ARM WARFIGHTERS FASTER THROUGH
MID-TIER ACQUISITION AUTHORITY

Templeton:       
I'm pleased to welcome Bill Greenwalt to the podcast today. Dr. Greenwalt is a non-resident senior fellow at the American Enterprise Institute, where he focuses on the expansion of America's defense, industrial base, and defense management issues. Issues include technology transfer reform, defense acquisition and procurement reform, technology policy and innovation, and the civil-military integration of US and Allied commercial and defense industrial basis. 

Dr. Greenwalt is also a founder of the Silicon Valley Defense Group. Dr. Greenwalt served in senior positions at the Department of Defense in Congress, and in the defense industry as Deputy Undersecretary of Defense for Industrial Policy. He advised the Undersecretary of Defense for Acquisition Technology and Logistics on all matters relating to the defense industrial base in Congress. He also served as a senior staff member for the Senate Armed Service Committee, the Senate Governmental Affairs Committee, and the House Appropriations Committee.

In the private sector, Dr. Greenwalt worked for Lockheed Martin and the Aerospace Industries Association. Dr. Greenwalt earned his BA in Economics and Political Science from California State University Long Beach, an MA in International Relations and Defense and Security Studies from the University of Southern California, and his Ph.D. in Public Policy from the University of Maryland.

Bill, welcome to the podcast.


Dr. Greenwalt:       
Thanks, Tim. Happy to be here, and am looking forward to a great discussion.


Templeton:       
Yeah, good stuff. I just want to kind of tee this up for our listeners, Bill. We've had a lot of guests on as policymakers, and certainly as contractors, but you really come with a different set of glasses because of your body of work on The Hill and your ability to truly understand how these things are done on both sides, and how rules are changed. So we really appreciate your experience and the insights you're about to bring forward. One of the interesting things you and I discussed was your background in rules change, which was led by Senator McCain at the time that you were closely involved with him. So for our listeners, please unpack, what that took in regards to the timeframe and some of the details…just to give us a good idea of how things happen on The Hill.


WHY SENATOR JOHN MCCAIN CHAMPIONED REGULATION CHANGE OVER A 3-YEAR PERIOD


Dr. Greenwalt:       
Happy to do that. And, as you and I talked about my resume—I'd already been on The Hill for two terms. This was about 2015. Senator John McCain was really concerned about two things that happened in the year prior. One was the invasion of Crimea by the Russians. And the second was the buildup of  fortresses by China in the South China Sea. He looked at these as a major inflection point for changes that needed to be addressed. The US was moving back into great power competition, and it needed to have its innovation systems modified to the degree that capability could get out to the warfighter, faster. And also so we could maintain our technological dominance over these two nations.

I had spent most of my career in acquisition and acquisition reform, and I was asked to come back to the Senate Armed Services Committee to take a swing at that windmill. And it was a terrific opportunity. We actually achieved a tremendous amount of reforms that we can talk about. But essentially, this was a personal drive by a senior member of Congress, and it led to the passage of a number of acquisition authorities that the department can use today.


Templeton:       
Why don't we unpack that in terms of timeframe, what the team looked like, and specifically what are some of the big drivers if anybody is, in your terms, ready to take a swing at that windmill again?


REGULATION CHANGE ON THE HILL STARTS WITH THE RIGHT LEADERSHIP

Dr. Greenwalt:       
First of all, you needed leadership and a senior member, essentially, who had frankly changed his mind 
about certain types of things. In other words, in the past, he focused a lot on a process and achieving compliance with that process. And the thought was, that was going to achieve better results. 

And right about this time, he was open to the idea that no, the process is what's holding us back, and we need to focus on different criteria. And that is time to capability. In other words, how fast can we get things deployed and out to the field? How fast can we adjust to the changing dynamics of the global geo-economic strategic situation? So what he did was, he brought together, under Christian Brose—and for those who don't know Chris, he's the author of a book called The Kill Chain—a really tremendous team of professional staff who supported Senator McCain in this endeavor.

So it requires leadership. And it requires staff under that leadership, who are empowered to do the right thing. Then: the slog of the legislative process. This brought us all together in 2015 when Mr. McCain became chairman of the Armed Services Committee—when the elections flipped, and the Republicans became a majority in the Senate. And, over the course of really three bills—the 2016, 17, and 18 National Defense Authorization Acts, or NDAs—is when most of these authorities and changes occurred.

Templeton:       
So basically, over a period of 36 months.

Dr. Greenwalt:       
Yes. And everything was focused on, “How do we take the various processes and provide the department authority?” So, let's talk about time for a second. Because this is how we unpack this. I published a lot of this in a Hudson Institute Report, about a year ago.


THE DoD REQUIRED UP TO 15 YEARS TO ARM THE WARFIGHTER


Dr. Greenwalt:
Essentially, the Department of Defense was looking at its time to innovate in a very linear, command-and-control, centralized oversight-process way. It took three years to go through a requirements process to figure out what kind of changes to go after. Then it took about three years to get it into the budget process and finally get resources to address that problem.

Then it took up to two years in the contracting process, which is obviously something we're talking about in speed to contract. So, in the ninth year, a company could now start hiring. They have money, they can actually start working on this thing. And by that time, if you're looking at the pace of innovation, the pace of Moore's Law, the pace of change out there in everything beyond the Department of Defense— cycles of technology had already turned over. Right? And so, everything we were thinking about in that ninth year, was completely overwhelmed by reality. But instead, we kept moving forward on it, and we would try to deliver something in another 15 years, in a predictive, linear fashion. And frankly, that is why we always ended up disappointed.


MCCAIN’S TEAM STARTED BY IMPROVING COMMERCIAL ITEM CONTRACTING

Dr. Greenwalt:       
So, essentially, we tried to attack each part of that. And the first thing we attacked was contracting. With contracting, we tried to improve the commercial-item contracting side of the house. But really what we did is expand the use of other transactions. Because you can potentially do other transactions in a much quicker fashion. 

And we've seen that in reality, but also linked it to a competitive prototyping phase—with another transaction, you can immediately go on to production and deliver capability to the warfighter. That was a huge change in statute. And then the other thing we tried to do, is we tried to mirror the success of the N wrap, which is essentially how you got counter ID equipment in the 2000s Iraq and Afghanistan conflicts. What followed was the rapid-acquisition ideas of how we can get capability quickly—rapid fielding of capability.

HOW MIDDLE-TIER ACQUISITION AUTHORITY WAS INITIATED


Dr. Greenwalt:       
Then, we also wanted to mirror how we developed new types of technologies. And we went back all the way to how we developed things like the first reconnaissance satellites in the 60s. And essentially, they were rapid operational prototypes and serial rapid operational prototypes. Taking those two examples, we created what is called middle-tier acquisition authority. In other words, we basically said, you, the Department of Defense don't have to go through this ponderous acquisition cycle.


REDUCING A 15-YEAR PROCESS TO ARM THE WARFIGHTER IN 3 TO 5 YEARS

Dr. Greenwalt:

You don't have to go through your ponderous requirements cycle. If the end goal is to achieve fielding of capability, either rapid fielding of a kind of known technology or rapid operational prototyping, that's key. It’s not just a science project, but something that's going to give you capability within a 3-to5-year timeframe. We're going to go away from this 15-to-20-year process and move it down to a 3-to-5-year process.

Templeton:       
When we were talking about this before, Bill, you mentioned how this process lives on today in a couple of projects. Specifically, you talked about our initiative of the rapid deployment of vaccines as well as the Falcon 9. Maybe you can quickly unpack that before we step into the next phase.


MID-TIER ACQUISITION AUTHORITY STREAMLINES THE WAY FOR SPACE X


Dr. Greenwalt:       
Yes, those two programs bookended this approach. Falcon 9 was created by the government and SpaceX. And what's fascinating about this example is that, here was a company that promised the government that it was going to do something at 10% of the costs that essentially a traditional defense contractor would charge. And frankly, all this is in a public cost estimate, which is a very interesting thing as well. So 10% of what the traditional contractor would do and would deliver at 10 times the productivity, as measured by getting the cost of something into space.

The fact that we were able to do that was because it was not done under a traditional contract, it was done by NASA Space Act authority. And so essentially, they could vertically integrate. They didn't have to deal with all the complexity of the contracting, the oversight regime that just adds layers of costs, and so on. They actually did exactly what they said they were going to do. They achieved it in 10% of the time, and they did exactly what they said at 10% of the cost. That is an amazing example. And frankly, I think you could probably see the same thing with what they were doing with Starlink, which is another example, although they're doing that around the government system and have created a capability that frankly is quite amazing.

MID-TIER ACQUISITION AUTHORITY IS USED TO FUND AND DELIVER COVID VACCINES

Dr. Greenwalt:       
So then we place acquisition authority into law and what happens? COVID comes around. It was very interesting how the government used transaction authority to create a number of what are called OTA consortiums. And one consortium that was set up was in the medical area. It was designed to bring in a lot of companies who would not normally do business with the federal government and with DoD because of all the constraints of the FAR, and all of the compliance that's required to take on a government contract. 

This vehicle was in place at the right time when COVID came down. And essentially, it was used, and something close to $10 billion was pushed through this vehicle to achieve the vaccine successes— prototype the vaccine successes, and then start on production. Wow, at the beginning of the pandemic, that to me was essentially the selling case that this authority can do amazing things in the right hands.

Templeton:       
Among all of us amateurs in the field as compared to your expertise, we read about SpaceX and are amazed by that. But actually, to hear what the numbers are, the background, and what was able to be achieved because of the foundation that you and the team—along with Senator McCain—led and instituted, it's amazing. Then on the other side is the vaccine situation, where we all lived it and actually experienced it to really understand, to know what went on in the back room and how that came about, that's incredible.

Dr. Greenwalt:       
Yeah, I don't know how they would've gotten the contracts online and brought in all the players they needed to bring in. I know some companies didn't all come in and that's fine. But, as it moved forward, this thing was really instrumental to implementation.


Templeton:       
From that same mindset, to be able to take players that aren't normally involved in government contracting, and bring their innovation into this paradigm, leads us to the next question. And you and I talked about this possibility earlier:  If we were to really focus 10 to 15% of the defense budget, we could eliminate the China threat completely, and actually get a 10x return. It certainly sounds like it's possible based on what happened with SpaceX. And certainly, what happened with vaccine innovations. You have a blank canvas right now; we're talking about the future. How would you set that up? Who are the players and the timeframe? And, based on your experience, and I know you've thought about this a lot, but for us in simple layman's terms, how would you put that in play?


ELIMINATE THE CHINA THREAT BY TARGETING 10% OF AN ANNUAL DoD BUDGET


Greenwalt:       
You want to bring in the entire industrial base of the United States and its allies. In other words, the entire western industrial base needs to be working on these problems. And so, you have to eliminate the barriers to doing that. 

The defense budget is about $850 billion. So, 10% to 15% of that is approximately $120 billion. Probably, you could do it for $100 billion or even less. I'd take that hundred billion, focus it on an investment account, and manage that just like a large VC fund. I would focus that fund, giving the department the flexible budgeting allowed to move that money into different types of projects.

Now, the key thing that we'd have to ensure is that they have two choices: 

They can drive technology into something that we've never done before and do operational prototypes like we used to do in the 50s—that essentially revolutionize the military. Or we could focus on the rapid fielding of technologies and pull together new capabilities in that 3-to-5-year timeframe. Do everything under middle-tier acquisition authority, to ensure that we get commercial companies who can bring something new to the table, as they did with the vaccines and like they did with SpaceX. I include our allies in this for a large reason: because they are out there and have access to some very interesting technologies, even in the defense area where their budgets haven't been high.

They've got some niche technologies. And we need to remove the barriers to working with them. And our biggest barriers are security-related. In other words, we have a system of export controls designed not only to limit what is exported to the world, but what's imported. And so there's this barrier of having our global engineers working together and talking together. And that needs to be shut down. 

I mean, if you think about it, the Chinese are 1.4 billion people, and they have the same ratio of engineers and STEM workers that we do, we'll assume. And so that's four times the amount of STEM workforce that the US has. We have to figure out a way unless our engineers are four times better, and maybe they are, I'm a pro-American. Maybe we're twice as good. Yeah. But maybe we need a few other engineers out there as well to work on these things. And I think that's where our allies come in.

Templeton:       
So, the big question is— and I was a big fan of Senator McCain—it takes leadership at the top, right? I mean, a vision at the top. To go in and say, all right, we're going to cut out a hundred billion, and take this fund, and this is going to be specific to the China threat, 2026 or thereafter, we're going to get after this and really focus, what are the realities? What are the things that you bump up against on The Hill when you start that discussion? What happens in a budget that's accounted for to date? I mean, how do you get around that politically? 

SPENDING 10% OF A DoD BUDGET WITH A FOCUSED, ACCOUNTABLE PROCESS

Dr. Greenwalt:   
The budget is obviously the hard part. There's no problem with spending $850 billion a year, and we might in the future see that defense budget at a trillion dollars. You know, it seems like the top line is fine. 

But how we spend that money is problematic. And, there are a number of staff members, particularly on the appropriations committee, who are wedded to a linear command-and-control, Soviet-style way of managing defense resources. And when I say we could do 10% of the budget, it's like we can leave the other 90% to be spent in the most inefficient way possible. <laugh>. 

Okay. But we need to convince someone up there, the leadership, to take their staff and put them over in the corner, take the GAO aside, and essentially say, “Measure us for what we get to the warfighter in five years. But leave us alone until that time. Essentially, come after me if there's something wrong.” That's the kind of leadership you need.

And that's the kind of leadership we had with Senator John McCain. And it's unfortunate he passed before he could take this to the next level.

Templeton:       
One of the things you mentioned—and I know you did this in an offhand way, Bill— you talked about your own career and what it really takes to work on The Hill—the dedication. Because obviously the riches, the money, it's not there. Right? This is something that's for those that are true patriots. And you'd mentioned, possibly having a younger version of yourself, those people that are interested in dedicating a good portion of their career, to really get behind something like this. What's your feeling right now? I mean, you're there, you're called in on numerous projects, in terms of the assets that we have in play now for individuals that can get behind this and make this happen.

NEW LEADERS ON THE HILL CAN MAKE A DIFFERENCE- WHO WILL STEP UP?

Dr. Greenwalt:   
I think there are a number of up-and-coming members of Congress who can be the John McCains of the future. They're learning, and they've got the right instinct, but they're not quite yet in leadership positions. And then we have some new leaders coming in and taking those positions. Like Ken Calvert taking the Defense Subcommittee on Appropriations; Susan Collins, taking the Appropriations Committee; Patty Murray, on the Senate side, on the Democratic side. They’re brand new to these positions in the sense that they can now make changes. This is not the old regime, the old guard. There's change coming up in these senior positions. So hopefully they will hear from their younger colleagues and try to make some changes at the margins.


TO INITIATE POSITIVE CHANGE, IT TRULY TAKES A VILLAGE WITH A FOCUS


Dr. Greenwalt:  
I think there are a number of staffers who are learning this. The problem is, you need to spend a significant amount of time up there and it's just not a career that's conducive to family life or actually making any money. And, unfortunately, once they're trained up and they're starting to do really good things, they're off The Hill. And so we need a cadre of individuals willing to stay up. There's also a great cadre of service members who leave the service and move on The Hill. The problem is, even there, they need about three to five years to really understand how the process works.

Not understand how a bill becomes a law, but how it really works.  And again, by the time they get there they're approaching an age where it's like “Gosh, if I don't leave and go to the private sector, I'm going to be in the poor house the rest of my life.” <laugh>. So, it's a tradeoff. But again, if you can keep a cadre of individuals who are willing to go in and come out and go in and come out, I think there’s something there.

And, the next thing: There's a lot of old guard willing to help train them up and so on. But it's a tough ask. Everything we’re talking about here is in the national interest, it's not necessarily in the state interest. It's not necessarily in the local interest. Right? And so, you need real leadership to basically decide, yeah, “I'm going after this because we need to do this to beat China.” Not,  “We need to do this because I can bring more pork to my state.” 

Templeton:       
We had Elliot Branch as a guest on the podcast, and one of the things that he brought up was understanding how to present and really package the offer and the conversation so it's meaningful. Not just nationally, not just state-wise, but also locally. When someone feels they're going to lose, how do you switch that around? So we understand that this is actually going to be a plus in the future?

Dr. Greenwalt:       
And that can be done easily in the sense that you know these contracts end up being executed everywhere. And frankly, if you focus on innovation and the capability, it's not just the money going there, but particularly if you're teaming with the commercial sector, it's jobs and technology and new opportunities for the future—if there is the civil and military back-and-forth, in terms of defining  solutions. So, you can make it, you can do that. It does work, and Elliot is exactly right in how to present that.  But at the same time, you have to find a member who's willing to say “Yes, I want to do this for national interest, but also, I have to portray it in a certain way. And, I'm willing to do both.”

Templeton:       
Good stuff. Listen, this has been really interesting. And as we bring this to a close, Bill, with all your  expertise and experience, you've probably forgotten more than most of us are going to learn in the next three to five years, in terms of how these things happen on The Hill. And that experience is extremely valuable. You talk about this young cadre of individuals and the importance of having someone like you or your peers there to help them and encourage them and warn them about the dead ends, not to go down. It's invaluable for the country and certainly, for the initiatives we're talking about.

MENTORS MAKE A DIFFERENCE. MINE MADE A HUGE IMPACT

Dr. Greenwalt:       
Obviously, on The Hill, I had my mentor, and he was terrific and had 20 years or more of experience and showed me the ropes. Unfortunately, all the mistakes I've made since that time were my fault, not his. Right.

Templeton:       
And by the way, who was that? Just so we know.

Greenwalt:       
That was John Etherton. John Etherton was a longtime staffer on the Senate Armed Services Committee. And frankly, he knows more about acquisition than I could ever hope to do. And, so he was just terrific. And I also learned a lot from my colleague, Peter Levine, who worked for Senator Lebanon. Those two individuals essentially, really helped me understand how The Hill worked. I owe everything I've done to those two individuals.

Templeton:       
We take our hats off to our mentors. There needs to be more of them. I appreciate you unpacking all of this for us and our listeners.

Dr. Greenwalt:       
My pleasure, Tim. I enjoyed it.

Templeton:       
Right. Well, we look forward to continuing the conversation. I want to thank you so much for your time, Bill.  

Dr. Greenwalt:       
Thanks for having me.