[5] A Practicable Holistic Strategy

[So that others might also subscribe, please share the following link with friends and colleagues.Subscribe!]

Holistic Contractor Management

Currently, defense contractors treat all government-funded development projects as if they were of equal importance to the national defense and of equal urgency. As a result, defense contractors allocate to each active project a perceived fair-share of development capacity. Worse, with each new project that any government agency decides to fund, defense contractors dilute the level of capacity available to earlier projects, so that they might staff the new project with its own fair-share of capacity. They do this, because they are unable to bring onto their payrolls a sufficiently large number of new workers fast enough to satisfy the unrealistic start-dates that win them the contracts in the first place.

Given the current threat to the security of the United States, this fair-share approach to the allocation of resources is itself a threat to homeland security. It delays the few projects that are made truly urgent by the threat of terrorism and related military operations, while favoring projects that should be given a lower level of priority today.

The ideal situation would be to have all government-funded development projects prioritized and sequenced, 1 through n, across all services. This would enable the optimum deployment of all development resources, and it would ensure that the most urgent of all active projects would be completed at maximum speed. Indeed, a limited version of this is exactly what happens when the generals in the Pentagon decide that ONE project, perhaps needed to fulfill one urgent mission, is given overwhelming priority at every defense contractor in the nation. However, the magnitude of such a massive prioritization task and the considerable political interests preclude such an ideal situation from ever existing. There is an alternative that is practicable and nearly as effective.

In most cases, development projects are performed largely by resources at a single contractor location. Therefore, to enable a much higher yet sustainable level of speed, it is sufficient to prioritize and sequence the projects at each contractor location. This smaller prioritization task greatly reduces the number of government offices that have to cooperate with each other at any one time; it minimizes the number of political interests that have to be satisfied.

Does this more practical approach eliminate one of the two obstacles to speed? It does. Recall. The first obstacle is that the executive teams of defense contractors lack the authority with which to prioritize and sequence the government’s projects. If the government prioritizes and sequences its own projects, the executive teams then simply subordinate their organizations’ operations to the government’s prioritization decisions. However, the second obstacle remains.

As mentioned earlier, the second obstacle is created by the additive profit model of the defense contractors. Given their additive profit model, if defense contractors do subordinate development operations to the government’s prioritization decisions, their resource utilization level and (more importantly for the contractors) profitability will be reduced.

The additive profit model is defined by the government’s own policies, measurements, and practices, which determine the detailed features of the various development contracts. To eliminate this obstacle, contracts must be designed so as to reward the rapid, complete, and effective delivery of the tangible items specified by each contract. In other words, the contracts must be performance-based and not cost-based, as they are now. All contractor payments must be triggered solely by the satisfactory delivery of tangible items, so that the focus of the contractors' executive teams shifts, from keeping people busy on anything to delivering all that has been promised to the government as fast as possible.

These two changes can be achieved only by the government. Further, given the current threat to homeland security, the responsibility for creating these changes falls squarely on the shoulders of the Department of Homeland Security and Secretary Ridge (or his replacement). It is the responsibility of all the other government services to cooperate fully with Secretary Ridge, should he decide to take these vitally important steps, so that the national security of the United States might be guaranteed to the maximum degree possible.


A Strategy for Transition

Given the current, significant threat of terrorism, making these and related changes is of utmost urgency. Accordingly, the Department of Homeland Security should begin by first prioritizing and sequencing its own technology development projects. Then, the Department should strive first to achieve the prioritization of the projects at the contractor location where its own most urgent project is being performed. The Department’s own prioritization list should guide the sequence in which other contractor locations adopt this more effective operational model. For each of these locations, the Department should solicit the cooperation of all other government offices whose projects are being performed at that same location. Those offices, in turn, should be mindful of their own responsibility to subordinate themselves to the national security of the United States.

Without question, the transition will require a considerable degree of re-education, both, in the government and within each contractor location, beginning with the highest levels of management in each. The re-education of decisions-makers, managers, and ultimately resources should precede all other steps, within the Department and at each contractor location.


Summary

Secretary Ridge observes correctly that the current rate of technology development is the one factor that limits our ability to collect defense-related intelligence and to secure the national defense of the United States. However, the current pace of technology development is made unnecessarily lethargic by management methods that are, themselves, forced by the government and employed by defense contractors. A new, more effective management model exists, which approximately doubles the speed with which technology development projects are completed. All that remains if for Secretary Ridge to understand the new model and to deploy it rapidly and effectively.

The new management model will be the focus of future articles on this blog.


Every Reader’s Responsibility

If you agree with all that I’ve discussed in this document, then it’s up to you to help make Secretary Ridge and other decision-makers in government aware of all that the government can do, to improve our ability to provide for the national defense. To that end, I urge you to share this document either directly with government officials or with individuals who have the ability to gain the attention of government officials.

[So that others might also subscribe, please share the following link with friends and colleagues.Subscribe!]