INTRODUCTION TO DEFENSE ACQUISITION MANAGEMENT tenTH Edition AUGUST 2010 Published by the Defense acquisition university Press Fort Belvoir, Virginia For sale by the U.S. Government Printing Office Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20401-9328 ISBN 978-0-16-084076-0, Stock Number 008-020-01592-0 ii PREFACE This tenth edition of Introduction to Defense Acquisition Management includes revisions to the regulatory framework for Defense systems acquisition from the December 2008 Department of Defense Instruction 5000.02, the Weapons System Acquisition Reform Act of 2009, and the July 2009 version of the Joint Capabilities Integration and Development System Manual. This edition also reflects the 2010 change from a biennial to an annual Planning, Programming, Budgeting and Execution process. This publication is designed to be both an introduction to the world of defense systems acquisition management for the newcomer and a summarylevel refresher for the practitioner who has been away from the business for a few years. It focuses on Department of Defense-wide management policies and procedures, not on the details of any specific defense system. The document is based on numerous source documents. For the reader who wishes to dig deeper into this complex area, a list of Web site addresses is provided after the last chapter. Every attempt has been made to minimize acronyms. Commonly used acronyms are spelled out the first time they are used in each chapter. More difficult or rarely used terms are spelled out each time for ease of reading. Initial capitalization has been kept to a minimum to increase readability. We encourage your suggestions and comments. A postage-paid customer feedback form is provided at the back of this pamphlet for your convenience. Please take a few minutes to fill it out and help us improve our publication. Bradford Brown Director, Center for Acquisition and Program Management Learning Capabilities Integration Center Defense Acquisition University iii ACKNOWLEDGMENTS The authors of Introduction to Defense Acquisition Management appreciate the comments and suggestions of interested readers and Defense Acquisition University faculty for this tenth edition. We would also like to offer special thanks to the following DAU Visual Arts and Press personnel: Tia Gray for layout and design and Frances Battle for Print Management. iv TABLE OF CONTENTS CHAPTER 1 Basics. .................................................................................................. 1 Definitions........................................................................................... 1 The Role of Congress, the Executive Branch, and Industry in Defense Acquisition....................................................... 3 Executive Branch........................................................................... 3 Legislative Branch......................................................................... 3 American Industry......................................................................... 4 Successful Defense Acquisition Program........................................ 5 Authority for the Defense Acquisition System................................ 6 Public Law..................................................................................... 6 Executive Direction........................................................................ 7 Chapter 2 The Acquisition Environment. ....................................... 8 Defense Systems Acquisition in the 21st Century........................... 8 Improving How DoD Does Business................................................ 9 Initiatives to Improve Defense Acquisition................................... 11 Chapter 3 Program Management in Defense Acquisition.... 14 Program Management.................................................................... 14 Program Manager........................................................................... 14 Program Manager’s Perspective................................................... 15 Why is Program Management Used in Defense Acquisition?..... 16 Integrated Product and Process Development.............................. 16 The Program Manager and Integrated Product Teams................. 16 Chapter 4 Department of Defense Acquisition Policy...... 17 Department of Defense Directive 5000.01.................................. 17 Department of Defense Instruction 5000.02............................... 17 Three Major Decision-Support Systems....................................... 17 Acquisition Categories.................................................................... 19 DoD Space Systems Acquisition Process....................................... 22 Defense Acquisition Portal.............................................................. 22 v Chapter 5 Defense Acquisition Management: Key Personnel and Organizations............................ 23 Background...................................................................................... 23 Packard Commission.................................................................... 23 Defense Management Review..................................................... 23 Program Executive Officers......................................................... 24 Acquisition Program Reporting................................................... 24 Component Acquisition Executives............................................... 24 Component Chief Information Officers ...................................... 25 Direct-Reporting Program Managers........................................... 26 Under Secretary of Defense for Acquisition, Technology and Logistics............................................................ 26 Defense Acquisition Board ......................................................... 30 Information Technology Acquisition Board . .............................. 30 Joint Intelligence Acquisition Board............................................ 30 Joint Requirements Oversight Council........................................ 30 Integrated Product Teams ............................................................. 31 Component-Level Oversight.......................................................... 32 Chapter 6 Determining Joint Warfighting Needs. ................ 34 The JCIDS Process and Acquisition Decisions............................. 35 Identifying Needed Capabilities..................................................... 35 The Sponsor..................................................................................... 37 Joint Potential Designators........................................................... 37 Functional Capability Boards....................................................... 37 Gatekeeper.................................................................................... 38 Interoperability............................................................................... 38 Testing of C4I Interoperability Requirements............................. 40 Chapter 7 DEFENSE Acquisition Management system. ........ 41 Acquisition Life Cycle..................................................................... 41 Technological Opportunities and User Needs.............................. 42 Entrance and Exit Criteria............................................................ 42 Evolutionary Acquisition.............................................................. 43 Milestones and Phases.................................................................. 43 Acquisition Strategy Considerations............................................. 43 vi  Pre-Systems Acquisition.............................................................. 43 Systems Acquisition..................................................................... 45 Key Activities................................................................................... 49 Chapter 8 THE Resource Allocation Process........................... 54 Phase I—Planning, Programming, Budgeting, and Execution Process..................................................................... 54 Phase II—Enactment...................................................................... 59 Phase III—Apportionment............................................................. 59 Phase IV—Execution...................................................................... 60 Internet resources .............................................................. 61 vii 1 Basics A basic understanding of the Department of Defense (DoD) acquisition system begins with the following overview: The Defense Acquisition System exists to manage the nation’s investments in technologies, programs, and product support necessary to achieve the National Security Strategy and support the United States Armed Forces. The investment strategy of the Department of Defense shall be postured to support not only today’s force, but also the next force, and future forces beyond that. The primary objective of Defense acquisition is to acquire quality products that satisfy user needs with measurable improvements to mission capability and operational support, in a timely manner, and at a fair and reasonable price. (DoD Directive 5000.01) DEFINITIONS Acquisition includes design, engineering, test and evaluation, production, and operations and support of defense systems. As used herein, the term “defense acquisition” generally applies only to weapons and related items, such as military cargo trucks and information technology systems, processes, procedures, services, and end products. The word “procurement,” which is the act of buying goods and services for the government, is often (and mistakenly) considered synonymous with acquisition; it is, instead, only one of the many functions performed as part of the acquisition process. For example, many things required by DoD, such as passenger vehicles, office supplies, and waste removal, are “procured”; however, they are not subject to the full range of regulatory oversight inherent in the acquisition process for weapons, information technology systems, and supporting services, so they are not described in this publication. 1 Acquisition programs are directed and funded efforts designed to provide a new, improved, or continuing materiel,1 weapon or information system, or services capability in response to an approved need. A weapon system is an item that can be used directly by the Armed Forces to carry out combat missions. Information technology systems include both national security systems and automated information systems. National security systems used for intelligence and cryptologic activities, and command and control of military forces are integral to a weapons system or critical to the direct fulfillment of a military or intelligence mission. Automated information systems are usually associated with the performance of routine administrative and business tasks such as payroll and accounting functions. Services refer to those contractor services that support and enhance the warfighting capabilities of DoD, such as advisory and assistance services. Management includes a set of tasks required to accomplish a specified project. One way of looking at systems acquisition management is by looking at individual elements that comprise each of these terms as noted below: System • Hardware • Software • Logistic Support — Manuals — Facilities — Personnel — Training — Spares Acquisition • • • • • • • Design and develop system Test Produce Field Support Improve or replace Dispose of Management • • • • • Plan Organize Staff Control Lead The program manager (PM) is the individual within DoD chartered to manage an acquisition program. Chapter 2 provides more insight on program management. 1 Materiel is a generic word for equipment. It is inherently plural. It is distinguished from material, which is what things are made of. Material can be singular or plural. For example, aircraft are materiel; the materials aircraft are made of include aluminum, steel, and titanium. 2 The Role of Congress, the Executive Branch, and Industry in Defense Acquisition At the national level, three major top-level participants in defense acquisition are the Executive Branch, Congress, and the defense industry. The perspectives, responsibilities, and objectives of these participants are summarized in this chapter. Executive Branch Major participants who have significant impact on defense acquisition programs within the Executive Branch are the President, the Office of Management and Budget, the National Security Council, and DoD. Chapter 5 contains a more detailed discussion of organizations and positions below this top level. The chart below characterizes the perspectives, responsibilities, and objectives of the Executive Branch: Perspectives • Formulate, direct and execute national security policy • Patriotism • Personal ambition • Re-election Responsibilities Objectives • Sign legislation into law (President) • Serve as Commander-inChief (President) • Negotiate with Congress • Make decisions on major defense acquisition programs (the Under Secretary of Defense for Acquisition, Technology and Logistics) • Issue directives/regulations • Contract with industry • Satisfy national security objectives • Maintain a balanced force structure • Field weapon systems to defeat threats to national security • Prevent undue congressional interest/scrutiny • Eliminate fraud, waste, and abuse in federal procurement Legislative Branch The Legislative Branch (Congress) includes the two committees that authorize defense programs, the Senate Armed Services Committee and the House Armed Services Committee; the two committees that appropriate dollars for defense programs, the House Appropriations Committee and Senate Appropriations Committee; the two committees that set spending limits for national defense, the Senate and House Budget Committees; various committees having legislative oversight of defense activities; individual members of Congress; the Congressional Budget Office; and 3 the Government Accountability Office. The chart below characterizes the perspectives, responsibilities, and objectives of the Congress: Perspectives • • • • • • Constituent interests Two-party system Checks and balances Patriotism Personal ambition Re-election Responsibilities • Conduct hearings • Raise revenue; allocate funds • Pass legislation • Perform oversight and review Objectives • Balance national security and social needs • Distribute federal dollars by district/state • Maximize competition • Control industry profits • Control fraud, waste, and abuse American Industry Industry (contractors) includes large and small organizations, both U.S. and foreign, providing goods and services to DoD. The chart below characterizes the perspectives, responsibilities, and objectives of the defense industry: Perspectives Responsibilities • Stockholders’ interests • Respond to solicitations • Capitalism • Propose solutions • Patriotism • Conduct independent research and development • Design, produce, support, and upgrade defense systems Objectives • • • • • Profit and growth Cash flow Market share Stability Technological achievement Numerous external factors impact and help shape every acquisition program, creating an environment over which no single person has complete control. These factors include policies, decisions, reactions, emergencies, the media, public sentiment, world opinion, and the ever-present (and changing) threats to national security. Often these factors work at opposite purposes. Understanding and dealing with the environment they create is one of the greatest challenges for defense PMs. Figure 1-1 illustrates some of the interrelationships among these key players. This figure also shows the PM in the middle of a complex triangle of relationships, faced with the challenge of managing a defense acquisition program in the midst of many significant, diverse, and often competing interests. 4 PROGRAMS/BUDGET AUTHORIZATIONS APPROPRIATIONS ($) HT EXECUTIVE S ING IEF /OV TIO RIC EST N AT ION AL SUP POR T S/R ION LAT P OL ALLIES C ONTR P RODUC ACTS TS/S E ION S LAT ICY EGU AC /REGU N /R RVICE NS /BR NS NS LA TIO RE TS PROGRAM MANAGER TIO BY /P USER RT OR RE GU HT EP SLA L OB COURTS S/P LA IG Y /R RS ON VE IM L EGI MEDIA PO ST S /O TE DIT ER AU SIG CONGRESS PUBLIC INDUSTRY Figure 1-1. The Program Manager’s Environment Successful Defense Acquisition Program A successful defense acquisition program places a capable and supportable system in the hands of users (the warfighter or those who support the warfighter), when and where it is needed, at an affordable price. The ideal outcome necessary for successful long-term relationships among the participants in defense acquisition is “win-win,” wherein each participant gains something of value. Depending on your perspective, “success” can take many different forms. • For the PM, success means a system that is delivered on time, within cost, and meeting the warfighter’s requirements. • For the Office of the Secretary of Defense, success means a program that satisfies national security objectives, provides a balanced force structure, and does not attract undue congressional scrutiny. • For Congress, success means a system that strikes a balance between defense and social needs and provides a fair distribution of defense dollars by state/district. 5 • For industry, success means a program that provides a positive cash flow, offers a satisfactory return on investment, and preserves the contractor’s competitive position in the industry. • For the warfighter, success means a system that is effective in combat and easy to operate and maintain. Authority for Defense Systems Acquisition The authority for DoD to conduct defense systems acquisition (i.e., to develop, produce, and field weapons and information technology systems) flows from two principal sources: public law (legal basis) and executive direction. Executive direction flows from the authority of the President and the federal government’s executive agencies to issue orders and regulations to enforce and facilitate the law and to carry out the constitutional duties of the executive branch. Public Law Statutory authority from the Congress provides the legal basis for systems acquisition. Some of the most prominent laws impacting defense systems acquisition follow: • Small Business Act (1963), as amended • Competition in Contracting Act (1984) • Department of Defense Reorganization Act of 1986 (Goldwater-Nichols) • Government Performance and Results Act (1993) • Federal Acquisition Streamlining Act of 1994 • Weapon Systems Acquisition Reform Act of 2009 • Annual authorization and appropriations legislation, which may contain substantial new or amended statutory requirements (like the FY2006 requirement for certification of major defense acquisition programs prior to program initiation). 6 Most provisions of the laws listed above have been codified in Title 10, United States Code, Armed Forces. Executive Direction Authority and guidance also come from the Executive Branch in the form of executive orders and national security decision directives issued by the President as well as other agency regulations. Examples of executive direction follow: • Executive Order 12352 (1982) directed procurement reforms and establishment of the Federal Acquisition Regulation (FAR). • Federal Acquisition Regulation (1984) provided uniform policies and procedures for the procurement of all goods and services by executive agencies of the federal government. Additional guidance for defense acquisition programs is provided in the DoD Federal Acquisition Regulation Supplement (DFARS). • National Security Decision Directive 219 (1986) directed implementation of recommendations of the President’s Blue Ribbon Commission on Defense Management. • Executive Order 13101 (1998) implemented the provisions of the Resource Conservation and Recovery Act to ensure federal agency use of environmentally preferable products and services, and directed the use of cost-effective procurement preference programs (sometimes called “green procurement”) favoring the purchase of these products and services. • Office of Management and Budget Circular A-11 (updated annually) describes the process for preparation and submission of budget estimates; strategic plans; annual performance plans; and the planning, budgeting, and acquisition of capital assets for all executive ­departments. 7 2 The Acquisition Environment Defense SYSTEMS ACQUISITION IN THE 21ST CENTURY The war on terrorism has taught us that future threats to our national security will come from many diverse areas—domestic and international terrorists, state- and non-state-sponsored threats, computer hackers, and others. Likely adversaries can be expected to pursue and adopt any methods and means that confer an advantage relative to U.S. military power -- including methods that violate widely accepted laws and conventions of war. Even an advanced military power can be expected to adopt some methods considered “irregular” by Western standards, while nonstate actors increasingly are acquiring and employing “regular” military capabilities. Rather than attempting to defeat U.S. forces in decisive battle, even militarily significant states are likely to exploit increasingly inexpensive but lethal weapons in an erosion strategy aimed at weakening U.S. political resolve by inflicting mounting casualties over time.2 The 2008 National Defense Strategy stresses the importance of winning the Long War. For the foreseeable future, winning the Long War against ­violent extremist movements will be the central objective of the U.S. … Success in Iraq and Afghanistan is crucial to ­winning this conflict, but it alone will not bring victory. We face a clash of arms, a war of ideas, and an assistance effort that will require patience and innovation.3 2 Capstone Concept for Joint Operations, v3.0, Chairman of the Joint Chiefs of Staff, 15 Jan 2009. Available at
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