Pentagon acquisition chief Frank Kendall says his third iteration of Better Buying Power would incentivize industry to be innovative in delivering better products for a better value to the military, and force program managers to think harder about what they hope to deliver to the warfighter and how to best achieve that end goal.

Speaking at the AFCEA Defense Acquisition Modernization Symposium Tuesday, Kendall said he would roll out  Better Buying Power 3.0 in the spring, which would build upon the success he’s had with the first two iterations.

Frank Kendall, Undersecretary of Defense for Acquisition, Technology and Logistics. Photo: DoD.
Frank Kendall, Undersecretary of Defense for Acquisition, Technology and Logistics. Photo: DoD.

Kendall said he wants to not just emphasize in BBP 3.0 the importance of competition to reducing cost in BBP 3.0, but to go a step further and analyze how competition is being leveraged in each service and in different categories of contracts – “knowledge-based services, I.T. services, electronic services, for example,” he said, according to a Pentagon transcript of his speech.

BBP 3.0 will also build “stronger partnerships with the requirements committee,” Kendall said. “I think as we go into the next iteration of Better Buying Power, we’ll also add to that stronger partnerships, not just between the acquisition community and the requirements community, but between the science and technology communities and the operational community and the acquisition community, so all of those communities are working together to help speed transition of technology faster to the warfighter.”

The undersecretary said BBP 3.0 would also expand incentives for innovation and productivity. “We’ll continue to work with our workforce to ensure that the workforce understands what that means and how to figure out how to do the critical thinking necessary to determine what type of contract to use, depending upon what you’re doing,” he said.

To encourage innovation in industry, Kendall said program managers need to be smart about choosing the right type of contract, and they need to get better at defining best value for their programs. He noted that program managers typically lay out the threshold requirements and the objective requirements, but industry almost always sticks to the lower threshold requirement to keep cost down – effectively creating a lowest price technically acceptable contracting scenario.

But, Kendall said, “we want industry to be incentivized to give us better performance. So in areas of performance where we care operationally about the results, where we get better exchange ratios, we just do better on the battlefield, we ought to give industry a reason to give us a better product, if they can do so cost effectively, as long as it’s affordable.”

“We’ve tried to define best value and define the difference between a threshold level of performance and an objective level of performance in dollars, so that you know what we’re willing to pay for the increased performance,” he continued.

He said the first few times he asked this of managers, he got back simply cost estimates for objective and threshold requirements.

“But basically, we don’t buy things based on what it cost somebody to make it for us. We buy it based on what its value to us is,” he explained. “So essentially for the service, I was trying to get them to come to grips with how much they were willing to pay for something, as opposed to how much they thought it would cost. Finally got there. And what this does, I think, is it allows industry to make informed judgments about what to bid to us. And it gives industry a reason to bid above the threshold, to give us more performance, to be innovative.”