If you want innovation, you need to accept failure because you are asking the organization to push its boundaries.


around that they’re being asked to put money forward to invent something on their own?


So, ironically enough, acquisition reform is relatively simple if you get back to the basics, and I’m encouraged that [Under- secretary of Defense for Acquisition, Technology and Logistics] Frank Kend- all, and many in the senior leadership in the Pentagon and the services, and cer- tainly others like [Rep.] Mac Tornberry [R, TX] understand this. Congressman Tornberry’s acquisition reform efforts, I think, have begun to zoom in on this topic of making sure that the incentives are set right.


Army AL&T: Speaking of incentives, the Joint Light Tactical Vehicle program had three companies


shouldn’t be surprised that one of those losers ends up exiting the business entirely because, well, now there’s noth- ing to go for until the next decade. For a midsize firm, it may cause them to exit that particular line of work or sell. For a larger, multibillion-dollar prime, it may cause them to exit that segment—or, if they see long-term potential, then hun- ker down.


that were competing,


and each built its own competitive pro- totype. And then it was a winner-take-all decision. Certainly those companies are getting paid for their work, but after scal- ing up, two companies weren’t going to win. Tey’re going to lose jobs. Should it be winner-take-all?


Chao: Tis is one of the huge tension issues that’s worth a deep look. We’re doing these big, joint programs to have large enough scale in the programs to entice people to pursue them, invest bid- and-proposal dollars, and undertake independent research and development, again, because they have sufficient scale to justify the investment required. On the other hand, it’s creating these win- ner-take-all situations in which—to your point—once you lose it, then we


Te size of the budget will determine the health of programs. But it’s the number of points of competition that will deter- mine the health of an industry. So, when you go to one Joint Strike Fighter, you shouldn’t be surprised that you’ll lose a whole bunch of people that were compet- ing in the manned fighter business, and now sit there and say, “Well, there’s noth- ing to compete for [over] the next decade.”


So, that is a deep issue in terms of future acquisition strategies and how you want to be building much broader acquisition strategies because you have those two tensions—create programs big enough to attract investment, but not so large that once they are decided you lose an industry. Some of the acquisition reform efforts address this and say, “Maybe we should have more X programs or other things so that when someone loses one of the big ones, they don’t drop out; they’ll have other things to hold them in.”


I would argue if you want a broad, health- ier industry, you want to have lots of smaller programs rather than huge ones. Tis goes back again to where you need to be sophisticated in your acquisition


strategies. If it’s an older, more mature technology, and you think it’s going to be the last of something, then maybe you don’t mind that you’re collapsing the industrial base to a monopoly. But if it’s an area where there’s a lot of innovation, then you probably don’t want to be creat- ing these big, mega-programs because you don’t want to be encouraging early exits by competitors, have them just give up because they don’t see another entry point.


Army AL&T: In terms of a big program and you have a product that’s supposed to last


for decades, should there be


some kind of mechanism where there’s some competitive hound snapping at the incumbent’s heels so they don’t get complacent because they’re locked in for decades?


Chao: Part of that depends on the broader technology cycles inside that industry. If the technology is not evolv- ing that rapidly, or evolving at a 10-year or 20-year pace, then it’s probably OK to lock in a vendor for that period of time. If you’re seeing, however, as in parts of the commercial world, a technological evolu- tion cycle of three years, then a decade or more without competition is probably too long. So, the acquisition strategy and the industrial-base policy strategy should not be divorced from an understanding of


the technology development cycles.


Tis is a sophisticated game, and one- size-fits-all policies will inevitably fail.


For example, one reform concept today is [that] we should make everything follow a spiral development program process. Spiral development, where you see how much you can get in a fixed time frame and then field it and move on to the next spiral, is very good for IT programs or other places where the technology is moving relatively quickly. It’s not neces- sarily correct for other programs where


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CRITICAL THINKING


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