The Blog

James: New acquisition initiative aims to cut costs

1/16/2015 – WASHINGTON, (AFNS) — Secretary of the Air Force Deborah Lee James announced a new initiative designed to help the Air Force partner with industry, encourage innovation and drive down the cost of systems.

James announced the Bending the Cost Curve program at the Atlantic Council here Jan. 14. She called it a targeted initiative that can be accomplished within current Air Force budget programs.

The initiative aims to improve dialogue with industry, “so we can better understand how processes, procedures, and some of the choices we make can inadvertently contribute to rising costs, the stifling of innovation and slow processes,” she said.

Different than past

It is different than past initiatives in that the Air Force is looking at very specific, albeit large, programs, James said. Bending the Cost Curve is about specifics and not generalities, she said.

The initiative has three focus areas — enhance, expand and improve, James said.

Enhance looks for the Air Force to better interact with industry throughout the acquisition lifecycle, she said. Expand, James added, seeks to increase competition among traditional and non-traditional industry partners to drive down costs and to increase innovation.

“Improve means we need to carefully examine our own internal processes and develop mechanisms to drive down costs and to speed up our acquisitions,” she said.

Cost capability analysis

The Air Force is launching a Cost Capability Analysis program, James said.

“Here’s our thinking: We think that by gathering data from a range of sources, it should be possible to identify instances where small changes in capability have large impact on cost,” James said. “This, in turn, should mean that the Air Force can develop much more affordable weapon systems.”

For example, she said, if the Air Force has a requirement for a jet to fly 500 mph, but can achieve significant cost savings by amending this to 450 mph, officials may use the information to make tradeoffs in how it develops the request for proposals and evaluation factors. The service may choose to modify requirements.

The Air Force looked at this before, but there was no way to incorporate industry, James said. Now there is and the service is aiming this effort at four programs. They are the T-X jet trainer, the long-range stand-off weapon, the Multi-Adaptive Podded System and the Space-Based Infrared System follow-on. The Air Force selected these programs “because they represent a range of use cases and segments of industry,” James said.

“We’re two years away from the T-X request for proposal, and our new process will allow us to directly engage industry as we develop an understanding of how to best evaluate our objective and threshold requirements,” the secretary said.

The other programs are at different acquisition stages and this will give the Air Force “a powerful comparative for learning the nuances of how to best engage industry around requirements,” she said.

Expanding competition

Expanding competition is focused on PlugFest Plus, James said. A PlugFest is a specialized industry event where companies collaborate and demonstrate their existing capabilities in live demonstrations for government customers. However, there is no contracting aspect to a PlugFest.

“Under our new PlugFest Plus approach, we will put in place a mechanism whereby a vendor could walk away with a contract just a few weeks after an event,” James said. “We accomplish this by combining these industry events with an Army acquisition model, which minimizes barriers for companies to participate.”

The first PlugFest Plus is set for Jan. 20, at George Mason University in Fairfax, Virginia. “We’ve decided to demonstrate this strategy with the Air Force Distributed Common Ground System — a system that produces intelligence information from data collected by a variety of sensors,” she said. “If this event proves successful, we will take steps to evolve the process to other Air Force applications.”

Improving internal processes

The Air Force needs to improve internal processes, James said. In conversations with industry about Bending the Cost Curve, “the number-one recommendation from corporate CIOs was that the Air Force should establish a business analytics capability,” she said. “The Air Force needs to get an enterprise view of our information technology spending so that we can understand tradeoffs and make wise future investment decisions.”

This is not the case today, and James announced the Air Force is standing up an Information Technology Business Analytics Office.

With this capability, if the Air Force wants a new database to do something “we will have a business case, empirical data and metrics to back that decision up,” she said. “What we’re really after here is a data-driven approach to spending.”

Similar efforts in the private sector have yielded 25 percent cost savings or more, James said.

Bending the Cost Curve will require the Air Force to be strategically agile, she said.

“All of this will be hard — but it’s worth the effort because we are the best Air Force on the planet and we must keep it that way,” James said.