Willingness to take on more risk must increase as part of new acquisition policies aimed at creating a larger and healthier defense industrial base (DIB) that can rapidly expand production to meet the current threat environment, the Defense Department says in its first industrial strategy.
In peacetime, acquisition reform is focused on “greater efficiency, cost effectiveness, transparency, and accountability,” but changes are needed to “acquisition mechanisms” to “revitalize the defense industrial base” amid the current threat landscape, says the National Defense Industrial Strategy.
“Correspondingly, there will need to be a change of acquisition mindset that includes increased flexibility and risk tolerances and embracing ‘fail fast’ and similar concepts,” the NDIS says. “Risk aversion must be replaced by aggressive, learning mindsets in both developing and fielding systems underpinned by strong commitments of accountability and responsibility.”
A more open acquisition mindset will mean diversifying the supply base, making it easier for small businesses to navigate the acquisition process, the strategy says.
The NDIS points to programs within the strategy and a 2019 report by the Section 809 Panel—authorized in the fiscal year 2016 National Defense Authorization Act (NDAA)—that offered nearly 100 recommendations to streamline and speed the DoD’s acquisition processes. Some of those recommendations require congressional action, such as passing appropriations bills on time and allowing the Pentagon go start new programs during a continuing resolution (CR) if Congress has previously appropriated enough funds.
Congress as a practice anymore fails to enact appropriations bills by the start of a new federal fiscal year and has resisted DoD efforts to authorize new program starts during CRs. Whether there is an appetite for more acquisition-related risk throughout the larger DoD bureaucracy and within Congress remains to be seen.
The White House Office of Management and Budget last year sent Congress a legislative proposal to allow new programs to begin even if a budget has not been authorized and enacted so that development work can begin (Defense Daily, April 19, 2023). The recently approved FY ’24 NDAA not include the proposal.
House defense appropriators in their markup of the proposed FY ’24 spending bill have recommended that a small DoD office, the Defense Innovation Unit (DIU), receive $1 billion to expand the DIB to include sources and solutions to field new capabilities rapidly and at scale. Senate appropriators recommended adding $2.5 million to DoD’s $107.2 million request for DIU, warning that “it is imperative that speed and innovation do not come at the expense of sound financial, acquisition, and management best practices essential to delivering capability to the warfighter on time and on budget.”
The DIU is charged with helping DoD accelerate the adoption commercially-developed systems and solutions for use by the department and warfighters.