non-promotable to a higher level,” Ether- ton said. “Tat conflicts in certain cases with some of the needs of the manage- ment of the acquisition process. Could I see us getting to that place at some point? It’s a possibility, but we really haven’t had much of a debate on that since the late 1980s.”
INCENTIVES TO SUCCEED No program can succeed without proper attention to the myriad decisions, large and small, that take a product or service from conception to delivery. Hence the Better Buying Power (BBP) initiatives. A central issue in acquisition reform is how to encourage smart decision-making at every echelon of program manage- ment, working within and in spite of the unwieldy acquisition bureaucracy and understanding what will induce industry to produce the best possible product or service at the best possible price.
A secondary issue is the degree to which these incentives need to be a matter of law, not just policy.
From the government’s perspective, incen- tives to manage an acquisition program efficiently and economically take a number of familiar forms besides career advance- ment, including greater flexibility to reprogram monies saved by creating effi- ciencies;
the ability to carry over such
savings to a new fiscal year rather than
“use it or lose it”; and more leeway to choose the particular contracting vehicle for a given program. Add to that list a new focus, on Capitol Hill and in the Pentagon, on creating incentives for early experimentation
and prototyping to
reduce the programmatic risk of relying on immature technologies, and a poten- tially powerful set of tools emerges to equip program managers to succeed.
Industry’s incentives to succeed are quite different, and much simpler—share- holder value and, to an extent, profit—but at the same time more difficult to trans- late to government acquisition policy and procedures. In his experience, Etherton said, “Shareholder value is the overarch- ing incentive,” at least for publicly traded companies. “It’s not necessarily profit on a specific contract,” although, he added,
“I see DOD looking at that as their short- hand for what incentivizes companies.”
Te government lacks a clear understand- ing of what constitutes shareholder value, Etherton believes. “I frankly think you really need to get some of the senior folks on both sides and put them in a room and say, ‘We’re going to talk about incentives and really try to get an understanding of that, and combine that with some of the analytic things’ that measure perfor- mance on both sides of the table,” he said.
“It’s very difficult for the government folks to take more of an enterprise view of things,” the former aerospace industry lobbyist added.
Rather, the program management profes- sionals tend to consider themselves at the mercy of the federal budgeting process, not to mention uneven and erratic con- gressional appropriations. Even within the Pentagon, Etherton said, acquisition managers tend to have little interaction with the budget managers and no sense of influence in that arena.
For industry representatives seeking government business, however, there is a direct link between what they do and their
companies’ financial
situation:
“You’re either making money or you’re not making money. It’s a fairly simple thing to start with. Ten you build your pro- cess and see what feeds into that … that, again, is sort of a more complex concept of shareholder value,” Etherton said.
Reducing this gap in understanding, to some degree, are DOD acquisition leaders with extensive experience in industry, Etherton added, such as Kend- all, USD(AT&L) since 2012, and Shay D. Assad, director of defense pricing since 2011 and Kendall’s principal adviser, par- ticularly on all program-related contract negotiation matters.
1989 Secretary of Defense Management Review
• Presidential directive to DOD to improve the procurement process and manage- ment.
• Recommended fully implementing the Packard Commission recommendations.
(Photo courtesy of History Channel via Encyclopedia Britannica)
ASC.ARMY.MIL 23
1989 Army Acquisition Corps established
1989 Berlin Wall falls
ACQUISITION
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