 Okay, good morning, and welcome to our panel, which is the corporate panel led by Gordon England. I'm Pete Daley, CEO of the U.S. Naval Institute. I'll introduce the honorable Mr. England, and he will introduce the rest of the panel. Gordon England provides, in one person, kind of the embodiment of the theme of the panel, which is corporate plus the understanding of the Defense Acquisition and Business Processes. Not only was he Secretary of the Navy twice, he was deputy of the Department of Homeland Security, and then became Deputy Secretary of Defense. In his role as Deputy Secretary of Defense, he led the Defense Business Processes. I had the pleasure to work for him personally as Secretary of the Navy on time number two. His business career spanned over 40 years as an engineer and senior executive. He was president of two major entities. First, he served as the president of General Dynamics Fort Worth, which later became Lockheed, and president of General Dynamics Land Systems Companies. No one has a better perspective on the discussion today than does Gordon England, and I want to mention that he just recently stepped down as the chair of our Naval Institute Foundation, for which we're very grateful, and we just honored him by naming a chair of professional naval literature in his honor. Let's welcome Gordon England. Pete, thank you. So yeah, Pete was my trusted aide when I was Secretary of the Navy, and it's great still being with him, and so welcome. It's a terrific to have you here today. So this is a very interesting topic. I was speaking right before the panel that when I was Deputy Secretary of Defense, I had him pull out all of the studies that had been accomplished on acquisition reform. There were, turns out, there were 128 studies. This goes back maybe 25 years. Four of them I actually chaired when I was on the Defense Science Board in my industry role, and so this is an ongoing process, an ongoing process about how do we have a better relationship between industry and government, and so hopefully today we get an update on what the situation is, and we're very fortunate today because we have Frank Kendall with us very recently, a very, very top position in government, and we have three people represent a cross-section of the defense industry that supports the Department of Defense. So Frank Kendall, the format today is, I'm just going to do a brief introduction, sit down. This could be question and answers, and you will have an opportunity also for time for questions before the panel is over, so you might think about something, you know, what is of interest to you personally, and we will try to address it for you today. So Frank Kendall is with us, and as you know, the Honorable Frank Kendall, he was acquisition, technology, and logistics, number three person in the Department of Defense, but most of the money, right? I mean, probably $150 billion he was responsible for in that role. Graduate U.S. Military Academy has a doctor of law from Georgetown and a master's in aeronautical engineering, so probably one of the most qualified people we've ever had in the position of AT&L. We have Marilyn Crothers with us, Marilyn, welcome, and so Marilyn represents the service aside, more and more business, service aside, more and more money going on in that side of a defense procurement, and she's with Hewitt Packard Enterprises and IT, so this is information technology, IT industry, network perspective, so we'll get a unique representation with Marilyn. We have Dale Bennett with us. Dale is Executive Vice President of Lockheed Martin's Rotary and Mission Systems Sector, about 34,000 employees, about $2.5 billion of business. It's like 1,000 programs under Dale, Aegis, combat systems, atural combat ships, of course, geolocopters, CyberZ4, you name it. He has a master's in engineering from Johns Hopkins, MBA from the Sloan Fellows Program, and I've got Mike Petters here, Mike. Okay, Mike Petters, old friend. He is President and CEO of Huntington Ingalls Industries, of course you know they do submarines, they also do the carriers, they do destroyers, amphibious warships, they do ships for the United States Coast Guard, he is a Naval Academy graduate, Naval Reservist, and he has an MBA from William & Mary, so a great cross-section, and so let's get on. So I'm going to ask Frank the first question, then I'm going to sit down with him, and so Frank Kendall recently from AT&L, so when I work for Donald Rumsfeld, Donald Rumsfeld, the first time he was Secretary of Defense back in the 70s, Donald told me that when they would get an appropriation, authorization from the Congress, it would come over and it would be one or two pages, so when I was deputy and we would get something from the Congress, it would be like 1200 pages, 1300, 15, every year for eight years, I mean that's like every year you got like 10 novels of information from the Congress, after a while it was hard to just keep track of all this, and now it appears that Congress even quoted even more intrusive because they decided to reorganize the Department of Defense, in fact it's his AT&L, I'd like to hear his comments on that, but you know they're talking about re-organized, in fact it's I guess they are, they're in a process of reorganizing AT&L now, so Frank my first question is, knowing again that Rumsfeld, there's a lot of unknown unknowns in this world going forward, but nonetheless, I mean what's your perspective on this, I mean how does people in DoD respond, how does the industry respond, I mean sort of give us a view, which is environment Frank, tell us, give us your perspective. There are extremes here that I'll mention, on the one end, and I think this is probably not unreasonable, the Congress will appropriate money, the DoD will put it on contract, and the industry will do the work, that is not going to change, and there are these, I've described the acquisition system as this layered system with industry at the bottom doing all the work, and a layer on top of that that basically manages industry and does the contracting and the program management and so on, the government's perspective, then a layer of senior government management on top of that and then the Congress up above. On the other side of the coin is the tendency of the Congress to micromanage and to try to influence things through all those layers, and I think Gordon's point about the length of the acquisition bill in particular is spot on. I understand Congress' frustration, they'd like to see every program executed perfectly and they get frustrated when they don't see that, but the business that the department is in and that industry is in for is inherently one that involves risk and uncertainty and difficulty, it's very challenging, we're trying to build systems that are a generation ahead of anything else in the world, we're going into places where nobody has ever been and there's risk associated with that and the idea that you can do that perfectly is totally unrealistic. Now I feel I should get a plug for my book in while I'm here. The problem, I'm not a very good businessman, my book is free. I wrote a collection of about 30 articles for the workforce and acquisition of the government while I was there and as well as a number of other things, I put them all together in a volume that I published just before I left, and if you Google Getting Defense Acquisition Right, you'll go right to it, it's a defense acquisition university and you can download it, Getting Defense Acquisition Right. So I won't have time to go through all the things that are there today but a lot of this stuff is covered, including the Congress and its role and some recommendations I specifically gave to Senator McCain and Levin when they were looking for input at one point. It's very difficult for the Congress, I make the analogy that it's as if the board of directors of a hospital or a large medical corporation if you will, we're trying to write detailed rules for how all the doctors should practice medicine. It's not a good model, it doesn't work and at the end of the day, improving acquisition is about doing an awful lot of things well and the enormous number of different circumstances and the thing I have pleaded with the Congress to do more than anything else is to give us flexibility. Last year, Mack Thornberry and the House Armed Services Committee had put out a draft version of the NDAA which included the guidance that all systems, all new programs, had to be open systems and had to be modular designs, period, no exceptions and I was able to persuade him to put the words to the maximum extent practical in that. Now some of his staff I think looked at that as kind of a loophole that we were to avoid the guidance but I looked at it as an absolute necessity. You don't have that freedom in every design to do what we were asked to do. It's a good practice, it's a general practice but it's not something you can always do and the range of things and the ranges of ways we acquire things and the risk-technical risk, operational urgency, whole host of factors, the business arrangements you want to have that are optimal, argue against very specific rigid rules. Same is true of contracting approaches for example. So I understand that Congress is frustration but my plea to them is stop writing rules for us and to look at the rules that we have and there's a commission that's looking at this now for contracting rules and try to get rid of some of them so that we can be given the opportunities to use our professionalism and do the right thing in the given circumstances. I don't know that I'm ever going to win that argument but I'm going to keep making it because it's absolutely the right thing to do. At the end of the day, getting acquisition right is about professionalism. Professionalism in industry, professionalism is in government and incentives that work for both of those groups to do the right thing and then close cooperation on requirements for the operators to make sure they're reasonable. It's not that hard an equation but the variety of circumstances we deal with is almost infinite and you've got to give people a chance to do their jobs and do them well and then hold them accountable for that. So Frank that's a great lead in. Roy, my next question and my next question is to all three of the industry panels here so Dale, I'll start with you. So Dale, if you were king for the day, we just anointed you secretary of defense. You now walk in, you're a secretary of defense and you can do one single thing based on your experience in industry. You can do one thing to improve the acquisition, the relationship, I mean this whole everything between government industry and the defense sector. Tell me what you do and why. Maybe try to change the conversation just a little bit and throw some numbers out at you that I think if I was secretary of defense, you know, and the new reality of where we are with a new administration and so this data is out of AIA and I thought I'd share a little bit with you so the aerospace and defense industry employees 1.7 million workers which represents 2 percent of the nation's total employment base and 13 percent of our manufacturing base. That's significant. These are real good jobs of real craftspeople doing real important work for our, if you add in the jobs that aren't necessarily related to A&D but support A&D, it's another 1.1 million jobs. We generated 608 billion in sales last year as an industry and this isn't just defense, this is aerospace and defense across the broad. We basically generated, you know, 1.8 percent of the GDP that came out of this industry and 147, 146 billion in exports. That's up 52 percent over the last five years. And I tip my hat to Secretary Kendall and all of, he did to help support a lot of exports along the way. So I would, you know, in the new administration, I'd shift the conversation around a little bit and say this is an industry that pays its own way, that generates good products and services, generates eye-watering technology that actually bleeds off into the economy and helps our productivity in the long run as a net exporter and it's an industry that cuts across all 50 states. And so I would take the great work on acquisition that's been done and really think through, how do I accelerate it? We don't know how much time we have. We can't spend two years doing AOAs and then two years doing draft RFPs. We'll miss the opportunity. And so what are the, we'll need to find what the new term is. What are the shovel-ready sort of things that we can do that's going to generate the jobs in our economy that's going to also help maintain DOD and defense as being a number one priority in the country and continue to work on our exports and our technology investments. And so I would take this opportunity. It's a win, win, win. It's a win for the defense department. It's a win for the economy. And it's what the president's looking for. And I think there's great opportunity for us to bring that technology and bring those jobs and do it now. So, given that, is there anything specific that you would, like in contracting or anything, is there anything that would benefit you as a company in terms of regulations, rules, negotiations, specifications, you name it? Sure. Sure. I think we've got to get back to, you know, what I'll call is threat-based set of requirements and really understand where the threat is going, how fast the threat's moving, what are the gaps to meet in that threat, and really focus our energies on that and really kind of come up with, you know, a way to rapidly do acquisition. You know, we've got the contracts folks are professional and what they do today, we've got to align them with the PEOs so that they can actually do it in a timeline that's relevant to the warfighter. So we get that capability out there in a timeframe that's ahead of the curve on the threat axis. I think we need to continue to have a closer conversation, a more in-depth conversation with the DOD and industry to make sure that we understand what the vexing issues are, that we're putting our IRAT on the things that are solving the tough issues that our nation faces and trying to get that into our factories as quickly as we can. No, I think that's right. By the way, I endorse that. I don't think we should have specifications written unless we know that there's somebody out in the industry that has some chance of fulfilling that specification, right? I mean, writing a specification without having industry signed up knowing they can't produce it, right? Rather than just, you know, it's a wish and whatever. So I think that's a very good point. So, Mike, I mean, here you are with Navy carriers, submarines, ships, et cetera. I mean, you're down there real hardware. I mean, real hardware guy, lots of people in the yard and Navy guys. So what's your perspective? Yeah, so first thing I'd do is take all the money from the Air Force and the Army and put it in the Navy. Seriously, I actually think that what the boss cares about is what the organization is going to care about. So I think your question is actually a really good question because if you're a leader in organization, you actually have to transmit what you care about. I think the challenges that we're talking about here, there's lots of causes and trying to figure out exactly the right one, you end up with 128 studies, right? But our version of the authorization and preparation bill that you talked about being one or two pages and now being 1200, in my office, I actually have a photocopy of the contract to build a battleship and it's four pages. It referenced, it's in 1896, we built a battleship for what became President Roosevelt's great white fleet. He wasn't the president when the ship was being bought, which is kind of the nature of our business building ships for the president after next. But the contract is interesting because there are a couple of things in the contract that it says you must do. I mean, it described the size of the ship and it described the speed of the ship. It referenced what I would say we would call a data package now. It referenced some drawing package that the ship would be built to, but the contract itself was only four pages. And I think that if the authorization bill is 1200 pages, when we deliver the final contract, I'm sure it's the same for everybody else here, you deliver the final contract for an aircraft carrier, you need a couple of freight trucks to get it all up there. And I think the question is step back from all of this for just a minute. Isn't there somebody in your family that is the cook, right? There's somebody in your family that actually can cook better than everybody else. And you talk to that person and you write down their recipes, but no matter how hard you try to follow that recipe as precisely as you can, your broccoli casserole just never turns out as good as the broccoli casserole of the cook. And I think we've got to get out of the business of trying to write the recipes and trying to get back to developing the intuition and the sense of what we're trying to get done. And from the what am I going to do on the first day, I think it's to recognize that we speak different languages between the government and the industry. On the industry side, writ large, we are talking about how much are we going to invest in that program and what's the return on that program. Now return takes lots of forms. We always kind of say, well, that's the profit, but actually return can be the jobs. It can be the communities that we build. It can be the other stakeholders. There's a return to a lot of different stakeholders there for the investment that you make in a program. But when you have a dialogue with and start talking about to the government, I believe my experience is that for all of the smart folks that we have in government who have done a lot of things, I think the question of investment and return in programs and in acquisition and in things that need to be done gets overtaken by a discussion about what's the budget and how much are we spending. So a budget expense discussion is a very different discussion than an investment and return discussion. An example of that is there was a few years ago, probably more years than I care to count now, I was up in Washington. We had a meeting up on the hill that morning and that morning there was a report delivered to Congress that identified the five programs with the largest amount of cost growth in the DOD budget for the last year. And, you know, kind of some of the folks that you may know about, but the one that caught my ear was the Virginia class submarine program was identified as one of those five programs. Well, the Virginia class submarine program is the gold standard for what you do right to get shipbuilding right. And so I started scratching my head and saying how can that be on the list of the programs with the greatest amount of cost growth? So I started asking around. Turns out that was the year that we went from one submarine per year to two submarines per year. So it doubled the cost. So it doubled the cost. Right? Now the, and all that's kind of cute, but the problem with it is that in the language of budget and expense versus investment and return, cost growth sounds bad, right? And to try to put that genie back in the bottle is very, very difficult. I mean, that one we actually were able to do, but the point is that we speak different languages. And I think that King for a day, I would start to try to drive the Pentagon and drive the system to start thinking more along the lines of investment and return and less about budget and expense. And with the hope that that would try to try to de-list or de-step the recipes that we continue to try to build. So also, Mike, your comment about the spec for the destroyers. So I go back, F-16 background, right? Back in the 70s when the prototype for the F-16 was authorized, it was built an airplane, had a three-page spec, three pages. Contractor had a lot of liberty what to do. We built two airplanes, a single seat and a two seat, and we operate them for a year in competition. Now, we have a lot of industries support us. The contract value to build two airplanes and fly them for a year was, get this, $42 million. And we booked $4 million profit on the program. The next prototype program was F-22. And it was a volume of specifications, very, very detailed. And that prototype program cost $5 billion. So I do think there's a message here about the degree of specification and given contract, particularly in the prototype phase, given a lot of flexibility to see what the industry can do rather than specifying what they need to do. And I think you're right there. I think it's my experience anyway. So Marilyn, okay, you come from a whole other sector, IT big sector, right? And this is more and more federal money going into this area. So would you deal with the same contracting and bother with a lot of effort about how do we deal with services and contract instead? So again, put that ahead of when you're now Madam Secretary for the day. And how would you improve your sector if you had the opportunity? So being an IT or information technology services expert, if I were clean for the day, what I literally would do is look at all of the challenges that we have holistically. The challenge isn't just about acquisition reform. And it isn't just about defining the specifications and the requirements and making sure that you can actually deliver, industry actually has a solution, or making sure that the funding is there, and that making sure that the funding is there for a long enough period of time so that you have the opportunity to bring innovation to the table and then taken into account also the end user requirements. I would say those four things are so integral to the success of an overall project. I would take the key stakeholders in each of those four areas, bring them into the room, and take them on a transformation journey. I would ask them to tell me what process end to end would allow for the overall success of the mission, from acquisition to specification to end user experience, all of those things. How do we make sure that there's no longer a gap in terms of what the CIO and the operators actually need to have done and what they actually have authorization to purchase? Right now, literally all of the items that you spoke about are not for lack of people wanting to do the right thing. It's because we have rules in place that are outdated that need to catch up with technology. I would go on a transformation journey. I would integrate all of those tools and resources together. I would bring the right key stakeholders in the room and I would solve the problem. Sounds like a systems approach to the issue. Let me bring up another issue. The issue now is one time defense was the big of Huna, right, and all the R&D, and advancements in technology, but more and more, vastly more and more, it's all in the commercial sector, right? I mean, commercial sector, every six, their business plan is six months a year, that's about it, and new products crank out regularly, etc. DOD still has the same long time. We heard it yesterday, panel right here, I listened in on seven years, 14 years, etc. If you have a program that's going to last seven, 14 years developed, in the meantime, the commercial world is out there, you're just roaring along, I mean, how does DOD keep up with all this? I think more and more, this is issue, because that commercial technology is available to our adversaries. So if we have trouble utilizing it on a timely matter, I mean, Franklin would fall behind. So Frank, what do you think? There's so much on the table here, it's hard to know where to start exactly. The cycle time for our major weapon systems has gone up modestly over the last few decades, and that you can track that to kind of the complexity of the weapons systems. The F-22, for example, is a very, very different weapon system than the F-16. So some of it is about the peer design, it just takes to do those new designs, and a lot of its software, which we need to get better at. It is quite clear that when we buy an asset, a capital asset, like a fighter aircraft, for example, or a capital ship, we're going to keep that asset in our inventory for 30 or 40 years. And because of the pace at which technology, particularly information technology, is moving, we have to be able to upgrade those systems at reasonable interviews. That is driven, frankly, as much by anything as by funding availability, and priorities within the department, within the services. You have to design that, you have to put that in up front, so it's easier to do that over time. So we encourage people to do that. We put that in as our policy. It's been actually part of the department's policy for many, many years. And I'm trying to get myself out of the habit of saying we, because I don't want to do it anymore. It's hard to do. But you know. So there are definitely things we can do in terms of management practices that make it easier to bring technologies in. I like to tell people that the defense industry, people up here with me, are not oblivious to those technologies, and they're looking at them as ways to be more competitive. I spent more time in Silicon Valley back in the 90s when I was VP of engineering at Raytheon than at any other time in my career. And it was because those were the technologies that were going to make us more competitive, that we could integrate them into the products we're going to offer. A lot of times those technologies are not the end items, if you will. They're going to be embedded in something else. So you need to figure out a way to bring them in through the people who are specialized at providing those big capital assets that are unique to the department, and that we buy in relatively low volume compared to commercial products. Now that's really the way that a lot of those things come on board. So you've got to create paths for that, and you have to create incentives for that to happen. So Dale, let me ask you then. Here you are, a defense contractor. You've got 1,000 programs that cover all this technology, defense contractor, but behind you there's this warring commercial technology out there, right? Changing every six months. So how do you access? I mean, how do you bring that in? Well, how do you, I mean, the commercial guys don't want to do business in DOD, right? They don't want to do business because we have all these rules and right profitability and everything. So how is it, how is it you keep abreast of what's going on out there in this wonderful world of commercial technology? I think Frank had it right in the sense of, you know, in our world it's about maintaining our competitiveness, and so it's really important that we pay attention to it because that's where we can get a lot of value, and it's moving very quickly. And so we know how to identify it. We know how to acquire it. We know how to ruggedize it. We know how to make it cyber safe, and we know how to make it, you know, deployable in the platforms and the environments it needs to work. And I think a little bit of it is understanding, okay, if I'm a platform, if I'm putting it on a platform, when do I want to strike the chalk line of what technology to deploy? And I'll probably want to make that a little bit later, you know, than I might otherwise, you might otherwise think, because I want to take advantage of where the technology is going to be when I'm ready to build the platform, right? So I think, you know, having the TRL level and the manufacturing right in this level conversation and not being too quick to strike that chalk line, I think, is really key. The other point, and you made it, was the scary part is technology is continuing to change, not in a linear fashion, but in an exponential fashion, and our adversaries have access to it. And that's the scary part about this problem for me is that. And so we're working, you know, with open architectures, and you think about, you know, the ARCHI program on the submarines, or even now we've got speed to the fleet on ages, you know, how do we make sure that, again, we're looking at the threat, we understand what threat gaps are, and we're bringing the technology to stay ahead of the threat, and we're doing it in a way that's easily done without having to rebuild the ships every time. So is there a way? I mean, so I put on my hat as a small business guy, I got some great breakthrough technology. I mean, is there a door? I mean, here's Lockheed, here's this, you know, it's like the federal government, right? I mean, it's gigantic company, 40 billion. I mean, is there a door I go knock on? I mean, how do I get in? How do you even know I exist? Well, that's an important issue. We get a lot of innovation out of small business, and we do embrace that. So certainly there's a regulatory piece of the right thing to do in our contracts for small business, but we do mentor protege, we're for small business, the Sibir's program is a great program. We welcome small business because they bring agility, they bring great ideas, and they can move faster in some cases than we can, and so we do embrace them, and there is, you know, through our procurement machines, we have industry days and a way to engage with the small business to make sure that we're not missing the boat on some technology. I do also think, you know, we don't in the industry have the deep research labs that we might have had decades ago, and so our partnership with academia and the labs is very important as well, so we understand where is the technology going, what is the art of the possible, and making sure that we don't miss the boat on a core technology that's important to our products, right? Yeah, I'll make a couple of points. I've worked with large and small businesses a lot, and the one thing that start-ups in small businesses are most concerned about is loss of their intellectual property. It's their principal asset, and they have an idea, they have a concept, they have some technology that they want to make into products themselves. They're afraid of big firms in the defense industry getting hold of their intellectual property, they're afraid of the government. So there's a lot of outreach that needs to be done, it needs to be proactive, and organizations like DIUX can really help with this. One of the first things we did for DIUX was give them some things they could use with start-ups in the valley and other places to kind of explain the government's side of the intellectual property equations and educate people about the fact that the government is not going to take your property and give it to everybody else. We're not going to do that. It's very negotiable, will be done on a case-by-case basis, and if the government does want to get some rights to it, it's going to be for relatively limited use, and you can still use it for commercial purposes, for example, without having to worry about loss, but for that. There's a definite need to reach out to these firms, which are, I won't say paranoid, but to some degree is justifiably concerned about preserving their intellectual property. That's one big piece of the equation. The other thing is, they're often looking for other markets that are much more lucrative for them than the defense market is. The defense market tends to be relatively small numbers. You don't get big volumes. I was talking to somebody earlier from a company that we're working with. He would like to sell tens of thousands, or millions even, of the product that he's involved in. The defense department is not going to buy that kind of quantity. We're not going to be that big a business. We might buy a relatively handful. So you got to take that into account. The thing that the defense department does bring to the equation that is very attractive to small businesses is research and development money that does not have any strings attached to it and does not involve giving up any equity. That's another thing that startups value very highly. So early funding that allows them to mature their technology, and that can be done in a very cooperative way with the government and not put them at risk or has them do their value at all. So there are ways to do this, but largely it's about being proactive on the start of the government. I think industry too, and reaching out to these people and finding them and identifying them as an active thing as opposed to waiting for them to come to you. So Mike, here you are sort of heavy metal, a lot of heavy, and also electronics and everything. So I guess the same question. I mean, how do you bring in commercial technology and particularly the manufacturing area, where there's a lot of changes going on, all the additive manufacturing, the 3D, all the things going on. How do you access all this? And by the way, I think that's a really good point, either Dale or Frank brought up. We don't have R&D labs anymore. So the relationship with universities is ever more important because that's really wrong. Most of the basic research has taken place. We don't have corporate labs anymore, right? So do you have ways that you connect with commercial, with universities, with small business? I mean, how do you keep yourself vibrant as a defense contractor in the commercial technology world? Well, I mean, it's certainly a bit of a challenge, but there are parts of our organization that that's their job is to go out and be in the universities and be in the garages where people are coming up with new stuff. I tend to think of this whole area, though, in kind of two layers. I think there's a first layer, which is what I would call the silver bullet layer. We're trying to find that one technology that's going to keep us so far ahead for some period of time. And I think the far ahead definition has changed in the last 30 years. And I think the period of time has shortened in the last 30 years. But I think that there is a level of how the heck do we go out and find that silver bullet that's going to give us that advantage for some period of time. And I think that's one set of muscles that organizations and the government have to continue to work on. In that range, you're kind of fighting with, do you even have a crystal ball that you can see far enough to see what the silver bullet should look like? I mean, that's kind of a futurist kind of way of thinking, which is actually completely different than anybody else in your organization is thinking. The second level is really less about trying to find the silver bullet. I call this the MacGyver level of technology. MacGyver goes out with an empty bag and they say, what tools do you need? And he says, I don't know. I'll pick them up along the way. And I think that there's a sense of how do I take the stuff that's in front of me and put it together better than anybody else has. And I think that's a different level of innovation and creativity and disruption for the organization. The second level is actually, I believe, a cultural challenge. And let's go back to the first question, Secretary. We talked about the specifications and the recipes and all of those things that are being written. People that are successful in that environment are not MacGyver's. People that are successful in that environment are the ones that can actually read the recipe and follow it. And so building your organization so that you have folks, you make it safe for leaders in your organization to go out with an empty bag and come back with something that's really unique. That's a big leadership challenge. I think that's a big leadership challenge inside any one of our corporations. And I think that's a big leadership challenge inside of the government as well. My own view is that there is an awful lot of investment out there that's looking for things to invest in, either at the Silver Bullet level or at the MacGyver level. And the question was brought up that maybe the defense area is not a place where folks really want to be because the volumes aren't there and all that sort of thing. But there are ways that the defense organization writ large, all of us together, can find ways to attract that investment a little bit better. And so to me, I think if we can decide which of the two levels you want to work in and then think about how do I go and create... The second level, the MacGyver level, is actually, frankly, that's cultural for the entire industry, as opposed to the Silver Bullet level, which is a group of folks over there that are living 25 years from now and trying to figure it out. And that's a different set of muscles and a different kind of problem. But the second level is something that we can all work on. So are you doing some additive manufacturing? I mean, at least we're doing after parts and all. Oh, yeah. We're doing a lot of this. Now, one of the things we run into is you do an additive manufacturing process to create, let's just say you go create a valve. Okay. Well, now you got to go make sure that the additive manufactured valve can meet all of the shock requirements and all the other test things you put in place. And what we're seeing is that while our suppliers are very thoughtful about these kinds of advances in manufacturing, they have no comprehension what it takes to get their product qualified to be in the platform. And if you think about what we bring to the industry, I mean, we actually know how to get through those kinds of things. We know that inside and out. And so that's where we're finding some pretty good marriages going on. Yeah, you're not only going to have to qualify, but then you have to control the process going forward. Yeah, all of that stuff. Right. And that's maybe a little more difficult. So Sam Merlin, Hewitt Packard Enterprises, do you also obviously do commercial work in your organization, right? I mean, HP Enterprises is both commercial and defense, right? So I would assume in your organization, there's lots of crosstalk between, you know, people in your organization or commercial clients and right. So I assume there's some robust exchange and probably not much difference between commercial and defense in your enterprise. So there is a little bit of difference, but the collaboration across the teams is very, very critical to our overall success. At Hewitt Packard Enterprise, we have kind of two approaches. One is the four, I think, and in terms of being visionary and strategic and understanding what the... Well, let me back up and say, for everybody, Hewitt Packard Enterprise, of course, you know, Hewitt Packard broke into two groups, right? That is correct. And how big is the enterprise section of that? So the enterprise area is more than $25 billion. Just the enterprise services part of that. Hewitt Packard Enterprise in total is about $57 billion. And then HP Inc is also about $57 billion roughly. Okay. The beauty of it is that we still do have R&D labs, and we still do a ton of forward leaning thinking in terms of what's the next wave of new technology coming down the pike, be it on the commercial side of the house or on the services side, including both government and commercial clients. And so we have a large arm that is focused on innovation and new technology, but we partner with some of the smaller firms around Silicon Valley to make sure that the best in breed and the newest ideas we're able to capture quickly. We have alliance relationships with some of the smaller companies. We also have a significant mentor protege and small business alliance that we use within my organization. And so we reach from the top of the organization to our alliance partners and small businesses. And also internally, we have what we call an investment review board. And that allows for innovation from the ground up to bubble up. Some of the best ideas come from the employees on the ground working specific client issues, and they best know how to solve those. And so we give those people an opportunity to voice what their ideas are and try to work those also into our technology roadmaps and innovation agendas. So from the bottom to the very top. So such an impressive. So question, like you do all the internet, right? You do Mgen, all that. You're big into the government IT network. Do you do the, for those networks, do you also do the cyber? We do. We have security baked right into most of our solutions. Absolutely. So one of the things I also want to highlight is a cloud palette that we're doing within MCI that is allowing for some of the commercial best practices to come right into the Navy today. For example, our office 365 project. What we use is agility or agile process that allows you to do the adaptive planning as well as being able to do evolutionary development, meaning you can integrate changes right into your development opportunity right then and they're on the spot as as the demand changes or the specifications change even work those in. It allows for faster delivery. And in most instances, we have been able to cut the engineering of that initial solution by 50%. And so really being able to have that agility and to be able to integrate today's solution into the current environment is so critical. It's exactly what these gentlemen talked about, being able to maintain and build a ship at sea or being able to fly an aircraft and build it in flight. So good. So I have a couple more quick, but I'm going to open it up. If anybody has a question, I think we'll give the audience an opportunity hearing which you've heard so far. Anybody have any compelling questions out there? Okay, here we go. Good. Yeah, take time. I'm saying ready. Good leader deserves a good follower. So I'm going to follow in the footsteps of Mr. Kendall and say if anybody wants to buy my books, come to the Naval Institute. Naval Institute booth there. And Mr. Petters did. Thank you, sir. Remember Frank Kendall's book is free, so be careful what you asked for here. Sir, I have a huge mortgage, so it's not free. But I am going to try to blend what Mr. Kendall said and Mr. Petters say into a question. When Mr. Kendall started, he said he talked about the risk and uncertainty. And then he kind of talked about what I would call leap ahead technologies for risk and uncertainty. And I briefly worked with Wayne Meyer before he died, and he always said if you put more than three new technologies into a program, it's going to fail. And I think he was thinking about Zumwalt, which boasted 10 new technologies. I would like you to talk a bit about DOD's approach to this thirst for the silver bullet versus incremental. Because some people argued, maybe even me, that the incremental approach has produced a F-16, but the leap ahead approach, unless you've got unique circumstances like building a nuclear weapon, seems to indicate failure. And what Meyer told, he said, Congress doesn't have the patience, no human can do it beyond the three. I'd like you to talk a bit about that, the silver bullet versus the incremental. Thanks. Interesting question. A lot of these things come together. Requirements are kind of the key to this, I think. And I used to say, simplistically, that if I could just fix the requirement system, I would probably have done almost everything I could to improve acquisition. Requirements need to be general at the beginning and get more specific as you get further along in terms of maturity. Because eventually, you want to put something fairly specific on contract. And I think the drawing package with that battleship that Mike talked about is probably that in that case. But at the beginning, you want time to explore and to try things out and do trade-offs and make decisions that operational community needs to be heavily involved in, cost needs to be a major consideration. When you go for a leap ahead kind of a silver bullet thing, you need to have some reasonable expectation that you can get there. And you need to lay out a program that does the hardest things first, in many cases. Reduces the risk associated with the thing that you're trying to accomplish. And then the more routine things can come along that are on. You also have to make judgments about how urgent it is and how much money you're prepared to waste to get to the place you want to be and how important it is to get there in a timely way. And then all factors didn't know how you structure a program. I give many, many examples of ways that the department has done things. If you look at the program I was talking about earlier was the forward aircraft here, I think. If you look at what happened there, there was a philosophy of transformation. And Gordon was in the administration when this happened. That we wanted to do things differently. And we wanted to make leaps in capability. So our decision was made to integrate on a single new class of ships. A number of technologies that were very immature. And it was a gamble. Anything like that is a gamble. There's a lot of risk associated with that. And it was done, frankly, over the Navy's objection. I think the Navy at the time didn't want to go down that path. And we ended up with a ship that had large overruns in the first of the class. But we're bringing that cost under control now. And the follow on ships will be much more economical. And I think you can make a fair argument about whether that was a good thing or a bad thing to do. But politically it's gotten an enormous amount of criticism for the approach it was taken. But I think it's actually, in some cases, it's better to go fast, experience some ways, and get the capability. And I make my best example of this, because you can contrast the programs, is MRAPs and the Joint Light Tactical Vehicle for the Army and the Marine Corps. We have people dying in Iraq, particularly, from IEDs. And we didn't have vehicles that gave them medical protection. And we went out to industry, and we did this competitively, and we did this with very general specification. It was done in the previous administration, not the one I was in, previous one before the previous one. And it was the right thing to do. And we got industry to take basically existing automotive components, put them together into packages that have a lot of armor and give our people a lot of protection. And a few design features that helped with that. And the first ones we bought weren't quite as good as they could have been. We made changes along the way. We spent a lot of money. More than 15, 20 billion, I think, more than that. We bought 25,000 vehicles, and we provided protection for our people at a time when they really needed it. So it was, I think, the absolutely the right thing to do. What happened when we did the surge in Afghanistan was we realized that those vehicles that we had bought mostly for Iraq were not the appropriate vehicles for Afghanistan, because the train was so different. So we had to go do another round of procurement, another rapid acquisition, if you will, to buy the MATVs that we used in Afghanistan, which had dynamic suspensions, which were smaller and were suitable to the train there. So we bought another few thousand vehicles. Again, rapid acquisition program, but again, people were dying. It was a urgent need. Today, we're only going to keep a small fraction of all of those vehicles we bought in the inventory. The rest of them are gone. Close to 30,000 vehicles, we're going to keep about 5,000. So is that waste or is that a good thing to do? I would argue it was a good thing to do for a variety of reasons. Now look at the JLTV program, Joint Light Tactical Vehicle. Cycles of development requirements, competitive procurement process, a lot of testing, very detailed requirements at the end of the day, careful trade-offs on our requirements, a longer development program, but it's gotten us a vehicle, it's getting us a vehicle that we're going to keep in the inventory in whatever quantities we buy for 30 or 40 years. Both approaches have their planes. Now the other reason I would call Silver Bullets, they're basically fairly basic capabilities. I can go on and on about this. I don't want to spend too much time on it. But I think getting the specific situation, understanding that, and doing what makes sense in that situation, taking the level of risk that's dictated by a whole bunch of requirements, including operational urgency and others, is the right thing to do. And when I share Dale's concerns about technological superiority, and we've given speeches about this for years, I think we need to be taking more risk. And I think we need to be accepting a little more waste along the way, if you will, or inefficiency is probably a better word, to get to better products faster. I think the threat is dictating that. And we're not as responsive to that threat as we need to be. Some of that is money, some of that is resources. Within the department, what we did in the previous administration was we funded a number of demonstrations, experimental prototypes, basically, which are not prototyping for production. They're much shorter than that. They're not the detailed design that meets all of our requirements. They do some basic things. But we did not fund any follow-on to any of those demonstrations. That's not in our budget right now. Now, there's a chance that budgets will go up. With the new administration, I don't think they're going to go up dramatically. I hope that some of that innovation, some of those things that we started, will be fully funded and taken on as programs. Industries will respond to whatever incentives the government puts in front of it. It will respond. And if there's a desire for innovation, a desire to go fast, industry will react to that appropriately. On the other hand, if it's just by more of the same, industry will react to that. So I think the government needs to make some good decisions about how it wants to proceed. And then frankly, if we're going to stay ahead, we've got to get back to a world in which we are prepared to take some risk, prepared to have some inefficiencies and some problems getting to the products that we need and accept that. Development is only 10% of the lifecycle cost in much of our programs. Having even a 50% increase in development cost is not the end of the world if you get a good product that gives you dominance for 20 or 30 years and that you can upgrade over its lifecycle. I think we distort this. The expectations on the one hand to go with lightning speed and take a lot of risk and do creative things, on the other hand, that never have a cost over one, are completely incompatible. And we've got to figure out a way to reconcile that. And if I could find if I jump in here, I sometimes wonder the second part of what Frank, I agree with exactly what you were talking about there, Frank, across the board. But I sometimes wonder at some level, what are we afraid of? How many of you have seen these programs that are on television where they are doing some kind of remodeling or they're building a new home or something like that? And they all have different names and everything, but they all do the same thing. Whether it's a 30-minute show or an hour show, everything kind of goes along pretty good until about two-thirds of the way through the show when there's the dramatic tension. The scope is increased. We just discovered fungus in the basement. You're going to have to clean that up. And now are you going to pay for the new balcony? Or are you going to add to the budget? Or are you going to stop and just cancel the balcony so you can take care of the fungus? My point of that is it's kind of, you know, and every one of these things follows the same way. And they get to that point and they create the dramatic tension. And then you'll see some people will add to the budget and some people will cancel the balcony. I mean, that's the way they all always go. The point of that is that the taxpayers actually do this every single day. They understand what scope is and they understand what risk is. And they understand that, you know, sometimes there's no benefit unless you take risk. And we have kind of created this sort of language around everything where cost growth is bad when you're increasing the production rate to two per year. And so somehow we've got to, and this is not something that, frankly, we can count on anybody else doing on our behalf, I think we've got to start to change the language around what we do so that we can have an honest conversation with the taxpayers about, you know, we're trying to get that silver bullet over there, or we're trying to save lives in Iraq and Afghanistan. And yep, this is not going to be an incremental approach. This is going to be an all in, let's go to the moon approach. And it's going to cost us a lot of money, but we're going to save lives. And we're going to have failures along the way. I actually think that the taxpayers can handle that kind of information. And I think we've got to find, we've got to find a way so that we can all talk about that. Otherwise, what we will do is we will incrementally improve our forces, you know, one budget cycle at a time. And I think that what then will happen is we'll just, we'll start to come back to the crowd and eventually fall behind. We have one more question here, but I'm going to make one comment for that question, and that is, DoD is not political, absolutely not political, but acquisition is a political process. Right? I mean, that is overseen by a board of directors that is purely political. So Washington is not about politics, Washington is politics. And so, like you're right, but as long as there's this overlay, this board of directors, right, I mean, you don't get to just keep this sort of in these channels that you want, right? I mean, that's the reality. I'll go another question here, because then we're going to be at our end, I think. Yes, sir. My question is regarding the acquisition system and trying to receive the newest updates in software. For example, when we buy a piece of equipment, say a radio or something, we get it with version one, which is the newest latest greatest that the company is making with that piece of equipment. By the time we install that equipment in a Shipper aircraft, it's on version three is the newest latest, but we don't own that version yet. We're still on version one, which we installed two years later, when we're still using that equipment, it's on version four. And yet we're going to update it to version two. So we buy each incremental version and then eventually through time schedule and money, we get to the latest greatest, maybe never. Is there a methodology that we can use that would meet both the industry side of the house in making sure that they get paid for all their work and software and yet get us up to date with the most current technology available as soon as possible so we can skip versions two and three and just get the latest greatest on the floor where we need it. There are a number of things we can do. And some of the things that the department has done to address that problem, think about the Virginia class submarine, use of commercial IT basically on the Virginia class submarine so that you could go to future generations pretty easily because you were commercial standards basically. Having planned technology insertion efforts and planned, it's automatic on a program like the F-35 that we're going to upgrade the software on two-year cycles and we're going to upgrade the hardware, some of the hardware on four-year cycles. So we kind of built that into the program going forward. I think you have to have an awareness up front of the pace of change in technology and then do a design that accommodates that. So that's the fundamental approach I think we need to take. Industry tends to resist that. The other thing we try to do is to have competition, future competition. Industry tends to resist that. Once they get a piece of market they want to hang on to as they can. But it's definitely in the department's interest to do that and I think industry being a good supplier will acknowledge that and we ask for it incentivize it, they'll give it to us. But I think that that's what you have to do. You just have to be aware of those areas where technology is changing quickly and then plan into your design, into your acquisition process. You've got to do that. The thing that keeps us from doing it better, keeps the department from doing it better, is as much money as anything else. We have a spectrum of equipment and we tend to have the cutting-edge things that we're buying right now that are as current as we could have made them. Then you have everything else, right? Even if we designed or built those things to accommodate upgrades over time, we often don't have the money to actually implement them. And that's as much of a problem for us, frankly, as being open to it from a technical point of view. So I see Pete coming. I actually have one more question and maybe we'll have a one-minute answer for everybody. Pete, if it's okay. I mean, so we have this very complex equipment out there, but we still have depots maintaining equipment that's getting more and more complex every day. Complex in a point of people manufactured, right? I mean, takes a long time to sort of put these systems together. I'm thinking mainly electronics, software, integrated systems, et cetera. So it seems to me at some point that's going to break down, Frank. I don't think you can keep people trained enough, right, to maintain these very, very complex systems at some point. Seems like it's got to go back to manufacture or some sort of, right? And so I'm always worried about this. And yet this is a huge political issue, right? I mean, depots are almost impossible to change a workload at a depot, or by ear knows that, right? But somehow I worry that as we get more and more complex, our current maintenance, and we trigger this question, was your comment 10% that causes acquisition, right? And so here's just, but this lights, I mean, maybe in the future it's more throwaway, it's, you know, more contractor maintenance. I mean, somehow I think we ought to change the system, but anyway, maybe a quick response and we'll go down there. Okay, you know, real quickly, I think it is interesting and you look at the maturation of a product lifecycle. So the product is developed and usually the the contractor does an interim support plan and puts that in place and that costs money. And then it goes all the way, the pendulum swings all the way to the deep organic depot expense. And then some years later, we have a mature conversation about performance based logistics. And we find a middle ground where we can keep working the depots, we can keep tied into the supply chain, which is really important to keep the systems up and running. And it's really about availability and keeping the systems up and running. And there's many very successful PBLs. And so I think maybe if there's a way to think through, how do we skip those interim steps of swinging that pendulum and go right to a performance based logistics that recognizes the fiduciary responsibilities of the depots to be able to maintain the systems that are deployed and just really focus on the outcome. And that is the availability of the platforms. Okay, right. You do get into politics. Sure. Obviously the 50-50 rule between depot and private sustainment work is almost ironclad. I think it would be good to revisit it, frankly, and open up to more competition. I think the reason the depots exist is to have a national capacity that can support our military departments if needed in a wartime, basically. But it's become obviously a political thing because of the jobs associated with depots and so on. I'm a huge fan of competition. And I think we're not allowed to have direct public-private competition with my law. I think that's kind of unfortunate because there are probably ways to do that. But I think that opening it up to more in the performance-based logistics thing that Dale mentioned is spot-on. It turns out that it's harder to structure business deals and contracts to do that. And you have to be careful how you actually implement them. But you can get a big payoff from that. And again, if you provide incentives to industry, industry will respond. And that's a good example of where that's true. I would just say that in the same way that we should find a way to trust the taxpayer in our language, let's find a way to trust our system. I think Frank's right. If you incentivize the industry, the industry will absolutely respond. And so to me, there's a little bit of a philosophy discussion around what are those things that the government should do that are organic to the government. And the reason that the government is doing them is because you can't incentivize the industry to get them to respond to that thing. And so to me, that's a way to start thinking through how do you decide what's in the government and then what's the rest of it going to be? I absolutely understand the whole problem of the politics of depots and brags. But if you really want to re-engineer this thing, I think you have to step back and say, there's a few things that the government's just going to have to be able to do because we can't, we're just not going to be able to pass that risk on to the industry. There's a lot of stuff that we're doing in the government today that, quite frankly, the industry could do at least as well as we're doing. And let's start working our way through that. I expect you already do your software. You already do all the maintenance and everything, right? You just sort of built into your model, right? So from an IT perspective, you know we can't shut down an IT infrastructure for six months to go off and do maintenance. So this is all real-time, actual tech refresh, software pushes, hardware upgrades on a day-to-day basis, real-time. And so we literally work very diligently. They have a roadmap in place so that we don't incur any risk from a performance standpoint and that we are leading edge in terms of bringing the latest and greatest technology. Okay. So good. So I thank Pete. You're going to close your word here. Yes, sir. First I just want to say on behalf of the United States Naval Institute and FCA International, we truly appreciate hearing the experience and wisdom of this panel and we thank Dale Bennett, Frank Kendall, Gordon England, Mike Petters, and Marilyn Carruthers for sharing their precious time and insights with us today. Thank you very much. Let's give the panel a big hand. No panel, no panel at West 2017 would be complete without a Naval Institute Press book. This one, Congress buys a Navy, the politics, economics, and the rise of American naval power, 1881 to 1921. Mike Petters already was in there with the battleship and this is by Paul Petters and it has an FCA bookmark. Again, we thank you all.