Transcripts For CSPAN3 Defense Acquisition Management 20180103

Mark esper, secretary of the army. Heather wilson, secretary of the air force, and james gurts, 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 . Were still dealing with a trilliondollar f35 program that continues to operate in dysfunction. The air force still subsidizes ula for space launch with costplus fixed fee contracts. The army has sunk nearly 6. 5 billion into wint. And that work that doesnt work. And the navys lcs program is delayed. And many of the capabilities remain unproven. Thats why this committee enacted the most sweeping acquisition reforms in a generation through the last two National Defense authorization act. And yet despite that legislation, and in the face of our eroding military advantage, the department has been unable or unwilling to change. 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, im encouraged by their 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 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 doesnt 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 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, a system must move faster. Time is of the essence. The work of groups like diux, the Strategic Capabilities Office and the rapid Capabilities Offices should become standard practice, not workarounds to the regular system. And 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 plan so that we can Work Together so that were not surprised when things dont go exactly as planned. We would rather have a small failure that teaches us something early in the acquisition process than deal with a multibilliondollar program that becomes, quote, too big to fail. Fifth, invest in the acquisition work force and empower them to succeed. Too often we hear that acquisition personnel are unfamiliar with or nervous about new authorities. 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. And along those lines, i dont if you fail, i would much rather you try and fail than do nothing. Okay . And if you keep in contact with us, and tell us what youre trying to do, and what youre doing, we will be patient for about five minutes. And finally and finally, reform your organizations and businesses 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 this is an opportunity to fail, this is an opportunity to update your structures and internal processes accordingly. Now, you have reforms and you want to try them come and see us. We would be glad to cooperate with you. And dont be afraid to fail. Because the only way that we will succeed is to take the risk of 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 authority as we go through the decisionmaking process. Do not hesitate to call any of them with the exception of senator reid. Thats right. Finally, i believe, and ill be glad 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, youll have a willing partner in this committee. Look, we had a hearing not a hearing. We had a briefing from the rand study that i think my friend jack reed would agree was one of the more disturbing briefings that we have had in the years that ive been a member of this committee. The gap is closing. Were not going to succeed unless we have a partnership here, okay . Thank you. Jack . Thank you, mr. Chairman. 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 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 in 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 mccains leadership, congress has strengthened the services role and the planning, requirements and review processes that strongly shape whether our acquisition programs succeed or fail. These new responsibilities are in addition to the roles the services have always played in the development of their plans in budgets, ensuring that programs are appropriately prioritized and funded, especially in difficult budgetary environments. Finally, the Services Play a critical part in nurturing the careers in 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 Weapons Systems acquisition reform act and the pentagons better buying power initiatives and making use particularly of the new reforms in the Defense Authorization act, again, led by chairman mccain, we are seeing some improvements in acquisitions processes and outcomes today and are wellpositioned to make more improvements, but we must do much, much better. And thats why youre 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 capability for the nation. Thanks again to the witnesses and the chairmen, and i look forward to the testimony. I would like to say how much i appreciate the partnership that i have with senator reed, despite his educational 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 im very proud to have senator reed as a partner. So well begin with the honorable ellen lorde, undersecretary of defense for Acquisition Technology and logistics. Secretary lorde. Chairman mccain, Ranking Member reed by the way, could i just mention one thing . We may have depending on what happens here, theres 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. Well, thank you for the opportunity to testify today on defense acquisition and Reform Efforts. Im pleased to be joined by secretary esper, secretary wilson and assistant secretary gurts. After having spent 33 years in industry, ive come to my current position during a unique period of time. One which provides a great opportunity to make a positive change. First, the National Defense authorization act for fiscal years 2016 and 17 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 Weapons Systems. Secondly, secretary mattis has placed a priority on implementing these provisions, alongside other departmentwide reforms, and practices required to improve the lethality and militariness. Using the industry analogy, i believe that the osd should function as a corporate office. Very lean, enabling the services as businesses to execute programs theyre responsible for. At l should be pushing the majority of the departments work back to the services, and focusing on proto typing 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 war fighter. Stating it plainly, at l needs to be the strategic body. With focus across the board, driving affordability and accountability, reducing time lines and equipping the services to execute their programs. Given the fact that the dod 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 war fighter requirement, until the award of the resulting major Weapons Systems contract, i have concluded that we have the ability to reduce this procurement lead time by as much as 50 . 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 departmentwide acquisition streamlining tools. Furthermore, Congress Gave us the ability to conduct ten pilot programs, permitting the reduction of cost and pricing data for Foreign Military sales. 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. Tell us a couple of those programs. C130j retrofit kits and the japanese global hawk. So one u. S. , one Foreign Military sales. Our goal is to get these pilot procurements done within 210 days from the issuance of the request for proposal. 210 days. 210 days is the interim goal. We would like eventually to get to 180 days. We have the process to work down. Were going to work with you and your teams to demonstrate how we do it. And were going to come back to you as we need additional authorities, if needed, but we believe its really interpreting the authorities we have now, making sure you agree with them, and having us move forward. So were also prepositioning production contracts to include options for yettobedeveloped sms requirements. In other words, in the official contracts, we have the language so we can almost fill in the blank for fms sales. Again, prethinking this is going to reduce the time line and allow us to be very, very responsive to international customers. So you dont need a 100page rfp for a pistol. Absolutely correct. On the joint Strike Fighter 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. The purpose of this cost review is to understand in detail at lockheed martin, northrop grummond, rollsroyce 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 of our sustainment efforts. On a goforward basis. And well promote more effective and timely contract negotiations. Just yesterday, the fy2017 defense acquisition work force awards ceremony was held. Deputy secretary shanahan and i recognized the outstanding accomplishments of 27 top dod acquisition professionals. Out of a work force of 165,000. A few of their accomplishments include implementing a cuttingedge approach to Cyber Security, testing for aircraft Weapons Systems, accelerating the testing for defensive systems on ac130j aircraft by two years. Getting 3,000 Tactical Combat casualty units to medics and special forces operators. Improving Cyber Security for medical facilities. And reducing biological agent decontamination time by 50 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 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. Were also and how many f18s are operational and ready to fly . Not enough. Ill defer to my colleague, mr. Gerts, on that one. Okay. The numbers i recall are 60 are not flying. Operational availability across our air assets is an issue. As i talk to each of the service secretaries, its very clear, theres a lot we can do at the beginning of these programs to design in the sustainment portion. And were focusing on that and well come back and tell you how were working on it. And let us know who is responsible. Absolutely. I would look forward to a small discussion in your office, and we can talk about the actions were already taking in terms of accountability with individuals. Thank you. So were 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 average i will 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. Im 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. Thank you. Secretary 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 in a highend 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 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 this important advice of congress is fully committed to bold reform that promises to provide americas soldiers with the weapons and tools they need to fight and win our nations 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 americas 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 armys ability to deploy, fight and win across the entire spectrum of conflict, especially the high end. Third, modernization. Build greater capability and capacity in longerterm to ensure clear overmatch in the future. Finally, reform. Improve the way we do business to free up resources, time, be 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 threestarlevel task force is mapping out a new command. Army futures command. That will consolidate the Services Modernization enterprise under one roof. Second, the army is executing eight directives intended to improve our capability by refining how we generate requirements, simplifying our contracting and 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 fy16 and fy17 and daas. Third, the army has stood up eight crossfunctional teams to enable our leadership to identify and manage investments across the armys 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 armys fourth effort is to ensure that Technological Solutions are mature before we begin a program of record. This includes a threatbased strategy that is lined 80 of the armys science and Technology Funding request against our six modernization priorities. Fifth, we are directly engaging Army Senior Leadership as decision makers, as directed in the fy16 ndaa through a very invigorated Army Requirements Oversight Council process. Underlying these efforts are the other benefits the army has derived from the recent ndaas. For example, streamline requirements and processes are being captured in a rewritten Army Regulation 701 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 today is the anniversary of december 7th, when we were caught off guard at pearl harbor, and in the few short years we energized the country, industry, the American People to fight and win that war. And 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. Well, thank you, mr. Secretary. Secretary gerts. 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. Were actively pursuing initiatives to capitalize on the new mid tier acquisition authorities, provided in fiscal year 2016 and 2017 ndaas. We continue to leverage the available tools that drive down procurement costs and assist the work force. We have made meaningful progress and will be efficient in our resources. Our work force 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, and amending the budget control act to increase funding levels would reduce market uncertainty and improve our ability to maintain schedule across all the Department 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 together. We appreciate the support of this committee, providing guidance on Acquisition Policy and reform. Thank you for your opportunity to speak before you today, and i look forward to your questions. Thank you. Secretary wilson, welcome. Mr. Chairman, i would like to put my full statement in the record and just summarize a few key points. Without objection. 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 warfare to the warfare war fighter more quickly. The air force manages 470 acquisition programs. Its 158 billion if you add up what we were authorized to spend over a fiveyear period. There are a few things in the legislation that you have given us that i want to update you on and 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 16 National Defense authorization act. Before that act came into being, 19 of 49 of the Largest Air Force programs were actually managed and Decision Authority kept at the office of the secretary of defense level. So only 39 of our programs did we have a decision or authority on. So you see it as an improvement. Well, today i have 76 of those programs. And last week, the undersecretary delegated eight more programs to the air force to manage. One of those was the gps3 followon. So last thursday, secretary lord gave us authority to move on that program. And in the last week, we have most forward and approved a strategy and put out the request for proposal. In that one action, we have saved three months in the time line to acquire that system. So were taking advantage of those authorities, but were also doing the same in the service. By pushing authority down to Program Managers to the colonels who run can run these programs. And we havent been changing things above them in the past. They know what theyre doing. Lets support them and let them get after their programs. The second major change in the Defense Authorization act was prototyping and experimentation. Weve been beginning to take advantage of those new authorities in a couple of ways. The most publicly discussed one is the Light Attack Aircraft. You mentioned about the 100page request for proposal for a 9 millimeter 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 fourpage set of requirements. And on the Light Attack Aircraft. It was sent out on the 8th of march. In less than five months, we had four aircraft on the ramp to test at Holloman Air Force base. And last night i 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. And what conclusion have you reached . Senator, i was busy preparing for this hearing and didnt read the report last night. [ laughter ] but its not just the Light Attack Aircraft that were experimenting with. Another very promising one is something we call an adaptive engine. Its intended to get an increase in thrust of about 10 with a 25 increase in fuel efficiency. And weve got two contractors working on that. Its not a program of record. Its an experiment. But were trying to mature the technology, refine the requirements, reduce the time lines to get better engines that are more fuelefficient to the war fighter, faster. So those proto typing and rapid fielding kinds of authorities are i think going to pay us big dividends, both in the shortterm and the longterm. The third thing that your authorities gave us was something called the other Transaction Authority. And were taking advantage of that in a number of our Different Program areas. Really targets those nontraditional dod contractors, the Small Innovative Companies that wont do business with the department of defense under normal circumstances, because were too hard to work with. An example. Space and mission systems, just led a 100 million contract, an umbrella contract for a consortium of Innovative Companies to give us space, ground, communication capabilities for particularly for our space forces. And that consortium is managing things for us under an other Transaction Authority contract. It took us three months to put that contract together. Rome labs is another one that is losing Transaction Authority arrangements you authorize to put together a consortium 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 work force. In fiscal year 16 we used expedited hiring to hire 810 people. In fiscal year 17, we almost doubled that up to 1,600. Direct hiring were even seeing more effort by the air force to take advantage of the authorities that youve given us. In fiscal year 16, we only hired two people under those direct hiring authorities. Fiscal year 17, its 266. Thank you also for the Defense Acquisition Workforce Development fund. We are using those funds to enable and power, educate and train exceptional acquisition officials to be able to take advantage of the authorities that youve given them to do things differently, faster and with more bringing more capability. There is much more work to be done. But were beginning to make some progress. There are areas where were 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. Thats why we call them experiments. But if we have productive failures, if we fail fast and learn for it and continue on in different vectors of technology, we have a chance of better meeting the adversary in 2030. And thats what this is all about. Thank you, mr. Chairman. Well, thank you, madam secretary. And i thank the witnesses. Id like to point out that it was about three 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 secretary of the navy no, the chief of Naval Operations who was responsible for a 2 billion cost overrun. You know what the answer was . He didnt know. He didnt know. I mean, theres such a thing as accountability. And all of the things that was just covered by the witnesses here that theres no theres no penalty for failure. Can you tell me one or two individuals that, because of the failure for example, 6 billion future combat systems that never worked can you tell me an individual or individuals where they paid a penalty for that failure . Yes. Senator, i would be more than happy to have a meeting in your office and talk about some actions weve taken over the past several months to get at that very issue. What can you tell us can you reveal can you illuminate us as to what we as a team are working very closely together to look at functions and individuals in osd and in the services, the duties theyre required to perform, and are determining whether or not we have the right people in the right slots. And i dont want to talk about individuals here in a broad forum. But would appreciate the opportunity to do that behind closed doors with a smaller group. Well, i thank you. But when i go to a town hall meeting and tell my constituents that we blew 6 billion and theres not been anyone fired or replaced or new way of doing things, theyre not really very happy. So well be glad to hear what you have done and what you plan on doing. But theres no reason why you shouldnt tell the American People. Thats 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 youve done besides say, we dont know who is responsible. Okay . Sir, excuse me. I want to be on record. We hold people responsible. And we will talk about that. All right. You hold people responsible. Thats our system of government. Who is it thats been fired . Any answer . No. Senator, im not aware of anyone being fired for fcs, to your point. We completely agree. All right. Senator reed. Thank you very much, mr. Chairman. Following along these lines of accountability, because i think thats probably the most critical principle, one of the practical difficulties these programs sometimes stretch over decades. And there are people who change out, retire, who are promoted, et cetera. 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 yeartoyear basis, what kind of metrics can we use to make sure were on track, and the individuals will be closely associated with accountability. Secretary 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 thats somewhat problematical in terms of discontinuity. So we are looking at holding on to Program Managers through key milestones or key events. I think that thats one helpful issue. Secondly, in the department, ill speak for myself here, but i know we all talk about this. I on a monthly basis roll out the 87 major defense programs metrics. So in other words, we have 87 acat1 programs that are accountable for about 96 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 co coms down range. Because, for instance, you could look at some precisionguided munitions programs that look green, if you will. If you look at the letter of the contract. However, we know we have shortages downrange. We know we have co coms 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 f35. Those are some of the ways we are Holding People accountable. In fact, we have what we call war rooms that weve put together. Its very transparent. You all are invited to come see. We have the metrics up on the wall. We have, in terms of accountability, we have the peos and the Program Managers names, and they come out and report out to us. We flow that information up. So, again, im 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. Thank you. In the remaining time, brief comment to amplify what secretary lord said. 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 on the personal side, as well. I want to address briefly what you said about the process being so long. So under the concept were developing with Army Futures 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 prototype, test, learn, fail, prototype, test, learn, fail. We are looking at reducing requirements developments process that currently runs about five years, 60 months, down to 12. And so if you reduce that time frame, you have clearly, there would be one person in charge of that effort, the cft leader. That gives one example how were trying to reduce the time lines to ensure accountability. Secretary gerts and secretary wilson. I apologize, my time is limited. I agree with both secretary espes and secretary lord. We have a gate review process where we, myself, and commandant are looking at these programs at milestone, and then we do annual reviews. So thats a key point, where we can see where the program is, and then assess that Program Manager or peo to see if theyre delivering. If not, then hold them accountable at that point. Another key issue, and secretary wilson mentioned, push responsibility down. So its hard to hold somebody accountable when they dont have the authority to actually make the decisions. So pushing that authority down is a key element. And finally, and probably most importantly, is Work Force Training and certification. Because if we havent done the effort to train them, certify them and make sure theyre capable, then its hard to hold them accountable. Thats our fault if we havent given the skills to be successful. Is it that theyre working 100 hour work weeks . Whose responsibility is that . On board the ship, sir, or on board the ships. Sir, that would be on the cnos side through the operational command. Well, when i asked the question, they said, well, were going to do a study on this. A study as to whether our sailors and marines should be working 100hour work weeks . We need a study to figure that out . Yes, sir. Im not familiar with 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. Thank you. Im sorry. Quite all right, mr. Chairman. Secretary wilson, if you have any additional comments, we would appreciate it. No, sir, i think my colleagues covered it. Thank you very much. And thank you for your service, secretary. Thank you. Senator rounds. Thank you, mr. Chairman. Just let me begin, secretary wilson. You mentioned the Light Attack Aircraft and where were moving on that. I want to compare that with the b21 radar program, which is also under development at this time, and that program, as you mentioned in your prepared statement, theres movement in both the oax and b21 radar program. A recently declassified audit from the Inspector General praised the b21 programs plan for meeting cost Program Goals and requirements. I think if this trend continues, the b21 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 hes 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 the process that weve that weve so far been successful in developing in the b21 plan, is that something that can migrate to other plans, such as the Light Attack Aircraft as well . Senator, were actually using different authorities there. We use other transaction authorities or simple authorities for the experimentation authorities for light attack. B21 is more traditional. The thing that is different is its being done by something we call the rapid Capabilities Office which kind of has a board of directors of senior people, including myself, at and l, the acquisition of 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, and were going to give this a try. Its 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 we are actually modeling that in our in the air force. 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 they used as an example when we were talking about it, a cell phone. Straightforward, off the shelf. I can buy it. Make a decision on it. Put it to use in about, what, a week at the most from the time that i get it until 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 two and a half years to acquire. This is basically out of date after a year to a year and a half. My question to you, when youre all said and done, using a piece of hardware and software combination available today to the general public for perhaps purchase within a oneweek or twoweek period of time, whats your goal for getting the acquisition process down from a twoandahalf year time period for Pentagon Acquisition and issue. Our goal is to look at where weve had successes with diux, with sko. In fact, ive asked will roper to be here with me today because we think theyve demonstrated the right kind of behaviors. Were looking at what the rapid Capabilities Offices have done, and frankly, as we organize at and l into a and s and r and e, what were doing is basically trying to scale the behaviors, the processes, or the lack thereof that weve seen in these different groups. And its an issue of scalability. Im going to run out of time but let me ask this one more time. Whats the goal in terms of, is there a goal for cutting back acquisition times . 12 months for major programs. From twoandahalf years to 12 months. Correct. Okay. Now thats a first step, i just would like to be on record as saying. Okay. Next of all, Cloud Computing is here to stay. Clearly the pentagon has got 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 war fighter representation from the military services, combat commands to include Cyber Command or if not, why not. We have pulled in all of the services and are talking to them. We put out an rfi and have gotten 52 responses. We, right now, are working on how were going to go about that contract. We dont know how were going to structure it yet. But absolutely, because what were looking at is mission focus here, not backroom business systems, and its all about getting that computing capability out to the edge. We want our war fighting 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, its going to be very hard to do that. So, frankly, sir, everything i do is about lethality and the war fighter. Thank you. Thank you, mr. Chairman. Thank you, mr. Chairman. And thank you all for being here today. The defense federal Acquisition Regulation supplement, as i know all of you know, requires that all d. O. D. Contractors, including Small Businesses, comply with a complex series of Cyber Security requirements by december 31st of this year. Now, i certainly think its very important for us to address the Cyber Concerns and have been banging the drum on that, particularly with respect to kaspersky software. But i am concerned as member of 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 theyre very concerned that they cant comply by this deadline, that unlike some of the bigger businesses that work with the department of defense, they dont 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 . I am very, very interested in this topic, and in fact, we are concerned about being compliant and working 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, and 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, ndia, and psc. 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, and we said that clearly the only requirement for this year is to lay out what your plan is, and 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 are maybe some old information out there, and any Small Company that has any issue can come to us and we will help them with that. Thats really helpful. Are there guidelines that we can share with the Business Community in our states to let them know . Absolutely. I will get that to your office. Absolutely. That would be very much appreciated. Secretary guertz, the virginia class submarine is one of the more successful acquisition programs. Its 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 were looking at the columbia class subs to ensure that they also can deliver on time and on budget . Yes, senator. Im third day on the job so i was not around that program as it originated in person. You should know the answer to this. Come on. Yes, maam. I would say looking back on it, though, designing for affordability and then holding a stable design were key traits. Having a the right government and Industry Team working together all through all of it, so, you know, as secretary spencer likes to say, shared risk, shared benefit, so a very good working relationship between the government and Industry Team. And then as we look at columbia, were 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 dont have to reinvent equipment and then we can get greater economic order, and then really focusing, really, on the design for affordability. Secretary lord and i had a review yesterday, i think it was, a 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 its designed. And i think those are great principles that well look to continue across the other parts of the department of the navy. Well, i appreciate that, and i hope that you will take the lessons that are learned and make sure that theyre incorporated. Absolutely. Into columbia. 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 program, the sttr program, have really been successful. For sbir, for every dollar spent through the air force, 12 was returned. In the navy, for every 1, 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 . I was just speaking with raj shah at diux a couple days ago about how we can take the success theyve had at duix because theyve had over 60 contracts to work with Small Businesses who might not have worked with the department of defense otherwise. And i asked him that exact same question, and he told me that there are some constraints on some of the sbir money that doesnt allow it to flow. I dont 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 towards incorporating commercial technology and so forth. I think this is one of the few cases ive seen so far where another authority or taking away some kind of legislation right now might help us. But id love to come back and give you specific examples. That would be tell us what you need. I will. Yes. And also, if the Small Business Committee Also needs to do anything, we can move on that as well. Very, very timely. I appreciate it. And senator, i would add to your point, Small Business tends to be an engine of innovation. Thats something 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 were working hard to deregulate, to delayer. Id say security clearances are a big challenges for businesses. Absolutely. We now have over a yearlong process, and the other complexity the other thing i mentioned, this is preaching to the choir, i mean, clearly with crs, and the yep. The uneven funding, if youre a small mom and pop shop out there, and aisim referring to industry experience, its hard for them to survive in an uncertain budgetary environment and we risk losing those folks. So thats a bill threg threat t supply chains. Can you characterize the relationship with senator, i think from an army permit, it perspective, its a growing one. Its something we need to develop, particularly with regard to i. T. Systems. Its a very particular challenge, given the fact that the Technology Changes to quickly and now the innovation is happening mostly, if not entirely, in the commercial sector. So i think its a relationship we have to continue to build with Silicon Valley and then broadly with the commercial sector and tap more make d. O. D. Acquisition more friendly to the commercial sector. Between the cia and d. O. D. Your i agree with that. Cia has done some great work. For instance, migrating to the cloud. To answer your question from my perspective, im leveraging the Defense Innovation board pretty significantly, and thats how im tying into Silicon Valley. Ive 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 can i do differently to solve some specific issues. And thats helpful. We also are using our diux arm out there to set up round tables for me to meet with a variety of software companies, because thats where im focused right now. How long has diux been in business . For two or three years, perhaps. I have to get back to you on the specifics on that. Im not smart enough to know that right now. Thats thats not a lot of progress. I want to build on it. Senator. Thank you, mr. Chair, and thanks to all of you for jaoinig us today. We had a great forum this last weekend. The reagan National Defense forum, and secretary lord, im glad you were there. We sat together on a wonderful, wonderful panel. I think everybody was engaged at one point or another through those discussions, and it was very helpful to see so many people that agreed on some of the challenges that we have, including the crs, as was just mentioned, sequester, our Budgeting Issues here in congress. And secretary lord, from this past weekend, you had mentioned the need to redirect our investments, to meet the demands on a shifting world. And 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 and thats a topic that we 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 . And how do we balance those investments, then, with the need that we have to improve our readiness . What were trying to do is strike that balance. We are talking about operational availability of aircraft earlier. We obviously need the readiness. What were doing is trying to take a very federated system of labs that we have right now between the services, ffrdcs, 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, were 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 and everybody defines cyber a little bit differently, but im talking about offensive and defensive cyber. Those are three areas where we are committed, and were looking at aligning our investments to make sure we make a step function change in our capability. Okay. I appreciate that. What were doing right now is working on the elements of that, and wed love to come back and talk to you about that in more depth. As you know, weve just stood up Cyber Command, and we have a whole series of efforts. Yes. For the last nine years that i know. Understood. Yes, the chairman and senator rounds have been very passionate about making sure that we are nesting our capabilities together and understanding who is responsible in what domain. So, very, very important. And secretary lord as well, ive heard just recent reports that this distributed Common Ground system or dcig soft, iswathe software that aggregates Intelligence Data is problematic. Its ineffective is what ive heard from some of those operators and i also understand there are a number of commercial solutions that may be better and immediately available, and in some cases, theyre 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 . I dont want to comment too specifically about that because we did have one of those contracts but i will verdict 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 were pursuing can achieve the lethality that we wish, then well talk about potentially terminating programs. And in fact, general holmes and i were just here talking to hacd last week about jstars recap. Thats a perfect example of where, given the contested environments in which were fighting, were thinking that perhaps there might be better ways to get sensors to work closer to the adversary. So, thats an example of where we came up and said, were 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 cant get into too many details but thats an example of where were 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. Okay, so multiple factors involved in that Decision Making process. Dollars, capabilities, overmatch. Absolutely. And its one thats not taken lightly, and all of the equities within the building are considered before we come and take the time of congress to say this is a serious concern of ours. Okay. Thank you very much. Several years. For the recap. Thank you, mr. Chairman. I dont have it here today, but i certainly could get that, yes, we do know. Is it in the millions . On the recap, i dont believe its in the billions, but i shouldnt speak without the data in front of me. We will get back to you. [ inaudible ] thank you, mr. Chairman, and thank you to our witnesses for being here today on this important topic. Ive previously asked each one of you if you would make research a priority in your work. You have all said yes. So im going to start with a really simple question. Are you still committed to prioritizing basic and applied research, and will this commitment be reflected in the fy19 budget . I am willing to take really short answers like, yes. Secretary lord. Yes. Secretary esper. We got this. Yes, senator. Yes, senator. Yes. Good. Good. So, i have another question. In an effort to emphasize the importance of r d and in recognition of the span of responsibilities at at and 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 attainment. And i know youre 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 departments acquisition requirements and that promising technologies are actually nurtured and incorporated into our programs of record . This is something were working on right now, and in fact, ive had conversations that im 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 were trying to do is put risk 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 and s side. So youre just going to get it further along while its still in the research bucket. Thats one piece of it. A second piece of it is we are working on streamlined acquisition processes where you basically have a flowchart and you use the simplest methodology possible to get things on contract so that were not held up in this do loop of you want to do something but you cant get it on contract. Right. And these other transaction authorities are particularly germane here because theyve helped us. Thirdly, were going to have some common resources between r and e and a and s, so its not as if we have people that are either 100 r and e or 100 a and s. We will have a lot of those, but were going to have some shared resources that span that gap that allow one group to understand what the other group is doing. This cant be personality dependent. It needs to be sustainable as we all move on. So, were going to actually be experimenting, you know, prototyping and experimenting over two years to make sure we get that right. The construct i have right now, and ill be coming back to brief all of you on this, is we are going to do a twoyear, eightquarter transition, and we have a model for what were going to do. And were going to tell everyone what that is, and well begin moving towards that model, but were not being rigid about it. Were experimenting and seeing what works. Were also making sure we get a lot of brains around the table to talk about all the what ifs. I really appreciate it and i appreciate the thought youre putting into this. We dont want to lose at that space. Secretary esper, would you like to add to that. Were low on time. I would say briefly the army has begun a process of realigning its investments toward our six Priority Areas so for 19 to 23, weve already r e realigned over 1. 3 billion toward s t. And the way were also doing that is as the cross functional teams are stood up and theyre responsible for their particular capability areas with s t aligned to that particular area, were issued a directive that would required standardized written agreements about what is expected to be delivered from the community to hand off to the actual cft leader to begin the acquisition process. Okay. Were trying to do exactly what i think you were saying. Im out of time so im 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 want to say, we got to get better at that. Anything that has the name, 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 cant translate that into something that helps our war fighters, then we have failed at our essential mission. Except for the clemson football stadium. Thats known as the valley of death. Not to me. All right. Thank you. Thank you. [ inaudible ] thank you, mr. Chair. Let us bring us back to this topic here. First of all, thank you, im so encouraged to hear the conversation today. I heard the word, crisis, mentioned twice. Ive heard, sense of urgency mentioned several times. As the next business guy in seeing this crisis, i am terribly encouraged by what you all are doing. Ive met you, and weve had private conversations. 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, and 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 three years after we demilitarized after world war ii, we were right back in the same position. And that war was a little different, and so forth. But today, we find ourselves in crisis. Im not going to spend time, i dont have time describing the crisis, but after 30 years of disinvestment and only one major recap and after 16 years of active combat, i believe weve got a crisis. The Global Situation is more dangerous than its ever been. Weve got a debt crisis here. Weve got a nearrival thats now going to be a full rival thats actually spending more money than we are in real terms, adjusted for purchasing power and parity. General mattis says that there are three phases to solve this problem. And youve each spoken about it in different ways. Theres a threeyear term of readiness. Weve got to get readiness recovered. Theres a 15 to 25year 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. Its not going to take 15 years before a lot of their new technology is hitting. They have leapfrogged major areas of restrictions. Theyre bringing product online much cheaper than we do, much quicker than we do, and with far less restriction and government intervention. Im worried about the shoulder season from year three to year 12, and i would like for you to i think secretary lord, if you will start with this, im really concerned about how do we find quick, lowcost solutions for the battlefield. Id like a combat and commander representatives to come in on this as well because im very concerned that we are weve got our eyes out here, were looking at where the money is needed, and yet these highcost solutions, flying f35s into battle space where an a29 might be okay, im not saying were doing that, but those types of examples. Jstars, great longterm capability. Weve got a dying platform right now. Technology, the battle spaces are changing. That interim period, thats a perfect example of where i dont personally see the air force or anybody else, really, moving toward that interim solution in a way that gives me comfort with a lowcost, Current Technology platform thats better than what we have, more Cost Effective than what we have but doesnt get in the way and take money away from longterm development. Would you address that . Twopart answer to the question. One, i would really like to come back and in a different setting and a classified setting thats fair. Talk to you about some of the programs going on. Id look forward to that. But secondly, what youre talking about is exactly what diux, sko, and the rapid Capabilities Office are doing, and 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 havent scaled it, because probably the best meeting i go to in the pentagon is something called the war fighters Senior Integration Group where we sit down every two weeks and we have on vtc, afghanistan, every two weeks, and then the other two weeks, iraq, and we talk to the war fighter about what is going on today and what they need in terms of Rapid Capabilities. This is what has spun out an enormous a amount of counteruas equipment and that has been fast. So we can do this. But we do it on a small scale, and thats what this reorg is all about, in my mind, is getting away from the 5,000 process, other than the 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. So, secretary, would you comment on im out of time. I would love to have you respond to that, all of you respond to that question after the meeting. Yes, sir, because its a great question. Just connect a couple dots from the historical example. The key here is changing culture. Thank you. Senator, the key is changing culture. At the end of the day, we have to change the culture. Thats what came out of the 2011 decker, wagner acquisition reform report. Thats the most crucial element and the way the army is getting at this is standing up the Army Futures Command to do just that, take an approach that says lets not make the perfect the enemy the better. Lets prototype, demonstrate, learn. Lets fell early. Lets fell cheaply, and lets go with 80 solution. Get something fielded. The view is if we can stand up the organization, the 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 were ready, positioned, postured to begin looking simultaneously at those mid and farterm threats that you described. And how long have we been fooling around with future combat systems . Well, thank goodness its in our rear view mirror now, mr. Chairman. Senator, in the navy, were taking an approach with an Agile Acquisition office, and that whole acquisition process, which i cochaired, theres a board, i cochair with the cno or the kmant daman da commandant. It can give us a bridge or theres a problem that we need a solution for, we cant wait for the business as usual. Were seeing about a threeyear acceleration for the projects were getting through those programs on manned aerial refuel or on the carriers, one of them, some of the highspeed velssels so thats a way to give again, we should have a menu of options. Some needs to be rapid, exactly what we have today, buy us, sold commercially. Some need to be build a carrier, very deliberate, you want to make sure you get it right because its going to be around for 40 years and theres a sweet spot, and quite frankly, your committees authorities and some of those rapid prototypes being abbreviated acquisitions really gets at that sweet spot. Thats what weve been missing. And so youve given us the authorities. Weve now got to go implement those. I think all of us are in the emerging stages of that and i think in the next two or three years, thats really going to get at that shoulder thing that, yeah, we cant wait for 15 years for something thats going to happen five years from now. Senator, for the air force, we look 5 to 15 years, and youre 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. Thank you all. And 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, followup meeting in a classified environment at your discretion. Thank you. I think its something we ought to pursue. We ought to pursue. Senator donnelley. Thank you, mr. Chairman. And for the witnesses, secretary wilson, i want thank you and your staff for a unique level of prompt communication since your confirmation. Weve been able to Work Together on some important issues to improve the readiness of our forces, and the lives of our airmen and their families. One of the challenges will be the readiness of the a10 fleet. If the air force intends to maintain the Current Fleet for the foreseeable future, im concerned about the shortfall and funding for new wings. 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 owned 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 forces options on this issue, taking into account budgetary challenges, readiness requirements, and our timelines . Senator, thank you for the question. The Defense Authorization bill that the Senate Passed and the house passed and the the House Appropriations mark add money into the air force budget to retool and open a line for wings. It wasnt in our budget. I know the Senate Appropriations committee is working on that now. If that comes through, we will execute that and get our get that line started back up so that we can rewing. I think the amount would be the first it would be the tooling and the first four or five sets of wings for the a10. Youre right, we are always managing, you know, how do we how do 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 a10 myself. Thank you. Secretary lord, i appreciate the hard work you are putting into getting our acquisition systems running more efficiently. Its really important to get it right as you well know. Weve discussed hypersonic systems in the past. Id like to revisit that today. Conventional prompt strike or cps is defenses most advanced hypersonic effort. Testifying to this Committee Earlier this year, strategy com commander general 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 . Yes, i see it as a priority. In fact, there are two key programs going on right now. One at darpa and one within osd that are moving along so i would be happy to have the technical lead come along to brief you on these. I was going to say, if you could provide us an update where you are with this effort. Yes. Senator, can i add one thing to that . Sure, absolutely. On the hypersonics, there are two demonstrators where the air force and i believe the navy as well are working with darpa and its a prototyping experimentation effort that is were using the authorities that you all gave us for experimentation and testing so we didnt wait for extensive requirements kinds of things. Were moving forward on an experiment for hypersonics, and it was through the authorities you gave us. Thank you. Secretary guerts, i want to ask you about the role our defense labs play in the acquisition process. I spent a lot of time at crane navy lab in indiana. Ive been struck by how integrity 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. Id love to get your view of defense labs as a vital player in the acquisition system. Yes, senator. I think, you know, in coming to the navy, im really impressed with their Warfare Centers and labs and how well theyre tied. I think having an organic capability, especially as weve got 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 so com days, Navy Dahlgren does all the software for our gun ships. That gave us great flexibility in special Operations Command to change as requirements on the battlefield game. So i think its an absolutely critical piece and i think its the key in getting through the valley of death because they can help mature, you know, and immature commercial product from a Small Business work with them and then get it so its in a fieldable or close to fieldable condition for us to put into the field. Thank you. Thank you, mr. Chairman. Thank you, mr. Chairman. Mr. Chairman, you know any time we have a committee talking about acquisition, i have to bring out my favorite prop and remind everybody of the actual pages. Almost 700 pages. Ten years to define a handgun. Next generation handgun. And i just found out with the update, good news is, weve down selected, weve got a manufacturer, and 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. But we know theres no logical basis for Something Like this for something as straightforward as a handgun. A 20year process from concept to full deployment within the army. I dont even know what it means for the whole d. O. D. But within the army. So, senator mccain and his opening comments with the exception of senator reed, he would like for you to talk with all of us. I think thats what he said. But no, in all seriousness, as somebody whos worked in procurement, as somebody whos worked in strategic sourcing and acquisition, if i were going into an organization to be retained to fix their acquisition process, id 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 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 these issues. 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 youve placed on yourself. And i would just like you to respond to that in the remaining time. 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, and 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 have been very happy with what we fielded. I would also note because its important to what youre saying, after the years of going through that extended process, the chief of staff of the army took to heart what congress said, used the legislation that was in contending, we had stood up about 20 months ago or so, the reinvigorated Army Requirements Oversight Council, so he took that case that youre talking about, refined the requirements process and 18 months later, we got to the point that we were delivering weapons so weve managed to turn a bad news story 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 dont see that again. Sir, from the navys perspective, you guys have been very help. Weve been doing some piloting of reducing number of critical performance parameters. You gave us the authority to try one where we only had two critical performance parameters. Thats simplified the solicitation. Then we could work with industry, again, getting to, as secretary wilson, a much shorter requirement, gave us a much broader look. That saved years from us going through the normal, tradition piece. So the authorities you give us, again, help us try and drive that change because ultimately, weve got to get the workforce trained and get the culture shifted from what has been to what needs to be. And as secretaries wilson and lord respond, weve got to keep in mind about the cumulative cost of this. I mean, weve got to take a look at, when you have to participate in a procurement for ten years, how much cost youre building into the Industrial Base that we ultimately pay for. So, i also want to make sure that im getting a commitment from you o aall to come up with specific actions that we need to take to accelerate the process. Secretary wilson and well finish with secretary lord. 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 is the letter of invitation and theres a fourpage document for the light attack experiment, and it it fits nicely in a very slim briefcase. You get a blue ribbon for that one. I will put the blue ribbon on this and provide you a copy. But the final report, we tested four aircraft, and the final report arrived last night with me, so its less than 11 months from a letter of invitation to the final report on testing, and well make a step from there. I actually do have some, you know, what else can congress do to be helpful, and you often ask that, and i i do have some suggestions for you. But maybe ill just provide those in answers to questions. Thank you. We are coming up with methodologies to step through a flowchart to arrive at the simplest and quickest compliant contracting methodology for different procurements. And i think part of the issue with this gun youre referring to is we applied a onesizefitsall, bring it on mentality and were trying to learn from our rapid Capabilities Offices, from diuk, from sko, who have taken the authorities that congress has provided and applied them appropriately to speed things up. Therefore, have them be more Cost Effective and thereby allowing Smaller Companies that couldnt afford to go through this multiyear process to participate. So, what were trying to do is scale all of those activities, but weve got to educate our Acquisition Workforce to be able to do that, and that is a huge issue. So, im taking a fundamental relook at how the Defense Acquisition University operates, and were looking at more one, twoday sessions where we teach people skill sets that they use the next day. But weve got to give people the tools, and then we have to train them. And i am very optimistic that we can do that. Because i think we have a lot of smart people that are looking for leadership you didnt have smart people before . I dont think the focus was on Cost Effective, quick solutions, and i dont think people had the intestinal fortitude to come up here and say what needed to be changed. And i think we have an environment now where we have a huge number of people that are all aligned on the same objective and were all very comfortable having a conversation, saying this is working, this perhaps has an unintended consequence, and i see a lot of momentum between the building and between the hill to Work Together to achieve our shared goals. Well, i certainly hope youre correct. Mr. Chairman, if i can adjust one quick thing to m mr. Tillerson mr. Tilliss questions. I would tell you in the case of the handgun, after we had done that 18month process, we had prototype tested, demonstrated, used soldiers, selected the handgun, and we had a protest. And i think to the degree that the congress can act on getting rid of frivolous protests, at least what the army considered one, would be helpful. All it does is add time, cost, and of course delays getting the soldier what he or she needs to be successful. Senator king. Perhaps the handgun example can remind me of my fathers advice that even the worst person can serve as a bad example. So, maybe we can learn from that. Mr. Geurts, a couple of preliminary observations. 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 assure you. Mr. Chairman, this is a very important hearing, and i want to thank you for calling it. And secondly, to the entire panel, this is one of the better or id say best hearings ive seen on this subject in five years. You are clearly focused on this problem. Secretary wilson, the what you told us about the Light Attack Aircraft and the process is incredibly encouraging, and 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. And i would like it if you could supply to this committee your organizational chart of this of the acquisition process, and im interested in seeing how many committees there are, how many approvals, what the levels are, because i do think im not being facetious, i do think the structure largely determines the outcome. If you have a complex, cumbersome structure, youre going to have a cumbersome outcome. Somebody said the ideal committee is made up of three people, two of whom are absent chblt. So if you could share with me your thoughts on this. 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 materials or services. That means you need to understand what youre buying and how to tailor the process, and thats what we have our contracting people doing right now, using reallife examples of how weve done this. So, thats what i will bring you, what that flowchart is. Id really appreciate that. And do i understand i think i heard in one of your testimonies, perhaps yours, that youre endeavoring youre making an effort to keep people in these positions at least through milestones. One of the problems weve identified is acquisitions people come and go, and it creates a herkyjerky process. 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 were all committed to do that. I will say that we all spend a lot of time in one anothers offices, and i know i meet with the Service Acquisition executives on a weekly basis, so were i hope that thats the sort of technical government organization, but i hope you can really focus on this issue of how long people stay in a particular office, because if they keep turning over, thats been identified in prior hearings as a significant problem. We are committed. Other piece is off the shelf technology. Mr. Geurts, i commend to you the p8, which is the new naval antisubmarine aircraft which i was delighted i went out to see them building them is an offtheshelf 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 p8, it seems to me, is an example of how we can do this without redesigning everything from the ground up. Is that are you familiar with that program . Yes, sir, and im getting more familiar as in the new job here. But certainly my background in special ops guy is, you know, is leverage whatevers there and put it to use as quickly as possible. I think back to the this idea that we will have to build new, that will take some time. Well 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 whats 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 forces work to create a new capability quickly so we dont have to reinvent a whole new cruise missile, so this focus on every dollar counts, every day counts, were in a war tonight, and we need to think that way in everything were doing, whether thats organizational design, acquisition requirements, operational tests, all of that has got to play together and i think as youre seeing here, were all committed to doing that for the nation. I have seen that today, and its its reassuring. Two quick points, just and you dont need to respond. But reducing lead times is almost as important as price. I mean, we cant be maintain our qualitative edge if it takes too long to get the weapon into the field. And finally, to reiterate what everyone has said today, we want to be partners and 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 youre doing. That you know. Mr. Chairman, i have to respond to rhetorical question i raised about the importance of maine. It is important because its sent us some of the most impressive senators in our history, olympia snow, susan collins, and angus king, and for the record, please note that. Senator mccaskill. I would like to take a moment to thank my fellow. My military fellow, Lieutenant Colonel sean foster. This is his last hearing. Hes an army j. A. G. Officer. He has been incredibly helpful to my office. Im 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 two years. Im going to miss sean a lot. How many of you have read the november 2017 d. O. D. Ige top ten management challenges that were issued in november . Everybody read it . No . No, maam. Who has read it . I glanced over it. I must admit it was in my readahead package. I read it yesterday. Secretary esper, have you read it . Secretary wilson . Okay. Im going to ask this question. Almost every time any of you come up here, im going to ask you if youve read ig reports. Nothing is more irritating to me than when the really hard work of gao and the igs identify problems and really make your job easier in terms of where you should focus and nobody consumes the product. Its really important, i think, that all of you consume this product, because they identify ten challenges of management, and thats what your jobs are. Is management. Im 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 h60 helicopter used by the services and so com, that they have purchased 2. 9 million spare parts for the h60, d. O. D. Has, using 2,000 separate contracts. Awarded to 590 different contractors. Over a 12month period. For almost 400 million. And often, these parts were purchased for different prices, the same part. This is, you know, the kind of stuff that just makes you want to tear your hair out as somebody whos a former auditor. What roadblocks 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. Since august, ive 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. And what i find is a couple trends relative to sustainment. One, early on in programs, people arent thinking about designing for sustainability. Theyre not thinking about setting up the right contract vehicles. Its often rather reactionary for different parts. So, as we develop these systems, we need a wholistic contracting strategy, because contracting is a strategy. I mean, i just think you guys should when something comes online, you should begin the process of identifying a handful of contractors, because you want the consistency and if somebody falls off, youve got others, and to get the best deal and leverage the best deal for that helicopter. I mean, i cant tell you how many times ive said in this committee, and pointed out inefficiencies between the services for things that theyre all using. Thats where at and l comes into play. We talk about delegated programs back. Thats 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 youre talking about. Im going to i dont have much time left. Im going to, for the record, im going to ask you about reporting contractor past performance. Its 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 the last thing i really want to 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 unwanted function or otherwise compromising the design or integrity. They specifically point out the Missile Defense agency as its relates to groundbased mid course defense system. Thats obviously of grave concern. Im 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 dont need to explain to any of you what the dire consequences of that could be in todays world. I would be happy to do that. In fact, i just had an Early Morning meeting with general ashley from d. I. A. About that very topic in my office this morning. I will ask about all of these ten Management Areas that i would recommend the next time you come, check and see if an ig report or a gao report has been issued in the last 30 days because i guarantee you im going to ask you about it. Im following you. You wouldnt 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 she sent over they sent over somebody to get approved for hiring at opm and guess what opm told them . They didnt have enough experience flying the joint Strike Fighter. So obviously the job requirements that are imposed upon you by opm are ridiculous, beyond the pale. Clearly nobody at opm knew that nobody had flown the joint Strike Fighter yet . Im working on it from my end. Thank you for your help on this one. We can surely continue to use the help. Did you get it approved finally . Its that particular one has been approved, but my average time to hire a civilian is about 180 days. Totally ridiculous. Its a major issue. Thank you, mr. Chairman. Senator, we have a task force looking at all of the requirements to hire people, how we can streamline those, both regulatory and that we can get onboard. I want to apologize to senator blumenthal because obviously, there is an event on the floor of the senate, which i know hes very interested in. And so if i may, mr. Chairman. Ill submit my questions for the record, and i hope well get prompt responses focusing on, among other issues, on the huey replacement program. Thank you, mr. Chairman. I thank the witnesses. This has been very helpful. Again, i hope the message is from this committee to you, is 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. And this crowded hearing will adjourn. Well, thanks, heather. Heres whats ahead this afternoon and into the even on cspan3. Up next, the Senate Judiciary Committee Reviews legislation to tighten gun background checks including banning devices designed to increase the firing rate. Dianne feinstein is sponsoring the legislation. Then beginning at 8 00 eastern, the first of three cspan cities tours leading off with programs about charlottesville, virginia. Cspan, where history unfolds daily. In 1979, cspan was created as a Public Service by americas Cable Television companies. And is brought to you today by