2017 NDAA reorganizes DOD acquisition office

Editor's Note: This article originally appeared on FCW.com

It might not be quite as dramatic as the breakup of AT&T, but the congressionally mandated split of the Department of Defense's AT&L office is no small matter.

Currently, the DOD's office of Acquisition, Technology and Logistics is headed by Undersecretary Frank Kendall, and his portfolio includes 17 different offices such as acquisition, research and engineering, logistics and material readiness and installations and environment.

Sen. John McCain (R-Ariz.), the chairman of the Senate Armed Services Committee, has long argued that the AT&L portfolio is too large for one individual, and in the 2017 National Defense Authorization Act, he prevailed.

The act states that by Feb. 1, 2018, the Undersecretary of AT&L job will be split into two positions: the undersecretary for research and engineering and the undersecretary for acquisition and sustainment.

"For years after the end of the Cold War, the United States enjoyed a near monopoly on advanced military technologies," said McCain in a November statement about the NDAA language. But he warned that adversaries are making substantial gains that threaten U.S. military technological dominance.

"That is why innovation cannot be an auxiliary office at the Department of Defense," he continued. "It must be the central mission of its acquisition system. Unfortunately, that is not the case with the Office of the Undersecretary of Defense for Acquisition, Technology, and Logistics (AT&L). It has grown too big, tries to do too much, and is too focused on compliance at the expense of innovation."

The provision calling for the AT&L split was included in the initial draft of the 2017 NDAA in the spring. At the time, the White House was unequivocal in its opposition.

"These changes would roll back the acquisition reforms of the last two decades and risk returning the Department to an era in which overly optimistic cost estimates, inadequate system engineering and developmental testing, inappropriate reliance on immature technologies, ineffective contractor management, and lack of focus on life-cycle costs by the military departments led to explosive cost growth and the failure of multiple major defense acquisition programs," said the White House in its May 16 Statement of Administration Policy in response to the draft NDAA.

"It is particularly inappropriate for the Congress to do this now, when the data clearly shows that recent performance of the Department's acquisition system has improved markedly in recent years," the administration argued.

Despite opposition on this front, President Obama signed the NDAA on Dec. 23.

Critics have argued that the split would essentially return the DOD to its pre-Goldwater-Nichols structure of separate acquisition and R&E offices, which was considered inefficient and prone to waste and abuse.

Katherine Kidder, a fellow at the Center for a New American Security, said that while this is a legitimate concern, there are ways to implement the split today that maintain effective oversight and control.

"I think that with a clear mandate in the role of USD/R&E, the pre-Goldwater-Nichols issues are surmountable," she told FCW. "Moreover, I think the larger issue at play is a [civilian-military] divide between the military/service-generated requirements process and the civilian-led acquisition process. This can be rectified by a greater flow of information, and in some ways the increased civilian role in the USD/R&E may facilitate better cross-pollination of technological innovation between OSD and the services."

Kidder said that if properly executed, the split will make innovation a co-equal of acquisition.

"The main challenge that may come into play is that while the new distinction streamlines the bureaucratic layers in the defense technological innovation process, it may create more bureaucratic processes on the back end, as the two functions are interconnected," she said.

Kidder also cautioned that the two new undersecretaries will have to work well together to coordinate their activities, and that there could be institutional inertia that resists changing the AT&L structure that's been in place since 2000.

"The move to USD/R&E accomplishes another goal that Congress…focused on over the past few years: delayering," she added. "The new legislation establishing USD/R&E eliminates statutory requirements for four assistant secretaries and three deputy assistant secretaries currently within AT&L."

Yet Alan Chvotkin, executive vice president of the Professional Services Council, told FCW that the split of AT&L might not achieve the reforms in acquisition and innovation that Congress is seeking.

"Organizational designs don't have as much influence as the capabilities and the leadership of the people in those organizations," he said. "A lot of the DOD acquisition system was built up around two very strong leaders in the AT&L, Ash Carter and Frank Kendall, so it's kind of hard to separate out the organizational from the personal leadership."

"If there was a criticism to be had, it was how much of the authority flowed into the office of the secretary of defense -- and not just AT&L but the other offices in OSD -- and away from the military departments and defense agencies," said Chvotkin.

He noted that last year's NDAA tried to address that by pushing more of the acquisition process back into the individual services, and the new mandate is in some ways an extension of that approach.

Chvotkin said the question now is how will the new administration and secretary of defense proceed with the changes?

One, he said, is to appoint a new undersecretary for AT&L and have that person preside over the dissolution of the office, then transition into one of the new roles. The other is to dissolve the office immediately and start fresh with two new under secretaries.

"Seems to me the wiser course of action is to have the secretary of defense as quickly as possible disestablish AT&L...and reestablish the two new offices, align the functions as necessary and then identify the best person to serve in each of those respective undersecretary positions," Chvotkin said.

Splitting up AT&L isn't the only organizational change spelled out in the 2017 NDAA. The legislation also undoes a change legislated in the previous NDAA but not yet put into effect – merging the positions of CIO and deputy chief management officer into one Senate-confirmed.

The 2017 NDAA maintains the status quo: separate CIO and DCMO positions.

"The call to unite the two into one position stems from some of the duplicative nature of back-end process management," said Kidder.

"There have been calls by the GAO and others for years to replace [outdated Enterprise Resource Planning systems] with newer, consolidated, interoperable systems," Kidder said. "Arguably, this kind of process management belongs under the chief management officer, who is responsible for making the institution run from the business perspective."

"I do think that it would have been possible to align all of the inherent business management responsibilities of the CIO with the DCMO's responsibilities: modernizing the networks and reducing IT costs, and possibly managing all of DOD's data," she said. "However, the CIO is also responsible for cyber defense within the department, and maximizing spectrum access to enhance operational effectiveness for the warfighter. These responsibilities are not as easily consolidated under a CMO-type position."

"The value of centralization is both transparency and accountability," said Chvotkin. He said the new secretary of defense will have to decide how to address persistent management challenges and whether to consolidate them at a level below an undersecretary or to maintain the more segregated and distributed management model.

"We never got to test out the integrated model," he said.

This article was updated Dec. 23 to reflect the signing of the FY2017 NDAA into law.