What DOD's reorg means for tech and acquisition

The Pentagon has released its long-anticipated report detailing plans to restructure the organizations that manage acquisition and technology research for the Department of Defense.

The so-called Section 901 report, officially titled "Restructuring the Department of Defense Acquisition, Technology and Logistics Organization and Chief Management Officer Organization," was delivered to Congress on Aug. 1.

The basic structures of the reorg were set by the 2017 National Defense Authorization Act. Section 901 of the NDAA mandated the breakup of AT&L and the creation of a chief management officer position within DOD.

The congressional mandate "provides a once in a generation opportunity to improve how [DOD] is organized and operates," the report states, and it notes that improving the department's ability to advance technology and innovation is the reorganization's primary goal.

The outlined changes are to be completed by Feb. 1, 2018.

The biggest change is the division of AT&L into two separate organizations -- one focused on acquisition and sustainment (A&S), the other on research and engineering (R&E) -- each led by a dedicated undersecretary of defense.

Current AT&L Undersecretary Ellen Lord, who was nominated in late June and confirmed a month later, presumably will shift to the A&S undersecretary job when the reorganization eliminates the AT&L position.

The R&E undersecretary post, which the report says will play the CTO role for DOD and have "responsibility and authority for ensuring U.S. military technical superiority," does not have a similar incumbent.

David Berteau, the former assistant secretary of defense for logistics and materiel readiness who is now CEO of the Professional Services Council, told FCW that recruiting for that position -- and clarifying its scope -- should now become a top priority.

"Somewhere out there they're recruiting somebody for a job that won't exist until next February," Berteau said. "It seems to me that if you want the top talent that [DOD] needs and this position is being created to attract, it would be helpful if you could define the boundaries and responsibilities and interfaces of that job with the rest of the department. I'm not sure that this report does that, and I'm not sure that the existing statute does that. "

The report seems to acknowledge that challenge, and states that establishing the R&E structure "is the first priority of implementing the new organization." 

The report also makes at least some interfaces and reporting structures immediately clear -- notably the placement of both the Defense Innovation Unit Experimental and the Defense Advanced Research Projects Agency squarely under R&E. DARPA has long been a quasi-autonomous organization, and former Defense Secretary Ash Carter had DIUx report directly to him. 

Both Berteau and Dave Wennergren, the former Navy CIO and DOD assistant deputy chief management officer, said those moves made sense. 

DIUx has done "some really interesting stuff" in its two-year history, said Wennergren, who is now with Deloitte, but it's happened largely outside the broader DOD structure. 

"That has to become the norm," he said. "We can’t have a two-caste system." 

Carter wanted DIUx directly under him to show its importance, and Wennergren acknowledged that visibility can be needed "to get some escape velocity." But for the unit to "have long-term sustainability as an entrepreneurial engine," he said, "I think it has to be part of this organization. Otherwise it'll be like a one-off."

Berteau had a similar assessment of DARPA, which he said "has a long history of great innovation and technology development -- and process innovation."

"The challenge," he said, "has always been how do you translate those successes into delivered programs which they don't own?" Such hand-offs are always difficult, Berteau said, and putting the DARPA and DIUx under the R&E under secretary "is a good way to integrate it."

"The real question is what's the hand-off point from R&E to acquisition and sustainment, which is now under a different under secretary," he continued. "The question that is unanswered, and that we're all going to be watching very closely, is how well does that hand-off occur?”

DOD's report suggests that Pentagon leaders will be asking that question as well. The document stresses that R&E's mission -- to push the technology envelope, experiment and be "willing and allowed to fail when appropriate" -- are somewhat in tension with A&S' mission of minimizing those risks and delivering promising technologies to the warfighter in a timely and cost-effective manner. "The fact that the two organizations … approach risk from such different perspectives reinforces special challenges," the report states.

The plan for ensuring smooth handoffs remains vague. According to the report, the two new undersecretaries and their teams "will minimize this challenge through improved process and planning, communication and effective leadership and management."

Another question also looms large: Will Congress change the marching orders again in this year's defense authorization bill? After all, the 2016 NDAA called for several substantial changes to DOD IT and management that were rolled back by the 2017 bill before they even began.

Such back-and-forths frustrated Frank Kendall, the former undersecretary of defense for acquisition, technology and logistics. Kendall said in January that while congressional mandates can be instructive, they are a "blunt instrument" for driving specific changes.

The House passed the NDAA for fiscal 2018 in July, but the Senate has not yet taken up the bill. Berteau noted that more than 700 amendments have been submitted for possible Senate consideration already.

"There’s almost the requirement to adjust Section 901 from last year in this year’s bill," he said, "and this input from the Defense Department is only part of the input necessary to come with the final resolution of this."

For both Berteau and Wennergren, it all adds up to a cautiously optimistic position of wait and see.

"I like the emphasis on risk management and driving innovation," Wennergren said, but he stressed that implementation is where it gets interesting. 

"We have some big plans in here," he said. "Seeing them actually come to fruition will demonstrate the commitment to this."