THE NEW ‘GANSLER REPORT’


One thing we might want to think about is creating an


organization that has some experienced people who can help as counselors or mentors for the contracting and acquisition practices.


is how much I’m willing to spend. Do you pick your heart surgeon on the basis of the lowest hourly rate? You wouldn’t make that your basis. You’d use prior experience, and you’d say, “What kind of references do they have?” and things like that. Why can’t the government do that? Te government doesn’t do a very good job of keeping past performance data, for example. Tat’s something the government


should be making “best-


value” judgments on the basis of—a combination of performance, reliability and cost—not just the cheapest. And yet, there’s been a move in that direc- tion, even more so in the services area, where professional, skilled services really matter. If they have experience to pro- vide that service, don’t go for the lowest hourly rate.


But that’s unfortunately what I hear from a lot of the service companies. Te thing I hear from the small businesses, where a lot of innovation comes from—I


120 Army AL&T Magazine April–June 2015


get calls all the time from the man or woman who runs a startup company, saying, “Can you get these auditors off my back? I’m spending all my time just trying to satisfy the specialized cost accounting rules.” Or, “Te auditor’s running through my factory and asking me questions and tying up my person- nel.” It’s a lack of trust.


If you want to go back to the original question about cost being a requirement, the JDAM [Joint Direct Attack Muni- tion] missile’s a perfect example, where we allowed them to use commercial parts for [about] 30 percent of the sen- sors and actuators and things like that, and then the independent cost analysis went down dramatically. Te Air Force had estimated that a single GPS receiver would be something like $150,000 per airplane. Now, you and I carry a GPS receiver around in our iPhone, and we didn’t pay $150,000 each for that chip.


Te chief of staff of the Air Force said there were only three requirements for the JDAM weapon. Because we have so many of them, it should cost under $40,000 each, and because the impor- tant point is to hit the target, it should have proven accuracy. And then the other important consideration is [that] when I push the button, it works. Te guidance system for the JDAM missile went from the independent cost analysis, using military parts, of $68,000 each, to $18,000 each as a result of using com- mercial


parts—rather dramatic—and


also using competition, which is another thing that the government needs to emphasize more.


So you want performance, reliability and low cost. And so people always say, “Well, gee, can you really get higher per- formance and lower cost?” Of course you can. Tat’s what innovation’s all about.


Lanchester’s law says the total force effec- tiveness is proportional to individual weapon effectiveness times their numbers squared. Numbers are more important than the individual weapon’s performance, and numbers are directly correlated with unit cost. And so it really matters what things cost: if you can get enough of them within the budget and if you plan ahead for what we’ll need in the future.


Tat’s one of the things that I think we need to place more emphasis on, the programming


aspect of the


budget-


ing process, the five-year plan: thinking about what we’ll need in five years and making sure we’re thinking about that for the future. [See Figure 4 on Page 118.] Tat’s the purpose of research, and that’s one of the reasons that you want to get some of the university people who are looking at global research to take part in that planning process. I think it’s very clear that we don’t have a requirements process that is looking ahead. It tends to be more looking back, and that’s some- thing we can’t afford to do because the world is changing too fast.


Army AL&T: Can you point out any country that does acquisition especially well?


Gansler: My impression is Israel, because they’re in an unfriendly neighborhood. Tey’re forced to do things faster and cheaper. Tey have to figure out a way to respond rapidly to their unfriendly neighbors [who are] shooting rockets and missiles at them. Tey developed the defense system, including electronic warfare and missile defense and things like that, fast, and they had to do it well because their own society is being threat- ened—the whole country, literally.


Army AL&T: So it’s the existential threat that drives them?


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