Love him or hate him, if you follow Defense Spending at all, you should have taken notice of this Executive Order, and hopefully you saw it for what it is--the most comprehensive attempt to reform Defense Acquisition since SECDEF McNamara destroyed innovation with PPBE back in the 1960's. I hope President Trump is successful on this because we cannot afford--financially or from a security perspective--any more time under the disaster mountain of regulations, risk aversion, and ineffectiveness that we currently have. No other nation spends nearly as much as we do, yet so many of them get so much more bang for the buck for the national defense. We have to change.

Read the EO, but the skinny of it is that the President is mandating a commercial-first approach, rapid acquisition, and a top-down review of decision-making authorities and workforce structure to accelerate fielding requirement to the warfighter.

My quick take? This could actually work if implemented correctly. It is the first acquisition reform in my lifetime that is comprehensive enough to cover everything needed. The final act to really make it work would be to get rid of the colors of money, and find a way to get Congress on board.

Here are some answers to a few expected questions about the EO:

What does this EO mean for Businesses?

- This may benefit small businesses, especially those who are agile and commercial savvy.

- Any company that produces products that have commercial and military benefits stands to win if they are willing to participate (think SPACEX).

- Small businesses who are reliant on set-asides and are FAR-reliant may struggle if they do not adapt, or if those set asides become more complicated and fall out of favor. The EO specifically de-emphasizes FAR-based set asides. They will have to learn to compete directly.

- Traditional Defense Primes, who have spent years cultivating a relationship with program offices and Congressional staffs and have spent large amounts of money training their people to be CDRL-responsive and focused on the FARs may find themselves on the outs if they do not adjust.

- The Big Question as they restructure will be how this affects small businesses that focus on SBIR/STTR developmental contracts, whether they are Commercial Services Offerings or a regular developmental contract. SBIRs often address stated needs, but the path to contracting via aligning the contract with a “vetted” requirement is painful at best now. Placing heavy emphasis on this process to actually produce equipment the forces need would be a huge benefit for the warfighter, taxpayer AND small businesses.

- The EO is very specific about using a commercially available product first. But acquisition officers unwilling to go this direction, or requirements personnel who want something more specific may—if the requirements rules allow them to—craft requirements that mandate a unique piece of equipment not available on the commercial market.

- Initially, the impetus may be on Acquisition professionals to target commercial companies to bring them into Defense for some of their products. Thirty years ago, commercial/defense companies were the norm. SECDEF Aspin's “Last Supper” where he told industry to consolidate destroyed that paradigm, and many companies may not want to jump back in.

- If you are a Defense Contractor that has thrived on a close relationship with the program offices, the next few years may prove to be a large challenge to you. Even more important, if you are a DoD PM who relies on your comfortable Primes, this may not end well for you.

- Use of OTAs and similar vehicles, especially when the contracting officers learn how to use them without making them mirror a FAR-based acquisition/contract, will lead to less red tape and accelerated actions.

Will EO 14265 reduce costs and speed up procurement?

- It should if followed aggressively. The key will be the incentives offered to the Acquisition professionals, and the re-vamp of the requirements process. I big part of the directive is the order to go commercial first. For example, existing aircraft, particularly those with a commercial market, immediately jump to the front of the line IF exquisite and unique requirements are not used to count them out.

- A way the DoD can ensure a reduction in the flash to bang timeline is to increase overall procurement funding while actively reducing R&D funding. This will force the issue.

- OTAs open the door for rapid prototyping for R&D programs—if used effectively.

- As we said before, one of the greatest catalysts the DoD can use to accelerate change is to cancel an existing overbudget/timeline program and replace it with a commercial variant right away. That will put the market on notice that this is not theater.

- Risk aversion runs deep in the DoD Acquisition establishment. It will take real leadership and patience to allow for failure and the “fail fast” mentality. That has not been the mindset for 50 years.

- Compliance arms of the DoD like DCMA may perceive themselves as big losers here, and fight change for vocal “altruistic” and “patriotic” reasons. It gets even more complicated when you start looking at compliance issues like CMMC and regulatory capture elements that have worked to shape the environment to their benefit. You may then have DoD bureaucracies partnered with companies that have exerted effort to protect and create turf that benefits themselves.

Will EO 14265’s mandated workforce reform make a difference or hinder the progress?

- The key to successful workforce reform will be incentives and a few early wins that put the force on notice without leading with threats of unemployment. The DoD wants everyone on payroll working hard to effect change until their last day on the job, and that won’t happen if they lead with threat of firings and workforce reduction instead of appealing incentives.

- The second key will be effective re-training of the workforce, at least “seeding” enough trained KOs in the various program offices to make a difference at first.

- If done correctly, the right-sizing of the approval chain can and will make a significant difference. PMs are often powerless to spend money and make changes to a program without getting to the General Officer/SES level very quickly, which stifles innovation and speed.

- We cannot say enough that existing culture will fight this until they see success or fear for their personal survival. The defense bureaucracy is very good at outlasting reform, to providing window-dressing reform while ignoring the main tenets of change that matter.

The Big Wildcards:

- Congress still controls the purse strings, and many MDAPs have strong political backing in specific districts.

- Even downsizing a failing program will run into headwinds in Congress.

- Defense contractors who have something to lose will not be advocates and use their lobbying power to be heard and slow down/scuttle change.