BBP 3.0 101
technological superiority is not assured, and in fact it is being challenged very effectively right now.”
Kendall aims to change that with a stra- tegic research and development (R&D) investment effort modeled on a similar 1970s effort that teamed government with industry. Tat effort “will be designed to set out the next few years of high-priority R&D to get us into position where we’ll have technologies we can take into game- changing systems.” He noted that the 1970s effort yielded many of the systems in use today: “things like smart weapons, smart-seekers, some of our networking technologies and other things that have allowed us to dominate on the battlefield for quite a long time now.”
“Te idea is to get to the next generation of those things,” Kendall said. “If we don’t do that, the concern I have about tech- nological superiority is going to become even greater.”
INCENTIVIZE PRODUCTIVITY Another core concept of BBP 3.0, Kendall said, is aligning profitability with DOD goals. “We do a reasonably good job of aligning industry’s opportunity to make a profit with the results that we expect. One thing we can do better is provide incentives to innovation” in addition to incentives for cost and schedule perfor- mance, he noted.
With respect to cost-plus or fixed-price contracts, Kendall said, “Tere is a stron- ger correlation in using the incentives in our results than there is to whether it’s a cost-plus or fixed-price contract. We’re going to continue to emphasize that.”
His office will also emphasize the expan- sion of the Superior Supplier Incentive Program across DOD, Kendall said. “Te idea here is to let industry know how it’s doing relative to its competitors and its peers in the industrial base.” Tis will be done at the service level, he said, not the DOD level, because many business units are aligned to particular services.
Another piece of BBP 2.0 that will carry over to 3.0 is increasing the use of perfor- mance-based logistics (PBL). “We’re not improving our performance in this area as much as I’d like to see,” said Kendall, although there have been improvements despite the “difficult year we had in [FY]13. Between sequestration and fur- loughs and everything else, the workload on our contracting people in particular was pretty excessive.” PBL is “a harder way to do contracting,” Kendall acknowl- edged, “but it gets results.”
A new element in BBP 3.0 is an effort to remove barriers to using commercial tech- nology. “Tis is one of the items in 3.0 where we’re going to put a team together, we’re going to work with industry and
we’re going to do specific things to imple- ment this broad goal. Technology—of course—in a number of commercial areas moves more quickly than in military areas. We want to take advantage of that. We want to find a way to bring innovators who are in the commercial world—give them a reason to be involved with the government and do business with the government.”
Te government’s awareness of industry’s internal R&D (IRAD) has improved, Kendall said. “We want to go a step further with this and start looking at what we’re actually getting out of both of these pots of money.” Te money for IRAD is about $4 billion to $4.5 billion a year, whereas contracted R&D is close to $10 billion a year. “Tat’s a significant amount of money,” he noted. “Our total R&D budget right now is running about $60 billion.”
INCENTIVIZE INNOVATION Increasing the use of prototyping and experimentation can help advance the state of the art, particularly when bud- gets are tight. Building prototypes and experimenting with them can be a more cost-effective way of developing new capabilities, Kendall said. “For a relatively small amount of money, you advance technology, you advance the state of the art in the direction you want to go by a significant amount. You reduce lead time by several years, perhaps, by having that technology in an actual product. You help your industrial base, you keep your design teams alive.”
“IT’S NOT OUR DUTY TO SPEND MONEY AND GET IT OUT THE DOOR; IT’S OUR DUTY TO CONTROL OUR COSTS AND SAVE MONEY WHEREVER WE CAN TO GET MORE VALUE FOR THE TAXPAYER.”
Te problem, he said, “is finding the money to do it. I’m going to be propos- ing some of these in the budget process this fall [2014], and we’ll see how it goes.” Kendall added that if money does go to proto typing and experimentation, that probably will mean sacrificing “something we won’t do … and that’s going to be the
122 Army AL&T Magazine January–March 2015
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