Department of Defense Press Briefing by Under Secretary of Defense Lord on DOD Acquisition Reforms and Major Programs

Undersecretary of Defense for Acquisition and Sustainment Ellen Lord


LT. COL. MIKE ANDREWS:  Okay.  Good morning, ladies and gentlemen.  Thank you for joining us today.
 
This morning, Under Secretary of Defense Ellen Lord will provide an update on the department's acquisition reforms and major programs.
 
She has an opening statement and then will take your questions.  We do have a hard stop at 10:45, so please be respectful with your questions so everyone will have a chance.
 
Ma'am, over to you.
 
UNDER SECRETARY OF DEFENSE ELLEN LORD:  Thank you, Mike.
 
Good morning, ladies and gentlemen.  We really appreciate you being here today.
 
It's been one week since I was here with you introducing the final report of the Defense Innovation Board's Software Acquisition and Practices Study.
 
This morning, I want to provide you with an update on the department's acquisition reforms, and comment on major programs.  I'll start with a brief recap of acquisition reforms we've completed.  Then I'll briefly discuss major initiatives that we will complete before the end of the year.  And then I will take your questions.
 
So, beginning with 2018.  A&S made significant progress in the field of acquisition reform in 2018.  And in 2019, we will continue efforts to improve the way the department does business.
 
In 2018, we completed a congressionally directed reorganization of AT&L into two organizations, Acquisition and Sustainment which I lead, and Research and Engineering led by Dr. Griffin.  This was one of the largest OSD reorganizations in 30 years.
 
A&S has been shaped into an organization that provides a Defense-wide adaptive acquisition framework that spans from the demand signal to disposal, with data-driven analysis linked to the National Defense Strategy objectives.  It scales to enable innovation and supports a culture of innovation, critical thinking and creative compliance.
 
I am committed to creating a culture of creative compliance, scaling innovation from pockets of excellence, and mainstreaming authorities provided by Congress.
 
In 2018, we focused on Section 804 middle tier of acquisition, and we are currently in the process of developing a formal policy and putting out -- following up on interim policy that was put out in April of 2018.
 
We published the Other Transaction Authority, or OTA, handbook that was in line with updated policy.  This was important because it improved policy and guidance while clarifying definitions and providing guidance in problem areas.  We expanded OTA to organizations with contracting authority and increased dollar threshold.
 
The Defense Acquisition University led the effort to communicate, and the handbook was turned into a series of workshops -- over 50 workshops at DAU.  DAU also helped to write the guide, and we've actually had over 35,000 views online of the guide.
 
In 2018, we had a major accomplishment with the F-35 program in linking both the execution with product quality, delivery times, and achievement of required production rates to contractor profit through incentive fees.
 
Compared to F.Y. '18, we achieved a 10 percent reduction in the negotiated cost per flying hour in the annual sustainment contract.  This reduction comes at a time when we are projecting to fly 39 percent more hours with a fleet size 26 percent larger than what was scoped in the 2018 contract.
 
The September '18 negotiated Lot 11 F-35A unit price was reduced by 5.4 percent.  For the first time in the F-35 production program, the Lot 11 contract includes production line performance inventive fees to reduce final assembly span time, while reducing variability and increasing aircraft quality delivered to the warfighter.  97 percent of Lot 11 aircraft have been delivered on time.
 
The Air Force's F-35A and the Marine Corps' F-35B have both operationally deployed and have flown operational missions in CENTCOM.  Feedback from our users in deployments and major exercises like Red Flag has been very positive.  The aircraft is performing well.
 
The F-35 is more than a fighter aircraft.  It is the quarterback of the Joint Force.  Its ability to collect, analyze and share data is a force multiplier that enhances all assets in the battle space.  With stealth technology, advanced sensors, weapons capacity and range, it is the most lethal, survivable, connected and interoperable aircraft ever built.
 
A major initiative for A&S in 2019 is the rewrite of DODI 5000.02.  This is the document that provides policies and principles that govern the Defense acquisition system and forms the foundation for all DOD programs, documents significant changes to acquisition policy included in the 2016 through 2019 NDAA, and implements direction to streamline discussion of the Defense acquisition process.
 
Instead of making people identify and justify removal of current 5000.02 documents we will start with a clean sheet and build up using the simplest way to be creatively compliant.  We will develop flow charts that take into consideration the specific nature of the program and identify only those items that help the service get the desired capability into the hands of the warfighter expeditiously and affordably.
 
As we reframe our approach to acquisition policy, we are also taking the opportunity to redefine how we write the underlying contracts.  We are laying out the different contractual mechanisms so that it is very clear what the menu of options are.
 
Cyber-security standard language:  We are doing the cyber-security standard language both for the defense industrial base, because we have seen vulnerabilities in data systems and software development environments of our contractors.  We need to help them with crisp ISO 9000-like cyber-security standards set so that they know the requirements we will hold them to, requirements with metrics that are auditable by third parties.
 
For major weapons systems, our understanding of cyber vulnerabilities has greatly increased in recent years.  We need to make sure we have a clear definition of how weapons systems need to be cyber hardened and how we will assess compliance.  These requirements will be included in the contractual language.
 
We want to manage and protect intellectual property (IP) with standard language clauses, both for sustainment -- the right IP posture allows us to make smart decisions through the lifecycle of our systems to manage costs and for development.  With the right IP we should be able to spiral in new sensors, weapons and algorithms.  We need to thoughtfully define IP requirements for each program at the start, carefully defining interface control documents.
 
Requests for proposals:  Vague language in RFPs and unclear descriptions of the intended source selection process contributes to protests.  We understand that if we are more precise in our RFPs we can reduce the time we spend resolving protests.
 
We want to develop contracts to support Agile DevOps software development.  Our systems need to be hardware-enabled and software-defined.  Software development processes are different than traditional production, development and sustainment processes for weapons systems.  We need a software color of money.
 
Software development requires different skill sets.  We need to change how we train and maintain talent.  We need to develop centers of excellence with broad reach across the acquisition and operational communities.
 
Security is a first order consideration.  We need to create a secure environment that supports DevSecOps for big defense contractors and small innovative companies.
 
The department cannot achieve the full breadth of these reform and modernization priorities alone.  We must continue to partner with the private sector and Congress.  I meet routinely with our industry partners.  We meet one-on-one with CEOs monthly, jointly with major defense contractor leadership teams and senior DOD and service representatives, and more broadly with the industry trade associations.  We talk about challenges and opportunities and how we can best work together.
 
I remain fully committed to consistent and timely engagement with Congress.  I regularly meet with professional staff members and members outside of hearings to talk about programs and reforms.
 
These engagements are important so we have a common understanding of each other's concerns and intents with proposed changes to statute.
 
Since the beginning of the 116th Congress in January, we have had A&S leaders testify at 13 hearings.  In addition, we have submitted 114 reports to Congress.
 
Just last week, I briefed the Senate on nuclear modernization, DOD's highest priority mission, ensuring that the United States has a safe, secure, reliable and credible nuclear deterrent now and in the future.  This is a bipartisan position and has been stated by three successive secretaries of defense.
 
While still militarily effective today, the U.S. nuclear deterrent remains dependent on aging nuclear delivery and NC3 systems built during the Cold War.  After 25 years of drawing down and life-extending these systems, repeated decisions to defer recapitalization of our nuclear forces have caught up to us.  Delay is no longer an option.  Systems can no longer be cost-effectively life-extended.
 
In February, Acting Secretary of Defense Shanahan directed me to be the department's lead for counter unmanned aerial systems.  In that role, I lead the Counter-UAS Senior Integration Group that includes Vice Chairman of the Joint Chiefs of Staff General Paul Selva.
 
The department continues to invest in research and development and fielding new equipment to stay ahead of a constantly changing threat.  We work directly with combatant commanders and the military services to identify emerging mission requirements.
 
The department has made substantial investments to develop, produce and field equipment for contingency operations and DOD facilities.  This includes capabilities transitioning to service programs of record for short-range air defense and force protection.
 
On 5G, the department is developing a 5G strategy.  5G networks are expected to be more than 100 times faster than current networks.  The improvements in command and control and situational awareness tools will be significant, and not just the speed but the resiliency.
 
The Defense Science Board, the Defense Business Board, and the Defense Innovation Board all conducted studies on different aspects of 5G, which will be incorporated in the department's strategy.
 
A&S is leading the discussion with partners and allies on the importance of secure 5G as part of national security and interoperability.  The goal is to ensure there is understanding domestically with industry, our interagency partners, Congress, the American public, and with our international partners that secure telecommunications networks are critical to national security.
 
We have 87 selected acquisition reports, SARs, this year:  17 Army, 38 Navy, 29 Air Force and 3 DOD.  The department will release summary data when all the SARs have been delivered to Congress.  We are making every effort to make these SARs accessible, reducing the use of "for official use only," but not at the risk of operational security.
 
In closing, China is increasingly attempting to erase research and development gains by leveraging and manipulating economic tools, like investment in U.S. companies with technology critical to our national security.
 
In 2016, a Chinese-backed private equity firm attempted to buy the third largest manufacturer of field-programmable gate array chips, a technology critical to our military.  The Committee for Foreign Investment in the United States, CFIUS, and President Trump stepped in to prevent a loss of this technology to foreign adversaries.
 
Although CFIUS can intercede on individual transactions to protect our national security, it does not provide a comprehensive or unified solution to the economic warfare employed by our adversaries.
 
I have approved a new department program called the Trusted Capital Marketplace, known as TCM, a public-private partnership that will convene trusted sources of private capital with innovative companies critical to defense industrial base and national security.  The Trusted Capital Program executes the National Defense Authorization Act, NDAA, for F.Y. 2018 Section 1711 mandate to establish a pilot program that supports small and medium-sized companies to manufacture, quote, "emerging defense and commercial technologies," unquote.
 
With that, I look forward to your questions.
 
STAFF:  Tony
 
Q:  One, thanks for doing this two weeks in a row.  We hope other DOD officials follow your model, because it hasn't been done since maybe the Rumsfeld years.
 
Anyway, F-35 in Turkey:  The U.S. is mulling pulling out of -- getting Turkey out of the F-35 program.  Major geopolitical implications obviously, but from an acquisition standpoint, are you starting to plan for taking -- replacing those 10 Turkish companies making critical parts?  Are you starting to look at the marketplace?  And what are the steps you've taken to mitigate the loss of Turkey's critical parts manufacturing?
 
UNDER SECRETARY LORD:  As you know, Tony, the U.S. continues to speak with Turkey on a routine basis.
 
We have been very clear that the F-35 and the S-400 are incompatible.  We have had Turkey as a NATO ally for many years.  They're also a very good supplier on the F-35 program.  Those partners in the F-35 program are awarded supply chain contracts on the basis of value.
 
We have for sometime now been working to look at alternate sources of supply for the F-35 supply chain that it is inside Turkey right now.  That being said, we continue to work with Turkey and hope that they will use a NATO-compliant system for their air defense system.
 
Q:  But if they don’t continue to buy -- on their path to buy it, how fast can you replace the Turkish suppliers with U.S. or other trusted foreign suppliers?  What's the timeline you're looking at?
 
UNDER SECRETARY LORD:  We have that under way right now and we are honing down on that timeline.
 
Q:  The Army's -- they're delinquent on SARs or what other services?  Because they're over a month and a half late.
 
UNDER SECRETARY LORD:  Question number two.
 
(CROSSTALK)
 
UNDER SECRETARY LORD:  Right now, the Army, if they haven't very recently, they are getting ready to submit their SARs.
 
Q:  Thanks.
 
STAFF:  Tony Bertuca?
 
Q:  Thank you, ma'am.
 
The GAO recently reported that cost performance has slipped at the department amid what looks like a drop in competition.  Could you talk a little bit about the findings in that report?
 
One of the most troubling things, according to Mr. Dodaro, is that programs that were begun after the 2010 reforms are now showing cost growth.  Can you answer some of the -- the criticisms in there?
 
UNDER SECRETARY LORD:  Well, the Weapons Systems Annual Assessment from GAO had some primary findings that we concur with, namely that programs that apply what they call key knowledge-based practices do well.
 
So that means looking at tech maturation, form, fit and function, TRL levels -- technology readiness levels.  That we look at tech maturation for CDR, that we also use all kinds of practices to look at cost and schedule.  So we agree with that.
 
They also talked about significant cost growth.  As I looked at that report, 50 percent of the cost growth from the initial estimates were caused by just a few programs:  JSF, B-22, National Security Space Launch -- which we previously called EELV -- and SSN-774, the Virginia-class.  All those programs are 23 years or older.
 
The way I read the report, those programs started after (inaudible) actually are showing better performance.
 
Q:  Also, the report mentioned that there doesn't seem to be as much competition as there once was, or some of the contracts 67 percent of the contracts for 183 major programs went to only a few contractors.  Can you talk a little bit about that?  Are you committed to re-energizing competition?
 
UNDER SECRETARY LORD:  Competition is our friend.  I am very, very supportive of competition.  And we try to drive that in many different ways.
 
We particularly are interested in small and medium-size businesses.  An enormous amount of our innovation comes from small businesses.  So through a variety of different contracting mechanisms, we are trying to include them as well as traditionally commercial businesses.
 
That's why you see the use of other transaction authorities.  That's also why you see us using pathfinder projects to create secure software development environments that smaller companies could use.
 
STAFF:  Marcus
 
Q:  Thank you.  And let me echo the thanks in doing this two weeks in a row.
 
I wanted to ask you about F-35 negotiations.  Lockheed this week made the rare move of saying it (inaudible) -- and talking a little bit about a bid (inaudible) submitted a bid for Lots 12, 13 and 14, with a less than $80 million F-35A.
 
I was wondering if you can talk about your observations of the contract negotiations so far, when you expect them to wrap up and how might -- you mentioned earlier, the incentive that you had in Lot 11.  How might you see this contract differing from previous contracts?
 
UNDER SECRETARY LORD:  So, we are in the midst of negotiating Lot 12.  I'm not going to comment on any prices or costs associated with that.
 
We continue to negotiate and, in fact, we are hoping to wrap up here very shortly.  We would like to have a contract award in the June, July timeframe.
 
What we see is Lockheed continuing to work closely with the department to really understand the cost drivers in the production line.  We are getting better and better fidelity around that, which is allowing us to continue to construct incentive fees around the work that's being done and the critical work to keep the number of aircraft coming off that line consistent with what we need to deliver each year.  That's our key driver.
 
We continue to look at ways to get costs out of the system.  We do have more and more aircraft being produced, which drives economies of scale.
 
Q:  Just to clarify, are you negotiating just 12 right now?  Or are you negotiating to block-buy the three lots together?
 
UNDER SECRETARY LORD:  The way this works is we contract all of Lot 12.  We have some international partners who have funds allocated for multiple lots so we commit to some of the international buys.
 
STAFF:  Lara
 
Q:  Hey, thank you.  I'd like to thank you for doing this, again.
 
I wanted to ask you actually about the National Security Space Launch Program that you just released an RFP for.  I'm wondering if you can talk, first of all, just about the importance of this program as space becomes more and more a national priority.
 
And then also, just maybe explain to us the thinking behind the acquisition strategy.  Because, as you know, it doesn't necessarily satisfy some of the bidders.
 
UNDER SECRETARY LORD:  Space is absolutely critical to us from a warfighting point of view.  You see an enormous amount of effort in the building going into how we organize for space.  We have many programs that we are discussing right now, along with an overall space architecture.
 
Launching into space is a critical capability for us.  And I very much support the market working in a free and open way and market dynamics sorting out.  We've stuck to what we had for an acquisition strategy on this program for multiple years now, and we are letting that strategy play out.
 
Q:  I'm just -- I just wanted to press you on that, because doesn't it -- is there some concern that limiting the contractor work to two contractors might limit the market that potentially could get bigger and bigger now?
 
UNDER SECRETARY LORD:  There is a very large commercial market, along with a Defense market.  Space is growing, so although we have two awards in this contract, there is enormous opportunity overall.
 
STAFF:  Leigh?
 
Q:  Hi, thank you.  Leigh Giangreco, Capitol Forum.
 
I wanted to ask you, last year, you mentioned a software "Do Not Buy" list.  That's apparently expanded to a DOD blacklist.  I'm wondering if you can tell us a little bit, you know, what industries that might include.  Is it just software or is it also going to be the hardware that that rides on?  Is it going to include aviation parts?
 
And then as I understand, some of the defense industry trade groups have members that have used Huawei and ZTE.  So I'm curious how many Huawei and ZTE-like companies has the DOD identified at this point as, sort of, you know...
 
(CROSSTALK)
 
UNDER SECRETARY LORD:  Okay.  We have a lot of questions going on there.
 
Let me start, first of all, the terminology we use is a "restricted vendor list."
 
Q:  Okay.
 
UNDER SECRETARY LORD:  And we have a restricted vendor list that we have the authority to have to protect our national security.
 
Additionally, if you review the F.Y. '19 NDAA, you will see that there are actually five companies called out that as of August '19 we are not allowed to procure from.  They include Huawei and ZTE.
 
So cyber-security is an area that has probably accelerated in terms of department focus more than anything else in the last 18 months, because we understand the vulnerabilities of hackers coming into our systems, into the defense industrial base systems as well.  That's why we are so bullish on developing this National Cyber-Security Standard, just like we have quality standards with ISO.
 
What we know is that if we do not have software from trusted sources, we cannot ensure our cyber-security.  So there are certain companies that often are hidden inside of other shell companies.  We are tightly coupled with the intel community to make sure we understand who is out there doing what.  We will continue to not buy from sources that are not trusted.
 
This is actually a large area of discussion with our partners and allies as well.  We are sharing a lot of information mil-to-mil so that we have a better understanding.
 
Q:  So who is -- can I just ask who exactly is policing this?  
 
Because talking with primes and even the subcontractors, there seems to be very little insight into, you know, who is down a couple ranks.  Like third-tier suppliers, they don't know where there might be a Chinese supplier, a bad actor...
 
(CROSSTALK)
 
UNDER SECRETARY LORD:  Okay, so there's two pieces to that.
 
One, a prime supplier to the Department of Defense has a responsibility to understand their supply chain.  The security of that supply chain, whether it's two or three levels down or six or seven levels down, is the responsibility of the prime.  Now, that's why we are developing standards that are very, very clear.
 
That being said, it is not always intuitively obvious how you ferret out where there is an issue.  This is an area where many small cyber-security companies are working to help primes and others understand their vulnerabilities.
 
On the other side of this, we are working with Congress to get authorities to be able to share our restricted vendor list.  We have some constraints in terms of what we can share right now with the defense industrial base.
 
But education is important.  This is one of the topics that, for the last 18 months, we have spoken about at every quarterly industry association meeting we have.  Quarterly, we meet with CEOs from small, medium and large companies that are part of PSC NDIA, and AIA, so that we can have a dialogue.  And we bring not only acquisition and contracting representatives, the service acquisition executives, DCMA, but we also bring intel representatives as well.
 
So this is truly a partnership between the intel community and the acquisition community.  Because it used to be that intel would have very pertinent information, but it wasn't getting to the acquisition community in a timely fashion so that actions would be taken.  I think we have made a big difference there, particularly in the last 12 months.
 
STAFF:  We're going to go right here.
 
Q:  Andrew Clevenger with CQ Roll Call.  And thank you for doing this.
 
Besides the pilot program and the separate appropriations category for software that you mentioned last week, can you outline your legislative wish list going into this next NDAA a little bit?
 
UNDER SECRETARY LORD:  So many things.
 
One of the issues that I'm particularly concerned about is making sure that we have staffing for critical areas.  In the budget request that is there, we have 14 individuals we're asking for to support our NC3 focus.  I'm partnered with General Hyten to look at all the command and control associated with our entire nuclear enterprise.  That is important.
 
Secondly, we have the 13806 report that we published on the defense industrial base fragilities, issues we have.  We moved out the minute we finished that, just like we did with the SWAP study, with an implementation plan.  And we need individuals to work for that.  So I asked for 14 billets for that as well.
 
Likewise with CFIUS, with FIRRMA legislation that allows us to look at minority ownership in U.S. firms as well as real estate transactions around military facilities, we need 14 more individuals for that.  So that is very, very important to me.
 
I would also like to have hiring authorities that allow us to more rapidly bring on talent for critical areas such as cyber-security.  One of our challenges is we have a lot of work that gets -- needs to get done in a fairly quick fashion and that's important to us to be able to move quickly.
 
So that's on the talent front because talent is how we get things done, and I think we don't always acknowledge that that's a key element, along with the material we buy and so forth.
 
But if we bring it up a level, my primary concern is making sure that we achieve the nuclear modernization that we need to.  We have zero margin right now.
 
Not only does DOD need their funding for the whole triad, GBSD, LRSO, Columbia-class and on and on, but the Department of Energy needs their funding to make sure that we modernize the infrastructure at Los Alamos, at Savannah River.  We need plutonium pits.  We need 30 plutonium pits by 2026 for GBSD, and we need to get 80 pits per year by 2030.  That will take investment in a crumbling infrastructure.
 
So I am extremely tightly coupled with Lisa Gordon-Hagerty at NNSA.  We are working closely together and we have the same mission here, because, again, we have a zero-margin with our nuclear deterrent and it's absolutely critical in order to preserve peace, we think.
 
STAFF:  John Tirpak.
 
Q:  Good morning, ma'am.  Thank you.
 
Back on the F-35 and Turkey, you're part of the steering group of all the partners.  I wonder if you can't speak for any individuals, of course, but as a group, are -- are they supportive of the pressure that we're putting on Turkey?  And can you talk a little bit about the system that has been offered in lieu of the S-400?
 
UNDER SECRETARY LORD:  So, yes, our partners are very supportive.  I last saw most of them, if not all of them, in Brussels last month at the CNAD, Council of National Armaments Directors.  And what we are putting forth to Turkey, what we have offered is our Patriot system.  So that's a solution, a NATO-compliant solution.
 
Q:  What is their objection to the Patriot system?
 
UNDER SECRETARY LORD:  We're under discussions right now to replace the S-400 with the Patriot.
 
Q:  One last one, then.  At this point, do you have some sense of the -- the magnitude of the cost or schedule impact to F-35 if Turkey was eliminated from the program?
 
UNDER SECRETARY LORD:  We are working on that right now.  And we see a potential slowing down of some deliveries over the next two years, some potential cost impacts but, right now, we believe we can minimize both of those and are working on refining.
 
STAFF:  Let's take one over here.  Go ahead.
 
Q:  Steve Trimble with Aviation Week.
 
So I know you're still working with LRIP 12, and 13 and 14 priced options over the next couple of months.  Last week, rear admiral -- or, sorry -- Vice Admiral Mat Winter testified in his written testimony that the negotiations for LRIP 15, 16 and 17, which are expected to start with a multiyear procurement that, so far, Lockheed Martin -- Lockheed Martin's prices don't justify going to an NYP.
 
So I'm wondering, you know, what's -- what's your sense of where that's going?  What's the minimum, you know, sort of threshold value that you need?  And if you can't get there, will you have to take a look at the volume you're talking about in that period, per unit?
 
UNDER SECRETARY LORD:  So I believe it's premature to talk about 15, 16 and 17 until we close on this negotiation.  However, I will say that we fully expect to continue to get the learning curve coming down, to get economies of scale, to work efficiencies into the line.  So we see lot over lot decreases in price.
 
Right now, we are working with our FMS customers as well as our partners to understand what the demand signal is.  We work very, very closely with Lockheed Martin.  I meet personally with Marilyn Hewson once a month to talk about F-35.
 
And we will continue to look at how to not only get the unit cost of the aircraft down but just as importantly, if not more importantly right now, I am focused on the cost per flight hour and the mission capability of the aircraft.
 
Q:  Is MYP still a goal for LRIP 15, 16 and 17?
 
UNDER SECRETARY LORD:  I'm not sure I would call it a goal.  It's under consideration.  There is a question of the benefits to doing that plus the negatives to doing that.  And any decision I make will be a data-driven decision.  And right now, we're still collecting the data.
 
STAFF:  Megan?
 
Q:  Thank you.  Megan Eckstein, USNI News.
 
Secretary Spencer recently said at a Senate hearing that the Navy's increasingly working with its allies to tap into their industrial bases to fill weaknesses in the U.S. industrial base.  So I wonder how your office is viewing this increasing look to foreign suppliers.  How viable a plan that is in the long term and to what extent you would rather see some more efforts to strengthen the U.S. industrial base?
 
UNDER SECRETARY LORD:  I obviously want to strengthen the U.S. industrial base.  We are working very closely with G.D. and HII to understand their constraints, whether it be staffing or whether it actually be facilities to understand the art of the possible.
 
That being said, we, in order to be responsible, need to have plan B.  And Richard and I have discussed that.  I know that we have talked to various individuals in the government in Italy about what can be done there as well.  So I think we owe it for the taxpayers, to look at best value, lowest risk, highest capability, so we wouldn't rule anything out.
 
Q:  Okay.  Are there certain, you know, technology component areas where you're seeing the most interest in looking at foreign suppliers?
 
UNDER SECRETARY LORD:  We are actually working through the issues right now to get better fidelity around that.  Again, I'll go back to the theme of being very data-driven.  We don't want to have notional conversations.  So Hondo Geurts is working very, very hard on that with the whole team.
 
STAFF:  Go ahead.
 
Q:  Hi.  (inaudible) with Jane's.
 
You had mentioned the effort you're doing on Counter-UAS with General Selva.  Could you give us some solid examples of either efforts you have made or that you see, as you try to get all these competing efforts together...
 
(CROSSTALK)
 
UNDER SECRETARY LORD:  Absolutely.
 
Q:  Sorry.
 
UNDER SECRETARY LORD:  Let me start there and you can follow up.  What we've done is we noted that the services and some of the agencies -- rightly so -- were coming up with innovative solutions for Counter-UAS.  The issue was we were concerned that learnings weren't always being shared and, down-range, different units weren't aware of all the choices they had.
 
And what we did was to use a framework that we've been using for many years called the Warfighter Senior Integration Group, where we get together once a month with a VTC with representation from down-range, from the combatant commanders, bringing all of the services together in one room.  And we talked about what the demand signal is on the battlefield and -- with the people that are out there fighting the fight every day.
 
By doing -- we do this for Afghanistan right now and for Iraq.  What we found is Counter-UAS became such a discussion with a lack of information and understanding that we decided we would have the same construct focused only on Counter-UAS.
 
So we're bringing the different theaters together with the combatant commanders, with representatives from here inside the building once -- actually, every two weeks, now, I think, we're doing it.  Talking -- actually, it's once a month.  I'll clarify that later.  Mike will help me with that.
 
But we're sitting and what we're doing is educating.  On one hand, saying here are all the different systems that are fielded right now.  This is what they do.  This is what we've seen.  Then we get intel on what the threat is and what the needs are.  And we real-time come up with follow-on action plans.
 
So we have planning meetings leading up to that, where all the services -- DTRA, (inaudible) a variety of others -- come together and talk about what the state of play is within all the different organizations so that there's knowledge across and we don't duplicate efforts, and we build on what's been done.
 
So what that's ended up with is a list of Counter-UAS systems we have, the level of maturity, the number deployed, how they've been used.
 
Q:  Last week, Dr. Jetty of The Hill said that he's -- it was a cat analogy, like, he's trying on directed energy to find the cats and then herd the cats, and there's a lot of applications to the Counter-UAS.
 
Are you finding any challenges looking at directed energy for applications in the Counter-UAS as you go through this? Since they're -- it's so scattered and the services don't even, sort of, have a handle on what is going on.
 
UNDER SECRETARY LORD:  Well, and that's why we're trying to segment the different types of systems.  Obviously, when you use directed energy, there are a lot of safety issues around that.  So I think that's the biggest challenge.  One of the things that Dr. Griffin's trying to do in R&E is understand the state of play for different technologies and their applications across the Department, and that's very, very helpful.  So that should be the one-stop shopping there.
 
But you know, I pulled together the three Senior Acquisition Executives (SAEs) biweekly, and we spend an hour just trading information on critical issues within the building, and during that hour session there's an incredible amount of trading of information and learning that helps stitch that together.  We have many forums across the Department trying to do that.
 
STAFF:  Jon.
 
Q:  Thank you.  Jon Harper with National Defense Magazine.  Thank you for doing the briefing.
 
With regard to 5000.02, when are you planning on completing that rewrite?
 
UNDER SECRETARY LORD:  At the end of the year.
 
Q:  Okay.  And for your Trusted Capital Marketplace, when did you authorize that program, and what are your specific plans for that for the rest of this year?
 
UNDER SECRETARY LORD:  Just a few weeks ago.  And the first step is to set up a website infrastructure to bring providers of trusted capital together with businesses looking for capital infusions.  I'm constrained legally from introducing one company to one venture capitalist, for instance.  However, what we can do is segment the marketplace and then put in companies that need capital infusions that we think have critical technology for us.
 
We can also vet different providers of capital, and this going to be a situation where we have individuals, family foundations, funds that are interested in our national defense, interested in making a return on their investments, but this might not be the best return if all else was equal.
 
So we just put out an RFP for -- it's actually an OTA for a provider of the website about 2 weeks ago, I think.  And what we've been having meetings with different individuals and providers to gather information.  Right now I think we're going to roll out the entire program in the July timeframe.
 
Q:  Thank you.
 
STAFF:  Travis.
 
Q:  Travis Tritten from Bloomberg.  Thanks again for doing this.
 
I wanted to follow up on that.  Can you give us some sense of the size of the pool of capital you think you might be working with, a dollar figure?  And also an estimate on the number of companies who may participate in -- in the pilot program?  And just describe what the benefit could be, the potential benefit here.
 
UNDER SECRETARY LORD:  So right now we are working on what that dollar figure could be and there's a wide range.  So I commit, in the next month, I'll come back to you and give you a target figure.  It's just pretty widely variable right now.
 
We have at least 50 companies that we've identified through the 13806 work, because we're using the segmentation from that study to organize this, but there are many more I think.  So the idea is to bring them all together.
 
And what was your final part of that question?
 
Q:  I had asked about the benefits.
 
UNDER SECRETARY LORD:  Oh, the benefits.
 
So a lot of these companies are small, innovative companies that, frankly, don't either have the resources or the sophistication in terms of the contacts to reach sources of capital.  And what we're trying to do is enable that so that they don't have to, frankly, go through a lot of time and expense with legal firms to try to ferret out who is out there.
 
Likewise, we have some incredible patriots who have come to us and said, "We're interested in putting our money somewhere that'll make a difference in our national defense."
 
So there are two willing, kind of, sides there.  And, frankly, I think there's an unmet need that somebody like government can provide the, sort of, ecosystem to make it work.
 
Q:  You've mentioned the angel investors in the past.  Are there any particular names that you can give us?  Any people that might...
 
UNDER SECRETARY LORD:  No.
 
(Laughter.)
 
STAFF:  We're going to go with Paul, then Vivienne and we're going to close out with Mike.
 
Q:  (Off mic) cyber-security strategy, how do you compel private industry to meet those standards?  Particularly small, innovative companies, you know, in Silicon Valley that -- that you're trying to work with to, kind of, bring into your orbit that -- that might not meet those standards or are -- might be hesitant to work with the DOD in the first place.
 
UNDER SECRETARY LORD:  On one hand, we are evolving to the point that these will be requirements to win a contract with DOD.  On the other hand, I am very hopeful that industry will look at A&S as a giant helpdesk, and come to us and say:  "How do we do this?"
 
I have a group in industrial policy that's trying to work with small businesses to show them what needs to be done and give them alternatives.  We're also very hopeful that the industry associations will continue to roll out information.
 
One of the ways we can help smaller companies is to basically furnish secure environments for software development, for instance.
 
Right now, we have a series of pathfinder projects where we are setting up secure enclaves in our government clouds where we will provide tools that are cyber-hardened, that if companies go in and use them, use our stack to develop their software, they'll automatically get their authority to operate.  So it provides an environment in which small companies can operate.  And we hope to scale that to a larger extent.
 
So if they can't secure their own networks, we will let them get entry into ours and work within ours.
 
STAFF:  Vivienne
 
Q:  Thank you.
 
I wanted to ask you about commercial satellite communications and the shift in procurement authority from DISA to the Air Force.  Can you give us your perspective on how that will benefit DOD in procuring these sorts of capabilities, and also, you know, some of the developments you anticipate in that portfolio in the next year or so?
 
UNDER SECRETARY LORD:  I'm going to have to get back to you with specifics on that.
 
But from a general point of view, I will tell you that Air Force has a number of the programs in space that they have subject matter experts, so they are looking at the applications.  And we always want to have the users very, very close to the acquirers so that we understand what the requirements are and they're translated into contracts that truly ask for the capability that we require.  So I think bringing that capability closer to the user is a very, very good thing.
 
I will also say that we are trying to provide acquisition authorities and contract types to the services that allow them to move much more quickly and more easily procure what they need.  And I think that there's a little bit more margin to move there.
 
STAFF:  Mike?
 
Q:  Thank you.  You had mentioned foreign military sales in this press conference, and then also very on in your -- early on in your tenure, as something you wanted to get speedier and have more money flow that way.
 
The numbers haven't borne out here in 2019.  State Department officials have said that 2019 would be a bigger number than '18.  Have you seen any flow of foreign military sales be constrained, how have you progressed on getting faster at it, and has the Turkey spat influenced it in any way with any customer?
 
UNDER SECRETARY LORD:  I don't see our issues with Turkey influencing other customers.  I also will say that we are in a fairly complicated geopolitical environment that makes some of these sales be questioned a little bit more within the interagency and Congress, but there is a pent-up demand, obviously.
 
What I can say is that we, from a contracting point of view, have a number of pathfinder programs, again, and we can get you details on these, that we have worked.  Where, we have used cost and pricing that's historically based, where we have a trend.
 
And instead of going back and getting certified costs and pricing again, and again, and again on the same system, we've been able to use the data that we have, where we are data-rich.  And we have used that to move contracts forward, picking up 6 to 18 months on FMS cases, in some instances.
 
So what we're doing is we're working with Congress to show that if we use a data-driven, responsible process, that we minimize risk and that we serve our customers well, and it serves U.S. industry well.
 
STAFF:  Ma'am, thank you very much for your time today.  Do you have any closing remarks for the group?
 
UNDER SECRETARY LORD:  I just appreciate that you all took the time.  I'd like to continue the conversation in terms of what we're doing, in terms of modernizing Acquisition because this is going to be a very, very dynamic year.
 
We are trying to put our policy into play.  We will continue to do what we did with middle-tier acquisition and put out broad policy, actually work it and refine it to get our final policy through doing real work versus talking around conference room tables.  So thank you very much.
 
STAFF:  Thank you, everyone, for being here.  Have a great Mother's Day weekend.
 
And happy Mother's Day, Mom -- to my mom.
 
(Laughter.)
 
UNDER SECRETARY LORD:  (Off mic) You're a good man.