making and management review processes. They are not attempts to usurp or to undermine the policy initiatives, execution authority and responsibilities of the Military Departments and Defense Agencies. On the contrary, the Military Departments and Defense Agencies are essential elements of the team approach to management that we have instituted. 1 will rely heavily on them to make our acquisition strategy work, and I intent to delegate as much responsibility as possible to them at all stages of the cycle. The organizational structure and policy process we have established are of no value unless they contribute to improving both the use we make of our resources and the output of our R&D and acquisition programs. I expect them to contribute in the following ways: o They will provide an institutional framework which encourages all participants in the policy process to view major programs from a broad, comprehensive perspective, including consideration of our allies, instead of a compartmentalized and parochial view. o They will integrate the major functions and responsibilities of the R&D and acquisition process, enabling us to construct a life-cycle acquisition strategy for each major program, to assign clear responsibility for executing that strategy, and to tie more closely together the policy-maker and those who implement his policy. O They will enable us to carry out more effectively In January 1977 DoD's primary directives on the acquisition process, DOOD 5000.1, "Major System Acquisition" and DoDD 5000.2, "Major System Acquisition Process" were revised and reissued to reflect the recommendations of the Commission on Government Procurement as incorporated by the Office of Federal Procurement Policy (OFPP) in OMB Circular A-109. Also in response to Circular A-109, the Secretary of Defense has appointed me the Defense Acquisition Executive. In this role and also as the permanent Chairman of the Defense System Acquisition Review Council (DSARC), I will provide a balanced assessment of each program at the major decision milestones, with the objective of developing a set of program options for the Secretary of Defense and avoiding unacceptable compromises that often result from strong opposing functional and user interests. A key thrust of the revised directives (DoDD 5000.1 and 5000.2) is that particular attention is given to restructuring the first phase or "front end" of the acquisition process. Programs will start when the Secretary of Defense approves a Service document termed "Mission Element Need Statement" (MENS), which states a mission deficiency or need in operational terms rather than system characteristics and performance. This MENS will form the basis for a mission-based request to industry, government laboratories and universities for alternative solutions, thus providing wide latitude in conceptual approaches to meet mission needs. I believe that formalizing our front-end activities will have the potential to reduce both development costs and schedules. The early validation of mission needs, the competitive development of system concept designs, and the emphasis on extended competition could go a long way toward reducing technical risks, shortening development times, and making our acquisition programs affordable. We also believe that application of these new policies will help make DoD a "better customer" by debating the need and the attendant constraints and reaching agreement between the Administration and the Congress before acquisition programs are begun, thereby, reducing the probability of program cancellation or significant redirection. To further expand on the "quality" of DoD as a customer, we intend to see that contractual and business planning aspects are inherent in all program planning. We will require that closer attention be paid in the acquisition strategy to Defense priorities, risks and affordability. Emphasis will be placed on obtaining a healthy level of competition throughout the acquisition phases beginning with solicitations for alternate concepts and extending, where practical, into production. Selection of the appropriate types of contracts and the incorporation of incentive clauses and other provisions will be made commensurate with program experience and risk. The cost of acquisition and the cost of ownership will be translated into meaningful design to cost and life-cycle cost values in order to evaluate cost on the same level as technical requirements. Military specifications, standards and data requirements will be tailored specifically toward the requirements of the given system. We also have established policy requiring the use of commercial specifications and the incorporation of commercially available components wherever practical. The requirement that a system demonstrate its technical and operational sufficiency to meet the specified military need remains the keystone of the new acquisition policies. However, we intend to ensure that there is a valid need whenever there is an acquisition program, and that we design to meet the need and no more. In support of these management initiatives I have directed my staff to examine the spectrum of acquisition policies within the DoD and reorient them or rewrite them such that we can begin managing our research, development, test, evaluation and procurement program more like a business. These efforts are further described in Chapter Ill of this Statement. The implementation of such a broad set of new policies is neither automatic nor instantaneous. During this past year there have been many false starts, and we believe there is still a long way to go. Our greatest challenge is to provide unambiguous guidance to the Services regarding implementation. After all, we make policy, but the Service functional and program manager must implement it. We now have, and will continue to have, a concentrated effort by my staff to assure that our initiatives are understood and non-disruptive to current programs. To this end we are consulting closely with the Services to obtain feedback on the impact of these initiatives so that we can "fine tune' them as necessary. I am also initiating a program to develop a long-range acquisition resources plan. Because of the lead-time phenomenon, our weapons requirements are necessarily based on competitive needs, developed from projected force deficiencies and threats, which will occur 10-20 years in the future. Since projections of the threat 10-20 years in the future are obviously uncertain, we attempt to address these uncertainties by developing hedges--the options produced by our Science and Technology Program are often critical to this effort. Nevertheless, I believe we can do a better job of establishing requirements, of designing our future systems and of exercising selectivity--particularly in the early stages of the R&D process--if we improve our understanding of both U.S. and Soviet R&D and acquisition processes and how they will pay off in terms of future deployed military capabilities. We must also develop better force-on-force analyses to identify both relative strengths and weaknesses, as well as those areas of uncertainty, that could affect future balances and conflict outcomes. Success in this effort would enable us to select R&D options in the areas of greatest leverage for future military capabilities and to design our equipment to exploit future Soviet weaknesses and our own strengths, while remaining viable despite possible changes in the threat. It would also assist in fine-tuning systems development and procurement to correspond with emerging requirements. These management tools are important to our efforts to improve both selectivity and, ultimately our military capabilities in the field. |