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competition in the marketplace, and the true transformation of the procurement workforce that is called for in all three BBP documents. Further, there is an element of uncertainty around the DoD along with its corresponding priorities and approaches. New Sec- retary of Defense James Mattis has a military rather than a civilian background, a distinct departure from his most recent predecessors. Additionally, changes in leadership at AT&L and other operational units of the DoD create potential uncertainty in how defense acquisition and ongoing acquisition reform will be handled. It is worth noting that General Mattis has had valuable civilian experience in addition to his distinguished military career, including service on the Board of Directors of General Dynamics and as an Annenberg Distinguished Visiting Fellow at the Hoover Institution. Time will tell how the DoD will be reshaped under his leadership. The DoD and The Defense Industrial Base- An Incomplete Model Thesis: The DoD and the Defense Industrial Base have made meaningful progress in driving acquisition reform, reducing costs and rising to increasing global challeng- es. Yet there remains a critical missing element render- ing the complex matrix of contributors to our defense incomplete. Commercial investment in innovation can help bridge the gap in support of affordable technology innovation in defense. The Pentagon and all elements of the armed services and their cor- responding labs (NRL, AFRL and others), government sponsored labs like DARPA, and non-profit labs such as Lincoln Laboratory and Draper Laboratory, all contribute meaningful and actionable research and development. The large prime contractors also invest a small percentage, typically between 2% to 3% of revenues, into internal R&D. While small as a percentage of sales, given the substantial annual revenues of the big- gest primes, the investment is substantial and badly needed. • "Price, schedule and technical perfor- mance are key contract outcomes of interest" • "Reliability", "Maintainability" and "Survivability" remain the key levers to a successful outcome regarding key platforms and underlying technologies • "Warfighting capabilities must not only have the needed techni- cal performance but must be delivered in a timely fashion to address operational threats" • "Increased demands for new capabilities can also add costs to contracts: that is visible… during the defense buildup in the 1980's by President Reagan and during the post-9/11 wars to combat global terrorism" • "BBP (Better Buying Power)-era drops are driven by declining development cost-growth rates" • "Reduced cost growth in the BBP era may correlate with the requirement to identify and pursue Should-Cost savings and a renewed effort to improve contract incentives. The DoD has continued to see increasing savings on programs from Should- Cost initiatives in BBP. These savings have grown across the acquisition portfolio…" Still work to be done Although there are some encouraging findings in the DoD 2016 Annual Report, the general program budget and acquisition environment is not all positive. The report noted above finds that "Cycle time—between the identification and fielding of a need…. Continues to be an area of concern in our BBP initiatives and elsewhere." At the same time, members of Congress, such as Senate Armed Service Committee Chair McCain, and President Trump- still in the early days of his Commander- in- Chief role, continue to be critics of program costs and overall DoD procurement in key MDAPs (Major Defense Acquisition Programs). Finally, the 2016 DoD Annual Report, while providing a detailed cost analysis, is not able to draw any connection between "bending the cost curve" and continuing to drive innovation, competitiveness or quality. In short, there is some evidence of cost containment under the three Better Buying Power initiatives of the last five years. However, the 200+ page DoD procurement report card is very transparent about the lack of linearity between BBP initiatives and the need to drive innovation, 3

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