new acquisition processes in DoD Instruction 5000.02

Defense AT&L: September-October 2017 2Defense AT&L: September-October 2017 2

Reimagining Defense Business Acquisition

Dewey DuHadway n Howard Harris n Melissa Naroski Merker n Scott Smith

DuHadway is a member of the staff of the Office of the Department of Defense (DoD) Deputy Chief Management Officer. Harris is a profes- sor of Acquisition Program Management at the San Diego Campus of the Defense Acquisition University’s West Region. Merker and Smith are staff members of the Deputy Assistant Secretary of Defense for Command, Control, Communications, Cyber and Business Systems.

T he Department of Defense (DoD) has spent billions of dollars annually to either modernize existing business systems or procure new business sys- tems, yielding uneven results. The milestones, models and documentation driven through the traditional DoD acquisition process have not provided a flexible enough structure for managing business systems. And, in prac-

tice, tailoring for a business system has often taken more time and effort than the benefits it produced.

History has shown that:

• The requirements, acquisition and investment review functions necessary for a successful program operate as separate processes, and the key players in each area do not work closely enough.

• There is a tendency to jump to an information technology (IT) solution to the business problem without fully understanding the underlying capability need.

3 Defense AT&L: September-October 2017 3 Defense AT&L: September-October 2017

• Functional Sponsors and/or Process Owner(s) are not taking enough ownership, responsibility and accountability for the definition and validation of the capability need and/or do not perform a broad enough analysis of all Doctrine, Organization, Train- ing, materiel, Leadership and Education, Personnel, Facilities, and Policy (DOTmLPF-P) solution options beyond just materiel (IT).

• The current acquisition culture, models, procedures, documentation requirements and oversight expec- tations do not align with commercial best practices for implementing commercial-off-the-shelf (COTS) products and are neither agile nor flexible.

Unfortunately, many of these challenges are not new. In 1995, the General Accounting Office (renamed in 2004 as the Government Accountability Office [GAO]) des- ignated the DoD’s multibillion-dollar business systems modernization program as high risk, and it has been on the GAO’s high-risk list ever since. In 2015, GAO added to the list Improving the Management of IT Ac- quisitions and Operations, recognizing that “federal

IT investments too frequently fail or incur cost over- runs and schedule slippages while contributing little to mission-related outcomes.”

Acquiring defense business systems (e.g., health care, finance, contracting, human resources, logistics, and training) are obviously quite different than acquiring weapon systems (e.g., Joint Strike Fighter aircraft, nu- clear aircraft carrier, or a tank), as shown in Table 1. DoD Instruction (DoDI) 5000.02’s milestones, models and documentation did not provide the proper structure for managing business systems. And, in practice, tailoring for a business system often took too much time and effort, making it hard to justify the benefits produced.

A New Development Approach Recognizing these uneven results and the unique na- ture of Defense Business Systems, Congress in the Fis- cal Year (FY) 2016 National Defense Authorization Act (NDAA) required the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD[AT&L]), the Deputy Chief Management Officer (DCMO), and

Defense AT&L: September-October 2017 4

the DoD Chief Information Officer (CIO) to collaborate on a new requirements, acquisition and investment review process for business systems. The USD(AT&L), DCMO, and DoD CIO viewed the FY 2016 NDAA requirement as an opportunity to build a framework to resolve discrepancies and other chal- lenges between acquisition policy in DoDI 5000.02 and DCMO guidance on business systems requirements and the investment review process. A team of subject-matter experts (SMEs) from across the DoD gathered and determined that a new business systems process must:

• Align to Commercial Best Practices: Enforce the mindset that “Industry is the Innovator” in the business systems product market and the need to customize COTS products should be minimized as much as possible.

• Provide Complete Solution Coverage: Cover IT business capabilities and business change across the DOTmLPF-P spectrum and must emphasize consideration of all other nonmateriel options before determining an IT (materiel) solution is needed.

• Maximize Process Efficiency: Reduce process overlaps, clarify oversight roles, and streamline documentation re- quirements to reduce total life-cycle time (and thus, cost)— from identifying a business capability need to delivery of a solution.

• Enforce Compliance: Address FY 2016 NDAA Section 883 • Provide Flexibility: While enforcing compliance, provide a

more useful common ground for process tailoring and allow for multiple implementation approaches (i.e., Agile, incre- mental, etc.).

The team’s work culminated in the business capability acquisi- tion cycle (BCAC) process and supporting policy in the form of the DoDI 5000.75, approved for release on Feb. 2, 2017, by the

USD(AT&L), DCMO, and the DoD’s CIO. The purpose of the BCAC is to rapidly deploy business capabilities which address identified mission and capability needs within approved cost, schedule and performance parameters. The BCAC addresses in part past recommendations by the Defense Science Board and requirements of Section 804 of Public Law (P.L.) 111-84 to establish a new acquisition process for information technology.

BCAC Process Overview As shown in Figure 1, the BCAC has five phases and is intended to be cyclical and flexible with steps repeating as necessary

Table 1. Weapon System vs. Defense Business System Category Weapon System Defense Business System

Requirements JCIDS process; KPPs; KSAs; ICD, CDD and CPD documents

Does not follow JCIDS process unless it is a special interest to JROC

Engineering Efforts Competitive prototypes; technology readiness lev- els; detailed design; and technical reviews

Limited development effort, COTS/GOTS software; software available in the commercial market place

Testing Detailed DT and OT

Full-up LFT&E as required

Demanding IOT&E with warfighters operating the system and in realistic operating environment

Full-up LFT&E not required; very limited environmen- tal testing; operational testing in office setting

Production Start new production facilities; train the new work- force; ramp up production and material in LRIP after Milestone C; full rate production

No production; No Milestone C. Emphases on COTS/GOTS integration coding

Sustainment Field environment; expensive O&S costs; all Inte- grated Product Support elements considered

Office environment; updating/batches/additional increments of software; priority on training

Key to abbreviations: CDD=Capability Development Document; COTS/GOTS=commercial off-the-shelf/government off-the-shelf; CPD=Capability Pro- duction Document; DT=Developmental Testing; ICD=Initial Capabilities Document; IOT&E=initial operating test and evaluation; JCIDS=Joint Capabilities Integration Development System; JROC=Joint Requirements Oversight Council; KPP=key performance parameter; KSA=key system attribute; LFT&E=Live Fire Test and Evaluation; O&S=Operations and Support; OT=operational test.

Source: The authors

Figure 1. BCAC Model

Source of Figures 1 and 2: DoD Instruction 5000.75

BCAC Phases

Capability Need

Identi�cation

Business Solution Analysis

Business System

Functional Requirements & Acquisition

Planning

Business System

Acquisition, Testing &

Deployment

Capability Support

5 Defense AT&L: September-October 2017

to drive more rapid achievement of intended outcome(s). The BCAC implements a governance and management structure; assigns responsibilities of the functional and acquisition com- munities; provides direction for the identification of business needs, development of capability requirements and supporting IT; and introduces continuous improvement as part of ongoing business capability support.

The linear version of the BCAC is shown in Figure 2 and reflects phases with associated decision points. The process steps, decision points, and roles and responsibilities affiliated with each BCAC step and decision are detailed in DoDI 5000.75.

Finally, Figure 3 summarizes key activities in each of the cycle’s phases.

The BCAC unifies existing processes for business systems into one policy as directed by DoDI 5000.75. The BCAC enables users to more quickly implement capabilities by emphasizing the importance of results rather than static documentation.

The defense business systems investment review process implements Title 10 United States Code (U.S.C.) Section 2222 and involves an approval of funds certification. This process is intended to enable the management of a well-defined IT in- vestment portfolio for the DoD Business Mission Area (BMA) by enforcing the business enterprise architecture (BEA), busi- ness process reengineering (BPR), and portfolio management. The investment review process is integrated into the BCAC with appropriate decision makers (depending on the level of

the program) participating throughout. The first certification to allow the obligation of funds will occur at the Acquisition Authority to Proceed (ATP).

The Clinger-Cohen Act (CCA), or Subtitle III of Title 40, U.S.C., applies to all IT investments, including National Security Sys- tems (NSS). One BCAC benefit is its streamlining of tradi- tionally duplicative CCA confirmation processes. The intent is that any requirement for CCA confirmation is validated during existing BCAC processes, eliminating the need for a separate CCA review.

Guiding BCAC Principles In the BCAC, success and readiness to move to the next phase will be measured on a “team” basis by acquisition, functional and IT professionals to streamline decision mak- ing and allow a quicker transition between phase activities. The BCAC focuses on the following core Guiding Principles to enable success:

• Work as a team: Key constituencies work together as one team with functional, acquisition and IT members involved throughout the life cycle.

• Plan to evolve: The life cycle is continual. Sustainment re- quires criteria and triggers that define on-ramps back into business need analysis to restart the cycle.

• Adopt best practices: Don’t reinvent the wheel. Be willing to prioritize requirements, deploy the 80 percent solution, change processes to minimize customization, and stop the effort if it will not achieve the desired outcome.

Capability Business Business System Business System Need Solution Functional Acquisition, Identi�cation Analysis Requirements & Testing & Capability Acquisition Planning Deployment Support

Solution Functional Acquisition Limited Full Capability Analysis Requirements ATP Deployment Deployment Support ATP ATP ATP(s) ATP ATP

Contract Award

Market Research Process IT

IT Solution Approach Selection

IT Requirements Functional Requirements Design Speci�cations

Organizational Change Management

Milestone decision Other key program event

Figure 2. BCAC Linear Model with Decision Points

ATP=Authority to Proceed

Defense AT&L: September-October 2017 6

• Show the money: Increase transparency by allocating and tracking funding for all activities across the DOTmLPF-P spectrum, including the cost of requirements development and sustainment.

• Do work once: Avoid bottlenecks and eliminate competing processes. Work products are for the use of the process operators—eliminate extraneous documentation for docu- mentation’s sake.

• Deliver value: This would be a capability that addresses the entire DOTmLPF spectrum—not just a system. Increase value by reducing the time required to deliver capability.

What’s So Different? The biggest differences from the previous state of practice for business systems operating under the DoDI 5000.02 and supporting guidance and now operating under the BCAC are that it:

• Utilizes ATP decisions in lieu of traditional acquisition mile- stone decisions for maximum flexibility. ATPs are tailored as necessary, and the decision authority may vary depending on the type of activity being authorized (e.g., acquisition activity would be authorized by a Milestone Decision Au- thority [MDA] whereas requirements activities would be

authorized by a Functional Sponsor). DoDI 5000.75 defines the decision authority at each ATP.

• Emphasizes change management throughout the pro- cess—from beginning to “end”—recognizing that there is no true “end” to IT programs and/or their underlying processes.

• Focuses on a thorough analysis of capability needs vs. wants or “nice to haves.” Performing this analysis upfront allows for identification of potential non-IT paths that may prove less costly and more effective in addressing an organiza- tion’s requirements.

• Dictates early examination of existing solutions in use around the DoD in order to avoid creating new solutions where sufficient ones may already exist. These reuse con- siderations apply not only to minimizing the customizing of commercial software to accomplish functional objec- tives but also to leveraging existing IT solutions, hosting and infrastructure.

• Takes a dynamic, information-centric approach to evaluat- ing programs rather than focusing on static documentation.

• Provides great encouragement to tailoring both process and documents. Artifacts are intended to be virtual in nature (i.e., not traditional “paper documents”) and will be used to support program execution. Programs may choose to

Figure 3. Key Process Activities

Capability Need Identi�cation

Solution Analysis ATP Functional Requirements

ATP Acquisition ATP Limited Deployment

ATP(s) Capability Support

ATP

Full Deployment ATP

Business Solution Analysis

Business System Functional Reqts &

Acquisition Planning

Business Systems Acquisition, Testing

& Deployment

Capability Support

ATP Decision “Milestone-like Event” Non-IT Capability Improvements

BCAC Continuation (IT Solution)

Phase 1: Phase 2: Phase 3: Phase 4: Phase 5:

Activities/Products: • Define business need

and desired end state, aligned with business enterprise architecture (BEA)

• Laws, Regulations and Policies (LRPs)

• Future capabilities to achieve end state

• Performance Measures

• Workplan and cost estimate for activities until next ATP

• Capability Require- ments Document (CRD) for approval at ATP

Activities/Products: • High-level business

process to support future capabilities and capability process maps

• Analyze use of existing solutions

• Initial Business Process Re-engineering (BPR)

• Develop initial Capabil- ity Implementation Plan (CIP) with DOTmLPF-P actions, cost/benefit, and schedule

•

Activities/Products: • Identify/Define IT

Functional Reqts (ITFRs) & Information Assets (IAs) to support business processes

• Determine evaluation cateria/overall solution approach (market research, etc.)

• Develop acquisition strategy

• Update CIP (Include acquisition strategy and non-materiel ac- tions)

• Secure funding • Draft Request for

Proposal (RFP)

Activities/Products: • Award contract (solu-

tion selection) • Establish Cost, Sched-

ule, and Performance Baselines(s) and update CIP

• Requirements modeling and design (detailed fit- gap analysis and design specifications)

• Testing prior to deploy- ment ATPs

• Implement solution and measure performance

• Develop initial Capabil- ity Support Plan

•

Activities/Products: • Readiness for capability

support • Ongoing performance

measurement • Updated Capability

Support Plan

ATP=Authority to Proceed; BEA=Business enterprise architecture Source of Figure 3: DoD Office of the Chief Management Officer

7 Defense AT&L: September-October 2017

develop any other artifacts or documents that they wish in order to execute their programs.

Keys to Implementation Success The following section provides keys to success that are lever- aged from industry research and support the BCAC guiding principles, further enhancing the driving factors that enable BCAC users to successfully execute the process.

Continuous process improvement is a way of life. Therefore, actively manage business processes throughout the life cycle to ensure they can be adapted and optimized. And remem- ber that continuous process and systems improvements also occur after the go-live stage.

Try before you buy. Conduct use case demonstrations, pilots and prototypes prior to acquisition. Use market research, anal- ysis and ratings to narrow viable options in advance. Leverage domain expertise and know the Art of the Possible.

Manage the change. Know your customer—the organiza- tion, culture and people. Involve end users throughout the project. Tailor development and deployment strategies to fit the culture and the product. Understand that commonly

used methods—such as agile development and cloud—are gaining traction.

Embrace the COTS/Government OTS mindset. Minimize customization and ensure vigorous change control gover- nance. Only customize if there is an advantage or efficiency to be gained. Focus COTS testing on integration points and enhancements.

Resources As the DoD transitions to this new approach for business sys- tems requirements and acquisition, lessons will be learned, best practices adopted and a body of knowledge and experi- ence will emerge. Under the sponsorship of the DCMO, DoD CIO, and USD(AT&L), a community of practice has been es- tablished to serve the workforce as its authoritative source for guidance, advice and information regarding the successful acquisition of a business system or capability and application of the BCAC. See https://www.milsuite.mil/book/groups/ bcaccommunity.

The authors can be contacted at david.t [email protected]; [email protected]; [email protected]; and [email protected].

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