It is vexing to hear the refrain that Other Transactions (OTs) are intended only or primarily for non-traditional performers. Several articles on the Strategic Institute website point out that appealing to nontraditional companies is a means to an end, not the goal. So, what is the end goal, the purpose of OTs?
The context begins with the findings of the Packard Commission, the year before I was appointed General Counsel of the Defense Advanced Research Projects Agency (DARPA) and began the quest to obtain OT authority for DOD. The President’s Blue Ribbon Panel on Defense Management issued its report in June 1986. The Commission found that DOD’s acquisition problems were deeply entrenched, having developed over decades resulting in an increasingly bureaucratic and overly regulated process. “As a result, all too many of our weapons systems cost too much, take too long to develop, and by the time they are fielded incorporate obsolete technology.”
Does the quote above sound familiar? It should, because despite decades of so-called acquisition reform, weapons systems development under the Federal Acquisition Regulation (FAR) and defense acquisition system is getting worse not better (Section 809 Panel testimony, 2018). Systems like the F-22 and F-35 take decades rather than years to go from project initiation to full scale production. In some cases, their electronic components, software and other sub-systems must be upgraded while they are still in development. A current example of lengthy and flawed development despite all the rules and a cast of thousands is the KC-46. There are numerous others.
The Packard Commission recommended modeling defense acquisition not on the flawed DOD model, but on examples of excellence. These are found in commercial practice, not in the government’s highly bureaucratic system. This was the basic rationale underpinning OTs. Address the cost too much, takes too long problem in weapons systems development by incorporating commercial business practices into DOD systems acquisition. A key ally in obtaining OT authority was General Bernard A. Schriever (USAF, ret.). Bennie Schriever led the Air Force’s ICBM program in the 1950’s – a program that delivered an entirely new class of weapons in just a few years. Bennie contributed his experience to the Packard Commission in a detailed submission.
For many in the younger or Millennial Generation the Packard Commission report must seem like ancient history. It is old, older than some acquisition practitioners today. Unfortunately, the lessons and recommendations of the commission have never been implemented. Packard’s was hardly the final word on the subject.
In 1994 the Defense Science Board (DSB) study of Acquisition Reform (Phase II) identified some important ideas and reached a few key conclusions. These included that it was feasible to: (1) move entire defense industry segments to commercial practices, (2) to increase requirements process flexibility in order to allow value and price to replace cost in defense acquisition, and (3) adopt commercial practices while still maintaining public trust. Conclusions were that mature jet engines, microelectronics, software, and space systems can and should be procured in a fully commercial environment; and, it is feasible to eliminate many of the barriers to adoption of commercial practices without sacrificing the public trust.
Like Packard, the DSB’s vision was not realized through changes to the traditional acquisition system. The FAR and DOD 5000-series regulations have been repeatedly changed and fine-tuned but remain arduously bureaucratic and overly regulated. Their key elements remain essentially the same despite all reform attempts. It was left to OTs to be the vehicle to pursue the vision of more rational and commercial-like practices in defense acquisition.
The DSB tried again in 2009 with a report on Fulfillment of Urgent Operational Needs. The report found that speed is counter-cultural to the traditional acquisition system. The DSB recommended an alternative system for rapid acquisition. This included creation of an organization for rapid acquisition utilizing available personnel authorities to staff it with motivated people capable of operating in a non-traditional, business environment. Other recommendations included creation of an “Open Business Cell” to reach out to commercial off the shelf/government off the shelf, commercial and foreign sources while taking full advantage of flexible contracting through competitive prototyping and use of OT authority. None of the current rapid and strategic acquisition organizations has fully lived up to this vision.
OTs provide the flexibility to implement new ways of doing business. For DOD new ways of doing business include doing business in ways that are common in the commercial arena. Sure, reaching out to innovative commercial firms is important and OTs can facilitate that. However, as illustrated above the challenge to DOD and the potential role for OTs is far greater.
Instead of just eliminating barriers to small, innovative companies. It is wise for the DoD to embrace the true vision of OTs. Policies to do this include –
- Encourage and permit major defense contractors to transition business segments to commercial practices.
- Make flexible use of senior procurement executive approval to award OT agreements to major defense contractors.
- Emphasize value and price in systems development rather than cost.
- Create an “open business cell(s)” as well as using other mechanisms to explore all potential solution sets to problems confronting DOD rather than relying exclusively on a requirements process.
- Eliminate barriers to medium and large size innovative commercial business participating in DOD science and technology, prototyping and systems development.
- Encourage acquisition professionals to use the flexibility of OTs to create unique structures and partnerships when needed to fully effectuate projects.
- Invigorate policies on a modular open systems approach and middle-tier acquisition centered on the flexibility of OTs.
written by Richard L. Dunn