[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]





 
                         [H.A.S.C. No. 114-76]

            ACQUISITION REFORM: EXPERIMENTATION AND AGILITY

                               __________

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                            JANUARY 7, 2016


                                     

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                      COMMITTEE ON ARMED SERVICES
                    One Hundred Fourteenth Congress

             WILLIAM M. ``MAC'' THORNBERRY, Texas, Chairman

WALTER B. JONES, North Carolina      ADAM SMITH, Washington
J. RANDY FORBES, Virginia            LORETTA SANCHEZ, California
JEFF MILLER, Florida                 ROBERT A. BRADY, Pennsylvania
JOE WILSON, South Carolina           SUSAN A. DAVIS, California
FRANK A. LoBIONDO, New Jersey        JAMES R. LANGEVIN, Rhode Island
ROB BISHOP, Utah                     RICK LARSEN, Washington
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN KLINE, Minnesota                MADELEINE Z. BORDALLO, Guam
MIKE ROGERS, Alabama                 JOE COURTNEY, Connecticut
TRENT FRANKS, Arizona                NIKI TSONGAS, Massachusetts
BILL SHUSTER, Pennsylvania           JOHN GARAMENDI, California
K. MICHAEL CONAWAY, Texas            HENRY C. ``HANK'' JOHNSON, Jr., 
DOUG LAMBORN, Colorado                   Georgia
ROBERT J. WITTMAN, Virginia          JACKIE SPEIER, California
DUNCAN HUNTER, California            JOAQUIN CASTRO, Texas
JOHN FLEMING, Louisiana              TAMMY DUCKWORTH, Illinois
MIKE COFFMAN, Colorado               SCOTT H. PETERS, California
CHRISTOPHER P. GIBSON, New York      MARC A. VEASEY, Texas
VICKY HARTZLER, Missouri             TULSI GABBARD, Hawaii
JOSEPH J. HECK, Nevada               TIMOTHY J. WALZ, Minnesota
AUSTIN SCOTT, Georgia                BETO O'ROURKE, Texas
MO BROOKS, Alabama                   DONALD NORCROSS, New Jersey
RICHARD B. NUGENT, Florida           RUBEN GALLEGO, Arizona
PAUL COOK, California                MARK TAKAI, Hawaii
JIM BRIDENSTINE, Oklahoma            GWEN GRAHAM, Florida
BRAD R. WENSTRUP, Ohio               BRAD ASHFORD, Nebraska
JACKIE WALORSKI, Indiana             SETH MOULTON, Massachusetts
BRADLEY BYRNE, Alabama               PETE AGUILAR, California
SAM GRAVES, Missouri
RYAN K. ZINKE, Montana
ELISE M. STEFANIK, New York
MARTHA McSALLY, Arizona
STEPHEN KNIGHT, California
THOMAS MacARTHUR, New Jersey
STEVE RUSSELL, Oklahoma

                  Robert L. Simmons II, Staff Director
                Robert Daigle, Professional Staff Member
                      William S. Johnson, Counsel
                          Abigail Gage, Clerk
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                            C O N T E N T S

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                                                                   Page

              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Smith, Hon. Adam, a Representative from Washington, Ranking 
  Member, Committee on Armed Services............................     2
Thornberry, Hon. William M. ``Mac,'' a Representative from Texas, 
  Chairman, Committee on Armed Services..........................     1

                               WITNESSES

Lombardi, Richard W., Acting Assistant Secretary of the Air Force 
  (Acquisition), U.S. Air Force..................................     7
Stackley, Hon. Sean J., Assistant Secretary of the Navy 
  (Research, Development, and Acquisition), U.S. Navy............     4
Williamson, LTG Michael E., USA, Principal Military Deputy to the 
  Assistant Secretary of the Army for Acquisition, Logistics, and 
  Technology, U.S. Army..........................................     3

                                APPENDIX

Prepared Statements:

    Lombardi, Richard W..........................................    67
    Smith, Hon. Adam.............................................    48
    Stackley, Hon. Sean J........................................    58
    Thornberry, Hon. William M. ``Mac''..........................    47
    Williamson, LTG Michael E....................................    49

Documents Submitted for the Record:

    [There were no Documents submitted.]

Witness Responses to Questions Asked During the Hearing:

    Dr. Fleming..................................................    85
    Mr. Turner...................................................    85
    Mr. Wilson...................................................    85

Questions Submitted by Members Post Hearing:

    Mr. Coffman..................................................    97
    Mr. Shuster..................................................    92
    Mr. Thornberry...............................................    89
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
            ACQUISITION REFORM: EXPERIMENTATION AND AGILITY

                              ----------                              

                          House of Representatives,
                               Committee on Armed Services,
                         Washington, DC, Thursday, January 7, 2016.
    The committee met, pursuant to call, at 10:02 a.m., in room 
2118, Rayburn House Office Building, Hon. William M. ``Mac'' 
Thornberry (chairman of the committee) presiding.

  OPENING STATEMENT OF HON. WILLIAM M. ``MAC'' THORNBERRY, A 
    REPRESENTATIVE FROM TEXAS, CHAIRMAN, COMMITTEE ON ARMED 
                            SERVICES

    The Chairman. The committee will come to order.
    The committee begins 2016 continuing to focus our attention 
on defense reform to help ensure that the U.S. military is 
agile enough to meet the extraordinary demands of a complex, 
dangerous, rapidly changing world. Last year's NDAA [National 
Defense Authorization Act] included important first steps in 
our long-term effort to reform the way the Pentagon buys goods 
and services. In 2016, we will build on those efforts.
    Technology and threats are both evolving very rapidly. Our 
own acquisition system too often undermines our ability to get 
the warfighter what he or she needs to meet and counter those 
threats. Generating and validating requirements, budgeting for 
funds, and contracting can each take two or more years, even 
before major acquisition programs are initiated. After major 
acquisition programs begin, it takes 8 to 9 years on average 
before systems are developed and deployed to warfighters. We 
cannot have an agile system if it takes us years to figure out 
what we want, how to fund it, who to hire even before 
development begins.
    Today's hearing is intended to examine a number of 
questions and topics but especially focusing on whether 
experimentation and prototyping new capabilities offers a means 
of improving agility, and what successes the military has had 
with experimentation as well as what obstacles the Pentagon has 
encountered.
    And it seems to me that as one examines periods of the past 
where there was significant innovation in military, 
experimentation was a key element, in some ways maybe even the 
heart of that innovation. And it is, I think, a very critical 
component of where the United States needs to go.
    Mr. Smith.
    [The prepared statement of Mr. Thornberry can be found in 
the Appendix on page 47.]

STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM WASHINGTON, 
          RANKING MEMBER, COMMITTEE ON ARMED SERVICES

    Mr. Smith. Thank you, Mr. Chairman. I thank you for both 
having this hearing and for your leadership on acquisition 
reform. As you mentioned, in last year's bill a number of 
changes were made in the area of acquisition, and I think you 
correctly state the need.
    We have, well, more equipment that we need to buy than we 
have money to buy it. The next decade is going to be a major 
challenge for the Pentagon no matter what with major systems 
that need to be replaced or upgraded and a budget that is less 
than we had hoped it would be and may even be less still. So if 
we can buy that more efficiently, more quickly, at a lower 
cost, that is better.
    But the challenges, you know, are in some cases, I think, 
difficult to overcome. And we can all sort of give the basic 
acquisition reform speech, which is, you know, we need to buy 
it more quickly; it needs to be upgradeable; we need to make 
decisions more quickly.
    But let's look at the reasons why we don't. You know, 
certainly part of it is the bureaucracy, and we can look at 
working on that. But part of it also is just the rapidly 
changing nature of technology.
    If you decide, okay, boom, right now, we are going to get 
this in 2 years, and in the middle of that process, there is 
some significant upgrade in a critical technology to the piece 
of equipment you are building, are you better to simply build 
what you did, accept good enough, or to try to incorporate in 
those new technologies that make it and improve it?
    That is not an easy decision to make. It is the nature of 
the world we live in, and I don't think any acquisition reform 
process is necessarily going to change that. What I am most 
interested in is how we can more empower the individuals at the 
Pentagon to make those decisions with fewer layers of 
bureaucracy because one thing that does slow down the process 
is the number of people that have to approve a program. And it 
becomes sort of a, you know, vicious cycle. The programs take 
so long that you have more and different people in charge or a 
part of them, and everyone has got a slightly different way of 
looking at it when they become in charge, so it changes more 
and more as you go forward.
    So what I would hope to do is to be able to empower 
individuals, program managers, to make quicker decisions to 
move forward. But if we are going to do that--is the last thing 
I will say--we also have to allow them to make mistakes.
    And I think that is one of the biggest reasons that we have 
the acquisition nightmare that we have, is if a program is 
purchased and it doesn't work out and it becomes too costly, 
everybody is outraged. And there are all kinds of exposes. And 
what do we do? We say, well, we have got to have more 
oversight. You know, we have got to make sure we don't make 
these mistakes again. And what more oversight means is more 
people, more time, and a slower process. So we really have to 
make the choice and say that--you know, Silicon Valley loves to 
say that one of their great things is they tolerate failure 
because they know that is part of the experimentation process.
    We need to learn how to do that a little bit at the 
Pentagon, empower people, make decisions, understanding they 
will make mistakes, but putting six layers of bureaucracy over 
the top of them isn't going to eliminate the mistakes and is 
only going to make the process more costly and more lengthy as 
well.
    So it is a difficult challenge, one that I am aware we will 
not be able to legislate a magic fix for, but we want to figure 
out what we can do to help. So I look forward to your comments 
today that will help guide us in that process.
    [The prepared statement of Mr. Smith can be found in the 
Appendix on page 48.]
    The Chairman. We are fortunate to be joined today by 
General Michael E. Williamson, the Principal Military Deputy to 
the Assistant Secretary of the Army for Acquisition, Logistics, 
and Technology; the Honorable Sean Stackley, Assistant 
Secretary of the Navy for Research, Development, and 
Acquisition; and Mr. Richard W. Lombardi, acting Assistant 
Secretary of the Air Force for Acquisition.
    Again, thank you all for being here. Without objection, 
your full written statements will be made part of the record, 
and each of you will be recognized to summarize your comments.
    General, please proceed.

STATEMENT OF LTG MICHAEL E. WILLIAMSON, USA, PRINCIPAL MILITARY 
DEPUTY TO THE ASSISTANT SECRETARY OF THE ARMY FOR ACQUISITION, 
              LOGISTICS, AND TECHNOLOGY, U.S. ARMY

    General Williamson. Chairman Thornberry, Ranking Member 
Smith, and distinguished members of the Armed Services 
Committee, in the interest of time, I will just make a few 
comments. But I would like to start by first thanking you for 
your continuing engagement with the Army on acquisition reform. 
This is really about, how do we get capability to our soldiers 
quickly, really, the right equipment at the right time.
    I also want to thank you for the legislation that supports 
attracting, training, and retaining quality acquisition 
professionals. At the end of the day, program success is tied 
to having qualified people managing and running those programs.
    I respectfully request that my written statement be made a 
part of the record. In it, I discuss a couple of key areas: 
First, modular open systems architecture; the Army's ongoing 
evaluation and experimentation programs and initiatives; and, 
really, our efforts to build a technologically superior force. 
That can only be accomplished by having an acquisition system 
that is responsive and agile.
    I think Mr. Smith's comment is really important: 
technologies will continue to change. So one of the things that 
I have been following this week is the Consumer Electronics 
Show out in Las Vegas, and what concerns me about that is the 
tremendous amount of technology that our potential adversaries 
now have access to. And so having an agile acquisition system, 
one that allows us to not just meet the current set of 
capabilities but also find technologies that give us a 
competitive advantage, overmatch capability becomes critical.
    Mr. Chairman, distinguished members of the committee, let 
me take this opportunity to thank you again for your steadfast 
and strong support to the outstanding men and women of the 
United States Army, our Army civilians, and our families. This 
concludes my opening remarks, and I look forward to your 
questions.
    [The prepared statement of General Williamson can be found 
in the Appendix on page 49.]
    The Chairman. Mr. Stackley.

STATEMENT OF HON. SEAN J. STACKLEY, ASSISTANT SECRETARY OF THE 
    NAVY (RESEARCH, DEVELOPMENT, AND ACQUISITION), U.S. NAVY

    Secretary Stackley. Chairman Thornberry, Ranking Member 
Smith, distinguished members of the Armed Services Committee, 
thank you for the opportunity to appear before you today to 
discuss Department of the Navy, Marine Corps acquisition, and 
our efforts to improve agility and experimentation.
    Your Navy and Marine Corps have a rich history of pushing 
the boundaries of science and technology to ensure our sailors 
and marines are equipped with the capabilities that they 
require to perform the full range of military operations that 
they are required.
    Our ability to maintain our maritime dominance has become 
increasingly difficult, however, as the complexity, risk, cost, 
and time to develop our weapons system has steadily increased 
with each new generation of technology. In fact, our 
technological advantage is eroding. It is being chipped away 
at, as other militaries leverage access to the rapid global 
advancements in commercial and military science, technology, 
and manufacturing.
    The Department of Defense [DOD] has been on a campaign 
commonly referred to as Better Buying Power, which is focused 
on and making critical inroads to address these trends. As 
well, we appreciate the work of your committee to understand 
the issues and to enact the measures that will support us in 
meeting our collective objectives to improve upon the cost and 
time required to develop and deliver these leading-edge 
warfighting capabilities.
    At the bottom line, maintaining our technological 
superiority requires greater innovation and agility to more 
than offset our adversaries' growing capabilities. Really, 
prototyping and experimentation are an essential element of our 
strategy. These efforts jump-start the development process and 
inform critical decisions on operational utility, technical 
feasibility, producibility, cost, and risk in order to expedite 
the ultimate fielding of advanced warfighting capability.
    Now, what do innovation and agility look like today? In 
response to the proliferation of ballistic missile threat and 
turning to the proven capability of the Aegis weapon system, 
the President announced 6 years ago that we would install Aegis 
at a remote location in Romania to provide missile defense for 
our allies in the region.
    In the ensuing years, involving sites at Huntsville, 
Alabama, and at the Aegis land base test site in Morristown, 
New Jersey, the Naval Warfare Center in Dahlgren, Virginia, and 
Wallops Island, Virginia, and the Pacific Missile Range 
facility in Hawaii, the Navy and the Missile Defense Agency 
completed the design, development, and test of the most complex 
to date Aegis BMD [ballistic missile defense] baseline to 
perform the mission and separately designed the facility, and 
built, assembled, integrated, and tested the total system at 
Morristown; then disassembled, shipped, reassembled, 
integrated, and the tested that facility on the ground in an 
austere location in Romania; all leading to turnover of the 
Aegis Ashore site to sailors of the 6th Fleet about a week ago.
    In the interim, the Navy had provided ballistic missile 
defense by forward deploying four BMD-capable Aegis destroyers 
to the Mediterranean. Subsequent to their arrival, a new cruise 
missile threat emerged. In response, the Naval Research Lab, 
working with Naval Warfare Center at Crane, Indiana, went to 
work breaking down the characteristics of the threat and, 
within a deployment cycle, assembled, shipped overseas, and 
installed onboard the destroyers a transportable electronic 
warfare system that would effectively counter it.
    In parallel, the Naval Sea Systems Command went to work 
designing and installing on the destroyers an adjunct system 
known as C-RAM that combines the radar, the Navy's close-in 
weapon system with the rolling airframe missile to provide 
defense in-depth against the threat. And all the while, the 
newest Aegis baseline and the Navy Surface Electronic Warfare 
Improvement Program are being updated with these capabilities 
to provide the permanent capability.
    Meanwhile, in the 5th Fleet, a torpedo threat emerged that 
triggered a demand for a torpedo defense for our carriers 
deployed in that region. And what was called the ``Push to the 
Bush,'' the Naval Undersea Warfare Center in New London, 
Connecticut, working with Penn State Applied Research Lab 
developed and integrated a series of underwater sensors, an 
alert system, and an antitorpedo torpedo that was installed on 
the USS George H.W. Bush prior to her deployment to provide the 
first-ever surface ship torpedo defense system. And we are now 
further improving upon that capability as we transition to a 
program of record.
    Separately, in response to a combatant commander's demand, 
within a 12-month timeline, the Navy converted the retiring USS 
Ponce to perform the mission of an afloat forward staging base 
for the 5th Fleet. And Ponce proved to be the perfect 
opportunity to put to sea the first ever laser weapon system. 
The Navy is leveraging this experiment to further our 
development of directed-energy weapons.
    And, meanwhile, on the other side of the globe, in the 7th 
Fleet, demonstration by China of a long-range antiship cruise 
missile, a long-range antiship ballistic missile, spurred rapid 
development of capabilities to counter these threats. And 
within about a year's timeframe, Naval Air Warfare Center at 
China Lake demonstrated the ability to employ the Tomahawk 
missile against maritime targets through a synthetic guidance, 
and we are exploring further systems with new seekers for that 
weapon.
    Similarly, we are developing the antiship version of the 
air-launched missile known as JASSM-ER [Joint Air-to-Surface 
Standoff Missile-Extended Range] and will explore further steps 
to develop a surface-launched version of this missile. And 
while the details regarding the defense against antiship 
ballistic missiles are classified, we are employing the same 
basic skills of integrating mature technologies into proven 
systems to rapidly provide the capability necessary to defeat 
the threat.
    Now, there are several key elements that are common to 
these examples of rapid prototyping and experimentation. First 
and foremost is a highly skilled and experienced acquisition 
workforce. And we are fortunate to have warfare centers, system 
centers, and laboratories equipped with world-class scientists 
and engineers uniquely qualified to develop technical solutions 
to complex warfighting problems, and they are positioned to 
leverage FFRDCs [Federally Funded Research and Development 
Centers], academia, small businesses, and the greater defense 
industry to execute our rapid prototype efforts.
    The Department, with strong support from Congress, is 
taking measures to strengthen this workforce, and we look to 
further those efforts with you this year.
    The second key enablers, the integration of these technical 
experts with our fleet forces, the collective wisdom of our 
operational forces combined with our technical community's 
understanding of complex science, technology, and engineering 
challenges facing naval warfare, provide an incredible 
opportunity to change the calculus of future naval warfare.
    The third key enabler is designing our major weapons 
systems for rapid insertion of technology through the use of 
modular open systems standards. The success of the Navy 
submarine force's Acoustic Rapid COTS [Commercial Off-the-
Shelf] Insertion program, which provided a common open system 
designed for submarine combat systems and enabled the near-
continuous upgrade to the systems paced by available technology 
and a response to the threat, has spurred a sea change in naval 
systems design.
    Navy and Marine Corps systems have since instituted modular 
open system design standards in the development of virtually 
all of our future platforms and major weapons systems.
    The fourth key enabler is a work in process, and that is 
agility on the business side of the equation, primarily 
budgeting and contracting to match the agility we expect and 
demand on the technical and operational side. The cycle time of 
the budget process alone is arguably greater than the cycle 
time of the technologies we need to leverage and, in certain 
cases, the cycle time of the threat we need to defeat.
    If we are to improve upon the speed at which we deliver 
capability to the fleet, we must improve upon the time required 
to go from the identification of a threat or a critical 
technology and touching the hardware and software required to 
defeat the threat.
    I am confident we have the ability to collapse this 
timeline while yet maintaining the necessary judicious 
oversight required by Congress on the use of taxpayer dollars. 
We have demonstrated the ability to accelerate capability and 
response to urgent needs, and we are bringing a similar sense 
of urgency to major program acquisition to deliver capability 
at much-needed speed of technology.
    The Navy looks forward to working closely with your 
committee again this year as we continue to tackle these 
challenges, and I look forward to your questions.
    [The prepared statement of Secretary Stackley can be found 
in the Appendix on page 58.]
    The Chairman. Thank you.
    Mr. Lombardi.

STATEMENT OF RICHARD W. LOMBARDI, ACTING ASSISTANT SECRETARY OF 
          THE AIR FORCE (ACQUISITION), U.S. AIR FORCE

    Mr. Lombardi. Chairman Thornberry, Ranking Member Smith, 
members of the committee and staff, thank you for today's 
opportunity to discuss acquisition reform and particularly 
experimentation and agility. It is my pleasure to do so.
    First, let me say that Dr. Bill LaPlante set our 
acquisition community on a brilliant course during his tenure, 
and I----
    The Chairman. Mr. Lombardi, would you get that mike right 
in front of your mouth, please. Thank you.
    Mr. Lombardi. Okay. Sorry about that.
    First, let me say that Dr. Bill LaPlante set our 
acquisition community on a brilliant course during his tenure, 
and I look forward to build on that foundation. Through his 
focused efforts over the last few years, the data has shown 
that we have improved our acquisition performance. Our costs 
are trending down. We are meeting key performance parameters on 
our major programs greater than 90 percent. And we have 
garnered over $6 billion in cost savings, using these savings 
to secure greater capabilities and additional weapons in the 
hands of our warfighters.
    In this endeavor, we are supported by the leadership of 
Frank Kendall, the Under Secretary of Defense for Acquisition, 
Technology, and Logistics. Our Air Force efforts are aligned to 
his Better Buying Power 3.0 initiatives, as well Secretary 
James' Bending the Cost Curve efforts, all which are designed 
to strengthen our ability to innovate, achieve technical 
excellence, and field dominant military capabilities.
    In today's complex environment, rapid change is truly the 
norm. We believe incorporating strategic agility into the Air 
Force's acquisition enterprise will be the way to capitalize on 
this dynamic environment. In order to make most of these 
potential opportunities, we are focusing the Air Force's 
efforts in three key areas: First, strategic planning, 
prototyping, and experimentation; second, science and 
technology; and, finally, modular and open systems 
architecture.
    Over the past 2 years, the Air Force has made great strides 
to improve the strategic planning process as evidenced by the 
release of the visionary 30-year strategy. We are also 
reinvigorating the use of prototype and experimentation with 
the purpose of providing warfighters with the opportunity to 
explore novel operational concepts, incentivize innovation in 
industry and government, and reduce risk and lead times to 
develop and field advanced weapon systems.
    Our Air Force S&T [Science and Technology] Program plays an 
integral role in technology development, often fielding 
temporary operational prototypes to meet urgent warfighter 
needs. However, they are not the final solution but a stepping-
stone to further develop a long-term solution that addresses 
aspects of producibility, reliability, and sustainability.
    The Air Force also has more programs than ever implementing 
modular and open systems architecture approaches. Best 
practices to achieve this are, of course, the use of modular 
and open architecture designs, but also to include the use of 
standard interfaces and the use of block upgrade approaches to 
fielding. These methods should help shorten developmental 
timelines.
    Such systems are designed to later upgrade, which can allow 
us to better manage our risk and schedule. We identified the 
advanced pilot trainer and the Joint STARS [Surveillance Target 
Attack Radar System] recap programs as strategic agility pilots 
that will utilize these approaches, much like the Long Range 
Strike Bomber is already doing.
    To address the business-related challenges, we are 
prototyping a new acquisition approach called Open System 
Acquisition. It will enable aggressive competition toward rapid 
prototyping and utilize other transaction authority to create a 
consortium specifically focused on reaching nontraditional 
defense companies.
    We tested this new process last year as a pilot initiative 
for the Air Force Distributed Common Ground System. Nineteen 
companies participated. We ultimately awarded it to two teams, 
both including nontraditional defense contractors who offer 
their products at approximately 80 percent of the original 
government cost estimate. Our efforts are now focused on 
formalizing this process and applying it to a broader sample of 
programs.
    I firmly believe that the Air Force acquisition enterprise 
has and is building an even stronger engineering and program 
management culture that values the strategic agility as a core 
capability. We look to capitalize on the complex and dynamic 
environment of today and tomorrow to ensure our airmen have 
what they need to meet any challenge or any threat anywhere in 
the world.
    In conclusion, I would like to take this opportunity to 
thank you for the authorities outlined in section 804 and 815 
of the National Defense Authorization Act of 2016 as they 
support the direction that the Air Force and the Department are 
heading. And I thank you as well for your service to the United 
States and for your continued support to the military and 
civilian men and women who serve our great Nation.
    Thank you, and looking forward to your questions.
    [The prepared statement of Mr. Lombardi can be found in the 
Appendix on page 67.]
    The Chairman. Thank you.
    I think Mr. Smith--I tend to agree with Mr. Smith. Two key 
things are that we need to thin out the bureaucracy so 
decisions can be made faster; and, secondly, we have got to 
allow people to make mistakes. One way to help with that is to 
be able to experiment in prototypes so that you see if 
something is going to work before you buy a bunch of them. That 
is the purpose, I think, of what we are talking here.
    So let me ask each of you if you could just outline very 
briefly the three top things that could be done to improve your 
service's ability to experiment and take advantage of 
prototypes.
    General.
    General Williamson. Yes, sir.
    So I want to start with this discussion about flexibility, 
and I would like to finish with an observation on risk. So this 
notion of flexibility applies in a couple of areas within the 
program, starting with early research. One of the challenges 
that we have is in the making sure that you lock down the 
requirements for whatever system. And so when you look at 
prototyping--and I don't intend to make this a primer--but it 
is really important to understand what type of prototyping we 
are talking about.
    So if I were [to] describe three, it would really be there 
is concept; there is developmental; and then there is 
operational prototyping. So in some cases, we have an idea for 
a program or for a capability that is needed, and these 
capabilities come in two areas. So, one, you want to address 
kind of a known threat, how can I quickly react to a known 
threat; and the second is, there is a technology opportunity 
for us to integrate into one of our systems.
    And so as we look at those three types of prototyping, it 
is, how can we do that early enough in the process? How do we 
have the leverage and the flexibility to bring those into 
programs? And I want to highlight something that Mr. Smith 
said, and that is the risk piece.
    The challenge that we have had in the past, sir, is that 
you want to have a direct tie to an investment that is made on 
the science and technology, on the prototyping and the 
experimentation, and you want to have a direct trace to a 
program of record, and you want to make sure that that 
technology is mature enough so that there is less risk in 
implementation.
    But the reality is, is that in many cases, as I look at 
whether it is a subsystem or whether it is an end item, in some 
cases, it may be difficult to integrate; it may not be mature 
enough; and you may have to walk away from it.
    And so the notion of risk, sir, becomes very important, 
because what I am finding--and I have watched this in our 
business for a while--is that unless that technology is mature 
enough to plug in, we are not willing to make the investment. 
And if it is not at the point where you have a great 
confidence, it is often hard to defend the funding associated, 
not only internally within the service but also at the 
Department and also to the American taxpayer----
    The Chairman. Okay. So if I could summarize that, an 
improvement you think could be made is the ability to prototype 
early in technology development, even when it may not be 
connected to a program of record, or to experiment with 
technologies.
    And then a different kind of experimentation in prototype 
is with more mature technology as you are approaching a larger 
acquisition. So there are kind of two kinds, and you need more 
ability to do the early, more experimental stuff without 
necessarily having it attached to a program of record.
    General Williamson. Yes, sir, that is absolutely correct.
    And just as an example, so for soldiers, for a dismounted 
soldier, the load that a soldier carries is really important. 
And so as we have more and more electronics on a soldier, one 
of the investments that we have to make is in batteries, in 
just purely power.
    And so the investment that we make in efficient battery 
systems I may not be able to trace to every specific program 
that will use it, but there will be a number of programs that 
will leverage the efficiencies that are discovered. I need the 
capability to be able to experiment in those areas and then, as 
I get more definition, be able to apply it directly to a 
program.
    The Chairman. Okay. That makes sense to me.
    Mr. Stackley.
    Secretary Stackley. Yes, sir. Let me first state what I 
tried to touch on in my opening remarks. We are at prototyping 
and experimentation in a big way today. What we are doing 
though is fairly--I will call it--episodic. It is being driven 
by a compelling threat that gets top leadership's attention, 
and we make mountains move to address the threat. What we need 
to do is take that model and incorporate it into a way we do 
business every day. And so that is the journey that we are on 
today.
    Much of what we need we are already working on. It is the 
skill set that I described, and I cannot overstate how critical 
section 219 funding has been to this effort. Section 219 
funding is lifeblood to our warfare centers, our science and 
technical community, and so everything that you all have done 
to support that is paying off huge dividends, and it is 
underpinning our efforts in terms of prototyping and 
experimentation.
    You touched on requirements and definition. The 
requirements and definition process is long and laborious, so 
if we are going to make serious inroads, we have to go ahead 
and march forward with prototyping and experimentation on the 
front end of the requirements definition process and not wait 
for requirements to be defined and then initiate an experiment.
    The prototyping and experimentation help to inform and help 
to better define the requirements. We want the ability to take 
the risk in that phase before we have invested large dollars 
and committed ourselves to a particular system solution. We 
want to go ahead and take those risks, experiment with what is 
possible, better define the requirements, narrow the solution 
set, get a better understanding of what the cost will 
ultimately be before we launch into the program of record.
    Prioritization is important. What we are doing today is we 
are taking our technical community, and merging it with our 
fleets, and sitting down with--inside of the fleet, they have 
warfare development centers--and sitting down with the warfare 
development centers and asking them, what are your top issues? 
We can't launch a thousand projects today. What we want to do 
is ensure that, at least on the front end, our efforts are 
focused on the top priorities. So we are getting those 
priorities from the fleet to address the--before requirements 
definition process--the experimentation that will help us all 
out and then move into execution.
    So let me talk about the things that we need to help out. 
One is money, and I am not coming here asking for money, but 
what I am describing is that the budget process, if we have an 
emerging issue today, we have missed the train for PB 
[President's budget] 2017. In fact, we have already submitted 
the POM [program objective memorandum] issue sheets for PB 
2018. So an emerging issue today may or may not make the 2018 
budget request.
    So we are sitting here in early 2016 without dollars that 
are available to address an emerging issue or a critical 
technology that creates an opportunity unless we have something 
like the entire Department aligned to reprogram and to do the 
acts that go outside of the normal budget cycle.
    So what we are grappling with is, how do we make dollars 
available to either address emerging threats or to respond to 
available technologies that will give us the capabilities that 
we need?
    The second issue is simply intel [intelligence]. The better 
we are aligned with our intel community, the less technical and 
operational surprise there is and better informs us in terms of 
our efforts earlier on. So, quite often, we are responding to 
the threat. The earlier start we get on that through access and 
alignment between our technical community, the intel community, 
and the operators, the better start that we will get.
    And the third item I would mention is access to commercial 
technology. And you see and hear of initiatives that are going 
on today, DIUx [Defense Innovation Unit-Experimental] that the 
Secretary of Defense has announced.
    But the bottom line is, there is much more technology 
available to help us solve our issues than we have direct 
access to today, and this in part is due to a reluctance in 
certain sectors of technology to plug into the large 
government, the large Department of Defense, because of fear of 
the bureaucracy that you referred to and what that might mean 
in terms of things like data rights, things like layers of 
oversight, what is referred to as the burden associated with 
doing business with the government. We are going at that. We 
are trying to pierce that. But that is not going to be a quick 
turnaround.
    The Chairman. Okay. Thank you.
    Mr. Lombardi.
    Mr. Lombardi. Yes, sir. Let me piggyback on both General 
Williamson's and Secretary Stackley's comments.
    From the Air Force perspective, what we are looking at is 
it is all about a team support and it is all about a team 
support getting together earlier. There was the discussion 
about the requirements. And what we need to do is make sure--
and as we are doing in our developmental planning type of 
activities, is bringing the operator and the requirements 
generator and the technologist and the acquisition community 
together early on so that we can take a look at where the S&T 
investments are right now, where the gaps actually are, where 
are the needs that the customer actually has, and start early 
on looking across the whole spectrum because it may not 
necessarily be a material solution. There may be that 
technology there that could rapidly go out into the field, but 
we need to understand how that technology would be operated. 
And then we need to take a look and make sure that we are 
developing the requirements set properly.
    If you don't do the early prototyping and experimentation 
early on, what tends to happen is we tend to recreate the 
requirements set that was from the previous system that this is 
replacing. And that is the wrong answer. What we need to be 
doing is really looking forward to, what is this new technology 
going to enable us to do, and how can we employ it in a better 
fashion?
    And so that is a key area where we have to be able to get 
the teams together early on. And we are working that within the 
Air Force in our enterprise collaboration teams and by virtue 
of bringing people together on very specific areas at first, 
and then we will take a look across the board.
    But we are looking at, for example, our Air Superiority 
2030 activities, which will allow us then to look at what might 
be the technology that is required later on and then how do we 
develop the CONOPS [concept of operations] associated with 
executing that, and then that rolls into the actual developing 
of the requirements that we can go and build to.
    Piggybacking on Secretary Stackley's comments on funding, 
the funding needs to be much more flexible. As was stated, we 
are already building our 2018 budget before the 2017 is even 
hitting the street here.
    And in there, if we are really going to be able to look at 
that, our budget documentation, because this is in the R-docs 
[requirements documentation], we tend to have to write to very 
specific areas. And as a result of that, we don't know 2 years 
out what specific areas that we are really going to want to 
attack. And as a result of that, then we end up having to come 
back in for reprogrammings or getting approval for new starts. 
And so if there is more flexibility in the language in the 
documentation that will allow us to start activities with less 
specific details, that would be very helpful for us. And then, 
again, as bringing in the use of nontraditional players, we 
have had some very--some good experiences with that.
    I mentioned in my opening statement the Air Force DCGS 
[Distributed Common Ground System]. You know, what we have done 
is been able to do--by virtue of having open systems of 
architecture--be able to bring in nontraditional players that 
we typically don't see in our trade space. And so that is an 
important area for us to reach out to that community, and our 
DCGS office is actually reaching out to DIUx to understand 
where there are people who could actually--companies who could 
actually support them in developing new capabilities, agile 
capabilities to bring new capability to the DCGS.
    Thank you.
    The Chairman. Thank you.
    I just mentioned on the flexible funding, I think, for me, 
I am interested in working with you all to figure out ways to 
do it, especially going back to early prototyping. We have to 
make sure there is the oversight mechanisms for the use of 
those funds because that is obviously our responsibility. But 
surely to goodness, we can find a way to meet your need and 
also our responsibilities at the same time.
    Mr. Smith.
    Mr. Smith. Thank you.
    I want to talk just a little bit about the program of 
record, which has come up a little bit here. And I view, based 
on a lot of historical examples, the program of record as being 
essentially evil. I realize there is a necessity for it.
    But I just want to do a little thought experiment and see 
if there is some way that we can reduce that, and I will use 
just one example: the expeditionary fighting vehicle [EFV]. We 
all know that the original idea didn't work out. I won't get 
into that. That has a lot to do, I think, with what the 
chairman says about prototyping and understanding what you can 
and can't do before you spend $8 billion.
    But once that was done, the Marine Corps still had to get a 
new amphibious assault vehicle, and there already exists--I 
think it is four different companies that make four different 
types of amphibious assault vehicles. And the Marine Corps was 
able to go out and look at them and say: Yeah, I think these 
will meet our needs.
    Now, the world that I would like to live in is a world 
where they go: That is the one we want, or we want these two; 
give us 10,000 of that and 10,000 of that. Now, the world we 
actually live in is even though these things already existed, 
even though the Marine Corps looked at them to make the 
decision, they had to go back and write an RFP [request for 
proposal] out to these four companies. And they are down-
selecting and moving through it. And I am sure somewhere along 
the way, someone is going to say: That is great, yeah, but can 
you make it lighter, or can you make it heavier, or could you 
put a gun here?
    And by the time we are done with it, this thing is going to 
wind up costing a heck of a lot more than if the Marine Corps 
could have simply said, like I said: Give us 10,000 of those. 
That is great. Let's go.
    So what is wrong with my scenario that I just described? 
Why can't we do that? And getting out of that scenario, is 
there any way we can reduce the number of purchases that are 
made by the Pentagon that require a program of record and 
simply allow for more buying, if you will? This isn't really 
commercial-off-the-shelf because we are talking about a piece 
of defense equipment. You can't go out and buy your own 
amphibious assault vehicle.
    But it is, nonetheless, you know, commercial-off-the-shelf, 
or if there is an existing piece of technology and you want to 
buy it, is there a way to reduce our reliance on having a 
program of record and all of the costs that come with that? Is 
there something we could do legislatively to help make that 
possible?
    Secretary Stackley. Sir, let me take that question. I have 
a lot of history on this particular program. You correctly 
summarized the expeditionary fighting vehicle in terms of that 
vehicle prototype was in the late 1980s, and the program was 
canceled in 2009. It was difficult. There is a difficult 
history that went behind that.
    The shift to what is referred to as the amphibious combat 
vehicle, which is the competition that is currently ongoing--
and, in fact, we have an award that was done a few weeks ago--
--
    Mr. Smith. Yeah.
    Secretary Stackley [continuing]. There were, in fact, four 
competitors, and we have gone to a down-select.
    Now, let me offer--you made a reference to cost. It would 
be cheaper to just go off the shelf than to go ahead and 
solicit proposals. I would refute that. Now, what we are doing 
is we are leveraging competition to drive cost down for the 
vehicle that the Marine Corps requires. And, in fact, the cost 
that we have received in the proposals are extremely affordable 
relative to--much more so than what was the EFV and relative to 
estimated cost based on the four contractors outside of 
competition.
    Mr. Smith. We don't have it yet, so I wouldn't celebrate 
that it-costs-less thing until we actually have the piece of 
equipment, is the one thing I would say, but----
    Secretary Stackley. Yes, sir. Now up a couple things to go 
with that. One, the structure of the contract, okay, our 
confidence, it is effectively getting us into a fixed-price 
arena because we are leveraging extremely mature technologies, 
as you described.
    Mr. Smith. Right.
    Secretary Stackley. We are leveraging mature technologies 
not just to have high-cost confidence but inside of the 
contract to give us what effectively is going to perform like a 
fixed-price type contract.
    Second piece is, we are going after this capability in an 
incremental fashion, which reduces risks, and we are going 
after it in two separate increments. The first increment will 
give us capability that we will be able to put to work early 
on, but ultimately we want Increment 2.
    What we have been able to do through the competition in 
identifying what Increment 2 capabilities will be is we have 
been able to drive the competitive field to offer vehicles that 
come as close as possible to an Increment 2. And, in fact, the 
potential is there that this initial vehicle that we award will 
be able to take us from Increment 1 to Increment 2 without any 
further follow-on development effort.
    So the entire approach here was to leverage mature 
technologies, take the industrial base that is out there today 
producing combat vehicles, lay in the requirements that are 
unique to the Marine Corps, do it in such a fashion that it is 
incremental but make it clear where we ultimately need to go 
and to let competition drive cost down and drive the 
competitive field to deliver those capabilities as early as 
possible.
    We think we are exactly where we should be. And the only 
thing we regret is that the first go-around, going back to EFV, 
didn't take a similar type of approach.
    Mr. Smith. That is a good explanation. I remain skeptical, 
and we will talk in 3 or 4 years when we see how all of what 
you just described plays out. But I still think, you know, 
shifting toward--and obviously this is a rather significant 
piece of equipment that I referenced. There are smaller things, 
and one of the things I would like to emphasize is buying more 
commercial-off-the-shelf. If there is a product out there that 
will do the job, let's just buy it and do the job because you 
can have competition in that environment too. I mean, even in 
this case, if there are four vehicles out there, there is 
competition right up front. I don't see why you have to have an 
RFP and a program of record to get those companies to compete. 
But I take your broader points, and we will see how it plays 
out.
    Secretary Stackley. Sure.
    Mr. Smith. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Forbes.
    Mr. Forbes. Thank you, Mr. Chairman.
    And we need to first acknowledge the effort that you and 
the ranking member have put in this whole area of acquisition 
reform. Thank you for that.
    Gentlemen, thank you for being here. All three of you are 
incredibly qualified, talented individuals, and we just 
appreciate your service to the country and being here.
    Let me tell you one of my most frustrating points when we 
are talking about acquisition reform, especially when you look 
at emerging technologies, capabilities, and threats. People 
come in here, and they give us the scenario. They say: In a 
best world, we have a year at the Pentagon to prepare a budget. 
Then it takes a year over here in Congress. And then we start 
trying to utilize that funding, and some of the stuff we are 
looking at has a shelf life of 3 years.
    But when I watch speeches outside of this committee room 
and try to listen to the changes they want, here is what I 
normally hear: A restating of the problem; secondly, I hear 
people say something needs to be done; then they say we are 
studying it; then they say we need a stable budget; then they 
will give some examples. But, oftentimes, we don't get the 
specificity we need.
    Mr. Stackley, you have had incredibly good work. You have 
been there 7-plus years, I guess, now. Based on your personal 
opinion and from the study you have had and what you have done, 
does the Navy need to establish something similar to the Air 
Force's Rapid Capabilities Office?
    Secretary Stackley. Let me describe it this way, sir: The 
Navy is going about that. And the way I would describe it, the 
Air Force's Rapid Capabilities Office [RCO] emerged about a 
little bit more than a decade ago and specifically focused on 
ISR [intelligence, surveillance, and reconnaissance] missions 
and special aircraft. And so it has a unique focus.
    We are looking much more broadly than that, although there 
will be something that will closely mirror the Air Force RCO 
going forward for unique missions, particularly in the black 
world.
    But much more broadly, we do have a very strong technical 
base that we need to better leverage, and we need to marry it 
up more tightly with the fleet and the Marine Corps to short-
circuit that longer process that goes through the requirements 
definition, the budgeting process, to ultimately get into a 
program of record.
    Mr. Forbes. So it would be your opinion that we need 
something that may not look exactly like the Air Force's Rapid 
Capabilities Office, but we need something similar to that in 
the Navy?
    Secretary Stackley. Yes, sir. And we actually do that 
today. However, we do it almost in an ad hoc fashion. And so 
what we are doing, and that is my organization alongside CNO 
[Chief of Naval Operations] and the Commandant, what we are 
doing is we are aligning our teams, and it is going to be one 
team, to bring the best technology and technical experts that 
we have to bear against the highest priority requirements that 
are being defined by the fleet today.
    And then let's launch now into experimentation and 
prototyping on how to deal with either that threat or that 
critical technology while in parallel the machinery starts up 
for requirements definition and budgeting so that by the time 
we get into that cycle, we have a firm understanding of the 
technical, and we have a much greater understanding of the 
cost, and we have started to shape and point our industrial 
base towards the solution. So we will both make progress in the 
interim and then reduce the amount of time it takes on the back 
end to ultimately field the longer term solution.
    Mr. Forbes. So it would be fair for the committee to expect 
that we would perhaps be seeing something in a more formalized 
structure like that Rapid Capabilities Office in the coming 
months?
    Secretary Stackley. Yes, sir. I think you can expect that 
Secretary, CNO, and Commandant will do a more formal rollout of 
this construct.
    Mr. Forbes. You also mentioned in your prepared testimony 
that one key enabler of innovation is funding expressly for 
rapid prototyping, experimentation, and demonstration. Will we 
be seeing any of that in the 2017 budget, and if so, where 
shall we be looking for that?
    Secretary Stackley. It would be preemptive of me to be 
discussing what is in the 2017 budget. However, most of these 
efforts are in an account called 6.4. It is in the R&D 
[research and development] account 6.4. Right now, our 6.1 
through 6.3 funding, which is sponsored by the Office of Naval 
Research, is a very mature budget process, and I think you all 
are very well familiar with it.
    When you get beyond 6.3 and get into 6.4 and beyond, now 
you are into programs of record, what we want to do is carve 
out the ability to increase our prototyping experimentation 
inside of that 6.4 account, and we will discuss it in greater 
detail when the budget comes across.
    Mr. Forbes. Thank you, all.
    Thank you, Mr. Chairman.
    The Chairman. Mrs. Davis.
    Mrs. Davis. Thank you, Mr. Chairman.
    And, really, just following up with everything that has 
been said previously, can you pinpoint to some extent--and I 
want to applaud you because you have the answer basically. I 
mean, you know what needs to be done. What is really getting in 
the way of doing that?
    How much responsibility does Congress bear? What can we 
obviously do better? And you have cited the 6.4 accounts. I 
don't know whether in terms of other research and development, 
you know, be it DARPA [Defense Advanced Research Projects 
Agency], people are aware of what is done there. What else--
where else can you drive this?
    Secretary Stackley. Yes, ma'am. If doing that is associated 
with the discussion we just had on funding, the issue is budget 
exhibits require that we define exactly how we are going to use 
the taxpayer dollars so that you all can authorize and 
appropriate and conduct the oversight.
    The nature of the beast, whether it is emerging threats or 
available critical technologies have become available, is that 
it is hard today as we put together our POM 2018 issue sheets. 
We cannot predict what that threat will be in 2018 so that when 
we are in execution we have dollars available to go directly to 
the threat.
    And so we are looking for, as General Williamson described, 
a degree of flexibility. And we are not talking large dollars, 
frankly, because we are talking prime-the-pump levels of 
funding that let us get the technical machinery moving aside 
the fleet to address these early experimentation efforts as 
soon as we see a technology or a threat that we want to 
address. Not large dollars, but defining it so that you all 
have confidence in terms of being able to authorize and 
appropriate to those dollars has been a challenge in the past.
    Mrs. Davis. General, did you want to speak to that?
    General Williamson. Ma'am, I just want to talk a little bit 
about the flexibility, and I am going to use an example, of 
which hopefully it is not overly simplistic, but I just want to 
give you this example.
    So this is not kinetic. So this is not about buying a new 
gun. But as I am progressing with a combat vehicle or even a 
tactical truck, and if I discover through some of the applied 
research or industry comes up with a better transmission, I am 
on the path where I am building a system. But a year into that, 
someone says: There is a great capability out there, a new 
transmission that will reduce fuel requirements by 50 percent. 
Because of the way we earmark--that is the wrong word for you. 
I apologize.
    Mrs. Davis. Don't want to use that word here.
    General Williamson. I apologize. But the way we identify 
how funding is going to be used, it will be a year before I can 
flex within my budget for that program to start doing 
integration work with that new engine.
    Mrs. Davis. Yeah.
    General Williamson. And so if I have some leverage, if I 
have some flexibility, say, great technology, because of things 
like modular systems architecture, I can start doing the work 
to plug that in now. I don't have to wait.
    Mrs. Davis. I would hope that everybody sees that as very 
commonsensical, to be able to shift when you see a need and be 
flexible. And I think what would be helpful--and I think you 
are already working with that, Mr. Secretary--is how then you 
define that perhaps in a budget process so that you have that 
ability to do that.
    And I guess what I am looking for is, where are still the 
obstacles to doing that? You know, we have been in the 
situation now for quite a number of years, and I think, just as 
Mr. Forbes mentioned, we kind of keep hearing the same thing. 
You know, we have got a problem. We need to fix it. We need to 
redefine it. We need flexibility. And how can we unstick this a 
little bit more so that you have what you need or without even 
waiting until the next NDAA?
    Secretary Stackley. Yes, ma'am. Well, let me commit to you 
that when the budget comes over, we are going to be coming over 
with the budget and sitting down with the authorization and the 
appropriation committees to lay out an approach and a process 
that will give you all the confidence and the insight and the 
oversight in terms of how we would execute funding to increase 
the degree of experimentation and prototyping that we are 
describing here today.
    Mrs. Davis. And you don't feel you can do that with 
existing legislative authority?
    Secretary Stackley. Well, actually, I think we can. What we 
need to do is convince the Congress that it has the degree of 
oversight and insight that it needs to do its job.
    Mrs. Davis. Okay. Thank you, sir.
    The Chairman. Chairman Davis--Chairman Miller, sorry. I was 
thinking about Mrs. Davis' comments. Chairman Miller.
    Mr. Miller. Thank you very much.
    I am wondering why you feel like the need for flexibility--
and I understand for rapid acquisitions. In fact, Mr. Lombardi, 
you talked about flexible funding, and then, Mr. Stackley and 
General Williamson, you both have referred to it. There 
probably was a reason at some point that Congress kind of 
stovepiped the money in the way it comes to you. Any idea what 
that reason was?
    Secretary Stackley. Sir, I can just give you one example, 
and this goes back probably 20 to 25 years ago. We had a thing 
called the M account. And the M account was a management 
account to--it had a degree of flexibility in it as a 
management reserve effectively for the Department.
    And Congress determined that it effectively did not 
appreciate the way the Department was managing the M account. 
And separately, as pressing needs emerged, the choices were 
between having dollars parked into an M account or having those 
dollars go toward specific budget line items. And so the M 
account eventually went away. That was a large account in terms 
of providing management reserve.
    Since then, there has been a reluctance to put any dollars 
into the budget that don't meet very well-defined, disciplined 
definitions of how the dollars will be used. And I think we can 
get past that. I think we can get past that. And I am looking 
forward to when the budget comes over, sitting down and talking 
with the committees and your staffs to work through this.
    Mr. Lombardi. I would like to just add on this. And I 
think, dating back to about 20 years ago, I think there was a 
concern with respect to coming out of accounts like this where 
we were actually starting program of records.
    And so I think, as Secretary Stackley says, I think it is 
very easy for us to come back together with a plan that would 
allow for all of us to have the flexibility that we need and 
the proper oversight for both the appropriation and the 
authorization committees to make sure that we are executing the 
funds in a logical and a very meaningful manner.
    But I think that a lot of what has been happening in the 
past was based upon a fear of us actually launching off on 
program of record based upon doing a certain type of 
prototyping early on.
    General Williamson. Sir, just to comment, I completely 
support the comments made by the other services. I do want to 
go back to something that was said earlier though, and that has 
to go to the culture in terms of risk tolerance and the culture 
of risk.
    So we all sit around and talk about the various successes 
that come out of Silicon Valley, but what we don't often do is 
talk about the number of failures that occur. And so one of the 
things that has to happen is we have to not only come with the 
plan that has been described and the appropriate due diligence 
to support that plan, but we also have to be willing to, if we 
want to push the envelope, if we want to have a capability that 
is not the current state of the art that our adversaries have 
or have access to, but if we are willing to push the envelope, 
there has to be some acknowledgment that there is risk 
associated with some of these experiments.
    And that culture, not just here, sir, but within our own 
service, within the Department, it has to be something that we 
are able to kind of quantify that risk but also appreciate that 
if you are going to push the envelope, there will be times 
where it doesn't come to fruition.
    Mr. Miller. I think most of us recognize that there is a 
need to take the risk, and I think we are willing to do that. I 
think the issue is between risk and waste, and that is where 
the biggest problem, I think--but is it that difficult to go 
through the reprogramming process here in Congress, or is it 
difficult at DOD to go through the reprogramming?
    Secretary Stackley. I would say it is difficult, both 
sides. It is difficult inside the Department of Defense because 
it starts with you identify a need, then you have to identify 
an offset. We don't send over reprogramming requests on the 
Aegis typically, and so it is a fairly long cycle within a 
cycle and it is a tough process.
    And then when it comes over here, it gets the appropriate 
scrutiny. So it is an element of time, sir. And relative to the 
annual budgeting process, which, as we have described is about 
2 years from the identification of a need when you actually get 
funding, it is probably half of that. But it is also funding 
that you cannot rely upon in terms of building a plan around to 
go ahead and get started executing. And so it is a degree of 
uncertainty that comes with the process.
    The Chairman. Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman.
    And thank you to the witnesses for the hearing today.
    In the last defense authorization bill, we actually moved 
forward on a series of reforms. And, again, I salute the 
chairman and ranking member for their hard work in terms of 
some of these streamlinings of the acquisition process.
    Another thing to build in was to revisit the National Sea-
Based Deterrence Fund to expand the range of acquisition tools 
available to the Navy as they prepare to move to the next 
critical stage of recapitalization of our ballistic submarine 
fleet, which, again, has been consistently identified as one of 
the top priorities of our national defense. It is also one of 
the highest cost programs that we are facing.
    In the 2016 NDAA, we expanded the fund to include 
authorization of incremental funding authority, economic order 
quantity contract authority, and advance construction 
authority. And, as Mr. Forbes knows, last month, the Seapower 
Subcommittee held a hearing on acquisition efficiency in Navy 
shipbuilding, and CBO [Congressional Budget Office] and CRS 
[Congressional Research Service] testified. Among their 
findings, both experts testified that using the fund with these 
new authorities would generate up to a 10 percent reduction in 
program costs. So we are talking about $100 billion program; 10 
percent is real money. That is almost the equivalent of getting 
12 boats for the price of 11, according to their math.
    So, Mr. Stackley, I just wanted to ask you if you have 
considered the benefits outlined by CBO and CRS in the use of 
the fund as it exists today with the new authorities that were 
enacted in the NDAA 2016 bill.
    Secretary Stackley. Absolutely, sir. First, the Department 
of the Navy greatly appreciates the way this committee has 
worked with us in terms of identifying the challenges 
associated with the Ohio Replacement Program [ORP] and helping 
to put tools in the toolbox to address those challenges. As we 
have discussed in the recent past, the Navy is working closely 
with industry, both Electric Boat and Newport News, in 
structuring an approach to attack the affordability side of the 
equation.
    The authorities that you have put in place, they will be 
extremely helpful. What we need to do is come back with a 
comprehensive approach, a more comprehensive approach, that 
explains to Congress how we are going to use these authorities, 
what the benefit we all receive from that, and how this is 
going to ultimately drive down the costs to recapitalize that 
critical asset. This will be an important part of our dialogue 
in the 2017 budget cycle.
    Mr. Courtney. So in terms of the ORP acquisition strategy 
and budget outlook, the authorities that we enacted last year--
or in the 2016 bill--they are something that your office is 
definitely looking at in terms of that plan that you are 
talking about working with us on?
    Secretary Stackley. Absolutely. The nature of the beast is 
we are still in the design and development phase, and the 
authorities that we are talking about really apply to the 
procurement phase, and so we have lead time in terms of 
structuring. So, for example, when we talk about EOQ [economic 
order quantity], we are all in in terms of EOQ. It is going to 
be a 12-boat procurement. There are certain things, like 
missile tubes, that we are going to stand up an industrial base 
that is going to make 12 boats worth of missile tubes, and then 
it is going to stand down. So if we stretch that out over a 15-
year period, the only thing we know for sure is that will be 
the most costly way to procure missile tubes. So we want to 
look at how do we leverage EOQ type of authorities and then 
batch build the missile tubes in such a fashion that we will be 
buying them potentially ahead of need, but we will be buying 
them in the most affordable manner and with the least impact on 
the industrial base.
    Mr. Courtney. Good. So, again, because that was one of the 
components that we wrote into the law last year, that is 
encouraging to hear that the Pentagon is embracing this. And 
the only observation I would make is that the fund has been 
sort of critiqued in some quarters as sort of a gadget that 
doesn't by itself generate savings, that the authorities are 
really where the money is. But what I would just note is that 
what we were able to do in this committee was to sort of 
package those authorities under the umbrella of the fund, which 
I think really made the legislative process, which has also got 
its own sort of cumbersome challenges, move smoother. So I 
think unpacking them and trying to do it sort of in a one-by-
one process in terms of these authorities is going to 
potentially undermine our ability to keep this moving forward, 
again, in the most intelligent, cost-effective manner possible. 
So, again, thank you for your comments this morning, and we 
look forward in the next coming months to making sure that we 
give you those tools in the tool box, to make sure that this 
program, which is going to be a huge fiscal challenge, gets 
done in the most efficient and cost-effective way possible.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Wilson.
    Mr. Wilson. I want to thank Chairman Mac Thornberry for his 
promotion of acquisition reform, experimentation and agility. I 
believe he is really making a difference and with your help.
    In particular, Secretary Stackley, what lessons can you 
draw from the experience of building a prototype laser weapon 
system on the ship Ponce that might illustrate the value of 
prototyping as well as the limitations?
    Secretary Stackley. Yes, sir. Thanks for the question. The 
laser weapon system on board the Ponce, size-wise it is what we 
would refer to as a 30-kilowatt [kW] system, so it is probably 
at the lower limit of lethality. But what we are able to do by 
experimenting with IT is to understand, how does the laser 
perform in a maritime environment, which has always been a risk 
with this type of technology? We are learning, what do we need 
to do to scale up from 30 kilowatts up to notionally 150 kW, 
which is a more lethal size weapon system? What does that mean 
in terms of shipboard, space, weight, power, and cooling 
requirements? What is the performance of the system against 
moving targets, both fast-moving surface targets, as well as 
aerial targets? And then what is the ship system and, most 
importantly, the operator perspective in terms of utilizing 
this and coupling it with other self-defense capabilities on a 
ship?
    Our next step is today we are taking the lessons learned 
from the Ponce, and we are evaluating and exploring a 150-
kilowatt system to go onboard a DDG-51 class [guided missile 
destroyer] for experimentation and prototyping to determine, is 
that the right size, shape for a system that will provide the 
degree of lethality that we are looking for out of this 
directed-energy system?
    Mr. Wilson. And speaking of systems, the success of a 
nuclear Navy, with submarines, with aircraft carriers, other 
ships, with the reactors that are located, what research is 
being done to promote small modular reactors [SMRs] that can be 
used at military facilities around the world to make them 
independent of electrical grids?
    Secretary Stackley. Sir, I know there are studies that have 
been done on this. I would have to get back to you with a more 
thorough response to give you the results of those studies.
    [The information referred to can be found in the Appendix 
on page 85.]
    Mr. Wilson. The success, again, of the Navy for decades 
should be replicated with SMRs, and I wish you well.
    For each of you, General, thank you.
    Mr. Lombardi, thank you for being here.
    What challenges or limitations do you see from the 
acquisition community in pulling good technologies developed by 
science and technology, S&T, investments into the acquisitions 
programs of record?
    General Williamson. Sir, I would say that is consistent 
with some of the discussion that we have had today in that how 
do I, one, have more awareness of those programs? So the work 
that is being done out in Silicon Valley in terms of exposing 
some innovative companies to our requirements I think is a 
great start. The problem for us is, because I am not completely 
sure, how do I create head room within programs so that I can 
bring those in as I discover them and plan for them? I think 
that is the biggest challenge for us right now, is 
identification and then the ability to have enough agility to 
fund them as we discover them into a program.
    Mr. Wilson. I am glad you mentioned Silicon Valley. I am 
very grateful for the efforts of Secretary Carter working with 
Silicon Valley to address the challenges of cyber warfare and 
conflict.
    Secretary.
    Mr. Lombardi. Yes, sir. I think, as we have talked before, 
is the importance of being able to bring together the 
technologists and the operator early on to really kind of 
understand where the real investments need to be in S&T to take 
care of near-term needs, but also look at where the long-term 
gaps are and where we need to be investing our S&T dollars. So 
I think by virtue of us being able to start more 
collaboratively bringing in the operator and the S&T with the 
acquisition community, we can start being able to bridge that 
gap.
    But there is still, as we tend to call it, the ``valley of 
death'' going from S&T to a program of record. And by virtue of 
bringing the teams earlier together--because, as I said 
earlier, development and planning to us is a team sport, and 
you have got to be able to work together to determine whether 
the emerging technology can actually take care of the given 
need; are there CONOPS that can be done, or do we actually need 
to do increased investment? And that in turn helps them on the 
development of their requirements for us to be able to turn 
that technology and bring it forward into the program of 
record.
    Mr. Wilson. Thank you.
    The Chairman. Ms. Tsongas.
    Ms. Tsongas. Thank you, Mr. Chairman, and thank you to all 
of our witnesses today. And in particular, I would like to 
welcome you, Mr. Lombardi. As we know, I came to know you in 
your work at Hanscom Air Force Base, and it is great to see you 
here in this new capacity. I appreciated very much the work we 
were able to do then, and I know coming from the Massachusetts 
environment, you do recognize the opportunities presented by 
working with the academic communities as well as the private 
sector and the federally funded research facilities and the 
opportunities that that creates given the rapid-change 
environment we live in.
    I wanted to revisit some of your testimony and what you 
talked about the Air Force's efforts to contract with companies 
that have not traditionally worked with the services. I know 
this was a pilot project that actually took place at Hanscom. I 
am just curious as to what your experience was with this type 
of outreach, and what are some of the best practices and 
lessons learned that came as a result? Given the universe of 
companies that are out there, I am also curious as to how you 
identified and solicited those companies to become part of this 
effort.
    Mr. Lombardi. Yes, ma'am. As I mentioned--and you are 
correct that this was all done as part of the team up at 
Hanscom, the PEO [program executive officer] up there, Steve 
Wert, as you are well aware. The DCGS program, what really 
helped us in being able to reach out to nontraditional 
companies was actually the fact that we had gone in and opened 
up the architecture with respect to the DCGS system. And by 
virtue of doing that, that opens up the capabilities of really 
going out to the nontraditional players because oftentimes, the 
nontraditional players are the ones who are going to provide 
you near-term really relevant applications or smaller 
components or anything. And so in the case of the DCGS, what 
was really interesting on this was that we were able to take a 
process that was actually--our DCGS is actually a system that 
takes in the intelligence and disseminates it out. It is 
disseminated out to not only our U.S. forces, but also 
coalition forces, and so the security levels are different. So 
what was happening was is this was a manual thing that was done 
over a half hour to an hour to be able to essentially take out 
elements of the reports to make sure it met each of the 
different players, different partners, and so by virtue of 
doing this application, we were able to get that work done in a 
matter of 30 seconds.
    Ms. Tsongas. But how did you identify the people you 
brought into this effort? How did you reach out to them?
    Mr. Lombardi. By virtue of going out and doing this as 
``other transaction authority,'' we were able to reach out to 
and build a consortium, and of that, the consortiums were all 
playing together, and the consortium was built with traditional 
and nontraditional players. And by virtue of that, then they 
started teaming together, knowing where the real capability of 
each were, and it came together into--as I said, there were 
originally 19 different companies, but they then went into 
about 13 teams. And, ultimately, we have got us down to 
awarding of two. So it was really the use of the other 
transaction authority that allowed us to reach out to 
consortiums that were building upon themselves in this matter.
    Ms. Tsongas. And this was an experiment, so you weren't 
really wrestling with the companies' concerns that Mr. Stackley 
referenced about nontraditional defense companies that don't 
know how to wrestle with the data rights issues or are 
concerned about them or the oversight issues. It was really 
more an experiment that sort of put those things aside?
    Mr. Lombardi. It was an experiment from that standpoint, 
but I think there is an opportunity here and particularly as we 
look at more and more of our systems having this open 
architecture approach, where we will be able to reach out and 
get to people who are really more of the nontraditional players 
because, in that case, we are going to actually own the 
standards. We are going to own the interfaces. We are going to 
own how everything is integrated in together. So by virtue of 
doing that, we can reach out to a better population of players 
to be able to support us.
    Ms. Tsongas. And you are taking this into account as you 
formalize this process and broaden it?
    Mr. Lombardi. Yes, ma'am.
    Ms. Tsongas. Thank you.
    I yield back.
    The Chairman. Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman.
    Mr. Lombardi, now the focus of this hearing is on 
experimentation, agility, and ultimately delivering combat 
capability to our men and women in the field. With that in mind 
and for over six decades, the Air Force's Big Safari program 
has been an extraordinarily successful, agile organization, and 
it has in the past been a go-to organization when capability 
was needed in a short amount of time.
    Yet it appears over the last few years that that sort of 
agility has come under some stress, and Big Safari is operating 
more like the mainstream organizations rather than trying to 
leverage and replicate that agility into those organizations. 
As one example, we understand that the contracting function has 
been moved out from under their organization, just as it has 
been across the rest of the Air Force. It would seem to many 
that aligning all elements of program execution under a single 
entity would make more sense.
    Looking back on what made this program successful, isn't 
the Big Safari program a model for some of the acquisition 
reform that we clearly need and are looking for now, and is 
this an acquisition culture model that we need to fully protect 
and to foster?
    Mr. Lombardi.
    Mr. Lombardi. Yes, sir. Big Safari has and continues to 
provide great capability for our Air Force and our warfighters. 
And you are right; the model has been one that has been very 
agile to be able to provide capability out to the warfighters 
in a very rapid pace. It is a model that we should continue to 
foster. I will have to get back with you, sir, with respect to 
the taking of the contracting element out of the Big Safari 
area, if you don't mind, because I would like to be able to 
study that a little bit further and understand what were the 
reasons associated with that.
    Mr. Turner. I would appreciate that because, obviously, if 
you look at its success, we don't want to diminish that success 
as we might look to it as a model.
    Mr. Lombardi. Yes, sir. Let me look to that, and I will get 
back to you.
    [The information referred to can be found in the Appendix 
on page 85.]
    Mr. Turner. Thank you.
    The Chairman. Mr. O'Rourke.
    Mr. O'Rourke. Thank you, Mr. Chairman, and I also want to 
join my colleagues in thanking you for your leadership on this 
issue. It is a very difficult one and one on which the Congress 
has worked for a long time, and I hope that with your 
leadership and that of the ranking member, we will continue to 
make some progress this year. There were a number of obstacles 
listed by both the chairman and the ranking member as to why 
acquisition reform has proven so difficult.
    One that was omitted, I believe, was the influence of the 
defense contractors themselves. We know that in 2014, which is 
the last year for which we have full data, they spent $70 
million to influence the decisions that lawmakers make, and I 
think that is a factor. I don't know how large a factor. We can 
measure what they spent. I don't know what its effect is on the 
ultimate decisions, but it is a factor, and I think that needs 
to be included in the calculus for reform. And I would link 
campaign finance reform to military acquisition reform. I think 
those two things are important, and I would welcome any 
comments on that.
    However, I would like to ask a question about a different 
area, and it gets back to another issue that has been raised in 
today's hearing so far, and that is allowing the military the 
freedom to experiment and the freedom to fail in order to 
better guarantee innovation and success down the road long 
term.
    General Williamson, I would like you to talk a little about 
the Network Integration Evaluation, or NIE, and the Army 
Warfighting Assessment, or the AWA--one which looks at programs 
that are programs of record and the other that allows the Army 
to experiment with programs that are not programs of record--
and how those two work together to satisfy the concern that 
many of us have raised and you have pointed to. I think I heard 
you say that we are looking for early, more experimental stuff, 
not necessarily connected to programs of record, not 
necessarily connected to identified gaps, but those kind of 
things that may appear in the future unbeknownst to us now.
    General Williamson. Sir, thank you for the question. This 
is one that I think as an Army we are very, very proud of in 
terms of the development of both the network integration 
exercises and the new warfighting assessments. So what we 
discovered in 2011 is that, as we were deploying capability in 
the theater, we found that even though we were finding the best 
of breed, whether it was a radio or a system, the integration 
was happening in the field in combat, and what we really needed 
was a venue to make sure that all of the pieces worked 
together. So the start of the NIE really was focused on 
integration. But at the same time we were doing that, sir, we 
really discovered that we did not have a good operational venue 
to look at new capabilities, get the warfighter to touch them 
early on and influence the requirements process and to make 
changes, refinements, in the requirements.
    So the network integration exercises quickly evolved from 
pure integration to also looking at, what is the effect of 
introducing this new technology? Because here is what I would 
offer to you, is that in some cases, it is not a new thing; it 
could be a new use for an existing technology. And how you do 
tactics, techniques, and procedures, how you organize your 
unit, all of those things have an effect on, am I increasing 
warfighting or the power of that unit?
    So as we discovered that, the NIEs really were technically 
focused, and we discovered that we needed to also spend more 
time reaching out and looking deeper, further out. What 
capability do we need 5 years, 10 years, 20 years from now, and 
the warfighting assessments that we are now implementing give 
us that capability.
    And, sir, to your point, this is really what is so 
important about what we are doing, is that that information 
comes back, and it influences not only current systems, but it 
also sets the conditions for the requirements documents that 
are more realistic in terms of what is really needed. I think 
this is something that did not exist. We did small pockets, but 
the center of gravity for us is a brigade. And even though this 
is resource heavy, we dedicated an entire brigade to have these 
experiments and to do these integration exercises. We are very 
proud of what they have accomplished.
    Mr. O'Rourke. Thank you.
    I yield back.
    The Chairman. Chairman Kline.
    Mr. Kline. Thank you, Mr. Chairman.
    Thank you, gentlemen, for being here. I heard a couple of 
you, I think Secretary Stackley and Lombardi, saying that they 
were confident that we could reduce some acquisition time, and 
you were on the right track for making changes. And that is 
good, but I am probably pretty skeptical. I certainly hope we 
can reduce the time and be more flexible and be more agile. The 
history just doesn't show that. Everybody in this room--and 
even Frank Kendall, who is not in this room--everybody kind of 
knows what you have to do to speed this up and understands it 
is going to be very difficult to get there because we can't do 
every program with the Skunk Works. We just can't do it.
    So we are looking for ways that we can speed up the 
process, streamline it. The ranking member talked about the 
levels of review and oversight within the Pentagon, and then we 
add on top of that. And, of course, we bear some culpability 
for sure here in Congress because if a system is being 
manufactured in our district or an office is in our district, 
it clearly is a key national security interest, and if it is in 
somebody else's district, it is a bill payer. So we understand 
that we are part of the problem, and we need to work on that 
ourselves. I have been pleased to see that you all, the 
Pentagon, and industry has been smarter and smarter in making 
sure that some major component is built in everybody's 
district, so that makes it a little bit easier because whatever 
that component is, is a key national security interest, and 
therefore, we are going to do our part to protect it. That is 
the way our job is because we are looking to protect jobs in 
our district.
    I want to go back for just a minute to the ever-name-
changing Marine Corps expeditionary fighting vehicle. I 
remember very well because I put it there in POM 1990 in an 
earlier life. We could not afford that vehicle, which was 
called the Triple A back then, so it was always in the last 
year of the POM. When people, my successors came, it kept 
coming, and it kept going the last year of POM, and we couldn't 
afford it. It took every nickel of procurement Marine Corps to 
buy that one item, and yet it stayed in the POM year after year 
after year, until finally reality caught up, finally.
    So part of this is, we need to live a little bit more, in 
my judgment, in the world of the possible, in a reality. If you 
can't afford it, you know you can't afford it, then why are you 
expending all of that energy? And I am raising my hand; I was 
guilty. I put it right in there because I was told how 
important this was. We need to do a better job--we 
collectively--we here and certainly those of you sitting at the 
table. When you are living, as we are now, in an uncertain 
budget time--I would argue we are always in an uncertain budget 
time--let's don't put our energy into doing something that we 
cannot afford and are not going to be able to afford. My 
argument to you is that is where that Triple A, which then 
became the expeditionary fighting vehicle and something else 
now, you couldn't buy it. If you took every procurement dollar, 
every procurement Marine Corps dollar--that is what it took--
you couldn't buy another thing. You couldn't buy a single 
rifle, nothing.
    I think that is part of this process. We all know that the 
JROC [Joint Requirements Oversight Council], the whole 
requirements process is cumbersome, and I have heard you use 
today words like ``long cycles'' and ``long cycles within 
cycles.'' It seems to me that is what we are trying to get at 
here. We are trying to find ways to make those cycles not so 
long cycles and make them not so cumbersome and get rid of some 
of the layers of bureaucracy that go here.
    I can never fix the fact that Mr. Turner is going to worry 
about some office or some production in his district. I guess I 
could worry about it, but I can't change it. But these 
processes, these bureaucratic processes--processes--we need to 
be getting at, and I know we want to do everything we can to 
clean that up as much as we can. And we have just got to stop 
doing business the same old way. And I know you know that, and 
you are trying, and if there is something in statute that needs 
to be changed, that is what we want to hear from you because we 
want to help you.
    I yield back.
    The Chairman. Mr. Langevin.
    Mr. Langevin. Thank you, Mr. Chairman.
    I want to thank our witnesses, Secretary Stackley and 
General Williamson and Mr. Lombardi. Thank you for your 
testimony and for the time and attention you are putting into 
this area.
    Obviously, we all consider acquisition reform critical if 
we are going to continue to maintain our technological edge 
going forward, as well as make better use of taxpayer dollars. 
We have often heard it repeated that the U.S. risks losing 
military technological superiority across a variety of domains 
if reforms are not made to improve the DOD's acquisition 
process. So do you believe that the current acquisition process 
does take so long that the technology actually becomes obsolete 
by the time it reaches the warfighter? On balance, is that what 
is happening today given----
    Secretary Stackley. Let me describe it this way, sir, is 
that the pace of technology is it is outpacing our current, 
recent history of acquiring capability. You pointed out the 
acquisition process. When I think about the acquisition 
process, I think about everything from the start of defining a 
requirement to the back end of fielding the capability and 
supporting it in service, as opposed to that thing in the 
middle that sometimes people refer to that is associated with 
contracting actions.
    It is a long and lengthy process, and much of the theme of 
this hearing, talking about how do we jump-start this, how do 
we accelerate it, much of the theme of this hearing is about 
taking risk upfront to try to accelerate that requirement's 
definition, the understanding of the requirement, and the 
maturing of the technologies. Let's take that risk upfront to 
try to collapse down some of that timeline. And then when we 
shift over to a more traditional development and production 
phase, then we are starting at a much more mature level, much 
better understanding of what we have to build and can, in fact, 
accelerate that at the same time.
    Mr. Lombardi. Sir, I would also add to that and, again, I 
think one of the key attributes that will allow us to speed up 
in some areas will be, again, use of modular open systems 
architecture, which will allow us then to build in the 
opportunities that as emerging technology becomes available, 
that we will be able to integrate it more easily into the 
systems that we have already developed.
    Mr. Langevin. I think it is obviously critically important 
in areas in particular where procurement timelines often don't 
align with budget timelines, such as cyber, which moves pretty 
rapidly. Let me turn to, can you discuss the effectiveness of 
the DIUx initiative and In-Q-Tel initiatives improving access 
to industry and overcoming transition challenges? I know you 
have touched on those topics this morning, but I would like to 
get an update on how they are working at this point.
    General Williamson. So, sir, I would like to start. I 
should be dancing on the table in regards to the kind of access 
and exposure that we are starting to see from both DIUx, but 
also the engagement with In-Q-Tel. I just recently spent 
recently an afternoon with the folks at In-Q-Tel and just the 
introduction to the innovative companies that, quite frankly, I 
had no situational awareness on and their interest now in 
coming into the defense space I think is going to pay 
tremendous dividends.
    But I really discovered, though, from the DIUx side is 
this, I would call it a gap, quite frankly, between the 
companies out there who have not operated in the defense space, 
the normal defense space, and their understanding of the types 
of products, the wide range of products that we build. So we 
have this perception of social networking and software only, 
but I would tell you that their engineering talent is 
sufficient--it is significant, rather. So I think that we have 
just started to break ground, and part of this effort is to 
continue to expose them to the types of requirements we have. 
If there is a challenge, it is one that was stated earlier, and 
that is, so historically we have not been great customers. 
Their cycle times, their business processes work much faster, 
and as a result, it is difficult for them to understand the 
time it takes for us to get to yes and start building 
something. So it starts with exposure, and I think what we have 
to do on our side is make sure that we are tightening up some 
of the lengthy processes that we have.
    Mr. Langevin. Thank you.
    The Chairman. Thank you.
    Mr. Rogers.
    Mr. Rogers. Thank you, Mr. Chairman.
    Mr. Lombardi, I would like to talk to you about the Defense 
Meteorological Satellite number 20, which the Air Force 
affectionately refers to as DMSP [Defense Meteorological 
Satellite Program] 20. Back in 1997, the Air Force paid 
industry to build this DMSP 20. Then they promptly put it in a 
storage facility for so long that the Air Force ultimately had 
to pay industry to upgrade it because it was antiquated. All 
the while, you paid millions of dollars a year to keep this 
satellite in storage. In all, the Air Force spent well over a 
half a billion dollars of taxpayer money on this satellite, 
$518 million to be specific. Then, in 2014, the Air Force told 
Congress that it no longer wanted the satellite and wanted to 
scrap it. Then they came back last year in 2015 and said: No, 
we have become too dependent on Russia and China for this 
meteorological information; we need to launch the satellite.
    Well, unfortunately, Congress had lost confidence in the 
Air Force's ability to manage this program.
    Mr. Lombardi, we spent $500 million that could have been 
used to support national security. Instead it is going in the 
trash. I presume it is going to be made into razor blades. We 
could have saved the Air Force and the Congress a lot of 
aggravation if we had 18 years ago put a half a billion dollars 
in a parking lot in a pile and just burned it.
    So my question is, why should we have any confidence that 
the Air Force can manage space programs when we look at this 
example, and what did we learn from this situation?
    Mr. Lombardi. Sir, I would tell you that the Air Force 
truly does understand the space business and understands how we 
need to operate in space. The DMSP 20 example that you put out 
is an unfortunate one in which you are absolutely correct, is 
that we have at a point where we are not able to be able to 
execute that satellite. But I would tell you that the Air Force 
has a tremendous understanding of the entire space business, 
and we are dedicated to be able to continue to provide that 
capability for our Nation.
    Mr. Rogers. You haven't convinced us, and this is a perfect 
example.
    In these times of austerity, when we are just struggling 
trying to keep the Pentagon funded--and this committee fights 
with the Congress constantly, trying to get adequate defense 
spending--this kind of example kills us. This is just an 
inexcusable waste.
    But now moving on. And this is to any of the witnesses. We 
have seen a number of cases where innovative acquisition 
approaches have led to quick, very effective procurement of 
desperately needed capabilities. One of the best examples is 
the public-private partnerships allowed to build military 
family housing with minimal upfront investment from the 
taxpayer. We have also seen energy savings performance 
contracts that have allowed us to build modern buildings and 
leverage long-term energy savings with minimal upfront taxpayer 
dollars. How can we extend these types of innovative 
arrangements? Are there new types of innovation you believe are 
needed, and most specifically, what statutory authority do you 
need to ensure these type of arrangements receive fair 
consideration?
    Secretary Stackley. Let me start. I think we referred to 
DIUx as an example of how we are trying to explore greater 
access to innovation, where we are trying to engage with a 
sector of our commercial technology, nontraditional for 
defense. We get a better understanding of what makes them 
successful, better understanding of what leading-edge 
technologies are in their hands that could provide great 
military utility, and perhaps more importantly is establish a 
longer-term relationship with this sector.
    Now in doing that, we have got to overcome some challenges 
in-house. When we take commercial technologies and then try to 
convert them to a weapons system, we have different standards. 
That is really underlying much of the challenge that we deal 
with today when we talk about innovation. There are very few 
instances where we can just take a commercial technology and 
carry it into war. But on the other hand, we have to take a 
hard look at the standards that we apply for our weapons 
systems to ensure that we are not placing excessive technical 
burden that would preclude----
    Mr. Rogers. You are missing my point. I am talking about 
taking creative approaches to financing program procurement. 
One of the things that I am hearing is that--CBO as well as the 
OMB [Office of Management and Budget]--is the problem in 
scoring, that we had to statutorily change the law so that the 
military housing could be built by private money and paid for 
over time. I guess I am looking for do you think we need 
statutory change to try to approach procurement with financing 
over a long period of time instead of paying for it in 1 year? 
Do you need some legislative authority to do that? My time is 
up. If you could respond in writing, I would appreciate that.
    Secretary Stackley. I would just very shortly say that I 
don't think there is a broad brush, but I think what we need to 
do is have a discussion about the specifics of examples or 
initiatives that we want to attempt because there are very 
clear cases where scoring does stand as an impediment, and we 
would like to bring the case.
    Mr. Rogers. Thank you very much.
    The Chairman. Ms. Sanchez.
    Ms. Sanchez. Thank you, Mr. Chairman.
    And thank you, gentlemen, for being before us. In reading 
through your statements and listening to some of what you have 
said, I am gathering that you are asking for more leeway. You 
are asking for more money. You are asking for less--not 
oversight--but less restrictions or requirements on how you 
spend the money. I am probably one of the few members here that 
gets to take a look at a lot of our classified programs where 
we spend, for lack of being able to talk about it in open 
session, billions and billions of dollars, where you have an 
incredible amount of leeway, lots of money, of ability to make 
prototypes, where it is okay to fail on our programs because we 
are investing for the future. We are trying new technologies. 
We are making new technologies. So if we would do that with 
more of our budget, if we would have more ability to fail, have 
less restrictions on the money, I think that I would see that 
as the American public seeing a lot more big failures from both 
our Pentagon and our military-industrial complex, which I think 
would undermine the confidence that Americans have in what we 
are doing with respect to defense.
    And I have only to note, Mr. Chairman, the F-35 program, 
which was a very open program where we tried new things, like 
concurrently doing the development at the same time that we 
were producing the product, which led to $700 billion overrun 
and 7 years late, and we still have a lot of problems with it.
    So I am trying to understand why you want more leeway. I 
think we need to have actually more oversight. I think we have 
to have a real audit of the Defense Department. I believe we 
really need to tighten down in a tough budgetary environment 
and make real choices. Choices aren't necessarily yours. They 
are what we do in the Congress. That is what we are supposed to 
do, but I would like you to speak to why advocate for more 
relaxation of requirements and regulation on how we ask you to 
spend this money?
    Secretary Stackley. Let me start, ma'am. First, we are not 
asking for more money.
    Second, it is not that we are asking for more leeway and 
fewer restrictions. What we want to be able to do is increase 
the degree of prototyping and experimentation that we can do 
and to shorten the timeline for developing our major weapons 
systems. And we want to use this limited amount of prototyping 
and experimentation to determine if we are on the right track 
for a technology or a specific technical solution to our 
warfighters' problem before we launch into major investment of 
dollars.
    So we are not proposing to invest large--first off, to 
raise the top line, invest large dollars, and put great dollars 
at risk. We are talking about a limited amount of funding to 
determine before we invest the large dollars, before we come to 
the Congress and ask you all to authorize and appropriate those 
dollars, to see if we are on the right track.
    And we are absolutely committed to doing this in broad 
daylight with the Congress so you have full insight and 
oversight to our efforts.
    Ms. Sanchez. So, therefore, you would agree that doing 
something like we did with the F-35, where we were concurrently 
developing it and at the same time producing it, is not the way 
to go, to stop going toward a major system until we do a little 
prototype of it? Is this what you are suggesting, sir?
    Secretary Stackley. I am absolutely not suggesting that we 
should be increasing the amount of concurrence that we do in 
terms of development and production at the same time. What we 
want to do is reduce the risk, mature the technologies before 
we get into that environment, make sure we are on the right 
track.
    We are, in fact, doing this today in limited cases. What we 
want to do is make this a greater part of our practice. The 
limited cases where we do it, we find success, and we simply 
want to make that a greater part of our practice.
    Ms. Sanchez. Well, I will have to think about that because 
when I look at the classified arena, we, as you know, have a 
lot of failures in going forward with some of those prototypes. 
So I don't know that we would want to do that----
    Secretary Stackley. Yes, ma'am. What I would be happy to do 
is come back and walk through some examples of the prototyping 
that we have done that has proven successful and how we move 
from that to the next step, what that means in terms of 
dollars, what that means in terms of the process that we use 
and why it makes good sense. And how can we the Department 
working with the Congress ensure that we are achieving our 
mutual objectives in terms of time, in terms of money, in terms 
of delivering capability, insight, and oversight.
    Ms. Sanchez. Chairman, I thank you, first of all, for the 
time. I think this is a very important issue for our committee 
to really take a look at if this is what we are become asked to 
do, and I think it would be very important also to get that 
briefing from a classified perspective to see the paths we have 
gone and have failed on because I think that is also a good 
indicator.
    The Chairman. There is good, bad, and ugly examples in the 
classified arena, just as in the open arena.
    Ms. Sanchez. Thank you, Mr. Chairman.
    The Chairman. Mr. Wittman.
    Mr. Wittman. Thank you, Mr. Chairman.
    Gentlemen, thank you so much for joining us, and thanks for 
your service to our Nation. I want to begin by laying out what 
I think the landscape is today in acquisition in the United 
States military. We look at our adversaries, and we look at how 
they can deliver systems, how they can deliver innovation and 
creation through new technology, and they start out with a 
blank sheet of paper, with no impediments. When we start out, 
we have a bureaucratic structure that starts out with a paper 
full of noes. No, you can't do this. No, you can't do that. You 
can do it this way, but you can't do it that way. And when we 
end up in that environment, things become risk-averse. No 
failure is accepted. And that is a fault not only within DOD 
but also here on the congressional side, and we stifle the 
innovation and creation that we need in order to keep up with 
our adversaries because they don't have those impediments.
    We operate in a structure today where the nirvana is to 
become a program of record. Instead of saying no, the nirvana 
needs to be to get technology to the warfighter as quickly as 
possible. So we are lacking innovation and creation and getting 
it there in a timely manner. The question then becomes, is how 
do we make that happen? We have all talked a lot about process 
here, and process is important, but let's not forget the 
purveyors of process. That is people. How do we empower people 
to make decisions, to not be so risk-averse that they say, 
``Listen, it is better for me not to make a decision than it is 
to make a decision where there is a risk or where there is a 
mistake that is made'' and we quickly correct that mistake? How 
do we empower people to make sure that they are on both ends 
accountable and we give them the authority to say either say, 
``No, this isn't working, let's take a different direction,'' 
or, ``Yes, this is working,'' or we see something out there off 
the shelf that we can immediately put in the hands of the 
warfighter to make them more successful? I would love to get 
your perspective on, how do we go through that empowerment 
process to create accountability and authority in the hands of 
those people that are making things happen?
    Secretary Stackley. Let me start. I think we are on that 
journey. I think we have been on that journey for 40 years or 
longer. It is a constant challenge. I am a former program 
manager, and I understand what the limitations are. I 
understand what the pressures are. I understand what the 
authorities are in the hands of our program manager, and he is 
really at the nexus. Nobody above him understands the details 
as well as he does--he or she does--and nobody below him or her 
understands the broader picture associated with our 
requirements, budgeting, and procurement processes. So how do 
you empower them? First and foremost, make sure they are 
qualified. Make sure we have got the best people assigned to 
those positions. In fact, one of the things that we have done 
is we are double pumping some of our program managers. I am 
taking a program manager, the Virginia-class submarine program 
manager, who served for 4 good years in that job. He is 
rewarded by becoming the Ohio Replacement program manager 
because that is our number one priority, and, by God, that is 
not a training ground. I want somebody that has been proven 
successful. So he is in place there, and you know what he has 
overseeing him, he has got me and the CNO. And we sit down 
regularly with him to understand the path that he is on to 
ensure that he has, one, our full support and the weight of our 
positions behind him so that the organization is responsive to 
him and, two, to make sure that he is on the right path.
    So empowerment means first and foremost having qualified 
people in the positions, and we are working on that across the 
board. And, two, it is ensuring that the authorities, that 
accountability, that the line of accountability is clear and 
unambiguous, from the program manager [PM], PEO, the 
acquisition executive, service chief, and the DAE [defense 
acquisition executive], so that the weight of those offices and 
not the staff surrounding them, is supporting the PM as opposed 
to impeding the PM.
    General Williamson. Sir, I would just like to add a couple 
of comments to what the Secretary said. Again, you start with 
making sure that you have a person who has been developed. But 
there is also this notion--I keep coming back to this notion of 
risk in the culture. So I am one of those people that actually 
managed a program that some would consider to have been a 
failure, but what we did, what I did was applied the due 
diligence, followed the process where appropriate, and 
challenged, also where it was appropriate. The difference is 
that I am sitting here today. So at the end of the day, you 
can't hatchet someone who has done the right thing, and as an 
organization, as an enterprise, we have to make sure that that 
is conveyed to our folks, that you have to be willing to take 
risk, but it has to be measured risk. I don't want people 
rolling the dice. I want people to collect data, be able to 
support that data, and then execute to the best of their 
abilities, and so that culture has to become a part of what we 
do.
    Mr. Wittman. Thank you, Mr. Chairman.
    I yield back.
    The Chairman. Thank you.
    Ms. Duckworth.
    Ms. Duckworth. Thank you, Mr. Chairman.
    Gentlemen, thank you for being here. Headquartered in my 
district is Northrop Grumman's electronics systems division, 
and every time I visit the facility to see what they are 
working on, I am always impressed by how well they have 
leveraged the open architecture concept in what they are doing 
from everything that they build from cockpit upgrades for Black 
Hawks, to an array of surveillance systems, targeting pods, 
electronic countermeasures. Everyone's testimony today has laid 
out the importance and the value of employing open architecture 
systems and how it is currently being used.
    But beyond that, Mr. Lombardi, perhaps you could start 
because in your testimony you say that despite all the great 
work the Air Force has underway to enable modular open systems 
architecture within our systems, to capture the full value of 
an open architecture system, we must look at new approaches. 
Could you share with us what these approaches are and how this 
committee could be helpful in enabling this approach? And then 
I would also like to hear from the other witnesses too on what 
needs to change within the acquisition system to better enable 
this open architecture approach?
    Mr. Lombardi. Thank you, ma'am. In my statement, what I was 
really referring to was with respect to more of our systems 
that are more application-centric systems that have an open 
architecture associated with that, and so really it was 
changing the dynamic of using other transaction authorities to 
be able to reach out and build a consortium where we could 
actually reach out and get people who traditionally don't play 
in our business, and so that was really what I was referring to 
with respect to we need to look at--it is another approach. It 
won't work for everything, and we know that, but there are 
certain conditions in which having OTA [other transaction 
authority] type of acquisitions will work because it will allow 
us to broaden out where we are able to look for the right kind 
of vendors to be able to provide us the right kind of 
capabilities.
    Ms. Duckworth. Okay.
    General Williamson, perhaps you can address more directly 
what you think we can do to make open systems use a priority 
where appropriate in the design of weapons systems, and what 
are the impediments?
    General Williamson. Yes, ma'am. I am going to give you two 
words. The first one is communications. That is the 
communications with industry, and that is the communications 
internally within your service for all of your programs. You 
have to make sure you are communicating what those standards 
are. As important as that word is, the real one is discipline. 
So just declaring that you have standards is insufficient. So 
everyone today, so it is very interesting, everyone today talks 
about open systems architecture. I don't think there is a 
requirement for anyone to tell us to use open architecture. You 
really have to do that. If you want to do things so that you 
have a growth potential, if you want to have competition in the 
future to bring in components very quickly, you have to start 
with an open architecture. Where I find difficulties is when we 
talk open systems architecture, but then we will find a 
component or a thing that we really like that is proprietary, 
and then we adjust for that. And so you have to have the 
discipline.
    And the example I would use is something like Google. So 
what is very interesting is when you look at all those apps 
that are out there, there are hundreds of thousands of 
applications that are built every single day, every year, but 
there is a standard. If you want to build an app and you want 
that app to work in that environment, you follow those 
standards, or you don't get to play. We have to have that 
discipline within our own organizations, not just for the 
current systems but for future systems. And industry has to 
believe that we are going to stay with those standards.
    Ms. Duckworth. Good point.
    Mr. Stackley, do you have anything to add?
    Secretary Stackley. Yes, ma'am. I described in my opening 
remarks the Acoustic Rapid COTS Insertion program that the Navy 
launched into. Because we could not afford to upgrade our 
submarine combat systems and the threat was outpacing us, we 
had to break that model. So we took an incumbent that had a 
sole source on our combat systems, and we broke it up. Now, 
that was tough because the software is the key. It is not just 
a hardware issue; it is a software issue. It took time to break 
up the software, open it, and then make it accessible to third 
parties to be able to compete and bring the technologies that 
we needed to advance our capabilities to where they are today 
and need to be. That model became the model for all of our 
systems. And so today our standard is, in fact, we have an open 
systems architecture standard that we drive into all of our 
programs. We have been on this path for about a decade. The 
challenge is the legacy systems. And those we upgrade by--we 
convert to open standards through the upgrade path. When we 
upgrade our existing systems, we look to open up at least that 
portion of the system so that future upgrades and third-party 
access to bring capabilities is made possible.
    Ms. Duckworth. Thank you.
    I yield back, Mr. Chairman.
    The Chairman. Thank you.
    Dr. Fleming.
    Dr. Fleming. Thank you, Mr. Chairman.
    Mr. Lombardi, I have a question for you, sir. I was 
interested to learn about the example you gave in your 
testimony regarding the communications and situational 
awareness systems developed by Air Force's S&T Program at the 
request of 20th Air Force and Global Strike Command. Could you 
please describe that particular effort and what was learned 
from it?
    Mr. Lombardi. Yes, sir. Well, what that was, was again, as 
we were going out to--having the capability to monitor out into 
our missile fields, and so what this was able to do was provide 
a network between the UH-1 helicopters, the ground teams in the 
vehicles, and also at the sites themselves, to be able to 
communicate in a better fashion, in one in which a network that 
was a very capable network that we would be able to keep people 
informed of any incidents that were happening along any of the 
routes. And so it was something that our S&T folks put together 
in a very rapid instance and everything. And so as what we have 
learned from that is that, again, we can put out those self-
generating types of networks on a regular basis and do it 
relatively easy. The issue long term we have to do is to make 
sure that as we do that, how do we develop out the 
sustainability and the support structures for those? And so 
that is the learning that we have to do is our S&T community 
does a great job in being able to provide rapid capability in 
certain instances, but then we have to figure out, how do we 
make this into a long-term, sustainable type of a system? And 
it causes all the ``ilities'' that you have to have with 
respect to that--the supply chain, all the sustainability and 
so forth. Those are the things we learn as we deploy those 
types of things. And then we test that, so it was something 
that we could use to continue to refine that capability, and so 
the lessons from that go back into the laboratory for them to 
then look at a next generation as we look to move forward into 
the future.
    Dr. Fleming. So this situational awareness technology would 
be the ability to talk and to text----
    Mr. Lombardi. Right.
    Dr. Fleming [continuing]. Ground to air--air to ground and 
throughout the battle sphere, and it would seem that a lot of 
that is off the shelf. It may have to be adapted. Would that be 
the case?
    Mr. Lombardi. A lot of it is, but a lot of it is, as a lot 
of the things that we do, there are a lot of things that are 
off the shelf. The issue is the integration associated with 
that, and that is where a lot of times the real magic occurs, 
is, how do we integrate these types of capabilities together to 
form a system? And so while there is a lot of things that we 
can do to take off the shelf, it is still a lot of the hard 
part is the actual integration to make them into a true system.
    Dr. Fleming. Right. How long was the prototyping process, 
and is there anything in your view that would have helped speed 
up that process?
    Mr. Lombardi. Sir, if I could, I would like to take that 
for the record and get back with you on the exact timeline in 
which we did and if there is something we learned associated 
with that, if you don't mind.
    [The information referred to can be found in the Appendix 
on page 85.]
    Dr. Fleming. Okay. Thank you.
    I yield back, Mr. Chairman.
    The Chairman. Dr. Wenstrup.
    Dr. Wenstrup. Thank you, Mr. Chairman.
    I appreciate you all being here today. I think it has been 
very informative. I want to ask the general a question about 
the defense acquisition workforce, and I give it high marks, 
and I am pleased to see that because it does make a lot of 
sense to me to go in that direction and to have a trained 
workforce.
    And one of the other comments I heard today was concern 
about our access to commercial technology because of the 
bureaucracy. Do you think it would be wise to work within that 
group, that trained workforce, for them to make recommendations 
to, as you called it, a tightening up of the process? I am 
familiar with the process. It is a good set of checks and 
balances, but very time-consuming and there may be steps that 
can be expedited or skipped. Would they be a good source to 
recommend changes there?
    General Williamson. Sir, that is a great observation. You 
know we always want to reach out to the workforce. There are 
two areas that I think they provide a lot of insight. As you 
know, part of what drives the process, part of what drives the 
system, are really two areas: Fairness, how am I making sure 
that this process is fair, meets regulations? And then how am I 
reducing risk throughout this process? So just like on 
production lines out in industry, you should go to the folks 
who are actually doing the work and take recommendations from 
them.
    Now, we do have some feedback mechanisms to do that, but I 
think to your point, that is something that we need to go back 
out. So I think the language that we received in this most 
recent NDAA gives us a lot of opportunities to improve the 
acquisition system. What we have to do is leverage that, go 
back out to the communities and see how we can improve within 
our own selves before we come back and ask for something else.
    Dr. Wenstrup. And I think what is attractive amongst that 
group is there is so much of a crossover of uniformed and 
civilian employees, and maybe some came from the private 
sector, right. And I am asking more than saying. But it seems 
to me that that would be a good mix of people in cooperation 
with the private sector folks. How can we change this system to 
make it still very effective, still reducing risk, but get the 
job done sooner?
    General Williamson. Yes, sir. So I think you are right. In 
terms of the best practices, so your point is a good one that I 
need to make sure I take away. And that it is not just from the 
government civilians that we have as well as the uniformed, but 
we also have defense contractors and other folks who have a set 
of best practices. We always take a look at how we incorporate 
those, but we also have to make sure that we are looking beyond 
our own borders to see whether there are improvements that we 
could make.
    Dr. Wenstrup. Currently, do they have an opportunity to 
weigh in with us, the outside components?
    General Williamson. I get lots of feedback from my industry 
partners.
    Dr. Wenstrup. I am sure you do in one way or the other, but 
I mean in a constructive way.
    General Williamson. I think I would offer that it is 
probably not as formal as I think you are leaning toward. There 
is always a tremendous amount of interaction between program 
managers and their industry counterparts and then across all of 
the functions within a program office. I think what I would 
look at is, how is that done structurally in a more formal 
manner?
    Dr. Wenstrup. Okay. Well, I thank you very much.
    I do have another question for you, Mr. Stackley. I have 
become aware that our only source of domestic enriched uranium 
and tritium, which you know you need to acquire for our nuclear 
subs, the DOE [Department of Energy] is going to shut that 
down, and we will not have a domestic source. Does that concern 
you from an acquisition standpoint?
    Secretary Stackley. Sir, I am actually not aware of that.
    Dr. Wenstrup. I will follow up with you.
    Secretary Stackley. Yes, sir. You might be referring to a 
company called USEC.
    Dr. Wenstrup. Formerly called.
    Secretary Stackley. Formerly called USEC. If that is the 
case, that is a separate issue which I would be happy to 
discuss with you in detail offline.
    Dr. Wenstrup. Okay. We will pick another time. Thank you, 
sir.
    And I yield back.
    The Chairman. Mr. Coffman.
    Mr. Coffman. Thank you, Mr. Chairman.
    Mr. Lombardi, from an acquisition perspective, the past 
efforts of the C-130 modernization program seem to have been 
problematic. For example, DOD's fiscal year 2016 budget 
justification reflects an acquisition cost of approximately 
$4.6 million per plane for the installation of the air traffic 
management upgrade that has already been done for commercial 
and other government variants of the C-130 for under $800,000.
    Can you explain why the government solution is over five 
times the cost, and could this be a good opportunity to look at 
experimentation with existing commercial solutions?
    Mr. Lombardi. Yes, sir, it is an area where we could look 
at experimentation with commercial solutions. And, in fact, I 
believe we are. And what I would like to do, if I could, is we 
would like to come back with you with our plan on how we are 
actually going to upgrade and provide that capability into the 
C-130s.
    We have been out on the Hill discussing with certain 
Members with respect to how we need to modernize and provide 
that capability, and we would like to be able to provide that 
information to you as well.
    Mr. Coffman. Thank you. I look forward to seeing that.
    And then for any of you, for all of you, the protection of 
intellectual property [IP] rights appears to be a significant 
issue in terms of successful adaptation or adoption of the open 
system architecture. How would you suggest a balance be 
reestablished between a DOD structuring of competition and 
industry's business models, including IP rights to recover 
investment in commercial and privately funded technologies?
    Who wants to start with that? Mr. Stackley.
    Secretary Stackley. I will start with that, yes, sir.
    First, when you go to open systems, it is a business model 
and it is a technical model. And the business model brings into 
question the data rights associated. Our view is that if the 
government has paid for the development of software, the 
government should acquire the data rights with that software.
    If somebody is bringing in software to a system that they 
developed, then, frankly, that is a discussion with that 
element of industry in terms of whether or not we, the 
government, feel like we need the data rights to that software, 
and then how would we go about acquiring that with industry.
    So it is a business model. If we pay for the software 
development, we should be acquiring the data rights as we pay 
for that development. If we have failed to do so, for whatever 
reason, and downstream now we need to upgrade or add 
capability, then we are reopening a contractual discussion with 
that contractor in terms of data rights on the software.
    So we have to be very careful that we are not chasing away 
industry when it comes to data rights and intellectual 
property, so we have to do a better job of having that dialogue 
and communication. But if we have paid for it, in fact, we 
should be acquiring the data rights with it.
    Mr. Coffman. General.
    General Williamson. Sir, if I could just add, I just wanted 
to add to what the Secretary said. So what I have discovered is 
that in many cases this gets to the communications piece. I 
have discovered there is a lot of urban legend about what the 
government owns and when you deal with them.
    And so when I talked about this exposure and these 
communications that we are having with nontraditional defense 
contractors, we are finding that there is this myth that they 
are going to lose their IP. And case by case, you have to have 
that discussion. We have to do a better job of communicating.
    And there are some cases where there have been specific 
algorithms, a specific technology that you are bringing that 
you should protect. And if we want it, we should pay for it. 
But you have to get rid of the myth first and understand the 
specifics of what we are talking about.
    Mr. Coffman. Mr. Lombardi.
    Mr. Lombardi. Yes, sir. I think what both of the panel 
members have said is absolutely correct, is that there is a lot 
of dialogue that has to occur to understand really where the 
myths are because we have seen that in the past where people 
will just say that we own the data rights. And as we peel back 
the onion on it, we find out whether we have or have not paid 
for those.
    And so it is really something that we need to continue to 
explore, but it is a real good communication to have with the 
program office and the contractor to be able to really get to 
the meat of where the real ownership of the data really is.
    Mr. Coffman. Okay.
    Secretary Stackley. I will add one thing, and that is, we 
have become much smarter about data rights, and we are having 
that dialogue much earlier in the procurement process so that 
we are not downstreaming while hung up.
    Mr. Coffman. Thank you, Mr. Chairman.
    I yield back.
    The Chairman. I will just add, if it is all a myth, you all 
really do have work to do, and not just on software, because 
the perception in industry--and this comes from some of the 
announcements that Mr. Kendall has made--is that DOD is going 
to suck up all the intellectual property, and they are going to 
own it forever. And it is a real issue. And I appreciate the 
gentleman bringing it up.
    Mr. Bridenstine.
    Mr. Bridenstine. Thank you, Mr. Chairman.
    Mr. Lombardi, according to your testimony, the Air Force 
views experiments as campaigns of activities rather than one-
off events and focused on specific missions such as close air 
support and air superiority rather than specific programs of 
record. In most cases, if experiments are not directly tied to 
programs of record, my question is, how are they funded?
    And as an example, how are you funding the close air 
support experimentation campaign?
    Mr. Lombardi. Yes, sir. In my statement, what I was really 
referring to was our process on developmental planning. And so, 
as I have mentioned before, developmental planning is really 
kind of a team sport where you have the requirements, the user, 
the S&T community, and the acquisition community coming 
together before we even know that there is going to be a 
material solution.
    So, therefore, we are not even sure that there is going to 
be a need for a program of record. What we are really trying to 
do is understand, what is the user's need, and what are the 
best ways to be able to approach that? It may be continuing to 
invest in some areas of S&T. It is starting to do some 
prototyping. It may be that it is just simply a CONOPS change 
on some technology that is already available.
    And so therefore----
    Mr. Bridenstine. Can you help me understand, where does the 
funding come from?
    Mr. Lombardi. The funding is really in our 6.4 line then, 
and it is what--we have a line that talks about technology 
transfer. And so, therefore, it is not necessarily tied 
specifically to a program of record yet, but it is an area 
where we continue to do our working to determine whether we do 
need a material solution or not.
    Mr. Bridenstine. Okay. That is good.
    I want to talk specifically about one particular 
experimentation that has been going on as it relates to space. 
And that is the Joint Interagency Combined Space Operations 
Center [JICSpOC], which, of course, was stood up with General 
Hyten and Doug Loverro. And, of course, you know, Deputy 
Secretary Work, it was his brain child.
    And I think what is happening there is critically important 
for our country. The idea that we can fuse all of these 
different sensors from the DOD to commercial industry to 
combined from our joint and coalition partners and other 
sources--the intelligence community, for example--getting all 
this information into one area and then experimenting to 
determine, you know, what are the threats that we face? How do 
we attribute those threats? How do we ultimately combat those 
threats?
    Could you share with this committee as far as the JICSpOC 
goes, how important are those experiments, and maybe not 
exactly what you have learned, but how important is it that we 
continue doing that?
    Mr. Lombardi. I think it is greatly important. Again, I 
think, as you characterized it, sir, is that both the DOD and 
the intel community recognize a need to have to work together 
to be able to share important information across the national 
security space enterprise.
    And so by virtue of bringing the right players together, we 
are actually doing this experimentation, as you mentioned, that 
began this past October and is, I believe, going to be 
completing in the May timeframe. And so at least that is the 
first phase of it.
    And from that, then General Hyten and also USSTRATCOM [U.S. 
Strategic Command] all will come together to kind of take a 
look and see, what have we learned from this? But the initial 
phase has really been to try and understand how the 
interrelationships would be and how they are moving forward.
    And so as we move forward with this, I know this is an area 
of interest for you, is as we get to a point where we have good 
information to be able to come forward, I think it would be 
very helpful to come see you and be able to provide you an 
insight on where we are at.
    Mr. Bridenstine. Great. The transition from what we learn 
in these experiments--and we need to understand kind of what 
comes out of those experiments, learning from that and then 
transitioning to an operational capability, which, of course, 
in many cases is going to require funding that we are going to 
have to advocate for; I mean, that is critically important.
    I have got about 31 seconds left. I want to emphasize that 
I would like to see the JICSpOC in the President's budget 
request. I don't know if you can help with that, but those 
kinds of activities in there would be good.
    Finally--I have got 18 seconds left--the DMSP 20, which we 
heard Chairman Rogers talk about, it is a big challenge. Would 
you be open to, for military weather purchases, purchasing data 
from commercial industry rather than purchasing $500 million 
satellites that ultimately sometimes end up being destroyed?
    Mr. Lombardi. I think, as we have looked at things in the 
past, we have used both civil and our international partners to 
be able to gather information with respect to weather 
information, so forth. And so we will continue to look at all 
aspects with respect to how we can provide capability to our 
Nation with respect to these areas.
    Mr. Bridenstine. Thank you, Chairman.
    The Chairman. Thank you.
    I appreciate you all. I think we have touched on a number 
of important topics today. I look forward to seeing the 
President's budget request, but as you can tell, the committee 
is not going to be content just seeing what comes over. We want 
to continue to work with each of you on a number of ideas and 
initiatives that we have to help push the whole system toward 
more agility.
    So, with that, we, again, appreciate you all being here, 
and the hearing stands adjourned.
    [Whereupon, at 12:15 p.m., the committee was adjourned.]
      
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                            A P P E N D I X

                            January 7, 2016

      
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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                            January 7, 2016

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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
      
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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                            January 7, 2016

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              RESPONSE TO QUESTION SUBMITTED BY MR. WILSON

    Secretary Stackley. In the past, DOD has funded studies on the 
practicality of SMR technologies for military installations which found 
that safety, certification, and licensing of SMR technologies take 
considerable lead times before deployment. In response to FY14 NDAA 
guidance, OSD chartered a Defense Science Board study to examine the 
``feasibility of deployable, cost-effective, regulated, and secure SMRs 
with a modest outpost of electrical power.'' The OSD study is expected 
to review SMR deployment challenges on security, siting requirements 
and timelines, regulation, long term solutions for spent fuel storage, 
and cost. Navy Secretariat, OPNAV, and Navy Reactors subject matter 
experts have been actively participating in this effort. We look 
forward to seeing the results and recommendations coming out of this 
Defense Science Board study.
    There are a number of licensing and operational issues that will 
need to be resolved before small nuclear power plants could be 
available for use by DOD. Recognizing this, DOD is also following 
advancements in SMR technologies which DOE is pursuing and will 
continue to collaborate with DOE as this technology advances.
    As an example, DOE and the Nuclear Regulatory Commission (NRC) 
created a SMR Licensing Technical Support program to promote the 
accelerate deployment of SMRs through cooperative agreements with 
industry partners. The first agreement in this program was awarded to 
the mPower America team of Babcock & Wilcox in November 2012, and the 
second round of funding was awarded to NuScale Power in December 2013. 
NuScale expects to submit the application for design certification in 
the second half of 2016 and anticipates their project to be operational 
by 2023-2024. B&W scaled back funding for their program in April 2014 
and plans to continue low-level R&D on mPower technology. DON stands 
ready to support the DOE and NRC as may be required.   [See page 21.]
                                 ______
                                 
              RESPONSE TO QUESTION SUBMITTED BY MR. TURNER
    Mr. Lombardi. The contracting function of BIG SAFARI remains within 
the 645th Aeronautical Systems Group, Wright-Patterson AFB, Ohio (645 
AESG, WPAFB), the organization that oversees the BIG SAFARI portfolio 
of programs. The 645 AESG Commander is appointed the System Program 
Manager for BIG SAFARI programs, and the contracting professionals for 
BIG SAFARI support the portfolio within the 645 AESG at WPAFB.
    The leadership within the Air Force Life Cycle Management Center 
and 645 AESG are not aware of, nor are pursuing, any movement of the 
BIG SAFARI contracting support out of the 645 AESG at WPAFB. The 
current contracting function is a key ingredient in enabling BIG SAFARI 
to meet a multitude of users demanding mission needs in an extremely 
timely manner.   [See page 24.]
                                 ______
                                 
             RESPONSE TO QUESTION SUBMITTED BY DR. FLEMING
    Mr. Lombardi. The prototype delivered to 20th Air Force and Air 
Force Global Strike Command was developed through the Air Force 
Research Laboratory (AFRL) Rapid Innovation Process, within the Air 
Force S&T program. After receiving authority to prototype a specific 
design concept from the AFRL Commander, the prototype was delivered to 
20th Air Force and Global Strike Command in six months. Prior to 
receiving authority to proceed, the AFRL Rapid Innovation Team worked 
closely with the user to analyze the needs, gaps and shortfalls in 
order to define solution options.
    In this case, the process was on target to meet the user needs. 
Because the user problem was framed correctly. Framing a problem 
correctly involves several areas, including needs decomposition, and 
identification of operational objectives, constraints, environment and 
standards. Prioritizing these efforts ensures an operationally suitable 
solution is identified that has a clear impact on operational 
effectiveness and efficiency.
    User involvement in needs analysis, solution conceptualization, and 
prototype development enables delivery of a suitable prototype with all 
the right attributes to satisfy the user need. Furthermore, a rapid 
spiral development process that incorporates experimentation and 
prototyping allows the design to evolve quickly based on lessons 
learned during operations.
    The Air Force has a successful history of developing rapid 
innovations to respond to senior leader-identified urgent needs. We 
continue to diligently refine our processes based on lessons learned 
over nearly a decade of such projects, and continue to carefully 
optimize the processes to rapidly produce cost-effective and 
operationally suitable prototypes.   [See page 36.]

?

      
=======================================================================


              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                            January 7, 2016

=======================================================================

      

                 QUESTIONS SUBMITTED BY MR. THORNBERRY

    Mr. Thornberry. During the hearing, witnesses expressed concern 
about the need for research and development funding, and additional 
flexibility in how funding can be used, to conduct experimentation and 
prototyping outside programs of record.
    a. What factors limit the use of 6.4 funding (Advanced Component 
Development and Prototyping)? b. If more flexibility were provided so 
that budget requests require less specificity about experimentation and 
prototyping efforts, what oversight mechanisms would you employ to 
ensure funds are used appropriately? c. To what extent is Other 
Transaction Authority used in your service for experimentation and 
prototyping efforts? Is it an effective approach for expanding these 
efforts?
    General Williamson. There is a long standing institutional barrier 
and culture of resistance to funding prototypes for concepts the Army 
needs to evaluate but may not buy. Prototyping for risk reduction and 
competition for formal programs has been more successful. The biggest 
barrier is that the Army does not have enough funds for the prototyping 
and experimentation that the Army needs to do early in the lifecycle.
    A good example for governance and oversight is the Executive 
Steering Group that maintains oversight of the Technology Maturation 
Initiative program. The Technology Maturation Initiative is a 
prototyping, budget activity 4 account the Army stood up under the 
authority of the DASA(R&T) to develop prototypes to reduce technical 
risk, inform concepts and reduce integration challenges to programs of 
record. The objective of the Technology Maturation Initiative program 
is to facilitate the transition of priority technologies at reduced 
cost and risk or evaluate the concept or use of new technologies. This 
is done by partnering S&T with acquisition program offices to further 
mature, prototype and validate emerging technologies prior to Milestone 
B.
    Army Science and Technology uses the Ground Vehicle System (GVS) 
Other Transaction Authority (OTA) to focus on vehicle and robotics 
technology research, development, test and evaluation projects. The GVS 
OTA mechanism facilitates collaboration and innovative technology 
development with industry, academia, and other Services and allows us 
to leverage Industry Research and Development Funding. The OTA 
mechanism allows a wider base of industry and academia partners to 
develop more rapid responses to DOD Warfigher requirements. 
Specifically, the Army is using this OTA for our Modular Active 
Protection Systems and Combat Vehicle Prototyping programs, among other 
efforts. Having OTA options and opportunities for prototyping opens 
additional possibilities to traditional contracting methods.
    Mr. Thornberry. Witnesses stated that a culture that is open to 
failure is necessary to foster experimentation and innovation, and 
ensure DOD retains its technological edge. What steps do you suggest 
Congress and the services take to move the culture toward one that is 
more willing to accept failure?
    General Williamson. As I alluded to during the hearing, if we want 
our potential enemies to achieve parity with regard to our 
technological military advantage, we should only pursue low risk 
technologies. To maintain our technological edge, we must be willing to 
accept more risk in pursuit of innovation and learn to tolerate 
occasional failure to that end. Today, when our brightest minds in 
government push the envelope and fail, it too often leads to the abrupt 
end of that technological pursuit. In the Services, it is increasingly 
difficult to defend the funding of a program perceived as marred by 
failure, particularly in an environment of limited resources and 
competing priorities. In Congress, failure is met with budget cuts or 
restrictive language in condemnation of a program perceived as flawed. 
The end result is an institutional culture that has become too risk 
adverse and has created perverse incentives that are driving our most 
innovative talent out of government and into the arms of industry.
    Both the Services and Congress must first recognize that they are 
part of the problem, and then work hand-in-hand to encourage a culture 
that is more tolerant of risk and willing to accept failure, so long as 
it can be justified. Accountability remains paramount. Risk must be 
carefully calculated, our choices should be well informed, and when we 
fail we must be able to demonstrate measurable progress toward greater 
goals.
    Mr. Thornberry. During the hearing, witnesses repeatedly expressed 
concern about the need for the S&T, acquisition, and war fighter 
communities to work together early and often. What are the barriers to 
achieving more effective collaboration?
    General Williamson. The different levels of risk tolerance across 
the S&T, acquisition and warfighting communities can hinder effective 
collaboration. I believe we have made significant progress on achieving 
better collaboration between the S&T, acquisition, and warfighter 
communities through our Long-range Investment Requirements Analysis 
(LIRA). The LIRA is being used within the Army to facilitate more 
informed program planning and budget decisions and strengthen the ties 
between the S&T community and their Program Executive Office (PEO) and 
Requirements community partners. We continue to work to refine this 
process, and tie in a broader set of stakeholders, such as the 
intelligence community, to ensure maximum collaboration across the 
Army.
    Mr. Thornberry. During the hearing, witnesses expressed concern 
about the need for research and development funding, and additional 
flexibility in how funding can be used, to conduct experimentation and 
prototyping outside programs of record.
    a. What factors limit the use of 6.4 funding (Advanced Component 
Development and Prototyping)? b. If more flexibility were provided so 
that budget requests require less specificity about experimentation and 
prototyping efforts, what oversight mechanisms would you employ to 
ensure funds are used appropriately? c. To what extent is Other 
Transaction Authority used in your service for experimentation and 
prototyping efforts? Is it an effective approach for expanding these 
efforts?
    Secretary Stackley. Factors for Budget Activity BA4 (6.4), Advanced 
Component Development and Prototyping funds, are provided and defined 
by the Department of Defense Financial Management Regulations to cover 
efforts necessary to evaluate integrated technologies, prototype 
systems in a high fidelity and realistic operating environment. The 
intent is to expedite technology transition from the laboratory to 
operational use. Emphasis includes component and subsystem maturity 
prior to integration in major and complex systems. In addition, some 
BA4 (6.4) funds are tied to programs of record, so the Department of 
the Navy (DON) is working to establish BA4 (6.4) funds that are not 
aligned to programs of record to further address Fleet needs and 
priorities.
    b. Internal to the DON, governance and oversight for rapid 
prototyping experimentation and demonstration (RPED) will be provided 
by the DON RDT&E Corporate Board. This Corporate Board is comprised of 
ASN (RD&A), the Vice Chief of Naval Operations, and the Assistant 
Commandant of the Marine Corps. The RPED process includes briefing the 
Corporate Board on actions being pursued as part of prototype 
selection. The Corporate Board will be notified of the need, the 
prototype, and RPED execution strategy, including financial execution. 
Upon identifying a prioritized Fleet need and selecting strategy and a 
prototyping plan, the DON will notify Congress and provide information 
on the identified need, the prototype being pursued, and a short 
summary of plan of actions and milestones.
    c. In the DON, the Other Transaction Authority (OTAs) awarded or 
active in FY2010-FY2014 totals $143.4 million. OTAs provide one of 
several contracting options for prototyping and experimentation, and 
will be considered when developing prototyping and experimentation 
strategies and plans.
    Mr. Thornberry. Witnesses stated that a culture that is open to 
failure is necessary to foster experimentation and innovation, and 
ensure DOD retains its technological edge. What steps do you suggest 
Congress and the services take to move the culture toward one that is 
more willing to accept failure?
    Secretary Stackley. Supporting rapid prototyping and 
experimentation is an important step in moving the culture in DOD. The 
Navy and Marine Corps leadership has embraced this idea and recognizes 
that even when prototyping efforts do not result in increased 
capability, technical insight is gained as part of the discover, 
develop, transition, and field cycle. It is important that Congress 
recognizes that every prototyping effort is an opportunity to ``learn 
fast,'' push the technological envelop, and inform requirements, 
budget, and acquisition decisions. This recognition will contribute to 
moving the culture.
    Mr. Thornberry. During the hearing, witnesses repeatedly expressed 
concern about the need for the S&T, acquisition, and war fighter 
communities to work together early and often. What are the barriers to 
achieving more effective collaboration?
    Secretary Stackley. There are no major barriers, but there are 
collaboration challenges typical of separate communities with different 
functional roles. A key element of the DON's rapid prototyping 
initiative is the active and continuous interaction between the Fleet 
operators, planners, and requirements developers and the scientists and 
engineers from across the Naval Research and Development Establishment 
(NR&DE). Continuous interaction between these key communities enhance 
and expedite crucial collaboration (technical and operational), 
minimizing barriers to the delivery of new capabilities to the Fleet. 
The Fleet will be a part of senior leadership prototyping decisions and 
continue their involvement throughout the experimentation and 
demonstration phase.
    An additional approach to further enhance collaboration is the use 
of multi-day Fleet engagement workshops involving key communities. 
These workshops are held prior to prototype development to explore 
emerging technologies, engineering innovations, and advanced 
warfighting concepts.
    The Chief of Naval Operations recently established Warfighting 
Development Centers to develop advanced tactics, training and 
procedures, conduct training and warfighting effectiveness assessments, 
set and enforce performance standards, and identify and mitigate 
warfighting gaps. Operators from these newly established Warfighting 
Development Centers are integrated into the prototype development and 
experimentation teams to further enhance collaboration and expedite 
delivery of new capabilities to the Fleet.
    Mr. Thornberry. During the hearing, witnesses expressed concern 
about the need for research and development funding, and additional 
flexibility in how funding can be used, to conduct experimentation and 
prototyping outside programs of record.
    a. What factors limit the use of 6.4 funding (Advanced Component 
Development and Prototyping)? b. If more flexibility were provided so 
that budget requests require less specificity about experimentation and 
prototyping efforts, what oversight mechanisms would you employ to 
ensure funds are used appropriately? c. To what extent is Other 
Transaction Authority used in your service for experimentation and 
prototyping efforts? Is it an effective approach for expanding these 
efforts?
    Mr. Lombardi. a. The primary limiting factors we see in the use of 
our 6.4 (Advanced Component Development and Prototyping) funding are 
institutional and cultural, both of which can be overcome through 
enhanced Service-wide and DOD-wide understanding. Historically, the 
expectation is that 6.4 funds will be used to address the technology 
development and maturation needs or performance requirements associated 
with a particular capability, according to a planned budget. Therefore, 
funds in this budget activity without clear or unambiguous traceability 
to a specific program plan and/or major shifts in the capabilities 
being focused on are sometimes subject to premature cuts or 
elimination. We're working to shift to a more agile mindset where we 
are able to use knowledge gained from our experimentation and 
prototyping efforts to inform the use of our 6.4 funding closer to and 
during the year of execution. We're working closely with our planning, 
programming, and budgeting process stakeholders to ensure the need for 
this type of flexibility is understood and can be communicated 
accordingly.
    b. Air Force senior leadership provides strategic direction for our 
experimentation and prototyping efforts and we believe this oversight 
provides the requisite discipline and accountability in this spending. 
We will maintain transparency by ensuring that our budget documentation 
for these efforts clearly describes the nature and type of 
experimentation and prototyping activities. At the same time, the 
documentation will still provide us the space to explore new ideas, 
concepts, and technologies, with the assumption that some may not work 
or be feasible.
    c. Currently, Other Transaction Authority is not highly utilized 
within the Air Force; however, we do think it could be an effective and 
powerful tool for our experimentation and prototyping efforts. We 
recently established an Other Transaction Consortium for use in 
acquiring open architecture systems for Air Force programs. We 
successfully demonstrated this with the Air Force's Distributed Common 
Ground System (DCGS) program and are on track to fulfill other Air 
Force requirements in FY 16. We plan to grow the effort in future years 
and are investigating other areas where we can use Other Transaction 
Authority.
    Mr. Thornberry. Witnesses stated that a culture that is open to 
failure is necessary to foster experimentation and innovation, and 
ensure DOD retains its technological edge. What steps do you suggest 
Congress and the services take to move the culture toward one that is 
more willing to accept failure?
    Mr. Lombardi. We know we cannot accept failure in carrying out our 
core Air Force missions critical for the security of our Nation. 
However, we want to emphasize that this is different than overcoming 
the fear of attempting difficult things, some of which may fail or turn 
out differently than expected. As many others have noted, we live in an 
era marked by great complexity and rapid change. Ensuring mission 
success in the future means we cannot become complacent or be afraid of 
exploring new ideas and concepts. We must rigorously challenge 
currently accepted ways of fighting and continually learn, innovate, 
apply, and adapt. The Air Force must become more of a learning 
institution and one of the steps we're using to get us there is 
employment of experimentation. Experimentation enables the exploration 
of new concepts to understand the interplay of combinations of 
technologies, organizations, and employment, and doing so rapidly and 
cost effectively. We must not be afraid of trying out innovative ideas 
and failing; we must test such innovative ideas to their breaking point 
so we can understand weaknesses, vulnerabilities, and causes of 
failure. We believe instituting a culture of experimentation, with 
those experimentation activities supported by Congress, will help us to 
better learn, adapt and field the next generation of game-changing 
warfighting capabilities.
    Mr. Thornberry. During the hearing, witnesses repeatedly expressed 
concern about the need for the S&T, acquisition, and war fighter 
communities to work together early and often. What are the barriers to 
achieving more effective collaboration?
    Mr. Lombardi. The Secretary and Chief of Staff have initiated 
Enterprise Capability Collaboration Teams (ECCT) to facilitate 
development planning for our highest-priority mission areas. We are 
using this ECCT approach to break down collaboration barriers in the 
exploration of alternatives and formulation of recommended courses of 
action (COAs). These alternatives and COAs will inform decisions on new 
capability development and enterprise affordability spanning both 
materiel and non-materiel solutions. ECCTs bring cross-functional users 
of core mission areas together with requirements, acquisition and S&T 
communities to collaboratively examine and comprehend operational needs 
and then formulate and explore new multi-domain concepts and 
capabilities that may address those needs. The members of ECCTs are 
highly motivated, innovative and empowered. They leverage knowledge and 
expertise residing in the Air Force acquisition enterprise, the DOD 
laboratory enterprise, Federally Funded Research and Development 
Centers, academia, and industry, as appropriate.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. SHUSTER
    Mr. Shuster. One of the concerns I have heard from my district is 
that there is a lack of visibility for smaller contract suppliers, and 
that often the relevant people at the Pentagon are not necessarily 
aware of the benefits or drawbacks of some smaller components purchased 
as part of a larger contract. Indeed, the 2012 panel on Business 
Challenges in the Defense Industry that I helped lead found that DOD 
lacks the ability to track small business participation at the lower 
subcontract tiers. Do you think this is still the case? And how do you 
believe we can properly ensure that if a smaller company makes a good 
product, it is properly recognized when so much of the focus is on 
bigger ticket items?
    General Williamson. The FY14 National Defense Authorization Act 
provided a means for prime contractors to report small business 
participation at the second and third tiers, in addition to the first 
tier. This reporting requirement, once fully implemented, will provide 
greater visibility of small business participation at those levels.
    As part of the Better Buying Power initiative, Program Managers 
(PMs) are encouraged to collaborate with the Small Business Innovative 
Research (SBIR) and Small Business Technology Transfer (STTR) PMs to 
review new technology that can be incorporated into their SOR 
throughout its acquisition life cycle. The Army Office of Small 
Business Programs (OSBP) participates in the Army System Acquisition 
Review Council (ASARC) to advocate for maximum opportunities for small 
businesses throughout a system's acquisition life cycle. During ASARC 
meetings, OSBP encourages PMs and Contracting Officers to consider 
including contract incentives for prime contractors if they exceed 
their small business subcontracting goals.
    Mr. Shuster. In 2012 I helped lead a panel on Business Challenges 
in the Defense Industry, and at the time one of the issues we 
discovered was that small and midsize businesses face particular 
challenges in contracting with the Department of Defense. At the time 
of the panel, DOD had been unable to meet its small business Federal 
procurement goals. Has this situation changed, to your knowledge, in 
the last three years, and what further steps do you intend to take to 
ensure participation of small and medium sized businesses in DOD 
contracting?
    General Williamson. The Army is committed to contracting with small 
business and has achieved its statutory goals for three consecutive 
years. In FY15, 31.6 percent of all Army contracting actions, valued at 
$17.5B were awarded to America's small businesses. The Army exceeded 
its annual goal of 26.5% for small business awards by 5.1 percent.
    The Army led the way for DOD in achieving its statutory assigned 
goals for FY15. For the third consecutive year the Army met all five 
statutory goals. Similarly, all assigned goals in the different small 
business categories were exceeded; for example: the small disadvantaged 
business goal achieved was 15.5% exceeding the 11% goal; service-
disabled veteran-owned business goal achieved was 4.75% exceeding the 
3% goal; the Historically Underutilized Business-Zone goal achieved was 
3.32% exceeding 3%; and the women-owned small business goal achieved 
was 5.85% exceeding the 5% goal.
    The Army continues to focus on small business participation across 
the enterprise at the prime and subcontractor levels. Army small 
business is concentrating on outreach and increased internal advocacy 
for small business involvement in contracting. Focus areas include 
improving market research to better enable contracting personnel to 
find capable small businesses. The Army is also leveraging the Mentor 
Protege program to foster more relationships between large and small 
businesses.
    Mr. Shuster. One of the concerns I have heard from companies in my 
district and that was also brought to light in our panel on Business 
Challenges in the Defense Industry is that the ever-changing nature of 
the laws and regulations governing defense acquisitions can make it 
difficult for companies with limited resources to stay abreast of the 
changes that could impact their business strategies. This places larger 
companies with teams of contract attorneys at a competitive advantage. 
How do you think we can bring greater streamlining and transparency 
this maze of rules and regulations?
    General Williamson. The implementation of Better Buying Power (BBP) 
focuses on many of these issues. The Army acquisition community is 
focused on streamlining the processes, removing barriers and investing 
in our acquisition workforce. The Army is working to address the 
complexities of acquisition to include, reexamining statutory and 
regulatory requirements, the reduction of which will improve 
responsiveness and agility.
    The Army continues to leverage use of commercial items and 
streamlined practices to eliminate costs unique to DOD/Army in order to 
capitalize on existing commercial capabilities. Commercial acquisition 
by its nature, is streamlined and more closely resembles rules in the 
commercial marketplace. Army is also increasing use of its Other 
Transaction Authority in the areas of R&D and prototyping to attract 
businesses that would not otherwise do business with the Government. 
OTAs are not a ``one size fits all'' and provide relief from Federal 
Acquisition Regulation based rules making them more flexible and 
attractive methods to bring new sources of technical innovation to the 
Department quickly and economically.
    Since the implementation of BBP, there has been a steady increase 
in the number of small businesses doing business with the Army, 
indicating an increase in streamlined arrangement. In FY15, the Army 
awarded 31.6 percent valued at $17.5B to small businesses whereas in 
FY11 small business represented only 22 percent of eligible dollars.
    Mr. Shuster. An issue raised by companies doing business with DOD 
in my district is that there is no incentive for large companies and 
contractors holding multiple year contracts to seek out the newest, 
most advanced and less expensive products, even when it would save 
taxpayers millions of dollars. Is there someone keeping an eye on such 
advancements when developing projects and upgrades, as well as 
allocating tax payer monies to them? If so, how do they approach this 
problem? Would a move to more open system architecture provide greater 
flexibility in this area?
    General Williamson. A key tenant of Better Buying Power (BBP) 
initiatives is to use appropriate incentives. The Army has and 
continues to implement BBP initiatives and apply appropriate 
incentives. One example is to align profitability with contractor 
performance and reward successful contractors by using special 
incentive fee structures. The Army also makes effective use of value 
engineering (VE) change proposals to reduce costs, increase quality, 
and improve mission capability. Whether voluntary or required by 
Federal Acquisition Regulations, the VE program assists with saving 
costs as well as benefiting technology insertion.
    The Army maximizes use of commercial products and services to keep 
pace with technology. In addition, the Army uses Other Transaction 
Authority (OTA), a flexible arrangement not subject to Federal 
Acquisition Rules, over traditional contracts to seek new technologies 
and innovation from industry. Use of these agreements are attractive to 
nontraditional contractors as well as traditional contractors as the 
Federal and Defense Acquisition rules do not apply. OTAs foster 
collaboration on the best approach for developing and leveraging 
commercial technology and R&D.
    The Army follows the DOD open systems architecture (OSA) laid out 
in the Defense Acquisition System Regulations (5000 series) and 
structures its contract language to target areas that foster open 
architecture (e.g., continuous competition, seeking data deliverables 
and rights in technical data). OSA is both a business and technical 
strategy for developing a new system or modernizing an existing one.
    Mr. Shuster. One of the concerns I have heard from my district is 
that there is a lack of visibility for smaller contract suppliers, and 
that often the relevant people at the Pentagon are not necessarily 
aware of the benefits or drawbacks of some smaller components purchased 
as part of a larger contract. Indeed, the 2012 panel on Business 
Challenges in the Defense Industry that I helped lead found that DOD 
lacks the ability to track small business participation at the lower 
subcontract tiers. Do you think this is still the case? And how do you 
believe we can properly ensure that if a smaller company makes a good 
product, it is properly recognized when so much of the focus is on 
bigger ticket items?
    Secretary Stackley. DOD and DON are aware of the challenge of 
collecting information on small business subcontracting achievements. 
As a starting point, the departments and agencies can determine the 
subcontracting dollars reported on Individual Subcontracting Report 
(ISR) submitted in Electronic Subcontracting Reporting System (eSRS) 
which is administered by GSA. However, ISR data fails to fully reflect 
DON's small business subcontracting achievement in terms of dollars 
because it does not capture orders under Basic Ordering Agreements, 
Blanket Purchase Agreements, SeaPort-e, or data related to Commercial 
Subcontracting Plans or the Comprehensive Subcontracting Plan Test 
Program. In addition, eSRS does not capture subcontracting by small 
business firms nor does it capture subcontracting efforts less than 
$700,000.00, the threshold for requiring a subcontracting plan. As a 
result, Command specific subcontracting goals cannot be established 
with any accuracy and, therefore, cannot be used to establish 
performance metrics. There is another challenge regarding identifying 
which small businesses which are performing subcontracts, especially, 
where the prime large businesses has a subcontracting plan which covers 
multiple prime contracts. In December 2014, the GAO conducted a study 
(GAO-15-116) on this subject and concluded that actions are being 
undertaken to facilitate linking small business subcontractors to prime 
contracts (e.g. Federal Acquisition Regulation (FAR) Clause 52.204-10 
which requires prime contractors to report first-tier subcontracts to 
small businesses of $30,000 to the Federal Subaward Reporting System).
    In an effort to improve subcontracting monitoring and compliance 
oversight, the DON Office of Small Business Programs (OSBP) is 
developing baseline performance metrics for the DOD Comprehensive 
Subcontracting Plan utilizing data obtained from the Defense Contract 
Management Agency's annually performed FAR and DFARS compliance reviews 
of contractors and the Contractor Performance Assessment Reporting 
System. It is anticipated these metrics will be in place by March 31, 
2016. Additionally a subcontracting metrics initiative, utilizing eSRS 
data, is being developed to provide contracting officers enhanced 
visibility to monitor and enforce Individual Subcontracting Plan goal 
achievement on contracts purporting the largest DON subcontracting 
efforts. It is anticipated this action will be completed by the end of 
Fiscal Year 2016.
    Mr. Shuster. In 2012 I helped lead a panel on Business Challenges 
in the Defense Industry, and at the time one of the issues we 
discovered was that small and midsize businesses face particular 
challenges in contracting with the Department of Defense. At the time 
of the panel, DOD had been unable to meet its small business federal 
procurement goals. Has this situation changed, to your knowledge, in 
the last three years, and what further steps do you intend to take to 
ensure participation of small and medium sized businesses in DOD 
contracting?
    Secretary Stackley. The Department of Defense has placed special 
attention on the use of small business consistent with Better Buying 
Power initiatives and to support the White House's 23 percent small 
business goal. Because a significant percentage of the Department of 
Navy's (DON) budget is dedicated to the procurement of ships, aircraft, 
missiles, and combat vehicles, clearly outside small business, DOD 
determined the Fiscal Year 2015 DON share of the 23 percent goal to be 
16 percent which DON exceeded. DON's small business performance for the 
last three fiscal years is as follows:

 
 
 
 
                        Actual                   Goals
FY13                    15.11%                   16.50%
FY14                    16.50%                   17.20%
FY15                    18.57%                   16.00%
 

    The DON has taken several actions to ensure small businesses 
receive maximum opportunities to provide quality products, services and 
solutions to meet the needs of our warfighters. As an example, I issued 
a memorandum in January 2015 assigning each Deputy Program Manager 
(DPM) as the Small Business Advocate responsible for identifying 
opportunities within their program for small business participation as 
well as serving as the technical point of contact for small businesses 
interested in pursuing these opportunities. This affects 13 Program 
Executive Offices and over 60 DPMs. Through collaboration, interviews, 
and engagement with industry a training curriculum is under 
development, designed to educate DPMs on their role as a Small Business 
Advocate. The intent is to expand the training to include all 
acquisition career fields. As the DON product lines move to 
sustainment, the goal is to track current vs. future procurement 
patterns to measure changed behavior.
    DON's Office of Small Business Programs (OSBP) monitors the 
Department's performance through contract award data analysis of the 
ten major buying commands and the 124 subordinate buying activities, 
which are responsible for the acquisition of over $80 billion in DON 
Procurements annually. OSBP monitors the five socio-economic 
categories, small business assessable markets, service portfolios, 
small business set-aside rate, percentage of GSA small business awards 
and SeaPort-e performance.
    The DON is actively working the Acquisition Professional Workforce 
Development, a DOD initiative. This initiative redefines the 
professionalism of the entire small business workforce through 
competency analysis, education, training and establishing criteria to 
develop a professional and respected cadre of Small Business 
Professionals equipped to support the acquisition process to its 
fullest capability. A professional, educated small business workforce 
will help DON achieve its innovation initiatives and bring in non-
traditional suppliers.
    Major components of the program are: (1) building leadership skills 
(leadership development program, functional experience, developmental 
assignments); (2) building technical skills (formal education, 
acquisition training, rotational assignments, functional experience); 
and (3) development continuum.
    Implementation initiatives include appropriate policy updates, 
workforce planning, standards, competency-based training, career 
development information and requests for requisite resources. While 
these professionals influence over 20 percent of DOD discretionary 
spending, the small business workforce had not been identified as a 
separate acquisition workforce functional area prior to this 
designation. The Director of the DON OSBP serves as the Small Business 
Functional Leader. The Small Business Functional Leader's vision is to 
transform the small business workforce into a highly skilled, business-
oriented force that provides innovative, efficient, and effective 
influence to the Department's readiness and technological superiority.
    Mr. Shuster. One of the concerns I have heard from companies in my 
district and that was also brought to light in our panel on Business 
Challenges in the Defense Industry is that the ever-changing nature of 
the laws and regulations governing defense acquisitions can make it 
difficult for companies with limited resources to stay abreast of the 
changes that could impact their business strategies. This places larger 
companies with teams of contract attorneys at a competitive advantage. 
How do you think we can bring greater streamlining and transparency 
this maze of rules and regulations?
    Secretary Stackley. While the acquisition system is a maze of rules 
and regulations, fortunately not all of the rules and regulations 
result in a burden to contractors. Many involve internal operating 
procedures to DOD. To the extent new and evolving procurement rules 
affect contractors, the rules are set forth in the Federal Acquisition 
Regulation (FAR) and the Defense FAR (DFARS) Supplement in title 48 of 
the Code of Federal Regulations (CFR) and are available online. The FAR 
and DFARS are living documents, continuously amended to capture the new 
or revised laws set forth in annual authorization acts or other 
statutes and delete laws which are no longer in effect. The FAR and 
DFARS are organized into 52 chapters and are comprehensive, to the 
point of containing required contract clauses. In most cases, FAR or 
DFARS revisions are published for comment in the Federal Register. When 
a new statute must be implemented in a relative short period of time, 
FAR or DFARS coverage is issued on a temporary basis while public 
comments are pending.
    Besides the FAR and DFARS for contracts, OMB is in the process of 
streamlining grants and cooperative agreement regulations for all 
federal agencies by consolidating them into part 2 of the CFR. DOD is 
now migrating its portions of its agency specific grants and agreements 
regulation from part 32 of the CFR to title 2.
    Mr. Shuster. An issue raised by companies doing business with DOD 
in my district is that there is no incentive for large companies and 
contractors holding multiple year contracts to seek out the newest, 
most advanced and less expensive products, even when it would save 
taxpayers millions of dollars. Is there someone keeping an eye on such 
advancements when developing projects and upgrades, as well as 
allocating tax payer monies to them? If so, how do they approach this 
problem? Would a move to more open system architecture provide greater 
flexibility in this area?
    Secretary Stackley. Certain contracts specify products with well-
defined requirements. These products have been qualified via 
demonstrated acceptable performance to fill critical warfighting needs. 
Other contracts are performance based, which may allow greater 
latitude. In either case, companies are motivated to provide products 
in a manner to maximize their profits. Program Managers keep an eye on 
advancements, continuing to monitor defense and commercial advancements 
in technology to better align acquisition plans.
    Yes, a move to more open system architecture would provide greater 
flexibility in this area. Open systems architecture (OSA) has been 
shown to have a definite impact on the integration of new capabilities. 
Program managers are moving towards these practices to ensure that 
innovations can be adopted in both new and existing programs thereby 
helping to improve capability and reduce cost. The standard in the 
Department of the Navy is that new systems in development will be open 
by design.
    Mr. Shuster. One of the concerns I have heard from my district is 
that there is a lack of visibility for smaller contract suppliers, and 
that often the relevant people at the Pentagon are not necessarily 
aware of the benefits or drawbacks of some smaller components purchased 
as part of a larger contract. Indeed, the 2012 panel on Business 
Challenges in the Defense Industry that I helped lead found that DOD 
lacks the ability to track small business participation at the lower 
subcontract tiers. Do you think this is still the case? And how do you 
believe we can properly ensure that if a smaller company makes a good 
product, it is properly recognized when so much of the focus is on 
bigger ticket items?
    Mr. Lombardi. Although current statutory provisions do not allow us 
insight into lower sub contract tier data, we have increased 
competition and small business participation in our acquisitions. 
However, it is recognized that additional opportunities exist to 
improve competition and leverage small business across the Air Force 
enterprise.
    Mr. Shuster. In 2012 I helped lead a panel on Business Challenges 
in the Defense Industry, and at the time one of the issues we 
discovered was that small and midsize businesses face particular 
challenges in contracting with the Department of Defense. At the time 
of the panel, DOD had been unable to meet its small business Federal 
procurement goals. Has this situation changed, to your knowledge, in 
the last three years?
    Mr. Lombardi. As of 2015, the Department of Defense (DOD) is not 
meeting small business subcontracting goal of 34.5%. In order to meet 
the department-wide small business goal, the DOD Office of the Small 
Business Programs sets challenging, but realistic, goals for the DOD 
Components. The Air Force has met Office of the Secretary of Defense 
(OSD)-set component goals for the past two years. In FY14, the Air 
Force exceeded the small business prime contracting goal for the first 
time ever, resulting in over $54B of contracts with small businesses 
and representing 23.47% of all DOD procurement funding for the fiscal 
year. Unofficial results for FY15 indicate the Air Force will exceed 
24% of Small Business contracts for DOD procurement. Although the DOD 
does not assign component level small business subcontracting goals, 
the DOD goal is to achieve at least 34.5% subcontracting to small 
business from DOD prime contractors. The department also strives to 
meet the four aspirational socioeconomic goals, such as the 5% prime 
contracting with women owned small business (WOSB).
    Mr. Shuster. What steps need to be taken to ensure participation of 
small and medium-size business?
    Mr. Lombardi. To ensure participation, the Air Force Office of 
Small Business Programs (USAF OSBP) is expanding and improving the 
training provided to small business professionals, encouraging 
compliance with subcontracting plans and utilization of small business 
participation plans, and engaging in aggressive outreach to purchasing 
organizations to educate on small business capabilities. The USAF OSBP, 
in addition to continually improving internal processes and procedures 
in response to advances in technology, plans to improve upon and 
increase the number of Mentor-Protege agreements and advocate for the 
use of SBIR/STTR programs.
    Mr. Shuster. One of the concerns I have heard from companies in my 
district and that was also brought to light in our panel on Business 
Challenges in the Defense Industry is that the ever-changing nature of 
the laws and regulations governing defense acquisitions can make it 
difficult for companies with limited resources to stay abreast of the 
changes that could impact their business strategies. This places larger 
companies with teams of contract attorneys at a competitive advantage. 
How do you think we can bring greater streamlining and transparency 
this maze of rules and regulations?
    Mr. Lombardi. The Air Force Office of Transformational Innovation 
(OTI) is spearheading an initiative called AQ,-Cognitive Computing that 
will create a publicly-available information resource that utilizes 
advances in artificial intelligence to help navigate acquisition laws, 
policies, and regulations. This system will use an easy-to-understand 
natural language query system that will help acquisition professionals 
as well as the business community. Many of the barriers small 
businesses face when partnering with the federal government could be 
removed by providing this clear and intuitive system to understand the 
requirements of and flexibility within the DOD contracting statutes, 
regulations, practices, and policies.
    Mr. Shuster. An issue raised by companies doing business with DOD 
in my district is that there is no incentive for large companies and 
contractors holding multiple year contracts to seek out the newest, 
most advanced and less expensive products, even when it would save 
taxpayers millions of dollars. Is there someone keeping an eye on such 
advancements when developing projects and upgrades, as well as 
allocating tax payer monies to them? If so, how do they approach this 
problem? Would a move to more open system architecture provide greater 
flexibility in this area?
    Mr. Lombardi. In line with DOD's Better Buying Power 3.0 
initiative, the Air Force incentivizes procurement of innovative less 
expensive products and services at various levels within our 
acquisition community. We emphasize technology insertion and refresh in 
program, planning, use Modular Open Systems Architecture to stimulate 
innovation, and utilize enhanced competition techniques such as market 
intelligence, pursue procurement of necessary data rights, and the 
development of alternate sources.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. COFFMAN
    Mr. Coffman. With regards to the C-130 AMP Increment 1, can you 
explain why a recent RFP to pursue the required air traffic control 
upgrade requested a separation of integration and installation efforts? 
Would this sort of procurement be a good opportunity for utilizing a 
combined commercial approach? Finally, could you please provide an 
explanation of the estimated costs of the AMP-1 program?
    Mr. Lombardi. The C-130H AMP Increment 1 strategy separates 
integration and installation. The separation followed several industry 
days and robust dialogue with industry. Based on industry response and 
market research indicating two or more capable small businesses, 
integration will be competitively awarded to a small business. 
Installations will be competitively awarded through the Air Force 
Sustainment Center's Contract Field Team (CFT) contract, which offers 
lower costs. CFT contractors have proven track records for similar C-
130 modifications and have demonstrated ability to meet schedule 
requirements. While a combined commercial approach was considered 
utilizing the existing lower cost Air Force Sustainment Center's CFT 
contract offers the best value for the government.
    Finally, the Air Force investigated multiple options available to 
reduce costs for the C-130H AMP Increment 1 effort, including 
procurement of mature technologies, use of existing Commercial Off-The-
Shelf (COTS) solutions, and installation efficiencies. The Program 
Office cost estimates have been updated, leveraging industry dialogue 
and COTS-based solutions. This selected strategy also permitted the Air 
Force to accelerate the fielding of these important upgrades to meet 
the January 2020 mandate. Updated program funding and schedule is 
reflected in the Fiscal Year 2017 President's Budget.
    Mr. Coffman. Mission success is of the upmost importance to the 
Department of Defense, and the Department has historically driven 
contracting practices to ensure quality and high performance of systems 
and platforms. Certification processes and military specification 
standards have been continually refined through lessons learned and 
reflect the marquee standards necessary to protect our national 
security interests. In some circumstances cost-saving procurement 
approaches featuring streamlined process and reduced bureaucracy 
introduce additional risk into the process. For example, last June, 
very shortly after a rocket was certified in an accelerated fashion by 
the Air Force, the rocket exploded on its very next launch attempt. 
This same rocket has now been re-engineered to include larger thrust, 
and a new propellant, yet the provider is challenging the need for a 
new Air Force certification of the rocket. How can DOD address the need 
for streamlined procurements and reduced bureaucracy without 
jeopardizing mission success and national security?
    Mr. Lombardi. The DOD has a well-defined developmental process 
grounded in statue and implemented by DOD Instruction 5000 which allows 
for the balancing of Public Safety, National Security, Mission Success, 
Cost and Schedule concerns. The DOD developed systems proceed through 
developmental and operation test programs to ensure that these systems 
meet the needs of the nation with maximum streamlining, minimal 
required bureaucracy and prudent risk taking on the part of the program 
managers.
    Additionally, in Air Force Instruction 63-101 Acquisition and 
Sustainment Life Cycle Management, current Air Force policy allows 
acquisition program tailoring to accommodate the unique characteristics 
of a program while still meeting the statutory and regulatory needs for 
oversight and decision making and ensuring the program is able to 
provide the needed capability to the warfighter in the shortest 
practical time and balance risk.
    In regards to the specific space example referenced above, National 
Space Transportation Policy, approved November 21, 2013, states that 
U.S. commercial space transportation capabilities that demonstrate the 
ability to launch payloads reliably will be allowed to compete for 
United States Government missions on a level playing field, consistent 
with established interagency new entrant certification criteria. The 
Air Force certification process is defined in the United States Air 
Force Launch Services New Entrant Certification Guide (NECG) published 
in 2011. The NECG provides a risk-based approach with four 
certification options based on maturity of the launch system. Despite 
the SpaceX launch failure June 28, 2015, SpaceX remains certified to 
compete for and win the award of National Security Space (NSS) 
missions. A failed mission does not automatically drive a revisit to a 
certification decision or a revocation of a certification. A launch 
system remains certified unless a process or design change, or some 
other certification factor (such as manufacturing quality, for 
example), causes the certification authority (SMC/CC) to determine that 
the launch system or provider is no longer certified.

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