PA Consulting Group's General Sir Mike Jackson and Nick Newman explore acquisition strategy, focusing on an incremental approach to reduce acquisition timescales
The former Minister for Defence Equipment and Support posed the challenge of halving acquisition times as a key tenet of the Defence Industrial Strategy. As current operations continue to subject the Armed Forces to a rapidly evolving and agile threat, and the first anniversary of DE&S arrives, a significant reduction in acquisition timescales should still be very much front of mind. The reasons for this are two-fold. Firstly, the fundamental purpose of the acquisition process is to provide the front line with what it needs, when it needs it, in order to accomplish their mission. Secondly, the earlier a capability is introduced into service, the earlier the Armed Forces can start exploiting it, thus deriving more total ‘value’ from the original investment while providing a new baseline capability.
It is widely acknowledged that the UK’s acquisition process faces some significant challenges (a discussion that is outside the scope of this article). However, while it does deliver substantial, effective and impressive new military capabilities, it may not always do so at the time or the cost that is required. Moreover, as the battlespace becomes increasingly complex and more highly integrated, it is likely to become less and less compatible with rapid development and fielding of future capabilities.
It is arguable whether the challenge of halving acquisition timescales is valid or meaningful; indeed, the definition of ‘acquisition timescales’ is also debatable. Nevertheless, it seems likely that the former Minister had something altogether more practical in mind – a challenge that, because of the magnitude of the change implied, means that the defence community has to think radically and cannot rely simply on more of the same procurement initiatives to succeed.
Used correctly, incremental acquisition – an approach based on staged delivery of capability, affords earlier deployment into service and, importantly, earlier availability and exploitation of new baseline capability.
Traditional delivery strategies frequently do not work for public sector procurement when the environment is unstable or technology is innovative
Given intense media and parliamentary scrutiny of taxpayers’ money, the approval and control procedures for defence acquisition projects are lengthy, detailed and risk averse. The most reliable route to approval is often to present a business case showing a clear goal and a single delivery solution to address it. This type of deliberate delivery strategy is attractive to both project team and scrutineers. It allows a concrete solution to be presented, straightforward estimates of project costs and timescales, and ready tracking of benefits or deviations from the plan. Tightened approval and control certainly improves project delivery where the environment is stable and the solution clear. However, where this is not the case, the approach that is pivotal to winning approval in the first place can come ‘unstuck’ during implementation. Deliberate delivery strategies risk backing the wrong solution or persisting with the right solution for what used to be the problem. Even if the option to change a failing solution is recognised, re-design and re-approval can seriously hinder the project’s credibility and hit its critical path, causing delays and cost growth.
Alternative delivery strategies are regularly employed outside the public sector, particularly where the environment is unstable or the problem needs an innovative solution. Private sector firms can choose from a wider set of project delivery strategies in these circumstances. There are four types of project delivery strategy, according to the stability of the project environment and the maturity of the solution: deliberate, portfolio, adaptive and emergent.
Portfolio delivery strategies can be used when the environment is stable but the solution is unclear. For example, pharmaceutical companies invest large sums in parallel drug projects to treat a single disease, accepting that no return from several projects may be offset by high yields from the rare successes.
Projects with no clear solutions in rapidly evolving environments can employ emergent delivery strategies. Here, solutions are developed once the project is under way by seeing what works in practice. This approach is often taken out of necessity, rather than choice. For example, deliberate, corporate 3G telecom strategies often failed and were replaced with emergent consumer-led solutions. However, even when innovation is required, resource constraints, parliamentary and media accountability can deter the use of portfolio or emergent delivery strategies that superficially smack of duplicative expenditure or a lack of direction.
Adaptive delivery strategies offer a realistic alternative by winning prior approval for several potential solutions and allowing the project to respond more flexibly as conditions change over time.
Incremental acquisition allows earlier delivery of capability while retaining sufficient budgetary freedom to adapt the design
One of the key reasons as to why current MOD acquisition timescales are lengthy is that the approvals process requires a high degree of de-risking in order to drive programmes to the point where they are firmly, or perceived to be firmly, based on a deliberate delivery strategy. It can take a considerable period to reach this point, particularly for complex platforms, which will be in Service for many years – there is therefore a requirement to demonstrate that the solution will provide the necessary level of capability over the platform life. This drives a tendency to be ambitious and to incorporate as much capability as possible in the initial solution, which carries the inevitable consequence of increasing the amount of technical, programme and cost risk. A vicious circle can then follow, where risk manifests itself in the form of programme slippage and, because the threat is changing, the requirement is adjusted to counter the threat. This builds in more risk, leading to more slippage, and so on.
An incremental approach offers a way of breaking out of this circle by delivering the programme in discrete stages, the first of which is an affordable, deliverable and low risk baseline. This offers the possibility of significantly reduced acquisition times and provides the freedom to explore later the other delivery strategies. This staged approach also offers a series of decision points that satisfy the public sector’s need to assure and scrutinise the spending of public money.
The key to a successful incremental approach is to develop a baseline solution with the increments already in mind, and flexibility as part of the fabric of the solution design, rather than being included as an afterthought. Flexibility, in terms of architectures, space, subsystems and operators, is critical to the success of an incremental approach, particularly if advantage is to be taken of an emergent delivery strategy in the future. However, this flexibility may well come at an additional cost to the baseline solution and it is therefore important that this is not traded out in the approval process. Clearly, the baseline solution must at least meet the minimum capability required by the user, and be accompanied by an associated capability increment plan that sets out what level of capability is needed and by when in order to meet the threat. In this approach, it is vital that the temptation to alter the baseline solution late in the process is avoided, as this will result in risk, delays and a lengthened acquisition time. It is far better to include any changes in the next, planned increment.
This approach opens up the possibility of using the adaptive, portfolio and emergent strategies in Fig. 1 to deliver upgrades as the environment evolves, solutions emerge or technology matures through focused research and development. In this way, programmes are divided into smaller, more easily delivered increments, which can use more innovative delivery strategies, resulting in shorter acquisition times. This will only work, however, if sufficient financial headroom is retained to allow investment in upgrades, as and when it is appropriate to do so. This is important, as each increment will have a ‘sweet spot’, where battle winning capability can be acquired with an acceptable amount of risk (and therefore cost) through military off-the-shelf (MOTs), maturing technologies or emerging solutions.
In order to make an incremental approach work, some significant changes are required to the MOD’s acquisition process. The requirement for flexibility in the design (and paying the associated premium for this) has already been mentioned, and there are other significant, process-related issues. Firstly, it is important to retain sufficient financial headroom and planning flexibility within the MOD’s acquisition programme in order to take advantage of the capability ‘sweet spots’ as they occur. Given the current pressure on the MOD budget, it is difficult to see where this headroom will come from unless funding is increased or ambition is reduced. Secondly, it is vital that the MOD develops the same agility in its decision-making as its potential adversaries. Reducing acquisition timescales can be enabled by an incremental approach, but only if it is underpinned by agile scrutiny, approval and decision-making.
Article contribution also received from Steve Kershaw.