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DoD Digital Portfolio Management Is Coming

Bottom Line Up Front: The 2021 Defense Budget implements a recommendation to rebuild ALL of DoD acquisitions from the ground up.

Who Is Section 809?

The 2016 National Defense Authorization Act established, in Section 809, a panel to “streamline acquisition regulations.” In 2019, the Section 809 Panel released its findings and recommendations, which you can find on this website. The 93 recommendations are wide-ranging and they rewrite the entirety of Defense acquisitions, overhauling the present state of the industry created by the Goldwater-Nichols Act of 1985.

The Digital Portfolio Model Recommendations

Recommendations 36, 37, 38, and 39 describe a shift away from acquisitions focused on individual programs. Instead, a big-picture “Portfolio” approach would be created.

The old world looks like this:

The new world will look like this:

If you are a decision maker in the Defense Contracting world, I greatly recommend you read the Panel 809 recommendations because this is going to be your industry soon.

The Pilot Test Is Now Law

Section 836 of the 2021 Defense Budget takes language directly from the recommendations listed above and establishes the pilot program they recommended. This pilot program will start testing out the new “Portfolio-Centric” acquisitions framework and find ways to update the 1980s-era world.

Part (a) explains that the entirety of the DoD’s Digital Transformation forms the foundation which will enable this new “Portfolio” world to work. Since everything will be digital and on the cloud, the new world digitizes and links “all aspects of the defense acquisition system, including the development of capability requirements, research, design, development, testing, evaluation, acquisition, management, operations, and sustainment of systems.” In other words, everything!

Part (b) explains that all those things we just listed will be seen from the top-level view and managed as a comprehensive portfolio, rather than as piecemeal individual programs or projects.

Part (c) begins a series of pilot programs. By this July, SECDEF will pick candidates to test out the new rules. The list of programs that will be selected for these pilot tests is as follows:

  • Decision support processes, including
    • Portfolio management.
    • One or more acquisition data management test cases.
    • One or more development and test modeling and simulation test cases to demonstrate the ability to collect data from tests and operations in the field, and feed the data back into models and simulations for better software development and testing.
  • Individual acquisition programs representing–
    • One or more defense business systems.
    • One or more command and control systems.
    • One or more middle tier of acquisition programs.
    • Programs featuring a cost-plus contract type, and a fixed-price contract type, and a transaction authorized under section 2371 or 2371b of title 10, United States Code.
    • At least one program in each military department.

As you can tell, there’s going to be a whole lot of testing of this new way of doing things. By March 15, 2022, SECDEF will modify Defense acquisitions based on the lessons learned. And the idea is that for the 2023 National Defense Authorizations Act, everything will be ready to go.

The Defense Innovation Board and the Defense Digital Service, both groups who have had deep involvement in the DoD’s Digital Transformation, will have a hand in evaluating results.

Holy Cow, What Does This All Mean?

You know that whole Digital Transformation thing? It’s peanuts. This new Acquisition Transformation is going to be much, much bigger and far more encompassing. The entirety of the Defense contracting industry is going to be fundamentally rewritten from the ground up.