KNOW HOW TO FULLY LEVERAGE
OTAs & OTHER TOOLS & TECH

Templeton:
I’m pleased to introduce our guest on the podcast today, Stan Soloway. Mr. Soloway is a longtime leader within the Federal Professional and Technology Services sector and a respected policymaker. He is also a  former DoD Acquisition Official with more than 15 years of experience as CEO of the Professional Services Council.

Mr. Soloway’s experience includes being named a Fellow of the National Academy of Public Administration, a Fellow of the National Contract Management Association, and a senior advisor to government executives at the Partnership for Public Service. 

Gannett Defense News has recognized him as one of the 100 Most Influential Figures in US Defense. Mr. Soloway is also the winner of the Technology Leadership Award from the Consumer Electronics Show -  Government Sector. He has been named Executive of the Year by Government Computer News, and is a 3-time Federal 100 Award winner.

Mr. Soloway is widely regarded as a professional who can see change, embrace change, and adapt to change.       

Templeton:
Stan, it is great to have you as our guest on the podcast today. As I mentioned in your introduction, your background in terms of policy-making, your experience in this space—well, you've forgotten more about this topic than most individuals will learn over the next five to 10 years, myself included. 

So, it's a pleasure to have you here today. And based on some of our earlier conversations, I am interested in getting into your thought process. As you know, Stan, I ask this question of all our guests: “What's been the single most effective transformation process you have been involved with for speed to contract, speed to market.?”  After unpacking that, let’s go into the second phase of it. You have a blank canvas in front of you, and your experiences are your paints. “What would be your best approach or thoughts to make new improvements, based on your experience?”

I think your whole direction in terms of regulation change and your thought process on it are both very unique. And, you made this big statement to me: “It's not the regulation, Tim. I believe we have a tool that's already in place, and it's called OTAs (Other Transaction Authorities). And we just simply need to embrace it and understand it at a deeper level.”

Just to get this started off: Because it is such a big statement, I'm sure you have a number of people that would agree with you, and I'm sure you have a number of people that wouldn't quite agree 100% with you. So perhaps you can unpack that for us as the expert at the top.
 


OTAs WORK WELL DURING EMERGENCIES. WHY NOT DAY-TO-DAY?


Mr. Soloway:
So let me back up a step. When you talk about thought process—and just get to this whole question of how we drive greater speed, efficiency, and performance on the acquisition process—I  actually have a very simplistic view of it. I look at things we've done in emergencies and the way the system has responded when needed. I mean, the most famous in recent years, of course, is N wraps or the vaccine— and, by the way, the vaccine was largely supported through OTA vaccine development. 

And I asked myself the question, well, what are we doing there that enabled us to get results so quickly that is different than what we traditionally do? Whether we could or could not do it, leave that to the side. But what we traditionally do in a traditional acquisition, and why are we not mimicking that in traditional acquisition along with fixes, if you will, to where there may have been problems that emerged because of weaknesses or gaps?

But if it's good enough in an emergency, why is it not good enough day-to-day? Now that doesn't mean we waive audit requirements or compliance. I agree that in public procurement—these are important parts of it. But there are so many examples out there of where the system has performed so admirably. And as a retired four-star once said to me, when he and I were taking a report to the front office in the Pentagon together, “We shouldn't call this lessons learned. Let's call it “lessons observed,” because we haven't learned a damn thing.”  <laugh> 

But the point being, I don't think we do a very good job of looking at these things we've done in really exigent circumstances to figure out how we could mirror or mimic them day to day.
 

OTAs: LESS ABOUT A SPECIFIC TOOL. MORE ABOUT WHAT WE LEARNED  


So that's sort of my premise. My comment about OTAs is less about OTAs as a specific tool than about what we have learned from the OTA experience. Are we going to use OTAs for everything in procurement? Of course not. Although I challenge people to tell me where OTAs are not appropriate, because the question of appropriateness is determined in my view, solely by whether or not a tool meets the basic tests of public procurement, the ethos of public procurement—transparency, competition, outcomes, et cetera. 

You know, those four or five basic tenants. And if that tool does meet them, then why wouldn't you use it more commonly? But this is not really about saying that OTA should be used everywhere. It's that again, we have a tool that has led to other tools, in fact, which I'll talk about in a second. It’s a tool that is delivering value, but really struggling to get over the finish line to become a near-peer capability to the FAR-based competitions.

 
WHAT HOLDS US BACK FROM USING OTAs MORE EFFECTIVELY?
 

And the question becomes “Why? What is holding us back?” In the report a colleague and I did a year and a half ago, we tried to look at the question “Does it meet those tests of federal procurement, the ethos of federal procurement? If not, where do we need to improve?” And then second, “Why are we not getting more results out of OTAs?”

Because spending on OTAs has gone from $500 million seven or eight years ago to $13 or 14 billion more recently. So, I don't want to suggest that OTAs are the panacea, but I think there are things we can learn from them that should actually inform how we go forward. 

The last point I'll make, and I'm sorry for this long answer to a straightforward question, is there are pieces of the OTA process, particularly as practiced by the Defense Innovation Unit, that are now being mirrored through statutory authority elsewhere.
 

CSOs: ANOTHER UNDERUSED TOOL. BUT WHY?


Mr. Soloway: 
The main one is called a CSO or Commercial Services Offering. And basically, under a CSO process, if you think about it, it's the front-end piece of an OTA. If the customer puts out a problem statement, invites people to come in with how they would address that problem, and then that customer selects one or more to actually move forward with prototyping. It is covered by the FAR; it's really a performance-based approach to awarding contracts and should lead you to a performance-based acquisition. 

And this way you do it, the CSO is a tool that is also underused and the question becomes “Why?” And so, again, to your point of “the tools are in there,” I'm really hesitant even to say that because that was the line you heard from people who didn't agree with all the acquisition reforms of the 90s, the 2000s, the 2010s, and so forth.

They said, “No, we don't need more reform. All the tools are there.” Well, they weren't there way back. They are there now. Some of them have been severely watered down. I think the 809 Panel a couple years ago identified some areas, particularly around commercial. And we've kind of taken two steps forward and maybe a step and a half backward, but they're there. The question is, “How do we now capitalize on them? And what can we learn from what's going on in the workspace?”


Templeton:
You take us down another pathway of thought, right? In terms of the whole idea behind this podcast and the discussion of how can we, as a group, as a team, make effective change? Knocking down the silos of communication, putting this medium together, and bringing people together to open up ideas, and mindsets. And then ultimately with the hope to motivate others to pull together too, to think differently, and act differently to affect more change. 

From your point of view—and obviously, you've served on many panels, and certainly have been contracted to write white papers on the topic—but going forward, what about this whole idea of culture? Even in education on OTAs and CSOs, how can these tools be utilized by so many more? What would be some simple steps? 

Again, we’re giving you a blank canvas to say “All right, if we agree on it, and it makes sense, what would be the process to really pull the right individuals together to place these tools in our culture for more effective use?”   

And by the way, your statement of going from, $500 million up to $13 billion in OTA spending demonstrates that obviously there's been progress. But how can we exponentially move that progress forward?


CAUTION: WE’RE STILL HAVING TROUBLE TRANSITIONING OTAs TO PRODUCTION

Mr. Soloway:
Yes. So, we have to be careful though. I mean, what you said is true. I should have pointed out that we're still having a terrible time transitioning OTAs to production. In other words, just without going into detail, OTAs were primarily an R&D tool, that we've been pushing for years. I pushed for it when I was in office back in the late 90s to get what we called “production authority.”

In other words, once I get a non-traditional contractor in the game, I want to be able to take that company through the full development-to-market process with the same terms and conditions as I had to start. Otherwise, you go back under the FAR and the same problem of them walking away happens.
 
AUTHORITY TO GO TO FULL-PRODUCTION THROUGH OTAs IS GRANTED

Mr. Soloway: 
Finally, that authority was granted several years ago. And yet very few programs have actually gone into production. There have been some, but some —and I've talked to companies that have taken them forward—have been very, very painful. It's required very large companies to make some difficult compromises that they would not ordinarily have made.

But what we find is once you roll out of that prototype environment into a production capability, which is what the law now provides, the tendency to throw FAR clauses back into the production contract, sort of submarines the whole intent of what an OTA is, to begin with. 

And Congress has repeatedly over the years, specifically said, “No, you don't need to do that.” But the system—and here we’re coming to your point about culture— maintains a hold on a couple of different pieces to the puzzle and they're, they're not easy. But I think there is some work being done.
 

THE DAU IS DEVELOPING MORE CURRICULUM AROUND ALTERNATIVE ACQUISITION TOOLS


The Defense Acquisition University is really working hard on a more robust curriculum around what we call alternative acquisition tools, and so forth. They're making a serious effort along those lines. But I would offer an observation, and I can say this now because I have a lot of gray hair and I'm not back at the beginning.


THE FAR IS NOT THE FOUNDATION FOR FEDERAL PROCUREMENT
 
Mr. Soloway: 
If we start with the premise of the FAR as the foundation for federal procurement, we're starting from the wrong foundation if you want to change the culture. And now here's the analogy I'll draw: If you go back 25 years and even in more recent years, some of the most significant reforms have involved getting away from certifications on contracts and mil specs and what we used as an equivalent language. So you must be CMMI Level X or equivalent, right? 

The OR equivalent was the key because there were other ways to get to the same outcome. We ought to approach the FAR the same way. The FAR or equivalent gives me what I need from a public procurement perspective. And we begin thinking and training towards that sort of duality—as it can be done under the FAR, but in some cases, it's much better to do it under a non-FAR contract.

So, I think it has to do with how we start orienting people from day one. If they're oriented to the FAR as the primacy of the FAR, everything else is an afterthought or an “alternative.” It's sort of like the company that sets up an innovation center in Austin, Texas, and it sits there in Texas and does some cool stuff, but it's never really embedded into the company's operations and DNA. You've got to find a way to blend the two. And again, it's not easy to do. But I do think it has to do with how we recruit and train. I think this is a little bit of a kind of snarky comment—and I  don't mean it that way—but I've been in a lot of conversations about the need for more mentors in the acquisition system, which I one hundred percent agree with.

I think a lot of my colleagues are great mentors. But I think we’ve got to be careful who the mentors are too. Because if it's a mentor who's my age, who's been in the system for a long time and is used to the way it used to be, what are you mentoring towards? Are you mentoring towards understanding the system? Or are you mentoring critical thinking and how to take on the system, if you will, in a productive way? I don't mean that in a radical way. So it's about education. It's about the way the system thinks of itself. 

And then the last piece I'll say is it's about focusing on organizations, not just individuals. Acquisition organizations are not just acquisition people. They're engineers, they're contracting officers, they’re program managers, they’re lawyers, they're accountants, they’re logisticians. It's a multi-functional exercise; we call it a “capital A acquisition.”

Unless that whole organization has a similar orientation to what we're trying to accomplish, you're never going to change the organization's culture, which means the individual functions within that organization are going to have to adapt to the dominant culture, right? It's like an organism. I don't take any credit for this, but:  A whole group of folks led by a couple of friends of mine, mostly government acquisition folks, a few years ago came up with a concept called “Acquisition of the Future.” It was really kind of a best practices approach, and it laid out a roadmap and so forth. But what they really zeroed in on, which I think was the most important piece, was you've got to think about acquisition from an organizational perspective.

Much as we think of other things like software development: As an individual entity, does my organization have the capacity for it, is it mature?  So think organizationally about what the outcomes and characteristics and descriptors at different levels would be. And then how do you actually build within it to get there? Because it does no good If I have a really creative 1102 and a rather stuck-in-the-mud program manager or vice versa, or a customer who wants outcome A but is told by someone in Legal or Finance Contracting, whatever it is, we can't do that. None of that works, right? 

And so, you almost have to rethink the development model as an organizational one. And as much as I know people have some antipathy towards Amazon and the giant companies, one thing Amazon does right: Everything they do is underpinned by customer input. And so that's organizational, that's not just you or me as individuals in the system. So I think we need to start with that.


Templeton:
So, we're talking about two tracks here Stan, a long-term track, which makes all the sense in the world.  I did have a Chinese mentor for 13 years and he taught me a lot about business. And, an old Chinese saying is, “When is the best time to plant a tree? A hundred years ago. The second-best time to do it? – it’s today.” And so the whole idea of culture moving forward—the Department of Defense University thought of re-looking at the culture and putting best practices in place.

But on the second side of this, we're laying out and discussing long-term changes. So, it does take time. And you said it correctly: It's easy to state; it's not easy to do. What has been done quickly that has been effective? What's gone on in the pandemic with vaccines. Okay, in wartime or, in an emergency, we can move fast as a country. And we've discussed this threat that’s a 2027 threat or sooner. I guess what I'm saying is not to wait for that to happen, but in the meantime, start on a dual track where we can see more efficiencies now and get better prepared now, which I do believe is also a long-term strategy of education, and cultural change, right?


TRAINING A YOUNG WORKFORCE OF SEVERAL HUNDRED THOUSAND

Mr. Soloway: 
Yeah, that's a great question. So, you've got the acquisition workforce at large, you've got several hundred thousand people. The average age, I think now, or average experience level is somewhere around five years or less. It's a fairly young workforce. So, from a timing perspective, in the acquisition community, we're actually running out of time because it's early in the career when you really need to get people imbued in a way of thinking.

Once they get to 10 years or 12 years in the system—and this is not a criticism of acquisition people—we all get sort of, “That's how it's done.” I mean, I'm the same way. So, there's a time sensitivity there, there's a time sensitivity in terms of global threat, whether it's the China threat, or frankly things like global warming and other major existential issues that require, regardless of what you think the actual solutions are, rapid action and creative thinking.
 

ALMOST ALL WE ARE TALKING ABOUT WILL BE SETTLED BY TECHNOLOGY

Mr. Soloway:
Let’s couple this realization with a few recognitions. One is that almost everything we're talking about now is going to be settled by technology. That may sound simplistic, but if you think about the role of space force and you think about non-kinetic warfare, I'm just talking about the national security side. What a general said several years ago at a forum I was at has come home in big ways. He said, “The future's not about the skin, it's about the man-machine interface inside the skin.” In other words, whether it's a plane, a drone, a ship, or a tank, it's all about the technology. And almost all of the technology that we're looking at is being developed by and large in the private sector. Most of it, not all of it obviously, but most of it.


MOST INNOVATIVE TECHNOLOGY COMES FROM THE COMMERCIAL SPACE

Mr. Soloway:
Much of it has commercial analogs and most of the innovative technology is coming out of the commercial space. This has been true for 50 years. We crossed that Rubicon back in 1976 when it was the first time the private sector spent more than the public sector in R&D. But we've never fully adapted to that reality. So that's another piece of the pie. So, what that argues for is, as you said, how do you do things more quickly?  I don't know that I have a good glib answer to that. I look at some things that people like Hondo Guerts did when he was running acquisition in the Navy around OTAs only, but I think it's a model that has other relevance. He decided that to accelerate change and accelerate innovation and creativity, rather than trying to retrain 1102s, his OTA agreements officers would be people who were not 1102s, so they didn't come in burdened by whatever it is that had been layered on them throughout the development of their career.

That's not to say there aren’t great 1102s, I've met many of them. But he was trying to accelerate the process. Didn't necessarily go all that far, by the way. Because there are a lot of challenges in doing that. Another way that DARPA (Defense Advanced Research Projects Agency), which is of course the largest user of OTAs, when Wes Bennett was running acquisition there, had a process of essentially testing the agreement workforce. It wasn't just an automatic “other duty” as assigned; there was some degree of winnowing out people who really had that different way of thinking. So, there are things you can do to get to prime the engine. Let me back up one more point. DAU, when I was at the Defense Department, DAU was part of my organization, and I developed a really deep respect for what they were trying to do.


MODEL HOW CORPORATE UNIVERSITIES TRAIN

Mr. Soloway: 
It sounds like it's a ton of money and so forth, but when you think about the challenge DAU has, it's enormous. And it was for a long time, kind of slow to adapt. I think the university has picked up steam under Jim Woolsey over the last number of years. 

But one of the things that I've always felt with DAU is as good as it's getting or as much as it's getting better, one of the commercial best practices where companies have really driven change is through how they handle developing their workforce. It is through corporate universities. And corporate universities are not populated by permanent faculty. Corporate universities are populated, and the courses are taught. almost exclusively by active practitioners who, as part of their job, come into the university for a week, two weeks, four weeks every several years, or whatever the cycle might be, to share what is going on that day in the marketplace and to help develop a workforce for the moment they're in.

I think that's an area that DAU has really struggled with. We actually looked at trying to convert it to a corporate university structure 20 years ago. But I think China has embedded much more of that, which is very difficult to do in our government. You don't have people available, such that you can take a really top-notch program manager and say, “I need you to leave the job for a month. “You know, it's really hard. But if you really think about it from a long view, you could build a workforce strategy around it. And that would begin to really get at culture as well.


Templeton:
That's very, very good. For this part of the conversation, Stan, I just have to take a moment. I sit back and I listen to you, and your experience just bleeds through the screen. <laugh>


Mr. Soloway:
Makes your brain hurt…


Mr. Templeton:
<laugh>. It’s just fantastic because you're on point with everything that you're talking about. I mean obviously all this regulation change and approach we're talking about approach, back in the 90s, you were in the room where it happened, to quote the Hamilton play theme. And, obviously having that experience, and bringing it to the table today, it's really, really important. This idea is about forward thinking, yet about taking the white hairs in the group and using our experience but leaving the way we saw things and applied that experience back in the day. How do we apply that knowledge to the situations that we have now? There can be wisdom gained from both us and today's market.


Mr. Soloway:
Can I offer one other thing along this about us grey beards? I have three nephews who are in the tech field, right? And one of the things that struck me, and I was really stunned by this, it's probably old news by now because this was back eight or nine years ago. But when they started at their companies, within about eight months, they were going to college campuses and being part of the recruiting team, right? And I said “You've only been there eight or nine months. They said, ‘How do you think we got other people who have the base of knowledge we have? Someone your age is not necessarily going to entice somebody to come.’” And I thought, well that's really creative and that is very common across the tech space today.


Templeton:
Again, as we take that idea about looking at how others do things and how they've been successful, one of the things I just wanted to touch on before we wrap this up Stan, is out-of-the-box thinking. Of approaching the problem, not from regulation, but by taking the tools that we do have in place and learning and building on culture going forward. One of the things that you did bring up and that demonstrates how our country is so effective, was the organization Flex and what they did and how they responded during the pandemic, which I thought was extraordinary. From your point of view, and as a policymaker, why did that business model impress you so much and why are many others looking at Flex and how they handle their operations? What could we duplicate ourselves in government and also corporately around acquisition?


FLEX CORP. HAS A PROCESS THE GOVERNMENT CAN LEARN FROM
 

Mr. Soloway: 
Flex, I think, is the second- or third-largest manufacturer in the world. They're not as big as Foxconn, but they're up there. They make something like 3000 products at 150 manufacturing facilities all over the world. They make everything for most everyone— for Dyson and Google and a bunch of other folks. They also do contract research and development-partnered research and development. 

So, they are a fascinating company. But what especially fascinated me about Flex was the way they approached the supply chain. And I think about this in the context of the government model. You talk about technology solving problems and how we think about organizations. They recognized—now we're talking probably at least 10 or 12 years ago—that if they could reduce inventory in the factory by one day a year, for them it was $75 million of free cash to the bottom line.

Now, we don't measure things that way in the federal government. But the mentality is what’s valuable. What does it mean to reduce inventory? What does speed to delivery mean? Does it have a real mission impact on the government? Does it have a mission impact in the national security space? An impact in natural disasters or service to veterans? I mean, there are clearly outcome impacts. 

And as I got to know more about what they were doing, and I won't go into the details of their model, but basically they created—and it didn't exist in the commercial space—they created their own capability of integrating 90-odd applications. It requires some significant engineering strength. If Application A is really where I focus, let's say it’s for in-transit visibility, and a better application emerges, I unplug and plug in with some engineering requirements. Of course, It’s never that simple, but you get the idea. 

It's a very dynamic, very agile model. And as the Washington Post article on Flex pointed out, they were able to manage and most importantly, predict and anticipate supply chain shortages and issues much more quickly and much further in than almost anybody else. And many times, the case is not just knowing you have a supply chain issue, it's knowing well in advance and being able to predict its impact. And they have all these pieces they put together. 

The reason they're relevant to this conversation is that the guy who actually designed that whole system for them who's globally known in the supply chain world, has been in multiple times, been invited in to talk to the military. I know for a fact, as I was working with a spinoff of Flex for a while. Defense Innovation University folks are right out there with them in Silicon Valley, going to visit Flex to learn what they are doing.

People have been blown away by it.
 
FLEX BUILT A MODEL THAT YOU COULD EMULATE
 
Mr. Soloway 
I keep asking the question, “Why can we not get some of that?” We keep spending a lot of money to invent bespoke solutions. And what Flex has done rather brilliantly is identify the solutions that meet their needs and transform their internal business processes to meet them. 

And as a result, the CEO or any executive at Flex can pick up his or her phone any morning, hit the app, and know every supply chain interruption they have, who's responsible for addressing it, and what progress was made since the day before towards closing it. And they’re listed by severity, so they don't see every little one, but anything graded by your level. It's transparent, it's dynamic, it's agile. I

It's kind of all these pieces that we'd love to see used more in the government. It’s just that agencies are finding it very, very hard to figure out how they can actually adapt. To me, that's really unfortunate because it's there. Now Flex has an interest in selling that; they don't sell supply chain solutions. My point is, the model they built is one you could emulate.
 
Templeton: 
We have a link on our microsite to the Flex article that appeared in the Washington Post. It's worth the read and it's worth the study. And so, Stan, on behalf of the podcast team, I want to thank you for your time and would like to continue the conversation. We will continue to stay in touch with you.

Mr. Soloway:
I look forward to it. Tim, thanks so much.