Interview transcript:
Terry Gerton: So you’ve just completed this big survey at MITRE. Tell us a little bit about it and what the biggest takeaways were.
Keoki Jackson: This survey on defense acquisition, particularly the state of defense acquisition and how things have changed over the past several years, was really done in concert with a significant conference that we held last week on breaking barriers in defense acquisition. The intent of the survey was to post a broad base of participants in the defense acquisition ecosystem. So including, of course, the providers in the industry, including what I’d call the traditional prime contractors and major defense industry players, but also a broad spectrum of small and medium businesses, what we call non-traditional contractors. So these would be suppliers who may not have a large defense or traditionally not have a large defense business but primarily supplied to the commercial world. And this could include many of the new entrants into the defense ecosystem. So these are what are often called “defense tech.” Technology companies coming out of Silicon Valley and other technology hubs, often funded by private venture capital, doing their own research and building commercial products, but then adapting them and delivering them into the defense ecosystem. So, we surveyed over a thousand folks, and so the responses span not just industry but also government, including defense practitioners and our other participants, including federally funded research and development centers and non-governmental organizations that participate in policy discussions as well. So, with that long introduction, what did we find? I think the first and major takeaway is although there has been some progress, there is a lot of work needed to be done in defense acquisition and this we saw from across all of the respondents that in fact barriers to defense contracting for these non-traditional contractors and small and medium enterprises remain pretty significant. Another takeaway is that perceptions vary, and so the perceptions of those non- traditional contractors are very different from the experience that others report. And finally, we identified the biggest opportunities, shall we say, biggest barriers, biggest opportunities for improving defense contracts.
Terry Gerton: Nobody who’s been around defense contracting would disagree that there’s lots of work to be done. And certainly, the new administration has said they want to reform the acquisition process. Some of those things though would require statutory reform, some of them are regulatory, and some of them or just habit built over time. So where did your survey respondents either in their answers or in the conference suggest ideas for really changing the game.
Keoki Jackson: Yeah, that’s a wonderful question. And as you note, this is the ideal time to be having this discussion. When we began planning the conference, this was before several major actions were taken by the government, including an executive order on massively streamlining and reducing the Federal Acquisition Regulation, or FAR, and the agency supplement. So that, in our case, would be the Defense Federal Acquisition Regulatory Supplement, as well, the DFARs. And in addition, there are multiple activities going on Capitol Hill, including maybe most prominently the so-called FoRGED Act, which has been introduced by Senate Armed Services Committee Chairman Senator Roger Wicker (R-Miss.) and this takes on those statutory opportunities to do defense acquisition reform as well. So maybe I’ll highlight the top three, and then there are a couple other interesting takeaways. The first one is process streamlining. So this is all about cutting red tape, reducing approval layers, and particularly simplifying procedures. The next area is in technology adoption. And this is really interesting because these are opportunities to change how the acquisition process is accomplished. So introducing automation, digital platforms, data analytics, and in particular, artificial intelligence. So in the conference, people suggested that AI could be used to get rid of, or streamline a lot of the busy work in preparing draft contracts, for example. And then the third top area that was suggested in terms of fixes is really moving to a more agile methodology. We use the term agile often in software development and software acquisition, but our participants believe that could be adopted more broadly. So think iterative development programs, think about rapid prototyping and then rapid transition into acquisition. And maybe I’ll just highlight acquisition pathways. So I’m from MITRE Corporation. MITRE was instrumental in developing what was called the Adaptive Acquisition Framework, or AAF. That included new pathways for acquisition, including the software acquisition pathway, services acquisition pathway and middle tier acquisition. And all of these utilize or potentially utilize streamlined acquisition approaches and contracting approaches. So think about things like other transaction authorities, which allow for the procurement under commercial processes and a greatly streamlined contracting. So, adapting those is one of the increasing utilization of those pathways is one of the key takeaways that came away from the survey.
Terry Gerton: I want to circle back to the point you made at the beginning about the nontraditional contractors. Certainly, Secretary Pete Hegseth in his memos has said he wants faster, commercial-type items. And so it makes sense that the venture capital funded tech folks out of Silicon Valley would try to figure out how to get to the table. What does DoD really need to do to bring them into meaningful acquisition conversations?
Keoki Jackson: This is a really exciting opportunity. As you note, the Department of Defense secretary has directed that the software acquisition pathway actually be utilized for all future software acquisitions and exploring opportunities to even use that pathway for currently ongoing acquisitions as well, so this is pretty exciting. Just to give you a sense of where we are in this process, it’s only been about two years. We’re in the toddler stage. Because only in 2023 could programs really start out from the beginning using the adaptive acquisition framework. And what we’ve seen is that, you know, things always start gradually, but just in the last couple of years in the software acquisition framework, we have gone from, I think it was 35 last year to about 80 programs or contracts in the following year. So we are seeing that pretty rapid uptake now. So that’s one takeaway is that this is really happening. And then the second takeaway is that with this impetus at the secretary level, we should see even greater and faster uptake. What we’re hearing from the non-traditionals and to your specific question, they have a very different perception from all of the others… The large contractors, the government folks. And so I thought this was really interesting. We asked them about how they perceive the efficiency, the speed and the effectiveness of the defense acquisition process. And roughly 80% of all the other respondents responded favorably, but it was really much lower when you ask the non-traditional contractors what did they perceive, and it was more like 50% responded favorably. And so you see that very different perception, we believe that is actually, you know discouraging new entrants from coming in. And so that’s one of the big takeaways is that we really need to actively address that perception to bring down just the psychological barriers to joining the defense ecosystem.
Terry Gerton: So with your survey results and your conference from last week, what’s your assessment now of the reform path that DoD is on? Are they taking the right steps? Are there other things they should be doing? How would you advise the secretary?
Keoki Jackson: The first thing is you know this opportunity, and I do think it’s a generational opportunity between the alignment of the Capitol Hill and the administration to streamline, this is absolutely right step. A little bit of a cautionary note, there’s a lot in the Federal Acquisition Regulation and the DFARs, and a lot of that actually is in place to lower barriers and increase opportunities for new entrants and non-traditional players. So we need to take a look at that and make sure that we are retaining the elements that open up the acquisition system, that encourage things like open architectures, that allow rapid evolution of defense systems and make sure that we retain the things that really promote commercial opportunities and commercial systems, for example. So that’s the first thing. The second is we’re in sort of a generational turnover of our acquisition workforce. And so a lot of experienced acquisition professionals are retiring. Our observation is that inexperienced folks tend to be more conservative, more risk-adverse, and so there’s going to be a significant training and education need at this point in time through things like the Defense Acquisition University, to make sure that our acquisition workforce really understands the flexibility that will be inherent in the system, knows how to take advantage of streamlined contracting approaches, and knows where to push the boundaries. What we need to do is change from a compliance mindset to a sort of a balanced risk approach and a risk-management approach. So that, in my mind, is one of the biggest takeaways is, hey, we can’t just change the regulations or get rid of the regulations, but we need bring the workforce along.
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