 I welcome you, good weather or bad, hot or cold. We count on this crew to show up. This is the second in our series of discussions with DoD in the ongoing process for both soliciting and incorporating industry views and inputs into the process for bettering acquisition and saving money along the way, which is underway. I wanted to welcome not only you all, but those on the phone as well. I believe we have arranged that the phone is broadcast only this morning, so there should be substantially less interference from rustling papers, background noises, barking dogs, and other assorted interferences. None of us in this room, of course, heard any of that, but those who are actually trying to make sense out of this telephonically might appreciate that a lot. What that does mean is you will not be able to transmit orally any questions. If you do have comments or questions that you want to submit, you can email them to me at dberteau at csis.org, and I will read them and deal with them appropriately, submit them or ignore them as the case may be. I want to welcome Brett Lambert back. Brett, of course, is running this process for DoD. I believe that both Jim Thompson and Katrina McFarlane are en route somewhere on the bridge, probably dealing with the things we've all dealt with the last couple of mornings, and we'll probably get here in time before the thing's over. Without any further comments, Brett, over to you. Thanks again for everyone. I appreciate it. This is really just a status update to let you know where we are in the process and to re-emphasize the seriousness which the Secretary, the Deputy Secretary, who is in Guam today, and the Under Secretary, Dr. Carter, and Mr. Kindle, take this initiative and the inputs we're getting. And I have to say, first of all, thank you to industry we've received. I have a large stack here of some of it that's come through the Internet site that we posted, and a lot of it has come directly to me. And either way is great. They're being delivered to the five working groups. I can assure you that there have been several of the comments that are working their way through the internal processes now. And I just wanted to share with you a few, just a reminder of a few of the comments. We were at Farnborough last week with Dr. Carter, and he mentioned that there were going to be 16 issues raised in his deliberation, and that was a bit out of context, so I first want to clarify that. The 16 items were really the result of our initial rollout here on June 28th of the areas he wanted to consider. So let me just briefly reset ourselves on the objectives of this effort. The objectives, as stated by the Secretary and the Under Secretary, are to deliver the warfighter capability we need for the dollars we have. And this is the phrase I've been using, we need to do more without more. Get better buying power for the warfighter and the taxpayer. You don't have to write this down because I have handouts here. Restore affordability to defense goods and services. Improve defense industry productivity. That's where we all come in. Remove government impediments to leanness. Again, that's where we play a role. Avoid program turbulence. And maintain a vibrant and financially healthy defense industrial base. Those are our objectives in this initiative. I would also point out that there's a key paragraph in Dr. Carter's initiative from June 28th, which is in relation to the memo we plan to issue in September, mid-September, as a result of both our internal efforts and the inputs we're getting from industry. And I'll just read this paragraph. The guidance memorandum I plan to issue will require each of you, and this is a memo to the procurement professionals inside the building, will require each of you as you craft and execute the department's contracts in the coming years to scrutinize these terms to ensure that they do not contain inefficiencies or unneeded overhead. The guidance will give you specific features to examine and targets to hit in the pursuit of greater efficiency. The guidance will focus on getting better outcomes, not on bureaucratic structures. But it must also take note of where the government's processes and regulations contribute to inefficiency in our business relationships. We really want to stress that. The inputs we're getting from industry have been very helpful, but I often feel inside the building that we shoot ourselves in the foot, we do a study, and I'm looking at one from 1988, we reload and then we shoot ourselves in the other foot. This is largely, in my mind, we have to change internally, but we understand that and we need your help to give us real honest suggestions of what we can be doing better internally to make the process work better. So the 16 issues that Dr. Carter mentioned at Farm Bureau, the topic areas, again I'm not going to go through all of them, but you all, if you were here before, had the handouts. The 16 questions we're trying to answer have been divided into these five buckets that Jim and Katrina are supposed to talk about here in a second. I'll just, I'll read the headlines. Leveraging real competition, using proper contract vehicles. Now we're probably going to get a lot of questions about that. Using proper contract types for services. Aligning policy on profit and fee based on the circumstance. Sharing the benefits of cash flow, we understand how important that is. Targeting non-value added costs. Involving dynamic small businesses in defense. Rewarding excellence in supplier base. Adopting should cost and will cost management. Strengthening the acquisition workforce. Improving our audit system. Improving, not increasing. Mandating affordability as a requirement. Stabilizing production rates. Eliminating redundancy within the war fighting portfolios. Establishing senior managers for procurement of services. And protecting our technology base. Those are the areas that we're trying desperately to work on. And when we release this directive in mid-September, it is our intent, as I've said before, this is a marathon. We didn't get here overnight. We're not going to get out of this overnight. We had a permissive budget environment where it covered a multitude of sins on both industry and government side. We know that. When we had program problems, the pressure we applied to the bleeding was money. We're no longer going to be able to do that. So we need, all of us need to step up our games, both in industry and in the department. And we recognize that. And so we're hoping that this initiative will allow us to have this interchange and interaction with industry to help us do our job better. So for those of you who don't have the June 28th memo, and it was the two of the three attachments to that memo, which include the 16 bullets, it's Ash Carter's 16 items that he mentioned in Farmboro and elsewhere, that is available on the DOD website. If you look at the press conference that was held at 3 p.m. on June 28th, there's a link that has the memo and the attachments there. So you can get all 16 of those items from that. I can just talk a little bit about the process. I'm sorry, Jim and Katrina obviously are here somewhere. But I'll talk a little bit about the internal process for people who want to know. Again, our goal here is to be as transparent as possible with industry. As I keep reminding folks, we don't, in the building, despite spending about a billion and a half dollars a day, we don't make anything. We rely on industry to provide the parts and the components to make things and to make them work and then sustain them for 20 or 30 years. So industry is a critical component. And I think Dr. Carter, Secretary Lan and the Secretary himself have demonstrated their understanding of that fact by opening lines of communication both through my office and their offices directly. So we need inputs. We need cooperation. We need to better understand what you're, you know, a lot of our program officers, as you know, have never read a P&L. So we're trying to educate. We have a lot of education to do on the inside, but we're going to need work. This is going to have to be a team effort here and we understand the importance of industry. So as I've said in my office over and over again, I need insight before we dictate oversight. So we need to make sure we are not acting on matters that have unintended consequences. We all know the story of the automobile industry and pushing down margins in the automobile industry which just went to the second and third tiers and we all know how that ended up. So we're going to avoid that in this effort. We are conscious of the effects that any decisions we make have on both not just the primes but the second and third tiers. So the five groups that Jim and Katrina are heading have been working tirelessly, although is Professor here? Yes, he's here. Where is he? Steve Schooner. Okay, so I know you're the skeptic. So good, good. So as a result of your skepticism from the last meeting, I've asked Eugene who's back there somewhere who's just joined my staff, Dr. Gould. We're going to convene a session of academics outside who aren't related to individual companies. They may have contracts, but these are 15, I think Eugene you came up with, 15 of the best and brightest from around the country of people who are concerned about reform, who have been through the 88 reform, who like you have skepticism and we've scheduled or we're trying to schedule something on the 10th and we're in August and we're hoping that you bring your skepticism. We need to know that. I think that the department will benefit from that kind of interchange and we just haven't had that interaction and we need to be skeptical because again, my fear is the unintended consequences. If we make these actions, if we're not doing it in an appropriate and effective way, we could make it worse, not better. So now that the choices that are on the table are we either get this right between ourselves and industry or somebody else tells us what to do or the European example where you just say you're going to take 5% out of every program, which would be devastating. So this is our opportunity to get it right and that's how we're viewing it inside the building is to just realize that we are where we are. We had a double digit growth environment at 46%, I think 46% over the last decade, an increase in defense money. It covered a lot of sins, like I said, on both sides and now we just need to correct that and we need to get smarter about how we operate and that's what this initiative is about, is not taking money away from contractors, it's not taking money away from the services. I think one of the unique features of this effort is that all the efficiency savings that will be retained will be retained inside the services. This is not a budget drill, as we've said, this is not trying to reduce them. It's trying to find greater efficiency inside of what we're doing. So for those of you who are skeptics, I encourage that. It's a good thing to be skeptics. I started this process out, I have to say, as being somewhat pessimistic, but the more I have become engaged with the senior leadership, particularly Dr. Carter and Mr. Kendall, the more optimistic I am about their real desire to have benefits and the comments we have gotten back from industry have been extremely positive. They're telling us what we need to do to change and we are spinning that out across the five working groups and they are engaging them and I would hazard to say that you will see a lot of your comments when you put them in, you'll see a lot of your comments reflected in the directive that Dr. Carter issues in September. Let me, Brad, if I can, exercise the moderator's prerogative and ask a long and complicated, actually it's a simple question, but it is a long and complicated lead-in, if you will. The chart that you laid out last week that showed the five issue groups and your industry working group on one side and the service working group on the other side with Jim and Katrina and the executive director role sort of implied that the issue groups would be taking input and wrestling with issues both from outside, that is, from industry and the inputs that you've alluded to there, as well as from inside the department and then they would somehow adjudicate, moderate, integrate, et cetera, those and the executive directors themselves had some of that integrating function because as was noted in some of the questions last week there are issues that clearly span across the issue groups and would touch more than one, in some cases three or four, maybe even all five of the issue groups. Is that an accurate reflection of what's happening and how is that done in real time? Right, well, so we are getting inputs and we have, if you go to our website, you'll see the form and some people are filling out the forms, others are just deciding to send me directly suggestions. Either one is fine. We then, the process is we categorize and bucket them and then I go to Jim and Katrina and talk about which buckets they should go into and as you've said, some of the suggestions we've been getting some are coming from associations, some are coming from individual companies and some are coming from individuals and some are very specific. DFAR 9.44 needs to be checked, which is fine and then we determine which of the organizations, which buckets they need to go into and then as they do their meetings where my office participates in their internal meetings to make sure that industry is being represented in those discussions and then when they're out briefed, the process is when they're out briefed to Mr. Kendall and Dr. Carter and eventually Deputy Secretary Lynn that the industry inputs are reflected. Now I will say that some of the industry inputs we've received are what I would call the part of the back end of the marathon. You know, I'm trying to take mile post one. What can we change immediately that needs to change or needs to, where we have effect? It doesn't mean that the other suggestions, I'd probably say half of the suggestions we've received so far have been more systemic changes that we need to make internally to the department and the process. Those are not going to be dismissed. There will be a lot of follow on effort. Dr. Carter's concept, which I think is solid, is that we will make these recommendations to procurement executives in September on new programs, new program starts. This is how you should be looking at these things as you do new programs. But then toward the end of the year, the calendar year, he'll ask for accountability. I think one of our groups for, I think is the group, has the largest challenge of anyone which is documenting accountability. How do we know we've improved anything? And that's a huge challenge internal to the building. So there will be a follow on effort to this. This is, again, it's a marathon, not a sprint. So the sprint will be the September guidance, but then there will be a significant amount of follow on from that effort. Let me ask a follow on question then. The service palms are essentially due to OSD, I believe at the end of this week, 30th of July. Yeah, I have them here. You have them? Okay, good. And I know from conversations with the military departments they've been wrestling heavily with implementing and reflecting in their own palms. The initiatives that the Secretary gave him in his guidance of June 4th, which implemented his Eisenhower speech back in May. It's obviously fair to say that those inputs will not reflect the deliberations you just described since the issue groups are just getting started and have just wrestled through that. So they've come to their own conclusions on this broader set of, I believe the Gates memo refers to it as efficiencies initiative, plural efficiencies. I tend to think of it as efficiency as an overall objective, so I haven't figured out whether I have a singular or plural in my own mind here. But how do you meld those two together over the next month and a half? That is the review of the service palms and their initiatives with the work of the issue groups as it folds forward into DOD. Well, again, I think this is part of the effort that we're engaged with industry on is about looking forward. So we're locking down palm as you've indicated, but when Dr. Carter has articulated specific programs where he would like to see whatever initiatives come out in mid-September, whatever we indicate, or guidance that he gives to procurement officials, and this will again be a document that's about guidance. It will be about new programs, new contract activities, so you can imagine the programs in mind. This is not about trying to correct past mistakes, although we will be guided by those mistakes and the anecdotes and a lot of the, you know, the documents and input we're getting are you guys really messed up and you could have saved a lot of money if you had just done this. Well, that's helpful, but it's like writing a report that's what I often find in my office we do, which is it may be of historical interest that. So we're looking forward. So we're looking at what programs are we, and we have some big programs coming up. I know everyone says we have no major program initiatives, but we have Ohio class replacement. We have new blocks on JSA. There are a lot of programs that are coming up where we can apply this discipline, this new effort on efficiencies, and that's what we'll be concentrating on. So it's not specifically, again, I go back to it's not a budget drill. It's about us trying to be better at what we do and getting industry to be aligned in rewards and incentives with what we do and getting everyone rowing in the same direction because if we don't row in the same direction, somebody's going to tell us what to do, and we want to avoid that. All right. Let me open the floor up for questions now. Just to remind you of our procedure, wait for the microphone. Stand up, speak into the microphone, identify yourself and your affiliation, and then you may offer your question, comment, or reaction. All right. I know that Ralph Nash is championing at the bit already. So while the microphone is winding, I'll mention the 1988 study to which Mr. Lambert referred to earlier. There's actually a couple of people in this room who worked on it. This was an incentivizing industry for better performance, and you'll recognize some of the names of the folks who wrote that work. I have it here. It's Mimeographed. It's really impressive. It is not available electronically, except in scanned PDF file, but it was Bob Moore, Chuck Henry, Tony Malayo, Bill Federaccio, and one other whose name I don't recall right now. So the microphone was not on. Let me just introduce. So these are the House 14th Street. Good. No, sorry. So we're all, I don't know, how many people here are without power? So yeah. So I spent two days now without power. So when I was trying to get ready for this last night, my kids helped me. I just wanted to show a prop here. I was trying to tell them what I was going to talk about today. They helped me. This is me. This is what I'm supposed to talk about. And these are the shiny items that we're supposed to. This is the good news thing at the end of the day. So anyway, it goes on and on. But this is all we could do at Candle. But I appreciate you guys for making it. And I won't say that this is their second full-time job anymore. So you corrected me of that. But we just went over kind of the process where we are. If you would just spend just a second talking about kind of individually, the five groups and the process. And then we'll just go to questions. So it's been, I guess, a couple weeks. And we have approximately 30 full-time people who have reached into additional staff inside of the services and agencies. And we are working very diligently on issues. In fact, on Friday, we were able to take one issue forward to Dr. Carter to expressly ask, is this the granularity you need for your ability to make the appropriate decisions? And he said yes. So now we have a template so we know what the product will look like. We have a lot of very, very good input coming in. And I have to say we're very fortunate that these folks that we have on this team are experienced and know exactly how to collect data and how to express it and to also formulate good alternatives that we can deliberate on. And that is essentially where we're at. We've got a lot of work in front of us. We've just been sitting in the car over here. And by the way, I don't envy your traffic. I thought it was bad on the other side of the water. My goodness. But on the ride over here, we went through the calendar realizing that there's pretty much no airspace left on it. Trying to find an opportunity to add some additional interest items to the table. And that's pretty much a top level unless you have anything you'd like to add. Maybe just to add a couple of quick things. Dr. Carter had signed out a letter back on 28 June that had a number of things in it that really gives us to be blind and really running start. There are a number of things in there that we're starting with to take a look at and to flesh out. So we're not starting from a completely clean sheet of paper. We've got a number of things that he's already articulated that he would like our group to take a look at. So we're doing that. The other thing just as Katrina said, you know our op tempo here is actually she and I meet about either three or four times a week depending on, pretty much every day, depending on whether or not we're having a team leadership meeting and then we meet with them extensively two to three hours each week to go through where they're at. So that's really the tempo we're on. So we're already off and running in the last two weeks to get the ideas fleshed out. The other thing that I would encourage you all to do if Brett hasn't already emphasized this, we need fact-based, data-based ideas. The time for anecdotes and those kind of things have been made clear to Ms. McFarland and I from Dr. Carter. We're not doing that for this drill. We really need fact-based information and ideas and adjustments in the policies, procedures, and practices and behaviors. So that's really what our team is focused on, is getting the facts right, getting the data to support those facts and then making the recommended adjustments and policies and procedures and practices and the things that we want to carry forward. So I would just ask, as you think about submitting ideas or adjustments in our thinking, that you do it with as much fact-based information as you can. That would certainly help us. As I said earlier, we have a large mix. I have yet to get the comment that I was expecting, which is if you just sell off the aliens in Area 51, you could reduce the deficit. So we're getting actually better things than that. But to Jim's point, the more fact-based it can be, the better it is for us and the more helpful it is and the more useful it will be in our deliberations. And then maybe one thing worth stating again, as Dr. Carter has made it clear to our teams that this is not a budget drill. The effort that we are in is really looking at those changes and adjustments and the way we do business and then we'll look to have those ideas and those initiatives undergird and support, looking at adjusting budgets from tail to tooth as we go forward. But our job is really not to go find specifically X numbers of billions of dollars. Our job is to really look at again, what are those policies, procedures, maybe even ledge props that we need to consider going forward. So it just certainly keeps our mind off of the other piece and keeps our mind very much on what we can really get our hands on and adjust and change. Yeah, I just, I had only one thing. I've been in all these meetings with these guys and the undersecretary in the DEBs here. This is not about how we find money within programs to cut and that's, you know, this is about how we do things better. And I just can't stress that enough. This is about how we do things that we are doing now, how we just do them better. One of the most remarkable things that the teams have discovered is that pretty much all of the guidance and policy exists already and has gone through the process and has been approved and has been legislated and has been authorized. The fact is we do not necessarily comply with it. We may comply with it at a margin. We may comply with it at the intent level, but we have not investigated the full details. Most of these activities that we're looking at have a spectrum of opportunity that you can take advantage of as a tool when you're out there working together. And so one of the things that we're targeting is where within that spectrum, you know, from one end to another, is the best place for us to look at doing the business better. So understanding the intent of the guidance that's out there and understanding the policies and what they were written and inscribed to be, what are we doing that we can do better to effectively meet that intent rather than taking the most expedient or the simplest route out. And so most of what we have found, in fact the detailed example that I was referencing earlier with the granularity it had, was I think it was 10 policies and governance and laws that existed today that would allow or already were in place to do this work. So it's not, you know, I hate to say this from my position, but rocket science, but it is essentially really understanding what the intent of these policies and procedures were in implementing them appropriate to the work that's in hand rather than taking the most expedient route forward. Mr. Nash, do you still have a question or has it now been adequately addressed? Do you still have the mic? Okay. Okay. All right. I'm an old academic skeptic. I started out on the... I started out on the... Yeah, this is a young one here. Which one? I've been through it in my newsletter. I call it a memory loss because if there ever was a program that should have been done for a competitive prototyping program, that was it. And you ran big paper competitions. If you've done that program right, you'd be flying tankers now down on Edwards testing. And I just wrote up an army program where they did competitive prototyping 1,000, they won 5,000 vehicles. They're going to do competitive prototyping for the test articles. And then they're going to award a single contract for 1,000. They're not going to run competition. Paper competitions don't like real competition between real products. That's what drives me up the wall if you want it. You know, there's a lot of success out there. But it's all forgotten. Of course, I won't comment on the ongoing efforts. But when you said locked into this initiative, into these... I'm confused as to what you meant by that. Well, there are some things that are one that lives. Yeah. Do you don't think they're broad enough? Well, requirements is any model that lives. Well, requirements is... Well, it's part of affordability. Well, it's part of affordability. But anyway, I just was... These are... These are all... Alan Shavotkin asked the question last time. These are all things we've been talking about for 50 years. There's nothing new here. And you're not going to improve the system by playing around with types of contracts. You're going to do more harm than good with types of contracts. Because you're going to suck people into fixed price contracts when they shouldn't have them. I don't know what you're going to do about profit, but I don't think that's a big issue. You know, competition, nobody knows what... what a real competition is. As I said, you like paper competitions. You like... You came out on the Internet last week. It cost Airbus $75,000 just to print the proposals. Printing costs. Euros or dollars? I don't know what it was. It said dollars, but I asked the second question. It might have been Euros. But it's all... Well, I hope you'll join us for the lunch on the 10th because this is the kind of feedback we have. But I do think that there's a difference in that... I take your point on competitive prototyping because that's come up in a bunch of the suggestions we've had from industry. So that I think is... and going back and looking and I recall the jail study that was done on successful programs, whether Sidewinder or A10, and... you know, again for this exercise. I mean, I think one of the issues we face and I think these guys particularly have been faced with is that we understand everyone agrees on industry and inside the building the general parameters of what needs to change. And so when there's an initiative like this, there is an incredible amount of pressure on that individual initiative to solve all the world's problems and to make things right. But we are not starting with a clean slate or in my old world, a clean whiteboard. We have to work with legacy systems and we have to think forward, not backward. And so we... this initiative is not going to make everyone happy. In fact, it's probably going to make some people upset. But we are trying to do what's in the interest of the department and I think the taxpayer and if we can get a 10% effective rate here, I will look at it as I did in my previous life in industry is this is a turn organization and you don't turn organizations quickly. It takes time. And so we just have to make the right steps and what we have to ensure and that's where we're going to need people like you, your help is that we're not doing things that have unintended consequences that make things worse rather than better. But that's why we're trying to have this dialogue and this outreach. If I could offer, there was something that I think is important to answer to that question. One of the things that we have been challenged in our teams are is how do you take effectively what is obviously information that's been made available to the department for a long time and make sure it's implemented. And that's the question of follow through. And what we've been working on is a path that we're calling it enablers. What are your steps that you take to enable the action and the intended consequences that you're desiring to be effectively put into the process and carried through. And we haven't come up with a final answer to it but we've postured things such as we're going to take programs go to the services pick specific programs and literally walk through the entire balance of the life cycle on that program with these initiatives imposed I'm using a bad term but imposed on them. There's several effects that that brings it brings education mentoring, it shows the process and how it's done it allows for people to understand and open forum critical thinking it's intended to be done for all the services so there's there's a let's be plain speaking here we all understand the resources the human resources and the government in a specific this time frame when we're going to go through an economic climate that we have that we're dealing with we have to have our side grow our government side grow so we're a better partner and a better customer to industry so that education process is critical in order to have success and we have a youthful community and we have a lot of folks that are going to have to go through that process of learning by hands on and so there is a natural progression of tasks that have to happen post this initiative that follow through on the desired outcomes that we're tabling that we're going to engage in just to have a sense of what we're intending to do I have on my list of questions I've got Bill, I've got Gordon and I've got Steve so let's start Bill here and if you want to catch my eye for a question I'll put you on the list here yeah there's you know it's like any household when the budget gets tighter everyone looks for coupons so everyone's out there doing initiatives our initiative is not focused on a dollar amount it's focused on this initiative is on the two to three percent of what we spend in the acquisition from an AT&L perspective a year and trying to wring out efficiencies there so there are ongoing efficiencies our effort is not related to any sizing in terms of the overall and I know that was mentioned in troop strength we're not doing that we're solely focused on about four hundred billion dollars a year or so that we spend on procurement on investment accounts and what we do with that I don't think we've had any guidance to look at anything else there are other people looking at other things that this is our focus and we were all asked to write checks for one hundred billion and not date them and we've given them in to the secretaries and no no we're not being asked it we haven't been asked to hit a specific target we've just asked we've been asked a very simple question which is how do we do what we're doing now better how do we get more without more and there is no dollar amount tied to it again this is not a budget drill we're not trying to find numbers we're trying to find efficiency I will add that this is just my personal comment on this would be that I think many in the building would say that it's going to be hard to find those kind of numbers unless we fundamentally go back and relook at notwithstanding that the comments earlier about we've been there before but without fundamentally going back and asking ourselves where can we get back to first principles that are already there we're not going to be able to achieve numbers anyway that's really being pressed down on the services so I think even though the services and everyone is out looking apart from this effort where they can find specific savings this effort instead is really looked at what do we need to do to really adjust again the practices and the behaviors and procedures that we can do we can affect those things we're going to have to go in and dial them in very specifically to get back to first principles and I'll go back as an example on prototyping there's probably no other person that I know in my sphere that is passionate about prototyping in general competitive prototyping is a very specific item in prototyping but to me that's a first principle argument it's first principles so our question should be to ourselves and we're asking this among our teams where is it that we've allowed ourselves not to prototype whether it's competitive prototyping or whether it's prototyping within industry government teams it's just a fundamental first principle so we need to go back and ask ourselves why is it that we don't see that practiced as much whether it's a radar or whether it's an aircraft or an unmanned aircraft why is it we don't see as much of that today where have we become unpracticed at that is a rhetorical question we want to ask ourselves and to me those are the first principle things we're asking our teams to come back and look at so that regardless of what the number is going to be in the future that we at least have an opportunity to pursue those numbers but without some fundamental adjustments in the way we're looking at our first principles in engineering and first principles in program management I think we're going to be hard pressed to get there In the back of the room on my right Court Sterling with AIA a number of the things that you're looking at are internal to the department processes that you can fix there's no doubt about that but there's still a lot of things that are imposed upon the department and on industry by congress there's a tremendous number of those government unique clauses we've had staff tell us they don't care about the cost of them it's about the policy the principle to what extent are you or is the secretary willing to take on congress on these issues I think of things such as the 3% tax the department estimated it cost it 17 billion over a 5 year period whether that number is accurate or not we know it's several billion but there's a number of other that are really clauses that congress has imposed on DOD has imposed on industry that are driving up costs is the secretary willing to take on the congress on this issue really push for these changes that would allow us to reduce our costs by reducing these mandates well I'd say we try never to use the word take on in congress in the same sentence ever I don't think it's a I just don't think it's a question of taking on somebody we need to do the right thing if we do the right thing I think reason people will respond in kind the direction we've been given is to do the right thing do what makes sense if I were running a business I wouldn't run it the way we're running our business I'd change it that's what we've been asked to do we're trying to change it it's going to take cooperation of our suppliers and our industrial base and it's going to take cooperation of the people who pay the bill which is ultimately the congress but we need to focus on doing the right thing not trying to please people and I think if anything the secretary has demonstrated his willingness to do the right thing and not necessarily worry about the the political fallout from that Steve if you would just pass it over to Bill Tuttle when you're finished that would be fine thanks I just want to briefly start with Katrina's point because I think it's so tremendously important there's reform and then there's implementation and realistically if you want to go back and look at the data and the experience DOD has either been gutting or under investing in its acquisition workforce since 1989 at the end of the day that's where a lot of your efficiencies come from if you're talking about how these things are going to change there's a lot of people who think that Shae Asad Frank Anderson have been partners in all this and at the end of the day if you're really going to get any kind of improvements you're going to have to do it with people implementing existing policies and you can rewrite the rules all you want but that's all about people you don't have the people and it's going to take your generation to fix it so let's be honest about that you know Brett I appreciate the fact that it's easy to say that I was the skeptic at the last meeting and I'm ecstatic that Eugene's going to host the academics in another week but as I mentioned to Matisse when I walked in we walked out of here on Thursday and a significant number of the people in this room all flew to Florida the National Contract Management Association World Congress and whether you like it or not this was what we talked about all week and every discussion we had on everything came back to this and so let me just offer you a few observations that we kept hearing time and time again last week I think the first one you keep telling us that you want fact based input but you keep talking about fixed price contracts and frankly what we're hearing is profit caps there are generations of empirical evidence that demonstrate that with fixed price contracts by inappropriate in inappropriate situations are failure and litigation and it's not what you want we can go all the way back to the renegotiation act and the rationales that killed the renegotiation act but the one good thing about the renegotiation act was it reflected that if you made too much profit on one contract whatever the hell that made if you lost money on another contract it was the contractors overall profitability that mattered profit caps are doomed to fail and if you're going that route then we're not really having an intelligent conversation second there's a lot of anxiety about the note in the Carter memo that talks about cash flow and sharing the benefits of cash flow and I think it's imperative that you all keep in mind and I think you know this that you can't squeeze the contractors on the time value of money there is a significant trade off in the industry and Wall Street has reflected it for years defense contractors make relatively less profit they take in many ways more in different types of risk but they do that because they have consistent reliable cash flow if you try to squeeze that as a saving then you're upsetting the apple cart in extremely significant ways just a couple other quick things and I think court already opened the door on this if you really want to talk about more competition if you really want to talk about getting the inefficiencies out of the system let's talk about far part 19 far part 25 and far part 37 but the reality is you're not going to do it with Congress and you're not going to win but that's where the game becomes inefficient that's where the lion's share of your regulation your training your implementation and your workforce energy gets squandered that's where you can get major improvements you're just not going to get them the last thing I just want to go back to the same thing that I started with when we talked on I think it was the 15th it's all about requirements you're going to have to decide what you don't want to pay for anymore and that's where the real savings are going to come from that's a leadership issue it's at the highest levels of the defense department in the Congress but the most frustrating thing about that is the requirements decision what you can do without is not an acquisition function and you can squeeze acquisition all you want but people are going to have to make really hard decisions about what you can live without and that's where the savings are going to come from I agree with your last point this is sort of a follow on question accidentally but that's all right I'm sorry bill title my affiliation today I guess is DAU Board of Visitors because I'm really my question is have you got DAU involved in this in terms of because the message out that you want to send Ms. McFarland to the workforce is use the authority you have and use it intelligently and that's a continual training problem but I think that will be important because over 100,000 a year that DAU reaches out and touches and this is a marvelous way to transmit the message of the need for efficiencies what it means keep it up to date so if you're doing that you've answered my question thanks I just say they've been intimately involved the whole point of this when we rolled out this initiative the Secretary gave his speech in the great state of Kansas and then when Dr. Carter rolled out this initiative on the 28th we made a point of coming here to CSI as first to reach out to industry they were gracious hosts and then we went directly from there to into you to meet with I think I don't know how many hundreds of our contract professionals to give them the same message that this was coming and then the Secretary himself met with Dr. Carter for a press release that afternoon so they are critical we need a level playing field I've seen it on the other side in my industry experience we have to step up our game in terms of our negotiating capabilities and knowledge we're the buyers and we just need to do a better job of that and I think everyone is very aware inside the building that we need to do better any other questions as we look out over the room here I've gotten none in by email either so you guys want to wrap up your concluding remarks and then by the way traffic is just as bad going the other way just different people those who have given up and gone back on the way now I just say you know I think I think there's I don't mean to characterize you as a skeptic but there's skepticism about this and I understand that I think in my personal role I've been in industry so I understand what these initiatives are this initiative is about first principles how do we do things better with what we have and it's not about cutting budgets it's not about saying we want fewer of this and that it's about how do we all get on the same page and start rowing in the same direction industry and the government it's going to be frankly a lot more work on our end inside the building I think I find that industry tends to respond when we give them clear direction we just need to give them clear direction of where we're going and I think that will hopefully be part of these directives and this initiative that comes out and these guys are working on their direction but the direction is not a fate of complete the directive that comes out in September will not be the end of it it will be the beginning of it and it's a long process and it's going to take years and it'll go into the you know I know the palms close all of that's closed this is going to go on for a long time it's just we're trying to course correct here for a new world that we find ourselves in as Dr. Carter says we're not in the that we had before and we're certainly not in the 46% or compounded double-digit annual growth that we've had in the last decade we're somewhere in between and we're trying to sort our way through that and part of it part of that will be being more efficient about the way we buy things so that we can ensure and we can say with a straight face to the taxpayer that we're spending their dollars wisely on behalf of CSIS I want to thank you all for coming for participating three of this series will be in mid-August we'll be sending out a save the date announcement shortly I think that power should be back on at most PEPCO homes by mid-August they may have gone off again but the CSIS will also continue to wrestle with ways to help DOD as they overcome the skepticism and the weight of 50 years of success here so thank you all and I appreciate your continued support