Clarifying the Language of Acquisition Innovation

DEFENSE ACQUISITION A PUBLICATION OF DAU | dau.edu May-June 2021 OTHER TRANSACTIONS DO ALL INDUSTRY PARTNERS BENEFIT FAIRLY? Brian’s Laws, Part I A Proving Ground Artificial Intelligence Versus Humans in the Business Battlefield Diminishing Sources and Shortages—and Parts Management in the Adaptive Acquisition Framework ALSO IN THIS ISSUE: Contract Award Protest Rulings—Highlights From the GAO Report for FY 2020 TABLE OF CONTENTS 8 2 OTHER TRANSACTIONS: DO ALL INDUSTRY PARTNERS BENEFIT FAIRLY? 20 20 Stephen Speciale and Richard Downs Other Transactions are uniquely attractive in offering tremendous flexibility and commercial-style business terms to attract industry partners of all sizes. 8 14 A PROVING GROUND Artificial Intelligence Versus Humans in the Business Battlefield Capt Anita M. Naylor, USAF Recent AlphaDogfight Trials saw artificial intelligence (AI) pilots opposing human pilots in simulated combat. Why not stage a dogfight between an AI system and a contracting officer to demonstrate AI’s potential for business decision making? DIMINISHING SOURCES AND SHORTAGES—AND PARTS MANAGEMENT in the Adaptive Acquisition Framework Brent L. Bolner The Urgent Capability Acquisition pathway is highly compressed and must be completed from pre-development to delivery of the capability in under two years. This provides very little time for all that must be done. BRIAN’S LAWS, PART I Brian Schultz With all the changes since the 1980s, we need additional laws that reflect the latest realities and help us understand acquisition. 26 26 CLARIFYING THE LANGUAGE OF ACQUISITION INNOVATION Maj. A.J. DeNeve, USAF, and Brian R. Price, Ph.D. A clearly articulated strategy is necessary for a manager to adjust the modus operandi. However, the signal often gets lost in the noise of buzzwords and jargon. DEFENSE ACQUISITION Vol L No. 3, DAU 280 Published by DAU Performing the Duties of Under Secretary of Defense for Acquisition and Sustainment Stacy Cummings DAU President James P. Woolsey DAU Chief of Staff Joseph Johnson 44 32 CONTRACT AWARD PROTEST RULINGS Highlights From the GAO Report for FY 2020 Janel C. Wallace, J.D., and Michael A. Rodgers, J.D. Every year, the Government Accountability Office reports to Congress on its most prevalent basis for sustaining protests of contract awards. 38 COMPLIANCE, CONTINUITY, AND COVID-19 Eugene A. Razzetti In responding to continued operations challenges, it may help for program managers to think of COVID-19 as a bioweapon. 44 RISK, ATTITUDE, AND FEAR OF FAILURE The Psychology of the Challenge Don O’Neill Facing a challenge requires the right balance of positive and negative attitudes— and a healthy approach to managing risk. ALSO IN THIS ISSUE 47 MDAP/MAIS PROGRAM MANAGER CHANGES Director, DAU Operations Support Group Leo Filipowicz Chief, DAU Visual Arts and Press Norene L. Johnson Defense Acquisition Editorial Staff Managing Editor/Senior Editor, DAU Press Benjamin Tyree Art and Graphic Design Ken Salter Online Content Editor Collie J. Johnson Production Manager Frances Battle Online Support Nina Austin Copy Editor/ Circulation Manager Debbie Gonzalez Editorial Support Michael Shoemaker Article preparation/submission guidelines are located on the inside back cover of each issue or may be downloaded from our website at https://www.dau. edu/library/defense-atl/p/Writers-Guidelines. Inquiries concerning proposed articles can be made by e-mail to defacq@dau.edu or by phone to 703-805-4282 or DSN 655-4282. 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POSTMASTER, send address changes to: DEFENSE ACQUISITION DAU ATTN DAU PRESS STE 3 9820 BELVOIR ROAD FT BELVOIR VA 22060-5565 Disclaimer Defense Acquisition magazine promotes the free exchange of ideas. The views expressed are those of the authors and do not reflect the official policy or position of DAU, the Department of Defense, or the United States Government. Articles are in the public domain and may be reprinted or posted on the Internet. When reprinting or posting, please credit the authors and Defense Acquisition. Some photos appearing in this publication may be digitally enhanced. May-June 2021 | DEFENSEACQUISITION | 1 26 | DEFENSEACQUISITION | May-June 2021 CLARIFYING THE LANGUAGE OF ACQUISITION INNOVATION by MAJ. A.J. DENEVE, USAF, and BRIAN R. PRICE, PH.D. A s the United States shifts its focus back to great power competition, ambitious and revanchist peer adversaries position themselves to challenge U.S. dominance in nearly every domain. Maintaining our technological edge requires a faster, more agile, and more innovative force. In response, new organizations such as the Defense Innovation Unit (DIU), AFWERX, SOFWERX, and many others have stood up. However, these small organizations are not designed to replace the roles of every traditional product center and program office. We need to capitalize on benefits that come with certain economies of scale by educating, training, and equipping the Department of Defense (DoD) acquisition workforce of more than 170,000 professionals. However, driving a cultural change in such a large and wellestablished organization is a monumental task. Caught in the undertow of the consistent leadership push to “accelerate change” and innovate, acquisition professionals are re-evaluating how they fit into this new way of doing business. Most perplexed by leadership messaging are the middle managers—those tasked with keeping an organization running, guiding inexperienced junior acquirers, and implementing the myriad federal, departmental, and command-level instructions. A clearly articulated strategy is necessary for a manager to adjust the modus operandi. However, the signal often gets lost in the noise of buzzwords and jargon. Innovation is not a magic dust that is sprinkled over a program to sprout better ideas. Repeated admonitions to “innovate!” leave troublesome ambiguity concerning both what to innovate and how to go about it. Recent changes to acquisition rules, including Section 804 authorities and the Middle Tier of Acquisition (MTA), benefit managers by providing more room for tailoring—but how should managers use this new breathing space? Some have embraced the new opportunities, but many find themselves perplexed or worse, threatened. Furthermore, evocative terms like “innovation” often serve as the catch-all for a group of related concepts such as creativity, speed, agility, and other desiderata. These attributes, while related and sometimes mutually-reinforcing, are different concepts. As such, they may require different operational approaches and management cultures. The first step in instituting foundational changes in our organizations is to understand the desired end-state and, therefore, to define our terms. This article takes a foundational step toward broader cultural change in the acquisition workforce by examining the distinction and interactions between innovation, speed, and agility— setting the stage with precise language for proposing organizational changes. May-June 2021 | DEFENSEACQUISITION | 27 Essential Attributes: Innovation, Speed, and Agility (1) Innovation is deceptively difficult to define. The term appears neither within the Defense Acquisition Glossary nor the June 2020 edition of the DoD Glossary. The Department of the Army’s “Innovation Strategy 20172021” uses the term 186 times without defining it, though it references the “U.S. Army Operating Concept,” which defines innovation as “The act or process of introducing something new, or creating new uses for existing designs.” We prefer a more succinct definition that captures these ideas: innovation is “useful novelty.” Writing in 1992, U.S. Air Force strategist Col. John Boyd echoed this idea, concluding that novelty is vital for organizations to meet changing conditions. Jeff DeGraff, noted author and thinker on innovation, expands on this broad definition by explaining that innovation “enhances something, eliminates something, returns something from our past, and eventually reverses into its opposite.” The value of an innovation has a time component since any novel idea has a lifespan. However, innovation is measured not only by the speed of its introduction; it also has a magnitude component. This combination of time scale and magnitude yields different categories of innovation. For example, an innovation might be a small, predictable improvement to an existing product. Such capability increments are termed “evolutionary change”—for example, a software update for a laptop that causes programs to use less memory. development, interrupted by brief periods of numerous, rapid changes that have revolutionary effect. Improvements might also take the form of a significant increase in capability that changes the way users interact with a system. These changes are termed “revolutionary change” and are often transformational and irreversible. For example, consider the transition from spinning disk drives to solid-state memory and the associated impact on the laptop’s speed and size. Historian and U.S. Military Academy professor Clifford L. Rogers adapted the biological concept of “Punctuated Equilibrium” to demonstrate how evolutionary and revolutionary changes coexist and interact similarly in natural and technological ecosystems. He explains that military history often exhibits long phases of incremental evolutionary Some readers will mistakenly identify revolutionary change with the ubiquitous term “disruptive innovation,” coined by innovation expert and Harvard professor Clayton M. Christensen in the mid-1990s. However, in his book The Innovator’s Dilemma, he explains that both evolutionary and revolutionary change are part of the same spectrum of “sustaining innovation.” Such changes continue to add value to an existing product with an existing customer base. In contrast, disruptive innovations are new technologies (or unforeseen combinations of technology), originating with a fringe user base, that eventually displace existing products in an unexpected way. For example, consider that the smartphone has largely replaced the role of the laptop computer for many users, with more than half of all Web traffic now originating from phones. By the time laptop manufacturers realized their loss in market share, it was too late for them to break into the cellphone market. (Ironically, SALES Figure 1. A Typical Product Life Cycle (Notional) introduction Growth maturity Decline Product B Product A TIME Source: The authors, based on a concept by Theodore Levitt. 28 | DEFENSEACQUISITION | May-June 2021 the smartphone only represents a sustaining innovation in the cellphone market, albeit a revolutionary one.) In established acquisition offices staffed predominantly by engineers, managers, and other optimizers, changes are typically small and incremental—that is, evolutionary. Economist Theodore Levitt characterized this mature stage in organizations: They possess large investments in the existing way of doing business and resolve to make only predictable, easily controlled improvements. The downside is that they often fail to fend off more innovative new competitors. This stagnating behavior results in the typical life cycle, shown in Figure 1, which has been found to apply on the scale of products, companies, and even macro-economics. Revolutionary change is needed to start the life cycle anew and continue to progress. However, disruptive innovations require an entirely different way of thinking. The introduction of nuclear weapons and stealth technology were not merely advancements in existing systems; they fundamentally and irreversibly changed the calculus for how military forces are employed. Their adoption required accepting a gargantuan amount of risk. They only succeeded because the DoD recognized an emerging technology’s potential and capitalized on opportunities before our enemies. Though it is compelling to be a part of the next Manhattan Project or something akin to Lockheed’s Have Blue stealth program, can we simply command these types of revolutions into existence? Notably, since innovation is defined by novelty, it is not possible to tell someone what to innovate, or to predict the emergence of the next big idea. According to Nassim Nicholas Taleb, author of the influential book Black Swan, this difficulty is due to the “law of iterated expectations.” If one knows what New technologies are always emerging, and keeping up is critically important in defense acquisition. they want someone to invent, then at some level, they must have already invented it. Commanding a team to innovate is merely equivalent to saying, “I have a problem, and I need a solution.” Empowering? Perhaps—but not instructive. What is most necessary for innovation to occur is a culture that rewards novelty while carefully accepting and managing risk. Middle managers play an exceptionally large role in establishing this culture. Of course, predictability and accountability are desirable to some stakeholders (e.g., Congress). However, the innumerable processes designed to eliminate program risk, though individually prudent, have the cumulative effect of weighing down programs and stifling their ability to innovate. Comfort with novelty will allow disruptive innovations to emerge more frequently; comfort with wellmanaged risk will allow us to capitalize on them. Managers must strike a careful balance between innovation and accountability. The current trajectory of risk-averse evolutionary innovation traps much of the acquisition enterprise in the “mature stage” with only incremental changes to postpone inevitable technological obsolescence. (2) Speed is a measure of distance traveled over time. In the product cycle context, it is the rate at which some process (procedural distance) marches along. Speed is increased by reducing the time to perform individual steps, by parallelizing steps, or by eliminating steps, thereby increasing efficiency. These optimizations, often made under the umbrella of Continuous Process Improvement (CPI), are a form of sustaining innovation and can have dramatic effects on speed. However, since novelty (especially surprise) is generally the enemy of efficiency, a balance is required here, too. This notion is best illustrated by the idea of a production labor “learning curve,” as illustrated in Figure 2. New processes take longer to perform until workers gain familiarity, and any procedural changes will cause a regression to some previously overcome level of inefficiency. While speed may increase due to innovation (production capital investment, a new contract type, CPI) speed also increases due to a lack of changes (experience and practice). Both forces contribute to the time required for development and production. Note that in real-world learning data, touch labor is commonly reduced by between 20 and 90 percent as manufacturers produce additional units. Of course, this concept does not apply only to manufacturing. A contracting officer with significant Federal Acquisition Regulation-based expertise may take significantly longer May-June 2021 | DEFENSEACQUISITION | 29 to award their first Other Transaction Authority contract, thus eliminating any supposed speed advantage. Process innovation must unlock significant long-term efficiencies to justify a temporary (but significant) increase in production time. to unpredictability and surprise is to “patch” the problem with more process. This increase in process adds novel tasks, creates increased complexity, and hinders speed (increasing exposure to additional surprises). For these reasons, efficient processes increase speed when applied to welldefined (and well-planned) tasks. The fundamental objective of any process is to increase consistency and repeatability by turning large tasks into a series of smaller ones and finetuning performance. Innovation is necessary for an organization to remain relevant, but managers retain the essential tasks of planning thoroughly and executing quickly. Even the new DoD Instruction 5000.80, governing MTA efforts, requires managers to produce a cost estimate, a budget, and an acquisition strategy. Innovation at an inappropriate place in the program life cycle may negatively impact planning and speed. Simply asking an organization to perform its traditional function faster is not necessarily a call for revolutionary change and certainly not a call for disruptive innovation. Given this definition, it is interesting that acquirers sometimes blame the acquisition processes for program sluggishness when these processes should increase efficiency. Two reasons account for the apparent disconnect. First, many regulations attempt to optimize for cost or risk, not speed. Shifting the focus to produce systems in less time necessarily means taking greater risks elsewhere. Second, the development of a complex weapon system is not perfectly predictable and, therefore, not entirely subject to optimization. The typical management response (3) Agility allows organizations to maintain speed while dealing with novelty like new requirements, unplanned rework, or process change. The Oxford English Dictionary defines agility as the “ability to think and understand quickly,” and also the “ability to move quickly.” Both definitions are appropriate and are unified in Col. Boyd’s famous OODA (Observe, Orient, Decide, Act) loop. Often referred to in the special operations community as “pivot speed,” agility is a measure of time it takes a team to adapt to an unplanned situation. Agile organizations suffer minimal penalties to their learning curve when an innovation or surprise is introduced. Agility enables innovation (high novelty) and process speed (high efficiency) simultaneously by overcoming the paralysis that occurs when a situation does not correspond with any predetermined process. Unfortunately, agility has (like innovation) become a buzzword. In fact, it has become so fashionable to affix the word “agile” to software development efforts that the Defense Innovation Board (DIB) published a guide with the provocative title Detecting Agile BS. Nominally agile software development may follow one of the myriad prescribed frameworks (Lean, SCRUM, Kanban), all attempting to add clarity to requirements and accelerate user feedback. However, agility is not a process or framework; it is a mindset. Figure 2. Production Labor Learning Curve Labor hours 40,000 30,000 20,000 10,000 0 0 40 80 120 160 unit number Source: The authors. 30 | DEFENSEACQUISITION | May-June 2021 As defense innovation constantly evolves to meet current threats, acceptance of bold acquisition risks is justified. U.S. Army photo by Sgt. Sarah D. Sangster Perhaps the best description of this mindset emerged as the Agile Manifesto—the result of a team of software development gurus attempting to identify the concepts at the core of the disparate agility frameworks. The four “values” of the manifesto are referenced and expanded in the DIB’s Detecting Agile BS guide. We believe they make up a good starting point and apply to any program seeking to increase agility: • Individuals and interactions over processes and tools • Working software [alternatively, products] over comprehensive documentation • Customer collaboration over contract negotiation • Responding to change over following a plan The common thread through all four values is fluid, real-time interaction with customers and contractors, coupled with a laser-focus on the end product. These are crucial guideposts to keep programs on track as planning departs from reality. Planning and its products are valuable to a point but may become overly constraining. Separating this agile mindset from agile strategies is an important distinction because, while those strategies may not scale to large monolithic programs, the mindset can. Even a 10-year shipbuilding effort with a waterfall program structure can be robust in the face of innovation and surprise. Notably, this mindset involves an increased tolerance for risk. However, risks taken to create an agile organization represent a far more lucrative bet than one that a well-engineered process will never break down. To have any hope for capitalizing on innovation or carrying out large programs in an increasingly complex world, agility must emerge as a core competency of acquisition teams. Conclusion The phrasing of USAF Gen. Brown’s “Accelerate Change, Or Lose” directive is clever. For the reasons discussed above, achieving useful change quickly—especially if the change is highly novel—is perhaps the most challenging organizational feat to achieve. Fortunately, experience in business suggests it is attainable. Even so, it is important to remember that none of these attributes is a replacement for an overall strategy. A more solid understanding of the relationships between innovation, speed, and agility is the key that enables managers to achieve tactical and operational objectives within the time required to make an overall strategy effective. Even a cursory consideration of these attributes reveals that accepting some risk is necessary, however uncomfortable, though such risk needs to be balanced appropriately with accountability and efficiency. As the threats against the United States proliferate, it becomes ever clearer that taking bold risks is justified. Speed, innovation, and agility are not silver bullets that will lead to continued U.S. dominance. But as the complexity and pace of the world have increased, all three are now essential. In our next article, we will utilize these definitions to provide actionable tips for infusing a culture of innovation, speed and agility into realworld programs. Opinions, conclusions, and recommendations expressed or implied in this article are solely those of the authors and do not necessarily represent the views of the Air University, the U.S. Air Force, the DoD, or any other U.S. Government agency. DENEVE is an Air University Fellow, teaching in the Department of Joint Warfighting at the U.S. Air Force (USAF) Air Command and Staff College (ACSC). He has master’s degrees in Systems Engineering and Military Operational Art and Science, as well as experience with various USAF Special Operations Forces, Intelligence, Surveillance and Reconnaissance, and Nuclear programs. PRICE is a former Silicon Valley executive, holding a B.A. in political science from University of California, Los Angeles, and a Ph.D. in military history from the University of North Texas. At ACSC, he teaches courses on War Theory, Joint Warfighting (JPME I), Airpower, and courses within the Joint AllDomain Strategist (JADS) concentration. Under a contract with Naval Institute Press, he is completing a book on USAF modernization in the post-Vietnam era. The authors can be contacted at allen.deneve.1@au.af.edu and brian.price.18@au.af.edu. May-June 2021 | DEFENSEACQUISITION | 31