director 

ELIZABETH L. KING, Minority Staff Director 

(II)

C O N T E N T S 

THURSDAY, DECEMBER 7, 2017 

Page 

DEPARTMENT OF DEFENSE ACQUISITION REFORM EFFORTS .................................. 1 

Lord, Honorable Ellen M., Under Secretary of Defense for Acquisition, Technology, and Logistics ............................................................................................ 4 

Esper, Honorable Mark T., Secretary of the Army ............................................... 10 

Geurts, Honorable James F., Assistant Secretary of the Navy for Research, 

Development, and Acquisition ............................................................................. 13 

Wilson, Honorable Heather A., Secretary of the Air Force .................................. 16 

Questions for the Record ......................................................................................... 44 

(III)

(1) 

DEPARTMENT OF DEFENSE ACQUISITION 

REFORM EFFORTS 

THURSDAY, DECEMBER 7, 2017 

U.S. SENATE

COMMITTEE ON ARMED SERVICES

Washington, DC. 

The committee met, pursuant to notice, at 10:00 a.m. in Room 

SD–G50, Dirksen Senate Office Building, Senator John McCain 

(chairman) presiding. 

Present: Senators McCain, Inhofe, Wicker, Fischer, Rounds, 

Ernst, Tillis, Sullivan, Perdue, Reed, McCaskill, Shaheen, Gillibrand, Blumenthal, Donnelly, Kaine, King, Heinrich, and Warren. 

OPENING STATEMENT OF SENATOR JOHN MCCAIN, CHAIRMAN 

Chairman MCCAIN. The Senate Armed Services Committee 

meets today to receive testimony on the Department of Defense acquisition reform efforts. 

We welcome our witnesses, Ellen Lord, Under Secretary of Defense for Acquisition, Technology, and Logistics; Mark Esper, Secretary of the Army; Heather Wilson, Secretary of the Air Force; 

and James Geurts, Assistant Secretary of the Navy for Research, 

Development, and Acquisition. 

Acquisition reform is one of the most important and frustrating 

topics this committee addresses. For years, we have been warned 

that America is losing its technological advantage. I hope you all 

have seen the work by RAND on this topic. 

That is why the Department of Defense needs acquisition reform, 

not just for efficiency or to save money. Simply put, we will not be 

able to address the threats facing this Nation with the system of 

organized irresponsibility that the defense acquisition enterprise 

has become. 

I want the witnesses to pay attention here, okay? 

We are still dealing with a trillion-dollar F–35 program that continues to operate in dysfunction. The Air Force still subsidizes ULA 

[United Launch Alliance] for space launch with cost-plus-fixed-fee 

contracts. The Army has sunk nearly $6.5 billion into Win-T, a network that doesn’t work. And the Navy’s LCS [Littoral Combat 

Ship] program is delayed. The costs are now $6 billion and rising, 

and many of the key capabilities remain unproven. 

That is why this committee enacted the most sweeping acquisition reforms in a generation through the last two National Defense 

Authorization Acts [NDAA]. And yet, despite that legislation, and 

in the face of our eroding military advantage, the Department has 

been unable or unwilling to change. 

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While the previous administration offered some rhetoric about 

reform, this committee was disappointed that we saw no meaningful action. Though I remain deeply concerned about the state of our 

acquisition system, I am encouraged by the early signs from your 

team. It appears that you are beginning to make progress. 

Let me remind you of our expectations. 

First, the Office of the Secretary of Defense [OSD] needs to let 

the services manage their programs. Congress has returned significant authority to the services, but we will be watching closely to 

make sure that you do business differently and use that authority 

wisely. 

Second, while we have empowered the services, that doesn’t 

mean you can go and do whatever you like. The services must let 

OSD set strategy and policy, and do real oversight. That means 

being transparent, providing data to and following the guidance set 

by OSD. 

Again, we will be watching. This committee takes its own oversight role seriously, and we will rely on you to keep us informed 

so that we can do our job. 

Third, the system must move faster. Time is of the essence. The 

work of groups like DIUx [Defense Innovation Unit Experimental], 

the Strategic Capabilities Office [SCO], and the Rapid Capabilities 

Office [RCO] should become standard practice, not workarounds to 

the regular system. We need these innovations for major defense 

acquisition programs, not just science and technology efforts. 

Fourth, you need to be willing to take more risk and be willing 

to fail when you try new things. We recognize that Congress can 

make that difficult. Keep us informed of your plans so that we can 

work together, so that we are not surprised when things do not go 

exactly as planned. We would rather have a small failure that 

teaches us something early in the acquisition process than deal 

with a multibillion-dollar program that becomes ‘‘too big to fail.’’ 

Fifth, invest in the acquisition workforce and empower them to 

succeed. Too often, we hear that acquisition personnel are unfamiliar with or nervous about new authorities. 

Finally, reform your organizations and business practices to simplify and move faster. The major changes we have instituted 

through legislation are intended to give you the opportunity to 

make more detailed changes in your organizations. This is an opportunity to update your organizational structures and internal 

processes accordingly. 

And along those lines, I would much rather that you try and fail 

than do nothing, okay? And if you keep in contact with us and tell 

us what you are trying to do and what you are doing, we will be 

patient for about 5 minutes. 

[Laughter.] 

Chairman MCCAIN. And finally, reform your organizations and 

business practices to simplify and move faster. The major changes 

we have instituted through legislation are intended to give you the 

opportunity to make more detailed changes in your organizations. 

This is an opportunity to update your organizational structures and 

internal processes accordingly. 

Now, if you have reforms and you want to try them, come see 

us, come talk to us, and we will be glad to cooperate with you. And 

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do not be afraid to fail, because the only way that we will succeed 

is to take the risk of a failure. 

Congress has provided you with all the tools you require. We expect you, as part of a new administration, to use these tools, unlike 

your predecessors. As you do so, you will have a willing partner in 

this committee. Do not hesitate to pick up the phone or come over 

and see any members of this committee. 

We have given our subcommittee chairs a great deal of latitude 

and a great deal of authority as we go through the decision-making 

process. Do not hesitate to call any of them, with the exception of 

Senator Reed. 

Senator REED. That is right. 

Chairman MCCAIN. Finally, we will be glad to hear your requirements and how we can help you do your business better and in a 

more efficient fashion. We expect you, as part of the new administration, as I said, you will have a willing partner in this committee. 

Look, we had a briefing from the RAND study that I think my 

friend Jack Reed would agree is one of the more disturbing briefings that we have had in the years that I have been a member of 

this committee. The gap is closing. There is no doubt about it. 

So we will be expecting a lot of you, but we are not going to succeed unless we have a partnership here, okay? 

Thank you. 

Jack? 

STATEMENT OF SENATOR JACK REED 

Senator REED. Thank you, Mr. Chairman. Thank you for holding 

this very important hearing, as you have pointed out in your opening remarks. 

I want to thank the witnesses also for appearing here today. We 

look forward to your testimony. 

We have a shared goal, to ensure that our military forces are 

equipped with the best systems and technology that the Department of Defense [DOD] builds and buys, and that those systems 

are the most effective and efficient ways possible to protect the Nation and protect, particularly, the men and women in our Armed 

Forces. 

We also have a shared goal that the Pentagon should be able to 

access the most innovative people and technologies available from 

the best small companies, defense industry, labs, and universities. 

Also, we owe it to the taxpayers to ensure that we are buying 

things at reasonable prices and within reasonable budgets. This 

hearing will give us a chance to learn how the Department is also 

working to make those shared goals a reality. 

In my view, the services should play a very important role in the 

research and acquisition programs that provide advanced systems 

and capabilities to our combatant commanders. 

Under Chairman McCain’s leadership, Congress has strengthened the services’ role in the planning, requirements, and program 

review processes that strongly shape whether our acquisition programs succeed or fail. These new responsibilities are in addition to 

the role the services have always played in the development of 

their plans and budgets, ensuring that programs are appropriately 

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prioritized and funded, especially in difficult budgetary environments. 

Finally, the services play a critical part in nurturing the careers 

of the military and civilian personnel who work in acquisition requirements and budget fields. Too often, we forget about those individuals and the necessity to maintain, enhance, and prolong their 

effective careers within the Department of Defense. 

Building on the successes of the Weapon Systems Acquisition Reform Act and the Pentagon’s Better Buying Power initiatives, and 

making use particularly of the new reforms in the recent National 

Defense Authorization Acts, again, led by Chairman McCain, we 

are seeing some improvements in acquisition processes and outcomes today and are well-positioned to make more improvements. 

But we must do much, much, much better. And that is why you 

are here today. 

I look forward to seeing how the services plan to use their authorities and live up to their responsibilities to support successful 

acquisition efforts. I also welcome a discussion of further changes 

that can be made to strengthen their role, as appropriate, with the 

hopes of continuing to improve acquisition outcomes and provide 

the best value and the best military capabilities for the Nation. 

Thanks again to the witnesses and the chairman, and I look forward to the testimony. 

Thank you, Mr. Chairman. 

Chairman MCCAIN. I would like to say how much I appreciate 

the partnership that I have with Senator Reed despite his educational—— 

Senator REED. Deficiencies. 

Chairman MCCAIN.—lacking. But we are partners, and the fact 

that the defense bill was passed through this committee without a 

single dissenting vote I think is ample testimony to the bipartisanship that characterizes our conduct of this committee, and I am 

very proud to have Senator Reed as a partner. 

So we will begin with the Honorable Ellen Lord, Under Secretary 

of Defense for Acquisition, Technology, and Logistics. 

Secretary Lord? 

STATEMENT OF HONORABLE ELLEN M. LORD, UNDER SECRETARY OF DEFENSE FOR ACQUISITION, TECHNOLOGY, AND 

LOGISTICS 

Ms. LORD. Chairman McCain, Ranking Member Reed, distinguished—— 

Chairman MCCAIN. By the way, could I just mention one thing? 

Depending on what happens here, there is going to be an event at 

11:45 on the floor of the Senate, and we may have to recess until 

that event is completed. 

Go ahead, please. Thank you. 

Ms. LORD. Thank you for the opportunity to testify today on defense acquisition and reform efforts. I am pleased to be joined by 

Secretary Esper, Secretary Wilson, and Assistant Secretary Geurts. 

After having spent 33 years in industry, I have come to my current position during a unique period in time, one which provides 

a great opportunity to make a positive change. 

5 

First, the National Defense Authorization Acts for fiscal years 

2016 and 2017 have provided the direction and the tools for the Department to advance the capabilities required to restore our overmatch, speed the rate at which we field these advanced capabilities, and improve the overall affordability of our fighting forces’ 

weapon systems. 

Secondly, Secretary Mattis has placed a priority on implementing 

these provisions alongside other Department-wide reforms and 

practices required to improve the lethality and the readiness of our 

military. Using an industry analogy, I believe that the OSD should 

function as a corporate office, very lean, enabling the services as 

businesses to execute programs they are responsible for. 

AT&L [Acquisition, Technology, and Logistics] should be pushing 

the majority of the Department’s work back to the services and focusing on prototyping and experimentation, developing architectures and standards, interpreting law into policy and procedures, 

and simplifying acquisition processes to quickly and cost-effectively 

provide material and services to the warfighter. 

Stating it plainly, AT&L needs to be the strategic body, with 

focus across the board driving affordability and accountability, reducing timelines, and equipping the services to execute their programs. 

Given the fact that the DOD, on average, awards daily 1,800 contracts and 36,000 delivery and task orders, every process improvement we make has the potential to produce significant results. 

Having reviewed data measuring, the typical lead time following 

validation of a warfighter requirement until the award of the resulting major weapon systems contract, I have concluded that we 

have the ability to reduce this procurement lead time by as much 

as 50 percent. Some of the ways in which we plan to do this are 

incentivizing contractors to submit responsive proposals in 60 days 

or less, and implementing electronic Department-wide acquisition 

streamlining tools. 

Furthermore, Congress gave us the ability to conduct 10 pilot 

programs, permitting the reduction of cost and pricing data for Foreign Military Sales [FMS]. Key to our success would be to have the 

same flexibility for our U.S. procurements. If we were granted the 

statutory authority on sole-source procurements, it would allow us 

to use our judgment to reduce the cost and pricing data we would 

require when we have cost transparency with the companies with 

which we do business. 

In my testimony, I stated that we have initiated six pilot programs that push the limits of our contracting agility. This is in 

order to demonstrate our ability to responsibly reduce this procurement lead time. 

Chairman MCCAIN. Tell us a couple of those programs. 

Ms. LORD. C–130J retrofit kits and the Japanese Global Hawk, 

so one United States, one Foreign Military Sale. 

Our goal is to get these pilot procurements done within 210 days 

from the issuance of the request for proposal. 

Chairman MCCAIN. Two hundred and ten days? 

Ms. LORD. Two hundred and ten days is the interim goal. We 

would like, eventually, to get to 180 days. We have the process to 

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work down. We are going to work with you and your team to demonstrate how we do it. 

And we are going to you come back to you as we need additional 

authorities, if needed. But we believe it is really interpreting the 

authorities we have now, making sure you agree with them, and 

having us move forward. 

So we are also pre-positioning production contracts to include options for yet-to-be-developed FMS requirements. In other words, in 

the initial contracts, we have the language, so we can almost fill 

in the blank for FMS sales. Again, pre-thinking this is going to reduce the timeline and allow us to be very, very responsive to international customers. 

Chairman MCCAIN. So you do not need a 100-page RFP [Request 

for Proposal] for a pistol? 

Ms. LORD. Absolutely correct. 

On the Joint Strike Fighter [JSF] program, we are determined 

to reduce the cost of production and sustainment. We have initiated an extensive JSF cost deep dive, led jointly by my office, ATL, 

and CAPE [Cost Assessment and Program Evaluation]. 

The purpose of this cost review is to understand in detail at 

Lockheed Martin, Northrop Grumman, Rolls-Royce, and BAE, as 

well as their primary subcontractors, and there are 100 of them in 

total, what JSF costs, why it costs what it costs, and, most importantly, what we can do to improve cost performance at the prime 

contractor and up and down the supply chain. 

This will be a completely transparent process with the companies 

involved. The knowledge gained will inform our product contract 

negotiations and all our sustainment efforts on a go-forward basis, 

and will promote more effective and timely contract negotiations. 

Just yesterday, the fiscal year Defense Acquisition Workforce 

award ceremony was held. Deputy Secretary Shanahan and I recognized the outstanding accomplishments of 27 top DOD acquisition professionals out of a workforce of 165,000. 

A few of their accomplishments include: implementing a cuttingedge approach to cybersecurity, testing for aircraft weapon systems, accelerating the testing for defensive systems on AC–130J 

aircraft by 2 years, getting 3,000 Tactical Combat Casualty Care 

units to medics and special forces operators, improving cybersecurity for medical facilities, and reducing biological agent decontamination time by 50 percent to accelerate the return of equipment back to the fight. 

Out of the 17 individual awards across requirements and acquisition-critical functions, the United States Special Operations Command [SOCOM] received four. Our challenge is to take these pilots, 

these silos of excellence, and scale them to the big Army, the big 

Navy, the big Air Force. We are also—— 

Chairman MCCAIN. And how many F–18s are operational and 

ready to fly? 

Ms. LORD. Not enough. I will defer to my colleague, Mr. Geurts, 

on that one. 

Chairman MCCAIN. Okay. 

Ms. LORD. All right. 

Chairman MCCAIN. The numbers I recall are 60 percent are not 

flying. 

7 

Ms. LORD. Operational availability across our air asset is an 

issue. As I talk to each of the service secretaries, it is very clear. 

There is a lot we can do at the beginning of these programs to design in the sustainment portion, and we are focusing on that. And 

we will come back and tell you how we are working on it. 

Chairman MCCAIN. And let us know who is responsible. 

Ms. LORD. Absolutely. I would look forward to a small discussion 

in your office, and we can talk about the actions we are already 

taking in terms of accountability with individuals. 

Chairman MCCAIN. Thank you. 

Ms. LORD. So we are also working to make use of the new rapid 

hiring flexibilities provided by this committee to bring in worldclass talent in areas like robotics, lasers, artificial intelligence, as 

well as new contracting specialists and test engineers. For example, in 2016, our labs hired nearly 2,000 new scientists and engineers using the hiring authorities Congress provided. 

Reforming and improving the Defense Acquisition System to create an agile enterprise is a continuing process requiring close partnership across the Department and with Congress. You have my 

total commitment to the success of that partnership. 

I am looking forward to working closely with the committee and 

the professional staffers to further implement the initiatives we 

have already begun. Thank you for your support in this significant 

effort, and I look forward to answering your questions. 

[The prepared statement of Ms. Lord follows:] 

PREPARED STATEMENT BY THE HONORABLE ELLEN M. LORD

Chairman McCain, Ranking Member Reed, distinguished members of the Committee, thank you for the opportunity to testify today on defense acquisition and reform efforts. I am pleased to be joined today by Secretary Esper, Secretary Wilson, 

and Assistant Secretary Geurts. 

Our Nation’s security is underpinned by the quality of the men and women who 

serve in our Armed Forces, and it is our collective responsibility—the Department 

leadership working closely with the Congress—to ensure the superiority of the 

weapon systems that our men and women in uniform train and deploy with as they 

conduct the business of our Nation around the world. Too, in the course of developing and fielding these weapon systems, it is our responsibility to uphold the highest standards of efficiency and effectiveness as we commit the resources entrusted 

to us by the taxpayer. 

Arguably, the weapon systems that the Department delivers to the warfighter 

today are the finest in the world. Inarguably, however, the current pace at which 

we develop advanced capability is being eclipsed by those nations that pose the 

greatest threat to our security, seriously eroding our measure of overmatch. Additionally, the increasing cost of our major weapon systems has placed at risk our 

ability to acquire and sustain these systems at the level required by our fighting 

forces. 

The National Defense Authorization Acts (NDAA) for fiscal years (FY) 2016 and 

2017 have provided the direction and the tools for the Department to reverse these 

trends; specifically, to advance the capabilities required to restore our overmatch, 

speed the rate at which we field these advanced capabilities, and improve the overall affordability of our fighting forces’ weapon systems. Secretary Mattis has placed 

priority on implementing these provisions alongside other Department-wide reforms 

and practices required to improve the lethality and readiness of our military. 

As reported to Congress in August, 2017, the Department is moving forward with 

restructuring the Office of the Under Secretary of Defense (Acquisition, Technology 

and Logistics) (USD(AT&L)) to form the two new Under Secretary offices for (Acquisition and Sustainment (A&S)) and (Research and Engineering (R&E)). We are currently conducting the detailed planning necessary to ensure that the roles and responsibilities of the two Under Secretaries have been clearly delineated and that 

8 

personnel and processes are aligned to ensure that the objectives of the reorganization are met. 

As described in detail in the report to Congress, the new USD(R&E) will set the 

technology strategy for the Department, solve our critical technical warfighting challenges, retire risk and speed the development of our most advanced capabilities 

through increased prototyping, experimentation, and exploitation of technologies 

made available through non-traditional sources. The new USD(A&S) will focus on 

improving the affordability and timely delivery of Defense procurement through the 

life cycle of our weapon systems, serve as principal advisor to the Secretary and the 

Services on acquisition policy and its execution, provide a joint, cross-domain view 

to ensure the integration and interoperability of the Department’s high end capabilities, and guide related investment decisions. Pending the series of Senate confirmations for the principals to be assigned to the new organization, we are on schedule 

to stand up USD(R&E) and USD(A&S) on February 1, 2018. 

This reorganization, the most significant change to Defense Acquisition since the 

Goldwater-Nichols Act, must be accomplished in-stride as we continue to execute 

the vast array of developmental activities, service contracts, and Major Defense Acquisition Programs that comprise the $300 billion annual investment portfolio that 

is aligned under the current USD(AT&L) organization. Accordingly, we will be deliberate in ensuring clear accountability as we transition from the current to the future organization. 

In advance of formally standing up the new organization, the Department has 

commenced implementing processes which support the intent of the reorganization 

within the Department’s fiscal year 2019 budget deliberations. In particular, the Department is shaping its modernization strategy in the future years defense program 

consistent with the same objectives Congress envisions for the new USD(R&E). We 

look forward to discussing these modernization initiatives and the accompanying 

prototyping and experimentation efforts that will speed their development in conjunction with the submission of the fiscal year 2019 budget. 

Beyond the reorganization, however, there are significant new authorities and 

tools provided by Congress aimed at improving the way we do business, which need 

to be placed into policy and practice across the Department. In total, 139 provisions 

supporting acquisition reform efforts have been enacted across the fiscal year 2016 

and fiscal year 2017 NDAAs. Of these, the Department’s implementation is nearly 

50 percent complete. Across the board, the Department is revising the DOD 5000 

Instruction series governing the Defense Acquisition System, issuing new instructions for the acquisition of Business Systems and services, and initiating Defense 

Federal Acquisition Regulation System cases to codify the new rules, in accordance 

with governing authorities provided by Congress. Commensurate with these 

changes, the Defense Acquisition University is updating its instructional materials 

to ensure the prevailing policies are embedded in the practices of our acquisition 

leaders and program managers. I have placed priority on working closely with Service Secretaries and their Acquisition Executives to accelerate completing the implementation of these provisions to ensure that the Department reaps the benefits they 

offer to Defense Acquisition as soon as possible. 

An important example is the ‘‘Designation of Milestone Decision Authority’’ provided by section 825 of the Fiscal Year 2016 NDAA, which delegates decision-making from OSD to the Services. I have completed my review of MDA designation for 

the current 87 Major Defense Acquisition Programs and have issued further delegation such that the Service Acquisition Executives hold authority for 73 of these programs. I will continue to review these programs and work towards further delegation, as appropriate, to meet the objectives of establishing greater accountability and 

improving the timeline and affordability of our most critical defense programs. I intend to ensure similar progress on the equally important sections 804 and 806 of 

the same Act, to provide the Services the authorities they need to press forward 

with their rapid prototyping and fielding initiatives. I look forward to updating the 

Committee of progress in these areas in the weeks ahead. 

Consistent with this emphasis on placing decision authority for major programs 

in the hands of the leadership that will be accountable for their execution, I have 

placed priority across the Defense Acquisition System on reducing the time required 

to award contracts once the requisite funds are authorized and appropriated by Congress. Having reviewed data measuring the typical lead time following validation of 

a warfighter requirement until awarding the resulting major weapon systems contract, I’ve concluded that we have the ability to reduce this procurement lead time 

by as much as 50 percent; significantly reducing our costs while accelerating our 

timelines for fielding major capability. I have initiated six pilot programs that push 

the limits on our contracting agility to demonstrate our ability to responsibly reduce 

this procurement lead time with the intent of implementing the lessons learned 

9 

from these pilot projects at scale across Defense contracting. I look forward to sharing these results and further recommendations with Congress as we proceed. 

As well, we are building on the initial success of earlier reform initiatives. For 

example, the Department requested and Congress provided authority to conduct a 

pilot effort to acquire innovative commercial items, technologies, and services using 

other than traditional transaction authority. The associated Commercial Solutions 

Opening (CSO) process piloted by the Defense Innovation Unit Experimental (DIUx) 

is a merit-based process that enables the Department to rapidly acquire promising 

innovative commercial technologies using non-traditional contracting tools. Since 

implementation, DIUx has awarded 61 such transactions totaling $145 million, 

averaging only 78 days from initial contact with the company to signing an agreement. More recently, they awarded the Department’s first two ’other transaction’ 

production contracts which, with a combined ceiling over $1 billion, will enable the 

Services to more broadly leverage these new authorities provided by Congress. 

Key to our success, as we implement the broad scope of reform initiatives, are the 

strength of the acquisition work force that will employ the new acquisition tools and 

processes, and the strength of our industrial base, which will ultimately develop and 

produce the capabilities needed by our military. 

As the USD(AT&L), one of my top priorities is to improve our competitive posture 

as we seek to attract, train, and retain talented leaders uniquely skilled in the complex business of defense acquisition. With the help of Congress, the Department has 

made significant progress in rebuilding the acquisition workforce and invigorating 

the science and technology workforce. The Defense Acquisition Workforce Development Fund (DAWDF) provided by Congress, and related special hiring authorities 

for the Science and Technology Reinvention Laboratories, have been particularly 

critical to the Department’s efforts to rebuild its technical workforce, strengthen 

early and mid-career year groups, improve certification and education levels, and expand participation in the contribution-based Acquisition Demonstration (AcqDemo) 

personnel management system. I thank the Committee for making DAWDF permanent and extending AcqDemo until 2023 as part of the Fiscal Year 2018 NDAA, and 

I’m committed to continue working with the Committee to ensure the success of the 

AcqDemo initiative with a vision of making AcqDemo permanent in the future. 

The nation’s ability to maintain technological superiority and prevail in a sustained conflict is predicated on a robust industrial base. In July 2017 the President 

directed the Department, in collaboration with other Agencies, to assess and 

strengthen the manufacturing and Defense industrial base. We are working on this 

assessment and will share our policy, legislative, regulatory, and investment recommendations to improve the competitiveness of our industrial base, reduce risks 

to its viability, and to improve the resiliency of our supply chain after full review 

by the Administration in 2018. Similarly, the Department is assessing reform and 

expansion of authorities of the Committee on Foreign Investment in the United 

States (CFIUS) and Foreign Investment Risk Review Modernization Act legislation 

to protect critical defense technology. We look forward to working with Congress on 

these and related measures necessary to protect critical defense technologies placed 

at risk by foreign competition, global business dynamics, and cyber threats. 

At the same time, however, Congress has provided broad authorities and tools to 

expand our sources of supply beyond the traditional defense industrial base to leverage the innovation and competitive potential offered by commercial technologies and 

small businesses. Though we are yet in the early stages of implementing the range 

of tools provided for this purpose, I am committed to accelerating their practice 

throughout the Department and will keep the Committee apprised of our progress 

with these important initiatives. 

Looking ahead, the Department is carefully reviewing the acquisition reform provisions in the Fiscal Year 2018 NDAA that is pending signature by the President. 

Once enacted, I will move out quickly with the Services to ensure the effective implementation of those provisions affecting the Defense acquisition system. In parallel, we are continuing to work across the Department and alongside what is commonly referred to as the section 809 panel, to identify further opportunities to 

streamline acquisition regulations. I am meeting regularly with the Service leadership and the panel leaders on these initiatives and look forward to bringing recommendations forward to Congress in 2018 in support of the Fiscal Year 2019 

NDAA. 

As USD(AT&L) completes its reorganization, we are reforming the Defense Acquisition System to create an agile acquisition enterprise that acquires and fields products and services that provide significant increases in mission capability and operational support in the most cost-efficient, timely manner possible. This reorganization, and the associated reform effort, is a continuing process requiring close partVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
10 

nership across the Department, and with the Congress, to refine and improve the 

Defense acquisition system. 

You have my total commitment to the success of that partnership. Thank you for 

your support in this significant effort. I look forward to answering your questions. 

Chairman MCCAIN. Thank you. 

Secretary Esper? 

STATEMENT OF HONORABLE MARK T. ESPER, SECRETARY OF 

THE ARMY 

Mr. ESPER. Chairman McCain, Ranking Member Reed, distinguished members the committee, good morning. 

When I appeared before this committee in mid-November, I stated that modernization was a top priority of mine and that ensuring 

the future readiness of the total force in a high-end fight would be 

very difficult without fundamental reform of the current acquisition 

system. In my few weeks as Army Secretary, I am even more convinced that this is true and more aware of the urgency for us to 

modernize. 

I am encouraged, though, by the progress that the Army has 

made, consistent with congressional direction, to begin overhauling 

the current system. To be sure, a long road lies ahead, and the 

challenges are great. But Army leadership with the support and 

advice of Congress is fully committed to bold reform that promises 

to provide America’s soldiers with the weapons and tools they need 

to fight and win our Nation’s wars as part of the joint force. 

This committee is well-aware of the growing challenges our military faces around the world. Rising near-competitors threaten and 

sometimes challenge America’s interests with capabilities that 

often match and, in a few cases, exceed our own. 

In short, our failure to modernize as quickly as possible will most 

likely increase risk to the force. This makes reform of our Industrial Age acquisition system a strategic imperative. 

Together with leaders from the regular Army, Army National 

Guard and Army Reserve, I am approaching this endeavor through 

the priorities I outlined previously. 

First, taking care of our people: our soldiers, civilian professionals, and their families. 

Next, readiness: ensure the Army’s ability to deploy, fight, and 

win across the entire spectrum of conflict, especially the high-end. 

Third, modernization: build greater capability and capacity in the 

longer term to ensure clear overmatch the future. 

Finally, reform: improve the way we do business to free up resources, time, money, and manpower that will make the Total 

Army more lethal, capable, and efficient. 

Given these priorities, the Army is currently undertaking five acquisition reform efforts designed to promote unity of effort, unity 

of command, efficiency, cost-effectiveness, and leader accountability. 

First, a three-star level task force is mapping out a new command, Army Futures Command, that will consolidate the service’s 

modernization enterprise under one roof. 

Second, the Army is executing eight directives intended to improve our capability and material development process by refining 

how we generate requirements; simplifying our contracting and 

11 

sustainment processes; and evaluating our progress through 

metrics to enable our ability to deliver capabilities to soldiers faster, among other things. These directives leverage authorities contained in the fiscal year 2016 and fiscal year 2017 NDAAs. 

Third, the Army has stood up eight cross-functional teams [CFT] 

to enable our leadership to efficiently identify and manage investments across the Army’s six modernization priorities. These crossfunctional teams are charged with using technical experimentation 

and demonstrations to inform prototype development and reduce 

the requirement process. 

Mindful of past failures, the Army’s fourth effort is to ensure 

that technological solutions are mature before we begin a program 

of record. This includes a threat-based strategy that has aligned 80 

percent of the Army’s science and technology [S&T] funding requests against our six modernization priorities. 

Fifth, we are directly engaging Army senior leadership as decision-makers, as directed in the Fiscal Year 2016 NDAA, through a 

reinvigorated Army Requirements Oversight Council process. 

Underlying these efforts are the other benefits the Army has derived from the recent NDAAs. For example, streamlined requirements and processes are being captured in a rewritten Army Regulation 70–1 Army Acquisition Policy. 

But there is more that we can and must do. To be effective, we 

must have predictable, stable, and adequate funding to restore balance and reduce risk. 

Ultimately, we are accountable to Congress and the American 

people. This is why we will continue to work with you and your 

staffs on the tasks before us. I fully believe you will see marked, 

clear progress in the coming months. You will see much more unity 

of effort, unity of command, efficiency, and accountability as we 

move forward. 

However, the ultimate test we will face is on the future battlefield, where we will succeed or fail based on our efforts to reform 

and modernize today. 

Mr. Chairman, I cannot help but be reminded that today is the 

anniversary of December 7th, when we were caught off guard at 

Pearl Harbor. And in a few short years, we reenergized the country, industry, the American people to fight and win that war. I 

think we need to take that same sense of urgency to the challenges 

we face today as we did in the 1940s. 

So with that, we understand the stakes. We have begun to make 

progress. And we will not fail. Thank you. 

[The prepared statement of Mr. Esper follows:] 

PREPARED STATEMENT BY THE HONORABLE MARK T. ESPER

Chairman McCain, Ranking Member Reed, distinguished members of the committee—good morning. 

When I appeared before this committee in mid-November, I stated that modernization was a top priority of mine, and that ensuring the future readiness of the 

total force against near-peer competitors in a high-end fight would be very difficult 

without fundamental reform of the current Acquisition system. In the couple weeks 

that I have been serving as Army Secretary, I am even more convinced that this 

is true, more aware of the pressing reasons why modernization is needed, and more 

encouraged by the progress the Army has made to date—consistent with Congressional direction—to begin overhauling the current system. A long road lies ahead, 

for sure, and the challenges are great. But the Army leadership, with the support 

12 

and advice of Congress, is fully committed to bold reform that promises to provide 

America’s Soldiers with the weapons and tools they need, when they need them, to 

fight and win our Nation’s wars. 

This committee is well aware of the growing challenges our military faces around 

the world. Rising near-peer competitors threaten America’s interests. The forces 

they are building often match, and in a few cases exceed, our own capabilities. And 

even in the absence of direct conflict with such states, we should expect to encounter 

their weapons and systems in the hands of others. In short, our failure to modernize 

as quickly as possible will most likely exacerbate the significant risks the Total 

Army now faces. This makes reform of our industrial-age Acquisition system a strategic imperative. 

As such, together with the rest of the Army’s leadership—Regular Army, Army 

National Guard, and Army Reserve—I am approaching this endeavor through the 

priorities I outlined previously: 

• First and foremost, People—take care of our Soldiers, civilian professionals, and 

their families; 

• Readiness—ensure the Army’s ability to deploy, fight, and win across the entire 

spectrum of conflict, especially the high end; 

• Modernization—build greater capacity and capabilities in the longer term to ensure clear overmatch in the future; 

• Reform—improve the way we do business to free up resources that will make 

the Total Army more lethal, capable, and efficient. 

Given these priorities and the strategic imperative we face, the Army is currently 

undertaking five acquisition reform efforts designed to promote unity of effort, unity 

of command, efficiency, cost effectiveness, and leader accountability: 

First, a three-star level task force is mapping out a new command—Army Futures 

Command—that will consolidate the service’s modernization enterprise under one 

roof. This task force will report directly to the Under Secretary and Vice Chief of 

Staff of the Army on a weekly basis. Once this new command is stood up, which 

is currently targeted for the summer of 2018, it will be the most significant organizational change to the Army’s procurement system since 1973. 

Second, the Army is executing eight directives intended to improve our capability 

and material development process by refining how we generate requirements, improving how we educate the acquisition enterprise, simplifying our contracting and 

sustainment processes, and evaluating our progress through metrics to enable our 

ability to deliver capabilities to Soldiers faster and more efficiently. Specifically, we 

intend to reduce the requirements development process from up to 60 months to 12 

months or less. This requires Army leadership to be directly involved in making 

tough choices to divest inefficiencies and reinvest in priorities, which we are committed to doing. All of these directives will help us to implement the many authorities contained in the fiscal year 2016 and fiscal year 2017 NDAAs. 

Third, and key to our reform efforts, will be the Army’s eight cross functional 

teams. These teams have been stood up to enable the Army’s leadership to efficiently identify and manage investment and divestment priorities by assessing them 

against the Army’s key modernization priorities: 

• Long Range Precision Fires—that will increase our reach and ability to acquire 

targets under adverse conditions. 

• Next Generation Combat Vehicles—in manned, unmanned, and optionallymanned variants to give our troops unprecedented freedom of maneuver in 

many different environments. 

• Future Vertical Lift platforms—attack, lift, and reconnaissance airframes that 

are survivable on the future battlefield. 

• An Army Network—hardware, software, and infrastructure that can be used in 

any environment, including places where the electromagnetic spectrum is denied or degraded. 

• Air and Missile Defense Capabilities—that will protect of our forces from air 

and missile delivered fires, including drones. 

• Soldier Lethality—the Army’s most important capability, which aims to improve 

their abilities to shoot, move, communicate, protect, and sustain. 

Each of these cross functional teams is a flat organization made up of subject matter experts from across the requirements, acquisition, and technical communities, 

and led by a hand-picked officer—a warfighter—who currently reports directly to 

the Under Secretary and Vice Chief of Staff of the Army. These cross functional 

teams are charged with using technical experimentation and demonstrations, in conjunction with industry and commercial sector partners, to inform prototype developVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
13 

ment and reduce the requirement process. These prototypes will enable us to learn 

and make informed resource decisions in less time and with fewer resources. 

Mindful of past failures, the Army’s fourth effort is to ensure that technological 

solutions are mature before we begin a program of record. This includes a threatbased strategy that has aligned eighty percent of the Army’s $2.4 billion science and 

technology funding profile against our six modernization priorities. Improved science 

and technology governance, and revised transition agreements with material developers, will ensure that we are judicious with taxpayer dollars. We have completed 

science and technology reviews that identified programs to divest, enabling us to realign $1.1 billion in science and technology funding toward the Army priorities mentioned above. 

Fifth, we are directly engaging Army senior leadership as decision makers for the 

first four efforts. The Fiscal Year 2016 NDAA provided the Chief of Staff of the 

Army an enhanced role in the Army Requirements Oversight Council. We have combined that with the Army Systems Acquisition Review Council to expand that oversight and decision-making role to ensure the Chief of Staff of the Army and I concur 

with program developmental decisions. 

Underlying these efforts are the benefits the Army has derived from the fiscal 

year 2016 and fiscal year 2017 NDAAs. Streamlined requirements and processes are 

now captured in a rewritten Army Regulation 70–1: Army Acquisition Policy. Simplified Acquisition Management Plans are reducing the amount of paperwork needed to manage a program and the establishment of a fourth Acquisition Category for 

programs that spend under $185 million in procurement is enabling faster decisions. 

These reforms will require predictable, stable, and adequate funding to restore 

balance and reduce risk. The Defense funding levels under current law, the Budget 

Control Act and Continuing Resolutions hinder our ability to resource the Total 

Army over the long term by prohibiting the service from starting new procurement 

programs and military construction projects. They also prohibit entering into multiyear contracts, increasing production rates, or realigning funds to higher priority requirements. 

Ultimately, we are accountable to Congress and the American people. I fully believe you will see marked, clear progress in the coming months. You will also see 

the Army’s new Futures Command stand up next summer. You will begin to see 

outputs aligned to our six modernization priorities within three years or less, barring any major funding shortfalls or significant international events. And you will 

see much more unity of effort, efficiency, and accountability in these early 

waypoints, and the ones that will follow later. 

However, the ultimate test we will face will be on the battlefield, where Regular 

Army, Army National Guard, and Army Reserve Soldiers will succeed or fail based 

on our efforts to reform and modernize now. Past ways of thinking, organizing, and 

executing have limited our ability to keep pace with technological development and 

our potential adversaries. There is a clear strategic imperative to reform our industrial-age acquisition system and modernize as quickly and efficiently as possible. We 

understand the stakes, we have begun to make progress, and we will not fail. 

Thank you. 

Chairman MCCAIN. Thank you, Mr. Secretary. 

Secretary Geurts? 

STATEMENT OF HONORABLE JAMES F. GEURTS, ASSISTANT 

SECRETARY OF THE NAVY FOR RESEARCH, DEVELOPMENT, 

AND ACQUISITION 

Mr. GEURTS. Mr. Chairman, Ranking Member Reed, and distinguished members of the committee, thank you for the opportunity 

to appear before you today to discuss acquisition reform efforts, recommendations for further reform, and requests for congressional 

support to improving acquisition outcomes. 

The Department of the Navy has embraced the recent acquisition 

reforms on multiple fronts. We are actively pursuing initiatives to 

capitalize on the new mid-tier acquisition authorities provided in 

fiscal year 2016 and 2017 NDAAs. We continue to leverage available tools to drive down procurement costs and assist the workforce. We have made meaningful progress to date, and we will continue to be efficient and effective managers of the acquisition reVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
14 

form efforts and our resources. Our workforce, in particular, has 

made progress advancing their professional and technical talents, 

thanks to your support. 

Further meaningful acquisition reform must be assisted by sufficient and predictable funding. Timely budgets, avoiding further 

C.R.s [continuing resolutions], and amending the Budget Control 

Act [BCA] to increase funding levels would reduce market uncertainty and improve our ability to maintain schedule and cost across 

all the Department of Navy acquisition programs. 

Sufficient and predictable funding translates into more capability 

delivered more efficiently, which reduces cycle time and cost, the 

goals we all share here together. 

We appreciate the support of this committee providing the guidance on acquisition policy and reform. Thank you for the opportunity to speak before you today, and I look forward your questions. 

[The prepared statement of Mr. Geurts follows:] 

PREPARED STATEMENT BY THE HONORABLE JAMES F. GEURTS

Mr. Chairman, Ranking Member Reed, and distinguished members of the committee, thank you for the opportunity to appear before you today to discuss acquisition reform efforts, recommendations for further reform, and requests for Congressional support to improving acquisition outcomes. 

We in the Department of the Navy (DON) succeed in acquisition when we work 

as part of a team that includes our acquisition workforce, our scientists and engineers, our resource professionals, and our men and women in uniform who identify 

what we need, and then test, train, and deploy with the resulting systems. That 

team cannot succeed, however, without the full participation of our industry partners and you in the Congress. No acquisition process can be successful without a 

true partnership by all stakeholders. And by partnerships I mean shared risk resulting in shared benefits. We must all be good stewards of our resources for the 

American taxpayers and leverage every tool at our disposal to ensure the continued 

security of our Nation. 

The DON’s priorities focus on people, capabilities, and processes. Those priorities 

are aimed at delivering readiness, lethality, and modernization, all with a sense of 

urgency. Recent laws have offered new tools that allow us to streamline how we develop and deliver necessary weapon systems, promote a healthy industrial base, and 

strengthen our acquisition workforce. 

The DON has embraced recent acquisition reform efforts on multiple fronts. For 

example, we have developed and implemented a new accelerated acquisition policy, 

which established an Accelerated Acquisition Board chaired by the Service Chiefs 

and our Service Acquisition Executive. This policy improves our ability to leverage 

technological innovations by relying on rapid prototyping and fielding and hastens 

our ability to respond to urgent needs. It establishes two paths; for priority needs 

where a suitable material solution has been identified, the preferred path is through 

a Maritime Accelerated Capability Office (MACO) program. Current MACO programs include the unmanned carrier-based tanker (MQ–25), the Large Displacement Unmanned Undersea Vehicle (LDUUV), and the SM–2 Block IIIC active medium range missile, which will field initial capability up to three years earlier than 

the previous programs of record. For priority needs where a suitable materiel solution is not sufficiently developed, the preferred path is through a Rapid Prototyping, 

Experimentation and Demonstration (RPED) project. Current RPED projects include 

the Navy Laser Family of Systems and the Expeditionary Surveillance Towed Array 

Sensor System. 

The Marine Corps has also established a Rapid Capabilities Office (RCO) to exploit emerging technological opportunities for rapid prototype development, fielding, 

and operational assessment that will improve the lethality and survivability of Marine units. Projects initiated or planned include Ship-to-Shore Maneuver Exploration and Experimentation, Tactical Electro-Magnetic Signature Operations and 

Support, Long Range Precision Fires, and Unmanned Swarm Systems. 

15 

All of these represent exciting new efforts that we are pursuing with vigor, but 

that also serve as case studies in action that allow us to measure, assess, and refine 

our approaches to gain even greater efficiency and effectiveness over time. 

None of these efforts will result in meaningful and sustainable change unless the 

people who carry them out are properly trained and incentivized. To that end, the 

DON has issued and is implementing an Acquisition Workforce Strategic Plan. This 

plan connects people to the product and mission more directly by aligning professional and technical excellence with capability needs, while reinforcing responsibility and accountability. Our efforts to execute this plan have been enhanced by 

Congressional extension of the Expedited Hiring Authority (EHA) that streamlines 

recruiting selection and hiring processes for acquisition professionals, for which we 

are grateful. We also appreciate your support of the Defense Acquisition Workforce 

Development Fund (DAWDF), which allows us to provide the appropriate training 

to our professionals and continue their development. 

The DON also continues to leverage available tools to drive down procurement 

costs, which is imperative as we move towards a 355-ship Navy. We continue to refine our requirements, seek to maximize competition, capitalize on multi-year and 

block buy contracts, explore cross-program efficiencies, and manage our cost of doing 

business to ensure we obtain as much warfighting capability out of every dollar as 

we can. For large and enduring programs, such as the VIRGINIA Class Submarine, 

the Navy uses these approaches to manage costs and stabilize the industrial base, 

as well as explore proven strategies such as making appropriate use of block buys 

and multiyear procurements as we have in the past with various ship types (carriers, subs, etc.) when supported by thorough analysis. These kinds of authorities 

can result in substantial savings: we estimate they may be as much as $5.4 billion 

for the Block V Virginia-class Submarines Multi-Year Procurement. Additionally, 

the DON is developing agile policy and procedures aligned with commercial best 

practices to support our defense business systems and information technology infrastructure. Lastly an appropriate cloud-based infrastructure will maintain a secure 

cyber posture, support flexibility and technology software updates, and reduce total 

ownership costs. 

The DON is actively pursuing initiatives to capitalize on the new mid-tier acquisition and acquisition authorities provided in the fiscal year (FY) 2016 and 2017 National Defense Authorization Acts (NDAA). In the first application of the new authorities the DON intends to develop a new increment of capability for the Standard 

Missile-2 program. In addition, the DON continues to leverage important DOD Laboratory authorities, executing over 1100 initiatives to make impactful improvements 

in critical technology areas as well as ensure we have the technical expertise we 

will need in the coming years. Taken as a whole, these new authorities provide the 

DON many new and important tools which we can tailor to our specific needs. This 

tailored approach retains the required rigor and oversight but relieves us of the requirement to make every program and project fit into a traditional Major Defense 

Acquisition Program (MDAP) model, increasing acquisition velocity and reducing 

fielding times. Through the use of these reforms, we are beginning to move the needle on our priorities and increase the readiness and lethality of our forces. While 

we have made progress, there is the potential for still more. As is described more 

fully below, we would welcome further adjustments to milestone decision authorities 

(MDA), additional expansion of funding mechanisms for rapid prototyping and fielding initiatives that will increase our ability to operate within a budget cycle, and 

further provide autonomy in DAWDF execution. 

The Fiscal Year 2016 NDAA directed program oversight and MDA be returned to 

the Services to speed decision making, improve efficiency, and ensure greater involvement of the Service Chiefs in acquisition programs. The DON is currently the 

milestone decision authority for 40 Acquisitions Category (ACAT) 1C MDAPs. Since 

passage of the Fiscal Year 2016 NDAA, the DON has initiated several new MDAPs, 

including the future Guided Missile Frigate (FFG(X)) and the MQ–25. In addition, 

the DON has gained approval to delegate five of the ten current ACAT–1D programs from USD(AT&L) to the Navy. We will continue to work with USD(AT&L) 

to pursue delegation of the remaining programs under its oversight, in accordance 

with Congressional intent. Placing the authority and accountability for these programs within the Navy will increase program agility, reduce decision timelines, and 

better align accountability and responsibility. 

The DON is also exploring the value of making greater use of rapid prototyping. 

We will work with our fellow Services, the Department and the Administration as 

we consider the utility of current authorities and whether or not refinements to 

these authorities would be helpful. And while efforts have been made to better support the acquisition workforce, the DON would like greater autonomy in our ability 

to target the areas of greatest need, develop and implement more efficient acquisiVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
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tion workforce development programs, reduce administrative burdens, and increase 

the rate of delivery of resources. 

Finally, and most importantly, meaningful acquisition reform will remain elusive 

until we can obtain sufficient, predictable funding. I cannot overstate how critical 

this is to our success. Continuing Resolutions (CRs) create tremendous disruption 

to programs that are vital to readiness—postponing vital work, delaying training 

and maintenance until the arrival of full funding, and causing tremendous amounts 

of programmatic and contractual re-work. Additionally, short-term fiscal uncertainty 

drives long-term industrial base concerns, which translate into higher prices and reduced flexibility. Timely budgets, avoiding further CRs and amending the Budget 

Control Act to increase funding levels would reduce market uncertainty and improve 

our ability to maintain schedule and cost across all DON acquisition programs. Resource predictably gives small businesses, second- and third-tier suppliers, non-traditional companies, and major suppliers’ confidence to smartly invest in a skilled 

workforce, infrastructure improvements, and research and development to inform 

our future options. All of this translates into more capability delivered more efficiently—which in turn reduces time and cost, the goals all of us share. 

We in the DON are appreciative of the interest and efforts this Committee has 

made to improve Defense acquisition policy, our processes, and the people who conduct this critical work. The new authorities provided in the fiscal year 2016 and fiscal year 2017 NDAAs, the continued support of acquisition workforce development 

initiatives, and the return of acquisition program oversight to the Services have 

been important steps towards our common goal of improving acquisition outcomes 

for the Department. All of these changes are needed for the Navy Marine Corps 

team to maintain our advantage against our adversaries and deliver the capabilities 

needed for the future. We appreciate the opportunity to speak before you here today 

and look forward to your questions on how we might further work together for the 

good of the Navy and Marine Corps team. 

Chairman MCCAIN. Thank you. 

Secretary Wilson, welcome. 

STATEMENT OF HONORABLE HEATHER A. WILSON, 

SECRETARY OF THE AIR FORCE 

Ms. WILSON. Mr. Chairman, I would like to put my full statement in the record and just summarize a few key points. 

Chairman MCCAIN. Without objection. 

Ms. WILSON. Mr. Chairman, I wanted to thank the committee for 

the authorities that you have given to the services to continue to 

accelerate procurement and to streamline getting capability to the 

warfighter more quickly. 

The Air Force manages 470 acquisition programs, programs of 

record. It is about $158 billion, if you add up what we were authorized to spend over a 5-year period. 

There are few things in the legislation that you have given us 

that I want to update you on where we are. 

The first has to do with delegation of authorities back to the 

services, which was very clear guidance in the Fiscal Year 2016 

National Defense Authorization Act. Before that act came into 

being, 19 of 49 of the largest Air Force programs were actually 

managed in decision authority kept at the Office of the Secretary 

of Defense level. So only 39 percent of our programs did we have 

a decision or authority on. 

Chairman MCCAIN. So you see it as an improvement? 

Ms. WILSON. Today, I have 76 percent of those programs. 

And last week, the Under Secretary delegated eight more programs to the Air Force to manage. One of those was the GPS III 

follow-on. So last Thursday, Secretary Lord gave us authority to 

move out on that program. And in the last week, we have moved 

forward and approved a strategy and put out the request for proVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
17 

posal. Just in that one action, we have saved 3 months on the 

timeline to acquire that system. 

So we are taking advantage of those authorities, but we are also 

doing the same in the service by pushing authority down to program managers, to the colonels who can run these programs. We 

have not been changing things above them in the past. They know 

what they are doing. Let’s support them and let them get after 

their programs. 

The second major change in the defense authorization act was 

prototyping and experimentation. We have been beginning to take 

advantage of those new authorities in a couple of ways. The most 

publicly discussed one is the light attack aircraft [OAX]. 

You mentioned about the 100-page request for proposal for a 

9mm pistol. I think it was actually more than that. It looked like 

a pretty big stack to me. 

This is the letter of invitation and 4-page set of requirements on 

the light attack aircraft. It was sent on the 8th of March. In less 

than 5 months, we had four aircraft on the ramp to test at 

Holloman Air Force Base. And last night, I just got the test report. 

So in less than 11 months, with five pages, we have tested four 

aircraft for a potential light attack aircraft for the United States 

and allies. 

Chairman MCCAIN. What conclusion have you reached? 

Ms. WILSON. Senator, I was busy preparing for this hearing and 

did not read the report last night. 

[Laughter.] 

Ms. WILSON. But it is not just the light attack aircraft that we 

are experimenting with. Another very promising one is something 

we call an adaptive engine. It is intended to get an increase in 

thrust of about 10 percent with a 25 percent increase in fuel efficiency, and we have two contractors working on that. 

It is not a program of record. It is an experiment. But we are trying to mature the technology, refine the requirements, reduce the 

timelines to get better engines that are more fuel-efficient to the 

warfighter faster. 

So those prototyping and rapid fielding kinds of authorities are, 

I think, going to pay us big dividends, both in the short term and 

the long term. 

The third thing that your authorities gave us was something 

called the Other Transaction Authority [OTA], and we are taking 

advantage of that in a number of our different program areas. It 

really targets those nontraditional DOD contractors, the small, innovative companies that will not do business with the Department 

of Defense under normal circumstances, because we are too hard 

to work with. 

An example, Space and Mission Systems just let $100 million 

contract, an umbrella contract for a consortium of innovative companies, to give us space, ground and communication capabilities, 

particularly for our space forces. And that consortium is managing 

things for us under Other Transaction Authority contract. It took 

us 3 months to put that contract together. 

Rome Labs is another one that is using Other Transaction Authority arrangements that you authorized to put together consorVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
18 

tiums of companies that are helping us on cyber, intelligence, surveillance, and reconnaissance. 

The fourth area that I wanted to highlight for you has to do with 

people and the emphasis of this committee on both expedited hiring 

and the professionalization of our workforce. In fiscal year 2016, we 

used expedited hiring in the Air Force to hire 810 people. In fiscal 

year 2017, we almost doubled that up to 1,600. 

In direct hiring, we are even seeing more effort by the Air Force 

to take advantage of the authorities that you have given us. In fiscal year 2016, we hired only two people under those direct hiring 

authorities. In fiscal year 2017, it is 266. 

Thank you, also, for the Defense Acquisition Workforce Development Fund [DAWDF]. We are using those funds to enable, empower, educate, and train exceptional acquisition officials to be able 

to take advantage of the authorities that you have given them to 

do things differently, faster, and with bringing more capability. 

There is much more work to be done, but we are beginning to 

make some progress. There are areas where we are, frankly, not 

very good at buying stuff. Software is one real example and is an 

area of continued focus and extra emphasis by the Air Force. 

Not all of this will work. That is why we call them experiments. 

But if we have productive failures, if we fail fast and learn from 

it and continue on in different vectors of technology, we have a 

chance of better meeting the adversary in 2030. And that is what 

this is all about. 

Thank you, Mr. Chairman. 

[The prepared statement of Ms. Wilson follows:] 

PREPARED STATEMENT BY THE HONORABLE HEATHER WILSON

Thank you to the Committee for holding this hearing. I appreciate your advocacy 

to improve the defense acquisition system and the additional authorities Congress 

has provided to the Air Force. These new authorities help us accelerate the Air 

Force acquisition process in order to support a more lethal force. The Air Force is 

taking advantage of the new authorities, but there is much more work to be done. 

Paramount is the need for budget stability. The most important action the Congress could take would be to lift the sequester in its current form. As this committee 

knows all too well, sequester did more to damage the Air Force than anything our 

adversaries have done in the past ten years. Continuing Resolutions and the defense 

budget caps in current law jeopardize our ability to successfully execute the National Defense Strategy. We trust the Congress under the structure of our Constitution to decide spending levels and appropriate. 

The Air Force develops, acquires and sustains everything from satellites and aircraft, to information technology and spare parts. While, in the past 16 years the 

United States has controlled the pace of conflict, in the future, speed will matter 

and we may not have control over timing. The Air Force must deliver capability 

from the lab bench to the warfighter faster than ever, to prevail against rapidly innovating adversaries. Congress has recognized that this requires changes to the 

ways we develop and acquire systems. In accordance with the intent of this committee, we are assuming more authorities from the Department of Defense and delegating more authority to empowered program managers. We are using new techniques to innovate including rapid prototyping and experimentation. All of these initiatives require a skilled, highly competent acquisition workforce prepared to use 

the authorities you have given to us. 

DELEGATION OF AUTHORITY TO LOWER LEVELS

The Fiscal Year 2016 National Defense Authorization Act directed that after October 1, 2016, the Milestone Decision Authority for programs reaching Milestone A, 

our first major milestone for an acquisition program, reside with the Service’s Senior Acquisition Executive, unless otherwise designated by the Secretary of Defense. 

19 

The acquisition rules divide acquisition into three categories. Acquisition Category 

I (ACAT I) are the largest programs. ACAT II and ACAT III are smaller. 

The Air Force currently manages 470 acquisition programs valued at 158 billion 

dollars (fiscal years 2016–23) that are in varying stages of research, development 

and production. Of those, the Air Force has milestone decision authority over 39 of 

51 Acquisition Category I (ACAT I) Major Defense Acquisition Programs and Major 

Automated Information System programs amounting to over 113 billion dollars. 

This is up from 19 of 49 programs before the Fiscal Year 2016 Defense Authorization Act. 

Some of the newly delegated programs are the B–52 Radar Modernization, Protected Tactical Enterprise Service, and the Advanced Pilot Trainer. In addition, this 

past July the Under Secretary of Defense for Acquisition, Technology and Logistics 

(USD(AT&L)) returned Milestone Decision Authority to the Air Force for some space 

programs, to include Space Based Infrared System Follow-on, Protected Satellite 

Communications Services-Aggregated, Mid-Term Polar Satellite Communications, 

and Military Global Positioning System User Equipment Increment 2. As of 30 November, USD(AT&L) further delegated Defense Enterprise Accounting and Management System Increment 1, Family of Advanced Beyond Line of Sight Terminal, 

Global Positioning System III, Integrated Strategic Planning and Analysis Network 

Increments 4 and 5, KC–46, Military GPS User Equipment Increment 1, Three-Dimensional Expeditionary Long-Range Radar This allows us to reach key decision 

points and field capabilities to the warfighter faster because there are fewer levels 

of review involved in each decision. We will continue to work with USD(AT&L) for 

additional delegations of Milestone Decision Authority to the Air Force for other programs which we are well-suited to execute. 

While the Office of the Secretary of Defense has delegated significant programs 

to the Air Force, the Air Force has taken steps to delegate decision authority for 

ACAT II programs from the Service Acquisition Executive to lower levels, either the 

Program Executive Officer (PEO) in order to shorten the acquisition timeline to field 

needed capabilities. PEOs have also delegated ACAT III programs to O–6 level Program Directors where appropriate. See Table 1. 

Table 1. Summary of Milestone Decision Authority Delegation 

Fiscal years 2016–23 Number of 

programs 

Delegated to 

lower level 

Total funding 

(in then-year) 

Average funding 

per program 

ACAT I ........................................................................... 51 39 (AF) $113 B $ 2.2 B 

ACAT II .......................................................................... 43 43 (PEO) $ 19 B $437 M 

ACAT III ......................................................................... 376 274 

(Program 

Directors) 

$ 27 B $ 70 M 

PROTOTYPING AND RAPID FIELDING

The Fiscal Year 2016 National Defense Authorization Act also authorized rapid 

prototyping and rapid fielding. Under this authority we are experimenting with innovative and affordable systems before a lengthy requirements process or detailed 

specifications are developed. An example of this is the Light Attack Experiment successfully conducted this past summer. From a simple letter of invitation from the 

Chief of Staff, to the day we had four aircraft on the ramp to flight test was less 

than 5 months. The results of the testing of the aircraft will be delivered to the 

Chief of Staff and I before the end of December—less than 10 months from the time 

we decided to do the experiment. 

Prototyping is a valuable tool for evaluation of design and performance to help 

speed transition from the research phase to production. As an example, under this 

umbrella we are accelerating research and development efforts in hypersonics to 

meet emerging threats in contested environments. We are also leveraging innovations in advanced manufacturing including 3–D printing. 

DEVELOPING PEOPLE

Our need for skilled and innovative acquisition professionals to execute these numerous initiatives has never been greater. We greatly appreciate Congress’ continued support of the Defense Acquisition Workforce Development Fund and expedited 

hiring authorities to attract, recruit, hire, develop, and retain a high-quality workforce. While there is important work to be accomplished on speeding the acquisition 

process and cost effectively delivering capability, our continued focus on talented acVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
20 

quisition professionals will be the biggest enabler to improving Air Force acquisition 

overall. 

The acquisition enterprise is currently optimized for industrial-age procurement 

of large weapons systems with extensive requirement development, military specifications and resultant long acquisition timelines. We must shift to align with modern industry practices in order to get cost-effective capabilities from the lab to the 

warfighter faster. We are changing the culture in the Air Force to focus on innovation, speed and risk acceptance while meeting cost, schedule and performance 

metrics. But we still have much to do. 

Innovation is part of the heritage of the United States Air Force and we must 

continue to drive innovation to secure our future. We are leveraging our partnerships with industry and academia to apply commercial best practices, talent, and 

technology. The Air Force is adopting new approaches to ease bureaucracy and rapidly deliver technology to warfighters on time and on budget. 

One of our more successful techniques has been to use rapid capability offices to 

accelerate prototyping for rapid fielding. The rapid capability office operates under 

a charter with senior level oversight and is compliant with all acquisition rules, but 

is empowered to take full advantage of the opportunities for rapid acquisition with 

a smaller team of highly competent people. A rapid procurement process has been 

developed to extend this streamlined decision-making approach to other parts of the 

Air Force acquisition enterprise. 

There are areas where the Air Force is still struggling to be exceptionally good 

buyers. Software is one. We need to improve the development and deployment of 

software-intensive national security and business information technology systems. 

As we move toward industry practices and standards, the line between development, 

procurement, and sustainment for software are blurred. Development cycles of 3– 

5 years or longer do not align with the pace of technological advancement. They contribute to failures in software-intensive programs and cause cost and schedule overruns. We have initiated pathfinder efforts and are working to improve the speed of 

software development. Likewise, we are continuing efforts with Open Mission Systems architecture, and initiatives with Defense Digital Services, Air Force Digital 

Services, and Defense Innovation Unit Experimental, in addition to our organic development capabilities, to improve software agility, development, and performance. 

This shift toward rapid development, experimentation and prototyping also requires an understanding that not everything we try will work. We need to create 

an oversight culture within the Department and with the Congress that supports 

experimentation because it allows failure. Risk-averse cultures inhibit rapid development and innovation. Programs need the ability to experiment first in order to 

quickly identify and develop capabilities that meet warfighter requirements, and 

provide program off-ramps to quickly adapt to technology breakthroughs. Failing 

fast and productive failure that leads to finding a better path toward the future is 

a virtue. 

The Congressional authorities provided to date are producing results. The Services have more authority and accountability in the execution of major programs. 

There are several areas we continue to explore that could lead to further improvements to the acquisition process: 

1. Current law requires us to establish program cost and fielding targets that are 

approved by the Secretary of Defense or the Deputy Secretary of Defense. We 

are working with our counterparts within the Office of the Secretary of Defense 

to determine where such authority would be best located. These targets are already included in annual reports and baselines. (Fiscal Year 2017 NDAA, section 807) 

2. Explore funding flexibility to align with more modern software practices. 

3. We should weigh the value of requiring contractors to select one bid protest 

forum and live with the results, and not be permitted to file bid protests at 

the Court of Federal Claims after losing at the Government Accountability Office. It is vital to prevent lost time, effort, and delays of needed warfighter capabilities. 

4. We are exploring ways to streamline our internal processes to eliminate duplication of effort wherever possible. We will also be looking at statutory requirements which may be imposing duplication of effort and look forward to working 

with the Committee to institute process improvements. 

Working with Congress, we can improve our ability to outpace the threat, and deliver capabilities to our Airmen to protect our vital national interests. Once again, 

thank you for your continued support. 

Chairman MCCAIN. Thank you, Madam Secretary. 

21 

And I thank the witnesses. 

I would like to point out that it was about 3 years ago that we 

were having a hearing with the service chiefs, and we were looking 

at the fact that the USS Gerald R. Ford had a $2 billion cost overrun, and I asked the Chief of Naval Operations, who is responsible 

for a $2 billion cost overrun? You know what the answer was? He 

did not know. He did not know. 

I mean, there is such a thing as accountability. And all of the 

things that were just covered by the witnesses here, there is no 

penalty for failure. 

Can you tell me one or two individuals that, because of the fail- ure, for example, the $6 billion Future Combat Systems [FCS] that 

never worked, can you tell me an individual or individuals that 

paid a penalty for that failure? 

Ms. LORD. Senator? 

Chairman MCCAIN. Yes? 

Ms. LORD. Senator, I would be more than happy to have a meeting in your office and talk about some actions we have taken over 

the past several months to get at that very issue. 

Chairman MCCAIN. What can you illuminate for us as to 

what—— 

Ms. LORD. We, as a team, are working very closely together to 

look at functions and individuals in OSD, and in the services, the 

duties they are required to perform, and are determining whether 

or not we have the right people in the right slots. And I do not 

want to talk about individuals here in a broad forum—— 

Chairman MCCAIN. Okay. 

Ms. LORD.—but would appreciate the opportunity to do that behind closed doors with a smaller group. 

Chairman MCCAIN. I thank you, but when I go to a town hall 

meeting and tell my constituents that we blew $6 billion, and there 

has not been anyone fired or replaced or a new way of doing things, 

they are not really very happy. 

So we will be glad to hear what you have done and what you 

plan on doing, but there is no reason why you shouldn’t tell the 

American people. That is why we have hearings in the Armed Services Committee, okay? So the next time that you come before this 

committee, and you will, I want to know what you have done, besides say, ‘‘We do not know who is responsible.’’ Okay? 

Ms. LORD. Sir, excuse me. I want to be on record. We hold people 

responsible, and we will talk about that. 

Chairman MCCAIN. All right. You hold people responsible. That 

is our system of government. Who is it that has been fired? Any 

answer? No. 

Mr. ESPER. Senator, I am not aware of anyone being fired for 

FCS, to your point. We completely agree. 

Chairman MCCAIN. All right. 

Senator Reed? 

Senator REED. Thank you very much, Mr. Chairman. 

Following along these lines of accountability, because I think 

that is probably the most critical principle, one of the practical difficulties is that these programs sometimes stretch over decades. 

And there are people who change out, retire, who are promoted, et 

cetera. 

22 

So starting with Secretary Lord and going down, any thoughts 

about how we can have this accountability stretch over many, 

many years? And as a subset of those questions, on a year-to-year 

basis, what kind of metrics can we use to make sure we are on 

track and the individuals will be closely associated with accountability? 

So, Secretary Lord? 

Ms. LORD. Absolutely. 

First, there is an active discussion going on about when we rotate program managers out. It has not always been aligned with 

critical milestones in the program, and that is somewhat problematical in terms of discontinuity. So we are looking at holding onto 

program managers through key milestones or key events. I think 

that that is one helpful issue. 

Secondly, in the Department, I will speak for myself here, but I 

know we all talk about this, I, on a monthly basis, roll out the 87 

major Defense program metrics. So in other words, we have 87 

ACAT [Acquisition Category] I programs that are accountable for 

about 96 percent of our $1.9 trillion programs of record. 

We rack and stack those programs in terms of their performance, 

not only to the contract itself, but to the needs of the COCOMS 

[Combatant Commands] down range, because, for instance, you 

could look at some precision-guided munitions programs that look 

green, if you will, if you look at the letter of the contract, however, 

we know we know we have shortages downrange. We know we 

have COCOMS who are asking for more. So we take that market 

intelligence, if you will, and factor it in. 

We look at the metrics. Where are we in terms of cost? Where 

are we in terms of delivery? Where are we in terms of quality? We 

review that, and we roll that all the way up to Secretary Mattis. 

Then I spend my time, from an OSD AT&L point of view, on 

those critical joint programs. So right now, an enormous amount of 

my time is focused on F–35. 

Those are some of the ways we are holding people accountable. 

In fact, we have what we call war rooms that we have put together. 

It is very transparent. You all are invited to come see. We have the 

metrics up on the wall. 

In terms of accountability, we have the PEOs [Program Executive Officer] and the program manager names. And they come and 

report out to us. We flow that information up. 

So again, I am taking that lens that I had in industry, and every 

month, rolling the numbers up and seeing where we are, seeing 

where we are in delivery time, and where we are in quality, and 

going back and making sure we have action plans against those. 

Senator REED. Thank you. 

Secretary Esper, in the remaining time, a brief comment to amplify what Secretary Lord has said? 

Mr. ESPER. Yes, sir. 

First of all, I completely agree with what she said with regard 

to aligning the program managers’ tenures with the critical milestones. And there are other things that we should look at doing on 

the personnel side as well. 

I also want to address briefly what you said about the process 

being so long. Under the concept we are developing with Army FuVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
23 

tures Command with regard to the cross-functional teams, what we 

envision is, with the unity of effort and unity of command, adopting 

a process that is enabled by the NDAAs where we will prototype, 

test, learn, fail, prototype, test, learn, fail. 

We are looking at reducing a requirements development process 

that currently runs about 5 years, 60 months, down to 12. And so, 

if you reduce that time frame, clearly, there would be one person 

in charge of that effort, the CFT leader. 

So that gives you one example of how we are trying to reduce the 

timelines to ensure accountability. 

Senator REED. Secretary Geurts and then Secretary Wilson, I 

apologize. My time is limited. 

Mr. GEURTS. Yes, sir. I agree with both Secretary Esper and Secretary Lord. Tenures are key. 

The Navy, we have a gate review process where we, myself, and 

the CNO [Chief of Naval Operations] or Commandant, we are looking at these programs at milestone, and then we do annual reviews. So that is a key point where we can see where the program 

is and then assess that program manager or PEO to see if they are 

delivering, if not, then hold them accountable at that point. 

Another key issue Secretary Wilson mentioned, push responsibility down. It is hard to hold somebody accountable when they do 

not have the authority to actually make the decisions. So pushing 

that authority down is a key element. 

Finally, and probably most importantly, is workforce training 

and certification, because if we have not done the effort to train 

them, certify them, and make sure they are capable, then it is hard 

to hold them accountable. That is our fault, if we have not given 

them the skills to actually be successful. 

Senator REED. Thank you. 

Secretary Wilson? 

Chairman MCCAIN. Whose fault is it that they are working 100- 

hour workweeks? Whose responsibility is that? 

Mr. GEURTS. Onboard the ships, sir? 

Chairman MCCAIN. Onboard the ships. 

Mr. GEURTS. Sure. That would be on the CNO side, through the 

operational command. 

Chairman MCCAIN. When I asked the question, they said, well, 

we are going to do a study on this. A study as to whether our sailors and marines should be working 100-hour workweeks? We need 

a study to figure that out? 

Mr. GEURTS. Sir, I am not familiar of the details of that plan, if 

I could take a question for you and get back with the exact strategy 

to get after that question I know you had previously. 

Chairman MCCAIN. Thank you. 

I am sorry, Jack. 

Senator REED. That is quite all right, Mr. Chairman. 

Secretary Wilson, if you have any additional comments, we 

would appreciate it. 

Ms. WILSON. No, sir. I think my colleagues covered it. 

Senator REED. Thank you very much, and thank you for your 

service, Secretary. 

Thank you. 

Chairman MCCAIN. Senator Rounds? 

24 

Senator ROUNDS. Thank you, Mr. Chairman. 

Let me begin, Secretary Wilson, you have mentioned the light attack aircraft and where we are moving on that. I want to compare 

that with the B–21 Raider program, which is also under development at this time, and that program. As you mentioned in your 

prepared statement, there is a movement in both the OAX and also 

in the B–21 Raider program. 

A recently declassified audit from the Pentagon inspector general 

praised the B–21 program’s plan for beating cost goals and requirements. I think if this trend continues, the B–21 could one day 

emerge as a model acquisition program. 

Congress and the taxpayers might wonder if we could duplicate 

all or, in part, a process that has worked well in this particular 

program for subsequent programs. I know that the chairman had 

expressed real reservations as to the approach that had been proposed. And I think he has been very interested in the development 

and the movement forward, in terms of getting this done on time 

and on contract. 

Do you see some similarities between that and the light attack 

aircraft possibilities? And can we use the process that we have 

been successful, so far, in developing in the B–21 plan? Is that 

something that can migrate to other plans, such as light attack aircraft, as well? 

Ms. WILSON. Senator, we are actually using different authorities 

there. We use other transaction authorities or simple authorities or 

experimentation authorities for light attack. B–21 is more traditional. 

The thing that is different is, it is being done by something we 

call the Rapid Capabilities Office, which kind of has a board of directors of senior people, including myself, AT&L, the acquisition 

authority. And things move very quickly. 

We are actually extending that down and using that charter for 

the Rapid Capabilities Office to extend that construct to our other 

procurements. We are going to give this a try. It is a charter for 

kind of a rapid capabilities process where senior leaders will allow 

a program manager to identify a program they want to move quickly on, set some parameters, and, instead of having to walk it 

around the Pentagon to get 20 signatures, they come to a board 

meeting, they make a presentation, they get a real hard-wire scrub, 

and then we move. 

So we are actually modeling that in the Air Force. 

Senator ROUNDS. Thank you. 

Secretary Lord, there was a discussion that I had with my staff 

in terms of the time frame it takes to get new data or new information, new plans put together. And they used as an example, when 

we were talking about it, a cell phone, straightforward, off-theshelf. I can buy it, make a decision on it, put it to use in about a 

week at the most, to the time that I can use it. 

Acquisition time for a new piece of software and hardware combination today through the Pentagon could take as much as 2.5 

years to acquire. This is basically out of date after a year to 1.5 

years. 

My question to you, when you are all said and done, using a 

piece of hardware and software combination available today in the 

25 

general public for, perhaps, purchase within a 1-week or 2-week period of time, what is your goal for getting the acquisition process 

down from a 2.5-year time period for Pentagon acquisition and 

issue? 

Ms. LORD. Our goal is to look at where we have had successes 

with DIUx, with SCO—in fact, I have asked and asked Will Roper 

to be here with me today, because we think that they demonstrated 

the right kind of behaviors. We are looking at what the Rapid Capabilities Offices have done. 

Frankly, as we organize AT&L into A&S [Aquisition & 

Sustainment] and R&E [Research & Engineering], what we are 

doing is basically trying to scale the behaviors, the processes, or 

the lack thereof, that we have seen in these different groups. And 

it is an issue of scaling—— 

Senator ROUNDS. I am going to run out of time, but let me just 

ask one more time. What is the goal, in terms of—is there goal for 

cutting back acquisition times? 

Ms. LORD. Twelve months for major programs. 

Senator ROUNDS. From 2.5 years to 12 months? 

Ms. LORD. Correct. 

Senator ROUNDS. Okay. 

Ms. LORD. Now, that is a first step, I just would like to be on 

record as saying. 

Senator ROUNDS. Okay. 

Next of all, cloud computing is here to stay. Clearly, the Pentagon has to be able to make decisions about how they acquire capabilities. You currently chair the Cloud Executive Steering Group, 

or the CESG. Does the membership include warfighter representation from military services, combatant commands, to include Cyber 

Command, or DISA [Defense Information Systems Agency]? Or if 

not, why not? 

Ms. LORD. We have pulled in all of the services and are talking 

to them. We put out an RFI [Request for Information] and have 

gotten 52 responses. Right now, we are working on how we are 

going to go about that contract. We do not know how we are going 

to structure it yet. 

But absolutely, because what we are looking at is mission focus 

here, not backroom business systems. And it is all about getting 

that computing capability out to the edge. We want our warfighting 

systems to be able to do machine learning, to have artificial intelligence. And until we have all of our data in just a few places, it 

is going to be very hard to do that. 

So frankly, sir, everything I do is about lethality and the 

warfighter. 

Senator ROUNDS. Thank you. 

Thank you, Mr. Chairman. 

Chairman MCCAIN. Senator Shaheen? 

Senator SHAHEEN. Thank you, Mr. Chairman. 

And thank you all for being here today. 

The Defense Federal Acquisition Regulation Supplement 

[DFARS], as I know all of you know, requires that all DOD contractors, including small businesses, comply with a complex series of 

cybersecurity requirements by December 31st of this year. Now, I 

certainly think it is very important for us to address the cyber conVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
26 

cerns, and have been banging the drum on that, particularly with 

respect to Kaspersky software. 

But I am concerned, as a member the Small Business Committee 

in the Senate, as someone who comes from a small-business State, 

that our small businesses are very important to technological innovation. And I have heard from many of them that they are very 

concerned that they cannot comply by this deadline, that unlike 

some of the bigger businesses that work with the Department of 

Defense, they do not have the support to comply with these complex regulations by this deadline. 

Can you tell me how concerned any of you are about this, and 

whether there are ways in which we can do more to help small 

businesses comply? 

Ms. LORD. I am very, very interested in this topic. In fact, we are 

concerned about being compliant and worrying about risks. We 

heard back over a year ago that there was great concern about the 

difficulty of implementing these requirements, so we went and 

modified them. 

In order to most effectively and efficiently get out to the whole 

community, especially the small-business community, we used a 

forum that I have set up where, quarterly, I meet with all the different components, with three industry associations, AIA [Aerospace Industries Association], NDIA [National Defense Industrial 

Association], and PSC [Professional Services Council]. They all 

have small-business components, the Professional Services Council, 

especially. 

In our early October meeting, we talked about this very issue, 

because it was brought up. We said that, clearly, the only requirement for this year is to lay out what your plan is. That can be a 

very simple plan, and we can help you with that plan. We can give 

you a template for that plan. And then just report your compliance 

to it. 

So we are trying to reach out very hard through the industry associations to get this word out. I think there may be some old information out there. 

Any small company that has any issue can come to us, and we 

will help them with that. 

Senator SHAHEEN. That is really helpful. Are there guidelines 

that we can share with the business community in our States to 

let them know? 

Ms. LORD. Absolutely. I will get that to your office. Absolutely. 

Senator SHAHEEN. That would be very much appreciated. 

Secretary Geurts, the Virginia-class submarine is one of the 

more successful acquisition programs. It is delivered on schedule 

and on budget. Can you talk about what happened in that program 

early on that has allowed it to be so successful, and whether there 

are lessons that we can transfer as we are looking at the Columbia-class subs to ensure that they also can deliver on time and on 

budget? 

Mr. GEURTS. Yes, Senator. 

I am third day on the job, so I was not around that program as 

it originated in person. 

Senator SHAHEEN. You should know the answer to this, come on. 

[Laughter.] 

27 

Mr. GEURTS. Yes, ma’am. 

I would say, looking back on it, though, designing for affordability and then holding a stable design were key traits, having the 

right government and industry team working together all through 

all of it. As Secretary Spencer likes to say, shared risk, shared benefit, so a very good working relationship between the government 

and industry team. 

As we look at Columbia, we are taking that philosophy and taking it to the next level. Quite frankly, using any of the common 

equipment we can across all the submarine fleets, so we do not 

have to reinvent equipment, and then we can get greater economic 

order. And then really focusing early on the design for affordability. 

Secretary Lord and I had a review yesterday, I think it was. I 

am very impressed with their thought process, their discipline process of really looking at cost in the design phase, not trying to make 

it more affordable after it is designed. 

I think those are great principles that we will look to continue 

across the other parts of the Department of the Navy. 

Senator SHAHEEN. I appreciate that, and I hope that you will 

take the lessons that are learned and make sure that they are incorporated into Columbia. 

Mr. GEURTS. Absolutely, Senator. 

Senator SHAHEEN. To go back to small businesses, as I said, and 

I know you all know this, that a lot of the technological innovation 

that we are now adopting in our military come from small businesses. 

The SBIR [Small Business Innovation Research] program, the 

STTR [Small Business Technology Transfer] program, have really 

been successful. For SBIR, for every dollar spent through the Air 

Force, $12 was returned. In the Navy, for every dollar, $19 was returned. 

So these are programs that really work. Can you elaborate on 

what more we can do to encourage the use of small business in 

these programs? 

Ms. LORD. I was just speaking with Raj Shah at DIUx a couple 

of days ago about how we can take the success they have had at 

DIUx, because they have let over 60 contracts using their Other 

Transaction Authority to work with small businesses who might 

not have worked with the Department of Defense otherwise. 

I asked him that exact same question. He told me that there are 

some constraints on some of the SBIR money that doesn’t allow it 

to flow. I do not have the specifics here, but I would love to come 

back to you. This answers the question of what else can this committee do to help move along toward incorporating commercial 

technology and so forth. 

I think this is one of the few cases I have seen so far where another authority or taking away some kind of legislation right now 

might help us, but I would love to come back and give you specific 

examples. 

Chairman MCCAIN. Tell us what you need. 

Ms. LORD. I will. 

Senator SHAHEEN. Yes. Also, if the Small Business Committee 

also needs to do anything, please, we can move on that as well. 

Ms. LORD. Very, very timely. I appreciate it. 

28 

Mr. ESPER. Senator, I would add to your point that small business tends to be an engine of innovation. That is something that 

we have to preserve. 

The Army works hard to meet and exceed its annual goals for 

business, and we do. I think the key thing is, we talked already 

about the complexity of regulations, something we are working 

hard to deregulate, to delayer, I would say security clearances are 

a big challenge for businesses. 

Senator SHAHEEN. Absolutely. 

Mr. ESPER. We now have over a yearlong process. 

Complexity, the other thing I would mention—this is preaching 

to the choir. I mean, clearly with C.R.s and the uneven funding, if 

you are a small mom-and-pop shop out there, and I am referring 

to my industry experience, it is hard for them to survive in an uncertain budgetary environment. We risk losing those folks who 

may, over time, decide that they are going to get out of the defense 

business and go elsewhere. 

So that is a big threat to our supply chains. 

Senator SHAHEEN. Thank you. 

Chairman MCCAIN. How would you characterize your relationship with Silicon Valley? 

Mr. ESPER. Senator, I think from the Army prospective, it is a 

growing one. I think it is something we need to develop, particularly when we talk about IT [information technology] systems. I 

think as Senator Rounds pointed out, I think it is a very particular 

challenge, given the fact that the technology changes so quickly, 

and now the innovation is happening mostly, if not entirely, in the 

commercial sector. 

So I think it is a relationship we have to continue to build with 

Silicon Valley and then, broadly, with the commercial sector, and 

make DOD acquisition more friendly to the commercial sector. 

Chairman MCCAIN. The relationship between the CIA [Central 

Intelligence Agency] and this outfit and DOD is not nearly as progressive. 

Ms. LORD. I agree with that. CIA has done some great work, for 

instance, migrating to the cloud. 

To answer your question from my prospective, I am leveraging 

the Defense Innovation Board [DIB] pretty significantly, and that 

is how I am tying into Silicon Valley. I have worked on the subject 

of software, where I think the most opportunity lies for the Department, both from a contracting point of view as well as developing 

commercial techniques. 

So I speak routinely with the Defense Innovation Board about 

how to do things differently and particularly Eric Schmidt I speak 

a bit with. I was just on the phone with him on Monday afternoon, 

asking him specifically what I can do differently to solve some specific issues. And that is helpful. 

We also are using our DIUx arm out there to set up roundtables 

for me to meet with a variety of software companies, because that 

is where I am focused right now. 

Chairman MCCAIN. How long has DIUx been in business? 

Ms. LORD. For 2 or 3 years, perhaps. I am going to have to get 

back to you on the specifics on that. I am not smart enough to 

know that right now. 

29 

Chairman MCCAIN. That is not a lot of progress. 

Ms. LORD. I want to build on it. 

Chairman MCCAIN. Senator Ernst? 

Senator ERNST. Thank you, Mr. Chair. 

Thanks to all of you for joining us today. 

We had a great forum this last weekend, the Reagan National 

Defense Forum. 

Secretary Lord, I am glad you were there. 

Secretary Esper and I sat together on a wonderful, wonderful 

panel. I think everybody was engaged at one point or another 

through those discussions. 

It was very helpful to see so many people that agreed on some 

of the challenges that we have, including the C.R.s, as was just 

mentioned, sequester, our budgeting issues here in Congress. 

Secretary Lord, from this past weekend, you had mentioned the 

need to redirect our investments to meet the demands of a shifting 

world. I agree with that as well, and we do need to invest in innovation to keep our competitive edge over near-peer adversaries, like 

China and Russia. That is a topic that Secretary Esper and I were 

engaged in on our panel. 

Can you talk about some of the emerging capabilities the Department of Defense should be investing in, to ensure that we are keeping that technological edge? How do we balance those investments, 

then, with the need that we have to improve our readiness? 

Ms. LORD. What we are trying to do is strike that balance. We 

were talking about operational availability of aircraft earlier. We 

obviously need the readiness. 

What we are doing is trying to take a very federated system of 

labs that we have right now right now, between the services, 

FFRDCs [Federally Funded Research and Development Centers], 

OSD, and so forth, and align them in terms of modernization. 

What do I mean by that? Instead of working on maybe hundreds 

of projects, we are trying to identify specific technology domains 

that we agree, across the Department, are critical to really reach 

the overmatch capability we want to have. 

So specifically, what does that mean? Hardened microelectronics, 

absolutely; hypersonics; then the whole cyber area. Everybody defines cyber a little bit differently, but I am talking about offensive 

and defensive cyber. Those are three areas where we are committed, and we are looking at aligning our investments to make 

sure we make a step function change in our capability. 

Senator ERNST. Okay, I appreciate that. 

Chairman MCCAIN. Do you have a strategy for cyber? 

Ms. LORD. What we are doing right now is working on the elements of that, and we would love to come back and talk to you 

about that in more depth. 

As you know, we just stood up Cyber Command we have a whole 

series of efforts. 

Senator ERNST. Yes. 

Chairman MCCAIN. We would be very interested, since we have 

been fooling around with this issue without a strategy for years. 

Ms. LORD. Understood. 

Senator ERNST. Yes, the Chairman and Senator Rounds have 

been very passionate about making sure that we are nesting our 

30 

capabilities together and understanding who is responsible and in 

what domain. So very, very important. 

And, Secretary Lord, as well, I have heard just recent reports 

that this Distributed Common Ground System, or DCGS-SOF, the 

software that aggregates intelligence data for our special operators, 

is problematic. It is ineffective, is what I have heard from some of 

those operators. 

I also understand there are a number of commercial solutions 

that may be better and immediately available, and in some cases, 

they are already in use. 

At what point does the Department then decide to simply cut its 

losses and move away from a program that they feel is ineffective? 

Ms. LORD. I do not want to comment too specifically about DCGS, 

because when I was at Textron, we did have one of those contracts. 

But I will vector over to an Air Force program to answer the same 

type of question. 

We feel strongly when the environmental conditions and our adversaries have changed rapidly, and we no longer believe that programs that we are pursuing can achieve the lethality that we wish, 

then we will talk about potentially terminating programs. 

In fact, General Holmes and I were just here talking to HAC– 

D [House Appropriations Committee–Defense] last week about 

JSTARS’s [Joint Surveillance Target Attack Radar System] recap. 

That is a perfect example of where, given the contested environments in which we are fighting, we are thinking that perhaps there 

might be better ways to get sensors to work closer to the adversary. 

So that is an example of where we came up and said, we are 

strongly considering and want you to understand this is our 

thought process. We want you to be thought partners with us, and 

these are all the reasons. 

It was a secret hearing, so I cannot get into too many details. 

But that is an example of where we are looking at the current state 

of events, our current capability, a current program, and what we 

now know about other ways to achieve the end objectives we were 

trying to initially address. 

Senator ERNST. Okay, so multiple factors involved in that decision-making process, dollars, capabilities, overmatch. 

Ms. LORD. Absolutely, and it is one that is not taken lightly. All 

of the different equities within the building are considered before 

we come and take the time of Congress to say this is a serious concern of ours. 

Senator ERNST. Okay, thank you very much. 

Chairman MCCAIN. How long have we been spending money on 

JSTARS? 

Ms. LORD. Several years. 

Chairman MCCAIN. Several years. 

Ms. LORD. For the recap. 

Senator ERNST. Thank you, Mr. Chair. 

Chairman MCCAIN. Do you have an idea of how much we have 

spent? 

Ms. LORD. I do not have it here today, but I certainly could get 

that. Yes, we do know. 

Chairman MCCAIN. In the billions? 

31 

Ms. LORD. On the recap, I do not believe it is in the billions, but 

I shouldn’t speak without the data in front of me. We will get back 

to you. 

Chairman MCCAIN. Senator Warren? 

Senator Warren? 

Senator WARREN. Thank you, Mr. Chairman. 

Thank you to our witnesses for being here today on this important topic. 

I previously asked each one of you if you would make research 

a priority in your work. You have all said yes, so I am going to 

start with a really simple question. Are you still committed to 

prioritizing basic and applied research? Will this commitment be 

reflected in the fiscal year 2019 budget? I am willing to take really 

short answers, like yes. 

Secretary Lord? 

Ms. LORD. Yes. 

Senator WARREN. We’ve got this. 

Secretary Esper? 

Mr. ESPER. Yes, Senator. 

Mr. GEURTS. Yes, Senator. 

Ms. WILSON. Yes. 

Senator WARREN. Good. 

So I have another question. In an effort to emphasize the importance of R&D [Research and Development], and in recognition of 

the span of responsibilities at AT&L, that they were so big, that, 

last year, this committee directed that the position that Ms. Lord 

now holds be split into two separate positions, one that focused on 

research and engineering, and the other that focused on acquisition 

and sustainment. And I know you are all working hard to try to 

implement that. 

I think having a senior leader focused on future technology is incredibly important. I support that. But one of the real problems in 

our system right now is that we struggle to convert promising new 

technologies in the lab into the field, and the gap from the lab to 

the field is sometimes known as the Valley of Death. I am worried 

that splitting oversight of R&D from acquisition is going to make 

this problem even worse. 

So let me start with you, Ms. Lord. After the split, how will the 

Department ensure that our research and development program 

stays closely linked with the Department’s acquisition requirements, and that promising technologies are actually nurtured and 

incorporated into our programs of record? 

Ms. LORD. This is something we are working on right now. In 

fact, I have had conversations, and I am meeting with staffers next 

week to go over what our preliminary plans look like, to have them 

be thought partners with us. 

But, quite simply, what we are trying to do is push the risk into 

the research and engineering side with a lot of prototyping and experimentation, so that there are many, many iterations in order to 

understand the capabilities of new systems and the cost of new systems before pushing them over to the A&S side. 

Senator WARREN. So you are just saying, get it further along 

while it is still in the research bucket? 

32 

Ms. LORD. That is one piece of it. A second piece of it is, we are 

working on streamlined acquisition processes, where you basically 

have a flow chart, and you use the simplest methodology possible 

to get things on contract, so that we are not held up in this do-loop 

of you want to do something, but you cannot get it on contract. 

Senator WARREN. Right. 

Ms. LORD. And these Other Transaction Authorities are particularly germane here, because they have helped us. 

Thirdly, we are going to have some common resources between 

R&E and A&S, so it is not as if we have people that are either 100 

percent R&E or 100 percent A&S. We will have a lot of those, but 

we are going to have some shared resources that span that gap 

that allow one group to understand what the other group is doing. 

This cannot be personality-dependent. It needs to be sustainable, 

as we all move on. 

So we are going to actually be prototyping and experimenting 

over 2 years to make sure we get that right. The construct I have 

right now, and I will be coming back to brief all of you on this, is 

we are going to do a 2-year, 8-quarter, transition. We have a model 

for what we are going to do. And we are going to tell everyone what 

that is, and we will begin moving toward that model. 

But we are not being rigid about it. We are experimenting and 

seeing what works. 

We are also making sure we get a lot of brains around the table 

to talk about all the what ifs. 

Senator WARREN. Good. I really appreciate it. I appreciate the 

thought you are putting into this. We do not want to lose at that 

space. 

Secretary Esper, would you like to add to that? We are low on 

time. 

Mr. ESPER. Yes, Senator. You ask a very good question. 

I would just say, briefly, that the Army has begun a process of 

realigning its S&T investments toward our six priority areas. So 

for fiscal year 2019 to 2023, we have already realigned over $1.13 

billion toward S&T along our priorities. 

The way we are also doing that is, as the cross-functional teams 

are stood up, and they are responsible for their specific capability 

areas, with S&T now aligned to that specific capability area, we 

are actually issued a directive that would require standardized 

written agreements about what is expected to be delivered from the 

S&T community to hand off to the actual CFT leader to begin the 

acquisition process. 

Senator WARREN. Okay. 

Mr. ESPER. We are trying to do exactly what I think you were 

saying. 

Senator WARREN. I am out of time, so I am going to ask the other 

two of you to answer this in questions for the record, so we can get 

it in writing. 

But I just want to say, we have to get better at this. Anything 

that has a name of the ‘‘Valley of Death’’ is not good, in terms of 

acquisition of new, cutting-edge technology. We can do all the terrific research in the world, but if we cannot translate that into 

something that helps our warfighters, then we have failed at our 

essential mission. 

33 

Senator KING. Except for the Clemson football stadium. That is 

known as the Valley of Death. 

[Laughter.] 

Senator WARREN. Not to me. 

All right, thank you. 

Chairman MCCAIN. What does Maine have to do with that? 

Senator REED. What does Maine have to do with anything? 

Chairman MCCAIN. Senator Perdue? 

Senator PERDUE. Thank you, Mr. Chair. Let’s bring this back to 

this topic here. 

First of all, thank you. I am so encouraged to hear the conversation today. I heard the word ‘‘crisis’’ mentioned twice. I have heard 

‘‘sense of urgency’’ mentioned several times. As an ex-business guy 

and seeing this crisis, I am terribly encouraged by what you all are 

doing. 

I have met you, and we have had private conversation. Secretary 

Wilson, yesterday, was so gracious with her time, talking about a 

major Air Force base and major piece of technology. 

I want to talk about something a little different. 

Secretary Esper, you mentioned first in your opening comment, 

in 1941, we built up not in years, in months, literally. We had 

things coming off the production lines literally in months, because 

we broke through everything, because we considered it a crisis. But 

in 1949, just 3 years after we demilitarized after World War II, we 

were right back in the same position. That war was a little different. 

But today, we find ourselves—I do not have time for describing 

the crisis. But after 30 years of disinvestment and only one major 

recap, and after 16 years of active combat, I believe we have a crisis. The global situation is more dangerous than it has ever been. 

We have a debt crisis here. We have a near-rival that is now going 

to be a full rival that is actually spending more money than we are 

in real terms, adjusted for purchasing power parity. 

General Mattis says that there are three phases to solve this 

problem, and you have each spoken about it in different ways. 

There is a 3-year term of readiness. We have to get readiness recovered. There is a 15- to 25-year plan for new technology and 

recap, and the full bloom of U.S. innovation and technology, with 

regard to providing for national security. 

At the same time, China is coming online. It is not going to take 

15 years before a lot of their new technology is hitting. They have 

leapfrogged major areas of restrictions. They are bringing product 

online much cheaper than we do, much quicker than we do, and 

with far less restriction and government intervention. 

I am worried about the shoulder season from year 3 to year 12. 

And I would like, I think, Secretary Lord, if you will start with 

this, I am really concerned about how we find quick, low-cost solutions for the battlefield. 

I would like the combatant commander representatives of Army, 

Navy, and Air Force to comment on this as well, because I am very 

concerned that we have our eyes out here. We are looking at where 

the money is needed, and yet these high-cost solutions, flying F– 

35s into battlespace where an A–29 might be okay—I am not saying we are doing that, but those types of examples. 

34 

JSTARS, you mentioned JSTARS just a minute ago, great longterm capability. We have a dying platform right now. Technology, 

the battlespaces are changing. That interim period, that is a perfect example of where I do not, personally, see the Air Force, or 

anybody else, really, moving toward that interim solution in a way 

that gives me comfort with a low-cost, current technology platform 

that is better than what we have, more cost-effective than what we 

have, but doesn’t get in the way and take money away from longterm development. 

Would you address that? 

Ms. LORD. Two-part answer to the question. 

One, I would really like to come back and in a different setting, 

in a classified setting—— 

Senator PERDUE. That is fair. 

Ms. LORD.—talk to you about some of the programs going on. 

Senator PERDUE. I look forward to that. 

Ms. LORD. But secondly, what you are talking about is exactly 

what DIUx, SCO, and the Rapid Capabilities Office are doing. We 

should come back and tell you about some of those successes. 

What we have to figure out how to do is scale that, and right 

now, we have not scaled it. 

Probably the best meeting I go to in the Pentagon is something 

called the Warfighter Senior Integration Group where we sit down 

every 2 weeks, and we have on VTC Afghanistan every 2 weeks, 

and then the other 2 weeks, Iraq. And we talk to the warfighter 

about what is going on today and what they need in terms of rapid 

capabilities. 

This is what has spun out an enormous amount of counter-UAS 

[unmanned aircraft system] equipment, and that has been fast. 

JIDO [Joint Improvised-Threat Defeat Organization] has come up 

with that. 

So we can do this, but we do it on a small scale. That is what 

this reorg is all about, in my mind. It is getting away from the 

5000 process, other than very complex areas where we might need 

some of that. But just use the little bit of process we need to get 

stuff out the door. 

Senator PERDUE. So, Secretary Esper, would you comment? 

I am out of time. I would love to hear from all of you, but I would 

love to have all of you respond to that question after the hearing. 

Mr. ESPER. Yes, sir, because it is a great question. I would just 

connect a couple dots from the historical example. 

Senator PERDUE. Please. 

Mr. ESPER. The key here is changing culture. 

Chairman MCCAIN. Witnesses will be allowed to respond. 

Senator PERDUE. Thank you. 

Mr. ESPER. Senator, the key is changing culture. At the end of 

the day, we have to change the culture. That is what came out of 

the 2011 Decker-Wagner acquisition reform report. That is the 

most crucial element. 

The way the Army is getting at this is standing up the Army Futures Command to do just that. Take an approach that says, let’s 

not make the perfect the enemy of the better. Let’s prototype, demonstrate, learn. Let’s fail early. Let’s fail cheaply. And let’s go with 

the 80 percent solution. Get something fielded. 

35 

The view is, if we can stand up the organization to command 

quickly, get that unity of effort and unity of command, get some 

early wins under our belt, we can start changing the culture, so 

that we are ready, position, posture to begin looking simultaneously at those mid- and far-term threats that you described. 

Chairman MCCAIN. And how long have we been fooling around 

with Future Combat Systems? 

Mr. ESPER. Thank goodness, it is in our rearview mirror now, 

Mr. Chairman. 

Mr. GEURTS. Senator, in the Navy, we are taking an approach 

with an agile acquisition office. And that whole acquisition process, 

which I co-chair—there is a board. I co-chair with the CNO or the 

Commandant. And that is really looking at that sweet spot of 

something that we know that is out there that we can either accelerate up quickly to give us a bridge, or there is a problem that we 

need a solution for. We cannot for wait for business as usual. 

We are seeing about a 3-year acceleration for the projects we are 

getting through those programs, unmanned aerial refueler on the 

carriers, one of them, total array on some of the high-speed vessels 

we are doing. 

Again, we should have a menu of options. Some need to be rapid, 

exactly what we have today, buy as sold commercially, get them in 

the field tonight, like I used to do at SOCOM. Some need to be 

build-to-carrier, very deliberate. You want to make sure you get it 

right, because it is going to be around for 40 years. And then there 

is a sweet spot. Quite frankly, your committee’s authorities and 804 

and some of these rapid prototyping abbreviated acquisitions really 

gets at that sweet spot. That is what we have been missing. 

And so you have given us the authorities. We now have to go implement those. I think all of us are in the emerging stages of that, 

and I think in the next 2 or 3 years, that is really going to get at 

that shoulder thing that, yes, we cannot wait for 15 years for something that is going to happen 5 years from now. 

Ms. WILSON. Senator, for the Air Force, we look 5 to 15 years. 

And you are right, the technical risk in the shoulder season is 

something that all of us are worried about along all of our programs, particularly those that are new ways of doing business. And 

I know you and I have a scheduled classified session to go through 

some of those that are a high priority for you. 

Senator PERDUE. Thank you, all. 

Mr. Chairman, thank you for your courtesy. And to the ranking 

member, thank you. 

I would think it would be very important if we could have this 

similar conversation and follow-up meeting in a classified environment at your discretion. Thank you. 

Chairman MCCAIN. I think it is something we ought to pursue. 

Senator Donnelly? 

Senator DONNELLY. Thank you, Mr. Chairman. 

Thank you to the witnesses. 

Secretary Wilson, I want to thank you and your staff for a 

unique level of prompt and clear communication since your confirmation. We have been able to work together on some important 

issues to improve the readiness of our forces and the lives our airmen and their families. 

36 

One of the challenges will be the readiness of the A–10 fleet. If 

the Air Force intends to maintain the current A–10 fleet for the 

foreseeable future, I am concerned about the shortfall in funding 

for new wings. One-third of the A–10 fleet, more than 100 aircraft, 

still need new wings, and the Air Force will be forced to ground 

some of these next year because their current wings have reached 

the end of their service life. 

I understand the many, many challenges the Air Force is up 

against right now, but this, obviously, has a very real impact. 

What do you see as the Air Force’s options on this issue, taking 

into account budgetary challenges, readiness requirements, and our 

timelines? 

Ms. WILSON. Senator, thank you for the question. 

The defense authorization bill that the Senate passed and the 

House passed, and the House Appropriations mark, add money into 

the Air Force budget to retool and open a line for wings. It was not 

in our budget. I know the Senate Appropriations Committee is 

working on that now. 

If that comes through, we will execute that and get that line 

started back up so that we can re-wing. I think the amount would 

be the tooling and the first four or five sets of wings for the A–10. 

You are right. We are always managing how we move to new 

platforms. At the same time, we try to maintain capability and 

cover missions with existing fantastic platforms. And I happen to 

be kind of a fan of the A–10 myself. 

Senator DONNELLY. Thank you. 

Secretary Lord, I appreciate the hard work you are putting into 

getting our acquisition systems running more efficiently. It is really 

important to get it right, as you well know. We have discussed 

hypersonic systems in the past. I would like to revisit that today. 

Conventional Prompt Strike, or CPS, is Defense’s most advanced 

hypersonic development effort. Testifying to this committee earlier 

this year, STRATCOM [Strategic Command] Commander General 

Hyten advocated for fielding a CPS capability by the mid-2020s. 

I believe the Navy has a vital role to play in fielding CPS. Do 

you see that as a priority for the Department? And if so, why? 

Ms. LORD. Yes, I see it as a priority. In fact, there are two key 

programs going on right now, one at DARPA [Defense Advanced 

Research Projects Agency] and one within OSD that are moving 

along. So I would be more than happy to come and have the technical lead brief you on those. 

Senator DONNELLY. I was going to say, if you could provide us 

with an update on where you are with this effort? 

Ms. WILSON. Yes. Senator, can I just add one thing to that? 

Senator DONNELLY. Sure, absolutely. 

Ms. WILSON. On hypersonics, there are two demonstrators where 

the Air Force, and I believe the Navy as well, are working with 

DARPA. And it is a prototyping experimentation effort. We are 

using the authorities that you all gave us for experimentation and 

testing. So we did not wait for extensive requirements kind of 

things. We are moving forward on an experiment for hypersonics, 

and it was through the authorities you gave us. 

Senator DONNELLY. Thank you. 

37 

Secretary Geurts, I want to ask you about the role our Defense 

labs play in the acquisition process. I have spent a lot of time at 

the Crane Navy lab in Indiana. I have been struck by how integrated they are in not only innovating new capabilities to meet 

Navy requirements, but testing and evaluating and verifying systems developed for the Navy by private industry throughout the acquisition process. 

I would love to get your view of Defense labs as a vital player 

in the acquisition system. 

Mr. GEURTS. Yes, Senator. I think, in coming to the Navy, I am 

really impressed with their warfare centers and their labs and how 

well they are tied. I think having an organic capability, especially 

as we have this rise of commercial technology and commercial 

products, that organic capability to take them, test them quickly, 

perhaps integrate them in a different way than would be done commercially, is a critical piece for us. 

Back from my SOCOM days, Navy Dahlgren does all the software for our gunships. That is all written organically. That gave 

us great flexibility in the Special Operations Command to change 

requirements on the battlefields. 

So I think it is an absolutely critical piece. I think it is a key in 

us getting through the Valley of Death, because they can help mature an immature commercial product from a small business, work 

with them, and then get it so it is in a fieldable or close to fieldable 

condition for us to then put into the field. 

Senator DONNELLY. Thank you. 

Thank you, Mr. Chairman. 

Chairman MCCAIN. Senator Tillis? 

Senator TILLIS. Thank you, Mr. Chairman. Mr. Chairman, you 

know anytime we have a committee talk about acquisition, I have 

to bring out my favorite prop and remind everybody of the actual 

pages. 

Almost 700 pages, 10 years to define a handgun, next-generation 

handgun. I just found out with the update, good news is we have 

down selected. We have a manufacturer. Ten years from now, all 

the Army units will actually have this gun, 20 years after it was 

conceived by the Air Force. 

First off, I thank you all for your service. Welcome. 

[Laughter.] 

Senator TILLIS. But we know there is no logical basis for something like this, for something as straightforward as a handgun, a 

20-year process from concept to full deployment within the Army. 

I do not even know what it means for the whole of DOD, but within 

the Army. 

So Senator McCain in his opening comments said, with the exception of Senator Reed, he would like for you to talk with all of 

us. I think that is what he said. 

But in all seriousness, as somebody who has worked in procurement, as somebody who has worked in strategic sourcing and acquisition, if I were going into an organization to be retained to fix 

their acquisition process, I would probably be firing quite a few 

people. 

Now, we operate a little bit differently here because you have 

constraints that are placed on you by Congress, so we probably 

38 

need to shine a mirror on us and fix some of the constraints. But 

shine light on that. Come to people like me and others who are 

passionate about this issue. 

The chair has empowered the subcommittees to look at this. Get 

us on a fast track for providing you with relief, and get on a fast 

track for removing some of the constraints that you have placed on 

yourself. 

I would just like you to respond to that in the remaining time. 

Mr. ESPER. Senator, if I may, since the handgun was an Army 

system, let me give you some good news. The handgun was actually 

fielded last week at my old unit, the 101st Airborne Division. That 

fielding has begun. 

I would note, since I saw him yesterday, that your colleague, 

Senator Tom Cotton, actually qualified on the weapon and was 

very pleased with it. The troops been very happy with what we 

fielded. 

I would also note, because it is important to what you are saying, 

after the years of going through that extended process, the Chief 

of Staff of the Army, General Milley, took to heart what Congress 

said, used the legislation that was contained in the NDAA—we had 

stood up about 20 months ago or so, the reinvigorated Army Requirements Oversight Council. 

So he took that case what you are talking about, refined the requirements process. Eighteen months later, we got to the point that 

we were delivering weapons. 

We have managed to turn a bad news story, I think, into a good 

news story. I think that type of process, leveraging the authorities 

we got from Congress, is the basis for which the Army is heading 

with regard to Futures Command and all the changes we plan on 

making to improve the acquisition process and make sure that we 

do not see that again. 

Mr. GEURTS. Sir, from the Navy’s perspective, you guys have 

been very helpful. We have been doing some piloting of reducing 

the number of critical performance parameters. You gave us authority to try one where we only had two critical performance parameters. That simplified the solicitation. Then we can work with 

industry. Again, getting to Secretary Wilson a much shorter requirement, it gave us a much broader look. That saved years from 

us going through the normal, traditional piece. 

So the authorities you give us, again, help us try and drive that 

change, because, ultimately, we have to get the workforce training 

and get the culture shifted from what has been to what needs to 

be. 

Senator TILLIS. As Secretaries Wilson and Lord respond, we have 

to keep in mind about the cumulative cost of this. We have to take 

a look at, when you have to participate in a procurement for 10 

years how much cost you are building into the industrial base that 

we ultimately pay for. So I also want to make sure that I am getting a commitment from you all to come up with specific actions 

that we need to take to accelerate the process. 

Secretary Wilson? 

Then we will finish with Secretary Lord. 

Ms. WILSON. Senator, I think you were out of the room when I 

did my opening statement, and I need to get a red ribbon, but this 

39 

is the letter of invitation, and there is a four-page document for the 

light attack experiment. It fits nicely in a very slim briefcase. 

Senator TILLIS. You get a blue ribbon for that one. 

Ms. WILSON. I will put the blue ribbon on this for and provide 

you a copy. But the final report, we tested four aircraft, and a final 

report arrived last night with me, so it is less than 11 months from 

a letter of invitation to the final report on testing, and we will 

make a step from there. 

′′What else can Congress do to be helpful?’’ You often ask that. 

I do have some suggestions for you, but maybe I will just provide 

those in answers to questions. 

Senator TILLIS. Thank you. 

Ms. LORD. We are coming up with methodologies to step through 

a flow chart to arrive at the simplest and quickest compliant contracting methodology for different procurements. I think part of the 

issue with this gun you are referring to is we applied a one-sizefits-all, bring it on mentality. We are trying to learn from our 

Rapid Capabilities Offices, from DIUx, from SCO, who have taken 

the authorities that Congress has provided and applied them appropriately to speed things up, therefore, have them be more costeffective, and thereby allowing smaller companies that couldn’t afford to go through this multiyear process to participate. 

So what we are trying to do is scale all of those activities, but 

we have to educate our acquisition workforce to be able to do that, 

and that is a huge issue. So I am taking a fundamental relook at 

how the Defense Acquisition University operates, and we are looking at more 1-, 2-day sessions where we teach people skillsets that 

they use the next day. 

But we have to give people the tools, and then we have to train 

them. I am very optimistic that we can do that. 

Chairman MCCAIN. What makes you so optimistic? 

Ms. LORD. Because I think we have a lot of smart people that 

are looking for leadership and—— 

Chairman MCCAIN. You didn’t have smart people before? 

Ms. LORD. I do not think the focus was on cost-effective, quick 

solutions. I do not think people had the intestinal fortitude to come 

up here and say what needed to be changed. I think we have an 

environment now where we have a huge number of people that are 

all aligned on the same objective, and we are all very comfortable 

having a conversation saying, this is working, and this perhaps has 

an unintended consequence. 

I see a lot of momentum between the building and between the 

Hill to work together to achieve our shared goals. 

Chairman MCCAIN. I certainly hope you are correct. 

Senator King? 

Mr. ESPER. Mr. Chairman, if I can add just one quick thing to 

Mr. Tillis’ question, you asked about things that the Congress could 

do. 

I would tell you, in the case of the handgun, through that 18- 

month process, we have prototyped, tested, demonstrated, used soldiers, selected the handgun, and we had a protest. I think to the 

degree that Congress can act on getting rid of frivolous protests, at 

least what the Army considered a frivolous one, would be very 

40 

helpful, because all it does is add time, cost, and, of course, delays 

giving the soldier what he or she needs to be successful. 

Chairman MCCAIN. Senator King? 

Senator KING. Perhaps the handgun example can remind me of 

my father’s advice that even the worst person can serve as a bad 

example. So maybe we can learn from that. 

Mr. Geurts, a couple preliminary observations. First, somebody 

at the Pentagon has a sense of humor to send you here on your 

third day. It will only get better from here, I can assure you. 

Mr. Chairman, this is a very important hearing, and I want to 

thank you for calling it. 

Secondly, to the entire panel, this is one of the better, or I would 

say best hearings I have seen on this subject in 5 years. You are 

clearly focused on this problem. 

Secretary Wilson, what you told us about the light attack aircraft 

and the process is incredibly encouraging. I hope that you will be 

able to continue along those lines. 

Secretary Lord, Freud said, ‘‘Anatomy is destiny.’’ Napoleon said, 

‘‘War is history.’’ My modest contribution to that is, ‘‘Structure is 

policy.’’ 

I would like it if you could supply to this committee your organizational chart of the acquisition process. I am interested in seeing 

how many committees there are, how many approvals, what the 

levels are, because I do think, I am not being facetious, I do think 

the structure largely determines the outcome. If you have a complex, cumbersome structure, you are going to have a cumbersome 

outcome. 

Somebody said the ideal committee is made up of three people, 

two of whom are absent. And so if you could share with me your 

thoughts on this. 

Ms. LORD. No, I agree with you, structure is policy. And so what 

we are doing is putting together flowcharts that allow contracting 

officers to pick the simplest route to get to placing a contract and 

delivering the materials or services. That means you need to understand what you are buying and how to tailor the process. That is 

what we have our contracting people doing right now, using reallife examples of how we have done this. So that is what I will bring 

you, what that flow chart is. 

Senator KING. I would really appreciate that. 

I think I heard in one of your testimonies, perhaps yours, that 

you are making an effort to keep people in these positions, at least 

though milestones. I mean one of the problems we have identified 

is acquisitions people come and go, and it creates a herky-jerky 

process. 

Ms. LORD. We are trying to be much more thoughtful about critical program junctures and aligning people being reassigned with 

that. 

Now moving forward, that takes a lot of coordination. I think we 

are all committed to do that. I will say that we all spend a lot of 

time in one another’s offices, and I know I meet with the service 

acquisition executives on a weekly basis, so we are committed to 

doing this. 

Senator KING. This is sort of technical government organization, 

but I hope you can really focus on this issue of how long people 

41 

stay in a particular office, because if they keep turning over, that 

has been identified in prior hearings as a significant problem. 

Ms. LORD. We are committed. 

Senator KING. The other piece is off-the-shelf technology. 

Mr. Geurts, I commend to you the P–8, which is the new naval 

anti-submarine aircraft, which I went out to see them building 

them. It is an off-the-shelf Boeing 737 with electronics inside. 

Somebody should be congratulated for not having to invent a new 

airplane. 

By the way, at that factory, Boeing produces one 737 a day, 

which is an amazing technological feat, in my mind. But the P–8, 

it seems to me, is an example of how we can do this without redesigning everything from the ground up. 

Are you familiar with that program? 

Mr. GEURTS. Yes, Senator, I am getting more familiar in the new 

job here. But, certainly, my background as a special ops guy is to 

leverage whatever is there and put it to use as quickly as possible. 

I think back to this idea that we will have to build new. That 

will take some time. We will have to fight with what we have tonight. A lot of what we can do in the interim is leverage what we 

have in new and creative ways, leverage what is in the commercial 

market in new and creative ways, leverage what each of us are 

doing in the services. So the Navy is leveraging the Air Force’s 

work in JASSM [Joint Air-to-Surface Standoff Missile] to create a 

new capability quickly, so we do not have to reinvent a whole new 

cruise missile. 

So this focus on every dollar counts, every day counts, we are in 

a war tonight, and we need to think that way in everything we are 

doing, whether that is organizational design, acquisition requirements, operational tests, all of that has to play together. I think 

as you are seeing here, we are all committed to doing that for the 

Nation. 

Senator KING. I have seen that today, and it is reassuring. 

Two quick points, and you do not need to respond. But reducing 

lead times is almost as important as price. I mean, we cannot 

maintain our qualitative edge if it just takes too long to get the 

weapon into the field. 

Finally, to reiterate what everyone has said today, we want to be 

partners. To the extent you can tell us what could be changed in 

terms of regulation, in terms of congressional requirements, please 

do so. Everyone at this desk is committed to helping you to succeed, because when you succeed, our country succeeds. 

Thank you very much for all the work you are doing. 

Senator REED. Mr. Chairman, I have to respond to a rhetorical 

question I raised about the importance of Maine. 

It is important because it sent us some of the most impressive 

Senators in our history: Margaret Chase Smith, Edmund Muskie, 

George Mitchell, Olympia Snowe, Susan Collins, and Angus King. 

For the record, please note that. Thank you. 

[Laughter.] 

Chairman MCCAIN. Senator McCaskill? 

Senator MCCASKILL. Thank you. 

I would like to take a moment, personally, just to thank my fellow, my military fellow, Lieutenant Colonel Sean Foster. This is his 

42 

last hearing. He is an Army JAG officer. He has been incredibly 

helpful to my office. I am very appreciative of the military for providing us fellows. Sean was particularly terrific. 

He is leaving to go to the Army Legislative Liaison office, so all 

of us will get to know him better. 

But I wanted to briefly recognize his great work in my office over 

the last 2 years. I am going to miss Sean a lot. 

How many of you have read the November 2017 DOD I.G. [Inspector General] top 10 management challenges that was issued in 

November? Everybody read it? No? Who has read it? 

Ms. LORD. I glanced over it, I must admit. It was in my readahead package. 

Mr. GEURTS. Yes, ma’am. I read it yesterday. 

Senator MCCASKILL. Okay. 

Secretary Esper, have you read it? 

Mr. ESPER. No, ma’am. 

Senator MCCASKILL. How about you, Secretary Wilson? 

Ms. WILSON. No. 

Senator MCCASKILL. Okay. I am going to ask this question almost every time any of you come up here. I am going to ask you 

if you have read I.G. reports. 

Nothing is more irritating to me than when the really hard work 

of GAO [Government Accountability Office] and the I.G.s identify 

problems, and really make your jobs easier in terms of where you 

should focus, and nobody consumes the product. It is really important, I think, that all of you consume this product, because they 

identified 10 challenges of management. That is what your jobs 

are, management. 

I am going to focus on a couple of those today, but I certainly 

would advise all of you to take this report seriously. 

Sustainment problems, the market leveraging for spare parts, 

they identify in this report that for the H–60 helicopter used by the 

services and SOCOM, that they have purchased 2.9 million spare 

parts for the H–60, DOD has, using 2,000 separate contracts 

awarded to 590 different contractors over a 12-month period for almost $400 million. Often, these parts were purchased for different 

prices, the same part. 

This is the kind of stuff that just makes you want to tear your 

hair out, as somebody who is a former auditor. 

What roadblocks you can you identify, Secretary Lord, that 

would keep you from fixing something ridiculous like that? I mean, 

2,000 separate contracts to 590 different contractors for spare parts 

for the same helicopter? 

Ms. LORD. Since August, I have been doing a lot of data dives 

to understand the body of work in the acquisition workforce, and 

this is the type of thing I keep coming across. What I find are a 

couple trends relative to sustainment. 

One, early on in programs, people are not thinking about designing for sustainability. They are not thinking about setting up the 

right contract vehicles. It is often rather reactionary for different 

parts. So as we develop these systems, we need a holistic contracting strategy because contracting is a strategy itself. 

Senator MCCASKILL. I mean, I just think, when something comes 

online, you should begin the process of identifying a handful of conVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6602 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
43 

tractors, because you want the consistency, and if somebody falls 

off, you have others, and to get the best deal and leverage the best 

deal for that helicopter. 

Ms. LORD. Right. 

Senator MCCASKILL. I mean, I cannot tell you how many time I 

have sat in this committee and pointed out inefficiencies between 

the services for things that they are all using. 

Ms. LORD. That is where AT&L comes into play. We talk about 

delegating programs back. That is absolutely what we want to do. 

Where AT&L can be very helpful, and A&S moving forward, is 

taking that horizontal look across the services for similar programs 

that leverage the same bill of materials and do the types of buys 

you are talking around about. 

Senator MCCASKILL. I do not have much time left. For the 

record, I am going to ask you about reporting contractor past performance. It is another really irritating thing for me, that we have 

bad contractors and we keep doing business with them with no consequence whatsoever. We never remove them from the list. 

But that the last thing I really want touch on is supply-chain 

management risks. In this report, I was really concerned about the 

identified risk of an adversary infiltrating the supply chain and 

sabotaging, maliciously introducing an unwanted function or otherwise compromising the design or integrity. 

They specifically point out the Missile Defense Agency as it relates to the Ground-Based Midcourse Defense system. That is, obviously, of grave concern. 

I am out of time, but what I would like for each one of you to 

do is to speak to me, especially Secretary Lord, what are you doing 

to secure the supply chain in terms of the integrity being compromised? 

I do not need to explain to any of you what the dire consequences 

of that could be in today’s world. 

Ms. LORD. I would be happy to do that. In fact, I just had an 

early morning meeting with General Ashley from DIA [Defense Intelligence Agency] about that very topic in my office this morning. 

Senator MCCASKILL. I will ask about all of these 10 management 

areas. But I would recommend, the next time you come, check and 

see if an I.G. report or a GAO report has been issued in last 30 

days, because I guarantee I am going to ask you about it. 

And I will tell you, I am following up. 

You would not believe this, Senator McCain, but when I was 

with Secretary Wilson at the Air Force base in Missouri, which was 

terrific that she visited, she told me that she was trying to hire 

trainers for the Joint Strike Fighter, and they sent over somebody 

to get approved for hiring at OPM [Office of Personnel Management], and guess what OPM told them? They did not have enough 

experience flying the Joint Strike Fighter. 

So obviously, the job requirements that are imposed upon you by 

OPM sometimes are ridiculous, beyond the pale. Clearly, nobody at 

OPM knew that nobody had flown a Joint Strike Fighter yet. 

Has that been resolved? I am working on it from my end. I just 

wanted you to know. 

Ms. WILSON. Thank you for your help on this one. We can surely 

continue to use the help. 

44 

Senator MCCASKILL. Did you get it approved, finally? 

Ms. WILSON. That particular one has been approved, but my average time to hire a civilian is about 180 days. 

Senator MCCASKILL. Totally ridiculous. 

Ms. WILSON. It is a major issue. 

Senator MCCASKILL. Thank you, Mr. Chair. 

Ms. WILSON. Senator, we have a task force looking at all the requirements to hire people, how we can streamline those, both regulatory and legislative fixes, so that we can get good people on 

board. 

Chairman MCCAIN. I want to apologize to Senator Blumenthal, 

because, obviously, there is an event on the floor of the Senate, 

which I know he is very interested in and so—— 

Senator BLUMENTHAL. If I may, Mr. Chairman? 

Chairman MCCAIN. Please. 

Senator BLUMENTHAL. I will submit my questions for the record, 

and I hope we will get prompt responses focusing on, among other 

issues, on the Huey replacement program. 

Thank you, Mr. Chairman. 

Chairman MCCAIN. I thank the witnesses. This has been very 

helpful. 

And again, I hope the message is, from this committee to you, 

that we want to work with you. We also have our responsibilities, 

and we will try to carry those out as well. 

So I think this hearing has been very helpful, including the recent one we just had. And I thank the witnesses for their willingness to help. 

This crowded hearing will adjourn. 

[Whereupon, at 11:47 a.m., the committee adjourned.] 

[Questions for the record with answers supplied follow:] 

QUESTIONS SUBMITTED BY SENATORS JOHN MCCAIN AND JACK REED

RAPID PROTOTYPING

1. Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, in 

fiscal year 2016 and 2017, statutory authority was given for the use of alternative 

approaches to rapid prototyping and rapid fielding. 

What has been the Department and Services approach to implementing these alternative approaches? 

Secretary LORD. My team is working on a memorandum, ‘‘Policy for Middle Tier 

of Acquisition for Rapid Prototyping and Rapid Fielding Programs,’’ that establishes 

interim Department policy and assigns Component responsibilities for the implementation of middle tier of acquisition programs. This will facilitate initial execution 

of these authorities while allowing for data/lessons learned to be compiled and further refined for incorporation into issuance of a formal DOD instruction. 

Secretary ESPER. The Army’s approach has been to direct its program managers 

to identify efforts that would be suitable candidates for use of the new ‘‘mid-tier’’ 

acquisition authorities and to leverage them to rapidly prototype and field capabilities that address combatant commander needs against near-peer adversaries. For 

such projects, our intent is to utilize a streamlined and coordinated requirements, 

budget, and acquisition process to expedite approval, operational assessment and 

delivery. We have already successfully used the mid-tier acquisition approach 

through the Army Rapid Capabilities Office, which rapidly prototyped and delivered 

an electronic warfare capability for the European theater. 

Secretary GEURTS. The Department of the Navy (DON) has refined its policy with 

regard to accelerating acquisition to ensure the full extent of acquisition approaches 

are available to our acquisition teams. The new governance policy was developed to 

take maximum advantage of recent acquisition reforms aimed at rapid prototyping, 

rapid fielding and acquisition agility at large. As a component of this accelerated 

45 

acquisition policy and process, I co-chair the Accelerated Acquisition Board of Directors (AABoD) alongside the Chief of Naval Operations (CNO) and Commandant of 

the Marine Corps (CMC) to establish Rapid Prototyping, Experimentation and Demonstration (RPED) projects, and Maritime Accelerated Capability Office (MACO) 

programs. The policy takes maximum advantage of recent acquisition reforms for 

rapid prototyping, rapid fielding and acquisition agility at large to streamline and 

more rapidly deliver capability to the fleet. 

Secretary WILSON. The Air Force has started implementing these alternative approaches, and to that end, I recently signed out the Rapid Procurement of Air Force 

Capabilities Charter which aims to streamline procurement and prototyping of certain Air Force capabilities. To do this, the charter applies the governance structure 

and key principles established for the Rapid Capabilities Office, allowing us to inculcate a culture of agility and innovation across the Acquisition Enterprise and the 

Air Force. Additionally, we are working to implement open system approaches into 

our programs. This approach is a key enabler to inject new technology into subsystem or component levels. The Air Force is a strong proponent of using prototyping as one method to infuse agility into the acquisition process and will continue 

to look for opportunities to use these authorities. 

2. Senators MCCAIN and REED. What have been the challenges or impediments 

for the acquisition community, if any, to implementing these approaches? 

Secretary LORD. Emerging needs are unknown during the two-year planning and 

programming budget cycle and therefore not programmed in the Department’s budget requests. As a result, the Department is in the position only to request funds for 

known requirements. If dedicated funding for the new prototyping authorities is not 

appropriated, then the Department must prioritize middle tier of acquisition programs alongside other competing priorities for allocation of available funds. To enable the Department to efficiently and effectively react to emerging threats and take 

advantage of innovative technologies, I recommend that Rapid Prototyping Funds, 

or other flexible funding accounts, be appropriated at both the Department and 

Service levels. 

Secretary ESPER. One challenge is the timeline allotted to complete rapid prototyping and fielding efforts. For these mid-tier acquisition projects, it would benefit 

the Army to have the option to continue the equipping phase beyond five years. 

While a rapid project may deliver the initial operational capability to the first unit 

equipped very quickly, and certainly within the five-year limit, the ability to continue fielding to additional units beyond five years would enable a multi-year approach to resourcing and incremental capability upgrades. 

Secretary GEURTS. Although the authorities are present and aimed at speed, the 

current budget process limits innovation and agility. We still lack the flexible funding constructs and associated appropriations that will allow new technologies, engineering innovations and, in some circumstances, game changing capabilities to be 

introduced to the Fleet as fast as possible. We cannot afford to wait two years— 

our typical budget cycle time—to address our adversaries’ new capabilities, nor 

should we wait two years to introduce our latest innovations. 

Secretary WILSON. The Air Force has experienced challenges in funding, processes 

and training. While we appreciate the authorities the Congress has provided for 

rapid prototyping and rapid fielding, the limiting factors are often not the authority 

to execute, but rather clearly defined implementation guidance, a source of funds, 

and workforce training. The Air Force does not have a dedicated source of funds for 

rapid prototyping, so potential prototyping opportunities must still compete for funding against other pressing Air Force priorities. We continue to work towards a balance of rapid prototyping efforts and traditional acquisition programs to ensure the 

right mix of rapid and revolutionary capabilities. Additionally, the Air Force is waiting for Department guidance on implementation of these authorities and we continue to work with the OSD policy team in writing the instructions. In the interim, 

the Rapid Procurement of Air Force Capabilities Charter will provide the strategic 

guidance for our rapid prototyping efforts. Finally, the Air Force needs to continue 

educating our workforce on the new authorities, and how and when to use them appropriately. 

3. Senators MCCAIN and REED. Can you highlight a few examples of programs 

that are taking advantage of the alternative approaches? 

Secretary LORD. We’re working with the Navy on the pilot effort to use these authorities to accelerate Standard Missile (SM)-2 Block IIIC development through 

rapid prototyping. This effort will deliver an initial fielding capability 3 years ahead 

of the program’s planned Initial Operational Capability (IOC). 

46 

Secretary ESPER. Yes. Consistent with the intent of these approaches, the Army 

rapidly assessed commercially available Active Protection Systems (APS) candidates 

in fiscal year 2017 and is now actively exploring the feasibility of equipping Abrams, 

Bradley, and Stryker vehicle platforms with APS variants as an interim solution for 

the European theater. Another example is the Army Rapid Capabilities Office Electronic Warfare project, which used a rapid fielding approach in fiscal year 2017 to 

provide an integrated electronic support and attack capability for the European theater. 

Secretary GEURTS. In accordance with the DON’s new Accelerated Acquisition 

governance policy we designated our first MACO Program (MQ–25) as a Key Performance Parameter (KPP) Reduction Pilot Program. Having just two KPPs allows 

the Department to better manage cost, schedule, and performance by focusing on 

MQ–25’s most important capabilities—Carrier Suitability and Aerial Refueling. Additional prototyping efforts in the Accelerated Acquisition process include: 

• Unmanned Undersea Vehicles (UUV) Family of Systems which provides longendurance and off-board systems for Intelligence Preparation of the Operational 

Environment. 

• Navy Laser Family of Systems (NL FoS) which demonstrates High Energy 

Laser (HEL) capabilities in Naval surface combatants. 

• Expeditionary Surveillance Towed Array Sensor System (SURTASS–E) which 

prototypes and explores a ‘‘roll-on, roll-off’’, modular, passive SURTASS capability. 

• Standard Missile (SM) Family of Systems which provides new increments of capability and increased range and lethality leveraging SM investments and accelerated through rapid prototyping and rapid fielding. 

• Ship-to-Shore Maneuver, unmanned swarm systems, long range precision fires 

and electronic attack prototyping of new operational concepts for Naval amphibious warfare. 

Secretary WILSON. One program that is taking advantage of these authorities is 

the Next Generation Command and Control Digitally Aided Close Air Support 

(DACAS) Platform software. The effort is a $1 million, six-month project under Defense Innovation Unit Experimental (DIUx) to create a modular, core software architecture and Joint Terminal Attack Controller software apps. Another example is the 

Micro Weather Sensor. This project is designed to assist Air Force Special Operations weather teams by collecting critical weather information in inhospitable environments. Having successfully developed and tested the sensor, the program is planning to execute $1.7 million of fiscal year 2018 procurement funding to acquire 100 

sensors to meet the current requirement. 

4. Senators MCCAIN and REED. In your opinion, have there been any successful 

efforts to date or programs you would consider models? 

Secretary LORD. Successful efforts specifically associated with utilization of rapid 

prototyping/rapid fielding authorities granted via fiscal year 2016 and fiscal year 

2017 legislation have not yet be aggregated; however, in 2017, the Department established a Rapid Prototyping Program which co-funded eight prototyping projects 

with the Services. Each of these projects will rapidly develop prototypes and deliver 

new capabilities to the warfighter over the next three years, and are summarized 

as follows: 

1. Electronic Warfare (EW)—U.S. Army. This project will accelerate EW prototyping to allow dominant maneuver in EW denied environments for the tactical soldier in the field. Technologies include offensive radio operations pods; 

Raven Claw software enhancements; electronic support and attack capabilities; radio frequency mitigation filters; and artificial intelligence and machine learning algorithms. This capability will support a USAREUR operational needs statement. 

2. Position, Navigation & Timing (PNT) / Project TITAN—U.S. Army. This 

project will enable U.S. Army platforms to continue operations in global positioning system (GPS)-challenged environments, providing an anti-jam antenna for the Defense Advanced GPS Receiver (DAGR). Enhanced PNT prototypes will be evaluated for the Abrams, Stryker, Bradley, and Paladin systems. This capability will support a USAREUR operational needs statement. 

3. Passive Wide-Area Detection of Small Unmanned Aerial Systems (sUAS)— 

U.S. Navy. This project will accelerate a counter-UAS capability for naval 

land and shipboard systems to automatically detect, track, and classify targets, and to provide threat alerts. Prototypes will consist of wide-area, 360- 

47 

degree electro-optical (EO) and infrared (IR) imaging systems, wide-area 

acoustic sensors, and high-speed, low-light EO and IR inspection of targets. 

4. Ship to Shore Maneuver Exploration and Experimentation (S2ME2)—U.S. 

Navy / U.S. Marine Corps. This project will extend the reach and increases 

the capability of the individual Marine by prototyping a suite of unmanned 

assets that enable approaches to amphibious fire support and underwater 

survey. Prototypes will enable the Marine Corps Forces to plan, execute, and 

monitor battlefield conditions and deceive the enemy as to maneuvers, 

strength of the forces and intentions for deployment. 

5. High Power Microwave (HPM) for Air Base Air Defense—U.S. Air Force. 

This project will advance two HPM prototypes capable of defeating enemy 

UAS’s and missiles. A counter-UAS prototype will integrate an Air Force developed counter-electronic system into a mobile unit to counter swarms of 

UAS’s. The counter-missile (CM) prototype will evaluate U.S. Navy HPM 

technology for use on a transportable system capable of defeating multiple 

missiles in a relevant operational environment. 

6. Open Mission Systems Contribution for Next-Generation Architectures 

(OCNA)—U.S. Air Force. The Air Force will prototype a platform architecture that combines an on-board data communication bus with advanced 

broad-band multi-element antennas and shared processors to enable use of 

non-proprietary standard interfaces. This prototype will expand the open 

mission systems (OMS) open messaging standard to capitalize on the capabilities of PlatformNxt, the Air Force’s next-generation avionics architecture. 

7. Army Navy/Transportable Radar Surveillance and Control Mode 2 (AN/TPY– 

2) Adjunct Sensor—Missile Defense Agency. The Missile Defense Agency will 

develop and provide a prototype adjunct sensor to be integrated with fielded 

forward-based mode AN/TPY–2 radars. This sensor with X-band dish capability will provide an extended field of regard and low elevation angle tracking. The capability will expand the TPY–2’s performance against hypersonic 

glide vehicles. 

8. Mission Rehearsal Trainer (MRT)—Joint Staff/J8. This project will prototype 

a distributed learning / training system to enhance the intelligence collection 

capabilities of a specific Combatant Command. Project details are classified. 

The process being utilized to develop the above prototypes represents a successful 

template the Department will use to allocate funds to support rapid prototyping 

projects. These projects emerged from requirements from the military Services, Missile Defense Agency, and the Joint Staff and include such diverse capabilities as enhanced electronic warfare, counter unmanned aerial systems, and high-power microwave based air defense prototypes. All of these projects are intended to reduce overall cost and deliver capability to the warfighter more rapidly, in some cases by several years. 

Secretary ESPER. While we are still in the early stages of incorporating these new 

authorities into Army business processes, I would consider both the Active Protection Systems project and Army Rapid Capabilities Office Electronic Warfare project 

good initial models. Both leveraged current and emerging technologies to deliver 

quick solutions to address urgent capability gaps. These projects are also following 

a phased approach that continuously improves capability and applies operator feedback to inform and reduce risk for enduring programs of record. 

Secretary GEURTS. While we believe that projects and programs designated for accelerated acquisition will be successful in the timely delivery of critical warfighter 

capability, it is early in their respective execution. 

Secretary WILSON. We are currently evaluating our prototyping efforts and organizational structures, training, and funding that support them so that we can establish model efforts. We will continue monitoring the progress of ongoing and future 

efforts and evaluate what lessons can be applied. 

5. Senators MCCAIN and REED. In your opinion, what additional steps are needed 

to advance these approaches? 

Secretary LORD. Appropriating dollars in prototyping accounts will allow the Department to address some of the emergent warfighter needs to include fielding proven technologies of new or upgraded systems with minimal development in 6 months 

and complete fielding within 5 years 

In addition to funding prototyping and production, it’s also important to fund experimentation that facilitates prototype utilization in realistic settings by operational users. This maximizes the value of the prototyping efforts, and provides the 

real-world experience that lets the Services define more detailed requirements. 

These requirements enable transition to a current or new weapon system program. 

48 

Experimentation sometimes requires operations and maintenance (O&M) and other 

types of RDT&E. 

Secretary ESPER. The Army must continue to institutionalize these alternative approaches, which are critical to our efforts to defeat emerging threats and keep pace 

with technological change. While I am encouraged by the results thus far, we must 

expand the application of these approaches as part of our larger effort to reshape 

and improve the agility, synchronization, and responsiveness of the Army acquisition enterprise. With regard to ‘‘mid-tier’’ acquisition for rapid prototyping and rapid 

fielding addressed in section 804 of the Fiscal Year 2016 NDAA, we are hampered 

by the requirement within this language to complete fielding within five years as 

opposed to achieving Initial Operational Capability and block or unit set fielding 

within five years, which is more consistent with our multi-year resourcing process. 

Secretary GEURTS. The DON will work with the Congress to seek support for 

flexible funding constructs and associated appropriations, alongside an agreed-to 

framework of governance and oversight that will ensure the effective and efficient 

use of such funds for their intended purpose. In addition, we are ramping up training efforts for our acquisition workforce. We are developing course work and other 

lines of effort with our Defense Acquisition Workforce Development Fund with specific concentration on the new acquisition authorities and how these can be applied 

to speed capability to the Fleet through rapid prototyping and rapid fielding. 

Secretary WILSON. Clear implementation guidance, as well as a dedicated source 

of Air Force funds for rapid prototyping would facilitate a streamlined process for 

quickly identifying and executing the highest priority prototyping efforts. Additionally, we need to train our workforce. Program managers are reluctant to try nonstandard acquisition approaches due to fear of failure. We need to encourage prototyping strategies to be inserted into programs from the beginning. These efforts will 

require more cross-functional teaming to ensure they are provided a well-planned 

pathway to success. 

STREAMLINED ACQUISITION PROCESS

Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, in recent years there has been an increased emphasis on adopting more streamlined acquisition management processes with a goal of reducing the administrative documentation and reporting burden on acquisition programs. 

6. Senators MCCAIN and REED. In your opinion, has DOD and the Services been 

successful in achieving this goal? 

Secretary LORD. The Department’s leadership at every level is firmly committed 

to streamlining our acquisition management processes. While I believe many of our 

reform efforts to date have put us on the path to achieving that goal, there’s clearly 

more to do. Consequently, we will continue to identify and eliminate burdensome 

administrative and reporting requirements. This is not a short term goal, but a long 

term commitment to improve the efficiency of our acquisition system. Additionally, 

we will scale practices used by the Strategic Capabilities Office (SCO), Defense Innovation Unit—Experimental (DIUx), Rapid Capabilities Office (RCO), Joint Improvised-Threat Defeat Organization (JIDO), Joint Rapid Acquisition Cell (JRAC), etc. 

to account for a greater percentage of our procurements. 

Secretary ESPER. The Army, empowered by Congress, has begun its efforts to 

streamline acquisition with several of the most important reform initiatives in 

progress. The Army has embraced the authorities provided by Congress in the fiscal 

year 2016 and fiscal year 2017 National Defense Authorization Acts and has taken 

action to reinvigorate the Army Requirements Oversight Council; consolidate Army 

staff elements; establish the Army Rapid Capabilities Office; and establish the Office of Process Innovation and Integration. 

The Army is executing eight acquisition reform directives that will streamline acquisition processes and increase the Army’s ability to quickly provide capabilities to 

Soldiers. These reforms will not be accomplished overnight and there will be challenges; however, I am convinced that we are reshaping and streamlining the Army 

acquisition management process to improve the agility, synchronization, and responsiveness of our Army’s acquisition enterprise. I expect you will see marked, clear 

progress in the coming months. 

Secretary GEURTS. I agree that acquisition documentation is overly burdensome, 

and that we need to find a better balance between oversight and transparency and 

the need to move more expeditiously. I note that programs that have been delegated 

to the Services for oversight still require many program documents which by statute 

must be approved at the OSD level. The DON appreciates your efforts to reform and 

eliminate some of these burdensome requirements, and will continue to work with 

49 

you and your staff to identify requirements that can be eliminated or minimized 

where there is little to no value added by the requirement. 

Secretary WILSON. We still have a lot of work to do, although we have had some 

successes. For example, I have directed a review of all Air Force directive publications with the goal of reducing the number ensuring they provide current, clear and 

concise guidance. Within acquisition, I have ensured approvals are delegated to the 

lowest appropriate levels, reducing the administrative burden for approvals and 

freeing up the workforce to manage their programs. 

7. Senators MCCAIN and REED. What specific steps is the Department and Services taking to help achieve this goal? 

Secretary LORD. Recent changes to our principal acquisition procedures have 

given decision makers in every acquisition category broad authority to tailor acquisition documentation and other regulatory requirements that are not required by statute. Tailoring in this context can include the elimination of the document where not 

required for the program under review and/or combining several documents where 

it is logical to do so. In addition, decision makers have the authority to tailor the 

acquisition approach consistent with specific program requirements and, consequently, reduce oversight and the associated reporting burden. We have also developed more focused procedures tailored to the unique requirements of services acquisitions and defense business systems. The associated documentation and reporting requirements are uniquely designed for the needs of those programs. As I mentioned in my testimony, we are initiating action intended to streamline our contracting procedures with the long term goal of awarding a contract in 6 months from 

the issuance of the Request For Proposals. Now, we need to memorialize successful 

tailoring practices in the form of case studies and teach our Acquisition Workforce 

through these real examples at the Defense Acquisition University (DAU). 

Secretary ESPER. Four of the Army acquisition reform directives specifically address streamlining the acquisition management process to reduce administrative 

documentation and reporting burdens on acquisition programs. These reforms will; 

(1) streamline and synchronize acquisition planning and processes; (2) streamline 

the development and approval of capability requirements to reduce the time it takes 

from concept development to an approved capability requirements document; (3) 

streamline test and evaluation and minimize redundant testing; and (4) streamline 

the contracting process to reduce the time it takes to develop and award a contract. 

In addition, the Army established eight cross functional teams (CFTs) to enable 

the Army’s leadership to efficiently identify and manage investment and divestment 

priorities by assessing them against the Army’s key modernization priorities. These 

CFTs are charged with using technical experimentation and demonstrations, in conjunction with industry and commercial sector partners, to inform prototype development and reduce the requirements process. These prototypes will enable us to learn 

and make informed resource decisions in less time with fewer resources. 

Finally, the Assistant Secretary of the Army (Acquisition, Logistics and Technology) recently introduced several initiatives to streamline the acquisition process 

and adapt the acquisition culture across the enterprise to empower program managers and promote smart decision making. The intent is to promote awareness of 

the acquisition flexibilities contained in recent Defense authorization acts to help 

ensure the Army acquisition community is postured to take full advantage of new 

authorities in areas such as ‘‘middle tier’’ acquisition and rapid prototyping and 

fielding of innovative system components and technologies, commercial items procurement, and other transactions authority. 

Secretary GEURTS. DON has recently refined its policy with regard to accelerating 

acquisition, to include our responses to urgent needs. The new governance policy 

was developed to take maximum advantage of recent acquisition reforms aimed at 

rapid prototyping, rapid fielding and acquisition agility at large, to include the use 

of Rapid Acquisition Authority when warranted. For our Defense Business Systems 

(DBS), many of the regulatory requirements and documentation requirements in the 

DODI 5000.02 have been eliminated in the 5000.75 because they are not applicable 

to DBSs. In addition, I have directed a review of all documentation required for all 

the different ACAT level programs to identify and eliminate documents which do 

not add value. 

Secretary WILSON. To achieve the goal of reducing administrative documentation 

and reporting, the Air Force continues to review and revise acquisition guidance to 

eliminate duplication. Policy has been updated to allow for additional decision authority delegation and to encourage a culture of ‘‘information vs. documentation’’ 

based decision making. Additionally, we are finalizing Air Force guidance amplifying current DOD policy for Defense Business Systems that streamlines oversight 

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munities. We have implemented a Rapid Procurement of Air Force Capabilities 

Charter to streamline reviews and documentation for critical programs. 

8. Senators MCCAIN and REED. In your opinion, what additional steps are needed? 

Secretary LORD. We are finding more opportunities to tailor our policies and reduce administrative burden as we implement the acquisition reform provisions in 

the fiscal year 2016, 2017, and 2018 NDAAs. I believe than an ongoing conversation 

with Congress is necessary to discuss what is working and what is not. I would like 

to hold a hearing highlighting excellent examples of programs where creative solutions were applied in a compliant manner. If we held hearings showing the art of 

the possible and the value of critical thinking, then we have the opportunity to motivate the Acquisition Workforce. 

I am also meeting regularly with the Advisory Panel on Streamlining and Codifying Acquisition Regulations (the section 809 panel) to discuss the recommendations they are making to Congress to streamline the acquisition process and to identify ways to update and modernize how the Department acquires systems while also 

reducing cumbersome procedures and statutory reporting requirements that no 

longer add significant value. Their final report’s Volume 1 includes some 74 specific 

recommendations in the areas of Commercial Buying, Contract Compliance and 

Audit, Defense Business Systems, Earned Value Management, Services Contracting, 

Small Business, Statutory Offices and Designated Officials, and Statutory Reporting 

Requirements. I look forward to continued discussions with the Panel on these and 

the next two volumes of recommendations. 

Secretary ESPER. The Army must successfully implement its ambitious slate of reforms to streamline acquisition processes and increase efficiency, cost effectiveness, 

and leader accountability while reducing administrative burdens. These reforms are 

underway and are expected to be implemented by the end of fiscal year 2018. We 

continue to seek flexibility in funding under Continuing Resolution and reprogramming authority once a funding bill has been enacted. The Army also believes greater 

flexibility in a Continuing Resolution that would allow the Services to execute programs at the lowest committee mark even under a Continuing Resolution would be 

beneficial. 

In addition to these reforms, the congressionally chartered section 809 panel is 

reviewing defense acquisition regulations to streamline and improve the defense acquisition process. The panel will recommend statutory reforms to simplify the acquisition system. The delegation of authority to the Service Acquisition Executive, coupled with internal Army reform efforts and relief from unnecessarily burdensome acquisition regulations identified by the section 809 panel will provide the additional 

steps needed to implement an agile and accountable defense acquisition system. 

Steps in Continuing Resolution reform would allow the Services to move forward on 

programs at the lowest committee mark instead of waiting for the final bill. 

Secretary GEURTS. While OSD has delegated authorities for most Navy/USMC 

programs back to the DON, there are several statutes and OSD policies which require DON to gain OSD approval in spite of these delegated authorities, thus greatly reducing the positive impacts of the delegation of these programs back to the 

Services. The DON will continue to work with the appropriate offices within OSD 

to identify additional opportunities to delegate authority currently retained by OSD 

to the Military Departments (MILDEPs). 

Secretary WILSON. The steps taken to date represent a significant culture change 

from risk aversion to risk management at all levels of governance. This culture 

change will enable speed but needs time to become standard practice. 

9. Senators MCCAIN and REED. Given the other ongoing changes in the acquisition 

structure, such as shift of acquisition authority to the services, what challenges to 

you see in providing oversight of an acquisition program without placing an unnecessary burden on the acquisition workforce managing the program? 

Secretary LORD. My statutory responsibilities as Under Secretary of Defense for 

Acquisition and Sustainment will include (among others) the responsibility to serve 

as the chief acquisition and sustainment officer of the Department and to be principal advisor to the Secretary on acquisition and sustainment. Consequently, I will 

have an enduring need for information about the status of our ongoing investments 

so I can assess progress, identify issues, and assist the program if needed. Access 

to program information will be a continuing requirement which I believe we can satisfy without burdening the services. I am using a monthly scorecard to follow MDAP 

cost, schedule and performance and will manage by exception. In order to increase 

the capability of the entire Acquisition Workforce, I am undertaking a reorganization of DAU and a total revamping of the curriculum. Only by attracting, developing 

51 

and training a skilled workforce, will we truly make an enduring difference in program execution. 

Secretary ESPER. The major challenge is to provide oversight for the breadth and 

depth of programs already managed by the Army Acquisition Executive in addition 

to the Major Defense Acquisition Programs delegated from the Office of the Secretary of Defense. To mitigate these challenges the Army must improve acquisition 

oversight through centralized planning, decentralized execution, and improved performance metrics. To achieve this the Army is driving down Milestone Development 

Decisions (MDD) and Milestone Decision Authority (MDA) to Program Executive Officers (PEOs) for Acquisition Category (ACAT) II and III programs. PEO’s with Milestone Decision Authority will be authorized to further delegate select ACAT IV programs down to O6/GS–15 Project Managers. We will align the duty assignments of 

PEOs and PM with the milestones established for their programs to ensure a clean 

handover of the program at critical points, and so that clear measures of effectiveness—cost, schedule, and performance—can be assessed. The Army has also initiated ACAT IV programs within our acquisition system. We have defined an ACAT 

IV program that includes efforts with mature technologies, limited complexities and 

lower risk that also have funding below $100 million for Research Development, 

Test and Evaluation and/or $400 million Procurement. 

The delegation of this execution authority will improve accountability by empowering the PEOs and PMs. It will allow the Army Acquisition Executive to focus on 

higher risk ACAT I programs while maintaining the mechanisms required to oversee the remaining programs. For instances, the MDAs will conduct an annual program review of all non-ACAT I programs and provide a concise report of the results 

of the reviews no later than the end of the fiscal year. Additionally, PEOs will ensure that the Army Acquisition Program Master List (AAPML) is updated quarterly, 

and will report all performance metrics required by Army Directive 2017–35, (Acquisition Reform Initiative #8) no later than the end of each fiscal quarter. 

Secretary GEURTS. With the ongoing changes in the acquisition structure, it is 

critical that the MILDEPs have sufficient numbers of trained acquisition professionals to provide the requisite oversight in light of the Services’ increased authority 

and responsibility. Continued support for the Defense Acquisition Workforce Development Fund (DAWDF) will be a key enabler for the Services to maintain effective 

oversight. 

Secretary WILSON. We have made strides in reducing bureaucracy. We continue 

to monitor activities to balance providing sufficient and timely information to senior 

leaders on our delegated programs against the burden of generating the information. The key is to find the right balance of speed and risk acceptance versus risk 

aversion. 

10. Senators MCCAIN and REED. What additional steps, including legislation, do 

you feel are needed from Congress? 

Secretary LORD. The Fiscal Year 2018 NDAA HASC report directed the Department to conduct a review of acquisition statutes to identify process requirements in 

acquisition statutes that hinder agile acquisitions; to identify obsolete statute; and 

to recommend related statutory changes that should be considered to simplify or improve the agility of the defense acquisition system. As of today, there are 34 candidates for acquisition related legislative changes that are in review within the Department. These potential legislative changes span topics of delegation of various 

waiver and approval authorities, monetary thresholds, written determinations and 

approvals, information technology acquisition, and numerous other topics to include 

potential expansion of exceptions related to the Competition in Contracting Act. 

Additionally, the Department currently has several authorities related to supply 

chain risk management considerations, based upon foreign ownership control and 

influence, in order to ensure secure procurements. Section 806 of the Fiscal Year 

2011 NDAA provides the Department with authority to exclude a source on the 

basis that it presents significant supply chain risk to a National Security System, 

and the Department is requesting that this authority be extended by five years, 

from 30 September 2018 to 30 September 2023. In accordance with section 807 of 

the Fiscal Year 2018 NDAA, the Department is ensuring utilization of this authority 

and implementing processes for enhancing scrutiny of acquisition decisions in order 

to improve the integration of supply chain risk management into the overall acquisition decision cycle. Also, as part of this effort, the Department is collaborating with 

related activities underway in the Office of Management and Budget, Office of the 

Director of National Intelligence, the Department of Homeland Security, and the 

General Services Administration to inform processes and determine additional authorities that may be needed, such as provision of more streamlined authorities for 

52 

National Security Systems and expansion of authorities to cover other than national 

security systems. 

Review and collaboration with your staffs will be key to ensuring we jointly champion implementation of changes with the goal of securely acquiring and fielding 

products that provide significant increases in mission capability and operational 

support in the most cost effective and schedule efficient manner as possible. I look 

forward to reviewing these with staffers as soon as possible. 

Secretary ESPER. Many of the reforms required to streamline acquisition management processes are now internal to the Army, and we appreciate Congressional action in the Fiscal Year 2018 National Defense Authorization Act (NDAA) to further 

streamline acquisition process. The Army could benefit further from; (1) a capabilities based versus program specific Program Element (PE) lines. Under this concept, 

the Army would be able to realign funding within a portfolio (with notification to 

Congress) should the need arise to accelerate or slow and effort without the need 

for an Above Threshold Reprogramming; (2) an additional increase in the ceiling of 

the Simplified Acquisition Threshold from $250,000 to $500,000 to provide greater 

agility and streamlining for these small purchases and allow us to keep pace with 

the threat and enabling a less bureaucratic and lengthy process in getting to expedited contract awards; (3) protection of Technology Maturation Program Element in 

Research and Development (R&D) so that programs would have a balanced approach between requirements pull and innovative technology driven; (4) continuing 

resolution (CR) reform. 

Secretary GEURTS. By statute, several major defense acquisition program (MDAP) 

documents and other requirements still require approval or action within the OSD, 

even for MDAPs for which the Service Acquisition Executive (SAE) is the Milestone 

Decision Authority (MDA). Congress can further reduce the administrative documentation and reporting burden on acquisition programs by assigning authority for 

these requirements to the MILDEPs when the SAE is the MDA. Examples include: 

• Program cost, fielding, and performance goals under 10 U.S.C. § 2448a (must 

be established by the Secretary of Defense, delegable only to the Deputy Secretary of Defense); 

• Independent cost estimates (ICEs) under 10 U.S.C. § 2334 (must be either conducted or approved by DCAPE); 

• Analysis of Alternative study guidance under 10 U.S.C. § 2366a (must be developed by DCAPE). 

In addition, amending 10 U.S.C. § 2306b(i)(3) to allow the Secretaries of the 

MILDEPs (delegable to the SAEs) to make the required certifications and determinations for multiyear contracts would reduce administrative burden for programs 

that are authorized by law to utilize such multiyear contracts. 

Secretary WILSON. The Air Force appreciates the authorities provided by Congress 

and requests continued efforts to ensure authorities and decisions that still reside 

outside the Air Force are delegated to the Service or appropriate level to align with 

Congressional intent. 

Current law (section 807 of the Fiscal Year 2017 NDAA) requires the Services to 

establish program cost and fielding targets and those cost and fielding targets must 

be approved by the Secretary of Defense or the Deputy Secretary of Defense, even 

for programs delegated to the Services. We believe that making the approval authority for these targets at the Milestone Decision Authority level would be more consistent with the direction Congress has been taking with delegation of other acquisition authorities. We would recommend that the law be changed to allow the Milestone Decision Authority be the approver of those targets. 

NON-TRADITIONAL COMPANIES

Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, the Department of Defense has a history of investing in innovative technologies, allowing 

the United States to maintain superiority on the battlefield and beyond. Now that 

commercial science and tech firms—′′non-traditional companies′′—are on the leading 

edge of innovation, DOD relies on them for new products and ideas. However, many 

non-traditional companies find the cost of doing business with DOD to be expensive, 

slow, and cumbersome. As a result, they are often reluctant to modify their products 

for DOD’s use or give up trying to navigate DOD’s complex acquisition process. 

11. Senators MCCAIN and REED. What do you consider to be the biggest obstacle 

to attracting non-traditional companies to modify their products for DOD use? 

Secretary LORD. The biggest obstacle is overcoming the perception that DOD does 

not have the flexibility or the ability to contract with non-traditional companies 

using scalable, commercial-like acquisition practices. DOD can contract, or enter in 

53 

other forms of agreements with these companies using commercial procedures consistent with Other Transaction Authorities (OTAs), and the commercial item acquisition methods in the Federal Acquisition Regulations (FAR) Part 12. Although their 

use has not been widespread in the Department, the military services and defense 

agencies began using OTAs in the 1990s. The challenge is to expand awareness of 

the available flexibilities and developments in statute, policy and regulations to the 

broader acquisition community to enable procurement of the innovative products 

and services that meet the rapidly evolving warfighter needs. The Department is 

taking steps to expand their usage by establishing centers of excellence including 

the Defense Innovation Unit Experimental (DIUx) as supported by Army Contracting Command—New Jersey, and Defense Advanced Research Projects Agency 

(DARPA), host OTA training events, and broaden acquisition and contracting workforce awareness of these techniques and best practices. We will ramp up our efforts 

to work with Industry Associations (AIA, NDIA, PSC, etc.) as well as government 

agencies like the SBA to reach out to small businesses. Additionally, we are 

leveraging our Defense Innovation Board members to connect with Silicon Valley 

software and artificial intelligence companies to establish working relationships that 

will allow us to connect with an entirely different base. 

Secretary ESPER. The federal acquisition process is encumbered with stifling regulations and processes that make it difficult for non-traditional companies to participate, and make the acquisition process untimely and sometimes even costly. In particular, we would support change to make the current process more inviting and 

easy to navigate, and decreasing barriers such as rigid requirements standards. 

Secretary GEURTS. Non-traditional suppliers to the DOD often cite factors such as 

(1) heavy legal requirements/regulations, (2) onerous cost accounting standards, (3) 

unpredictable contracting timelines, (4) slow contracting timelines, and (5) fear of 

loss of intellectual property as disincentives to working with the DOD. I would agree 

that these factors, as well as the lack of training of government acquisition professionals on how to incentivize and contract with non-traditional suppliers and lack 

of open interfaces and architectures are obstacles. 

Secretary WILSON. The feedback we have received from industry points to 

misperceptions and concerns about certified cost and accounting requirements the 

Department levies to meet the Truth in Negotiations Act and intellectual property 

requirements under the Federal Acquisition Regulation. These drive up the cost of 

doing business and increases the risks for these companies. Industry also does not 

want to risk giving away their Intellectual Property or to spend the money to get 

an ‘‘approved and certified’’ system when what they have works for every other facet 

of their business. From a small business perspective, entering into a contract with 

the DOD is a big challenge. Allowing the acquisition process to attract innovative 

and non-traditional businesses is key. 

12. Senators MCCAIN and REED. What steps are the services and OSD taking to 

address concerns raised by non-traditional companies, specifically as they relate to 

(1) simplifying the acquisition process, (2) protecting intellectual property rights, (3) 

decreasing contracting timelines, (4) reducing contract terms and conditions, and (5) 

training the contracting workforce? How are you measuring your progress? 

Secretary LORD. Using OTAs, DOD has dramatically simplified the research and 

development acquisition process using best business practices, negotiated flexible intellectual property rights, decreased contracting timelines, and dramatically reduced 

contract terms and conditions. We are making progress using commercial-like practices and utilizing commercial solutions (products and services) to meet the Department’s mission needs. Building on the success of the Commercial Solutions Opening 

(CSO) process conceived in the office of the Under Secretary of Defense for Acquisition, Technology, and Logistics and piloted by DIUx to award OTAs, the Department 

is working to implement section 879 of the National Defense Authorization Act for 

fiscal year 2017, Public Law 114–328 (fiscal year 2017 NDAA) pilot authority to acquire innovative commercial items, technologies, and services using the CSO process 

to award FAR based contracts or OTAs. The CSO process is a merit-based source 

selection strategy, similar to broad agency announcements (BAAs), enabling the 

DOD to acquire promising innovative commercial technologies in response to problem statements, rather than conducting a traditional competition for specific solutions. With the express authority in the National Defense Authorization Act for fiscal year 2018, Public Law 115–91 (Fiscal Year 2018 NDAA), DOD expects that OTA 

usage will be expanded into DOD’s Small Business Innovative Research (SBIR) programs along with other non-traditional companies. DOD recently hired an OTA expert as the Learning Director at Defense Acquisition University to develop training 

programs and host innovative acquisition workshops for all of the Department. DOD 

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mation in fiscal year 2013. The Department has experienced a steady growth in actions and obligations associated with non-traditional companies. With the statutory 

changes provided by Congress, this trends is expected to grow significantly. We have 

pilot projects to measure how quickly we can get on contract and look forward to 

measuring progress using a series of metrics. 

Secretary ESPER. The Fiscal Year 2018 NDAA continues a trend from the previous 

two NDAAs by encouraging the procurement of commercial items. By using commercial procedures to purchase supplies and services, we can attract more non-traditional defense contractors, and allow the rapid acquisition and delivery of capabilities to our Warfighters. An emphasis on commercial contracting will simplify acquisitions, protect intellectual property rights, decrease contracting timelines, and reduce contract terms and conditions. DOD training requirements for contracting professionals are well established. The Defense Acquisition Workforce Improvement Act 

(DAWIA) requires personnel to become certified through contracting specific training. 

In support of the NDAA reforms, the Army has taken steps to implement eight 

key Acquisition Reform Initiatives. The Army is in the process of streamlining the 

contracting process to reduce the time it takes to develop and award a contract and 

establishing metrics to improve efficiency and effectiveness. 

Secretary GEURTS. The DON is exploring the increased use of Other Transactional 

Authorities (OTAs) to combat these concerns and offer a great deal of flexibility in 

working with non-traditional and traditional suppliers. We are taking steps to increase our knowledge and develop an expertise in contracting using OTAs. In addition, through the Office of Naval Research, DON has effectively used Broad Agency 

Announcements for research topics to encourage small and large companies to share 

and develop their ideas and new or improved technologies. For small businesses, the 

DON uses the Small Business Innovation Research (SBIR) and Small Business 

Technology Transfer (STTR) program to encourage small businesses to share and 

develop their new or improved technologies. To encourage small business participation in our programs, the DON has assigned each Deputy Program Manager the responsibility to be the small business advocate for all things associated with the program. The DON regularly promotes increased participation by nontraditional small 

and large companies through DON outreach efforts conducted jointly with our Office 

of Small Business Programs to hear different perspectives and ideas. Finally, we are 

exploring new collaboration models such as SOFWERX, to enable earlier and more 

robust sharing of our capability gaps to enable earlier identification of potential existing commercial solutions from non-traditional suppliers to solve DON capability 

gaps. 

Secretary WILSON. The Air Force is making greater use of Other Transaction Authorities that allow more flexibility in negotiating intellectual property with companies. Additionally, our Small Business Innovative Research (SBIR)/ Small Business 

Technology Transfer (STTR) Program allows for a more streamlined process for 

small businesses to enter into a SBIR/STTR contract. The SBIR/STTR program has 

started working with innovative programs such as Technology Accelerators to align 

solicitation guidelines to best meet the rapid pace of an Accelerator and speed up 

contracting actions. Another benefit of SBIR/STTR is that all companies awarded a 

contract from a SBIR/STTR topic retain intellectual property rights. The Defense 

Acquisition University offers Other Transaction Authority training courses to acquisition and contracting personnel. The Air Force is reviewing its initial skills training 

course to incorporate Other Transaction Authorities. 

13. Senators MCCAIN and REED. Congress has taken action to address some of the 

concerns raised by non-traditional companies in the fiscal years 2016 and 2017 National Defense Authorization Acts, for example by allowing greater use of Other 

Transaction Authority and eliminating or reducing the burden of some contract 

terms and conditions . What additional authorities, if any, do you need from the 

Congress to address concerns raised by non-traditional companies? 

Secretary LORD. At this time we do not anticipate needing any additional authorities to address concerns raised by non-traditional companies. The Department appreciates the flexibilities provided by Congress in the fiscal year 2016 and 2017 

NDAAs, as well as the recently passed Fiscal Year 2018 NDAA. The Department 

continues its efforts to increase awareness and encourage use of OT authorities by 

the acquisition workforce through additional training and OTA delegations. We are 

implementing these provisions via Defense Federal Acquisition Regulation Supplement Cases, Defense Procurement and Acquisition Policy Memoranda, or updates to 

the OT Guide, with the intent of increasing awareness and access to non-traditional 

contractors. However; we would like to reserve the ability to revisit this topic with 

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tunity. As stated in responses to other questions, our ability to establish streamlined, effective training methodologies using a new approach at DAU is critical to 

enabling a sustained capability within our Acquisition Workforce to facilitate a simple, fast and flexible acquisition system. 

Secretary ESPER. DOD is implementing legislative reforms in fiscal years 2016, 

2017 and 2018 NDAA. As we work towards instituting these reforms, we will identify the need for future legislative reforms and work with Congress to develop legislative solutions. One example is improving commercial buying policies to be more 

consistent with commercial practices in order to attract the best and the brightest 

non-traditional companies to the government market place. Achieving the definition 

of commercial items and challenging operational testing with commercial items also 

could add many of the implementation steps are in the early stages, therefore, it 

is too early to determine whether additional Congressional authorities are warranted. 

Secretary GEURTS. The DON greatly appreciates the additional acquisition flexibility provided with the expansion of our ability to use OTAs to reach firms, products and ideas that we have not been able to reach with the more traditional acquisition authorities for research projects, prototypes and limited production. No additional authorities are requested at this time. Continued support for the Defense Acquisition Workforce Development Fund will be critical so that we can properly train 

our acquisition workforce on best practices to leverage these new authorities to 

reach a broader set of solution providers. 

Secretary WILSON. The Air Force appreciates the Congressional support of expanding the use of Other Transaction Authorities and minimizing the burden on 

small business entry into the Department of Defense. The Air Force would like to 

see authorization for Direct to Phase II Small Business Innovative Research / Small 

Business Technology Transfer contracts. It was not re-authorized in the Fiscal Year 

2018 NDAA and lapsed as of 1 October 2017. The reauthorization of Direct to Phase 

II would give non-traditional companies a streamlined option to do business with 

the DOD. 

MAJOR WEAPONS SYSTEMS

14. Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, 

when DOD awards major weapon system development contracts that establish cost, 

schedule and performance goals that are informed by mature technologies and early 

systems engineering analysis—an approach that reflects best practices used by 

many leading commercial companies—those goals are more realistic and program 

success is much more likely. While DOD has made progress in this area over the 

past decade, many programs continue to experience cost, schedule, and performance 

problems. 

In your opinion, what are the root-causes of major weapon system program problems, and what additional changes, if any, do you think DOD needs to make to address them? 

Secretary LORD. The Department conducts a detailed root cause analysis (RCA) 

on all programs that breach critical Nunn-McCurdy (N–M) thresholds. While these 

kinds of breaches are uncommon, the forensic analysis embodied in the root cause 

analyses illustrate how poor planning and/or execution leads to these poor outcomes. 

An analysis of all the critical N–M breaches from 2010 to 2018 revealed a number 

of cross-program trends. Among those are the development of unrealistic baseline 

estimates for cost and schedule and poor performance by government and contractor 

personnel responsible for program management. The most recent N–M breach on 

the Advanced Arresting Gear (AAG) program is an example of both these causes. 

The RCA concluded that the program failed to understand the technical maturity 

of the program at its inception and to plan properly. Additionally, program management and leadership failed to recognize these latent problems early and execute 

fixes early on. These causes are further demonstrated by the Next Generation Operational Control System (OCX) program where an unrealistic externally dictated 

schedule was established without reference to program content. Unrealistic schedules and cost estimates have been seen on a number of other N–M RCAs such as 

the F–35, the Assembled Chemical Weapons Alternatives (ACWA) program, and the 

Global Hawk. For this reason, the Department has been driving the requirement 

to understand and track throughout development the basic framing assumptions 

that programs baseline cost and schedule estimates are based on. Understanding 

cost, schedule and performance risk is greatly facilitated by prototyping and experimentation prior to program kickoff. We are striving to introduce more prototyping 

and experimentation through the new R&E construct. Additionally, I believe that 

flexibility with requirements is key as programs progress in order to facilitate 

56 

streamlined, cost effective and schedule efficient execution. As discovery occurs over 

the course of a program and shortfalls are identified, non-materiel effective and suitable compensatory measures may be identified, such as updates to tactics, techniques and procedures. Speed of decision is critical during program execution, as 

every additional day represents more tax payer dollars spent and delayed fielding 

of critical capabilities to our nation’s forces. As such, authority to approve such requirements changes needs to be delegated to the lowest possible level. 

In terms of personnel performance, I am taking major steps to improve program 

management and the acquisition workforce. These steps include making sure we 

have the right people in the right positions, as well as ensuring they have the right 

education and training for the duties they will be expected to perform. Additionally, 

the Defense Acquisition University curriculum is being reconsidered in regard to 

content and delivery. 

Secretary ESPER. A root cause for major weapon system program problems within 

the Army starts with requirements that take too long to establish, are often too ambitious, and frequently change throughout the process. 

Secretary GEURTS. Poorly defined requirements, a lack of proper change control, 

and non-flexible architectures and processes are the root-causes of major weapon 

system program problems. Our focus is on stable, well-defined and understood requirements prior to weapons systems production while also building flexibility into 

our systems and processes that allow for accelerated system delivery and adaptability in the integration of new requirements within appropriate cost. 

Secretary WILSON. The Air Force believes there are a few root causes of problems—technical challenges, requirement stability, and stable budgets. Technical 

challenges during system development often cause delays and cost growth. We can 

alleviate these by pursuing more prototyping and experimentation to identify the 

achievable capabilities and technical requirements in the timeframe the warfighter 

needs them. In addition, ensuring requirement stability curbs program cost growth 

and schedule delays. For example, the Air Force has experienced challenges with 

software development-intensive programs. We have started Pathfinder efforts to 

relook at how we initiate these programs. The Air Force also experiences challenges 

ensuring stable and timely program budgets. We identify the budgets programs 

need to execute the acquisition strategy. However, the instability of funding 

amounts and timeliness are challenges all programs face. We need stable, timely 

budgets to execute the plans and programs to deliver the warfighter capability. 

15. Senators MCCAIN and REED. Given the shift in acquisition authority from 

OSD to the military services, do you anticipate any challenges with ensuring programs begin with well informed and realistic goals? 

Secretary LORD. I do not. The shift in authority to the Services is balanced by 

the requirements of section 807 of the Fiscal Year 2017 NDAA which requires the 

Secretary to establish cost, schedule and performance goals prior to beginning Major 

Defense Acquisition Programs to ensure the Service programs are affordable and 

will deliver when needed. We are currently working through section 807 requirements on the Army Lower Tier Air and Missile Defense Sensor (LTAMDS) program. 

Secretary ESPER. I believe that the shift in acquisition authority coupled with the 

establishment of Cross Functional Teams and a reinvigorated Army Requirements 

Oversight Council posture us to establish well-informed and realistic goals. With renewed emphasis on aligning resources, requirements, and acquisition, and emphasis 

on Senior Leader engagement, the real business of developing and fielding capabilities quickly and efficiently can be addressed in real time with all of the key participants. 

Secretary GEURTS. The delegated authority allows DON to manage the performance of programs designated as Acquisition Category 1C and IB. There are, however, numerous additional milestones and phase documents still requiring OSD approval. Examples include: 

• Program cost, fielding, and performance goals under 10 U.S.C. § 2448a (must 

be established by the Secretary of Defense, delegable only to the Deputy Secretary of Defense); 

• Independent cost estimates (ICEs) under 10 U.S.C. § 2334 (must be either conducted or approved by DCAPE); 

• Analysis of Alternative study guidance under 10 U.S.C. § 2366a (must be developed by DCAPE). 

The DON will continue to ensure appropriate analysis and rigor is taken when 

developing program capability, cost, and schedules, and will continue to work with 

the experts across the DOD and industry for review, validation and best practices. 

57 

Secretary WILSON. The Air Force has put an emphasis on ensuring realistic technical requirements and cost goals that will result in the timely delivery of affordable 

capability within the appropriate level of risk. We will continue that emphasis for 

all of the Air Force acquisition programs. Additionally, Congress put in place requirements for both the Service Secretary and Chief of Staff to concur with the cost, 

schedule, technical feasibility, and performance trade-offs for our Major Defense Acquisition Programs. These reviews ensure leadership receives adequate information 

before program initiation. 

16. Senators MCCAIN and REED. Given your prior experiences, what do you believe are the keys to a successful product development program, and to what extent 

do you believe those keys are resident within the DOD acquisition environment? 

Please explain. 

Secretary LORD. Based on my industry experience, we need to establish a proper 

program baseline and identify realistic cost, schedule, and performance metrics. 

Then we put people with the appropriate skill sets, training and leadership capability in key roles and hold them accountable. As I did in industry, we look at the 

numbers every month to see where we are and establish action plans where we are 

not meeting targets. I believe the keys to success depend on attracting, developing 

and retaining motivated people in the acquisition workforce. I will also be retooling 

the Defense Acquisition University so that the workforce has the proper training 

and resources to be successful. 

Secretary ESPER. I believe keys to a successful product development program are 

stable, realistic requirements, predictable and stable funding and sufficiently mature technologies prior to integration, test, production and fielding. We absolutely 

have the capabilities to successfully execute product development within the Department of Defense. 

Secretary GEURTS. Successful programs have well defined requirements, built in 

open standards and flexible architectures. They have the right government and industry team for the particular program, who are both empowered and held accountable, with access to rapid decision making processes. 

I believe there are many examples of these programs in the DON including the 

Virginia-class Submarine Program and the P–8 Program. My focus will be to continue to ensure we focus on these factors for success as we execute our existing portfolio or programs and design MDAPs in the future. I believe putting program responsibility back into the hands of the Services to execute will greatly enhance the 

ability of more programs to be successful in the future as it enables the key tenets 

of accountability, rapid decision making, and empowered teams. 

Secretary WILSON. The keys to successful product development: understand the 

feasibility of capabilities given the required timeframe and available resources; continue to emphasize technical maturation and risk reduction activities; and aggressive use of tools such as prototyping and experimentation before pursuing the full 

development of a system. 

LPTAS

17. Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, section 832 of the Fiscal Year 2018 NDAA prohibits the use of the low-cost, technically 

acceptable (LPTA) source selection approach for DOD’s engineering and manufacturing development contracts for MDAP’s. 

In your opinion, is there any situation that you would feel warrants a LPTA 

source selection approach for DOD’s engineering and manufacturing development 

contracts? 

Secretary LORD. No. The Lowest Priced Technically Acceptable (LPTA) source selection process is the appropriate source selection process to use when the products 

and services are well-defined, commercial, or non-complex; there is minimal risk of 

unsuccessful contract performance; price has a dominant role in source selection; 

and there is no value, need or interest to pay for higher performance. These are not 

characteristics of engineering and manufacturing development (EMD) contracts for 

Major Defense Acquisition Programs (MDAP); therefore, I do not believe there are 

any situations that would warrant an LPTA source selection approach for DOD’s 

EMD contracts. 

Secretary ESPER. Current Army and DOD Source Selection procedure guidance 

specify that LPTA should only be used when there are well-defined requirements, 

the risk of unsuccessful contract performance is minimal, price is a significant factor 

in the source selection, and there is neither value nor willingness to pay more for 

higher performance. Since requirements for engineering and manufacturing developVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
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1Section 802 of the Fiscal Year 2016 NDAA, amending 10 USC 2547(a). 

ment phase contracts are typically not as well defined as requirements for subsequent program phases, use of an LPTA contract would generally be inappropriate. 

Secretary GEURTS. The Lowest Price Technically Acceptable (LPTA) method is a 

tool in the Best Value Continuum, and when used in appropriate circumstances and 

combined with effective competition and proper contract type, can provide a best 

value solution. The first prerequisite to use of LPTA is a firm understanding of what 

constitutes ‘‘technically acceptable.’’ 

Secretary WILSON. Every acquisition program is different and must be evaluated 

on the specific program details. In general, the LPTA source selection approach is 

not appropriate for Engineering and Manufacturing Development contracts for 

Major Defense Acquisition Programs. 

18. Senators MCCAIN and REED. In the past, programs have stated that they are 

not using an LPTA source selection approach but the intent of the approach was 

to select the lowest cost, technically acceptable bidder, what steps will you take ensure that the approach taken by programs follows the intent of section 832? 

Secretary LORD. The Milestone Decision Authority for each MDAP approves an 

Acquisition Strategy that describes the source selection strategy for the EMD contract. The Department also conducts multi-functional senior-level peer reviews of solicitations for contracts over $1 billion. Contracts less than $1 billion are reviewed 

by senior acquisition leaders at each component. We will continue to leverage these 

tools to ensure that MDAP source selections are consistent with section 832. 

Secretary ESPER. There are appropriate levels of review and approvals to monitor 

use of LPTA. The Army seeks best value in all procurements that ensure we secure 

the best price, the items meet technical standards and safeguard taxpayer dollars. 

Secretary GEURTS. The intent of section 832 is regularly shared in senior acquisition forums such as the Naval Contracting Council. The statutory prohibition will 

be implemented by the DOD in the Defense Federal Acquisition Regulation Supplement. 

Secretary WILSON. The Air Force will use the procedures established in the Defense Federal Acquisition Regulation Supplement as section 832 is implemented. 

19. Senators MCCAIN and REED. In your opinion, what do you see as the challenges in enforcing this provision? 

Secretary LORD. In 2010, the GAO reported challenges the Department faced 

when using best value tradeoff procedures and recommended developing training 

elements such as case studies. The Department concurred and implemented the recommendation in August 2012. The DOD Source Selection Procedures were issued 

in March 2011 and expanded in April 2016 to provide additional guidance in making 

sound award decisions. No further recommendations were made by GAO in its 2014 

follow-up study or its 2017 report; however, we will also ensure that a module addressing section 832 is included in applicable Defense Acquisition University 

courses. I am confident that the processes described above are adequate to ensure 

compliance with section 832. 

Secretary ESPER. Army and DOD guidance aligns with the provision in section 

832 of the Fiscal Year 2018 NDAA regarding the use of LPTA. We will continue 

to scrutinize all program decisions including the contracting approach to identify 

and mitigate any emerging challenges with enforcing this provision. 

Secretary GEURTS. As LPTA contracts were previously often contract ‘‘vehicles of 

choice’’ by many buying organizations, ensuring they have the proper training and 

mindset will be required. In addition, training the requiring organizations to be able 

to clearly articulate what is of value will be critical to ensuring we are selecting the 

right offeror for the requirement. 

Secretary WILSON. Once the requirements of this provision are implemented for 

the Department of Defense we do not anticipate significant challenges enforcing this 

guidance. 

OSD(AT&L) REORGANIZATION

20. Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, the 

Fiscal Year 2016 National Defense Authorization Act significantly enhanced the role 

of the service chiefs in acquisitions, giving the chiefs input into decisions regarding 

balancing resources and priorities (such as tradeoffs between the cost, schedule, and 

performance of major weapon systems), and the management of career paths in acquisition for military personnel. 1

59 

2Section 825. Under certain circumstances, the Secretary of Defense may designate an alternate milestone decision authority, including for joint programs. See 10 USC 2430. 

The Fiscal Year 2016 NDAA also requires the JROC to ‘‘seek, and strongly consider, the views of the Chiefs of Staff of the armed forces’’ and for the chiefs to advise the decision authority for Milestones A and B on cost, schedule, technical feasibility, and performance trade-offs. 

Given their other responsibilities, is this asking too much of the Service Chiefs? 

Secretary LORD. From my perspective, the goal is not to make the Service Chiefs 

and non-acquisition senior officers into experts in acquisition, but rather to ensure 

they have the opportunity to provide their warfighting perspective and recommendations before and during program execution. Their input on priorities and trade-offs 

facilitates more informed acquisition decisions and improved program outcomes. I 

value their input and perspective. 

Secretary ESPER. No, I do not believe that this is asking too much of the Service 

Chiefs. The Chief of Staff of the Army has embraced his enhanced role in acquisitions while capably discharging his important title 10 responsibilities. I’m confident 

that the Chief of Staff of the Army is fully capable of executing his authorities. 

Secretary GEURTS. The Service Chiefs provide a valuable perspective as we develop and procure systems for the warfighter. The DON has refined our gate review 

process to ensure the alignment of the new role of the Services Chiefs as part of 

the acquisition process, and have also established a new Accelerated Acquisition 

Board of Directors (AABoD), composed of the CNO, CMC and myself, to designate 

selected warfighting needs and priorities to be accelerated and increase the speed 

to capability. The involvement of the Service Chiefs is critical to this effort to 

streamline the development and approval of top level requirements designed to support a more flexible, agile and cost effective path to solution development and fielding. 

Secretary WILSON. The inclusion of the Service Chiefs is critical to ensuring we 

are integrating and balancing requirements, technical feasibility and affordability in 

acquisition. 

21. Senators MCCAIN and REED. Do you believe that three should be an increased 

focus on acquisition in senior officer training, to instill a greater understanding of 

acquisition among senior officers? 

Secretary LORD. From my perspective, the goal is not to make the Service Chiefs 

and non-acquisition senior officers into experts in acquisition, but rather to ensure 

they have the opportunity to provide their warfighting perspective and recommendations before and during program execution. Their input on priorities and trade-offs 

facilitates more informed acquisition decisions and improved program outcomes. I 

value their input and perspective. 

Secretary ESPER. Increased understanding of the acquisition process helps ensure 

better acquisition outcomes across the force. We will continue to build upon the 

progress made to date in training that encompasses the basics of the acquisition 

process but also includes a focus on writing clear, concise and executable requirements. Current senior officer training leads to a better understanding of the value 

that acquisition expertise brings to bear on the process and a greater synchronization of our total Army efforts to equip the force. 

Secretary GEURTS. In order to grow the acquisition skills in our requirements offices, we must provide general acquisition training at every level of Officer training 

to ensure we are developing well rounded Officers that are positioned to have a solid 

understanding of the acquisition process as they progress through the ranks. My 

staff has been working very closely with the Service Chiefs to ensure increased communication and training. 

Secretary WILSON. Yes, I believe that senior officers need to have a better appreciation and understanding of how the Air Force acquires systems. An understanding 

of acquisition assists in more informed decisions by those officers serving in crucial 

areas such as requirements, development, budgeting and financial management. 

22. Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, the 

Fiscal Year 2016 NDAA shifted significant acquisition authority to the services. For 

example, generally, the service acquisition executive will be the milestone decision 

authority for major defense acquisition program. 2

Do the services have the necessary expertise and personnel to execute these new 

responsibilities? 

Secretary LORD. I believe the Services, for the most part, have the necessary expertise and personnel. The Services have always acted as the Milestone Decision 

60 

Authority (MDA) for those programs where USD(AT&L) was not designated as the 

MDA. Even in cases where USD(AT&L) was the MDA, the Service Acquisition Executives reviewed the programs prior to the OSD review. The same expertise and 

personnel will be resident in the Services for delegated programs. In addition, even 

where the USD(AT&L) was the MDA, the Services still executed the programs so 

no additional preparation on their part should be required. The measure of success 

should be whether needed capabilities are delivered on time, in militarily meaningful quantities, at an affordable cost. Progress towards these goals needs to be measured on a monthly basis. I plan to significantly revamp the Defense Acquisition University, add many short courses, focusing on utilizing the authorities provided by 

Congress. Acquisition professionals will have the opportunity to review case studies 

that show how these authorities have been successfully implemented to simplify and 

speed up acquisition. 

Secretary ESPER. In the Army, we have a skilled cadre of Acquisition Workforce 

professionals who are trained, educated, experienced and certified in the acquisition 

process within one or more of the Department’s 14 specific acquisition career fields. 

Depending on the mission, I am confident that there are extremely qualified and 

experienced acquisition professionals and teams ready to execute these responsibilities. That said, I understand from recent conversations with my Army Acquisition 

Executive that he has a plan for ensuring greater technical competencies both within the general acquisition workforce but in the leadership as well. This includes the 

requirements development community. I will work closely with Dr. Jette and, as 

necessary, officials within the office of the Assistant Secretary of the Army (M&RA) 

to ensure the Army acquisition workforce has the skills and capabilities to develop 

and acquire the best equipment, services and technologies available today and in 

the future. This includes properly balancing the necessary skills and resolving the 

constraints on developing inherently governmental technical talent. 

Secretary GEURTS. Yes. The Navy’s acquisition workforce has the necessary expertise and personnel trained to execute these new responsibilities. The Navy was the 

Milestone Decision Authority (MDA) for 29 of our ACAT I programs, and now is the 

MDA for 37 of our 39 ACAT I programs. 

Secretary WILSON. Today, the Air Force has the expertise and personnel necessary 

to execute the increased responsibilities for acquisition authority. I will monitor the 

workload and skill sets needed to exercise these increased authorities. 

23. Senators MCCAIN and REED. What steps does your service need to take to be 

fully prepared to execute these duties? 

Secretary LORD. I believe the Services, for the most part, have the necessary expertise and personnel. The Services have always acted as the Milestone Decision 

Authority (MDA) for those programs where USD(AT&L) was not designated as the 

MDA. Even in cases where USD(AT&L) was the MDA, the Service Acquisition Executives reviewed the programs prior to the OSD review. The same expertise and 

personnel will be resident in the Services for delegated programs. In addition, even 

where the USD(AT&L) was the MDA, the Services still executed the programs so 

no additional preparation on their part should be required. The measure of success 

should be whether needed capabilities are delivered on time, in militarily meaningful quantities, at an affordable cost. Progress towards these goals needs to be measured on a monthly basis. I plan to significantly revamp the Defense Acquisition University, add many short courses, focusing on utilizing the authorities provided by 

Congress. Acquisition professionals will have the opportunity to review case studies 

that show how these authorities have been successfully implemented to simplify and 

speed up acquisition. 

Secretary ESPER. My understanding is that the steps are already in place. The 

Army Acquisition Workforce Human Capital Strategic Plan focuses on five major 

goals: Workforce Planning; Professional Development; Leader Development; Employee Engagement; and Communications and Collaboration. Readiness is the 

Army’s number one priority, and this plan, which is executed by the Army Director, 

Acquisition Career Management (DACM) Office, ensures our Army acquisition professionals remain ready to provide the equipment and services for our Soldiers to 

win across multiple spectrums, conditions and geographies now and in the future. 

Secretary GEURTS. To properly execute our new responsibilities, it will be necessary to maintain a robust acquisition workforce that can provide to effective oversight without undue burden on programs. The Navy will continue to utilize and leverage the Defense Acquisition University and other acquisition training and continuous learning to maintain and grow our acquisition professionals. 

Secretary WILSON. We already have the processes in place needed by the Air 

Force Service Acquisition Executive to make milestone decisions for programs at the 

Air Force level. 

61 

24. Senators MCCAIN and REED. How will your service manage these programs 

differently than OSD in order to deliver better outcomes? 

Secretary LORD. I believe the Services, for the most part, have the necessary expertise and personnel. The Services have always acted as the Milestone Decision 

Authority (MDA) for those programs where USD(AT&L) was not designated as the 

MDA. Even in cases where USD(AT&L) was the MDA, the Service Acquisition Executives reviewed the programs prior to the OSD review. The same expertise and 

personnel will be resident in the Services for delegated programs. In addition, even 

where the USD(AT&L) was the MDA, the Services still executed the programs so 

no additional preparation on their part should be required. The measure of success 

should be whether needed capabilities are delivered on time, in militarily meaningful quantities, at an affordable cost. Progress towards these goals needs to be measured on a monthly basis. I plan to significantly revamp the Defense Acquisition University, add many short courses, focusing on utilizing the authorities provided by 

Congress. Acquisition professionals will have the opportunity to review case studies 

that show how these authorities have been successfully implemented to simplify and 

speed up acquisition. 

Secretary ESPER. The delegation of milestone decision authority will help the 

Army improve both accountability and efficiency in acquisition. First, control of the 

decision making process allows the Army to be accountable for its decisions. With 

the authority and manpower, the Army can take meaningful steps to ensuring its 

program managers’ tenures are aligned with the critical milestones, and ensure that 

those program managers and the Army will be answerable for their decisions. 

We intend to expand on this concept, and drive down the decision authority to 

the program offices where able. Centralized planning and decentralized execution 

will help drive agile initiatives as the program offices will be able to operate without 

unnecessary bureaucratic interference delaying programs, changing requirements, 

or driving up cost. Through our ongoing Army Acquisition reform efforts and developing organizational concepts, we intend to reduce the requirement development 

process from nearly five years down to one. It will also insure that our warfighters 

are in involved from the earliest stages of acquisition and partnering in the decisions. 

Secretary GEURTS. The Navy takes the new responsibilities enacted in the Fiscal 

Year 2016 NDAA very seriously. We have worked with USD–ATL to delegate eight 

of our 10 ACAT 1D programs to the Navy for management, and will continue to 

work with ATL to identify additional opportunities for streamlining under the new 

authorities. The Navy already utilizes the gate review process to manage and review 

programs annually. I intend to provide a monthly snapshot of our acquisition programs to the Secretary, CNO and CMC. I also intend to conduct regular portfolio 

reviews with each of the Program Executive Offices (PEO) to ensure programs are 

on track and risks are identified with mitigation plans in place. While delegating 

milestone decision authority to the Navy means that the PEO and program offices 

most familiar with the issues are the organizations resolving them, I note that programs that have been delegated to the Services for oversight are still subject to certain program documentation being approved at the OSD level. The Navy will reach 

out to the appropriate offices within OSD for subject matter expertise as required. 

Secretary WILSON. The Air Force will not specifically manage the programs differently than OSD. With processes already in place to work towards major program 

decisions, we anticipate more timely decisions from the Service Acquisition Executive with the reduction of bureaucracy. The Air Force will continue to keep a 

streamlined decision process in place to prevent needless delay. 

25. Senators MCCAIN and REED. How should we measure the success of the services in executing acquisitions? 

Secretary LORD. I believe the Services, for the most part, have the necessary expertise and personnel. The Services have always acted as the Milestone Decision 

Authority (MDA) for those programs where USD(AT&L) was not designated as the 

MDA. Even in cases where USD(AT&L) was the MDA, the Service Acquisition Executives reviewed the programs prior to the OSD review. The same expertise and 

personnel will be resident in the Services for delegated programs. In addition, even 

where the USD(AT&L) was the MDA, the Services still executed the programs so 

no additional preparation on their part should be required. The measure of success 

should be whether needed capabilities are delivered on time, in militarily meaningful quantities, at an affordable cost. Progress towards these goals needs to be measured on a monthly basis. I plan to significantly revamp the Defense Acquisition University, add many short courses, focusing on utilizing the authorities provided by 

Congress. Acquisition professionals will have the opportunity to review case studies 

62 

that show how these authorities have been successfully implemented to simplify and 

speed up acquisition. 

Secretary ESPER. A measure of success should be whether we fielded the equipment necessary within specified resourcing allocations to achieve a sustained overmatch against our adversaries in time to meet the need. We should specifically 

measure acquisition programs against their approved Acquisition Program Baselines 

(APB) and should also use metrics to assess our success in achieving stability in 

resourcing and requirements. 

Secretary GEURTS. The success of the Services in executing acquisitions should be 

measured by their ability to affordably deliver capable capacity to the warfighter in 

a timely manner, on cost and on schedule. 

Secretary WILSON. The Air Force should measure success through the on-time, onbudget delivery of capabilities the warfighter needs. We have in place today measures that track our performance in these areas and we will continue to track our 

performance going forward. 

26. Senators MCCAIN and REED. What should be the benchmark for determining 

if this assignment of authority to the services was successful? Or for determining 

that the services have not lived up to expectations and acquisition authority should 

be assigned to OSD? 

Secretary LORD. I believe the Services, for the most part, have the necessary expertise and personnel. The Services have always acted as the Milestone Decision 

Authority (MDA) for those programs where USD(AT&L) was not designated as the 

MDA. Even in cases where USD(AT&L) was the MDA, the Service Acquisition Executives reviewed the programs prior to the OSD review. The same expertise and 

personnel will be resident in the Services for delegated programs. In addition, even 

where the USD(AT&L) was the MDA, the Services still executed the programs so 

no additional preparation on their part should be required. The measure of success 

should be whether needed capabilities are delivered on time, in militarily meaningful quantities, at an affordable cost. Progress towards these goals needs to be measured on a monthly basis. I plan to significantly revamp the Defense Acquisition University, add many short courses, focusing on utilizing the authorities provided by 

Congress. Acquisition professionals will have the opportunity to review case studies 

that show how these authorities have been successfully implemented to simplify and 

speed up acquisition. 

Secretary ESPER. The execution of acquisition programs against their approved 

APBs should be the benchmark we use to measure the success of delegation of Milestone Decision Authority to the services. 

Secretary GEURTS.The Services ability to affordably deliver the required capability 

to the Fleet in a timely manner on cost and schedule should be the benchmark. The 

Navy will still work closely with the OSD AT&L staff during program execution and 

will transparently inform the Hill on program progress for any program within the 

Navy’s portfolio. 

Secretary WILSON. The Air Force should be reaching milestone decisions more expeditiously than before. The benchmark for determining if this assignment authority 

is successful will be the delivery of warfighter capability on time and within budget. 

GENERAL ACQUISITION REFORM AND IMPROVEMENTS

27. Senators MCCAIN and REED. Senators MCCAIN and REED. Secretaries Lord, 

Esper, Geurts, and Wilson, we are hearing about numerous efforts to reform acquisition. Some of the services have publicly embarked on acquisition reform initiatives. 

OSD is working on reform efforts. The Administration has talked about such reform 

and issued an executive order that affects acquisition regulations. The 809 Panel— 

which this body established to put forward recommendations—will be issuing a report in January. Such a fragmented approach risks competing efforts and conflicting 

approaches, potentially leading to little meaningful progress. Who is coordinating, 

overseeing, and ultimately managing these disparate efforts to ensure unity of effort? 

Secretary LORD. The Department recognizes that, as the attached chart shows, 

there are multiple and in some cases overlapping efforts ongoing, all with the goal 

to improve acquisition agility and innovation; improve acquisition outcomes; and reduce regulations. I am responsible for overseeing these efforts as the USD(AT&L); 

once the reorganization is in effect the USD(A&S) and the USD(R&E) will share 

that responsibility and will coordinate with each other and the Services. With regard to ongoing efforts: 

63 

a. With regard to the section 809 panel, while that panel was established as an 

independent panel I meet with them regularly. Their final report’s Volume 1 

includes some 74 specific recommendations in the areas of Commercial Buying, 

Contract Compliance and Audit, Defense Business Systems, Earned Value 

Management, Services Contracting, Small Business, Statutory Offices and Designated Officials, and Statutory Reporting Requirements. I look forward to continued discussions with the Panel on these and the next two volumes of their 

recommendations. When they publish their final volume, I will provide my recommendations to you. 

b. DCMO is leading the Department-wide Regulatory Reform Task Force, but my 

Defense Procurement and Acquisition Policy staff leads the acquisition-specific 

DFARS subgroup. 

c. OSD and the Services are participating in the Acquisition Statute Review as 

called for in the fiscal year 2018 HASC committee report. That review is well 

underway. I will identify opportunities to modify statute that will help us 

streamline the acquisition process while still achieving the statutory intent. 

Among the 35 proposals under review include statutory revisions intended to 

delegate approval and waiver authority to a lower level than currently provided; elimination of certain written determinations and approvals; and other 

changes to streamline IT acquisition and generally allow for approval authorities closer to the level of execution. I will approve the recommendations included in the report which we will transmit to the HASC and SASC. 

d. I anticipate USD(R&E) will coordinate with me on their Review of Barriers to 

Innovation in R&E Activities. 

e. I will soon issue two key policies, the first a revision to DODI 5000.02 which 

provides overarching policy on the operation of the acquisition system and second, a separate policy document uniquely tailored for Middle Tier acquisition 

programs. 

f. The Independent Advisory Panel on Tech Data Rights was established pursuant to the Federal Advisory Commissions Act. When they publish their final report, the Department will transmit it to the Defense committees and I will include my recommendations at that time. 

Secretary ESPER. The Office of Assistant Secretary of the Army for Acquisition, 

Technology, and Logistics (OASAALT) has served as the Army’s lead for implementing the acquisition reforms Congress has enacted. The Army also is participating in the Department of Defense’s implementation efforts and has representaVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00067 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA

17-92_Lord1.eps
64 

tion in most if not all fora for those endeavors. We are also attempting to pilot key 

efforts that will provide feedback on our lessons learned to the Office of the Secretary of Defense. 

Secretary GEURTS. ASN (RD&A) oversees and manages all DON acquisition reform initiatives in close coordination with USD (AT&L) in order to ensure unity of 

effort within the DON and among the DON and other DOD components. 

Secretary WILSON. Within the Air Force acquisition enterprise, we have a Chief 

Process Officer and a team coordinating, overseeing, and managing these efforts. 

This team tracks progress against acquisition reform efforts. Additionally, we have 

created an Acquisition Process Model, which gives program managers a tool for 

mapping their processes to align with the most recent guidance and policies. 

28. Senators MCCAIN and REED. Senators MCCAIN and REED. Secretaries Lord, 

Esper, Geurts, and Wilson, a number of analysts have raised concerns that there 

is not enough coordination between requirements, budget, and acquisition execution. 

Do you believe this to be true? If so, what are your thoughts on how to address any 

lack of coordination? 

Secretary LORD. I do not believe there is a lack of coordination between the Department’s three business cycles. Rather, there is a natural tension engendered by 

competing demands for scarce resources and the need to address shifting priorities 

to meet immediate threats. The key is for open communication between the stakeholders so that the Department can optimize resources to meet short- and long-term 

needs. I believe that there is good teamwork among DOD senior leadership that enables better communication and collaboration than in the past. 

Secretary ESPER. Yes, the Army has taken several steps to improve coordination 

between its requirements, acquisition, and budget processes, and is currently implementing additional reforms to further integrate and strengthen these processes. The 

Fiscal Year 2016 NDAA (section 808) directed the Army to report on the links between requirements, acquisition, and budget processes. The then Acting Secretary 

and the Chief of Staff took some immediate actions as a result of this study to improve the Army’s ability to evaluate and reform our acquisition process. Some of the 

actions include; (1) reinvigorating the Army Requirements Oversight Council; (2) 

consolidating staff elements; (3) establishing the Army Rapid Capabilities Office; 

and (4) forming the Office of Process Innovation and Integration to provide further 

support for Army Acquisition reform. 

The Office of Process Innovation and Integration has followed these initial reforms 

with a total of nine new initiatives that will increase the Army’s ability to more 

quickly provide capabilities to Soldiers while being fiscally responsible. The most 

pertinent reform is the establishment of Army Modernization Task Force to explore 

all options to establish unity of command and unity of effort that consolidates 

Army’s modernization process under one roof. These initiatives will adhere to the 

following overarching principles to improve the Army’s processes: use of (1) early engagement and collaboration, (2) centralized planning and decentralized execution, 

(3) cost- and resourced-informed decisions, and (4) consistent metrics to evaluate 

success. This ensures that those developing the requirements have insightful realistic advice on technologies essential to operational concepts, that realistic costing 

is applied to concepts for more informed trades, and that those involved in the specific acquisition process understand their programs from the underlying operational 

concepts, technologies, costs, and trades to contracting and execution. 

Secretary GEURTS. No, I do not believe there is a lack of coordination between the 

requirements, budget and acquisition processes. The Navy ensures close coordination through the Gate Review process which enables the CNO and CMC to directly 

participate in the requirements and acquisition process and work with me to balance the necessary trades among cost, schedule and technical maturity to meet the 

Fleet needs. As the SAE, I participate with the CNO’s requirements officials on the 

Corporate Review Board which is responsible for oversight of the Navy budget. 

In addition, I am initiating monthly portfolio reviews that will bring together the 

acquisition, programming, and requirements officials to discuss coordination, support, execution and delivery of the right capability and capacity for the DON’s 

warfighting requirements. 

Secretary WILSON. The Air Force has made a concerted effort to improve the coordination between requirements, budget, and acquisition execution. We believe we 

have in place today the processes in all of these areas that bring these key players 

together to help make programs successful. There is always room for improvement 

and we need to continue to look at ways to ensure we have in place the appropriate 

checks and balances. 

65 

3 Congressional Budget Office, Long-Term Implications of the 2016 Future Years Defense Programs, January 2016, p. 3, https://www.cbo.gov/sites/default/files/114th-congress-2015–2016/reports/51050–2016—FYDP.pdf. See also U.S. Government Accountability Office, Defense Acquisitions: Assessments of Selected Weapon Programs, GA0–15–342SP, March 12, 2015 (reissued 

April 9, 2015), p. 5, http://www.gao.gov/assets/670/668986.pdf, which states ‘‘the majority of programs actually experienced a cost increase over the past year, and more than half of the 78 

programs in the portfolio reported cost increases not related to quantity changes, which we refer 

to as a loss in buying power.’’ 

29. Senators MCCAIN and REED. Senators MCCAIN and REED. Secretaries Lord, 

Esper, Geurts, and Wilson, CBO and GAO have regularly reported that DOD starts 

more acquisition programs than it can afford to complete. As a 2016 CBO report 

stated ‘‘Several areas of DOD’s budget have frequently turned out to cost more than 

originally planned or to increase more rapidly than expected. Those areas include 

the following: costs to develop and purchase weapon systems . . . [and] operation and 

maintenance costs.’’ 3 How do you guard against starting more programs than you 

can afford? How do you ensure that the cost estimates are realistic? 

Secretary LORD. Current policy requires the Milestone Decision Authority (MDA) 

to assess affordability and establish corresponding acquisition and sustainment constraints which are to be monitored throughout the program’s lifecycle. This was reinforced in the Fiscal Year 2017 NDAA which codified establishing program cost, 

fielding, and performance goals before funds are obligated for technology development, systems development, or production of an MDAP. The Department is in the 

process of establishing the mechanisms to implement specific requirements of the 

statute, starting with near term new Army and Air Force programs. 

To ensure cost estimates are realistic, I rely on the Department’s cost estimating 

community, particularly CAPE and the Service Cost Agencies to produce estimates 

based on historic data that consider prior contractor performance, historic program 

performance, and risk, plus the associated costs if those risks are realized. These 

cost estimates represent the best judgement and assumptions available at a point 

in time. Rather than being inviolable, costs estimates can and should change as we 

respond to changes in technology, threats, budget priorities, and other factors to ensure we’re being responsive to evolving needs. I meet weekly, one-on-one, with the 

Cost Assessment and Program Evaluation (CAPE) Director to ensure adequate communication. 

Secretary ESPER. The Army must fully fund programs to the cost position in the 

Future Year Defense Plan (FYDP) at Milestone (MS) A, B, and C Decision Reviews 

and Full-Rate Production (FRP) Decisions or Full Deployment Decision (FDD) reviews. The Army identifies specific offsets to address any funding shortfalls that 

may exist in the current FYDP. In order to ensure cost estimates are realistic, the 

Army has implemented formal cost estimation measures for Major Defense Acquisition Programs (MDAPs) and Special Interest programs across the HQDA level that 

convene at the Request for Proposal (RFP) Releases and each of the Milestone Decision Reviews (MS A, MS B, MS C, and FRP) to reconcile the Program Office Estimate (POE) and the Army independent estimate into a single Army estimate 

through a Cost Review Board (CRB). The reconciled position is a complete life-cycle 

cost from inception to disposal and becomes the Army Cost Position (ACP). The ACP 

is compared to program funding to determine program affordability and ensure full 

funding of the program. If the program cannot be fully funded to the ACP, it is adjusted by adding additional resources, program re-phasing, or de-scoping. ACAT II 

and III programs are delegated to the Program Executive Offices (PEOs), which are 

responsible for conducting reviews at their respective levels. In addition, Headquarters Department of the Army conducts annual reviews of ACAT II programs. 

To further improve cost estimation, the Army validates early course of actions for 

Initial Capabilities Document (ICD) estimates and develops independent cost estimates for Army Acquisition Executive (AAE) selected non-Major Defense Acquisition 

Programs (MDAP). Finally, the Army conducts Operational Sustainment Reviews 

(OSRs), which are initiated five years after the Initial Operational Capability (IOC) 

is declared and continues through the life cycle of the system. These engagements 

provide Army leaders with consistent and accurate information to make informed 

resource decisions. 

Secretary GEURTS. Our program wholeness efforts as part of our budgeting process, combined with Gate Reviews, Configuration Steering Boards, and program Sufficiency reviews are geared to provide the leadership with the information about 

programs Cost, Schedule, and Technical challenges, and to inform on program affordability. 

Stability is key to controlling costs across our acquisition programs. We accomplish this by: setting firm requirements; stabilizing designs; taking an incremental 

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approach to technology development (via prototyping and experimentation, as appropriate) to decrease technical risk prior to approving major defense acquisition programs; employing acquisition strategies that maximize multi-year procurements, 

block buy contracts, and economic order quantity and cross program common equipment buys when applicable; obtaining stable budgets; and increasing competition at 

all levels of procurements whenever possible. Competition produces both technological and cost benefits to the Navy and is a critical enabler of performance. 

Secretary WILSON. The Air Force has an established process to determine an acquisition program’s long term affordability. The process looks beyond the Future 

Years Defense Program and estimates costs to acquire as well as cost to sustain the 

programs. This process ensures the Air Force has a long term view and funding 

strategy before starting new programs. 

To ensure cost estimates are realistic, cost estimators have been incorporated into 

the early phases of the acquisition process and they constantly update their cost estimation models with the latest program execution costs to keep the affordability 

process informed. 

30. Senators MCCAIN and REED. Senators MCCAIN and REED. Secretaries Lord, 

Esper, Geurts, and Wilson, senior leaders frequently state the DOD needs to take 

more risks and be willing to fail. How will you create a culture that is accepting 

of risk and failure while ensure that such risks and failures are small, managed, 

and generate useful information? Do you have examples of good failures in your organizations? 

Secretary LORD. The stand-up of the new USD(R&E) organization will be the first 

true sign of culture change within the DOD. This organization will be designed to 

take risk and be forward leaning in providing capability to our Warfighters. Technology developers are motivated to take risk and to explore the art of the possible, 

while acquisition managers are motivated to minimize risk and to pursue stable, 

well-understood capabilities to minimize overall acquisition program risk. I believe 

that aligning incentives so as to motivate program managers to review technology 

options to improve performance and reduce cost, and to motivate technologists to 

harden, demonstrate, and de-risk emerging technologies, would significantly aid 

technology transition. 

An example of a past failure that increase our knowledge base, a few years ago, 

we invested in a prototyping effort to provide a low cost orbital launch vehicle to 

address urgent warfighter needs for imagery augmentation. As we got into the 

project, we found out we underestimated technical risk associated with software limitations, which in turn increased program schedule and resulted in hardware re-designs. We eventually terminated the program, but residual assets, including engines, test data and a preliminary technical data package were transitioned to our 

missile and space programs to ensure we captured this innovation for use in future 

programs. 

In addressing culture change, our goal is to ensure our design, development, and 

early production teams work more closely with the Intel, sustainment and test community, as well as the Warfighter, to identify and monitor risks early in the development process before transitioning technologies into Programs of Record. In parallel, we are working to increase the use of other transactional authority that employs simpler and more rapid contracting mechanisms that make it easier for nontraditional sources of innovation to work with the Department of Defense. We are 

also seeking to attract, train, and retain talented leaders uniquely skilled in the 

complex business of defense acquisition, bringing aboard innovative thinkers who 

understand the art of risk taking in both science and technology and acquisition 

programs as well as technical leaders in critical technology areas essential to our 

National Defense. 

USD(A&S) will ensure that an acquisition ecosystem is developed that enables a 

culture of innovation, critical thinking and ‘‘creative’’ compliance. This integrated, 

flexible and adaptable acquisition ecosystem will be enabled by clearly articulated 

authorities, policy improvement, data and tools. We are striving to scale innovation. 

Secretary ESPER. Creating a culture that is accepting of risk and failure can be 

accomplished by prototyping new capabilities early, soliciting Soldier input and reducing the requirements timeline. Leaders must also communicate this philosophy 

to Program Managers and Program Executives Officers. This ensures issues are 

identified before large costs and lengthy development times are incurred, allowing 

us to fail small and early. One example of ensuring risks are small, managed and 

generate useful information is the Trophy Active Protection System effort for the 

Abrams tank. Utilizing the Buy-Try-Decide model has allowed the Army to take 

prudent risk by procuring the Trophy System, validating vendor performance claims 

and addressing integration issues, based on Soldier feedback, in less than 18 

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months. In addition to providing immediate capability for Soldiers, this method will 

also inform future efforts for all ground and air Active Protection Systems going forward. 

Secretary GEURTS. Maintaining our edge is critical and more challenging due to 

current strategic environment and the availability of leading edge commercial technology. Our ability to maintain Fleet capabilities and technological advancements 

requires us to identify, understand and take appropriate, well-informed, and calculated risks. Delegation of Milestone Decision Authority to the Services will enable 

better risk management by focusing and streamlining the Department’s oversight 

of programs and encourage faster decision making in response to market forces and 

industry operational needs. Through rapid prototyping and more agile acquisition, 

we will learn and advance more quickly, allowing early failures at relatively low 

cost of time and resources. Recent examples of designated rapid prototyping include 

Expeditionary Surveillance Towed Array Sensor System, and Navy Laser Family of 

Systems. We are also expanding the use of innovative approaches such as Prize 

Challenges, which have proven to enable outside the box thinking and development 

of ambitious, novel solutions to difficult technical and operation problems. These 

price challenges attract a wide array of non-traditional and creative thinkers, and 

build an ecosystem of risk tolerant organizations. We continue to explore opportunities to adapt and leverage commercial best practices, as appropriate. 

Secretary WILSON. In order to create a culture that accepts risk and failure, we 

need to experiment, try something, learn from it, and call it a ‘‘productive failure’’. 

We need to celebrate ‘‘productive failure’’ and the individuals responsible. To date, 

we do not have an example of what I would categorize as a productive failure. We 

anticipate as we continue to delegate authorities and stress this culture shift with 

our people that examples will become readily available. 

31. Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, 

please provide a few specific items that you are willing to be held accountable for 

over the course of the next calendar year. For each item, please establish a specific 

goal for success that you wish to be measured against and when would be an appropriate time during the calendar year to evaluate performance against that metric. 

Secretary LORD. I am committed to organizing and staffing A&S to make it easy 

to do business with the government while being great stewards of taxpayers’ dollars. 

I am also committed to drive excellence with respect to program sustainment by increasing availability and responsiveness while lowering cost. I will lead efforts to 

increase the National Security Innovation base. I believe that an interim report on 

progress is appropriate in the mid-June timeframe with a final report no later than 

January 15, 2019. 

Secretary ESPER. While I am responsible for the execution of all Army programs, 

I will be focusing my efforts on standing up and fine tuning the Army Futures Command. Given that this command promises to fundamentally transform the Army 

modernization process, this is the most significant action that my performance 

should be evaluated against. Our intent is to achieve Initial Operating Capability 

by July 2018. An evaluation of our progress in the early autumn of this calendar 

year would be appropriate. 

Secretary GEURTS. In the first few months on the job, I’ve met with the Navy and 

Marine Corps Systems Commands and the Program Executive Offices to reinforce 

the lines of accountability and to establish my four specific focus areas of: lethal capacity for the Naval forces; increasing agility; driving affordability; and building the 

workforce for the future. I am developing a strategic plan to lay out my vision and 

focus areas throughout the organization which will include specific goals, objectives, 

and measures of performance. 

In January we completed a DON Acquisition Workforce Summit to identify key 

activities, actions, and measures of performance for the next year to ensure we are 

recruiting, selecting, developing, and retaining the talent needed for the future. In 

February I will complete a comprehensive review of MDA levels for all DON programs. The results of this review will be used to adjust MDA authority to the appropriate level to provide effective oversight of Navy programs. Beginning in April I 

intend to institute monthly comprehensive portfolio reviews of all DON programs 

and provide monthly updates to the Secretary, CNO and CMC. These are but a few 

of the numerous actions underway to accelerate the DON Acquisition Enterprise. 

While I welcome a review of these activities and the resultant impact on the DON 

Acquisition Enterprise at any time, a review this summer would be a reasonable 

time to assess the initial impacts of these initiatives and our recommendations 

where Congress could provide additional help to reduce bureaucratic burden and increase efficiency and effectiveness. 

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Secretary WILSON. I am working with the Assistant Secretary of the Air Force 

(Acquisition, Technology & Logistics) to establish a set of initiatives to measure the 

successes and challenges within the acquisition enterprise. We have implemented 

the Rapid Procurement of Air Force Capabilities Charter, with a goal of using it for 

at least one program in fiscal year 2018. In an effort to reduce the number of steps 

in the acquisition process, we are planning to transition to the Joint Business Clearance Pilot Program. This pilot program is for small acquisitions to implement across 

applicable Program Executive Offices to streamline business clearance by combining 

Milestone Decision Authority and Clearance Approval Authority review and approval into a single step. 

OTHER TRANSACTION AUTHORITIES (OTAS)

32. Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, this 

committee believes that Other Transaction Authorities are an important tool to 

speed experimentation, prototyping, and acquisition. The DOD and services still underutilize this authority despite additional flexibilities being provided in recent 

years. 

How will you ensure that OTAs are used as a matter of standard practice while 

guarding against their misuse? 

Secretary LORD. There are opportunities to employ OTAs more broadly across the 

Department to spur innovation and attract companies with leading-edge technologies and business practices that enable us to explore innovative technology rapidly. Because OTAs are formed under the authorities that do not require standard 

terms found in Federal Acquisition Regulation (FAR)-based procurement contracts, 

DOD practitioners must have the requisite training and experience to guard against 

their misuse. Obtaining senior leadership support and establishing robust training 

programs to promote judicious use of OTAs with senior level acquisition personnel 

negotiating the terms and conditions of the agreements is the next step. Centers of 

Excellence in the use of OTAs are emerging in the Department to include the Defense Innovation Unit Experimental (DIUx) as supported by Army Contracting Command—New Jersey and the Defense Advance Research Projects Agency (DARPA). 

Leveraging this expertise and sharing their best practices are an important first 

step toward adopting the innovative contracting and agreement changes to promote 

increased flexibility and speed in the acquisition process. We will establish training 

modules at the Defense Acquisition University (DAU) to ensure that we memorialize 

our OTA learnings and train acquisition professionals using actual examples. 

Secretary ESPER. The Army utilizes the standard practices outlined in the 17 January 2017 OSDOTA Guide which outlines the processes and procedures for executing OTAs. Use of OTAs is now widely considered in developing the contracting 

approach for Army weapon systems programs. 

Secretary GEURTS. The DON has delegated authority to utilize OTA to our major 

acquisition commands (i.e. NAVSEA, NAVAIR, SPAWAR, MARCORSYSCOM, and 

ONR) for projects under $50 million. We look forward to implementing the even 

greater flexibilities included in the Fiscal Year 2018 NDAA. I will ensure that DON 

acquisition personnel are familiar with the appropriate potential uses for OTA 

under 10 U.S.C. §§ 2371 and 2371b and that highly trained contracting and acquisition personnel are assigned to DON OTA projects. The DON will leverage DOD’s 

OTA Centers of Excellence to enhance OTA competency throughout the Department. 

As we expand the use of OTA, we must assign our best people the task of learning 

from those with OTA experience in order to make the most of this exceptional authority while simultaneously protecting the Government’s legitimate interests. 

Secretary WILSON. The Air Force has used and continues to use OTAs for research 

and prototyping as appropriate. We employ OTAs within established DOD processes 

to ensure they are used properly. As new efforts come forward, we are challenging 

our acquisition professionals to ensure they are considering OTA use. 

33. Senators MCCAIN and REED. Do you have examples where OTAs have been 

used in a way you would like to see replicated? 

Secretary LORD. A recent example of a streamlined program solicitation that resulted in the award of an OTA for prototype was DARPA’s Robotic Servicing of Geosynchronous Satellites (RSGS) public-private partnership program. 

Secretary ESPER. Other OTAs that are either in process or we envision executing 

support the Lower Tier Air and Missile Defense System (e.g., accelerated the program’s Milestone A from 1QFY19 to 2QFY18, the Expedited Active Protection System effort for Bradley and Stryker, the Next Generation Weapon Systems (will 

allow for weapon fielding acceleration by five years), Long Range Precision Fires, 

and the planned Maneuver Short-Range Air Defense program (ASD(A)). 

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Secretary GEURTS. The DON’s recent and current OTA efforts leverage the U.S. 

Army’s OTA experts in Picatinny working through DIUx and a number of industry 

consortia for command and control, cyber, vertical lift and ordnance. Some examples 

include use of the Army’s DOD Ordnance Technology Consortium for prototypes and 

demonstrations for the Electromagnetic Rail Gun, the Hypervelocity Projectile, high 

energy lasers, and radio frequency weapons technology. Our special operations 

forces, explosive ordnance disposal community, C4I professionals, and unmanned 

underwater vehicle designers are all currently using OTA for advances in unmanned 

and counter unmanned systems, human systems and talent management, and leading edge software development techniques from Silicon Valley. We have and we will 

continue to collect the lessons learned from these initial experiences, in order to expand the use of OTAs as we integrate them into our routine way of doing business 

and as the workforce becomes more comfortable with the tool. 

Secretary WILSON. We have multiple examples where OTAs have been used and 

that we would like to see replicated. One of these highly successful examples is the 

Light Attack Experiment, a live-fly event held in August 2017. Use of the OTA allowed the Air Force to move quickly, with the Light Attack Experiment taking place 

within 5 months of the Invitation to Participate being released to industry. Being 

able to move rapidly is critical to ensuring the Air Force can efficiently and effectively execute our experimentation campaigns. These campaigns are not acquisition 

programs, and they allow the Air Force to explore the art of the possible and quickly 

assess utility for the warfighter. 

A second example is the Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) OTA consortium managed by the 

Air Force Research Laboratory (AFRL). AFRL’s Information Directorate in Rome, 

New York has an OTA with the System of Systems Security Consortium (SOSSEC) 

to develop C4ISR Information System prototypes, which will provide ‘‘plug-n-play’’ 

technologies via modern open systems architectures to provide rapid adaptation and 

integration of new capabilities. The agreement allows AFRL to quickly and efficiently reach the 70+ member companies of SOSSEC while leveraging SOSSEC as 

a single point intermediary, reducing overhead and facilitating project execution. 

The Air Force currently has four OTAs with industry for rocket propulsion systems, all of which require shared cost investment between the government and industry. These investments initiate the transition away from the RD–180 by investing in critical Rocket Propulsion System technologies. These Rocket Propulsion Systems were proposed by industry for commercial launch systems that can be enhanced to meet more stressing National Security Space requirements. The Air Force 

intends to release an RFP later this summer for Launch Service Agreements to complete the development of the replacement launch systems continuing the shared industry/government investment approach. 

Finally, the Air Force has established a Space Enterprise Consortium using an 

OTA for prototyping activities to attract new space and non-traditional mission partners. 

SOFTWARE ACQUISITION REFORM

34. Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, the 

committee continues to be concerned about the way the DOD and services acquire 

software and software intensive systems. What specific changes are you making to 

the way you manage software? Which programs do you intend to make changes to? 

How will you ensure that new software intensive programs do not fall victim to the 

same problems that plague current programs? 

Secretary LORD. I recognize that large-scale software development and 

sustainment are key acquisition challenges that the Department must confront 

across all of our programs—including information and weapon systems in all warfare domains. DOD is already challenged to deliver software on time and within 

budget. The demand for software-reliant capability will only continue to rise and the 

inherent challenge of large-scale development is further compounded as the DOD 

must maintain operational advantage in an environment of constant change (e.g., 

evolving threats; disruptive technological change). 

To address the challenge, the Department is modernizing our practices, workforce, 

competencies and training to enable more rapid delivery of reliable and secure software across the enterprise—in all Warfare domains and application types. DOD 

needs to consider how modern, commercial best practices and robust software development and test environments can help avoid big bang integration and late, expensive defect discovery at the end of a prolonged development cycles—and help validate requirements and deliver value sooner. 

70 

However; we are in the early phases of adopting agile software development practices to deliver software capabilities more rapidly and in smaller increments in order 

to address the rapidity of change affecting our software intensive systems. We need 

to scale our efforts and are developing a plan to do so. I hiring a Special Assistant 

for Software Development and Acquisition onboard, reporting directly to me, to organize and implement this process. Several programs are already utilizing a variety 

of agile development tools and quality metrics (such as velocity, sprint burn down 

charts, and release burn up charts) such as, Integrated Personnel & Pay System— 

Army (IPPS–A), Distributed Common Ground System—Navy Increment 2 (DCGS– 

N Inc 2), Global Command & Control System—Joint Enterprise (GCCS–JE) (DISA), 

Air & Space Operations Center—Weapon System (AOC–WS) (USAF), Next Generation Operational Control System (OCX) (USAF), Key Management Infrastructure 

(KMI) (NSA). These programs are also instituting governance forums to emphasize 

user involvement in early experimentation/observation efforts and allow user feedback to shape capability development, with less emphasis on perfecting requirements or upfront planning ahead of the actual development activity. 

Our efforts are not yet mature enough to have settled on final best practices, but 

we have already revised formal policy guidelines. 

The newly enacted sections 873 and 874 of the NDAA require that DOD select 

a number of programs to pilot agile development methods. These programs will be 

monitored to inform further development of best practices guidebooks, Defense Acquisition University training materials, and policy guidelines. It is important that 

we consider and assess the best approach for bringing essential reliability and cybersecurity skills into the engineering and design process early enough to avoid 

costly redesign and late defect discovery—and enable rapid delivery of secure, reliable software. Updating current policy will be an iterative effort as we continue to 

gain experience in agile development. A major change is forthcoming to the Department’s formal acquisition policy that will institutionalize several improvements suggested via legislation over the past two years and implement transition of milestone 

decision authority to the lowest appropriate level. This will reduce decision delays 

and streamline alignment of resources with schedules to reflect end-user capability 

needs and timelines. 

People are the biggest enabler of program success, whether software or hardware 

or system of systems integration. To modernize Software Engineering (SWE) competency and practice, we need to attract, train and retain a capable workforce. We 

must incorporate modern software engineering skills, technology and development 

practices such as scaled Agile, build/test/release automation environments, continuous integration and tool chains, and DevOps. To increase use of these solutions, 

the Department must realign its processes for identifying, training and managing 

software competencies to keep pace with these advances. The Defense Acquisition 

University has begun to deliver continuous learning resources in the area of Agile 

software development for our acquisition workforce to enroll as part of their professional development. In the Fiscal Year 2018 NDAA, section 891 will provide a deeper Defense Acquisition University in residence training program to prepare the 

staffs of the Agile or Iterative Development Method pilots. As DAU constructs this 

workforce development program, they are expected to involve instructors and content from non-government entities to highlight the commercial best practices and 

well as lessons learned from DOD programs.’’ 

Secretary ESPER. Virtually every warfighter and enterprise system in the Army 

today requires complex software that must be developed or acquired, updated, integrated, and maintained, in quick succession, to support the end user. Recognizing 

the criticality of software to maintain overmatch, the Army is establishing greater 

unity of effort in the governance, development, and sustainment of software. We are 

working to enable a more defensible network by improving the integration of software assurance and acquisition life cycle activities. Our software assurance activities will allow us to identify and fix cyber and software quality holes before software 

is put in the hands of our Soldiers. We are also driving Army-wide efficiencies in 

the software life cycle to improve readiness, while reducing cost, risk, and complexity. A key component of these efforts is optimizing Army software development 

and sustainment oversight and policy for both the operational and administrative 

elements of the Army. Our sustainment considerations will include Commercial-OffThe-Shelf product selection criteria, including license maintenance costs, and the appropriateness of acquiring rights for selected software code. On the tactical side, we 

are implementing a plan to update Mission Command software to a single standard 

baseline across 400 Army, Army Reserve, and Army National Guard units. This initiative will reduce system complexity; improve interoperability; simplify network 

initialization, software patching, and sustainment; and facilitate a smoother transition to the next baseline as part of the Army’s Common Operating Environment. 

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Secretary GEURTS. Information technology is changing faster than our processes 

and policies can keep pace. The DON is not an IT company so we do not want to 

duplicate IT sector efforts, but rather we want to be a faster follower of industry 

and leverage their investment in the IT sector. Our efforts are focused on buying 

IT as a service, essentially ‘‘leasing’’ commercially available products and infrastructure, and maximizing the use of enterprise license agreements. When we buy IT the 

same way it is sold and used in the commercial sector, the DON is able to take advantage of industry best practices, maximize efficiencies and receive all the patches 

and updates the vendors provide. 

The acquisition of Defense Business Systems (DBSs) will pave the way for this 

new business model. OSD has recently issued the DODI 5000.75 to provide guidance 

for software dependent DBSs, and the DON is developing our own policy and implementation guidance for these systems. We will buy commercial-off-the-shelf (COTS) 

products that satisfy the majority of our requirements, modify our business processes to adopt the commercial product to the maximum extent possible, and only 

configure the products where needed to meet our unique Naval requirements. This 

process minimizes or eliminates costly custom development and shifts our resources 

from capital investment to operations and maintenance. We are also increasingly 

looking to acquire necessary hardware and/or infrastructure as a service, to include 

cloud services. 

The Fleet’s portfolio of software intensive weapons systems such as the AEGIS 

Weapon System, AN/SQQ–89(V) Surface Ship ASW Combat System, and the Submarine Warfare Federated Tactical Systems have been modernized using open architecture code bases; leveraging, to the maximum extent practical, the investment 

of the commercial IT sector in delivering effective warfighter capability. We are 

shifting to more Agile development so capability can be deployed more rapidly to 

pace the threat, technology can be inserted more frequently, and the overall system 

can be kept more current and secure. This shift to an Agile software development 

approach is occurring in weapon system development programs for the Aegis Weapons System and the Air and Missile Defense Radar Program (SPY–6). Within the 

Aegis Weapon System program, Agile software principles and the use of a common 

source library of have enabled engineering for maximum proliferation across baselines through In-Stride deliveries. 

Secretary WILSON. To manage software differently, the Air Force has developed 

implementation across the acquisition enterprise and must continue oversight of 

software across our weapon systems. To manage software differently, the Air Force 

is embracing modern software development practices such as Agile DevOps for 

many programs across the acquisition enterprise. We have initiated pathfinder efforts and are working to improve the speed of software development. Likewise, we 

are continuing efforts with Open Mission Systems architecture, and initiatives with 

Defense Digital Services, Air Force Digital Services, and Defense Innovation Unit 

Experimental, in addition to improving our organic software development capabilities. 

For example, the Air Force initiated AOC Pathfinder to test a new software development methodology to meet warfighter needs. AOC Pathfinder more closely aligns 

software development to commercial practices. To date, the AOC Pathfinder has delivered 3 applications to Air Force Central Command. These 3 apps iterate daily and 

push 10–20 new features to end users each week. We are delivering apps faster 

than originally planned, and significantly faster than AOC Increment 10.2 Program 

of Record. 

Reforming software acquisition is a top priority for the Air Force. We must train 

our workforce appropriately and have dedicated subject matter expertise, just as we 

do for other science-related fields. 

35. Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, as 

the Department and Services seek to change their acquisition systems, particularly 

in the context of software intensive systems, in what ways do you need to change 

your approach to testing? What changes do you intend to make to developmental 

test processes and organizations? How can you better collaborate with the Director 

of Operational Test and Evaluation to speed time to deployment while making sure 

that deployed capabilities are safe and fit for purpose? 

Secretary LORD. Software is an integral part of all Department capabilities, to include weapon systems, information enablers and business systems. The Department 

needs to modernize our practices, workforce competencies and training to enable 

more rapid delivery of reliable and secure software across the enterprise. DOD 

needs to consider how modern, commercial best practices and robust software development can help avoid late big bang integration and defect discovery. The Department also needs to move towards earlier, more frequent test engagements, which 

72 

are focused on working capabilities, using short cycle, incremental, testable software 

builds. This allows developers to conduct multiple test and integration events and 

field intermediate products to gain user acceptance and feedback to improve future 

builds or increments. Cybersecurity T&E must be integrated with these efforts, and 

the Department is working to provide acquisition programs with approaches to integrate earlier cybersecurity testing and industry software testing best practices. 

Testing is a critical component of software development and can be a time-consuming aspect of software delivery. The Department’s testing communities need to 

evolve their testing policies, procedures and approaches to accelerate software fielding cycles. Automation and artificial intelligence are areas the Department needs to 

invest in and leverage highly efficient industry best practice, improved adoption of 

automation, artificial intelligence, and higher fidelity integration labs. The Department’s testing community needs to collaborate with industry to identify new ways 

of addressing software testing requirements and adopt best practices for agile development and DevOps development which leverage performance and cybersecurity 

test data from early in development through sustainment. For example, in fiscal 

year 2017, the current OSD level DT&E organization supported 22 Cyber Table Top 

Exercises with programs that averaged identified 15 High or Very High system vulnerability risks per event. Cybersecurity risk will continue to challenge the Department as it moves to more COTS based software and cloud-based environments. Mission-Based Cybersecurity Risk Assessments must become the norm across the system development life cycle for the Department. 

I will work with the Undersecretary of Defense for Research and Engineering and 

the Director of Operational Test and Evaluation community to include the operational test community’s equities of suitability, effectiveness, and cybersecurity are 

considered early in both the design and the developmental test process to ensure 

efficient testing is done. My ultimate goal is to acquire safe, combat-capable systems 

for the Warfighter at the speed of relevance. 

Secretary ESPER. Although the current Army approach is effective, we are considering new ways to better execute our test and evaluation mission. As part of the 

Army’s Reform, the Test and Evaluation Enterprise is examining and proposing legislative changes, as well as making changes to regulations, policies, and infrastructure to put them in line with a culture shift towards rapid and agile acquisition. 

A few improvements being considered are: (1) contract language that includes the 

requirement to show evidence of software analysis, safe design, implementation, 

coding, and low-level testing to ensure software safety; (2) shifting senior management assessments to the left by conducting program assessments at each software 

drop along the acquisition cycle to ensure program performance is demonstrated and 

validated prior to operational events; and (3) the Army Test and Evaluation Command (ATEC) will be directly engaged in the reform process, placing emphasis on 

tailoring test strategies to consider critical program requirements. 

At the conclusion of the Army Acquisition Reform effort, I put several directives 

in place to improve the acquisition process as a whole and for testing specifically. 

The establishment of Cross Functional Teams (CFT) will streamline the development and approval of capability requirements thus streamlining the test and evaluation planning and execution processes. We are further streamlining and minimizing test and evaluation processes through standardizing test language, metrics, 

data dictionaries, and data methods. We are also bringing cybersecurity to the forefront of our test operations by requiring the test community to provide results of 

cyber and cyber electromagnetic tests at various milestones in the acquisition process to ensure program security prior to progressing into an operational test. 

Successfully coordinating with DOT&E early to reach an agreement on the appropriate levels of testing and acceptable levels of risk for specific programs, will expedite the Test and Evaluation input to acquisition program decisions and the resulting fielding decisions. 

Secretary GEURTS. The traditional snapshot-in-time testing of DOD systems is not 

applicable for IT systems and software given cyber vulnerabilities and threats can 

change daily. Our testing should focus more on process and less on the status of 

the system at a specific point of time. Testing should evaluate and validate risk 

management framework (RMF) processes and disciplined cyber hygiene processes. 

A product which passes a cyber ‘test’ today provides no assurance that it will defend 

against a threat tomorrow; however, a program with a solid RMF process should 

have adequate discipline to identify risk and defend against threats throughout the 

lifecycle. Certification, compliance and authority to operate a system on the network 

are of equal concern to testing. We need faster processes to get our systems approved to operate, and the RMF process should also facilitate this. The CIO is critical in this area as well on working reciprocity agreements. Within the DON, we 

73 

are reorganizing our CIO organization to streamline processes and reduce bureaucracy. 

Testing of commercial IT products (hardware, software and services) which have 

already received commercial certification should not require the same level of testing as something developed from scratch or significantly customized. Doing so is redundant and costly. Acquiring hardware, software, and the cloud as they are developed, sold and certified, often as a service, allows us to be a fast follower of industry 

and pace technology. Additionally, products that have been previously certified and 

are considered cyber safe should not require lengthy retesting and recertifying when 

they migrate from a data center to the cloud. We need to leverage more reciprocity 

with industry and other government agencies and trust the vetting which has already been done. I intend to require the Navy team to ensure redundant testing is 

not performed. 

This can differ for shore-based business systems and tactical afloat systems. Tactical IT systems often need a product developed or software customized, so an agile 

software development process should be used. Agile development requires continuous planning, continuous testing, continuous integration, and continuous fielding. 

Agile developmental efforts should develop a little, test a little and field a little. If 

the testing construct is not equally agile, the benefits of the agile process are negated. I will work with our Navy test organizations and DOT&E to streamline 

where applicable. 

Secretary WILSON. Software intensive systems, especially those using agile development approaches, present unique challenges to test and evaluation. The Air Force 

is currently evaluating, with a few pilot programs, the impacts of agile development 

to traditional test and evaluation methodologies. We have initially identified the 

need for more automated test tools and processes to provide more rapid feedback. 

Additionally, we’ve identified a need to address test and evaluation throughout a 

system’s lifecycle to continue to support agile development in the fielding of updates, 

patches, and fixes. We will also assess the workforce for skills and training required 

for agile software development. Finally, the Air Force works closely with the Director of Operational Test and Evaluation and will continue to collaborate on the approval of Test and Evaluation Master Plans, data sharing, and other areas as needed to speed fielding of capability to the warfighter. 

DEVELOPMENTAL TEST AND EVALUATION (DT&E)

36. Senators MCCAIN and REED. Secretaries Lord, Esper, Geurts, and Wilson, the 

Congress has demonstrated through legislation such as the Weapons Systems Acquisition Reform Act of 2009 and other Public Laws in recent years that the Congress places high value on the need for conducting thorough Developmental T&E 

to assist program managers and the Department leadership by providing essential 

information on the progress of a program during the acquisition progress. The Congress has included legislation requiring high level reviews of the developmental test 

and evaluation for the Departments major acquisition programs. Do you agree that 

thorough DT&E is essential to program progress and the ability of the leadership 

and Congress to have independent information derived from the DT&E to measure 

the progress of programs and assist the program manager to find the best design 

solution during development of acquisition programs? How do you use that information at the Military Service leadership levels and Office of Secretary of Defense level 

and where within your organizations does the oversight for DT&E reside? 

Secretary LORD. Yes, I agree that thorough DT&E is essential and an effective 

way to minimize risk by avoiding discovery of deficiencies late in program development and providing valuable information to support sound decision making. The 

goal of DT&E is, put simply, to devise, resource and execute plans to discover as 

many issues as possible associated with the most significant risks on programs, and 

to do it as early as possible in these programs when the impacts are far less severe/ 

costly and when appropriate corrective actions are feasible without major disruption 

in the programs. Methodical, build-up prototype testing and risk management approaches are necessary in support of design/technology maturation in order to minimize risks as programs progress, and hence increase confidence in successful engineering and manufacturing development efforts leading to production and fielding 

of critical capabilities. 

Having said the above, I also believe that combined developmental and operational testing, under an integrated test and evaluation (IT&E) construct utilizing 

both developmental and operational test personnel, is absolutely key to success. 

Under this IT&E construct, effective communication and collaboration is achieved 

spanning the developmental and operational test agencies, utilizing a framework 

under which test data are collected and shared and deficiencies are jointly 

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dispositioned and assessed for potential corrective actions. The result is a more efficient means of achieving the goal of fielding effective and suitable systems/capabilities to the operational communities as rapidly as possible. 

The information provided by DT&E, and IT&E, informs the acquisition community at several levels, from the program manager who must make informed decisions about when to proceed through critical phases between milestones, to acquisition executive who must decide program readiness to enter a major milestone and 

proceed to the next phase. As Milestone Decision Authority shifts to the Services, 

I am returning DT&E oversight responsibilities and program progress tracking to 

the Service developmental test organizations. Senior leadership will be informed of 

critical test results via monthly updates on MDAPs reviewed by OUSD(A&S) and 

subsequently submitted to DEPSECDEF and SECDEF. 

Currently, the senior leader responsible for DT&E resides within the office of the 

Assistant Secretary of Defense for Research and Engineering in the Under Secretary 

of Defense for Acquisition, Technology, and Logistics. We are in the detailed planning phase of the restructuring the offices and functions of AT&L into the two new 

Undersecretaries of Defense for Research and Engineering and Acquisition and 

Sustainment. Subsequent to the statutorily mandated reorganization effective February 1, 2018, I will work with the new USD(R&E) to implement an organizational 

structure that ensures a developmental test and evaluation office is properly staffed 

and resourced and given sufficient authorities within the Department. 

Secretary ESPER. Developmental testing is important to the Army and we understand Congressional desire for appropriate Service Department oversight. In the office of the Secretary, the Deputy Undersecretary, has responsibility to ensure that 

proper test plans, policy oversight and funding will enable a robust and independent 

testing program for Department of the Army. The independent US Army Test and 

Evaluation Command conducts Developmental testing as one of the three formal 

types of T&E, by statute. DT&E verifies that the system’s design is satisfactory and 

that all technical specifications and contract requirements have been met, and most 

importantly certifies readiness for operational testing. 

Secretary GEURTS. Yes. Thorough DT&E, as part of the systems engineering process, conducted for acquisition programs, is essential to inform program managers, 

Department leadership and Congress. T&E is conducted to gain knowledge to advance systems development, understand technical and operating characteristics and 

performance to support acquisition decisions. DT&E provides early learning and 

identification of technical, operational and system deficiencies to ensure that appropriate and timely corrective actions can be developed prior to system fielding. Test 

results inform decision makers at critical points in a program’s development. Within 

the Navy, each program has a Chief Development Tester and a Lead DT&E Activity 

are assigned to oversee developmental test planning, execution, analysis and reporting activities. The DON T&E Executive is the senior executive for T&E policy, capability and T&E workforce. 

Secretary WILSON. Yes, the Air Force agrees developmental test and evaluation 

is essential in developing combat capabilities and informing the warfighter and decision makers, including Congress. The Air Force uses developmental test and evaluation results to measure program progress, determine overall system maturity, aid 

in system development, identify program risks, and prepare for operational test and 

evaluation. The Air Force includes these results in regular program reporting to 

senior leaders as well as the Office of the Secretary of Defense. The Air Force’s Director, Test and Evaluation (AF/TE) performs developmental test and evaluation 

oversight. AF/TE works with the Air Force Test Center and Air Force program offices to ensure developmental test and evaluation is properly resourced and that Air 

Force test ranges are capable of supporting Air Force programs. Individual program 

offices and lead developmental test and evaluation organizations provide day-to-day 

oversight of developmental test and evaluation activitiess. 

37. Senators MCCAIN and REED. Secretary Lord, the Congress in recent years has 

passed legislation that included specific duties for a strong, well-resourced DT&E 

oversight organization within your broader organization at the OSD level. Do you 

agree that you need such an organization and, if so, where do you believe it should 

reside in your new reorganization plans and how do you intend to address the requirements for such an organization that we have included in prior legislation such 

as having direct access to your leadership, having authority to review and approve 

Test and Evaluation Master Plans and providing direct input to milestone decisions 

for major acquisition programs? 

Secretary LORD. Yes, I believe in a strong, well-sourced Developmental Test and 

Evaluation (DT&E) because it is important to the success of acquisition programs 

in the Department. A strong DT&E organization, via ‘‘hands-on’’ engagement, can 

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assist programs in devising developmental test plans that enable discovery of as 

many deficiencies as possible associated with the most significant risks on programs, and as early as possible when the impacts are far less severe/costly, thus 

enabling programs to take appropriate corrective actions without major disruption. 

Ultimately, insight and active participation in programs, vice oversight, is what enables the DT&E organization to be most effective with respect to minimizing risks 

as programs progress, and hence increasing confidence in successful engineering and 

manufacturing development efforts leading to production and fielding of critical capabilities. Further, a well-resourced DT&E organization maintains insight and active assistance efforts on programs, establishes policy and direction, and ensures the 

up to date education and continuous learning of the 8,700 plus T&E workforce in 

the Department. 

The final decision of where the senior leader responsible for DT&E will reside 

within the restructured Under Sectary for Research and Engineer is in the planning 

phase. The future roles and functions of the DT&E organization will be shaped by 

prior congressional legislation concerning access to leadership, Test and Evaluation 

Master Plans approval authorities, and inputs to milestone decisions for major acquisition programs. I, along with the new Under Secretary of Defense for Research 

and Engineering, will review and implement an appropriate organizational structure to ensure that developmental test and evaluation is properly staffed and 

resourced and given the right authorities in the Department. 

Secretary WILSON. Yes, I agree that we need a strong, well-resourced organization 

providing DT&E oversight at the OSD level. In the Air Force, we oversee the execution of developmental and operational testing with a single Director of Test and 

Evaluation who is independent of acquisition. OSD and Congress should likewise 

consider a test and evaluation oversight construct that combines developmental and 

operation test oversight into a single office independent of the acquisition chain. 

This combination would promote both test and acquisition efficiencies and better 

align with the vision for rapid acquisition outlined in the National Defense Strategy. 

These efficiencies would include streamlined review and approval of Test and Evaluation Master Plans; encourage the sharing of data, analyses, and reporting; allow 

quicker identification of duplicative test needs or common test gaps; and provide a 

single, independent test voice to Milestone Decision Authorities. 

QUESTIONS SUBMITTED BY SENATOR JAMES INHOFE

SUSTAINMENT COSTS OF NEW PROGRAMS

38. Senator INHOFE. Secretary Lord, Secretary Esper, Secretary Wilson and Secretary Geurts, do you think that weapons system sustainment is being adequately 

incorporated into initial acquisition planning for new weapons systems to ensure 

these programs can be efficiently and effectively maintained over their life cycles? 

Secretary LORD. While there are many factors contributing the current troubling 

state of materiel readiness, not the least of which are budget uncertainty and high 

optempo, the high cost to sustain our weapons systems is a factor that is particularly difficult to address once a system is fielded. For example as Naval aviation 

depot level reparable items costs have risen by 2.5 percent above inflation annually 

over the past 20 years, mission capable rates for Naval tactical aircraft have declined by 2.5 percent per year on average. The Department’s greatest leverage over 

weapons systems Operating and Support costs is in the earliest acquisition decisions, including initial design and those that precede the decision to down-select to 

a single vendor and commit resources to a particular design. During these early decisions typically 80 percent of program controllable O&S costs are determined 

through design decision. Leverage over O&S costs declines to under 10 percent by 

the time a systems enters production. Some of these early impactful decisions occur 

even before we’ve formally established a program of record. While the Department 

has made progress over the past few years emphasizing sustainment planning in 

weapons programs, there is still more that we can do to drive cost out of 

sustainment and improve our prospects to improve readiness in future systems. 

It is vitally important to acknowledge, engage, and equip those functions upon 

which Program Managers are critically dependent for sustainment direction and 

support, specifically the requirements and resourcing functions. These functions fall 

under the purview of the Service Chiefs, but I see a real opportunity for the 

OUSD(A&S) to advise the Services on practical analyses that can inform development of sustainment requirements that will yield improved readiness outcomes and 

lower cost, while not over constraining the design space such that capability is suboptimized. An essential component of maintaining sufficient operational availability 

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at affordable costs is leveraging data analytics and machine learning. I believe that 

we have an opportunity to leverage industry practices to set up sustainment systems that are far more predictive in nature and better rationalize the number and 

physical location of spares. 

Resourcing for appropriate sustainment analysis early in weapons system development is also critical to ensuring that systems are best postured for effective and 

efficient sustainment. Incorporating sustainment strategy options into an analysis 

of alternatives may add modestly to the cost of the analysis, but such cost is 

dwarfed by the returns in sustainment productivity over a weapon system’s life 

cycle. Similarly, investment in supportability analyses in concert with technology 

maturation can yield technologies that are more reliable and maintainable when incorporated into system designs, yielding more supportable end items. History has 

shown us that 70 percent of product cost is in sustainment. We therefore have a 

significant opportunity to impact lifecycle cost if we improve our sustainment capability. 

Secretary ESPER. We currently plan and document weapon system sustainment in 

a Lifecycle Sustainment Plan (LCSP) for each weapon system. This is a detailed and 

collaborative effort between our acquisition program offices and the Army Materiel 

Command with great focus on key elements to include reliability, availability, maintainability and operations and support costs. In 2016, the Army introduced the 

Operational Sustainment Review (OSR) to examine how well each major defense acquisition program’s sustainment strategy is performing once fielded to Army units. 

The OSR is a detailed metrics-based assessment that looks at all aspects of a weapon systems sustainment strategy two years after initial operational capability has 

been declared. Since 2016, we have conducted fourteen reviews and have six more 

scheduled for the rest of 2018. In addition, the Army is running a pilot to add a 

Transition to Sustainment annex to the existing Life Cycle Support Plan (LCSP) 

with a focus on setting the conditions early in a program as well as using insight 

gained from the OSRs that will improve the Army’s sustainment functions. The 

Army can effectively and efficiently maintain our systems with these processes. 

Secretary GEURTS. While sustainment cost projections are considered through the 

phases of product development, the Department could do a better job of considering 

sustainment costs on equal footing with procurement costs. The goal of the Department is to produce, support, and maintain the required performance and readiness 

objectives of our weapon systems efficiently and effectively. In fiscally constrained 

environments, we have been challenged with achieving this goal with lower levels 

of Total Obligation Authority. Thus, it is important for programs to consider and 

review all potential strategies to optimize program planning and costs while providing the required levels of future readiness. 

Clearly, one standard solution does not fit all weapons systems sustainment scenarios. Program Managers have to consider organic, commercial, and hybrid 

sustainment solutions to meet both program and mandated United States Code, 

Title 10 requirements. DON uses integrated product teams and/or cross-functional 

relationships working groups in defining depot maintenance requirements. Additionally, Systems Engineering Technical Reviews, Life Cycle Sustainment Plans, and 

milestone reviews ensure programs include realistic considerations for industrial 

depot maintenance solutions to capture support and sustainment requirements. 

Secretary WILSON. Yes. Product Support Managers, who are accountable to the 

Program Manager, support the Air Force’s acquisition programs for planning and 

executing sustainment strategies that achieve operational readiness outcomes at an 

affordable cost. Throughout the acquisition process, the Product Support Manager 

continuously assesses system design to ensure they give adequate consideration to 

reliability, availability, maintainability and sustainment costs. The Air Force also 

places affordability constraints on acquisition programs, ensuring that each program’s estimated sustainment costs fit within future Air Force resource allocations. 

Finally, the Air Force executes Independent Logistics Assessments to validate the 

sufficiency of sustainment planning and identify areas for improvement. 

39. Senator INHOFE. Secretary Lord, Secretary Esper, Secretary Wilson and Secretary Geurts, how do we balance the need to consider long term costs associated 

with sustainment of aging weapons systems with the need to speed up the acquisition process and get emerging technology to warfighters? 

Secretary LORD. Among our options to lower costs to sustain currently fielded systems is a greater emphasis on data-driven sustainment and condition-based maintenance. Our experience is that data driven condition-based maintenance approaches 

will yield conservatively a 5 percent increase in a system’s materiel availability and 

an associated 5 percent decrease in the cost of sustainment. In concert, these thrust 

areas will provide DOD with the insight to target areas providing the greatest opVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00080 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
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portunity to reduce sustainment costs and the means to quickly address these leverage points. Such efforts could be accelerated and the likelihood of cross-Departmental adoption increased through an appropriately resourced DOD-level 

sustainment R&D program specifically chartered to improve sustainment productivity. Approximately 3 percent of RDT&E is currently used for readiness improvement and sustainment R&D. 

Options for improving long-term sustainment for any acquired capabilities will 

vary in large part depending on the degree to which the new capability includes 

dual use commercial technology. Where the ratio of commercial technology is small 

compared to technology developed for DOD’s unique purpose through DOD funding, 

improved sustainment will depend on the Department investing in data, tools and 

analysts that support design influence and more effective technical data procurement. For capabilities largely comprised of commercially development technology, 

the Department’s sustainment options are likely to vary from disposable end items 

that are replaced rather than repaired to using field service representatives where 

the warfighting concept of operation is supportive or establishing innovative technical data provisions and pricing that supports organic sustainment. 

Secretary ESPER. The Army conducts comprehensive annual Strategic Program 

Analysis Reviews (SPAR) of future and sustained systems over 30-year roadmaps. 

These roadmaps include Science and Technology (S&T) insertion opportunities and 

serve as a guide for senior leaders to discuss the point at which emerging technology 

becomes mature enough to consider replacing our aging weapon systems. The end 

product is a coordinated strategy to meet the Army’s strategic equipping goals, including divestiture of legacy equipment, at an acceptable level of risk. This decision 

process is key to balancing funding for systems in a disciplined approach to when 

the Army initiates a new development or procurement, a deliberate transition to 

sustainment, and a directed disposal timeline aligned with fielding new technologies. 

Secretary GEURTS. Speed to the fleet of new technology and restoring and maintaining readiness of our fielded products are equally important. Life cycle costs are 

considered throughout the development and sustainment of a weapon system. There 

are occasions where speed of a capability can temporarily drive a less cost effective 

sustainment solution that are usually tied to Urgent Need Statements from the 

combatant commanders. 

To have an effective balance between legacy system sustainment and speed of 

emerging systems to the warfighter we must think in terms of velocity (speed in 

a given direction) vice simply speed. The collaborative work that the DON Product 

Support Managers and Program Managers do at the initiation and throughout each 

weapons systems program provides system sustainment direction for each program 

throughout its life-cycle. Velocity is accomplished by making informed risk-based 

procurement and maintenance decisions at every stage of a programs life-cycle. 

Secretary WILSON. The Air Force balances long term sustainment costs with the 

need to speed up the acquisition process by executing an integrated life cycle management approach. The Air Force has taken several steps to achieve this integration, better aligning at all levels the roles and responsibilities for acquisition and 

sustainment of our weapons systems. The Assistant Secretary of the Air Force for 

Acquisition, Technology, and Logistics now has a Deputy Assistant Secretary for Logistics and Product Support responsible for ensuring that acquisition programs appropriately plan for the long-term sustainment of our systems. Also, the 2011 reorganization within Air Force Materiel Command reinforced our Program Executive 

Officers and Program Managers are responsible not only for acquiring systems, but 

also for sustaining them. Finally, the Air Force has assigned Product Support Managers to its program offices, ensuring that a senior life cycle logistician focuses on 

planning and execution of sustainment strategies that achieve operational readiness 

outcomes at an affordable cost. While we balance these long term sustainment costs 

with the need to field emerging technologies, we have not been able to retire weapon 

systems. The Air Force would like the flexibility to make these trades. 

CHANGING ACQUISITION PROCESSES

40. Senator INHOFE. Secretary Esper, understanding the Army is in the process 

of replacing the M4, how can you ensure the Army will avoid another 350 page requirements document and years of wasteful testing? 

Secretary ESPER. The lengthy Request for Proposals associated with the Modular 

Handgun System was a Federal Acquisition Regulation-based contract which included many clauses that were mandated by statute. However, based on language 

in the fiscal year (FY) 2016 and fiscal year 2017 National Defense Authorization 

Acts, Congress has provided us the tools that allow us to shift the paradigm. The 

78 

Army will leverage Other Transaction Authorities to further streamline the acquisition process and leverage commercial industrial expertise for the technologies required to develop the Next Generation Squad Weapon. 

The Army is also is looking at test reform to focus on priorities of warfighters, 

specifically capabilities and limitations of our systems in a more cost and schedule 

effective way. 

QUESTIONS SUBMITTED BY SENATOR ROGER WICKER

NATIONAL SECURITY TECHNOLOGY ACCELERATOR

41. Senator WICKER. Secretary Lord, Congress has expressed strong support for 

the MD5 National Security Technology Accelerator Initiative. MD5 accelerates technology development by facilitates collaboration between civilian and military personnel, their counterparts in academia, and the high-tech industry. The organization has launched a number of successful initiatives including Hacking 4 Defense, 

the Innovation Boot Camp, and the Marine Corps Adaptive Threat Force program. 

How do you plan to support MD5 in the future? 

Secretary LORD. MD5 has provided real value, both to the Department and the 

broad array of non-traditional partners with whom it interacts, through the creation 

of two programs of record for the US Marine Corps and more than 900 new applications, concepts or solutions back to problem sponsors throughout DOD. Although I 

believe the Department needs to evaluate MD5 as part of a broader, holistic discussion related to program priorities and attendant resources, my office intends to advocate for its inclusion in the Department’s submission as part of the President’s 

Budget for fiscal year 2020 to build upon early success stories like Capella Space, 

which started as a Hacking for Defense team at Stanford University in 2015 and 

has already raised more than $20 million in private funding as a venture. I will also 

ensure that funds are available to sustain MD5 operations through fiscal year 2018 

and fiscal year 2019 without disruption, including seeking continuing resolution 

funding for the program, so long as this is consistent with the intent of Congress. 

EFFICIENT SHIPBUILDING

42. Senator WICKER. Secretary Geurts, the President will sign the National Defense Authorization Act into law very soon. The NDAA includes my legislation—the 

SHIPS Act—that will make it national policy to meet the 355-ship requirement. As 

part of a naval buildup, the Navy needs to accelerate shipbuilding and leverage our 

hot production lines. Is the Navy buying ships in the most efficient manner possible? If not, do you need additional authorities from Congress or modified authorities? 

Secretary GEURTS. The Navy is committed to building ships in the most efficient 

manner possible to meet the 355-ship requirement summarized in the 2016 Force 

Structure Assessment. Our goal is to maintain stable production lines throughout 

the shipbuilding industrial base for all core platforms. This ensures a surge capacity 

throughout the industrial base that will allow the Navy to retain the ability to surge 

to meet fleet requirements. 

By balancing long-term efficient acquisition profiles with targeted service life extensions and aggressive growth options, the Navy plans to stabilize the industrial 

base and set the foundation for efficiently and deliberately growing the force towards its warfighting requirement. Of particular importance is the sustainment of 

the industrial base at a level that supports more affordable acquisition, predictable 

and efficient depot level maintenance and modernization, and an appropriately sized 

experienced workforce for more aggressive growth if additional resources become 

available. 

Key to maintaining stable production lines is stable funding coupled with contracting strategies that provide a long-term commitment to industry. The Navy utilizes contracting tools such as multi-year procurements, block buy contracts, and 

economic order quantity buys, when and where it makes sense to do so to provide 

a stable commitment to industry. 

INCREMENTAL FUNDING AUTHORITY FOR AMPHIBIOUS SHIPS

43. Senator WICKER. Secretary Geurts, the NDAA also contains Incremental 

Funding authority for the Navy to buy either the 30th LPD amphibious ship or the 

first LXR amphibious ship. Incremental Funding is a tool to help the Navy to get 

started on ship production without having to budget for the entire ship. Can you 

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commit to me that the Navy will take advantage of the incremental funding authority in NDAA? 

Secretary GEURTS. The Navy is currently exploring all options with regards to the 

fiscal year 2018 incremental funding of the next LPD or the first LXR. The funding 

will help jump start the LXR program. This earlier start will reduce the risk of a 

loss of learning and will help ensure the most efficient use of taxpayer funds. 

BLOCK BUY OF FORD-CLASS AIRCRAFT CARRIERS

44. Senator WICKER. Secretary Geurts, the Senate Armed Services Seapower Subcommittee conducted a number of hearings on options to build the 355 ship Navy. 

We held a hearing with former Reagan Administration officials—including Secretary 

Lehman—to learn about the 1980s fleet buildup. The Reagan executed a block-buy 

of aircraft carriers. The Navy got carriers faster and saved money through 

leveraging competition in the supplier base. On the current trajectory, when will the 

Navy meet its requirement for 12 aircraft carriers? Could a block-buy strategy get 

us to 12 carriers faster? What are the implications for the shipbuilding industrial 

base? Would a block-buy stimulate the industrial base and generate competition and 

new suppliers? Do you see benefits for the rest of the shipbuilding program? 

Secretary GEURTS. The current legislative requirement is for eleven operational 

aircraft carriers (CVNs). On the current trajectory with five-year build centers, the 

Navy will not meet 12 operational aircraft carriers. A multi-ship buy alone will not 

increase the operational aircraft carrier inventory to 12 CVNs any sooner. To 

achieve a 12–CVN force, the frequency of aircraft carrier procurement would have 

to increase to every three to four years in comparison to the current five-year build 

centers. 

Returns from multi-ship buys have consistently shown that volume material buys 

and level loading of the shipbuilder and vendor base is a proven practice to reduce 

cost of shipbuilding programs. Previous experience with two ship buys of CVNs 

(CVN 72 and CVN 73 were procured in fiscal year 1983 and CVN 74 and CVN 75 

were procured in fiscal year 1988) demonstrated significant savings. Multi-ship buys 

enable both the Navy and the shipbuilder to take advantage of material procurement efficiencies, and the stability it affords industry provides for more efficient use 

of resources and a more favorable market for suppliers to enter, thereby encouraging more competition. Component commonality between the submarine and CVN 

industrial base furthers the opportunity for stability and savings. Multi-ship buys 

also minimize fact-of-life changes between ships, thus reducing follow-ship drawing 

and construction costs, and affording the shipbuilder the ability to optimize production trades management. The shorter time between deliveries results in increased 

design stability, minimizes potential obsolescence, and provides greater opportunities for learning. 

FRIGATE PROGRAM ACQUISITION STRATEGY

45. Senator WICKER. Secretary Guerts, the new Frigate will be an essential component of the future fleet. The Navy’s acquisition strategy for the Frigate is commendable. You are going to pick a proven design rather than start over with a clean 

sheet design. This decision should accelerate the program significantly. Is there anything else that could be done to accelerate this program? 

Secretary GEURTS. The Navy is currently on the quickest path to procure the Frigate (FFG(X)). To allow adequate time to define FFG(X) requirements, thoroughly 

evaluate design alternatives and mature the design, the President’s Budget (PB) 

2018 submission deferred the first year of FFG(X) procurement to fiscal year 2020 

with additional Littoral Combat Ships (LCS) being procured in fiscal year 2018 and 

fiscal year 2019. 

The Navy is using a two-phase acquisition approach to procure FFG(X) starting 

with a Conceptual Design phase from Q2FY2018 until Q3FY2019. This will allow 

Navy and Industry to reduce risk by maturing parent FFG(X) designs and identifying cost and capability drivers, to incorporate into the Navy’s requirements. The 

Conceptual Design phase will be followed by a full and open competition for Detail 

Design and Construction in Q4FY2019 with award to a single shipbuilder in 

Q4FY2020. 

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QUESTIONS SUBMITTED BY SENATOR MIKE ROUNDS

CESG MEMBERSHIP

46. Senator ROUNDS. Secretary Lord, at the SASC hearing on Dec 7, I asked 

whether Cloud Executive Steering Group (CESG) membership included warfighter 

representation from the services and combatant commands (including cyber command). You responded in the affirmative that ‘‘We have pulled in all of services.’’ 

Please provide the Committee the names of individuals from the military services 

and combatant commands who are voting members of the CESG and the roles they 

serve so that the Committee can consult with them on their participation. 

Secretary LORD. The CESG, through their action officer representatives, has conducted numerous information gathering sessions with the Combatant Commands, 

Services, and agencies, and continues to do so on a regular basis. My response was 

not intended to imply that there were additional voting members of the CESG. Per 

the Deputy Secretary of Defense’s January 8, 2018 memorandum titled ‘‘Accelerating Enterprise Cloud Adoption Update,’’ the Deputy Chief Management Officer 

(DCMO) is responsible for execution of the new enterprise cloud program. DCMO 

will chair the CESG going forward. My role will be to serve as the acquisition decision authority. 

BID PROTEST REFORM

47. Senator ROUNDS. Secretary Esper, you stated the Army needs help from Congress to protect programs from frivolous bid protests. You said the context was the 

Army’s handgun program. What difference do you believe the reforms in Sec. 827 

of the NDAA 2018 conference report will make? 

Secretary ESPER. I fully support the pilot program authorized by section 827, 

which will allow the DOD to determine the effectiveness of requiring larger contractors to reimburse the Department for costs incurred in filing protests denied by the 

Government Accountability Office. I believe this is a good first step in reducing frivolous bid protests. 

48. Senator ROUNDS. Secretary Esper, how will you make use of this authority? 

Secretary ESPER. The Army will work closely with the DOD to develop and implement the pilot program authorized by section 827. Authorizing Competition in Contracting Act (CICA) reform would hold contractors responsible for frivolous protests 

and for the Services to be able to execute their contracts in a timely manner to 

avoid schedule delays awaiting a decision that typically takes 90 days to occur. The 

delays, pending the results of a bid protest end up shifting program schedules to 

the right, even when protests are usually ultimately resolved in the government’s 

favor. 

49. Senator ROUNDS. Secretary Esper, what additional legislative support do you 

require to address the Army’s needs and concerns? 

Secretary ESPER. The Army recommends Congress consider legislation that would 

give Competition in Contracting Act (CICA) relief and the ability for the Government Accountability Office to implement a ten day rule on stays, instead of the traditional 90 days, and a penalty if the contractor loses the protest. Penalties can be 

scaled based upon contract value as to not discourage small businesses from filing 

legitimate protests. We would also recommend enacting relief right away as opposed 

to waiting for a pilot program. 

QUESTIONS SUBMITTED BY SENATOR DAN SULLIVAN

BLANK SLATE ACQUISITION REFORM

50. Senator SULLIVAN. Ms. Lord, Dr. Esper, Mr. Guerts, and Dr. Wilson, what are 

your best, most radical ideas to improve Department of Defense acquisitions? If you 

could start with a clean slate for acquisitions, what would you do? 

Secretary LORD. Fundamental changes are required of the Department of Defense’s acquisition system if we are to achieve the objectives articulated in the National Defense Strategy (NDS). In my view, we require a transition from the traditional linear acquisition process to an Adaptive Acquisition Ecosystem. This unified 

framework would enable key stakeholders in execution organizations (e.g. R&E, the 

Services, and COCOMs) to use both traditional and innovative acquisition pathways 

based on program need as a standard practice. I intend to organize OUSD(A&S) to 

manage, analyze, and provide data to govern programs, executed by components, by 

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linking their products to NDS objectives. We will fundamentally change the Defense 

Acquisition University (DAU) to teach through case studies that will highlight real 

examples of how a variety of contract vehicles are appropriately utilized to simplify 

and speed up acquisition. We have goals of reducing acquisition time by 50 percent 

with pilot programs currently being executed. We are not only focused on domestic 

procurement, but Foreign Military Sales (FMS) as well. 

Secretary ESPER. A successful acquisition system is fast and responsive to current 

and emerging needs, and visionary in meeting long-term threats, leaping ahead of 

capabilities of major adversaries. It requires centralized planning, decentralized execution, and accountability. With these concepts in mind I have three recommendations. First, authorize and appropriate ‘‘colorless’’ acquisition funding to provide predictable, stable, and adequate defense acquisition funding over a two year cycle. To 

increase effectiveness of this recommendation, reduce current restrictions under 

Continuing Resolutions and amend the Budget Control Act that create budget uncertainty hindering the Army’s ability to predictably start new programs, enter into 

multi-year contracts, increase production rates, or realign funds to higher priority 

requirements or simply allow the Services to execute at the lowest committee mark 

under a Continuing Resolution. Second, allow greater reprogramming thresholds. 

Higher below-threshold reprogramming gives the Army greater authority to move 

cost savings within our funding lines and incentivize delivering programs on time 

and under budget. Third, improve the flexibility of the acquisition personnel system 

to alleviate required wait periods to hire former military personnel and accelerate 

the accession process to hire and relocate civilian personnel. 

Ideally we would request the flexibility to execute our programs, including the 

ability to start new programs, enter into multi-year contracts, increase production 

rates or realign funding to higher priority requirements, even under Continuing 

Resolutions. 

Secretary GEURTS. I offer the following ideas to improve DOD acquisition: 

1. Significantly reduce or eliminate statutory information requirements for 

MDAPs and major systems acquisition programs, and allow DOD to set and 

refine these requirements in regulatory issuances such as DOD Instruction 

5000.02 (similar to recent legislation pertaining to major automated information system (MAIS) programs). This would allow program managers and milestone decision authorities greater flexibility in tailoring program information 

requirements to the needs of the particular program. 

2. Provide for defense budgeting and defense appropriations to be made on no 

shorter than a two-year basis, rather than an annual basis, to provide stability 

in program budgets and mitigate the impact of continuing resolutions. 

3. Expand certain acquisition authorities of the Secretary of Defense to the Secretaries of the MILDEPS, in particular: 

• Congress has granted the Secretary of Defense, without power of delegation, 

statutory authority to waive any acquisition law or regulation to acquire a 

capability that would not otherwise be available to the DOD Components. 

Congress can grant similar waiver authority to the secretaries of the 

MILDEPs. 

• Congress has granted the Secretary of Defense, without power of delegation 

to the Under Secretary of Defense only, statutory authority to initiate section 804 (Fiscal Year 2016 NDAA) rapid prototyping projects and rapid fielding programs by using on an annual basis up to $200 million cumulatively 

of any funds available to DOD. Congress can grant similar funding flexibility for section 804 initiatives to the secretaries of the MILDEPs. 

I will continually encourage the DON acquisition enterprise to identify gamechanging ideas to improve DOD acquisition, including clean-slate proposals. I will 

also work with USD (R&E), USD (A&S), and the other MILDEPs to develop such 

ideas. 

Secretary WILSON. If I could start with a clean slate, the Air Force would streamline the approval process required to execute an acquisition program, so that all decisions are made at the appropriate level. Additionally, the Air Force would like additional funding flexibility particularly for software development efforts. On software development efforts, the line between development, production and 

sustainment is blurred or non-existent. The current appropriation categories limit 

and slow acquisition activities and fielding of software-intensive capabilities. The 

Air Force encourages the establishment of a new appropriation for software-intensive systems. 

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MULTIYEAR ACQUISITIONS AND ICEBREAKERS

51. Senator SULLIVAN. Secretary Lord and Secretary Guerts, does it make sense 

to sign multi-year acquisition contracts to reduce overall program costs for shipbuilding? 

Secretary LORD. I fully support the use of multi-year acquisition contracts for 

shipbuilding programs once there is a stable design baseline for the program accompanied by realistic estimates of contract cost and savings. Multi-year acquisition 

contracts have proven to reduce overall shipbuilding program costs by reducing risk 

via stabilization of the shipbuilders’ workforce and the vendor base that supports 

many of our shipbuilding programs, by enabling economic order quantities, and by 

reducing overhead costs related to multiple proposals and contract negotiations. 

Some programs include fragile suppliers that might not otherwise be able to remain 

viable or cost effective. Multi-year acquisition contracts can incentivize the shipbuilders to establish a procurement plan with their suppliers to sustain the industrial base through workload balancing, process improvements, or other investments. 

Secretary GEURTS. Yes. Multi-year contracts provide stability, commitment, and 

more effective use of funding to the shipbuilding industrial base that result in lower 

costs to the Navy. Multi-year contracts enable the Navy and Industry to take advantage of material procurement efficiencies and to utilize resources in an efficient 

manner, while also providing industry at the prime and sub-vendor levels with the 

commitment necessary to support investment in their facilities and people. The 

Navy will continue to aggressively pursue multi-year procurement contracts whenever feasible and where it makes sense to do so. 

52. Senator SULLIVAN. Secretary Guerts, if we do not procure ice-breakers through 

a multi-year procurement contact, in your personal opinion, will it likely result in 

an inefficient use of valuable U.S. tax dollars? Shouldn’t any plan for icebreaker procurement include a multi-year acquisition plan? 

Secretary GEURTS. Since forming an Integrated Program Office in 2016, the Coast 

Guard and Navy have been developing an acquisition strategy that makes the most 

efficient use of government resources to procure heavy polar icebreakers. Although 

the statutory requirements in 10 U.S.C. § 2306b prevent the use of a multi-year procurement contract for the lead ship, the Services are jointly exploring cost-saving 

acquisition approaches on follow-on ships, including block buy contracts. The Navy 

and Coast Guard will work with Congress to determine whether additional authorities are required. 

53. Senator SULLIVAN. Secretary Guerts, given the urgent need of U.S. icebreaker 

capacity and capability, combined with an outlook for limited procurement, does it 

make sense to analyze purchasing icebreakers from allied and partner nations? 

Secretary GEURTS. The U.S. Coast Guard (USCG) has conducted the analysis to 

determine whether there are any in-service, foreign icebreakers available for purchase and has determined that there are none that meet the USCG’s heavy polar 

icebreaker requirements. 

As a bridging strategy and to maintain the nation’s current heavy icebreaking capability the USCG has chosen to extend the service life of the POLAR STAR (the 

nation’s only operational heavy polar icebreaker) until new heavy polar icebreakers 

are delivered. 

JAASV ACQUISITION

54. Senator SULLIVAN. Secretary Esper, how will recent acquisition reforms enable 

system like the JAASV—which should consider existing domestic or foreign platforms—be procured more efficiently and expediently? Would you recommend procuring the JAASV as a ‘‘middle tier’’ program to enable rapid fielding? 

Secretary ESPER. In 2012, the Army determined that no short-term or long-term 

operational warfighting requirement exists that supports the continued ownership 

and sustainment of the current Small Unit Support Vehicle (SUSV) or a successor 

(e.g. JAASV). The Army’s current modernization priorities are designed to drive the 

allocation of limited resources to ensure overmatch with respect to anticipated 

threats and operational requirements. At the same time, I also recognize that our 

Total Force faces unique needs in cold weather, austere, and other environments. 

I remain committed to evaluating how those capability requirements align with the 

Army’s modernization and sustainment priorities-including identifying the optimal 

way to procure new capabilities within available authorities and funding. 

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COMBAT RESCUE HELICOPTER ACQUISITION TIMELINE

55. Senator SULLIVAN. Secretary Wilson, given the critical importance of the personnel recovery mission to the Air Force, what steps is the Air Force taking to ensure an on-time delivery of the Ops Loss Replacement helicopter (and eventually, 

the Combat Rescue Helicopter) to sustain this sacred mission? 

Secretary WILSON. The Air Force is diligently working to deliver the Operational 

Loss Replacement HH–60Gs. The Air Force is committed to Combat Rescue Helicopter. The Air Force structured the contract for Combat Rescue Helicopter to 

incentivize early delivery. If the contractor meets the goal, they receive an incentive 

and we immediately start procurement 

QUESTIONS SUBMITTED BY SENATOR DAVID PERDUE

ACQUISITION STRATEGY—ARE WE IGNORING THE MEDIUM TERM?

56. Senator PERDUE. Secretary Lord, DOD is facing today in terms of balancing 

readiness, modernization, and this time in between where we’re seeing increasing 

capability gaps. The last big boost in military spending, wasn’t to recap, but rather 

was spent fighting wars. As you well know, we’re still living on the last legs of the 

Reagan build-up, and all the bills are coming due at once with a major acquisition 

bow wave. At the same time, our adversaries are showing that they can get new 

platforms online a lot faster than we can. Right now, we’re dealing with the nearterm issue of restoring readiness in the immediate future of 0–3 years, and we’re 

also focusing on future threats and capabilities in the 15–25 year-out window. I’m 

concerned we’re not looking to the 3–12 year window, where we’re going to see a 

lot of capability gaps—including with our submarine fleet, the JSTARS recap, and 

other programs. Defense expert Mackenzie Eaglen told this committee last week 

that, quote, ‘‘policymakers must avoid a ‘‘barbell’’ investment strategy that deemphasizes the medium-term needs of the 2020s.’’ As I said on Thursday, I worry 

that’s what we’re doing now with JSTARS. How will acquisition reforms help us 

bridge the capability gaps we’re going to have in the next 3–12 years? 

Secretary LORD. While the modernization of the platforms supporting the nuclear 

triad is a long term challenge, we are making investments in more robust capabilities for the mid-term. We are ramping up production of the F–35; increasing quantities of ground systems such as Joint Light Tactical Vehicle, Armored Multi-Purpose Vehicle, Paladin Integrated Management, and the M–1 Abrams Tank Modification/Upgrades; and going to maximum rates of production across multiple preferred 

munitions. We also have opportunities to address medium term capability needs by 

inserting innovative technologies that enhance our capabilities and confound our adversaries; for example, by exploring opportunities and new capabilities that sustain 

and extend DOD’s military advantage in the Electromagnetic Spectrum. The Department’s commitment to Modular Open Systems Architecture and standard interfaces encourage traditional and non-traditional sources of supply to offer subsystem 

options and more rapid insertion of capabilities into platforms. And our investments 

in advanced design and manufacturing tools enable faster and more affordable prototype development, which accelerates time to market. The broad reform efforts 

within the Department aimed at improving business operations will generate savings that can be applied to more pressing warfighting needs in the 2020’s. The Department also requires the support of Congress to reduce the costs of things we no 

longer need such as excess infrastructure and, where warranted, program cancellations. Most importantly, we need repeal of the Budget Control Act caps and substantially higher topline to pay for increases in procurement and targeted force structure 

growth. 

57. Senator PERDUE. Secretary Lord, will you commit to working with me and this 

committee to look at low-cost, rapid solutions which support our first National Defense Strategy, for JSTARS recap and other programs so we can be sure that we’re 

taking care of our needs in the near, medium, and long term? 

Secretary LORD. I look forward to working with you and the committee to look 

at low cost, rapid solutions to meet our national defense needs for the future. 

JSTARS—EXAMPLE OF RAPID ACQUISITION?

58. Senator PERDUE. Secretary Lord, the JSTARS program is a unique capability 

that provides not only valuable ISR—including ground moving target indicator, but 

also battle management and command and control in an on-board management 

suite that allows warfighters on the tactical edge of battle to cut through the fog 

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of war, real-time. In fact, Air Combat Commander General Holmes testified in 

March of 2015 that, quote, ‘‘The capability to perform this dual mission at the tactical edge provides C2 (command and control) mission assurance in a contested environment. The USAF is fully committed to the JSTARS mission.’’ Since 1991 when 

the initial JSTARS concept was proven as a critical, joint, combat capability for real 

time intelligence, battle management and command and control which we still use 

today on the E–8C fleet of aircraft. In 1999, the Air Force decided the unique 

JSTARS capability should be recapitalized and developed the initial JSTARS recap 

for the E–10. However, in 2008 and after spending almost $2 billion in research and 

development, the E–10 program was cancelled, with the intent of replacing JSTARS 

with a future, space-based or networked technology. The legacy fleet continues to 

perform and support forces across the globe identifying threats on the ground and 

providing timely intelligence analyzed by airmen and soldiers on board to manage 

the battle for ground forces. According to the Congressional Research Service, in 

2008 the E–10, which was the first attempt at a JSTARS recap, was cancelled because quote, ‘‘Some people believed the mission could be accomplished by spacebased assets, while others, viewed unmanned aircraft as most cost effective, while 

others believed in downgrading with role of high-cost platforms in favor of 

networked, distributed collection systems.’’ That sounds like the exact same strategy 

the Air Force is considering pursuing again, while the legacy fleet continues to support real world missions and is now 9 years older, with uncertainty on the what 

the replacement will be, how much the replacement will cost, and when that replacement will be developed, tested and fielded if the JSTARS acquisition strategy 

changes. This envisioned future, space-based technological replacement never came 

to fruition, and not until 2015 did the DOD decide to start the current JSTARS 

recap program. And as they looked at how to move forward, they had 5 analyses 

of alternatives telling them that the current JSTARS recap plan is the best way to 

proceed to fulfill this critical capability. The current JSTARS recap program is 

scheduled to announce source selection early next year based on the fiscal year 2018 

acquisition strategy. All while the current, aging legacy fleet is being sustained for 

$348 million per year, with growing sustainment costs and time in depot to conduct 

maintenance and modifications. I agree that the Air Force needs to plan for and 

maintain Air Superiority, today and in the future, in 2030 and beyond with cost effective modernization. However, for JSTARS we need rapid, innovative, bridging or 

interim solutions to cover the gap created by cancelled and changing acquisition 

strategies based on something better in the future without a cost or schedule. Right 

now, we’re heading towards a massive capability gap. The current JSTARS recap, 

which could be fielded within the next five year Future Years Defense Program 

(FYDP) based on the latest schedule we have seen, is a perfect candidate to use for 

rapid acquisition to field the next planes quicker and reduce the sustainment costs 

of the legacy fleet, which is probably a lower cost solution than the proposal I have 

seen to bridge the gap until the latest and greatest can come online in 2030 or even 

later. We need to close this capability gap that I see happening between fiscal year 

2019 (when 3 planes from legacy fleet go offline) and 2030 (an optimistic estimate 

of when the new system will be up and running). We need this capability today and 

in the future with non-traditional concepts. Do you think the JSTARS recap is a 

program that could benefit from a rapid acquisition, given the legacy fleet 

sustainment costs, PDM delays, and long lead time for us even getting the technology to provide a new solution? 

Secretary LORD. As the Department moves forward in recapitalizing the JSTARS 

capabilities, I believe there should be opportunities to leverage rapid acquisition 

processes to ensure we continue to provide the capabilities provided by JSTARS in 

all warfighting environments in a prudent and expeditious manner. 

59. Senator PERDUE. Secretary Lord, General Holmes previously testified to Congress that the recap would reduce operation and sustainment costs by 27 percent 

compared to the legacy fleet. Would you be open to looking at the JSTARS recap 

as a rapid acquisition as a way to save costs as we work towards a future solution? 

Secretary LORD. Yes, I would be open to looking to leverage rapid acquisition processes to save cost as we pursue future solutions to provide the battle management 

command and control and wide area surveillance capabilities capable of operating 

in all warfighting environments. 

60. Senator PERDUE. Secretary Lord, if JSTARS is not a candidate for rapid acquisition, why not? 

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Secretary LORD. We will explore opportunities to leverage rapid acquisition processes to save both cost and time as the Department moves toward future solutions 

to provide JSTARS capabilities. 

61. Senator PERDUE. Secretaries Lord, Esper, Wilson, and Geurts, do you agree 

that the JSTARS should be considered a joint program in terms of your oversight 

policy since the Air Force, Army, Marine Corps and Navy all depend on its targeting 

information to detect and attack moving ground targets? 

Secretary LORD. While the JSTARS platform is but one of our many warfighting 

assets that provide vital data to a myriad of joint customers, only the Air Force will 

procure and operate the aircraft. This is different from traditional joint programs, 

such as the F–35 Lightning II and the Joint Light Tactical Vehicle, where more 

than one service will procure and operate the weapon system. Our traditional management approach is appropriate for the JSTARS program. 

Secretary ESPER. We have no issues with the Air Force continuing to be the executive agent for JSTARS. 

Secretary GEURTS. From an acquisition perspective, the Navy does not believe 

that JSTARS should be considered a joint program in terms of Navy oversight policy. That being said, the Navy’s Intelligence, Surveillance and Reconnaissance (ISR), 

requirements are satisfied by the Global Force Management (GFM) process. The 

Navy agrees that JSTARS fills a Combatant Commander (COCOM) requirement. 

Secretary WILSON. The Air Force would defer to Ms. Lord and Secretary of Defense, in consultation with Combatant Commanders, on this inquiry. 

62. Senator PERDUE. Secretaries Esper and Geurts, since the JSTARS platform 

supports your soldiers on the ground, could you tell me if you’ve been consulted 

about the new approach to the JSTARS recap, and how this decision to accept more 

risk in the interim will impact to our soldiers, sailors and marines in theater on 

the ground? 

Secretary ESPER. The Army is aware of the approach to the JSTARS recap. The 

Air Force plans to utilize the RQ–4 Global Hawk Block 40 GMTI sensors during the 

JSTARS recap transition to mitigate risk. The Air Force has committed to continuous coordination with the Army to ensure interoperability and maximize sharing 

of collected data. The Army remains platform-agnostic to how we receive GMTI 

data. 

Secretary GEURTS. Having assumed my position as ASN RD&A in December 

2017, I have not yet been consulted about JSTARS. 

ISR REQUIREMENTS

63. Senator PERDUE. Secretary Wilson, as a follow up to a RFI submitted through 

the Air Force Liaison Office on November 2nd, could you clarify the ISR statistics 

for me—you have said that today only 5 percent of ISR requirements are being supported. Of the 5 percent supported, what percentage is filled by JSTARS? 

Secretary WILSON. While the JSTARS currently accounts for 1.4 percent of the 

total AF ISR contribution and 13 percent of the total Ground Moving Target Indicator (GMTI) support provided to combatant commanders, it does this in an 

uncontested environment. In the future, near-peer competitors will not allow the 

joint force unimpeded access across the battlespace we enjoy today. The JSTARS 

cannot survive in that contested environment. However, the Air Force will keep the 

JSTARS through the current Future Year Defense Plan, and invest in a family-ofsystems to support combatant commanders in the highly contested environment of 

the future. 

64. Senator PERDUE. Secretary Wilson, could you provide an apples-to-apples comparison of percentage of ISR requirements being fulfilled by each of the Air Force’s 

ISR platforms? And of what percentage of ISR provided is done by each ISR platform? 

Secretary WILSON. Our inventory of ISR assets have different capabilities by design. Together with our team of ISR Airmen doing analysis, these assets each provide pieces of the puzzle to answer key intelligence questions. They are part of a 

larger Joint Force ISR and Intel Community Enterprise. The table lists the platforms and contributions to the COCOMs in 2017: 

Air Force Asset GMTI FMV SIGINT GEOINT 

E–8C: ............................................................................................ 1.4% N/A N/A N/A 

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Air Force Asset GMTI FMV SIGINT GEOINT 

MQ–1/9: ........................................................................................ N/A 13.8% 8.7% N/A 

RQ–4 Block 30: ............................................................................ N/A N/A 0.7% 6.1% 

RQ–4 Block 40: ............................................................................ 1.0% N/A N/A N/A 

RC–135: ........................................................................................ N/A N/A 0.4% N/A 

U–2: .............................................................................................. N/A N/A 1.0% 6.6% 

USAF Total: ................................................................................... 2.4% 13.8% 10.8% 12.7% 

DOD Total: ..................................................................................... 5.7% 46.1% 29.2% 20.5% 

65. Senator PERDUE. Secretary Wilson, today 5 percent of ISR requests are supported, and in 2030, the supported percentage is expected to fall to 1 percent of ISR 

requirements supported. If so, what are the factors driving that reduction in support 

of ISR request from 5 percent to 1 percent? 

Secretary WILSON. The exact percentage of ISR requirements that will be satisfied 

in 2030 is unknown and could vary greatly based on assumptions. However, based 

on the historical trends and an increasing demand for ISR, we know combatant 

commander requirements will continue to grow. At the same time service inventories remain constrained at a relatively steady state. This increasing quantitative 

gap is further exacerbated by retaining inventory that is challenged by peer adversary advancements, reducing our previous qualitative advantage. The Air Force supports the National Defense Strategy position to migrate away from costly, non-survivable weapons systems and move toward countering the gaining influence by potential adversaries. We are building a strategy to leverage data from multiple domains to create clear advantage for our military. 

66. Senator PERDUE. Secretary Wilson, I understand that of the 5 percent of ISR 

requirements being supported, I understand that roughly 80 percent of the GMTI 

requirements are supported by JSTARS. Is that number correct? 

Secretary WILSON. JSTARS provides approximately 13 percent of the total GMTI 

requirements supported by assets through the Global Force Management Allocation 

Process. That equates to about 1 percent of the total GMTI requested by combatant 

commanders. 

67. Senator PERDUE. Secretary Wilson, if we know and expect that today, what 

is the plan to address this decrease in support? For example, if we only have 11 

Block 40 Global Hawks that can provide GMTI (which reportedly would take at 

least 4 to match the JSTARS in area covered), and no plans to procure more Block 

40 Global Hawks, how are we going to meet requirements in the interim? 

Secretary WILSON. JSTARS will continue to operate throughout the Future Years 

Defense Program, as will RQ–4 Global Hawk Block 40, so we do not anticipate a 

drop in support to the joint force in the near term. 

68. Senator PERDUE. Secretary Wilson, what is a low-cost solution to fill the loss 

in capability between today and 2030 and beyond? 

Secretary WILSON. We believe a networked system of systems approach will provide more capability and greater flexibility in the near term at a lower lifecycle cost, 

while also providing more capability to the warfighter in a near-peer engagement. 

69. Senator PERDUE. Secretary Wilson, what is the feasibility of an interim solution to mitigate the forecasted gap and reduction in support between now and 2030 

and beyond? 

Secretary WILSON. Our work up to now points to a low technical risk in achieving 

a near-term, networked GMTI solution. 

70. Senator PERDUE. Secretaries Lord and Wilson, if we know there will be a gap 

in 2030 and beyond, we should work to a rapid acquisition solution for JSTARS 

recap, or use a used plane and existing radar for the recap. Wouldn’t you agree that 

supporting 1 percent of our ground forces ISR requirements is better than not providing or supporting any requirements, especially given what JSTARS is doing in 

less-contested environments (like counter-drug and counterterrorism missions)? 

Secretary LORD. ISR is a critical enabler for our ground forces and is in extremely 

high demand across all operational levels. The demand is insatiable so any amount 

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of ISR we can provide is operationally valuable. That said, the Department must 

be prepared to provide critical ISR capabilities, such as those provided by the current JSTARS platform, in both contested and less (or non)-contested warfighting environments. We are committed to doing that in the most cost-effective and operationally-relevant manner. 

Secretary WILSON. ISR is a critical enabler for the joint force and is in high demand across all spectrums of conflict. The Air Force must prepare itself to provide 

ISR for not only counter drug and counterterrorism missions, but also for high-intensity, near-peer conflicts. As we move to the future, in line with the National Defense Strategy, we will use a combination of existing platforms and sensors while 

investing in new systems for the long term. We will keep current E–8C JSATRS 

operational through the mid-2020s, as we develop and transition to an advance battle management system. 

ACQUISITION SPEED

71. Senator PERDUE. Secretary Lord, do you think the JSTARS recap is a program 

that could benefit from a rapid acquisition, given the legacy fleet sustainment costs, 

PDM delays, and long lead time for us even getting the technology to provide a new 

solution? 

Secretary LORD. As the Department moves forward in providing the next iteration 

of the Ground Moving Target Indicator (GMTI) and Battle Management Command 

& Control (BMC2) capabilities, I believe there are benefits in leveraging rapid acquisition processes to acquire key technology solutions for the JSTARS recap program. 

72. Senator PERDUE. Secretary Lord, given that JSTARS recap is a joint Major 

Defense Acquisition Program, will this program be managed by AT&L or will this 

Air Force led program which supports the other services ground forces or will the 

management of this program be delegated to the Air Force? 

Secretary LORD. The USD(AT&L) is the Milestone Decision Authority for the 

JSTARS recap program, however, I am working closely with the Services to look at 

every program individually to determine if and when a given program can be delegated. 

JSTARS—UNIQUE CAPABILITIES AND DEMAND FROM COCOMS

73. Senator PERDUE. Secretaries Lord, Esper, Wilson, and Geurts, as you know, 

JSTARS is a truly joint platform that provides unparalleled Battlefield Management, Command and Control, and Intelligence, Surveillance, and Reconnaissance 

(BMC2ISR) capabilities. Could you comment on what makes the JSTARS platform 

unique across the services and the importance of this Joint Force capability to the 

warfighter on the ground? 

Secretary LORD. JSTARS is an important component of a suite of airborne-based 

sensors and platforms that support our warfighting requirements. What makes this 

unique from other capabilities is that JSTARS provides airborne Battle Management Command and Control (BMC2) using an on-board radar capable of providing 

ground moving target indications (GMTI) of various target sizes and speeds to our 

warfighters in a permissive environment. This target information can then be 

matched to direct attack aircraft, stand-off weapons, and ground based attack assets 

in direct support to the warfighter on the ground. This is why it is important the 

JSTARS replacement be viable in future contested environments in order to support 

the joint warfighter anywhere and anytime. 

Secretary ESPER. The Army utilizes a wide range of Ground Moving Target Indicator (GMTI)/Synthetic Aperture RADAR (SAR) collection platforms and sensors to 

determine patterns of life, perform intelligence preparation of the battlefield, define 

the operational environment, and evaluate the threats in support of ground forces. 

The specific platform and sensor tasked depends on the mission, terrain, weather, 

region, and factors such as platform/sensor specifications and the Joint Commander’s priorities. The Army is platform agnostic as to how it receives GMTI data. 

GMTI capability is not unique to JSTARS. There are two other Air Force platforms that provide high altitude global GMTI coverage, the U–2 and RQ–4B Global 

Hawk Block 40. The Navy’s MQ–4C Triton and the new P–8A Poseidon multi-mission aircraft also have this capability. The Army’s medium altitude Aerial Reconnaissance-Low (ARL), Enhanced Medium Altitude Reconnaissance and Surveillance 

System (EMARSS), and the MQ–1C Gray Eagle provide GMTI to Army ground tactical units. While the Army does not utilize the JSTARS’ BMC2 capabilities, the Air 

Force utilizes this capability to coordinate air assets to support air and ground missions. 

88 

Secretary GEURTS. I am not aware of anything about JSTARS that makes this 

platform unique although I do note that it provides critical capabilities to the Joint 

Force. 

Secretary WILSON. JSTARS is an important airborne BMC2 platform that can effectively integrate on-board battle management command and control, robust communications, and wide-area surveillance sensors into a single platform. However, 

the system cannot survive in contested environments. It cannot safely get close 

enough to perform its critical mission. We owe it to our warfighters and the American Taxpayer to find a better way to provide the capabilities. 

74. Senator PERDUE. Secretaries Lord, Esper, Wilson, and Geurts, what does 

JSTARS do that other platforms (specifically AWACS, Global Hawk, or RPAs) can’t? 

Secretary LORD. JSTARS provides real-time battle management and organic widearea surveillance in support of ground forces on a single platform. 

Secretary ESPER. JSTARS is a manned platform that provides both BMC2 and 

GMTI data. AWACS is manned but only provides BMC2. The RQ–4 Global Hawk 

Block 40 and other Remotely Piloted Aircraft (RPAs), such as Predator or Reaper, 

are unmanned and provide GMTI data. 

Secretary GEURTS. I defer to the Air Force regarding JSTARS capabilities. 

Secretary WILSON. JSTARS combines robust communication systems, on-board 

battle management, and an organic wide-area surveillance sensor onto a single aircraft in support of ground forces. 

75. Senator PERDUE. Secretaries Lord, Esper, Wilson, and Geurts, Admiral 

Locklear, the former PACOM Commander, said before Congress in 2015, ‘‘JSTARS 

is a critically important capability in the ISR world, also in the battle management 

world, particularly when you operate in potentially contested environments where 

other parts of your command and control may be under cyberattack or space attack, 

having an aircraft that’s manned that has that ability to have that functionality and 

thinking work is good.’’ Would you agree with that assessment? 

Secretary LORD. The ability to operate in contested environments requires us to 

maintain the right mix of cross-domain solutions for command and control of our 

forces. 

Secretary ESPER. Yes. The mobility of the JSTARS platform will prove valuable, 

if other parts of the Joint and Satellite Command and Control System are under 

attack. However, the intensity of the contested environment will impact JSTARS’ 

ability to operate due to vulnerabilities to threat anti-air capabilities. 

Secretary GEURTS. I believe this was an honest and accurate assessment in 2015. 

Regarding current ISR requirements, I defer to the Joint Staff and the Combatant 

Commanders the importance of JSTARS. 

Secretary WILSON. The global security environment has changed and future wars 

against near-peer adversaries will be devastating if the Air force does not change 

to focus our readiness and lethality on resources for a highly contested environment. 

The JSTARS cannot survive in contested environments. Adversary threat systems 

have evolved denying our ability to access battlespaces from where JSTARS communication and sensor capabilities are effective. We believe this requires us to carefully 

consider the right mix of capabilities to ensure resiliency and agility of our ISR and 

command and control forces in the future. 

76. Senator PERDUE. Secretaries Lord and Wilson, without going to a classified 

level, can you tell us how JSTARS could maintain command and control during a 

cyber or other attack on sensors or satellites? 

Secretary LORD. In order to operate in contested environments, JSTARS requires 

redundant and protected communications paths to maintain combat effectiveness. 

Secretary WILSON. The system cannot survive in contested environments, where 

the aircraft cannot safely get close enough to perform its critical mission. We expect 

to operate in contested environments in all domains, including both space and cyber 

domains. Our forces will require redundant, agile communication paths to enable 

combat effectiveness. We owe it to our warfighters and the American Taxpayer to 

find a better way to provide these capabilities. 

77. Senator PERDUE. Secretaries Esper, Wilson, and Geurts, how and why is 

JSTARS (specifically, its BMC2ISR capabilities) so important to the joint and combatant commanders needs? 

Secretary ESPER. The combatant commanders’ ability to access GMTI capability 

is integral to react to a dynamic and changing operating environment. This capability to collect GMTI data deep into enemy territory provides collection to support 

89 

the combatant commanders’ Priority Intelligence Requirements (PIRs). The Army 

does not have a requirement for BMC2. 

Secretary GEURTS. I defer to the Joint Staff and the Combatant Commanders the 

importance of JSTARS. 

Secretary WILSON. Effective BMC2 and ISR capabilities accelerate the find, fix, 

track, and engage kill chain and provide direct support to ground units. 

78. Senator PERDUE. Secretaries Esper, Wilson, and Geurts, what is the demand 

signal looking like from your Soldiers, Airmen, Marines and Sailors through combatant commanders for JSTARS capabilities? 

Secretary ESPER. The combatant commands’ demand for Aerial Intelligence Surveillance and Reconnaissance (AISR) continues to grow. The demand for JSTARS 

GMTI capability is comparable to other AISR platforms. Demand currently exceeds 

capacity. 

Secretary GEURTS. Regarding the current and future demand signal for JSTARS, 

I defer to the Joint Staff and the Combatant Commanders. 

Secretary WILSON. JSTARS demand signal consistently exceeds capacity. 

79. Senator PERDUE. Secretaries Esper, Wilson, and Geurts, could they use more 

JSTARS to help with their missions? 

Secretary ESPER. Additional AISR capability and specifically GMTI, are always in 

demand so our current requirements exceed available capacity. 

Secretary GEURTS. Regarding the current and future demand signal for JSTARS, 

I defer to the Joint Staff and the Combatant Commanders. 

Secretary WILSON. Combatant commanders request the use of the capabilities 

JSTARS brings in multiple theaters and demand currently exceeds capacity. 

80. Senator PERDUE. Secretaries Esper, Wilson, and Geurts, do you expect demand signal to decrease any time in the near future? 

Secretary ESPER. No. The Army does not expect the demand signal for GMTI to 

decrease, but rather to increase based upon the anticipated threats and the increasing complexity of the operational environment. 

Secretary GEURTS. Regarding the current and future demand signal for JSTARS, 

I defer to the Joint Staff and the Combatant Commanders. 

Secretary WILSON. We do not expect to see a reduction in the demand signal for 

JSTARS capabilities in the near future. 

81. Senator PERDUE. Secretaries Esper, Wilson, and Geurts, to give you some scenarios, without going into a classified level, if we had a war with North Korea in 

the near term, would you need JSTARS? 

Secretary ESPER. Yes. Once air superiority is established, platforms with GMTI 

capability are key components in responding to combatant commanders’ Priority Intelligence Requirements. We need GMTI, along with other AISR capability. 

Secretary GEURTS. Regarding operational use of JSTARS, I defer to the Joint Staff 

and the Combatant Commanders. 

Secretary WILSON. Yes, JSTARS would benefit the Joint Force as both a battle 

management command and control and intelligence, surveillance, and reconnaissance platform. However, the system cannot survive in contested environments 

where the aircraft cannot safely get close enough to perform its critical mission. We 

owe it to our warfighters and the American Taxpayer to take a new approach to 

fulfill the GMTI and BMC2 missions. To achieve this evolutionary shift, the Air 

Force is transitioning from a primarily aircraft-centric approach to a net-centric approach using sensors across the battlespace linked by agile, resilient communications to provide the warfighter persistent capabilities in both uncontested and highly-contested environments well into the future. 

82. Senator PERDUE. Secretaries Esper, Wilson, and Geurts, if we had a simultaneous problem in Europe and Korea, or in the Middle East—for example Syria or 

Afghanistan—do we have all the assets today that we need to meet those simultaneous requirements, in terms of the JSTARS fleet? 

Secretary ESPER. No. Requirements exceed current GMTI capacity. The Joint 

Staff reallocates assets to meet priorities. 

Secretary GEURTS. Regarding operational use of JSTARS, I defer to the Joint Staff 

and the Combatant Commanders. 

Secretary WILSON. No, the simultaneous requirements for BMC2 and GMTI in 

these conflicts would likely exceed our current capacity. 

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JSTARS RECAP CHANGE IN ACQUISITION STRATEGY

83. Senator PERDUE. Secretaries Lord and Wilson, has a cost estimate been conducted on a new JSTARS replacement (ie the ABMS if JSTARS recap is cancelled), 

and how does that compare to the current JSTARS recap total program cost? 

Secretary LORD. I have not been briefed on an updated cost estimate, however, 

I will continue to work with the Air Force to understand the costs as they evolve 

to their future system of systems approach to providing battle management command and control and wide area surveillance to the Joint Force. 

Secretary WILSON. The Air Force realizes the importance of the Ground Moving 

Target Indicator and Battle Management Command & Control missions. As we 

evolve the mission to a system of systems approach, we will provide a detailed cost 

estimate. 

84. Senator PERDUE. Secretaries Lord and Wilson, has a cost benefit analysis been 

conducted on a new strategy for JSTARS recap, given that JSTARS recap is the 

number four acquisition priority for the Air Force in a fiscally constrained environment? 

Secretary LORD. There has not been an updated cost benefit analysis conducted 

by the Air Force regarding their new strategy for JSTARS Recap. 

Secretary WILSON. No, there has not been a cost benefit analysis regarding a new 

strategy for JSTARS Recapitalization. 

85. Senator PERDUE. Secretary Wilson, I understand that it would take multiple 

RQ–4 Global Hawk Block 40s to provide the same broad view of the battlespace as 

JSTARS does today with one aircraft. How many Global Hawk Block 40s would provide the same coverage as a legacy JSTARS for GMTI given the difference in size 

of the antennas on the E–8C and RQ–4 block 40? 

Secretary WILSON. It would take approximately two RQ–4 Block 40s to provide 

the same maximum geographic coverage as a JSTARS system. However the long endurance of the RQ–4 Block 40 significantly reduces the force structure costs and 

eliminates the air refueling costs to sustain a 24-hour operations. Also, the RQ–4’s 

higher operating altitude provides better visibility in complex terrain types. Lastly, 

the remotely piloted aspect of the RQ–4 eliminates risk to aircrew in a more contested operations environment. 

86. Senator PERDUE. Secretary Wilson, I understand there will be a capability gap 

if the RQ–4 Global Hawk Block 40s provide GMTI in place of the E–8Cs, given the 

sensors and ground-based BMC2 are not currently available. Does the Air Force intend to invest in more Block 40s to provide an equivalent capacity (comparable coverage) and capability (comparable timely analysis and battle management) of GMTI 

coverage for ground forces? 

Secretary WILSON. At this time, the Air Force has no plans to invest in additional 

RQ–4 Global Hawk Block 40s and there is no funding allocated for the procurement 

of additional Block 40s in the future. 

87. Senator PERDUE. Secretary Wilson, if not, why not? 

Secretary WILSON. We routinely consider the right mix of ISR capabilities and 

currently we don’t believe additional RQ–4 Global Hawk Block 40s are required. 

88. Senator PERDUE. Secretaries Esper, Geurts, and Wilson, what is the risk to 

the ground forces of no longer having GMTI and BMC2 available to ground forces 

with a capability gap and possible transition to RQ–4 Global Hawk Block 40s with 

yet-to-be-developed sensors ground based BMC2 capability? 

Secretary ESPER. The Army does not foresee a risk, assuming the capability gap 

can be mitigated by other Services’ GMTI capabilities. 

Secretary GEURTS. Regarding operational use of JSTARS, I defer to the Joint Staff 

and the Combatant Commanders. 

Secretary WILSON. The Air Force budget request in the Fiscal Year 2019 President’s Budget operates the E–8C JSTARS and the RQ–4 Block 40 Global Hawk, at 

the same level of support to ground forces, throughout the Future Year Defense 

Plan (2019–2023). This mitigates near-term capability gaps while the Air Force develops the future replacement systems. 

89. Senator PERDUE. Secretaries Esper and Geurts, what are your thoughts on a 

possible JSTARS recap capability gap in the next 3–12 years in support for your 

ground forces? 

91 

Secretary ESPER. JSTARS recap would be important to the Army to continue to 

receive GMTI data to ground forces from the future JSTARS platform. 

Secretary GEURTS. I am not aware of a future JSTARS recap capability gap. 

90. Senator PERDUE. Secretaries Esper and Geurts, what is the risk to our ground 

forces in the next 3–12 years without a JSTARS recap, and relying on other ISR 

assets that are currently overstretched? 

Secretary ESPER. Without a JSTARS recap and no other replacement for the 

GMTI capability that JSTARS currently provides, the Joint Force will have less 

GMTI capacity. 

Secretary GEURTS. Regarding operational use and demand signal for JSTARS, I 

defer to the Joint Staff and the Combatant Commanders. 

91. Senator PERDUE. Secretaries Esper and Geurts, have you submitted issue papers or letters of dissent during the POM–19 process regarding the JSTARS recap 

decision? 

Secretary ESPER. No. The Air Force provided a bridging strategy to utilize the 

RQ–4 Global Hawk Block 40, which will provide GMTI to ground forces. Additionally, the Services can provide other GMTI capabilities for Joint Staff allocation. 

Secretary GEURTS. To my knowledge, the Navy has not submitted any issue papers or letters of dissent during the POM–19 process regarding the JSTARS recap 

decision. 

92. Senator PERDUE. Secretaries Lord and Wilson, I understand that a competitive range determination was made on November 8, 2017 for the radar for the 

JSTARS recap. However, the Radar Risk Reduction was extended through December 20, 2017, and the RRR was not yet complete when this decision was made. Why 

did the Air Force ‘‘down-select’’ on a radar prior to the completion of a $130 million 

radar risk reduction program? How will this impact the source selection for the 

JSTARS recap? 

Secretary LORD. The details regarding the Air Force’s competitive range determination are source selection sensitive. Therefore, I have not been briefed on the 

Air Force’s rationale or the impacts on their source selection timelines. 

Secretary WILSON. The Radar Risk Reduction and competitive range determination for source selection activities are independent efforts. The competitive range decision was not contingent upon the completion of Radar Risk Reduction activities. 

Any further details regarding the acquisition remain source selection sensitive. 

SOFTWARE ACQUISITION REFORM

93. Senator PERDUE. Secretary Lord, what specific changes are you making to the 

way you manage software? 

Secretary LORD. The Department believes that software development is never 

complete and must be managed as a continuously improving product. This is largely 

done post initial capability development. Industry best practices of smaller incremental improvements that are robustly and automatically tested then deployed are 

being pursued. In short, contracting language to incentivize agile software development frameworks and secure continuous development and delivery is now being considered. 

Several programs, such as the Reserve Component Automation System, already 

utilize a variety of agile development tools and quality metrics (such as velocity, 

sprint burn down charts, and release burn up charts). Newer piloting activities, particularly in the area of cyber capability development, are also instituting governance 

forums to emphasize user involvement in early experimentation/observation efforts 

and allow user feedback to shape capability development, with less emphasis on perfecting requirements or upfront planning ahead of the actual development activity. 

We anticipate that new programs of record that stem from these pilots, such as the 

forthcoming Joint Cyber Command and Control, Unified Platform, and Persistent 

Cyber Training Environment, will benefit from these types of governance processes. 

Our efforts are not yet mature enough to have settled on final best practices, but 

we have begun revising policy guidelines. Since publishing a new instruction for 

business systems acquisition in February 2017, the Department continues to work 

through organizational and cultural changes, implement the policy and adopt industry best practices. OSD established a community of practice approach to policy clarification and training. Business systems acquirers in the Services and DOD Components work with functional proponents to manage their programs. As part of the 

AT&L reorganization, I am creating a Special Assistant for Software that will report 

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to me directly. This office will focus on addressing the challenges that the Department has faced with implementing and managing major software based programs 

or complex weapon systems, like the Joint Strike Fighter program, that include a 

significant amount of embedded software. 

As you know, newly enacted sections 873 and 874 of the Fiscal Year 2018 NDAA 

require that DOD select a number of programs to pilot agile development methods. 

My staff is assessing several high-risk, software-intensive candidates to pilot use of 

tailored acquisition procedures and DevOps software methods to meet simplified requirements. Each Service has had programs that experienced cost growth, schedule 

delays, or difficulty in delivering operational capability. These programs present opportunities to try new and innovative acquisition approaches precisely because cost/ 

schedule/performance are already off track. The potential benefits from new development methods outweighs concerns about deviating from an existing and previously 

unsuccessful plan. We will monitor the selected programs to inform further development of best practices guides, Defense Acquisition University training materials, 

and policy changes. It is important that we consider and assess the best approach 

for bringing essential reliability and cybersecurity skills into the engineering and 

design process early enough to avoid costly redesign and late defect discovery—and 

enable rapid incremental delivery of secure, reliable software. Updating current policy will be an iterative effort as we continue to gain agile software development experience. Formal acquisition policy changes are forthcoming that will institutionalize several improvements undertaken over the past two years via legislation, 

including transition or delegation of milestone decision authority to the lowest appropriate level. This will reduce decision delays and streamline alignment of resources with schedules to reflect end-user capability needs and timelines. 

In addition, we will leverage several years of work piloting Rapid Cyber Acquisition processes allowed within existing law and policy to assist United States Cyber 

Command as they comply with the Fiscal Year 2018 NDAA section 1642 requirement to complete an ‘‘ . . . evaluation of alternative methods for developing, acquiring, and maintaining software-based cyber tools and applications.’’ In short, we are 

committed to rapidly modernizing how DOD develops software. 

94. Senator PERDUE. Secretary Lord, which programs do you intend to make 

changes to? 

Secretary LORD. I defer to the Service Acquisition Executives to confirm changes 

envisioned for those programs for which I have delegated Milestone Decision Authority, in accordance with section 825 of the Fiscal Year 2016 NDAA. However, I 

anticipate the Services and DOD Components will be making changes to several 

programs, with OSD support as needed. 

In addition, we are changing our approach to some complex, joint programs for 

which I have retained acquisition oversight. We are leveraging commercial best 

practices and lessons learned from early work of the Defense Digital Service and 

the Defense Innovation Unit Experimental (DIUx) for programs such as the F–35 

Lightning II, Next Generation Operational Control System (OCX), and Air & Space 

Operations Center—Weapon System (AOC–WS). 

The F–35 Joint Program Office (JPO) has reassessed the planned approach for 

executing Follow-on Modernization (FoM) and determined that we cannot continue 

as we did in the System Development and Demonstration (SDD) phase to apply a 

slow, rigid ‘‘big bang’’ development approach2 designed and optimized for hardware 

intensive solutions. The F–35 JPO is instead establishing a holistic acquisition 

strategy based on agile practices called Continuous Capability Development and Delivery (C2D2). The C2D2 methodology is designed to deliver continuous modernization, enhancements, and improvements to the entire F–35 Air System, and deliver 

Block 4 in smaller capability drops to the Warfighter on an expedited timeline. This 

new agile approach to capability development will be characterized by capabilitybased engineering, agile/automated test, parallel development and operational test, 

flexible contract strategies, and new Cost Estimating Relationships. Additionally, 

this approach will be facilitated by an increased use of open architectures, Government-purpose data rights, and the right organic software engineering skill sets to 

effectively manage the process. The result is that capabilities will be continuously 

developed using expedient, tailored, predictable processes and will be available to 

the field in relevant, timely, verified releases. The Department must apply a more 

rapid and iterative process to field its software intensive solutions, aligned with enabling hardware upgrades, to keep pace with the dynamic threat environment and 

maintain the viability of the Joint and International F–35 fleet over its 50+ year 

lifecycle. The F–35 JPO is now in the process of formalizing the C2D2 acquisition 

strategy. 

93 

Following a Critical Change in 2016, the AOC–WS program continued to struggle 

with a traditional acquisition approach. Even the most optimistic schedule projections indicated the program would not field capability for several more years. The 

Air Force re-assessed AOC modernization plans in light of DIUx successes with 

agile development of the Tanker Planning Tool (TPT). The Air Force is now pursuing a twelve month Pathfinder proof of concept that will deliver a dynamic targeting capability and validate the agile methodology. OCX is currently implementing modern software development techniques via DevOps. This approach, recommended by Defense Digital Services, will help produce high quality software for 

Blocks 1 and 2. Raytheon expects to field those major system elements in 2021– 

2022. 

As a result of sections 873 & 874, of the Fiscal Year 2018 NDAA and with the 

Department’s adoption of commercial best practices, the Services and Defense Agencies are encouraged to adopt iterative and agile approaches more broadly in order 

to reduce the time needed to deliver capabilities. The Defense Innovation Board, the 

Defense Digital Service, DIUx, and the Department as a whole will continue to examine high payoff opportunities for streamlining of current policies, practices, and 

processes. 

95. Senator PERDUE. Secretary Lord, how will you ensure that new software intensive programs do not fall victim to the same problems that plague current programs? 

Secretary LORD. The Department is early in the process of adopting DevOps and 

agile software development practices to deliver software capabilities more rapidly 

and in smaller increments. Several programs, such as the Reserve Component Automation System, already utilize a variety of agile development tools and quality 

metrics (such as velocity, sprint burn down charts, and release burn up charts). 

Newer piloting activities, particularly in the area of cyber capability development, 

are instituting governance forums to emphasize user involvement in early experimentation/observation efforts and allow user feedback to shape capability development, with less emphasis on perfecting all requirements before proceeding to development activities. We anticipate that new programs of record that stem from these 

pilots, such as the forthcoming Joint Cyber Command and Control, Unified Platform, and Persistent Cyber Training Environment, will benefit from these types of 

governance processes. 

In addition, practitioners will be able to share lessons learned, isolate recurring 

challenges, and identify requests for policy-makers to remove bureaucratic roadblocks. OSD will engage with governance across portfolios of programs to ensure 

they are progressing toward their objectives. 

We should expect improved outcomes when DOD and industry collectively empower a workforce of motivated and properly trained program management teams 

with sufficient insight into the risks, opportunities and ultimate rewards of a capability developed, tested, and fielded quickly and with end-user participation. To 

modernize software engineering (SWE) competency and practice, we need to start 

with our people. The Department needs to be able to identify and characterize its 

software engineering and acquisition professionals so that it can assess and address 

its SWE workforce gaps (quantity/quality) and inform its recruiting efforts. Recent 

rapid advances in SWE skills, technology, and modern software development practices have proven highly successful in a competitive marketplace. Examples include 

scaled Agile, build/test/release automation environments, continuous integration and 

tool chains, and DevOps. To increase use of these solutions, the Department must 

realign its processes for identifying, training and managing software competencies 

to keep pace with these advances. Initial policy changes and process improvements 

are already underway. These initial steps are part of a crawl, walk, run strategy 

that addresses an increasingly complex and uncertain cyber environment and that 

will transform our software development processes and improve our products in the 

months and years to come. 

96. Senator PERDUE. Secretary Lord, as the Department and Services seek to 

change their acquisition systems, particularly in the context of software intensive 

systems, in what ways do you need to change your approach to testing? 

Secretary LORD. Software is an integral part of all Department capabilities, to include weapon systems, information enablers and business systems. The Department 

needs to modernize our practices, workforce competencies and training to enable 

more rapid delivery of reliable and secure software across the enterprise. DOD 

needs to consider how modern, commercial best practices and robust software development can help avoid late big bang integration and defect discovery. The DepartVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00097 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
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ment also needs to move towards earlier, more frequent test engagements, which 

are focused on working capabilities, using short cycle, incremental, testable software 

builds. This allows developers to conduct multiple test and integration events and 

field intermediate products to gain user acceptance and feedback to improve future 

builds or increments. Cybersecurity T&E must be integrated with these efforts, and 

the Department is working to provide acquisition programs with approaches to integrate earlier cybersecurity testing and industry software testing best practices. 

97. Senator PERDUE. Secretary Lord, what changes do you intend to make to developmental test processes and organizations? 

Secretary LORD. Software is an integral part of all Department capabilities, to include weapon systems, information enablers and business systems. The Department 

needs to modernize our practices, workforce competencies and training to enable 

more rapid delivery of reliable and secure software across the enterprise. DOD 

needs to consider how modern, commercial best practices and robust software development can help avoid late big bang integration and defect discovery. The Department also needs to move towards earlier, more frequent test engagements, which 

are focused on working capabilities, using short cycle, incremental, testable software 

builds. This allows developers to conduct multiple test and integration events and 

field intermediate products to gain user acceptance and feedback to improve future 

builds or increments. Cybersecurity T&E must be integrated with these efforts, and 

the Department is working to provide acquisition programs with approaches to integrate earlier cybersecurity testing and industry software testing best practices. 

Testing is a critical component of software development and can be a time-consuming aspect of software delivery. The Department’s testing communities need to 

evolve their testing policies, procedures and approaches to accelerate software fielding cycles. Automation and artificial intelligence are areas the Department needs to 

invest in and leverage highly efficient industry best practice, improved adoption of 

automation, artificial intelligence, and higher fidelity integration labs. The Department’s testing community needs to collaborate with industry to identify new ways 

of addressing software testing requirements and adopt best practices for agile development and DevOps development which leverage performance and cybersecurity 

test data from early in development through sustainment. For example, in fiscal 

year 2017, the current OSD level DT&E organization supported 22 Cyber Table Top 

Exercises with programs that averaged identified 15 High or Very High system vulnerability risks per event. Cybersecurity risk will continue to challenge the Department as it moves to more COTS based software and cloud-based environments. Mission-Based Cybersecurity Risk Assessments must become the norm across the system development life cycle for the Department. 

I will work with the Undersecretary of Defense for Research and Engineering and 

the Director of Operational Test and Evaluation community to include the operational test community’s equities of suitability, effectiveness, and cybersecurity are 

considered early in both the design and the developmental test process to ensure 

efficient testing is done. My ultimate goal is to acquire safe, combat-capable systems 

for the Warfighter at the speed of relevance. 

98. Senator PERDUE. Secretary Lord, how can you better collaborate with the Director of Operational Test and Evaluation to speed time to deployment while making sure that deployed capabilities are safe and fit for purpose? 

Secretary LORD. Software is an integral part of all Department capabilities, to include weapon systems, information enablers and business systems. The Department 

needs to modernize our practices, workforce competencies and training to enable 

more rapid delivery of reliable and secure software across the enterprise. DOD 

needs to consider how modern, commercial best practices and robust software development can help avoid late big bang integration and defect discovery. The Department also needs to move towards earlier, more frequent test engagements, which 

are focused on working capabilities, using short cycle, incremental, testable software 

builds. This allows developers to conduct multiple test and integration events and 

field intermediate products to gain user acceptance and feedback to improve future 

builds or increments. Cybersecurity T&E must be integrated with these efforts, and 

the Department is working to provide acquisition programs with approaches to integrate earlier cybersecurity testing and industry software testing best practices. 

Testing is a critical component of software development and can be a time-consuming aspect of software delivery. The Department’s testing communities need to 

evolve their testing policies, procedures and approaches to accelerate software fielding cycles. Automation and artificial intelligence are areas the Department needs to 

invest in and leverage highly efficient industry best practice, improved adoption of 

95 

automation, artificial intelligence, and higher fidelity integration labs. The Department’s testing community needs to collaborate with industry to identify new ways 

of addressing software testing requirements and adopt best practices for agile development and DevOps development which leverage performance and cybersecurity 

test data from early in development through sustainment. For example, in fiscal 

year 2017, the current OSD level DT&E organization supported 22 Cyber Table Top 

Exercises with programs that averaged identified 15 High or Very High system vulnerability risks per event. Cybersecurity risk will continue to challenge the Department as it moves to more COTS based software and cloud-based environments. Mission-Based Cybersecurity Risk Assessments must become the norm across the system development life cycle for the Department. 

I will work with the Undersecretary of Defense for Research and Engineering and 

the Director of Operational Test and Evaluation community to include the operational test community’s equities of suitability, effectiveness, and cybersecurity are 

considered early in both the design and the developmental test process to ensure 

efficient testing is done. My ultimate goal is to acquire safe, combat-capable systems 

for the Warfighter at the speed of relevance. 

QUESTIONS SUBMITTED BY SENATOR BEN SASSE

DIUx 

99. Senator SASSE. Secretary Lord, what obstacles do you anticipate while making 

DOD’s overall acquisition effort function more like DIUx, the Strategic Capabilities 

Office (SCO), and the Rapid Capabilities Offices (RCO) in the various services? 

Secretary LORD. We intend to transition from a traditional, linear acquisition 

process to an adaptive acquisition ecosystem. The goal of this transition is to allow 

acquisition professionals to use multiple pathways/models for their programs as a 

standard practice. In some cases, that will require the agility demonstrated in the 

DIUx/SCO/RCO models. When successfully prototyped and implemented, the goal 

would be to scale the innovative solution across the adaptive acquisition ecosystem. 

We will need to attract, develop and retain the appropriate acquisition work force. 

A key element for training will be to reorganize the Defense Acquisition University 

(DAU) curriculum to focus on the appropriate use of specific contract vehicles by 

presenting case studies that depict actual programs. I envision a much more modular approach to developing courses with one to two day modules focusing on specific subjects with pertinent examples. We desire to instill a culture of ‘‘creative compliance’’. 

100. Senator SASSE. Secretary Lord, how will you scale the acquisition success 

you’ve had with DIUx, SCO, and the RCOs as you begin the formal split of Acquisition, Technology, and Logistics (AT&L) into Research and Engineering (R&E) and 

Acquisition and Sustainment (A&S) on February 1, 2018? 

Secretary LORD. We intend to transition from a traditional, linear acquisition 

process to an adaptive acquisition ecosystem. The goal of this transition is to allow 

acquisition professionals to use multiple pathways/models for their programs as a 

standard practice. In some cases, that will require the agility demonstrated in the 

DIUx/SCO/RCO models. When successfully prototyped and implemented, the goal 

would be to scale the innovative solution across the adaptive acquisition ecosystem. 

We will need to attract, develop and retain the appropriate acquisition work force. 

A key element for training will be to reorganize the Defense Acquisition University 

(DAU) curriculum to focus on the appropriate use of specific contract vehicles by 

presenting case studies that depict actual programs. I envision a much more modular approach to developing courses with one to two day modules focusing on specific subjects with pertinent examples. We desire to instill a culture of ‘‘creative compliance’’. 

101. Senator SASSE. Secretaries Esper, Geurts, and Wilson, how has your service 

worked with DIUx or other offices to use Other Transaction Authority (OTA) to 

speed up acquisition cycles? 

Secretary ESPER. The Defense Innovation Unit Experimental (DIUx) provides a 

mechanism for the Army to connect with small, non-traditional businesses in the 

technology sector, and has assisted the Army with contracting and market research 

to speed up acquisition cycles. For example, DIUx supported the Army Cyber Command in the procurement of an industry standard end-point platform that increases 

network asset awareness and visibility. The Army has achieved success using Other 

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space operations (DCO) capabilities. The Army will continue to leverage OTAs and 

other instruments to keep pace with the rate of technological change, as well as enable widespread use of evolutionary and streamlined acquisition approaches. 

Secretary GEURTS. The DON uses OTAs to accelerate prototyping and acquisition, 

where appropriate, and has engaged with DIUx and other offices on multiple occasions. 

DON’s recent and current OTA efforts leverage the U.S. Army’s OTA experts in 

Picatinny working through DIUx and a number of industry consortia for command 

and control, cyber, vertical lift and ordnance. Some examples include use of the 

Army’s DOD Ordnance Technology Consortium for prototypes and demonstrations 

for the Electromagnetic Rail Gun, the Hypervelocity Projectile, high energy lasers, 

and radio frequency weapons technology. Our special operations forces, explosive 

ordnance disposal community, C4I professionals, and unmanned underwater vehicle 

designers are all currently using OTA for advances in unmanned and counter unmanned systems, human systems and talent management, and leading edge software development techniques from Silicon Valley. 

Early collaboration has shown promise in getting the best commercial innovators 

and technology to help develop superior war fighting capability. Future efforts include expanding with key Naval warfare centers, system centers and laboratories, 

and continued leveraging of existing mechanisms such as Small Business Innovative 

Research. 

Secretary WILSON. We have multiple examples where OTAs have been used and 

would like to see replicated. One of these highly successful examples is the Light 

Attack Experiment, a live-fly event held in August 2017. Use of the OTA allowed 

the Air Force to move quickly, with the Light Attack Experiment taking place within 5 months of the Invitation to Participate being released to industry. Being able 

to move rapidly is critical to ensuring the Air Force can efficiently and effectively 

execute our experimentation campaigns. These campaigns are not acquisition programs, and allow the Air Force to explore the art of the possible and quickly assess 

utility for the warfighter. 

A second example is the Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) OTA consortium managed by the 

Air Force Research Laboratory (AFRL). AFRL’s Information Directorate in Rome, 

New York has an OTA with the System of Systems Security Consortium (SOSSEC) 

to develop C4ISR Information System prototypes, which will provide ‘‘plug-n-play’’ 

technologies via modern open systems architectures to provide rapid adaptation and 

integration of new capabilities. The agreement allows AFRL to quickly and efficiently reach the 70+ member companies of SOSSEC while leveraging SOSSEC as 

a single point intermediary, reducing overhead and facilitating project execution. 

The Air Force currently has four OTAs with industry for rocket propulsion systems, all of which require shared cost investment between the government and industry. These investments initiate the transition off the RD–180 by investing in critical Rocket Propulsion System technologies. These Rocket Propulsion Systems were 

proposed by industry for commercial launch systems that can be enhanced to meet 

more stressing National Security Space requirements. The Air Force intends to release an RFP later this summer for Launch Service Agreements to complete the development of the replacement launch systems continuing the shared industry/government investment approach. 

Finally, the Air Force established a Space Enterprise Consortium using an OTA 

to utilize for prototyping activities and to attract new space and non-traditional mission partners. 

AFFORDABLE ACQUISITION

102. Senator SASSE. Secretary Lord, are any legislative, policy, or regulatory 

changes needed to increase small businesses or non-traditional defense contractor 

involvement in DOD acquisition programs? 

Secretary LORD. As I lead the congressionally directed reorganization of DOD’s 

management of Acquisition, Sustainment, Research and Engineering; I will identify 

and implement or recommend appropriate legislative, policy, or regulatory changes 

to increase small business or non-traditional defense contractor involvement in DOD 

acquisition programs. In the meantime, I recommend the following six legislative 

changes related to the Small Business Innovation Research and Small Business 

Technology Transfer (SBIR/STTR) programs to immediately help DOD increase 

small business or non-traditional defense contractor involvement in DOD acquisition 

programs. 

1. Program Permanence for SBIR and STTR—The SBIR and STTR programs are 

proven enablers that allow DOD to engage with small business and research 

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institutions to develop technical capabilities for many complex problems facing 

our warfighters today. In addition to providing enhanced capabilities for national security, these programs are a significant driver of innovation in our Nation–leveraging U.S. strengths in entrepreneurship, acceptance of risk, and access to technical talent and smart capital to create businesses that are shaping 

the commercial technology landscape. In fact, the section 809 panel volume 1 

report recommended DOD, ‘‘Build on the success of the SBIR/STTR and RIF 

programs.’’ Unfortunately, these two critical programs, SBIR/STTR, are not 

permanent and require periodic reauthorization by Congress. Making these 

programs permanent would allow for consistency and remove uncertainty over 

the long-term support for this critical driver of innovation for DOD and job 

growth for the country. Permanency also improves the ability for the DOD consumers of SBIR/STTR technology solutions to plan for technology integration 

and insertion, and clarifies the program status for contracting officers, thus improving the timeliness of awards and development of technical solutions. 

2. Use of Other Transaction Authority (OTA)—Other Transaction Authority (10 

U.S.C. sections 2371 and 2371b) provides DOD with a flexible business tool to 

enable smarter and more efficient acquisition of research projects and prototype systems. Agreements under this authority can improve the operation of 

the SBIR and STTR programs by allowing a flexible agreement with the ability 

to quickly award SBIR/STTR efforts and decrease the time between Phase I 

and Phase II awards. In addition to decreasing time to prototype, the use of 

OTA can reduce wait times for small businesses and decrease the level of contracting overhead during the Phase II award process. Amending 15 USC 

638(e)(3) to include OTA in the definition of SBIR/STTR funding agreement 

will greatly enhance the ability of OTAs to contribute to innovation and job 

growth by including them as an option for funding SBIR and STTR research. 

3. Reauthorize the pilot three percent Assistance for Administrative, Oversight, 

and Contract Processing Costs Authority—The SBIR/STTR Reauthorization 

Act of 2011 (Public Law 112–81) authorized the head of each federal agency 

required to conduct an SBIR program to use up to 3 percent of such funds for 

costs relating to administrative, oversight, and contract processing activities. 

This pilot admin authority expired on September 30, 2017. Reauthorization of 

this authority will provide necessary resources to administer the programs, 

conduct targeted outreach, enhance fraud waste and abuse efforts, and implement efforts to improve program responsiveness. DOD Components used this 

authority to enhance SBIR/STTR outreach and marketing efforts and improve 

the availability of commercialization and transition support to small businesses. An effort to use Contracting Focus Centers for SBIR/STTR to streamline acquisition processes, reduce time to contract award, reduce proposal burdens and standardize the experience for submitters has been discontinued due 

to expiration of this authority. 

4. Reauthorize Phase Flexibility—In today’s environment, rapid delivery of technical capabilities to the warfighter is critical. Phase flexibility, or Direct to 

Phase II, provides the Department with the ability to shorten the development 

cycle for critical technology solutions as appropriate. By using the phase flexibility authority, the Air Force was able to quickly develop and field devices for 

dismounted navigation in a GPS denied environment. The potential for a direct 

to Phase 2 award also encourages companies with more mature technologies 

to participate in the program, further enhancing the technical solutions available to DOD. 

5. Authorize DOD to approve waivers—The ability to approve waivers for DOD 

Components and Agencies consistent within the intent of the SBIR/STTR programs will improve the ability for DOD to provide responsive program execution. DOD and its components need the ability to make rapid decisions for the 

most effective use of SBIR/STTR funding in support of technology overmatch. 

This request is not to change the SBA’s role but would provide the Secretary 

of Defense with the authority to approve waivers for DOD components and 

agencies in the efficient use of SBIR/STTR funding. Examples of the waiver 

types are a waiver to exceed the time limit to notify a small business of their 

selection for award and a waiver to exceed award amount guidelines by more 

than 50 percent. 

6. Authorize DOD to conduct pilot programs to improve SBIR and STTR processes—DOD needs the ability to experiment with new processes and procedures in the use of SBIR/STTR authority to quickly respond to emerging 

threats, technology advances, and market changes. DOD needs the ability to 

create and execute pilot programs to evaluate the effectiveness of innovative 

SBIR and STTR processes to include but not be limited to, efforts to decrease 

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time to prototype, methods to work with DOD innovation efforts to include 

SBIR technology in capability enhancements, developing methods to work with 

DIUx and other organizations to leverage rapid contracting and rapid prototyping initiatives, and contracting process improvements. 

PROGRAM MANAGERS

103. Senator SASSE. Secretaries Lord. Esper, Geurts, and Wilson, what problems 

exist with the way program manager personnel rotations are currently conducted 

and how might such rotations be altered to increase continuity and efficiency in acquisition programs? 

Secretary LORD. Recent statutory changes require any Program Manager for an 

ACAT I or IA program assigned before Milestone B to be assigned at least through 

Milestone B approval. Any ACAT I or IA Program Manager assigned immediately 

following Milestone B approval is required to be assigned until initial operational 

capability is achieved. By policy, program managers outside of these periods will be 

assigned for at least 4 years or until the completion of the phase of the program 

that occurs closest in time to the date on which the person has served in the position for 4 years. These changes are recent enough to preclude recognition of any 

trends. 

Based on trends previous to the statutory change, the biggest challenge to ensuring adequate tenure length for military program managers of major acquisition programs is competing with requirements associated with career progression and promotion. In the past, some military program managers were rotated from their program manager position with notably less than four years of tenure (the previous requirement). This was often due to being promoted to general/admiral, or to gain 

other experiences needed to remain competitive for promotion. Follow-on job opportunities also led to shorter than optimum tenures for some civilian program mangers albeit at a lower rate than military counterparts. 

The most effective means to improve continuity and efficiency is to more strictly 

enforce the tenure agreements program managers are required to sign before beginning their tour as program manager. The Department needs to ensure the agreements conform to the above criteria and that they are adhered to. Some have suggested that continuity would be improved if only civilians were eligible for the program manager position. However, I do not feel there is a need for this limitation 

since each community brings unique skills and knowledge. Personnel with these 

varied skills should be available and selected based on the needs of the program. 

A second initiative that may improve continuity and efficiency in acquisition programs is for the Services to ensure program managers have completed all required 

training before beginning their program manager tour. Often, for various reasons, 

some resident training is not completed before the program manager has started in 

their position and must be completed sometime during their tour. The Department 

can increase consistency and take better advantage of skills and knowledge gained 

in class if all required training was done prior to managing the program. 

Secretary ESPER. In an effort to promote greater accountability, I would aim to 

ensure the alignment of the duty assignments of PMs with the Milestones established for their programs to ensure there is a clean handover of the program at critical points, and that clear measures of effectiveness—cost, schedule, and performance—can be assessed. I would aim to do the same with PEOs and their responsibility for the highest priority programs in their portfolio. 

Secretary GEURTS. I believe Program Manager (PM) personnel are rotated properly in the Navy. We assign PMs and Deputy Program Managers (DPMs) using a 

very selective slating process where both military and civilian applicants are considered for each PM and DPM position. We closely monitor the performance of the PMs 

and DPMs and have these individuals sign tenure agreements based on the ACAT 

Level of their program. While the personnel have a prescribed tenure, Navy Leadership monitors the phase of the program and determines the proper time to rotate 

personnel on a case by case basis as necessary. For example, in certain circumstances, Navy Leadership may extend a PM to ensure disruptive changes are 

not made immediately prior to a program milestone. 

Secretary WILSON. The Air Force takes the rotation and development of its program managers seriously. The Air Force strives to make certain its program managers rotate between assignments based on the individual’s skill-levels and capabilities so they are developed for future assignments. We have established processes to 

approve program manager moves earlier than their expected tours are completed. 

These are approved by the Service Acquisition Executive. We continue to closely 

monitor key leadership moves during critical milestones on our programs. 

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QUESTIONS SUBMITTED BY SENATOR BILL NELSON

SPACE ACQUISITION

104. Senator NELSON. Secretary Wilson, recently the Commander of STRATCOM, 

General Hyten, said this country has lost the ability to ‘‘go fast’’. He said we now 

take four years to study a problem before do something about it. He also said this 

is not acceptable when it comes to space, because while we can compete right now, 

in the future, others will easily overtake us. I was glad to hear that you had agreed 

with him. So, what institutional changes is the Air Force making when it comes to 

space acquisition? 

Secretary WILSON. I have requested delegation of Acquisition Category I programs 

from AT&L to the Air Force in order to speed decision making and avoid multiple 

levels of bureaucracy. Internally, the Air Force delegated Acquisition Category II 

and Acquisition Category III programs to the lowest possible level. We are evaluating how we organize our acquisition centers to be more responsive and agile to 

new and changing threats and to work with our operators to make our warfighting 

forces more effective. We are also leveraging developmental planning, experimentation, and prototyping to support fielding of future Air Force capabilities to support 

the joint force. Our technically advanced Air Force must embrace a willingness to 

‘‘fail fast’’ in order to iterate and harvest lessons as keys to innovation. 

105. Senator NELSON. Secretary Wilson, to what extent does space acquisition 

need to be different than other programs outside of space? 

Secretary WILSON. Every warfighting domain faces unique challenges that impact 

how we develop, acquire, and present our forces. All domains need to be responsive 

to new and changing threats and be able to rapidly integrate new capabilities to 

make our warfighting force more effective. This agility must extend through the entire space enterprise, to include how we learn about the threat; develop solutions; 

acquire, test, deploy, operate, and evolve new systems; and ensure our space mission 

force is ready to defeat a thinking adversary in a complex, multi-domain 

battlespace. 

106. Senator NELSON. Secretary Wilson, how will you prioritize making these 

changes in regards to the other Air Force missions? 

Secretary WILSON. The action I have taken are for all programs, not just for 

space. The Air Force has requested the delegation of the Milestone Decision Authority for Acquisition Category I (ACAT I) Major Defense Acquisition Programs from 

the Under Secretary of Defense for Acquisition & Sustainment back to the Air 

Force. Of the 14 programs recently delegated or reverted back to the Air Force, 

seven fall under the space umbrella. 

We will continue to work with the Under Secretary of Defense for Acquisition & 

Sustainment for additional delegations of Milestone Decision Authority to the Air 

Force for other programs, which we are well-suited to execute. 

While the Office of the Secretary of Defense has delegated significant programs 

to the Air Force, the Air Force has taken steps to delegate decision authority for 

ACAT II programs from the Service Acquisition Executive to lower levels, either the 

Program Executive Officer (PEO) in order to shorten the acquisition timeline to field 

needed capabilities. PEOs have also delegated ACAT III programs to O–6 level Program Directors where appropriate. 

107. Senator NELSON. Secretary Wilson, what changes need to be made to space 

acquisition that would capitalize on cost savings that have been made by commercial space? 

Secretary WILSON. Private sector research and development continues to outpace 

military investments in space. The Air Force is actively exploring opportunities to 

leverage the commercial sector wherever possible, including launch, space command 

and control, and satellite communications. One place where change would be helpful 

is in the use of next-generation commercial satellite communication services. The 

Air Force has been using commercial satellite communications for years but found 

legal and policy impediments to taking full advantage of the cost savings. A legislative proposal that is working through the approval process for fiscal year 2019 

would remove hurdles and allow the Air Force to take full advantage of the potential reduced costs and increased performance capability of commercial systems. 

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CYBER ACQUISTITION

108. Senator NELSON. Secretaries Lord, Esper, Geurts, and Wilson, Another area 

we need to be able to move fast in is in acquiring cyber capabilities. Can you explain 

how your services are acquiring cyber capabilities in coordination with Cyber Command? 

Secretary LORD. As the Department stands up its Cyber Mission Force (CMF) of 

133 teams, the Services and U.S. Cyber Command are both playing a key role in 

equipping this force for conducting cyberspace operations. Currently, the Services 

have the lead role for acquiring the capabilities for equipping Cyber Protection 

Teams. Equipping the Combat Mission Teams and National Mission Teams is a 

shared acquisition responsibility. To help synchronize the acquisition of cyberspace 

capabilities across the Department, U.S. Cyber Command conducts quarterly cyber 

capability reviews with the Services. 

U.S. Cyber Command’s acquisition authorities were recently enhanced. As part of 

the Fiscal Year 2016 NDAA section 807 (Acquisition Authority of the Commander 

of U.S. Cyber Command), the USD(AT&L) delegated acquisition authority to Commander, Cyber Command to organically manage non-major system acquisitions (i.e., 

acquisition category (ACAT) III or below). 

For larger ACAT programs or acquisitions of foundational infrastructure (e.g., the 

Unified Platform (UP)) or software architectures the duration of which is expected 

to last more than five years, U.S. Cyber Command works with the Services to provide validated cyberspace operations requirements. 

In response to previous Congressional direction (e.g., NDAA 2016 section 1645), 

the Department designated Executive Agents (EAs) for critical cyber capabilities. 

The U.S. Army is the DOD EA for DOD Cyber Training Ranges and the acquisition 

lead for the Persistent Cyber Training Environment. The U.S. Air Force is the DOD 

EA for Joint Cyber Command and Control as well as the UP. For the UP, the U.S. 

Air Force is the EA. The stand-up of these EAs and governance boards has helped 

the Department place the appropriate emphasis on delivering these key capabilities 

required to train and equip the Cyber Mission Force. 

One of our most important ongoing acquisition efforts is for the Unified Platform, 

a cyberspace operations capability that will help the CMF teams more effectively 

conduct cyberspace operations. U.S. Cyber Command conducted UP operational 

prototyping in fiscal year 2017 and is continuing prototyping in fiscal year 2018 to 

supplement the longer term technology prototyping and development of the U.S. Air 

Force’s UP Program Management Office (PMO) and the Services’ related acquisition 

PMOs. 

Secretary ESPER. The Army recognizes the need to rapidly evolve cyber capabilities by quickly injecting technologies in response to new and emerging threats. The 

Army is increasingly synchronized with U. S. Cyber Command and the other services through joint programs such as unified platform, joint command and control, 

and the persistent cyber training environment. Through Army Cyber Command, the 

Army’s component headquarters to the U. S. Cyber Command, the Army remains 

aligned to US Cyber Command requirements and priorities. In fact, the Army was 

designated by Joint Staff as the lead service for a priority US Cyber Command Joint 

Urgent Operational Needs Statement last year. The Army continues to rapidly develop that solution and other capabilities based on US Cyber Command 

prioritization. With regard to the Army’s portion of the Cyber Mission Forces, the 

Army has made great strides by developing requirements, prioritizing resources, 

and establishing rapid acquisition models. The Army’s cyber acquisition approach 

leverages rapid requirements development, the use of Other Transaction Authority 

to achieve commercial off the shelf solutions, some limited authorities for Army 

Cyber Command in-house procurements, and a ‘‘DevOps’’ environment to create new 

capabilities. Through this approach, the Army is well-postured to present fully 

equipped Cyber Mission Forces to US Cyber Command according to joint standards. 

Secretary GEURTS. The Navy works closely with both US Cyber Command (USCC) 

and the Defense Information Systems Agency (DISA) to acquire joint/common cyber 

tools. As the service components of USCC, Navy Fleet Cyber Command (FCC) and 

Marine Forces Cyberspace Command (MARFORCYBER) are the direct links between the Department of the Navy and USCC. FCC and MARFORCYBER coordinate requirements and acquisition with the Navy and Marine Corps operational 

staffs (OPNAV and HQMC) and their acquisition commands. OPNAV and HQMC 

also directly coordinate with the Joint Staff and USCC on Joint Urgent Operational 

Needs that trigger rapid acquisition efforts. The cyber Subject Matter Experts at 

FCC, MARFORCYBER and PMW 130 assist USCC and DISA with design, analysis, 

and acquisition of cyber tools and systems to meet Naval requirements. An example 

of this is the current system used DOD wide (with metrics and reporting to USCC) 

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of the Host Based Security System (HBSS). DISA manages the central acquisition 

of the HBSS system and licenses based on USCC and Service requirements and the 

Navy (via PMW 130) deploys the system to all required networks and computers. 

The Navy acquires other cyber capabilities (e.g. SHARKCAGE) that are unique to 

the Navy for cyber intrusion detection. In accordance with the direction given in Fiscal Year 2018 NDAA section 1642, USCC is also working closely with the Services 

to evaluate alternative methods and repeatable, disciplined processes for increasing 

the speed of developing, acquiring, and maintaining effective cyber tools across the 

DOD. 

Secretary WILSON. As the Executive Agent for the Unified Platform and Joint 

Cyber Command & Control programs, the Air Force is overseeing the standup of 

program management offices focused on agile software development processes. Direction from stakeholder governance bodies, which includes representatives from the 

Air Force, Cyber Command and other Department of Defense stakeholders, guides 

the course for these programs. To support maximum warfighter responsiveness for 

evolving requirements, the primary decision body is delegated to the lowest practical 

level (O–6/Civilian equivalent) with stakeholder Senior leadership providing oversight and strategic direction. This framework allows for close teaming between the 

operations and acquisition communities. 

QUESTIONS SUBMITTED BY SENATOR CLAIRE MCCASKILL

CONTRACTOR PERFORMANCE ACCOUNTABILITY

109. Senator MCCASKILL. DOD IG audits have determined that contracting officials do not always use the Contractor Performance Assessment Reporting System 

as required system, and that the system itself has ineffective internal control measures that allow incomplete evaluations of contractor performance to be submitted. 

Secretary Lord, what is being done to shore up the weaknesses in this system to 

ensure that Federal source selection officials have access to timely, accurate, and 

complete past performance assessment information necessary to make informed decisions related to contract awards? 

Secretary LORD. The Department is fully committed to improving past performance assessment information. The Department addressed and closed out all the recommendations in the latest DOD IG audit (DODIG–2017–081) issued on May 9, 

2017. The Director, Defense Procurement and Acquisition Policy issued a memorandum on May 16, 2017, to DOD Contracting Organizations and Service Acquisition Executives emphasizing the importance of contractor past performance evaluations and the quality of written narratives to ensure ratings given are fully supported as described in the Federal Acquisition Regulation. In addition, they were reminded to assign responsibility and management accountability for the completeness of past performance submissions. 

Furthermore, the Department forwarded the DOD IG auditors system enhancement recommendations to the General Services Administration (GSA), who has 

management responsibility for the Federal wide mandated Contractor Performance 

Assessment Reporting System (CPARS). GSA implemented a system enhancement 

in August 2017 to require narratives for every factor for which there is a rating. 

An additional enhancement was made to provide the FAR ratings definitions as a 

‘‘prompt’’ to facilitate ratings consistent with written narratives. GSA and the Department believes these system enhancements will improve the quality of past performance information available to our Acquisition Officials. The CPARS Guide was 

also amended to emphasize that ‘‘a supporting narrative must be provided for each 

factor used.’’ 

Lastly, the Department monitors and posts quarterly compliance CPARS Metrics 

to ensure evaluations are being accomplished in a timely manner. The metrics are 

posted here: https://www.acq.osd.mil/dpap/pdi/eb/monthly—contract—distribution—metrics.html. The January 9, 2018, metric for the first quarter of fiscal year 

2018, shows a DOD compliance rate of 83 percent, which far exceeds the average 

Federal Agency compliance rate of 60 percent. 

110. Secretaries Esper, Geurts, and Wilson, what training is being done for your 

contracting officials to ensure they know how to properly use this required system, 

and what are you doing to hold contracting officials accountable for their failure to 

use systems like this? Are you ensuring that their use of or failure to use such systems is included in their regular evaluation reports? 

Secretary ESPER. The Army leverages existing Contractor Performance Assessment Reporting System (CPARS) training provided by the CPARS Program ManVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00105 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
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ager for those Army contracts that meet reporting eligibility requirements. Additionally, many of our Command-level contracting activities provide one-on-one training 

to assessing officials (including requiring activity representatives) on the ‘‘how to’’ 

workflow process for the use of the CPARS system. The Army also takes advantage 

of Army Logistics University and Defense Acquisition University training modules 

that incorporate limited CPARS instruction. 

The Army’s contracting leadership continues to place emphasis on monitoring contractor performance of all contracts that meet reporting eligibility requirements 

through CPARS. Contracting Leaders are held accountable at the Command-level 

for ensuring that CPARS accurately captures contractor performance. 

There are a number of systems that contracting officials utilize in the performance of their duties, CPARS is just one of those systems. Metrics and measures are 

in place to ensure compliance with utilization of those systems across the Acquisition community. Depending upon mission priorities, leadership includes compliance 

with set standards in individual evaluation assessments which would include utilization of the standard reporting systems such as CPARS. 

Secretary GEURTS. The DON is committed to ensuring that Navy and USMC contracting officials and program offices are using the Contractor Performance Assessment Reporting System (CPARS). Contracting officials are responsible for registering applicable contracts after award into the CPARS and program/requiring office personnel are responsible for completing the actual assessments of Contractor 

performance. DON works closely with the Naval Sea Logistics Center Portsmouth, 

which is charged with providing supplier performance and material quality support/ 

services across a broad customer base that includes the DON, Joint Services, DOD, 

and Federal and Civilian Agencies. Together, we develop and implement CPARS 

training and guidance that is supportive of Navy procedures and processes. Additionally, each Navy buying activity has specific CPARS Agency POCs charged with 

monitoring local CPARS compliance. 

Secretary WILSON. The Air Force uses the Contractor Performance Assessment 

Reporting System (CPARS) tool and policies established by the Defense Department 

to train personnel and record evaluations of contractor performance. Individuals appointed to CPARS roles must complete training specific to their CPARS role(s) within 30 days of appointment. This includes contracting officers as well as program 

managers and PEOs. 

111. Senator MCCASKILL. Secretary Esper, in June 2017 the GAO released a report (GAO–17–457) that I asked them to conduct regarding the Army’s contract operations. One of their key findings was that Army leaders regularly did not have 

the necessary information to properly evaluate and improve operations regarding 

contracts. Another important finding was the existence of the ‘‘use it or lose it’’ mentality when it comes to measuring the efficiency of obligating taxpayer funds. Essentially, the most important metric involved was whether or not funds were obligated, 

but not whether they were obligated efficiently or whether the best deal was obtained for the taxpayer. One of the key recommendations made that go to both of 

these issues was to develop metrics to assess contracting operations in terms of 

timelines, cost savings, and contractor quality—metrics that are not currently part 

of the assessment of the quality of the Army’s contracting operations. What has the 

Army done since the publication of this report to try and change the ‘‘use it or lose 

it’’ culture mentality of the Army’s contracting and procurement personnel? What 

is the Army doing to ensure that proper metrics are being put in place so that senior Army leaders like yourself and Acquisition Decision Authorities can make informed decisions when it comes to overseeing, evaluating, and managing the Army’s 

contracting operations? 

Secretary ESPER. The Army acquisition community emphasizes proactive requirements development and timely funding obligation. Early planning requirements review with all stakeholders, and the receipt of funding improves contracting execution and counters the ‘‘use it or lose it’’ culture. The frequent reliance on Continuing 

Resolutions to provide incremental funding to the Army, however has an extremely 

negative impact on contract and budget execution. Continuing Resolutions force the 

Army to postpone projects, the maintenance of equipment, and initiatives involving 

training and recruitment. Continuing Resolutions also prevent the Army from reprogramming funding to meet emerging needs and prohibit the start of new programs to modernize for future threats. For the current fiscal year, it locks the Army 

into previous levels, mandating a level of spending that is billions less than the fiscal year 2018 Presidents Budget. 

In September and November 2017, the Acting Secretary of the Army issued eight 

key Acquisition Reform Initiatives, to include evaluating the health of Army Contracting through assessment of contracting operations. Subsequently, an initial set 

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of metrics have been put in place. An integrated product team was formed to identify additional strategic metrics that will be value-added, influence strategic decisions and support optimal acquisition outcomes. 

112. Senator MCCASKILL. In October 2016 GAO released a report (GAO–17–17) 

on the need for DOD to improve its efforts to identify and use contractor inventories 

in particular for contracted services. GAO noted that the services have not developed the plans to integrate the contractor inventories into their total workforce 

planning, strategic budgeting, and decision-making process. 

Secretary Lord, what efforts are you taking at the Departmental level to drive 

better integration of contractor inventories into the workforce planning, strategic 

budgeting, and decision-making process for determining the use of service contracts? 

Secretary LORD. As the Department seeks to maximize lethality, improve and sustain readiness, grow the force, and increase capability and capacity, we must improve the overall management of our Total Force of active and reserve military, government civilians, and contracted services. The contractor inventories that DOD 

Components are required to compile provide increased visibility into contracted 

services, supporting and informing the Total Force planning and management necessary in achieve these objectives. Jointly with the Under Secretary of Personnel 

and Readiness, I signed out annual guidance in September 2017 directing DOD 

Component heads to complete reviews of contracted services in accordance with the 

statutory requirements of 10 U.S.C. sec. 2330a. These reviews are particularly focused on categories of high-risk contracted services providing special studies or analysis that is not research and development, information technology services and telecommunications services; and contracts providing professional, administrative, or 

management services, especially where they are staff augmentation contractual efforts to in-house organic government staff. These reviews are designed to: 1) ensure 

that DOD components are not inappropriately leveraging contract support for inherently governmental functions or critical work; 2) assess the level or reliance on contractor support and capabilities; and 3) facilitate and inform workforce mix determinations, force management decisions, risk assessments, mission prioritization, 

and resource allocation. However, the inventory and subsequent review process is 

just one tool/process that DOD components have at their disposal. We are also continuously improving on and executing Services Requirements Review Boards to validate and prioritize contract requirements. As part of the on-going reform efforts, the 

Deputy Secretary of Defense (DEPSECDEF) established a Services Contract Reform 

Team to initiate key reforms and develop new capabilities in support of these goals. 

As a member of the DEPSECDEF’s Reform Management Group, I am overseeing 

the Reform Team’s efforts as they develop / implement new capabilities in requirements prioritization, category management, should-cost for contracted services and 

data management to ensure the required integrated cross-functional areas appropriately support all the aforementioned processes that govern how the Department 

acquires services and utilizes services contracts within the Department to execute 

its mission. 

113. Senator MCCASKILL. Secretaries Esper, Geurts, and Wilson, what are your 

plans for using service contract inventories to inform the strategic budget and workforce planning and implementation processes? 

Secretary ESPER. The inventory of contracted services enables the Army to fully 

understand the composition of its workforce, provides better oversight to avoid duplication of effort or shifting of in-house reductions to contract, enables the Army 

to better account for and explain its total workforce, and allows for more informed 

workforce staffing and funding decisions. 

Since its implementation in 2005, the Army has learned that gaps and discrepancies between the Inventory of Contracts for Services (ICS)/Enterprise Contractor 

Manpower Reporting Application (eCMRA) data and our programming/budgeting information systems has limited our ability to use the data to inform the strategic 

budget and workforce planning and implementation processes. Beginning in fiscal 

year 2017 (FY17), the Army embarked on an initiative to integrate the contracted 

services data and our programming, budgeting, and execution information systems. 

The goal of this initiative is to improve the accuracy and auditability of contracted 

services data throughout the programming, budgeting, and execution cycles; increase the accessibility of contracted services data to support planning, programming, and budgeting decisions; and ensure the most appropriate and cost efficient 

application of military, civilian, and contract sources of labor. Full data integration 

is scheduled to be complete for development of the Army Fiscal Year 2021–25 Program Objective Memorandum. 

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Secretary GEURTS. The DON compiles the annual inventory of contracted services 

per Defense Department guidance and distributes the information to the financial 

and manpower Assistant Secretaries for planning purposes. DON uses the Service 

Requirements Review Board (SRRB) process as a means to provide oversight and 

to validate services acquisition requirements. The DON requires that every services 

acquisition requirement valued in excess of $150,000 be reviewed, vetted and approved by a SRRB. These SRRBs are chaired by Flag Officers or Senior Executives 

and involve leadership reviews by the requirement owner(s) as well as the acquisition and financial communities. 

Secretary WILSON. The Air Force utilizes our service contracts as required for mission accomplishment and will ensure compliance with all statutory requirements as 

described below: 

Budget Process: The Air Force will continue to utilize the service contract inventory to establish an average contractor work year cost by appropriation which is 

used to calculate contractor full-time equivalents as required in 10 U.S.C. § 235. 

Workforce Planning and Implementation Process: All contracted services requirements are reviewed by the cognizant manpower office which is incorporated into the 

requirements approval processes across the Air Force prior to initiating a service 

contract. The local level decision authorities throughout the Air Force have real-time 

access to the information that is used to build the service contract inventory and 

are able to use this information for their decision making processes. 

114. Senator MCCASKILL. Secretary Wilson, we have discussed the need to improve the timeliness and efficiency of civilian hiring within the Air Force and that 

you established a taskforce to identify and reform the hiring process including a review of regulatory and legislative fixes. Can you please submit more details on the 

goals and efforts of the taskforce and provide a list of existing hiring authorities the 

Air Force is using to recruit new talent and any regulatory or legislative barriers 

to improving the hiring process? 

Secretary WILSON. Civilian hiring is a top priority for the Air Force. The ability 

to hire top-tier talent efficiently and effectively is essential to sustaining a ready 

and lethal force. The Air Force is undertaking a multi-pronged approach that will 

significantly improve civilian talent management from recruiting through the entire 

employee life-cycle. 

Four lines of effort include: Resources, Legislation, Policy and Process. Within 

these lines of effort, the Air Force team has identified near-term (Quick Wins), midterm (1–3 years) and long-term (3–5 years) goals to reform and accelerate civilian 

hiring. These goals include, but are not limited to: fixing IT infrastructure latency, 

streamlining employee onboarding, increasing workforce planning efforts and maximizing usage of direct hiring authorities. In addition, the Air Force is pursuing a 

civilian talent management pilot program that incorporates greater flexibilities associated with attracting, compensating and retaining top talent. The desired end state 

of these Air Force civilian hiring efforts is to have an agile, flexible Talent Management System responsive to warfighter needs. 

Under the National Defense Authorization Act for fiscal years 2016 and 2017, 

Congress provided the Department of Defense with numerous new Direct/Expedited 

Hiring Authorities enabling the Air Force to hire faster in critical occupations like 

depot maintenance and cyber. By using these authorities, the average time-to-hire 

is reduced by 40–50 days. These authorities include: 

• Fiscal Year 2016 NDAA, section 1112, Direct-Hire Authority (Acquisition-Veterans Technical Experience) 

• Fiscal Year 2017 NDAA, section 1106, Direct-Hire Authority for Post-Secondary 

Students and Recent Graduates 

• Fiscal Year 2017 NDAA, section 1110, Direct Hire Authority for Financial Management Experts in the DOD 

• Fiscal Year 2017 NDAA, section 1125, Temporary Direct Hire Authority for Domestic Defense Industrial Base Facilities, the Major Range and Test Facilities 

Base, and the Office of the Director of Operational Test and Evaluation 

• Fiscal Year 2017 NDAA, section 1643. Direct Hiring Authority for Cyber Workforce 

A critical barrier to Air Force civilian hiring is the lack of an Interchange Agreement that allows managers the ability to effectively manage its workforce across 

Title 10 Defense Civilian Intelligence Personnel System (Excepted Service) and Title 

5 General Schedule employees (Competitive Service) in response to mission needs. 

The Office of Personnel Management rescinded this agreement back in 2010 and 

there is currently no legal authority to internally manage this part of the hiring 

105 

process. The Office of Secretary of Defense and Intelligence Community’s efforts to 

have this agreement reinstated have not been successful. Absence of this agreement 

presents major obstacles to developing and retaining our civilian Airmen in the Intelligence career field. 

QUESTIONS SUBMITTED BY SENATOR JEANNE SHAHEEN

THE SMALL BUSINESS INNOVATION RESEARCH (SBIR) AND SMALL BUSINESS TECHNOLOGY

TRANSFER (STTR) PROGRAMS

115. Senator SHAHEEN. Secretary Lord, through the SBIR and STTR programs, 

Congress has provided the participating agencies with tremendous statutory flexibility to design their programs to best meet their needs. For example, even though 

the law says a Phase I award is typically six months in timeframe and $225,000 

to explore the promise of an idea, and a Phase II award is typically a maximum 

timeframe of two years and $1.5 million to further develop the idea, an agency has 

full authority to speed up the process. If DOD likes the shorter turn-around time 

of DIUx, the same can be done with the SBIR and STTR programs, for all the topics 

or topics that your program offices deem more time-sensitive. Will you make sure 

to maximize the SBIR and STTR programs and their transition into the warfighter 

as you form the two new Under Secretary offices for (Acquisition and Sustainment 

(A&S)) and (Research and Engineering (R&E))? 

Secretary LORD. I am committed to taking the lessons learned from programs conducted by DIUx, the Strategic Capabilities Office and the Special Operations Command’s SOFWERX and applying them to other acquisition programs. As we work 

over the next two years to design and implement the new structure I will ensure 

that we maximize the effectiveness of the SBIR and STTR programs to provide innovative solutions for our warfighters. The reauthorization of the Assistance for Administrative, Oversight, and Contract Processing Costs authority (Pilot Admin Authority) will improve our ability to improve program execution. Administration of 

the SBIR and STTR programs requires significant effort to improve commercialization, perform outreach initiatives to attract participants, streamline and simplify 

contracting and program procedures, implement and continue oversight and quality 

control measures, and perform activities related to the oversight and congressional 

reporting including fraud, waste and abuse prevention activities. Dedicated administrative funding will allow DOD organizations to more effectively administer the 

SBIR/STTR programs and maximize contributions. 

116. Senator SHAHEEN. Secretary Lord, as part of the Fiscal Year 2018 National 

Defense Authorization Act, Congress enacted a five-year pilot program that will help 

streamline the acquisition of technologies developed by non-traditional small businesses through the SBIR and STTR programs. Specifically, the provision requires 

the Secretary of Defense to establish this pilot program within 180 days that uses 

multiple award contracts for the purchase of technologies, supplies, or services that 

they developed under the SBIR and STTR programs. Will you commit to me that 

the Department will work with the Senate Committees on Small Business and Entrepreneurship and Armed Services to develop and implement this pilot program 

within the 180-day deadline? 

Secretary LORD. Yes, we will implement the pilot program within the 180 day 

deadline. The Navy currently supports this approach by using Indefinite Delivery/ 

Indefinite Quantity contracts for the purchase of technologies developed under the 

SBIR and STTR programs. I am committed to maximizing the effectiveness of all 

programs that contribute to the readiness and technological superiority of our 

forces. To that end I will work with all stakeholders to seek input and develop an 

effective pilot program to award multiple award contract vehicles to covered small 

business concerns for the purchase of technologies, supplies, or services that the covered small business concern developed under the SBIR or STTR program. I believe 

this effort has the potential to improve the efficiency of transition of SBIR and 

STTR technologies by simplifying the ability for all Services to acquire the innovations developed by small businesses under these programs. 

117. Senator SHAHEEN. Secretary Lord, please highlight recent successes of the 

SBIR/STTR programs in transitioning technologies to Phase III. 

Secretary LORD. I will highlight four successes of SBIR/STTR technologies 

transitioning to Phase III, one each from the Army, Navy and US Special Operations Command and one example of a cross agency transition success. 

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The PowerShade, a portable, survivable, and sustainable energy source for deployed operations, was developed by PowerFilm Inc. to support the US Army. The 

PowerShade integrates flexible solar panels into a fabric structure to provide power 

from solar energy and reduce the heat load on the structures it covers. This provide 

opportunities to reduce fuel consumption at Forward Operating Bases and provide 

tactical level power to deployed forces. The Army SBIR Program supported development of technology for applying PowerFilm’s flexible photovoltaic (PV) material to 

fabric and fabric structures. The two main products coming out of this program were 

the PowerShade structure and the lightweight foldable PV array. The PowerShade 

structure can span most standard military tents and work areas providing solar 

power and shade. The smaller foldable arrays can be carried in a backpack and deployed to recharge standard military batteries. Significant follow-on investments 

came from both DOD and private sources to drive continual improvement and implementation of these products. PowerFilm has received over $20 million in Phase 

III funding to improve and expand the technology into new products and allowed 

significant expansion of their manufacturing capacity. As a result, PowerFilm is a 

stable supplier of advanced portable power technology to DOD and commercial markets. 

The Adaptive Diagnostic Electronic Portable Testset (ADEPT) was developed by 

Mikros Systems, Inc. for the Navy as a maintenance workstation for AEGIS SPY– 

1 radar, designed to maintain, diagnose, align, repair, and calibrate this complex 

electronic system while also supporting remote predictive analytics and Condition 

Based Maintenance (CBM). A SBIR investment of just under $2.1M has generated 

over $100 million in Phase III funding as Mikros has extended ADEPT to cover 

other radar variants and developed a logistics support suite for surface combatants. 

ADEPT continues to expand its footprint into new radar and other systems, with 

a planned enhancement to provide remote support to the AEGIS Mk 99 Fire Control 

System, a collaboration with IBM that will provide big data analytics for combat 

systems CBM data. ADEPT will be installed in varied ship classes to help manage 

a broad inventory of Combat System Elements. 

Physical Optics Corporation developed the Advanced Micro Weather Sensor 

(AMWS) for USSOCOM for a SBIR investment of $2.45 million low-cost, lightweight, ruggedized, highly integrated sensor gathers and describes 18 characteristics of weather, such as wind speed, wind direction, precipitation, temperature, humidity and visibility. The AMWS replaces a much larger, less capable legacy system 

that is quickly becoming obsolete with a three-pound package less than 200 cubic 

inches in size. The Air Force awarded a $24.5 million Indefinite Delivery/Indefinite 

Quantity contract for the system and has funded $4.8 million for development and 

procurement of the AMWS and Micro Weather Sensor. 

The Creare LLC Directed Heating System for High Speed Manufacturing of Thermoplastic Composites, was developed under an Army SBIR and received US Air 

Force funding for transition to the F–35 program. The Directed Heating System 

(DHS) allows the local and efficient heating of thermoplastic composites improving 

tape feed rates by a factor of two over current techniques. Creare’s laser-based approach received approximately $1.5M in Phase III funding to transition this technology to the production of the F–35 aircraft. Creare is also working with a major 

fiber placement supplier to adapt the DHS technology to support carbon fiber applications in the automotive industry. 

BUY AMERICA CONTRACTING

118. Senator SHAHEEN. Secretary Lord and Secretary Geurts, the Committee continues to be concerned about the Department of Defense (and Federal Government 

at large) support for ‘‘Made in the USA’’ contracting opportunities. As qualified 

American companies—especially small businesses—consider participating in the 

Federal government procurement process, all options should be made available to 

consider these domestic manufacturers and employers when competing with comparative foreign firms for all federal contracting opportunities. The Committee has 

made clear our belief that price is not the single significant contributing factor toward making contracting awards for critical DOD contracts—a best value approach 

that considers past performance, quality and preferably domestic manufacturing 

should be incorporated in the procurement decision-making process. What efforts 

are the Department of Defense and service branches taking to ensure that domestic 

small businesses are afforded every opportunity to compete openly and fairly with 

foreign-owned large businesses for future contracts? 

Secretary LORD. The Department universally applies the restrictions of the Buy 

American statute (41 U.S.C chapter 83) which restricts the purchase of supplies 

that are not domestically produced end products. This law mandates that a prefVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00110 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
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erence be given for procuring ‘‘domestic’’ supplies/products, construction materials, 

and in some instances services. On limited cases, the Department considers offers 

of foreign products or components that are exempt from the restrictions of the Buy 

American statute if the origin of the products or components are from a Qualifying 

Country, which has a reciprocal defense procurement memorandum of understanding (MOU) or international agreement with the United States. Other limited 

exceptions may be granted to Designated Country products or components covered 

by the World Trade Organization Government Procurement Agreement or Free 

Trade Agreement, if purchasing eligible products or components that are valued 

above the particular trade agreement threshold. 

The Department awards a significant percentage of all contracting dollars to 

small businesses. DOD provides small businesses increased opportunities when competing with large businesses, foreign and domestic. The increased opportunities include small business goals, negotiated annually with the Small Business Administration (SBA). DOD and Federal Government contract programs authorize contracting officers to set aside certain federal contracts for eligible Women-owned 

small businesses, small businesses in HUBZones, Service-Disabled Veteran-Owned 

Businesses, Small Disadvantaged Businesses and the 8(a) Business Development 

Program. Small business set-asides are a powerful tool for helping small businesses 

compete for and win federal contracts. The Department and the Federal Government are currently working to increase opportunities for Small Businesses participating in multiple award contracts. 

Secretary GEURTS. Contracting officers located in the US are required to consider 

US small businesses first when making any buy valued over the micro-purchase 

threshold. Small Business Professionals have input to this decision for buys valued 

at or over $10,000. 

Continuous auditing programs such as Procurement Performance Management 

Assessments and Small Business Administration Surveillance Reviews are in place 

to assess how well contracting officers uphold these rules. New procurement personnel must take training on how to apply the small business preferences; contracting site Small Business Professionals supplement this training with updates 

and on-going guidance. On-going engagement with industry allows us to hear their 

concerns and know where to target additional oversight or education efforts. 

In addition, the Small Business Innovation Research (SBIR) and Small Business 

Technology Transfer (STTR) Program requires that all effort be performed within 

the USA. One of the unique selling features of the SBIR/STTR Program is the ability of the small businesses to deliver quality products and services, usually at lower 

prices, and to respond quickly to customer needs. An independent professional study 

of the DON SBIR/STTR Program concluded that Phase II projects conducted between 2000 and 2013 resulted in an average of $5.5 million in sales per contract, 

and a total of $14.2 billion in commercial and military sales, while creating 200,000 

new jobs at an average $70,000 wage. 

119. Senator SHAHEEN. Secretary Lord and Secretary Geurts, do foreign-owned 

firms benefit from less stringent contracting requirements, including small business 

sub-contracting rules? 

Secretary LORD. The Department universally applies the restrictions of the Buy 

American statute (41 U.S.C chapter 83) which restricts the purchase of supplies 

that are not domestically produced end products. This law mandates that a preference be given for procuring ‘‘domestic’’ supplies/products, construction materials, 

and in some instances services. When applying restrictions of the Buy American 

statute to procurement actions, it is typically not the firms country of ownership 

that matters, but rather the country of origin of the materials, components, or product which is considered. 

Foreign contractors do not have an advantage, regarding the Federal Acquisition 

Regulation (FAR) requirements for subcontracting plans and subcontracting limitations. The FAR requirements for subcontracting plans and subcontracting limitations, applies to all contractors, including foreign contractors. Contracts, including 

all subcontracted work, performed entirely outside of the United States and its outlying areas are exempt from the FAR subcontracting rules. 

Secretary GEURTS. No. Foreign-owned firms do not benefit from less stringent contracting requirements. Foreign-owned firms must meet all of the small business requirements that domestic large firms are required to meet. For example, subcontracting plans are required for contracts performed in the U.S. by both foreignowned and large domestic firms. Foreign-owned firms are treated as large businesses in being excluded from a small business set asides. 

The Buy American Act further limits domestic contracting from foreign firms. 

FAR Part 25 contains the Buy American Act protections. While some exceptions do 

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exist based on non-availability of certain commodities or items, there would be no 

difference in solicitation requirements based on foreign ownership. 

Under the SBIR/STTR Program the small businesses as well as the subcontractors must be U.S. owned and operated unless a specific waiver is granted. 

120. Senator SHAHEEN. Secretary Lord and Secretary Geurts, what steps are the 

Department of Defense and the service branches taking to ensure that Americanowned small businesses are given every opportunity to participate in Federal procurements? 

Secretary LORD. DOD has an excellent track record of providing maximum opportunities for American-owned small businesses to sell to the Department. In fact, 

DOD procured over $50 billion of products and services annually from small businesses during the past few years. This represents over 22 percent of the Department’s procurement actions that small businesses were eligible to fulfill. Virtually 

all of the small business procurement was with American-owned firms. We will continue our practices of complying with small business procurement laws, striving to 

meet our small business procurement goals, and leveraging the innovation and cost 

competitiveness of small businesses. SBA regulations require that a small business 

be ‘‘independently owned and operated’’ with ‘‘a place of business in the US’’ and 

that it ‘‘operates primarily within the US or makes significant contribution to the 

US economy through payment of taxes or use of American products, materials or 

labor.’’ We will continue to adhere to the laws provided by the Congress that enable 

American owned small businesses to compete successfully for DOD contracts. 

Secretary GEURTS. DON is engaged and deeply committed to ensuring that all 

types of small businesses are provided a chance to participate in DON contracting 

opportunities. DON, represented by the Office of Small Business Programs (OSBP), 

participates in small business networking and matchmaking events, as well as congressional, Federal, state, and local government small business outreach activities, 

conferences, training events, partnerships, and working groups. DON’s SBIR and 

STTR Program gives small businesses the opportunity to solve tough naval capability and performance challenges by providing innovative solutions, cost savings, 

and schedule efficiencies. DON has ten geographically dispersed buying commands, 

each of which has a Small Business Program Director. 

DON participates in two signature outreach events to communicate directly with 

small businesses across the country; The Navy League Sea Air Space Expo in April 

and the DON Gold Coast Procurement Event in August. These outreach events are 

great opportunities for small businesses to network and learn how the DON’s acquisition process works and contracting opportunities within the DON. 

121. Senator SHAHEEN. Secretary Lord and Secretary Geurts, are there areas 

where the Department believes contracting opportunities for domestic manufacturing small businesses can be improved? 

Secretary LORD. Small business manufacturers provide DOD with about 15 percent of the annual manufacturing needs of the Department. This equates to over 

$15 billion of about $100 billion of annual manufacturing procurement. Domestic 

manufacturing small businesses play an important role in providing parts to sustain 

DOD weapons systems. These small business manufacturers all meet the three criteria in existing laws: 1) they have a domestic place of business, 2) they primarily 

use domestic labor and materials and 3) they operate primarily within the US. In 

some instances, small business manufacturers lack the surge capability or ability to 

provide the continuous volume of supplies needed by DOD, such as for medical commodities, food or lumber. Nevertheless, we can improve contracting opportunities for 

domestic manufacturing small businesses through several approaches. First, we 

could use new or existing authorities to ease the contracting burden placed upon 

small businesses. Second, we can continue to seed future manufacturing by having 

a permanent Small Business Innovation Research program that enables domestic 

firms to mature their technologies and become future manufacturers. And finally, 

we can continue to encourage DOD’s large suppliers to use small business manufacturers in their supply chains as subcontractors. 

Secretary GEURTS. DON is engaged and deeply committed to ensuring that all 

types of small businesses are provided a chance to participate in DON contracting 

opportunities. DON, represented by the Office of Small Business Programs (OSBP), 

participates in small business networking and matchmaking events, as well as congressional, Federal, state, and local government small business outreach activities, 

conferences, training events, partnerships, and working groups. DON’s SBIR and 

STTR Program gives small businesses the opportunity to solve tough naval capability and performance challenges by providing innovative solutions, cost savings, 

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and schedule efficiencies. DON has ten geographically dispersed buying commands, 

each of which has a Small Business Program Director. 

DON participates in two signature outreach events to communicate directly with 

small businesses across the country; The Navy League Sea Air Space Expo in April 

and the DON Gold Coast Procurement Event in August. These outreach events are 

great opportunities for small businesses to network and learn how the DON’s acquisition process works and contracting opportunities within the DON. 

QUESTIONS SUBMITTED BY SENATOR KIRSTEN GILLIBRAND

STRENGTHENING MANUFACTURING IN THE DEFENSE INDUSTRIAL BASE

122. Senator GILLIBRAND. Secretary Lord, during your confirmation, you agreed 

that the Manufacturing USA Network is critical to ensuring the United States remains a global leader in manufacturing. Part of this bipartisan program’s mission 

is to use these public-private partnerships to develop and commercialize new defense technologies that are critical to our men and women in uniform, like the integrated photonics R&D happening at the DOD institute in Rochester, NY. In response to my questions, you had committed to placing a high priority on investing 

in the Manufacturing USA institute network. Since you were confirmed, what steps 

have you taken to evaluate what resources are required to support the institutes 

and other industrial base investment programs? 

Secretary LORD. The Department is committed to supporting the institutes at the 

agreed upon funding levels. In addition to the institute start-up funding under my 

direction, other DOD organizations have seen value in the institutes and are funding projects at the Institutes (see chart below). 

Institute 

DOD Funding 

Commitment on 

Start-up Agreement 

(in millions) 

Committed Industry Cost Share 

(in millions) 

DOD-directed Project 

Funding To-Date 

(in millions) 

America Makes (Additive Manuf.), Est. Aug 2012 (Youngstown, OH); satellite in El Paso, TX ...................................... $ 62 $ 58 $19.7 

Digital Manufacturing and Design Innovation Institute 

(DMDII), Est. Feb 2014 (Chicago, IL) .................................. $ 82 $106 $13.3 

LIFT—Lightweight Innovations For Tomorrow, Est. Feb 2014 

(Detroit, MI) .......................................................................... $ 70 $ 78 $ 0.7 

AIM Photonics (photonic integrated circuits), Est. Jul 2015 

(Albany and Rochester, NY) ................................................. $110 $502 $ 16 

NextFlex (Flexible hybrid electronics), Est. Aug 2015 (San 

Jose, CA) ............................................................................... $ 80 $ 99 $ 5.9 

Advanced Functional Fabrics of America (AFFOA), Est. Apr 

2016, Cambridge, MA .......................................................... $ 75 $272 

BioFabUSA (Advanced tissue biofabrication), Est. Dec 2016, 

Manchester, NH .................................................................... $ 80 $214 

Advanced Robotics for Manufacturing (ARM), Est. Jan 2017 

(Pittsburgh, PA) .................................................................... $ 80 $174 

The ecosystem within each of the technology spaces associated with the institutes 

consists of stakeholders from Government (local, state, and Federal level), academia, 

and industry (small, medium and large). To maintain a nationally relevant institute, 

all stakeholders must remain in a relationship with the institute. DOD is focused 

on implementing a strategy that will enable a continued partnership between the 

Department and the eight DOD-led institutes ensuring that they are providing 

value to the Department. We are planning a study that will assist us in developing 

a sustainable business model for the Institutes as they begin to transition from their 

initial start-up funding. 

With respect to other industrial base investment activities, the Institutes are part 

of a portfolio of industrial base investment programs. This portfolio includes the Institutes, OSD and Service Manufacturing Technology programs, the Defense Production Act Title III program, and the Industrial Base Analysis and Sustainment program. As part of on-going efforts in support of a number of Executive Orders, we 

are developing a deeper understanding of our industrial base challenges and opportunities and evaluating how to better position all of our investment programs for 

greater impact for the national security. These efforts will inform DOD decision 

making on our investment programs as we begin to develop our fiscal year 2020 

budget later this year. 

110 

123. Senator GILLIBRAND. Secretary Lord, is the Administration working towards 

establishing new Manufacturing USA Institutes within the network, and will there 

be an investment in the network in the upcoming budget requests to expand this 

work? 

Secretary LORD. The current DOD budget is focused on the eight existing DOD 

Institutes and does not contain funding to establish any additional Institutes. The 

Department works with the Department of Commerce’s National Institute of Standards and Technology (NIST), the Department of Energy, and other Government 

agencies to support the current Manufacturing USA network. Funding for the Manufacturing USA network is appropriated in the NIST budget request. Th2at being 

said, the Department is are working to develop contracting scenarios using Other 

Transaction Authorities and other innovative agreement methods that enable our 

acquisition program managers and others to better utilize the Institutes for faster 

innovation and product development. 

124. Senator GILLIBRAND. Secretary Lord, during your confirmation you confirmed 

your willingness to make greater use of DOD programs like financing available to 

defense suppliers through the Defense Production Act (DPA), to strengthen the nation’s defense production capacity. In the recently passed NDAA, Sec. 1771 created 

a pilot program to accomplish this, by directing DOD to use DPA to scale up production of defense technologies by providing incentives like purchasing commitments, 

issuing loans or loan guarantees, and giving funding to third party entities to support investments in small- and medium-sized manufacturers, including debt and equity investments. Will you commit to working with me to implement this pilot? 

Secretary LORD. I will happily work with you and your colleagues to advance the 

needs of the warfighter, and this pilot program has the potential to increase the Department’s flexibility to incentivize suppliers of all sizes. 

While section 1711 does not directly mention the Defense Production Act (DPA), 

it allows the pilot program to utilize ‘‘such other legal authorities as the Secretary 

considers applicable to carrying out the pilot program.’’ Title III of the DPA authorizes the use of purchases, purchase commitments, loans, and loan guarantees to address shortfalls facing the defense industrial base, and as such may be an appropriate authority to leverage through this program. 

I see purchase commitments, loans, and loan guarantees as innovative options for 

preserving the United States’ technological advantage. Purchase commitments offer 

an effective, market-based approach to bridge new technology from research and development prototypes to scalable production. Loans and loan guarantees provide a 

return-on-investment for the U.S. Government while establishing the credit history 

necessary for new businesses to obtain follow-on loans from the commercial sector. 

Through these market-based solutions, this pilot’s results have the potential to demonstrate how DOD can proactively preserve technology in the United States, rather 

than relying on the more reactive intervention of policy tools like Committee on Foreign Investment in the United States reviews. 

125. Senator GILLIBRAND. Secretary Lord, last year’s NDAA created a Manufacturing Engineering Education Program (MEEP) to prepare our workforce with indemand skills for advanced manufacturing to strengthen the nation’s defense industrial readiness. This program invests in training at universities and other education 

institutions across the country to help give students the skillsets necessary to succeed in the high-tech manufacturing workforce. This year’s NDAA continued support 

for MEEP. As MEEP has not yet been fully implemented since last year’s creation 

of the program, will you commit to working with me to ensure the program is stood 

up as soon as possible? 

Secretary LORD. I am committed to supporting this program and we are already 

making progress. A Funding Opportunity Announcement (FOA) was released on 12 

Jan 2018 in support of MEEP. The DOD, through the Office of Naval Research 

(ONR), seeks a broad range of consolidated and integrated multidisciplinary programs of education with an emphasis on developing multidisciplinary instruction 

that encompasses the total manufacturing engineering enterprise, providing opportunities for students to obtain relevant work experience in manufacturing, demonstrating faculty and student engagement with industry that is directly related to, 

and supportive of, the education of students in manufacturing engineering, and geographical diversity. White Papers for this FOA are due in February 2018 with expectation of awarding grants the end of June. 

In addition, we have also awarded three projects at Lightweight Innovations For 

Tomorrow (LIFT) and America Makes Manufacturing Institutes. The first project is 

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tion series, to reach seven states. The Advanced Curriculum in Additive Design, Engineering and Manufacturing Innovation (ACADEMI) Expansion Initiative will target design engineers, manufacturing engineers, and material scientists to learn 

skills from an integrated set of additive manufacturing disciplines. The third is the 

creation of a new scalable and replicable technical manufacturing curriculum, developed by LIFT. 

126. Senator GILLIBRAND. Secretary Lord, the Manufacturing Extension Partnership (MEP) program within the Department of Commerce supports a national network of centers that help the nation’s small and mid-sized manufacturers better 

compete by improving their technology, accessing skilled workers, and developing 

additional markets. Recognizing the well-established services MEP has developed, 

which have been proven to be successful, I believe that DOD should partner with 

MEP to strengthen the small and mid-sized manufacturers that are critical to the 

defense supply chain. Congress recognized the need for such a partnership by directing DOD to utilize MEPs within the Department’s Manufacturing USA institutes as 

well as to assist with the integration of small and mid-sized manufacturers into 

DOD’s supply chains. Will you commit to working with Commerce on making better 

use of MEP within DOD’s Manufacturing USA network and other efforts to 

strengthen the defense industrial supply chain? 

Secretary LORD. In May 2015, the Department signed a Memorandum of Understanding with the Department of Commerce, the National Institute of Standards 

and Technology, and the Hollings Manufacturing Extension Partnership (MEP). 

This MOU provides the following 

• DOD will leverage the assets and resources of the national MEP Program to 

assist the Manufacturing USA Institutes led by the DOD as they strive to 

broadly and deeply enhance their impact on small and medium sized U.S. manufacturers. 

• NIST MEP will expand its ability to positively impact the competitiveness and 

growth of U.S. manufacturers by developing expertise in the focus areas of the 

DOD-led institutes. 

The Department continues to work and support MEP activities. The most recent 

effort with the Department and the MEPs is the embedding of MEP personnel in 

the Manufacturing USA Institutes. The purpose being is to assist in connecting 

mostly small and medium size companies with the Institutes. The MEPs have become very active in the Manufacturing USA network and they are also participating 

in the ongoing review of the manufacturing and defense industrial base as directed 

by Executive Order 13806. 

MICROELECTRONICS

127. Senator GILLIBRAND. Secretary Lord, this committee has taken a great interest in ensuring that DOD has access to trusted and reliable microelectronics for use 

in defense systems. I understand that DOD is faced with the challenge or maintaining world class semiconductor research, design, engineering, and manufacturing capabilities—either in-house or in the private sector—at a time when budgets are constrained and when commercial microelectronics continues to far outstrip military capabilities. How do you plan to ensure that DOD maintains access to trusted and 

assured sources for the microelectronics it needs? 

Secretary LORD. The Department, in coordination with interagency partners, developed the Microelectronic Innovation for National Security and Economic Competitiveness (MINSEC) strategy to address current and future microelectronics needs, 

the threats to assured access to a robust industrial base, and continued U.S. leadership. This strategy drew from numerous reports, including the Defense Science 

Board, President’s Council of Advisors on Science and Technology, Defense Innovation Unit Experimental, Semiconductor Industry Association, and National Defense 

Industrial Association. The MINSEC strategy is also aligned with the requirement 

in the Fiscal Year 2017 National Defense Authorization Act, section 231, which directed a strategy to address access to assured microelectronics, including investments in science and technology, commercial microelectronics capabilities, and 

changes in policies, financial management, and public-private partnerships. 

As part of the larger whole of government MINSEC strategy, the DOD is investigating a strategy to resource a DOD MINSEC activity that focuses on disruptive 

research and development, modernization, and DOD unique technologies, e.g., strategic radiation-hardening. The DOD MINSEC activity would build upon the existing 

Trusted and Assured Microelectronics (T&AM) program, Trusted Access Program 

Office, the Joint Federated Assurance Center, and other related microelectronics activities. 

112 

The Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics (OUSD(AT&L)) initiated the T&AM program in the Fiscal Year 2017 President’s Budget to ensure assured microelectronics are available to meet the DOD’s 

needs. This program provides protections to ensure military unique chips are protected from malicious exploit (loss of DOD intellectual property), and from malicious 

tampering during design and manufacturing. 

128. Senator GILLIBRAND. Secretary Lord, what role does investment in domestic 

semiconductor microelectronics design and manufacturing play in that plan? 

Secretary LORD. Over the past decade, microelectronics manufacturing has migrated offshore. Although the shift to Asia has occurred, the U.S. is still the preferred investment location for leading edge fabrication, and today retains a supporting infrastructure of research, design, intellectual property rights, and physical 

plants that make the U.S. a viable investment market for the semiconductor industry. Aggressive investments and licit and illicit actions by peer nations threaten this 

remaining U.S. leadership. China alone purports investment of $150 billion and a 

strategy to achieve dominance in this critical technical area. 

The domestic semiconductor design and manufacturing industrial base is an important element of the Microelectronics Innovation for National Security and Economic Competitiveness strategy. The Department will seek to maintain access to 

U.S. domestic production of advanced state-of-the-art technologies. This includes advanced microelectronics design, fabrication, packaging and prototyping, and manufacturing capabilities, and the ecosystem of expertise, focused to develop innovative 

capabilities in performance, size, weight, and power for the strategic areas mentioned earlier. Further, DOD will seek opportunities to mature domestic state-of-thepractice foundries to produce more advanced technologies. This will allow more capacity for innovators, startups, research institutions, and other low-volume customers, such as the Aerospace and Defense community. Applications include autonomous and artificial intelligence systems, strategic and tactical high performance 

computing, sensing and processing platforms, and high performance weapons and 

electronic warfare capabilities. 

129. Senator GILLIBRAND. Secretary Lord, what role do investments in research 

and innovation play in this effort to ensure access to trusted microelectronics? 

Secretary LORD. Research and innovation play a central role in the strategy to 

ensure access to trusted microelectronics. Similarly, strategic management of the intellectual property resulting from these efforts is critical to ensuring return these 

investments. The Trusted and Assured Microelectronics program is investing in 

technology to ensure access to assured microelectronics by increasing the ability of 

the defense industrial base and commercial industry to more easily secure, assure, 

protect, and validate the design and manufacture of microelectronics across the domestic supply base for critical DOD and national security needs. 

A core element of the DOD Microelectronics Innovation for National Security and 

Economic Competitiveness is disruptive research and development in partnership 

with industry that is captured and protected in a robust domestic ecosystem. These 

investments will allow the DOD and the nation to maintain leadership in the next 

generation of assured microelectronics. 

Long-term, a whole of government strategy is needed that includes a focus on fostering innovation and reducing the barriers to quickly deliver assured microelectronics. Microelectronics is an enabling technology that can deliver overmatch capabilities to the DOD and commercial industry in the areas of autonomy, artificial intelligence, secure communications, financial and big data information processing, as 

well as nuclear and space modernization. 

130. Senator GILLIBRAND. Secretary Lord, what role will DIUx, Service S&T programs, DARPA, ManTech, DMEA, and OSD(MIBP) each play in this effort to ensure 

access to trusted microelectronics? 

Secretary LORD. The DOD Microelectronic Innovation for National Security and 

Economic Competitiveness (MINSEC) activity is currently led by the Assistant Secretary of Defense for Research and Engineering (ASD(R&E)). This activity and participants in the Trusted & Assured Microelectronics (T&AM) program and the Joint 

Federated Assurance Center (JFAC) include the Air Force Research Laboratory, the 

National Security Agency, the Naval Surface Warfare Center Crane, the U.S. Army 

Aviation and Missile Research, Development, and Engineering Center (AMRDEC), 

as well as Defense Microelectronics Initiative (DMEA), Defense Advanced Research 

Projects Agency (DARPA), the Department of Energy (DoE), and the Intelligence 

Community science and technology (S&T) organizations. 

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The Deputy Assistant Secretary of Defense (MIBP) is a key partner in DOD 

MINSEC when facilitating interactions with the industrial base. In accordance with 

current policy, the DMEA accredits trusted suppliers of application-specific integrated circuit (ASIC) services, which are predominantly State of the Practice 

(SOTP), for the design and development of custom ASICs for DOD end-use by programs. However the scope of DOD’s current and future needs extend beyond what 

is currently available through today’s accredited suppliers. 

DOD MINSEC investments, through the DARPA Electronics Resurgence Initiative, will also spur the disruptive technology required to ensure that the U.S. leads 

the next generation of microelectronics technology and that it is assured. Further, 

the JFAC, T&AM program, DARPA, DMEA, and industry have, and are developing, 

the methods to protect the design intent and operability of critical designs, which 

is needed to access State Of The Art (SOTA) foundries in a secure manner. For 

those needs that have no commercial supplier due to process or protection requirements, DMEA will continue to serve as a foundry of last resort. 

131. Senator GILLIBRAND. Secretary Lord, will you use the authorities of the Defense Production Act in this effort to ensure access to trusted microelectronics? 

Secretary LORD. We are currently using DPA authorities, most notably Title III, 

to ensure access to trusted microelectronics. 

The Department is already using the authorities, most recently in a June 2017 

Presidential Determination which addressed a variety of challenges facing the Space 

Industrial Base. More specifically, this Presidential Determination selected Radiation Hardened Trusted Field Programmable Gate Arrays as an area of concern, 

and since then the program has been used to develop a trusted domestic source of 

this capability to minimize or eliminate the potential insertion of malicious circuitry 

in U.S. manufactured semiconductors. Planned funding for this project is $14.0 million over the next five years. 

In addition, the President just signed a determination that designates trusted advanced photomasks as essential to national defense. The trusted advanced 

photomasks project will assure a chain of custody throughout all steps of the design 

and manufacturing process of photomasks from a ‘‘trusted’’ merchant supplier. This 

is critical for ensuring the integrity and confidentiality of legacy and state-of-theart integrated circuits used in sensitive U.S. Government systems. This sector is becoming increasingly costly and supply chains are lengthening, threatening U.S. 

dominance in this space but also reinforcing the essentiality of Government action 

to mitigate this threat. Planned funding for this project is $7.2 million. 

DPA also has authorities that are being utilized to protect the domestic microelectronics industrial base, including Title I (Priority in Contracts and Orders) and Title 

VII (General provisions including the authority establishing the Committee on Foreign Investment in the United States (CFIUS)). DOD recognizes the significance of 

ensuring access to trusted microelectronics and we are using numerous DPA titles 

to advance this essential technology. 

COMBAT RESCUE HELICOPTER MISSION

132. Senator GILLIBRAND. Secretary Wilson, the many Air Guard units including 

the 106th Air Rescue Wing in Gabreski, NY accomplish complex missions flying 

Combat Rescue Helicopters. When it comes to acquisition of new Combat Rescue 

Helicopters, though, this is a program in which the Air Force has chosen not to field 

the aircraft in a concurrent and proportional manner, putting the Air Guard at risk 

of never receiving the latest helicopters and technology. Our Airmen regularly go 

out on rescue missions, and they should not be forced to use the oldest helicopters 

for years to come. Last month, it was rumored that Air Force leadership is considering a shift of the Combat Rescue Helicopter mission from Air Combat Command 

to Air Force Special Operations Command—a decision that could result in fewer 

new rescue helicopters reaching the force and disadvantaging Guard units. Has the 

Air Force reached a decision as to whether the Combat Rescue Helicopter mission 

will remain under Air Combat Command or shift to Air Force Special Operations 

Command and if so what is that decision? 

Secretary WILSON. The decision to realign Air Force Rescue from Air Combat 

Command to Air Force Special Operations Command has not been made. Both applicable Major Command Commanders continue analysis and discussion in determining the most appropriate train and equip command. 

133. Senator GILLIBRAND. Secretary Wilson, if the Air Force has not yet decided 

whether to move the Combat Rescue Helicopter mission, what is the timeline for 

the decision? 

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Secretary WILSON. While analysis remains ongoing, and discussions amongst 

Major Command Commanders continue, there is no established timeline in terms 

of Air Force Rescue Major Command Realignment. 

134. Senator GILLIBRAND. Secretary Wilson, if the Air Force moves the Combat 

Rescue Helicopter to Air Force Special Operations Command, will you ensure that 

Air Guard units continue to receive new aircraft concurrently and proportionately 

with active units? 

Secretary WILSON. If Air Force Rescue is moved from Air Combat Command to 

Air Force Special Operations Command, analysis will continue in order to determine 

the most capable force needed to meet Combatant Command requirements. It 

should also be noted in terms of delivery of future and effective rescue capability 

to the Air National Guard, that ALL Rescue Air National Guard units are scheduled 

to receive the HH–60G Operational Loss Replacement aircraft FIRST. These aircraft 

will be the lowest hour and most advanced HH–60G aircraft in the Air Force inventory, and are meant to offset the later delivery of the Combat Rescue Helicopter to 

the Air National Guard. Force laydown and unit distribution of the new Combat 

Rescue Helicopter are yet to be determined; however, ANG rescue forces will remain 

a critical component of the AF’s capability. 

135. Senator GILLIBRAND. Secretary Wilson, how does the Air Force plan to keep 

the Senate Armed Services Committee apprised of any changes to the Combat Rescue Helicopter mission? 

Secretary WILSON. My Office of Legislative Liaison will advise the Senate Armed 

Service Committee if a decision is made to change the Combat Rescue Helicopter 

mission. 

AIR FORCE RESEARCH LAB ROME

136. Senator GILLIBRAND. Secretary Wilson, one of the good fortunes we have in 

New York is our talented workforce, and the Air Force Research Lab in Rome is 

the perfect example of an installation that has benefited from the state’s ability to 

attract and concentrate high-skilled workers. Past Air Force leaders have visited 

Rome and been very impressed by the amazing work happening at the lab and its 

leadership on cyber in the Air Force and beyond—which you mentioned during this 

hearing. Will your team work with my staff to schedule a visit for you to join me 

in Rome, NY and see this critical work firsthand? 

Secretary WILSON. I’d be happy to join you for a tour of the AFRL Information 

Directorate’s (AFRL/RI) facilities. I will ensure my team will work with your office 

to set up a visit to the Rome, NY facility. 

QUESTIONS SUBMITTED BY SENATOR RICHARD BLUMENTHAL

HUEY REPLACEMENT PROGRAM

137. Senator BLUMENTHAL. Secretary Lord, the UH–1N ‘‘Huey’’ average fleet age 

is over 40 years, and continues to operate under national security waivers because 

it is incapable of meeting requirements to protect our ICBM fleet and National Capital Region. The Huey Replacement program has been discussed in some form since 

2001. What is your involvement with this program? Why are we now spending an 

additional $400 million in research and development for the Huey Replacement program, when we could be fielding helicopters sooner by capitalizing on existing production lines? 

Secretary LORD. The Under Secretary of Defense for Acquisition, Technology, and 

Logistics designated the UH–1N Replacement program as an Acquisition Category 

1C pre-Major Defense Acquisition Program and delegated Milestone Decision Authority to the Secretary of the Air Force on August 16, 2016. The Air Force provided 

the following information about their acquisition strategy. 

The current acquisition strategy capitalizes on existing production lines. Through 

voluntary information exchanges, all interested vendors identified performance 

shortfalls that necessitated research and development funding to meet the Air 

Force’s operational requirements. This funding is necessary to integrate non-developmental items, support test activities, and deliver the initial four helicopters. Executing the current acquisition strategy will result in the quickest fielding of a replacement helicopter that meets the requirements. 

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CYBER AND TECHNOLOGY SECURITY

138. Senator BLUMENTHAL. Secretary Lord, I am concerned following reports 

about foreign owned or affiliated products used by the federal government, including 

the Department of Defense, which may pose a risk to our national security. What 

type of national security due diligence is performed on products and services before 

DOD decides to purchase? 

Secretary LORD. The Department has several mechanisms in place to, on a caseby-case basis, perform due diligence on products and services before purchase. DOD 

Instruction 5200.44, ‘‘Protection of Mission Critical Functions to Achieve Trusted 

Systems and Networks (TSN),’’ outlines a risk management approach that spans the 

entire systems’ lifecycle, including criticality analyses to identify critical functions 

and components; use of all-source intelligence on suppliers of critical components; 

and use of TSN processes, tools and techniques to manage risk. We use Program 

Protection Planning (PPP) activities to address the full spectrum of security risks 

for the critical components contained in our weapons systems to assess supply chain 

vulnerabilities and implement mitigations to manage risk to system functionality. 

Using the PPP to inform courses of action, we can apply the vendor-neutral Federal 

Acquisition Regulation and Defense Federal Acquisition Regulation Supplement 

(DFARS). 

Absent suspension or debarment, or country- or vendor-specific prohibitions, individual vendors are not precluded from providing products or services to the DOD, 

nor would our cleared defense contractors be precluded from using such products or 

services. However, when necessary, there are authorities available to the Department to limit or exclude vendors in specific circumstances, and the Department is 

currently working on a number of activities to review and improved its capabilities 

to identify and mitigate these supply chain risks. 

More specifically, section 806 of the Ike Skelton National Defense Authorization 

Act (NDAA) for fiscal year 2011, as amended, has been implemented at DFARS Subpart 239.73, ‘‘Requirements for Information Relating to Supply Chain Risk.’’ The 

rule enables DOD components to exclude a source that fails to meet established 

qualifications standards or fails to receive an acceptable rating for an evaluation 

factor regarding supply chain risk for information technology acquisitions, and to 

withhold consent for a contractor to subcontract with a particular source or to direct 

a contractor to exclude a particular source. 

Section 841 of the NDAA for fiscal year 2015, implemented with Class Deviation 

2015–O0016, ‘‘Prohibition on Providing Funds to the Enemy and Authorization for 

Additional Access to Records,’’ provides the authority for heads of contracting activities to terminate, void, and restrict contracts, grants, and cooperative agreements, 

with an individual or entity that has been identified by the Commander of U.S. Africa Command, U.S. Central Command, U.S. European Command, U.S. Pacific Command, U.S. Southern Command, or U.S. Transportation Command to have provided 

funds, supplies, or services directly or indirectly to a person or entity that is actively 

opposing U.S. or Coalition forces (′′the enemy′′) involved in a contingency operation, 

or that failed to exercise due diligence to prevent such activities. Section 842 of the 

NDAA for fiscal year 2015, implemented with Class Deviation 2015–O0016 and 

Class Deviation 2018–O0008, ‘‘Additional Access to Records in the United States 

Central Command,’’ authorizes access to contractor and subcontractor records, to ensure that funds, supplies, or services under a covered contract are not provided directly or indirectly to the enemy. 

In the area of space launch, section 50131 of title 51, U.S. Code (U.S.C.), requires, 

with limited exceptions, the Federal Government ‘‘shall acquire space transportation 

services from United States commercial providers whenever such services are required in the course of its activities.’’ 51 U.S.C. 50101 defines ‘‘United States commercial provider’’ as ‘‘a commercial provider, organized under the laws of the United 

States or of a State, that is—(A) more than 50 percent owned by United States nationals; or (B) a subsidiary of a foreign company and the Secretary of Transportation 

. . . . [makes certain findings].’’ Additionally, the National Space Transportation Policy (as revised November 21, 2013) requires ‘‘United States Government payloads 

shall be launched on vehicles manufactured in the United States unless an exemption is coordinated . . . through an interagency process.’’ DOD has processes in place 

to ensure these requirements are met. 

Under circumstances where a foreign company is acquiring a U.S. company, DOD 

uses its participation in the Committee on Foreign Investment in the United States 

(CFIUS) to identify and mitigate the national security risks that arise from the 

transaction. Pursuant to section 4565 of title 50, U.S. Code, CFIUS may negotiate, 

enter into or impose, and enforce any agreement or condition with any party to a 

covered transaction to mitigate any threat to the national security of the United 

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States that arises as a result of the transaction. These mitigation agreements can 

and do address concerns related to foreign control over DOD products and services 

resulting from CFIUS-reviewed transactions. 

In addition, DOD is able to utilize a number of country- or vendor-specific authorities: • A country-specific prohibition is found in section 1296 of the NDAA for fiscal 

year 2017, ‘‘Maintenance of Prohibition on Procurement by Department of Defense of People’s Republic of China-Origin Items That Meet the Definitions of 

Goods and Services Controlled as Munitions Items When Moved to the ‘600 Series’ of the Commerce Control List,’’ amends section 1211 of the NDAA for fiscal 

year 2006, and specifically prohibits Communist Chinese military companies 

from supplying, through a contract or subcontract at any tier supplies or services covered by the United States Munitions List or the 600 Series of the control 

list of the Export Administration Regulations, contained in Supplement No. 1 

to part 774 of subtitle B of title 15 of the Code of Federal Regulations to DOD. • In the area of commercial satellites, 10 U.S.C. 2279 requires, with a limited exception, that the Secretary of Defense may not contract for satellite services 

with a foreign entity if the Secretary reasonably believes a ‘‘covered foreign 

country’’ has an ownership interest that may affect satellite operations; or the 

foreign entity plans to or is expected to provide a launch or other satellite services under the contract from a covered foreign country. The term ‘‘covered foreign country’’ includes the People’s Republic of China, North Korea, and any 

country that is a state sponsor of terrorism. This prohibition can be overcome 

if the Secretary of Defense determines there a national security need to enter 

into such a contract, and not later than seven days before entering into the contract, in consultation with the Director of National Intelligence (DNI), submits 

to the congressional defense committees a national security assessment with 

various findings. • A vendor-specific authority is provided at section 1634(a) of the Fiscal Year 

2018 NDAA, ‘‘Prohibition on the Use of Products and Services Developed or Provided by Kaspersky Lab,’’ prohibits any Department, agency, organization or 

other element of the Federal Government from using, whether directly or indirectly or through work with or on behalf of another Department, agency or organization or element of the Federal Government, any hardware, software, or 

services developed, provided in whole or in part, by Kaspersky Lab (or any successor entity, by an entity that controls, or is controlled by, or is under common 

control of Kaspersky Lab; or any entity of which Kaspersky Lab has a majority 

ownership. This prohibition takes effect on October 1, 2018. 

Finally, the Department is currently working to review and improved its capabilities to identify and mitigate these supply chain risks. Moving forward, under the 

direction of section 807 of the NDAA for fiscal year 2018, ‘‘Process for Enhanced 

Supply Chain Scrutiny,’’ we are working to enhance our processes to perform national security due diligence on products and services before DOD decides to purchase. 

In addition, pursuant to section 1634(b) of the NDAA for fiscal year 2018, the Secretary of Defense is required to conduct a review of the procedures for removing suspect products or services from the information technology networks of the Federal 

Government in consultation with the Secretary of Energy, the Secretary of Homeland Security, the Attorney General, the Administrator of the General Services Administration, and the DNI. The Secretary of Defense will report the results of this 

review to the appropriate congressional committees. 

139. Senator BLUMENTHAL. Secretary Lord, as the global supply chain expands, 

what are the specific considerations for foreign goods? Is this sufficient? 

Secretary LORD. DOD’s support and sustainment challenge lies in continually 

leveraging evolving global supply chains. This pursuit provides both opportunities 

and challenges. We support warfighters within the boundaries of applicable laws, 

such as the Berry Amendment and Buy American Act. Existing authorities rightly 

bound the DOD supply chain to focus on procurement and sustainment activities 

within our own borders, but we also consider allied support and contractor activities 

in these processes. A mature and varied global market affords the Department 

greater access to key technologies, products, and services. The traditional risk 

framework considers the quality and reliability of the goods and components we use. 

A new element of risk now lies in ensuring all goods and components are cyber secure. To meet this demand, the Department examines and validates the integrity 

and reliability of all critical components, to include foreign items, both individually 

and as part of the higher assembly or subsystem. DOD uses a range of policies and 

guidance to protect our supply chain against malicious, defective, and counterfeit 

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parts, whether domestic or foreign. These include FAR Part 25, Evaluating Foreign 

Offers in Supply Contracts, DFARS 252.246–7007, Contractor Counterfeit Electronic 

Part Detection and Avoidance System, and DODI 5200.44, Protection of Mission 

Critical Functions to Achieve Trusted System Networks. These processes and procedures identify critical program information and components that can be expanded 

to accommodate and sufficiently address the expanded use of a global supply chain. 

In addition, we partner with the intelligence community, the CIO, and others to ensure both awareness of new and evolving threats and that we are adapting to meet 

those threats to ensure secure acquisition and support processes and products, while 

continuing to leverage available opportunities. 

140. Senator BLUMENTHAL. Secretary Lord, what are you doing to ensure our acquisition system has the necessary protective measures in place to prevent national 

security vulnerabilities for DOD acquired technology? 

Secretary LORD. The Department engages in a comprehensive approach to protect 

DOD acquired technology by providing explicit policy to the acquisition community, 

employing defense acquisition regulations, and providing operational protection. Examples of each of these approaches is provided below. 

In 2017, the Department amended the DODI 5000.2, Operation of the Defense Acquisition System to add Enclosure 14, Cybersecurity in the Defense Acquisition System which identifies the responsibility for program managers to identify and mitigate vulnerabilities across the scope of their program. This scope includes program 

information, organizations, supply chain, the system being managed, as well as networks, and enabling systems. 

In addition to policy guidance, DOD requires the inclusion of the Defense Federal 

Acquisition Regulations Supplement (DFARS) clause 252.204–7012, ‘‘Safeguarding 

Covered Defense Information and Cyber Incident Reporting,’’ in all DOD contracts 

for other than commercial items. The 252.204–7012 clause requires contractors/subcontractors to: 

• Safeguard covered defense information that resides on or is transiting through 

a contractors internal information system or network; • Report cyber incidents that affect a covered contractor information system or 

the covered defense information residing therein, or that affect the contractor’s 

ability to perform requirements designated as operationally critical support; • Submit malicious software discovered and isolated in connection with a reported 

cyber incident to the DOD Cyber Crime Center (DC3); • If requested, submit media and additional information to support damage assessment; and • Flow down the clause in subcontracts for operationally critical support, or for 

which subcontract performance will involve covered defense information. 

In addition to policy and regulatory approaches, DOD provides several avenues 

of operational protection. Some examples of these capabilities include: 

• The Joint Acquisition Protection and Exploitation Cell (JAPEC), established to 

integrate intelligence community (IC), law enforcement (LE), counterintelligence 

(CI) and acquisition community data, analysis, processes, and tools in order to 

mitigate losses of unclassified controlled technical information (CTI), and address compromises. The JAPEC is co-led with USD(I), and prioritizes critical acquisition programs and technologies to focus efforts. 

• The Joint Federated Assurance Center (JFAC), established to federate DOD 

tools and expertise to better support program needs for software and hardware 

assurance evaluations and guidance. 

• The Committee on Foreign Investment in the United States (CFIUS), employed 

by the Department to support foreign investment, consistent with the protection 

of national security. As one measure, CFIUS can apply risk mitigation tools if 

a mitigation agreement is required to support a proposed transaction. DOD supports the modernization of CFIUS by supporting the Foreign Investment Risk 

Review Modernization Act of 2017 (FIRRMA). 

• Other risk mitigation tools are available through the National Industrial Security Program, administered by the Defense Security Service (DSS). DSS employs Foreign Ownership, Control, or Influence (FOCI) mitigation techniques to 

allow foreign investment consistent with the national security interest of the 

United States. 

Finally, USD(AT&L) is leading a cross functional team to provide a comprehensive approach to maintain DOD’s technology advantage. This team is developing and 

implementing a strategic framework and lines of effort to counter adversaries licit 

and illicit technology exploitation strategies. This comprehensive approach will leverage the above initiatives, and many other DOD activities and stakeholders. 

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141. Senator BLUMENTHAL. Secretary Lord, what other authorities do you need to 

execute secure purchases? 

Secretary LORD. The DOD currently has available several authorities to ensure 

secure purchases for the Department. These authorities relate to supply chain risk 

management considerations based upon foreign ownership control and influence. 

Section 806 of the Fiscal Year 2011 NDAA provides DOD with authority to exclude 

a source on the basis it presents significant supply chain risk to a National Security 

System. In accordance with section 807 of the Fiscal Year 2018 NDAA, the Department is moving to ensure utilization of this authority, and other processes that focus 

on secure purchases. 

As part of this effort, the Department is collaborating with the related activities 

underway in the Office of Management and Budget, Office of the Director of National Intelligence, the Department of Homeland Security, and the General Services 

Administration to inform processes and determine additional authorities that may 

be needed. One area of consideration is how to provide streamline authorities in 

place for National Security Systems. Another area of consideration is the expansion 

of 806 authority to cover than national security systems. 

FAIR PAY: RESPONSIBLE CONTRACTORS

142. Senator BLUMENTHAL. Secretaries Lord, Esper, Geurts, and Wilson, what 

processes do you have in place to ensure contracts are awarded to responsible companies who play by the rules, treat workers fairly, & uphold existing labor laws? 

Secretary LORD. In general, the Department of Defense coordinates with the Department of Labor (DOL) to administer and enforce contractors’ compliance with 

most labor laws, as DOL has oversight and responsibility for remedying labor violations under these laws. This coordination helps to ensure contracts are awarded to 

responsible companies who play by the rules and treat workers fairly. Before awarding a contract, contracting officers review information regarding the responsibility 

of prospective contractors, including the offeror’s ability to perform the prospective 

contract successfully and has a record of integrity and business ethics. The source 

selection evaluation process reviews offerors proposals and considers past performance information of the offerors. Contracts are only awarded to responsive and responsible offerors. Contracting officers must make an affirmative responsibility determination before award, and it could affect the Government’s determination of the 

prospective contractor’s responsibility. After contract award, a wage violation for a 

specific contract action is frequently referred to the contracting officer, who in turn 

would generally coordinate with DOL to pursue corrective actions through administrative procedures, litigation, and/or criminal prosecution as appropriate. 

Secretary ESPER. For all acquisitions, Army acquisition officials ensure a responsibility determination occurs to validate contractor fitness or exclusion for doing business with the government. This validation signifies that the Government has judged 

the contractor to have the means and ability to perform the contract. We assess 

areas such as contractor financial resources, past performance record, operational 

controls and the eligibility of the contractor to receive an award under applicable 

laws and regulations. 

Secretary GEURTS. FAR Part 9 sets forth the policies, standards and procedures 

for agencies to determine whether prospective contractors and subcontractors are responsible entities eligible for contract award. A responsibility determination includes factors such as whether such entities have a satisfactory record of integrity 

and business ethics and a satisfactory performance record, and takes into account 

labor law compliance as set forth below. In determining responsibility, DON contracting officers review information in the Federal Awardee Performance and Integrity Information System (FAPIIS), and consider any other past performance information about the offeror. This assessment includes a review of information in the 

System for Award Management to ensure that agencies do not solicit offers from or 

award contracts to entities that have been suspended or debarred from receiving 

government contracts. 

As part of determining responsibility, DON officials also access FAPIIS to review 

and consider contract performance assessments entered by contracting officers in 

CPARS. These assessments might explain how a violation of labor laws negatively 

affected contract work performance, product or service quality, and/or employee 

safety. Pursuant to FAR Part 15, source selection officials may also use such past 

performance information in evaluating offeror bids and proposals. Department of 

Labor (DOL) regulations and the FAR provide contracting agencies like DON with 

other remedies and enforcement tools to address labor law compliance under the 

federal prevailing wage laws. DON enforces the Construction Wage Rate Requirements statute by performing regular compliance checks and investigations. The 

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DOD FAR Supplement and specific DON guidance on these construction requirements assist efforts to ensure compliance with prevailing wage laws and provide 

DoN contracting officers with information to be used in determining a contractor’s 

responsibility. 

Secretary WILSON. The Air Force follows the Federal Acquisition Regulation 

(FAR) Part 9 and Defense Acquisition Regulations Supplement (DFARS) Part 209 

which address contractor responsibility, suspension and debarment. In addition, the 

Air Force uses the procedures established in FAR—Part 22 and DFARS—Part 222 

for Application of Labor Laws to Government Acquisitions. 

COMBAT RESCUE HELICOPTER

143. Senator BLUMENTHAL. Secretary Wilson, in October, I led a bipartisan letter 

to you and General Goldfein expressing concern about any change in the current 

acquisition plan, as has been rumored. My letter requested an update on the CRH 

program, as well as your commitment to keeping us informed of any potential 

changes. I appreciated your interim response last month that noted you would look 

into it. Please provide an update on maintaining the program of record and lead of 

the mission. 

Secretary WILSON. The Air Force is fully committed to the program of record of 

112 aircraft. We will keep you informed of any changes. 

144. Senator BLUMENTHAL. Secretary Wilson: Following the Air Force posture 

hearing earlier this year, you sent me a letter noting that you ‘‘fully support CRH 

as it moves towards Initial Operational Capability in fiscal year 2021.’’ Do you continue to uphold this commitment? 

Secretary WILSON. Yes, the Air Force fully supports the Combat Rescue Helicopter 

program as it moves toward Initial Operational Capability. 

FUTURE VERTICAL LIFT

145. Senator BLUMENTHAL. Secretary Esper, please provide an update on how the 

Army is progressing in its development of future vertical lift platforms. How are you 

partnering with the other services? 

Secretary ESPER. Future Vertical Lift (FVL) is a strategic advance in vertical lift 

capability and remains a high priority for the Department of the Army. The FVL 

program is currently preceded by the Joint Multi-Role (JMR) Science and Technology initiative. This initiative focuses on an Air Vehicle Demonstrators (AVD) and 

a Mission Systems Architecture Demonstration (MSAD). The AVD will produce two 

Air Vehicle Demonstrators which will inform and influence the FVL program. Flight 

demonstrations are scheduled to take place during fiscal year 2018 through fiscal 

year 2019 and the Mission Systems Architecture Capstone Demonstration is scheduled to take place during fiscal year 2018. Both are expected to show significantly 

improved performance capabilities over current rotorcraft. The Future Vertical Lift 

program will provide a family of vertical lift platforms that deliver next generation 

capabilities at the tactical, operational, and strategic levels. 

Future Vertical Lift Capability Set 3 (CS3) is an Army led program with Joint 

participation and continues to be the primary joint interest for the initial FVL acquisition effort. The U.S. Army, in conjunction with the United States Marine 

Corps, Special Operations Command, the Office of the Secretary of Defense, Acquisition and Sustainment, and the Joint Staff have chartered five Integrated Product 

Teams (IPT). The five IPTs are the Acquisition IPT (AIPT), Requirements IPT 

(RIPT), and International Engagement IPT (IE IPT), Science and Technology IPT 

S&T IPT), and the Common Systems (IPT), and the Common Systems IPT (CSIPT) 

and members from the aforementioned agencies are represented at each IPT. The 

U.S. Army, the United States Marine Corps, and SOCOM currently have an Analysis of Alternatives (AoA) in progress and the results are expected 1QFY19. The outcome of the AoA is a major decision point for all services involved and will provide 

options that inform our senior leaders. Additionally, the IPTs have initiated draft 

language for Concepts of Operation, Acquisition Strategy, and early development of 

individual service and joint requirements. 

JOINT STRIKE FIGHTER PROGRAM (JSF)

146. Senator BLUMENTHAL. Secretary Lord and Secretary Wilson, the Future 

Years Defense Program attached to the fiscal year 2018 budget shows another delay 

for the 60 F–35As per year procurement plan. Two years ago it was to begin in fiscal year 2018, last year it was pushed to fiscal year 2021, and now it has been delayed to an undetermined date beyond FYDP projections. At a time when we are 

120 

focused on cost savings, such delay in robust procurement only hampers such savings. How are we going to achieve more savings with continued delay to ramping 

up to 60 F–35As per year? Do you agree that production level increases will contribute to cost savings? 

Secretary LORD. The Department is committed to ramping F–35 production to as 

high a procurement rate as is affordable in order to maximize cost savings, but the 

F–35 procurement must be balanced against other competing Department priorities 

as well as the Services ability to support and sustain their fleets. While I agree that 

an increased procurement ramp will help reduce production costs, we must also consider the costs of retrofit to the Block 4 hardware configuration we need to counter 

advancing adversaries. In addition to those added costs, retrofits also task valuable 

depot resources and remove aircraft from operations for an extended period. In light 

of these considerations I believe the Department’s procurement profile is appropriate for this budget period. 

Secretary WILSON. The Air Force is committed to ramping F–35 production to as 

high a procurement rate as is affordable in in light of other F–35 costs. The procurement of the F–35As must be balanced against other competing priorities, as well 

as the Air Force’s ability to support and sustain its fleet. While I agree that an increased procurement ramp will help reduce production costs, we must also consider 

the current and future costs to retrofit current production as well as the existing 

fleet to counter advancing adversaries and technology advances. In addition to those 

added costs, retrofits also task valuable depot resources and remove aircraft from 

operations for an extended period. In light of these considerations, I believe the Air 

Force’s procurement profile is appropriate for this budget period. 

147. Senator BLUMENTHAL. Secretary Lord and Secretary Wilson, please explain 

the process and progress you have made on the JSF cost deep dive review that was 

mentioned during the hearing. How do these efforts build on past initiatives? How 

do they differ? What success have you had? What engagement and focus have you 

had on the jet’s engine? 

Secretary LORD. The Joint Strike Fighter (JSF) Deep Dive Cost Reduction Initiative is part of a broader F–35 Affordability Strategy that focuses on true cost reduction across all three lines of effort—Development, Production, and Sustainment. In 

performing the Deep Dive, the cost structures of Lockheed Martin (LM), Northrop 

Grumman (NG), BAE Systems, and Rolls Royce (RR), as well as each of their significant subcontractors, will be examined. There are four main objectives of the 

Deep Dive: 

1) Enable the Government to understand what JSF costs, why it costs what it 

costs, and define every cost reduction opportunity that can be realistically implemented; 

2) Establish a data driven baseline for use in all future production negotiations; 

3) Provide a firm foundation of information and knowledge to inform the broader 

F–35 Affordability Strategy; 

4) Train a cadre of approximately 25 Government engineers and cost analysts 

who will form an enduring cost analysis capability for JSF. 

The Deep Dive will take advantage of the recently completed aircraft hardware 

qualification testing, the final aircraft Functional/Physical Configuration Audits efforts, and leverage the production cost experience over the first 10 production buys. 

The Deep Dive is being led by the Director of Defense Pricing, in coordination 

with the Deputy Director for Cost Analysis in the office of Cost Analysis and Program Evaluation (CAPE). The Government team will work with engineers from A.T. 

Kearney, who have significant experience in cost analysis, commercial manufacturing, and cost reduction initiatives. 

A.T. Kearney previously collected similar cost data from the F135 engine prime 

contractor, Pratt and Whitney (P&W) as part of a prior cost assessment. The previously collected data from P&W will be included in this cost baseline. This initiative will collect data from RR, which is a sub-contractor to P&W for the F–35B propulsion system. 

The work will be performed in three phases. We have commenced work on Phase 

One of this effort, which will focus on direct labor and manufacturing support at 

LM, NG, and RR, and have made good progress to define the scope and depth of 

the review. We are also working issues related to obtaining access to the necessary 

cost data at the prime contractor and each of the major subcontractors. The review 

will also leverage the cost data submitted to CAPE on each of the first 10 production 

buys. 

Phase Two of the Deep Dive will focus on continued efforts at LM, NG, and RR. 

In addition, direct labor and manufacturing support at BAE will be examined. Deep 

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analyses of a number of key subcontractors will take place. Phase Three will primarily focus on the supply chain structure, to include a review of the remainder of 

the key suppliers. In addition, indirect labor and overhead structure reviews at LM, 

NG, RR, and BAE will occur. In total, the three phases are expected to take approximately a year to complete. 

As cost savings opportunities are identified, they will be prioritized and tracked 

through a detailed Target Assurance Program (TAP). The TAP will include a detailed action plan to make each potential savings opportunity a reality. 

Secretary WILSON. The Joint Strike Fighter (JSF) Deep Dive Cost Reduction Initiative is part of a broader F–35 Affordability Strategy that focuses on true cost reduction across all three lines of effort—Development, Production, and Sustainment. 

In performing the Deep Dive, the cost structures of Lockheed Martin, Northrop 

Grumman, BAE, and Rolls Royce (F–35B), as well as each of their significant subcontractors, will be examined. There are four main objectives of the Deep Dive: 

1) Enable the Government to understand what the JSF costs and define every cost 

reduction opportunity that can be realistically implemented; 

2) Establish a data driven baseline for use in all future production negotiations; 

3) Provide a firm foundation of information and knowledge to inform the broader 

F–35 Affordability Strategy; and 

4) Train a cadre of approximately 25 government engineers and cost analysts who 

will form an enduring cost analysis capability for JSF. 

The Deep Dive will take advantage of the recently completed aircraft hardware 

qualification testing, the final aircraft Functional/Physical Configuration Audits efforts, and leverage the production cost experience over the first 10 production buys. 

The Deep Dive is being led by the Director of Defense Pricing, in coordination 

with the Deputy Director for Cost Analysis in the office of Cost Analysis and Program Evaluation (CAPE). The government team will work with engineers from A.T. 

Kearney, who have significant experience in cost analysis, commercial manufacturing, and cost reduction initiatives. 

A.T. Kearney previously collected similar cost data from the F135 engine prime 

contractor, Pratt & Whitney as part of a prior cost assessment. The previously collected data from Pratt & Whitney will be included in this cost baseline. This initiative will collect data from Rolls Royce, which is a sub-contractor to Pratt & Whitney 

for the F–35B propulsion system. 

The work will be performed in three phases. We have commenced work on Phase 

One of this effort, which will focus on direct labor and manufacturing support at 

Lockheed Martin, Northrop Grumman, and Rolls Royce, and have made good 

progress to define the scope and depth of the review. We are also working issues 

related to obtaining access to the necessary cost data at the prime contractor and 

each of the major subcontractors. The review will also leverage the cost data submitted to CAPE on each of the first 10 production buys. Phase Two of the Deep Dive 

will focus on continued efforts at Lockheed Martin, Northrop Grumman, and Rolls 

Royce. In addition, direct labor and manufacturing support at BAE will be examined. Deep analyses of a number of key subcontractors will take place. Phase Three 

will primarily focus on the supply chain structure, to include a review of the remainder of the key suppliers. In addition, indirect labor and overhead structure reviews 

at Lockheed Martin, Northrop Grumman, Rolls Royce and BAE will occur. In total, 

the three phases are expected to take approximately a year to complete. 

As cost savings opportunities are identified, they will be prioritized and tracked 

through a detailed Target Assurance Program. The Target Assurance Program will 

include a detailed action plan to make each potential savings opportunity a reality. 

QUESTIONS SUBMITTED BY SENATOR MAZIE HIRONO

SMALL BUSINESS R&D AND THE ACQUISITION PROCESS

148. Senator HIRONO. Secretary Lord, the DOD runs a $1 billion annual small 

business innovation research (SBIR) program that has successfully invested in high 

tech businesses and developed advanced technologies that are being used by operational forces today. I understand that one challenge facing these small businesses 

is their difficulty crossing what is called ‘‘the valley of death’’—the stage after the 

small business has done some good R&D work—but before they can really sell a 

product to the Pentagon. What steps are taking to address this issue? 

Secretary LORD. Technology transition from developmental programs into acquisition programs remains a challenge. Past technology transition successes were, in 

many cases, a result of personalities and relationships rather than robust process. 

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Program Managers who knew and trusted the technology developer were often willing to take the risk of insertion of new technology. We must ensure technology transition is a critical focus area as the Department pursues new capability. 

The Department is focused on reducing the risk of the ‘‘valley of death’’ for small 

businesses using existing resources and authorities including the Commercialization 

Readiness Program and the Rapid Innovation Fund to support the transition of 

technologies, products, and services developed under SBIR and STTR programs. We 

appreciate the support of Congress in granting authority for a pilot program to use 

multiple award contracts in support of more efficient transition of SBIR and STTR 

developed technologies. 

The skills necessary to successfully operate a business and transition or commercialize technologies are different from those required to develop new technologies, 

and the Mentor Prote ́ge ́ program provides a unique opportunity for small businesses 

to learn these skills from more experienced companies serving as mentors. The Mentor Prote ́ge ́ program provides small businesses an opportunity to learn skills such 

as design for manufacture, business development, and business management; skills 

necessary to successfully grow a business and create viable technology transition 

strategies. 

Passing legislation to make the SBIR, STTR and Mentor Prote ́ge ́ programs permanent would assist the Department’s efforts to support innovation and enable consistent funding for small businesses to navigate the complex process of transitioning 

technology to the Department for our use. Reauthorization of the Pilot Admin Authority is another key enabler to improving the ability to transition or commercialize 

SBIR technologies by providing funding for education and outreach for both government program personnel and small businesses. I remain committed to identifying 

further opportunities to work with the committee to improve our ability to maximize 

the contributions of small businesses. 

TEST RANGES

149. Senator HIRONO. Secretaries Lord, Esper, Geurts, and Wilson, the Pacific 

Missile Range Facility, located on the island of Kauai, is a crown jewel amongst our 

defense facilities. It is an undersea range used by our submarines and an above 

ground range where many of our missile defense tests are conducted. It would also 

be a great place to test Directed Energy projects. What role do test ranges play in 

developing systems that will make servicemembers effective in combat? Are you concerned about the health of our ranges and their ability to meet operational needs? 

What initiatives are you undertaking to strengthen the ranges? 

Secretary LORD. I believe that the Department’s test capabilities play a critical 

role in modernizing our defense systems. Major Range and Test Facility Base 

(MRTFB) ranges, such as the Pacific Missile Range Facility (PMRF), provide a suite 

of test infrastructure and operationally realistic environments (e.g., realistic threats) 

through the use of modeling and simulation capabilities, hardware-in-the loop facilities, installed system test facilities and open air ranges. This capability to conduct 

realistic testing is critical to any modernization of our defense systems. 

We work together with the Services to address issues to ensure the DOD has the 

space, infrastructure and capabilities to support the development of our current 

weapons system programs as well as modernization and sustainment of older systems. There are some military construction projects currently underway and 

planned for the near future that will allay the concerns of some of these issues, and 

we are also continuing to resource projects that will modernize or replace existing 

aging capabilities. 

Secretary ESPER. The Army’s Test Centers and Ranges plan and execute developmental testing, support independent operational testing, and provide technical and 

safety assessments that are instrumental to determine equipment effectiveness, 

suitability, and survivability. The information derived from analysis of T&E data is 

critical to inform senior leader decision-makers and improve materiel solutions 

while helping commanders mitigate risk and improve operational readiness. 

I believe the Army Test Centers and Ranges are doing an outstanding job meeting 

the needs of the warfighter; however, I am concerned with their overall health and 

readiness to test future Army equipment. The Army is currently undertaking a 

study to determine efficiencies within the Army Test and Evaluation Enterprise to 

free up funds that can be applied to address current readiness issues. We are also 

working to identify investment requirements to ensure the Test Centers and Ranges 

are prepared to test future Army systems. 

Several initiatives are underway in order to both strengthen the Army Test Centers and Ranges and to prepare for the future. The RAND Corporation is conducting 

a study to determine the optimum way to fund the Army’s Test Centers. The Army 

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is conducting a separate but related study to examine the appropriate physical, intellectual, and regulatory composition and disposition of the test enterprise, as well 

as methods to adequately manage test infrastructure. Under the authorities granted 

in section 233 of NDAA 2017, several Army ranges are executing a pilot program 

that waives certain regulatory restrictions that impact the ability to operate in an 

optimal manner and may initiate a proposal for statutory changes. In fiscal year 

2018, the Army began to include a major military construction project annually to 

address critical facility readiness issues at Army Test Centers. Additionally, the 

Test and Evaluation Executive is in the process of developing a life-cycle 

sustainment strategy for all instrumentation and facilities to better forecast the 

sustainment requirements for existing assets and the investment requirements to 

ensure the Test Centers and Ranges are prepared to test future Army acquisition 

programs. 

Secretary GEURTS. Test ranges support the development and testing of almost all 

warfighting systems that are eventually deployed into combat, and play a critical 

role by providing the sea, air and land space required to test systems in operationally realistic environments. Over the last four years, there have been significant investments to modernize the Navy’s Test ranges to address aging infrastructure and 

develop new capabilities to address emerging threats, and ensure they are sufficiently healthy to support our operational needs. The Navy has a number of ongoing 

initiatives to strengthen the health of our ranges to include expansion of Fallon 

training range, refurbishment of Barking Sands Tactical Underwater Training 

Range (BARSTUR), and procurement of advanced threat emitters. In addition, the 

Navy continues to explore opportunities to integrate our open air range capabilities 

into a Live Virtual Constructive training concept. 

Secretary WILSON. Test ranges are critical to providing operationally relevant environments in which to develop weapon systems and conduct developmental testing, 

operational testing, tactics development and force development evaluation. I am concerned about the advancing threat and the need to continuously improve all methods of developing combat capability to include test and evaluation ranges and workforce. I am also concerned about the condition of facilities on our test ranges as I 

am about Air Force facilities in general. For this reason, we made significant investments in the fiscal year (FY) 2017 President’s Budget (PB) to sustain, repair, and 

modernize test facilities. We have made significant investments in air and cyber 

range capabilities in the fiscal year 2017 and fiscal year 2018 PBs, including investments in propulsion, hypersonics, sensor threat and cyber testing. We are reviewing 

options for further investing in space test range infrastructure. 

CORROSION

150. Senator HIRONO. Secretaries Esper, Geurts, and Wilson, corrosion costs DOD 

$20 billion/yr. According to Defense Science Board estimates, approximately 30 percent of current DOD corrosion costs could be avoided through investment in 

sustainment, design, manufacture and other preventative measures. How do each 

of your services intend to address the corrosion issue and work with the DOD Corrosion Policy Office to take a life-cycle view to include addressing the problem early 

in acquisition programs? 

Secretary ESPER. The $20 billion being addressed here is as reported by the DOD 

Corrosion Policy Office, using Military Department information systems, takes into 

consideration field and sustainment maintenance activities funded via the Operation 

and Maintenance (O&M) appropriation accounts. There is a portion of these funds 

that are simply the cost of operation (e.g., cleaning, lubrication, etc.) for which the 

operational and training tempo determines. 

The Army has emphasized the importance of corrosion prevention and control in 

the command maintenance and supply discipline programs. We have conducted corrosion prevention and control survey teams to identify corrosion issues. We have 

completed a number of tests or demonstrations on equipment covers, conducted a 

Business Case Analysis, and published policy on the use of equipment covers in high 

corrosion severity zones. We are modifying the policy to use best business practices 

for using double galvanizing of select steel substrates and transitioning to the use 

of improved metal rich primers to enhance corrosion resistance. We are publishing 

a corrosion and acquisition policy guide that is intended to remind members of the 

acquisition workforce to take a life-cycle approach to corrosion prevention and control. 

The Army has designated the Deputy Assistant Secretary of the Army for Acquisition Policy and Logistics as the Army’s Corrosion Control and Prevention Executive 

(CCPE) in accordance with section 903 of the Fiscal Year 2009 National Defense Authorization Act. The CCPE has developed and maintains an Army Corrosion PrevenVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00127 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
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tion and Control Strategic Plan, which is linked to the DOD Corrosion Policy Office 

strategic plan, to govern the Army’s corrosion prevention and control program. We 

participate on the DOD Corrosion Prevention and Control Integrated Product Team 

and its associated Working-level Integrated Product Teams. Based on the DOD Corrosion Policy Office Impacts of Corrosion Reports, the trend for Army equipment 

and facilities expenditure of O&M funding is downward. 

Secretary GEURTS. DON maintains an established, Department-wide corrosion 

Cross Functional Team to address corrosion concerns. This program comprises the 

DON Systems Commands working together to address both common and platform 

specific corrosion issues. The program works on reducing corrosion through research 

and development efforts, adding corrosion-resistant product designs, training and 

educating the fleet on preventative and corrective corrosion maintenance, and developing technically sound and operationally viable maintenance procedures for the 

system life cycle. 

The DON also collaborates with the DOD Corrosion Policy Office (CPO) and the 

other Service Corrosion Control and Prevention Executives to coordinate policy and 

share best practices that lead to cross-Service, force multiplier initiatives. The DOD 

CPO supports these initiatives and DON efforts by funding research and development of corrosion control products and processes. 

Secretary WILSON. The Air Force is collaborating with the DOD Corrosion Policy 

and Oversight office to increase acquisition program emphasis on corrosion prevention and control across the life cycle. In particular, new changes in Air Force Service 

Acquisition Executive guidance require program managers to obtain early Air Force 

Corrosion Control and Preventative Executive involvement in their life cycle corrosion planning efforts. 

151. Senator HIRONO. Secretary Lord, any of the materials and processes which 

determine subsequent corrosion performance are specified very early in the design 

stages. How does AT&L assure that programs have effectively addressed corrosion 

from the very beginning and involved corrosion subject matter experts throughout 

the life of that program? 

Secretary LORD. Through a comprehensive program, the DOD Corrosion Policy Office has invested in identifying and having more corrosion Subject Matter Experts 

available to Program Managers, along with improved and updated standards and 

specifications for materials and processing impacting corrosion. In the past, the 

DOD Corrosion Policy Office has been involved in Defense Acquisition Board reviews but with an emphasis on acquisition streamlining; the responsibility for implementing the best corrosion practices has been relegated to program managers 

who have been given improved resources in the form of Subject Matter Experts, instructions, and various guidebooks such as the Program Managers Handbook, the 

Corrosion Best Practices Handbook, and the Corrosion Prevention and Control Planning Guidebook. In addition, the detailed annual cost of corrosion study conducted 

by the DOD Corrosion Prevention Office provides visibility as to the impacts of corrosion to help ensure that corrosion is considered throughout all stages of a program. 

DEFENSE ACQUISITION

152. Senator HIRONO. Since the establishment of the Department of Defense in 

1947, the procurement process has been studied, enhanced and improved over the 

many decades. Often times there is a pendulum effect that moves from tighter controls to looser controls allowing more flexibility in the system depending on what 

was going on at the time politically and in industry itself. This includes making the 

defense process more like what is in the ‘‘commercial sector’’ and allowing more 

flexibility or less to the acquisition professionals who do this work on behalf of the 

U.S. Government. However, despite all of the reviews and reforms which have been 

instituted over the decades we are still in a place where we experience bad results 

from the acquisition system in terms of delivering the needed systems to the 

warfighter in an efficient manner that is on time and within reasonable costs. Some 

of the programs the Chairman mentions regularly which are spread across the services come to mind. In your opinion, what are the impediments to achieving an acquisition system that delivers on schedule and within cost parameters and what must 

be done to achieve this goal? 

Secretary LORD. As you stated, the procurement process has been studied, enhanced and improved over decades. The Department has also tried innovative approaches to acquisition as well, some of which have worked well and others have 

not (e.g., Total Package Procurement). I would expect that Congress and the Department will need to continue to work together and assess acquisition reforms to idenVerDate Nov 24 2008 09:02 Aug 09, 2018 Jkt 000000 PO 00000 Frm 00128 Fmt 6633 Sfmt 6621 C:\USERS\WR47328\DESKTOP\30987.TXT WILDA
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tify ways to improve the process. We owe that to the taxpayers and the warfighters. 

I believe that the on-going acquisition reform efforts, including the section 809 panel 

review, the Regulatory Reform Task Force, our Acquisition Statute Review, and an 

initiative I have on-going to reduce the time to get on contract will all contribute 

to reducing impediments. If there is one area I would ask for help in, it’s for stable 

funding for our programs. Repeated Continuing Resolutions and the threat of Budget Control Act induced sequestration require continual adjustments to our acquisition programs which work against our ability to deliver systems on time and within 

cost. We will continue to focus on attracting, retaining and developing a high performance acquisition work force while upgrading our educational programs at the 

Defense Acquisition University to focus on simpler, faster tailored processes. The 

use of case studies and the incorporation of current practitioners will be critical to 

rapidly improving our acquisition capability. 

Secretary ESPER. The Army needs an acquisition system that is inherently fast, 

responsive to current and emerging needs, and visionary in meeting long-term 

threats, leaping ahead of capabilities of major adversaries. This requires hard 

choices on which programs and initiatives to fund or forego. Programs must establish well-defined and realistic requirements to keep programs on schedule and on 

budget. 

Predictable and stable funding are key to maintaining and delivering needed systems to warfighters. We must also ensure our programs are structured around mature technology, use open systems architecture to allow continuous system improvement, and have the mechanisms in place that allow flexibility of resources, both people and dollars that can quickly adjust to program changes and opportunities. Finally, we must delegate and empower our Program Managers to quickly identify opportunities and resolve issues that arise throughout the acquisition process. 

Secretary GEURTS. Instability in funding and requirements are the main impediments to an effective and efficient acquisition system. Instability includes uncertainty in budgets and funding or unrealistic or changing requirements. Within the 

DON, stability in acquisition programs is accomplished by establishing firm and realistic requirements (including close coordination with the Service Chiefs, via the 

DON Gate Review process), stabilizing system designs, and incrementally developing technology in order to reduce technical risks before defense acquisition programs incorporate new technologies. DOD and the DON must maximize competition 

at all tiers to reduce costs and enhance technical innovation. In addition, the appropriate use of multiyear procurements, block buys, economic ordering quantities, and 

cross-program procurements of common equipment are important tools for reducing 

costs and increasing the efficiency of the acquisition system. 

Also, an overly prescriptive, burdensome, statutory and regulatory environment 

encumbers Program Managers with additional laws, policies, and rules that limit 

flexibility, increase oversight and slow the acquisition system. We will continue to 

work with Congress to identify those laws and policies that should be eliminated 

or revised to improve acquisition outcomes. 

Secretary WILSON. There are several challenges we have within the Air Force to 

deliver capability on time and within budget. These challenges include maintaining 

stable requirements and stable, timely budgets. We are taking deliberate actions to 

ensure we constantly monitor and ensure that new requirements or changes to existing validated requirements are not the driving factor in the costs or schedule 

growth of programs. To better inform us on the capabilities and technical requirements that can be achieved in a warfighters needed timeframe, we are focusing 

more on prototyping and experimentation. 

We also need stability in funding programs to ensure we give program managers 

resources when they are needed to successfully execute the plans they put in place. 

This will require leadership to ensure we pursue the right programs at the right 

time to provide programs the resources needed. Establishing and adhering to executable schedules will also improve performance. 

QUESTIONS SUBMITTED BY SENATOR MARTIN HEINRICH

PLUTONIUM CAPABILITIES

153. Senator HEINRICH. Secretary Lord, I was particularly concerned recently to 

learn that the NNSA’s required Analysis of Alternatives for plutonium pit production resulted in only two preferred alternatives, including a ‘‘big box’’ facility at Los 

Alamos National Laboratory. Such an impractical and costly facility, the CMRR–NF, 

had previously been rejected, and in 2014, the Nuclear Weapons Council explicitly 

directed NNSA to instead pursue a ‘‘modular’’ building strategy at LANL as defined 

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in sec. 3114 of the National Defense Authorization Act for fiscal year 2013. In your 

role as Chairman of the Nuclear Weapons Council, have you received and been 

briefed on the NNSA’s report on the recommended alternative endorsed by the Administrator for recapitalization of plutonium science and production capabilities of 

the nuclear security enterprise? 

Secretary LORD. Yes. It is my understanding that the Administrator of the National Nuclear Security Administration (NNSA) will respond to the reporting requirements of subsection (a) of section 3114 of the National Defense Authorization 

Act for fiscal year 2013 by providing Congress the October 2017 Final Report of the 

Plutonium Pit Production Analysis of Alternatives (AoA). The NNSA provided copies 

of the Plutonium Pit Production AoA to the Department of Defense in late November 2017 and briefed the Nuclear Weapons Council on the AoA on December 20, 

2017. The AoA identifies two recommended alternatives, and it is my understanding 

that the NNSA is now conducting an Engineering Analysis (EA) of the two alternatives, including a ‘‘modular’’ strategy, to inform selection of a single alternative 

and support conceptual design of the needed plutonium pit production capabilities. 

The NWC looks forward to being briefed on the results of the EA no later than April 

2018. 

154. Senator HEINRICH. Secretary Lord, have you also been briefed on NNSA’s 

independent Office of Cost Estimating and Program Evaluation’s review of the report? 

Secretary LORD. Yes. At the same time that the National Nuclear Security Administration (NNSA) provided copies of the final Plutonium Pit Production Analysis of 

Alternatives (AoA) to the Department of Defense, it also provided copies of the Office of Cost Estimating and Program Evaluation’s (CEPE) review of the analysis in 

the AoA. The CEPE recommended additional analysis be completed prior to selection of a single alternative. It is my understanding that the CEPE recommendations 

are being taken into consideration during the NNSA’s current Engineering Analysis 

of the two alternatives identified by the AoA. I look forward to reviewing the results 

by April 2018. 

155. Senator HEINRICH. Secretary Lord, do you agree the ‘‘modular’’ building 

strategy at LANL, as defined in section 3114 of the National Defense Authorization 

Act for fiscal year 2013, should be fully analyzed by NNSA as the NWC directed 

in 2014? 

Secretary LORD. Yes. I fully support analysis of reasonable alternatives that will 

lead to a long-term, reliable, and flexible pit production capability that enables the 

nuclear enterprise to meet the Nation’s military requirements and policy goals. The 

longer we delay reestablishing a robust pit production capability for the Nation, the 

greater the risk, complexity, and cost we will take on. It is my understanding that 

the National Nuclear Security Administration’s (NNSA) Office of Cost Estimating 

and Program Evaluation’s (CEPE) review of the Plutonium Pit Production Analysis 

of Alternatives suggests further study of both modular and greenfield facilities at 

Los Alamos National Laboratory (LANL). As the NNSA works toward identifying 

the most desirable pit production alternative, I expect the NNSA to brief the Nuclear Weapons Council and Congress on the analysis conducted, including the option 

of a modular building strategy at LANL. 

156. Senator HEINRICH. Secretary Lord, is it your expectation that you will be 

able to respond to the certification required by subsection (b) of sec. 3141 of the National Defense Authorization Act for fiscal year 2018 regarding whether the recommended alternative proposed by the Administrator meets each of the criteria in 

paragraphs (1) and (2) of that subsection? 

Secretary LORD. Yes. The Nuclear Weapons Council (NWC) will provide the certification requested by Congress within the timeline identified in subsection (b) of 

section 3141 of the National Defense Authorization Act (NDAA) for fiscal year (FY) 

2018 if the National Nuclear Security Administration (NNSA) identifies a single alternative in its Engineering Analysis (EA) that meets all military requirements for 

pit production. It is my understanding that the Administrator of the NNSA will respond to the report requirements of subsection (a) of the NDAA for fiscal year 2018 

by providing Congress the October 2017 Final Report for the Plutonium Pit Production Analysis of Alternatives (AoA). That report identifies two preferred alternatives, not a single recommended alternative. In December 2017, the Nuclear 

Weapons Council (NWC) was briefed on the AoA and the associated plan for the EA. 

The NWC is keenly interested in the NNSA’s plans to resume pit production and 

looks forward to receiving the results of the single alternative identified by the EA. 

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DIRECTED ENERGY—NEW PROGRAM

157. Senator HEINRICH. Secretary Lord, Secretary Esper, Secretary Geurts, and 

Secretary Wilson, section 215 of this year’s NDAA Conference Agreement establishes a new Department-wide program to accelerate the transition of Directed Energy weapon systems within each of the military services. Specifically, section 215 

authorizes additional funding to be used by military services and Department agencies specifically for the purposes of prototyping and demonstrating high-energy-laser 

and high-power-microwave weapons systems that are beyond the beginning stages 

of basic and applied research. The NDAA also assigns the newly created position 

of Under Secretary of Defense for Research and Engineering to lead and coordinate 

Directed Energy efforts across the Pentagon. Can I get a commitment from each of 

you to utilize this section 215 program next year to help advance and field this technology? 

Secretary LORD. I am committed to using section 215 to advance and field directed 

energy capabilities. As directed by the NDAA, the USD(R&E) will lead and coordinate Directed Energy efforts across the Department. As the USD(A&S), I will ensure the acquisition and sustainment communities support the transition and fielding of these capabilities. 

Secretary ESPER. We are closely tracking the language in the Fiscal Year 2018 NDAA authorizing $100 million to be used specifically for the purposes of prototyping and conducting demonstrations of high energy laser (HEL) and high power 

microwave weapons systems that are beyond the beginning stages of basic and applied research. The Assistant Secretary of Defense (ASD) for Research & Engineering (R&E), and the position that will become the Under Secretary of Defense (USD) 

for R&E, has been designated as the Senior Official responsible for oversight of Directed Energy investments across the Department of Defense. We work very closely 

with ASD R&E, and will continue to do so with USD R&E, to leverage these prototyping resources to integrate and demonstrate HEL technologies that have matured 

in Science &Technology in order to accelerate the technologies’ transition to the Programs of Record. 

Secretary GEURTS. Yes. The DON is committed to working with OSD in using section 215 to advance this technology. The DON has established new accelerated acquisition processes that are intended to take maximum advantage of a number of 

recent acquisition reforms aimed at rapid prototyping, rapid fielding, and acquisition agility. These Navy processes are implemented under the direction of an 

AABoD that I co-chaired with CNO and CMC. The AABoD has already recognized 

the importance of accelerating Directed Energy (DE) capabilities to the fleet by designating the Navy Laser Family of Systems in 2017 as one of the first accelerated 

acquisition effort under the new Navy process. 

Secretary WILSON. Yes. The Air Force is committed to the development and transition of Directed Energy technology and will use the authorities provided. 

AIR FORCE RESEARCH LABORATORY: CONTRACTING DELAYS

158. Senator HEINRICH. Secretary Lord, Secretary Esper, Secretary Geurts, and 

Secretary Wilson, in my role as Ranking Member of the Emerging Threats and Capabilities Subcommittee, we held a hearing with some of your former lab directors 

this year and they pointed to the slow pace of acquisition and contracting process 

as a key impediment to their ability to work with innovative companies. What steps 

are you taking to help our labs and contracting offices speed up the contracting 

process and what help do you need from us to do this? 

Secretary LORD. While challenges in the acquisitions and contracting process continue to exist, the DOD is taking steps to streamline both. The DOD established 

an advisory panel of current and former DOD executives to identify opportunities 

to streamline the acquisition process. There are also a number of provisions in the 

Fiscal Year 2018 NDAA that aim to incentivize innovation and to augment DOD’s 

collaborations with research groups outside the Department. We are in the early 

stages of implementing these provisions. Much of the necessary authorities are in 

place. The challenge for the Department is to balance the need for speed and adaptability in order to innovate for the future battlefield and maintain technological 

dominance while also providing adequate oversight and ensuring transparency, best 

value for the Department, and preventing mismanagement. Additionally, we will 

fundamentally change the Defense Acquisition University (DAU) to teach through 

case studies that will highlight real examples of how a variety of contract vehicles 

are appropriately utilized to simplify and speed up acquisition. We have goals of reducing acquisition time by 50 percent with pilot programs currently being executed. 

We are not only focused on domestic procurement, but Foreign Military Sales (FMS) 

as well. 

128 

Secretary ESPER. In September and November 2017, the Acting Secretary of the 

Army issued eight key Acquisition Reform Initiatives, to include streamlining the 

contracting process. In support of these initiatives, the Army is focused on talent 

management and streamlining burdensome policies and oversight. 

The Army has increased its use of Other Transaction Authority (OTA) agreements, which are not governed by the Federal Acquisition Regulation (FAR). Recent 

National Defense Authorization Acts (NDAAs) have given the Government greater 

flexibility in using OTAs for a wide range of needs and with a broader group of industry partners. 

The Army has achieved success using OTAs for prototyping and limited fielding 

of defensive cyberspace operations (DCO) capabilities, and scientific research and 

developmental activities. OTAs are a mechanism that can be used to execute science 

and technology efforts that we are aligning to the Army’s Modernization Priorities 

which include Long Range Precision Fires, Next Generation Combat Vehicle, Future 

Vertical Lift, C3I/Networks, Air and Missile Defense and Soldier Lethality. In fiscal 

year 2017, the Army has spent $1.5 billion on OTAs. Programs that the Army has 

or is planning to use OTAs include, but not limited to, Long Range Precision Fires, 

the Expedited Active Protection System effort for Bradley and Stryker, the Lower 

Tier Air and Missile Defense System, and the Next Generation Squad Weapon System. The Army will continue to leverage OTAs and other authorities to keep pace 

with the rate of technological change. 

Secretary GEURTS. Section 233 of the Fiscal Year 2017 NDAA required DOD to 

initiate a pilot program to ‘‘demonstrate methods for the more effective development 

of technology and management of functions’’ at science and technology reinvention 

laboratories. Accordingly, the DON’s laboratories will continue to identify regulations, restrictions, and other policy and guidance that if waived would streamline 

their contracting processes. In the DON’s implementation of section 233, the DON 

labs have several pilot areas waived. In addition, the Naval Research and Development Establishment created a Rapid Contracting Team tasked to identify best practices to support rapid prototyping, provide practical feedback and lessons learned, 

and make advisory recommendations to the DON acquisition leadership. We expect 

to implement additional improvements based on this effort. To the extent that Federal regulations cannot be waived under DOD authority, we may request additional 

Congressional assistance. 

Secretary WILSON. We are looking across the entire Air Force contracting enterprise, including the Air Force Research Laboratory, to evaluate ways to improve our 

contracting processes and timelines. The contracting career field faces the challenge 

of a relatively inexperienced workforce as a whole because contracting expertise is 

highly valued by other employers. We greatly appreciate the additional hiring and 

personnel authorities Congress has granted the Department. We will continue to 

use those authorities in an effort to improve contracting agility and reduce delays. 

159. Senator HEINRICH. Secretary Wilson, I have heard specific concerns about the 

speed of contracting by Air Force Research Lab, especially in New Mexico. Could 

you have your staff look into this and get back to us on the situation and how you 

plan to improve and speed up the processes? 

Secretary WILSON. Yes. 

OTHER TRANSACTION AUTHORITIES (OTA)

160. Senator HEINRICH. Secretary Lord, OTAs provide a powerful vehicle for encouraging innovation and speeding up the contracting process for small businesses. 

This year’s NDAA directs the Secretary of Defense to establish a preference for 

using OTAs in the execution of science and technology and prototyping programs. 

Can you please give some examples where OTAs have been used in a way you would 

like to see replicated? 

Secretary LORD. A current example of a streamlined program solicitation that resulted in the award of an Other Transaction Authorities (OTA) for prototype is Defense Advanced Research Projects Agency’s (DARPA’s) Robotic Servicing of Geosynchronous Satellites (RSGS) public-private partnership program. From an earlier 

perspective, an example of a highly streamlined acquisition resulted in the high-altitude, high endurance, unmanned aerial vehicle utilized by the Air Force is Global 

Hawk. Defense Innovation Unit Experimental (DIUx) and Army Contracting Command—New Jersey (ACC–NJ) have demonstrated that the pilot program for the 

Commercial Solutions Opening (CSO) process can be used to attract non-traditional 

vendors who bring critical technology into the Department. The CSO process could 

serve as an example that can be expanded to the other appropriate defense agencies 

and activities to efficiently and effectively procure innovative products and services 

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that meet the rapidly evolving needs of the Warfighter. We intend to develop a module, based on case studies, at the Defense Acquisition University (DAU) in the near 

future to help educate our acquisition workforce. 

SPACE RAPID CAPABILITIES OFFICE (SPACE RCO)

161. Senator HEINRICH. Secretary Wilson, I believe we need a greater sense of urgency in space. One of the big changes in the NDAA this year was making Space 

Command the sole authority for organizing, training, and equipping all space forces 

within the Air Force. What impact will the centralization of space authority have 

on building a more resilient space architecture—both in terms of acquisition and the 

use of non-traditional launch services? 

Secretary WILSON. I share the committee’s sense of urgency with regard to space 

and am taking action to address a variety of issues. I will direct a comprehensive 

review of Air Force acquisition organization and authorities, including those of 

Space and Missile Systems Center, in order to increase the speed of acquisition of 

space capabilities. This review will be consistent with the statutory authorities and 

obligations of the President and the Secretary of the Air Force. 

If additional legislative changes are necessary, we will work with the appropriate 

elements of the Department, OMB, and the Congress to address them. Potential impacts that may arise from changing authorities are uncertain at this time with regard to both resilient space architectures, acquisition, and the use of non-traditional 

launch services, but we will remain focused on increasing lethality and better supporting the warfighter as space becomes an increasingly contested and congested environment. 

162. Senator HEINRICH. Secretary Wilson, we also re-designated the Operationally 

Responsive Space office as the Space Rapid Capabilities Office, which will now report directly to General Raymond at Space Command instead of SMC. What role 

does the Air Force see for the Space Rapid Capabilities Office in terms of acquisition, and how should we resource that mission? 

Secretary WILSON. The Air Force is currently evaluating how best to use the 

Space Rapid Capabilities Office to improve enterprise agility and respond to changing threats. The Space Rapid Capabilities Office is one tool, but the entire space enterprise must shift to a rapid-acquisition mindset to stay ahead of the threats. The 

fiscal year 2019 PB will begin that shift both within the Space RCO and throughout 

the space acquisition enterprise. 

QUESTIONS SUBMITTED BY SENATOR GARY PETERS

ARMY ACQUISITION CULTURE

163. Senator PETERS. Secretary Esper, last month I asked Dr. Jette, the nominee 

to be Assistant Secretary of the Army for Acquisition, Logistics, and Technology, 

about the impact of what I feel is an unhealthy conflict between key communities 

within the Army acquisition process. I’m concerned that too often we wind up with 

a process that creates over-burdensome requirements that are not tailored to soldiers’ needs, which fosters a testing culture that is too risk-adverse, which results 

in a conservative acquisition process that does not provide the equipment soldiers 

need on time or on budget. What steps have you already taken and what action do 

you plan to take to improve the Army’s acquisition culture? 

Secretary ESPER. The Army must better integrate the efforts of its various acquisition communities to ensure that those developing requirements have insightful advice on technologies essential to operational concepts, and science and technology efforts must inform the development of capabilities and fully enable the transition of 

technology. To achieve this end the Army established eight cross functional teams 

(CFTs) to better integrate the requirements, budget, science and technology, test 

and evaluation, and acquisition communities, among others 

The Army is also implementing eight policy directives to change the acquisition 

culture and the way we do business. These initiatives will increase the Army’s ability to more quickly provide capabilities to Soldiers, while being fiscally responsible 

with the taxpayer resources Congress allocates. The core policy changes the Army 

will implement focus on (1) streamlining the development and approval of capability 

requirements; (2) improving talent management; (3) improving the governance, 

strategy, and synchronization of science and technology; (4) streamlining test and 

evaluation and minimizing redundant testing; (5) aligning sustainment policy to foster cost efficiency and improved readiness; (6) streamlining the contracting process; 

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ing cost estimation and resourcing; and (9) establishing metrics to track performance and outcomes. 

ACQUISITION OF ADVANCED TECHNOLOGY

164. Senator PETERS. Secretaries Lord, Esper, Geurts, and Wilson, I’m concerned 

that when it comes to cutting-edge technology such as artificial intelligence, autonomy, and robotics—the capabilities that will drive the future of warfare—we are still 

figuring out how to get acquisition right. I know there are attempts at utilizing 

unique authorities Congress has provided, as well as outreach to industry through 

channels like D–I–U–X in key locations across the country. But this doesn’t mean 

that harvesting from industry is the only answer. There is very important work happening in Department of Defense labs and the science and technology community 

across the Department of Defense. I’m concerned that we do not leverage the significant S&T investments made by the Department and each of the services, and we 

do not see the results that we could if we made better use of the innovation that 

is already occurring within the S&T community. Please explain how we can improve 

the acquisition of advanced technology such as artificial intelligence, autonomy, and 

robotics working with industry and Department of Defense labs. 

Secretary LORD. I firmly believe that the Department should pursue opportunities 

wherever we find them. We must build relationships, leverage cutting-edge technologies being developed within our labs, academia, industry or allies, and ensure 

that we develop acquisition processes that support our ability to deliver the capabilities we need at the costs we can afford. Our acquisition processes must be flexible 

and rapid enough to meet the pace of development for technologies such as Artificial 

Intelligence and autonomy which are driven by commercial development/investment 

as well as deliberate enough to ensure affordable/effective long-term major acquisitions such as the next generation aircraft carrier. 

I agree with you. The DOD laboratories and engineering/warfighting centers are 

absolutely a major driver for innovation within the Department of Defense. They 

serve as sources of innovation aligned to solving military problems and often kickstart industry into moving in a direction that benefits the US military. By doing 

the early risky research, we set the stage for industry to take the best ideas from 

our labs and make it into products that meet the Warfighter’s needs. 

For those technologies that fall into a rapidly developing tech space, such as AI 

and Machine Learning, the DOD should heavily leverage the considerable commercial investments to simultaneously increase capability and affordability across a 

wide variety of Department missions. Commercial technology will not meet the military’s needs, however, in all mission areas. In select missions requiring high levels 

of trust, some technology development will remain inherently governmental but still 

be informed by demonstrated commercial capability. Our acquisition policy and 

processes should support this dual path approach. In the specific areas of AI and 

autonomy, we are in the process of developing an overarching strategy for the Department by identifying target application areas in which emerging technologies can 

enhance or transform warfighting capabilities and business processes. We are doing 

this in close cooperation with the Services/Agencies and the Joint Staff. Additionally, this strategy will recommend S&T and transition initiatives that build on current activities within the DOD S&T community to assure and extend the nation’s 

competitive advantage in these areas. Through efforts such as this, we are improving the engagement between the operational and DOD S&T communities, and taking steps to ensure that we attract and retain the talent necessary both to generate 

and utilize these emerging technologies. 

Secretary ESPER. I believe that advancements and innovation in science and engineering are empowered by collaboration among Army and other Department of Defense or Federal laboratories, academia and the private sector. I support using rapid 

acquisition authorities to expand our outreach efforts to the entrepreneurial community and I believe the Army has the tools needed to address this challenge. The 

Army is invested in curating mechanisms that foster collaboration among small 

businesses, universities, and our laboratories, and encourage domestic investment 

in critical technology areas. One example is the Small Business Innovation Research 

(SBIR) program, a network of Army laboratory scientists and engineers who provide 

technical assistance to small businesses in a wide range of technology areas. Another example is the Army Research Laboratory’s new business model, Open Campus, which pursues leading-edge basic and applied research in a truly collaborative 

fashion by enabling the continuous flow of people and ideas between Army Science 

and Technology laboratories, academia, and the private sector. The Army Open 

Campus model, along with SBIR and DIUx, provides mechanisms to transform and 

enhance the level of technical collaboration among these entities to improve rapid 

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acquisition of advanced technologies in rapidly evolving fields such as autonomy, robotics, and artificial intelligence. 

Secretary GEURTS. The DON has been investing in cutting edge science and technology such as artificial intelligence, autonomy, and robotics since the 1940s. These 

investments include basic research (6.1), applied research (6.2), and advanced technology development (6.3). Discoveries and inventions resulting from these investments have had significant impact on military and commercial cutting edge technology. The DON takes full advantage of the unique authorities provided by Congress such as OTAs. Combined with grants and other traditional contracting vehicles, the DON has the tools required to invest in cutting edge technology across industry and academia. The DON heavily participates in the DOD’s Science and Technology Communities of Interest, which are inter-Service, separate teams, each focused on different technology areas to collaborate and harness ideas across the Services. The DON also participates in National Defense Industry Association events facilitated or sponsored by OSD. These provide an excellent venue for sharing R&D 

efforts and needs across the DOD and our industry partners. The DON routinely 

leverages DOD Laboratories, the DOD Research Enterprise, National Laboratories, 

and Federally Funded Research and Development Centers in the development of 

cutting edge technology. 

Secretary WILSON. I agree that we need to innovate across our acquisition 

lifecycle, and our science and technology (S&T) investments. I have directed the development of an S&T 2030 Strategy to investigate on what basic and applied research areas we should focus and how we might adjust our processes and structure 

to improve how we conduct scientific research and technology development. The effort will engage academia, industry, small business, investors and others to provide 

ideas across the technology spectrum including the important areas of artificial intelligence, autonomy, and robotics. We have also pursued an increased focus on obtaining patents and other intellectual property resulting from work performed at the 

Air Force Research Laboratory in an effort to leverage these assets to further support advanced technology development. The expertise contained in our Air Force Research Laboratory is highly valued and we must continue to strengthen and reinforce an integrated, collaborative approach across the Services, academia, and industry, while bringing on-board non-traditional partners. 

PROGRAM MANAGER WORKFORCE

165. Senator PETERS. Secretary Esper, Secretary Geurts, and Secretary Wilson, 

the Fiscal Year 2017 NDAA requires the Secretary of Defense to establish and implement a program to develop the civilian program manager workforce. Recruiting 

and retaining a knowledgeable, stable program manager workforce could have a significant positive effect on ensuring the continuity of best practices and improving 

long-term oversight of major defense acquisition programs. What positive effects do 

you think greater continuity in the program manager workforce will have on acquisition? 

Secretary ESPER. In the Army Acquisition Workforce, there is a significant talent 

management initiative that has been in place for the last several years focused on 

identifying civilian talent and cultivating that talent with the right functional and 

leader development activities up front and early. This initiative is based on the understanding that to grow an Acquisition Program Manager of the future, we need 

to ensure the right training, development, education and experiences are afforded 

to our acquisition talent so that when we centrally select our Program Managers, 

we have the best and brightest impacting the acquisition process. We are already 

seeing the benefits of these efforts for our civilian professionals. We must continue 

to invest in developing and retaining critical acquisition skillsets that grow key program management professionals. Continuity is important and so is continuing to develop the next group of acquisition professionals to ensure a critical pipeline of talent is readily available. These efforts will have the lasting benefit of nurturing a 

community with the necessary competencies for today and into the future as professionals go through their career cycles. 

Secretary GEURTS. Greater continuity in the program manager (PM) workforce 

will improve acquisition outcomes. Military or civilian, effective PMs have the right 

balance of competencies, experience, and expertise. Key to growing and sustaining 

an effective PM workforce is professional and technical education and training. The 

DON uses the Defense Acquisition Workforce Development Fund (DAWDF) to address specific hiring, training, and retention needs. This fund is critical to the Department’s efforts to recruit and retain a knowledgeable acquisition workforce. 

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gram Managers, we have a formal slating panel process to evaluate candidates for 

leadership positions. This allows us to track and attract talent for our critical jobs 

at each Systems Command. A part of the slating process is providing feedback to 

each candidate so they can understand areas where they need to focus in order to 

be considered for future opportunities. The DON also has a robust SES Talent management process which includes slating for key acquisition positions. 

Secretary WILSON. The Air Force ensures that the program manager workforce 

has the collective skills and knowledge needed to create economic value for the individuals, their employers, and their community. Greater continuity within the program manager workforce will contribute to the Air Force’s efforts to produce leaders 

who understand the requirements, environmental factors, organizations, activities, 

constraints, and motivations impacting a program. 

166. Senator PETERS. Secretary Esper, Secretary Geurts, and Secretary Wilson, 

what do you think is an effective tenure requirement for program managers? 

Secretary ESPER. An effective tenure requirement for Project Managers (PMs) 

would be in concert with the Milestones established for their programs. I would aim 

to ensure Deputy Project Managers (DPMs) are also in place for the tenure duration 

and beyond to ensure accountability and transparency. Alignment of PM tenure 

with milestones will help enhance oversight of cost, schedule and performance 

metrics. Additionally, determining an appropriate tenure length by taking into account specific program milestones allows the opportunity to understand these performance measures of effectiveness and ensures a clean transition at appropriate 

critical points. 

Secretary GEURTS. While program managers (PMs) have a prescribed tenure, and 

sign tenure agreements based on their program’s ACAT level, Navy Leadership 

monitors the phase of the program and determines the proper time to rotate personnel on a case by case basis. In general, a PM should remain in their position 

for approximately four years to effectively guide their program, but the DON does 

consider program events and milestones when establishing a PM’s tenure. 

Secretary WILSON. Program managers assigned to key leadership positions are required to remain in the respective position for the tenure period as specified by the 

Service Acquisition Executive. As each individual case is unique and the needs of 

the Air Force or personal situations may change, we have an established process 

to approve movement of program managers before their tenure period is complete. 

We also review and consider extending program managers based on programmatic 

milestones. 

COMMERCIAL ITEM PROCUREMENT

167. Senator PETERS. Secretary Lord, the Fiscal Year 2017 NDAA addresses commercial item procurement by establishing a way for the Department to purchase 

commercial items through online e-commerce platforms. The hope is that this will 

result in cost savings and faster acquisition of commercial off-the-shelf items. In 

your view, do you think this provision has the potential to realize cost savings? 

Secretary LORD. An e-commerce market place promotes competition, which drives 

down costs. I believe that with the abundant competition for commercial off-theshelf (COTS) items in combination with the e-commerce site there is a potential for 

the Department to attain cost savings. 

The Department is supporting the Federal implementation of section 846 ‘‘Procurement Through Commercial E–Commerce Portals’’ which is led by the Office of 

Management and Budget (OMB) and General Services Administration (GSA). On 

January 9, 2018, OMB and GSA hosted the first public meeting to initiate ongoing 

dialogue with industry and interested parties in Government throughout the program’s implementation. The Defense Procurement and Acquisition Policy organization representatives attended and will continue to participate in the future. 

168. Senator PETERS. Secretary Lord, in implementing this provision, how important do you believe it is for GSA and OMB to ensure transparency in how prices 

are generated and displayed on these e-commerce platforms, especially as certain 

items may be subject to dynamic or variable pricing that could impact commercial 

item expenditures? 

Secretary LORD. Transparency promotes accountability; therefore, I believe it is 

extremely important for the Department and the taxpayers to know how commercial 

off-the-shelf (COTS) items are priced. This would include General Services Administration’s (GSA’s) ability to adjust to dynamic or variable pricing to ensure the Department gets the best pricing available on every item, every time. Transparency 

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also promotes trust and we need the taxpayers to trust we are being good stewards 

of their money. An e-commerce portal will address both objectives. 

SERVICES CONTRACTING

169. Senator PETERS. Secretary Esper, Secretary Geurts, and Secretary Wilson, in 

order to ensure better oversight of services contracts and avoid waste of taxpayer 

funds, the Fiscal Year 2018 NDAA requires each military Department to make services contract data available to the Secretary of Defense so that the Department can 

analyze past spending patterns and anticipate future needs. Does your Department 

have the technical capability to fully provide and analyze data about services contracts to comply with this requirement, and if not, what will you do to ensure that 

becomes the case? 

Secretary ESPER. Yes, the Army has the ability to analyze services contract data 

and provide the results of that analysis to the Secretary of Defense. I fully appreciate the importance of examining and understanding past spending activities for 

services to identify trends and buying behaviors, and to allow for efficient planning 

for future services requirements. In fact, the Army is currently conducting spend 

analysis as we migrate our service focus to implementation of category management 

initiatives. 

Secretary GEURTS. Yes, DON utilizes the Federal Procurement Data System-Next 

Generation (FPDS–NG), the official reporting system for the Federal Government, 

to collect and report data on Contractual Services obligations. We also conduct Service Requirements Review Boards for every services acquisition requirement valued 

in excess of $150,000 to provide oversight and to validate services acquisition requirements. These reviews are chaired by Flag Officers or Senior Executives and involve leadership reviews by the requirement owner(s) as well as the acquisition and 

financial communities. 

Secretary WILSON. As part of our acquisition leadership, the Department of the 

Air Force has designated a Program Executive Officer for the acquisition of services 

contracts greater than 100 million dollars. This individual also serves as the Senior 

Services Manager, providing strategic governance all for services contracts Air Force 

wide. 

Additionally, the Air Force conducts an annual Services Governance Health Assessment to review mission owner requirements and ensure organizations are efficient in their buying practices while meeting their mission needs. 

The Air Force makes great use of the Federal Procurement Data System—Next 

Generation data tool to help gather contract trend data for various services portfolios outlined by DOD. We also supplement the data with internal authoritative 

systems to be able to address specific areas. This information is used to make 

resourcing adjustments, where appropriate, to leverage our buying power and identify strategic sourcing opportunities for future procurements. 

170. Senator PETERS. Secretary Esper, Secretary Geurts, and Secretary Wilson, 

will the data you provide to the Secretary include information about the use of 

bridge contracts in your Department? 

Secretary ESPER. Yes, the services contract data the Army provides to the Secretary of Defense will include information on the usage of bridge contracts. The 

Army developed the capability to monitor the use of bridge contracts through the 

Virtual Contracting Enterprise system in fiscal year 2017. 

Secretary GEURTS. Yes, the DON has the capability to obtain information about 

the DON’s use of bridge contracts and can make this data available to the Secretary 

of Defense. 

Secretary WILSON. Through the use of the Federal Procurement Data System— 

Next Generation tool, we can identify the majority of the bridge contracts each year. 

There is a need to supplement this data and we will work with the Office of the 

Secretary of Defense to determine the appropriate level of fidelity and dollar thresholds required. 

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