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Armed Services Senate Committe Hearing

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Excerpts from the Testimony of Frank Kendall, Under Secretary of Defense AT&L, on April 30, 2014


Page 2: “The hard part of bringing change to the Pentagon is not announcing new policies; it is following up to ensure that those policies are actually implemented, understanding their impact, and making any needed adjustments. Time and constancy of purpose are essential if this process is to be successful.”

Page 4: “The ability to perform strategic analysis on major defense acquisition programs, set target cost goals, and execute accordingly – without fear of being punished for not spending the money – makes huge dividends for the Department.”

Page 6: “…LPTA should be used with professional judgment about its applicability. This technique works well when only minimal performance is desired and contracted services or products are objectively defined.”

Page 7: “…I am finding that bureaucratic tendencies tend to grow and to generate products for use within the bureaucracy itself, together with the comfortable habits of years and even decades are hard to break.”

Page 8: “Competition works…Simply put, I want every defense contract to be worried that a competitor may take his work for DoD away at some point in the future.”

Page 11: “It is not enough to know acquisition best practices; acquisition professionals must understand the “why” behind the best practices—that is, the underlying principles at play.”

Page 13: “We need to make decisions and track our performance via data and robust analysis, not anecdote or opinion. It isn’t always easy to look in the mirror, and some government institutions or industry firms may not like what the report reveals, but the road to improvement has to begin with an understanding of where the problems lie.”

Page 15: “We are in the process of losing 10s of thousands of engineers and skilled production workers from our industrial base.”

Page 16: “…one fact became strikingly apparent to me: our system, over time, has accumulated levels of unnecessary statutory and regulatory complexity that is imposed on our program managers and other professionals.”

Page 17: "I believe the evidence supports the assertion that we are making progress. Equally clearly, however, there is still ample room for improvement and much more hard work for us all to do."

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Guest Vern Edwards

Response to Mr. Kendall's comments:

Page 2: Policies do not make change. Policies tell people what to do. People make change. People can make good changes only if they know what to do and how. They know what to do and how only when they have been educated and trained and when they are personally capable and competent. Right now, DOD and our government generally is facing a dangerous and almost overwhelming and irremediable crisis of incompetence. Most people who are incompetent are not incompetent because they are unintelligent, but because they have not been adequately educated and trained and because they have been poorly led. As for time and constancy of purpose, we'll see.

Page 6: LPTA is appropriate not when only "minimal performance" (whatever that is) is required, but when the buyer can specify what it wants and when there is little doubt about industry's ability to provide it and to estimate the cost of doing so. If you want gold plating, then if you can specify it, and if there is little doubt about industry's ability to provide it and to estimate the cost of doing so, then you can buy it with LPTA, and you can buy it more quickly and at lower cost than with the tradeoff process. If you cannot specify what you want or if you have doubts about industry's ability to provide it or to estimate the cost of doing so, then don't use LPTA and be prepared to take longer to make the buy, to pay more than you might have to for whatever you might get, or to not get anything at all for your money.

Page 8: "Competition works" is a foolish thing to say. Damned foolish. First, define competition. What do you mean? Do you mean the competitive proposals contracting process or do you mean free market competition? if you mean the competitive proposals contracting process, then I say that while such competition can produce good results, it often harms as much as it helps. Competition can provoke competitors into promising more than they can deliver. Competition has often led to overly optimistic technical and schedule proposals and unrealistic cost estimates. (See Peck and Scherer, Vol. 1.) You need to speak more intelligently and avoid vague and grossly overgeneralized statements such as "competition works." If the guy in charge won't speak more intelligently, how can he expect his subordinates to act more intelligently? Anyway, if competition is so great, who is going to produce a second engine for the F-35, and why has SpaceX been forced to file a protest to get a chance to compete for launch services?

Page 11: Mr. Kendall, see my comments on your page 8.

Page 13: Mr. Kendall, see my comments on your page 8.

Page 16: Why do you think Congress has done that to DOD program managers? Heck, why has DOD done that to its program managers. (Always scribble, scribble, scribble, eh Mr. Kendall?) Is it because they have been astonishingly successful?

Page 17: See your comments on your page 13.

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Guest Vern Edwards

We're not going to hear from Mr. Kendall, and he is unlikely to see my comments, or care about them if he does.

He already knows those things that I said and may even agree with most of them. If he doesn't know and agree, then it won't do him any good to read them.

I wrote this to a friend this morning in response to Mr. Kendall's comments and the comments of others about the success of recent DOD acquisition reform initiatives:

Acquisition is a long-term activity and improvement, if even possible, is a long-term endeavor. For anyone to say that they’ve seen significant improvements in prospective acquisition outcomes on the basis of four years of BBP activity, much of which time was spent in getting BBP off the ground, is absurd. It’s a matter either of damned lies or self-deception.

All democratic and republican governments are tainted by the “need" for politicians and bureaucrats to claim that whatever they’ve done and what they’re doing to fix problems is working effectively and by their willingness to lie to the public, exaggerate, and even deceive themselves. They do it to avoid criticism and to keep their jobs...
The thing reminds me of scholarly articles about adverse selection and moral hazard, both of which are endemic to democratic republicanism. Politicians lie, cheat, and steal. The voting public is in no position to make observations to confirm or deny what is being claimed. They either have to take the politicians’ and bureaucrats’ claims at face value or assume that they are lying through their teeth. Either way, it is impossible for them to make informed voting decisions.
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