By Geoff Fein

In February, Navy Secretary Donald Winter issued an eight-page memo outlining the way ahead for improvements to the service’s acquisition process.

It’s hoped that the new effort will improve the way the Navy buys things…making the right decisions before making significant investments, Winter told Defense Daily in a recent interview.

“One of our biggest objectives right now is to minimize the need for changes, to be able to really stabilize requirements, specifications, and our criteria [for] the way we want to have our products, our ships, aircraft, command and control systems…how we want them built for us,” he said. “We have to keep that all stable and it’s going to take a little bit of effort, upstream if you will, to make sure that happens.”

Winter has made acquisition reform a priority and has said in the past he hopes to get the ball rolling on this before his term ends in January 2009.

The memo, issued Feb. 26, 2008, “establishes a review process to improve governance and insight into the development, establishment, and execution of acquisition programs in the Navy. The goal is to ensure alignment between service-generated capability requirements and acquisition, as well as improving senior leadership decision-making through better understanding of risks and cost throughout a program’s entire development cycle.”

The initiative applies to all pre-Major Defense Acquisition Program (MDAP) programs, all MDAP Acquisition category I (ACAT I) programs , all pre-Major Automated Information System (MAIS) programs, all MAIS (ACAT I) programs and selected ACAT II programs.

The initial step, or Pass I, is to be led by the Chief of Naval Operations or the Commandant of the Marine Corps and encompasses three requirements gates. The first gate review will grant authority for a Navy initiated initial capabilities document (ICD) that has completed a service review that is to be submitted to the Joint Staff for joint routing using the Joint Capabilities Integration and Development System (JCIDS).

Gate two review occurs after completion of an analysis of alternatives (AoA) and prior to submitting Milestone A documentation. The review will examine AoA assumptions, analysis, cost estimates, conclusions and recommendations. This phase will also approve the Navy’s preferred alternatives from the AoA analysis and provide approval to develop a Capability Development Document (CDD) and concept of operations (CONOPS) guidance.

Gate three will grant authority for a Navy-initiated CDD that has completed service review to be submitted to the Joint Staff to enter joint routing using the JCIDS review process; approve the CONOPS; review program health for satisfactory cost, risks and budget adequacy before continuing on with Milestone A or B preparations.

Within the Milestone A and Technology Development Phase, there are three more gate reviews before a capability production document (CPD) is approved.

Although it may appear to be adding more time up-front in the process, Winter believes the effort will have a payoff.

“I believe it is generally recognized, and I believe very strongly in this, time invested up front actually saves time in the long run,” he said. “Making the right decisions before you start making significant investments always pays off because the cost of having to make a change later on is very significant.”

Winter acknowledged that as the Navy transitions to the new approach to acquisition it may appear to slow things down, but, in the end, it is the right thing to do.

“There are a few cases where that is creating a little bit of stress, but we are working through it,” he noted.

One of the first programs to go through this process is the follow-on to the Navy Marine Corps Internet (NMCI), referred to as NextGen (next generation).

Winter said the new process is providing good discipline to plotting out a path forward for NextGen.

“We are getting people engaged, and I think that we are starting finally to really address what I view are some of the critical issues that need to be defined for a program of that type,” he said. “In particular, to make sure we understand what it is we want to buy and how we want to buy it before we get all wrapped up in the issue of who we are going to buy it from.”

There are several significant issues, in regard to NextGen, in both of the first two questions, Winter said.

In terms of what the Navy is going to buy, there really are some significant questions in terms of how NextGen is going to compare to NMCI, he added.

“Some people suggested NextGen should be the nest stage of one very, very large activity that would encompass all of the IT (information technology) of the Navy,” Winter said. “Other people point out that that would take NextGen into areas such as command and control systems where you would start getting into questions about inherently governmental functions–do you or do you not want to have contractors and contractor personnel directly engaged in command and control operations that may occur at a time of war?”

To what extent would the Navy want to have contractor personnel required for deployments in the future, he asked.

“So we are having to address all of these issues. How much additional investment do we want to make in security systems, for example, and how we want to parse the system out to support the security interest is another matter we are going through right now,” Winter said. “I am pleased that what I am seeing at this point in time, as people prepare for these control gates, are the analysis of these issues. We need to get them right now, because if we can get them right now that scope will affect the question of how we acquire, which will affect the solicitation, and could impact whom we acquire [it] from. So it has a way, if you will, of going though a domino process.”

There are a few significant issues when the Navy looks at how it wants to acquire NextGen, Winter noted, that get to the heart of how the service wants to match up with the industrial base and how it wants to maximize the value of the existing industrial base.

In that regard, NextGen is different from both the Navy’s aircraft and shipbuilding programs, he added.

“Shipbuilding is kind of the other extreme. [In] shipbuilding we create the market…we are the market makers. You go and take a look at the big six yards that we use and we are…absent some small business from the Coast Guard at several of the yards, and a limited amount of Jones Act work that NASSCO [does], we are the business base. So we have a direct impact there,” Winter explained.

NextGen is a different effort, he added.

“Here we are trying to leverage the industrial base that’s been established by commercial practice and other government activities, and the question is how do you want to best leverage that existent base,” Winter said. “That gets into the questions of, ‘how do you want to acquire?’

Does the Navy want to pursue a single large contract as it did with NMCI, in which case only a few contractors are in a position to bid on it, Winter noted. “Or do you want to break it up into various pieces that would enable more contractors to bid on individual pieces?

In that case, the Navy has to consider that while maybe it can increase the competition on some of those pieces, it might also be putting more demand on the integration process and more demands on the contracting process, Winter said.