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The “Ideal” Acquisition Strategy

Bottom Line Up Front: Steven Wert, head of PEO Digital’s $19 billion portfolio, says his ideal acquisition strategy involves many more startups and small businesses.

Who is PEO Digital?

Established in 2018, Program Executive Office Digital (PEO Digital) is the Air Force’s outfit in charge of buying software and technology. Formerly called “Program Executive Office Battle Management,” PEO Digital’s purpose is to bring modern Silicon Valley technology methods and know-how to military acquisitions.

At a recent discussion of DoD leaders including PEO Digital boss Steven Wert, and Nuclear Command, Control and Communications Executive Officer Colonel Amanda Kato, they talked about the direction they want to take DoD acquisitions. It is relevant to note that Steven Wert controls $19 billion in acquisitions, and Col. Kato is in charge of $14 billion. When they speak, astute businesses listen because they’re telling you how they want to spend their money.

The spirit of the law

It’s important to know why changes are happening because as the reforms from the Air Force come out, they only make sense if you know the big-picture intent behind them. What is the overall goal they are trying to achieve? Knowing the spirit of the law helps inform the letter of the law.

The “IDEAL” Acquisition strategy

Ok, here is, in their own words, what the spirit of the law is. Businesses, pay attention.

Steven Wert says:

“My notion of an ideal acquisition strategy is to include a large domain expert, a small business or two, and maybe a start-up or two,” he said.

Is there anything in the Air Force that currently illustrates his “ideal”?

“Now, I don’t know if we have a single effort that fits exactly that, but Kessel Run may be close. So that to me is the definition of a healthy acquisition strategy, at least in my mind.”

Kessel Run is a Silicon-Valley-like software program under Steven Wert. Kessel Run has been the testing ground for a ton of the reforms coming out of the Air Force. If your company or business wants to know how they should reform to be relevant in the future, they would do well to study Kessel Run and become more like them. Steven Wert and his billions are looking for just such companies.

What does this mean?

Up until now, the customary way of doing contracts is for one single giant defense contractor to own the whole ball of wax. The one giant contractor is in charge of everything and controls everything. It is very important to note that this is not what Steven Wert wants for the future. For him, the future still has room for traditional large contractors, but with the leavening of small businesses and startups to make it ideal.

Astute business folks, I think he’s talking to you.