The Best Job in the world—equipping the best war fighters in the world
The career journeys and perspectives of contract management executives offer lessons and insights for NCMA members at all levels in their careers. For this reason, Contract Management is conducting interviews with leaders from government and industry.
This month, we present NCMA CEO Kraig Conrad’s discussion with Army Lt. Gen. David G. Bassett, the director of the Defense Contract Management Agency (DCMA). As the director, he leads a Department of Defense (DoD) agency consisting of more than 12,000 civilians and military personnel who manage more than 300,000 contracts, performed at more than 10,000 locations worldwide, with a total value in excess of $5 trillion.
The interview, which occurred in August 2021, has been edited for length and clarity.
Kraig Conrad (KC)
Thinking about your career, which opportunities did you grab along the way and which were just pure luck?
Lt. Gen. David G. Bassett: (DB)
I think in any career, certainly one that’s gone on as long as mine has, you’re going to have to have some luck to get to the finish line. I was really fortunate when I made the decision to go into the acquisition corps. I had some mentors there at the time who weren’t tied to a particular career field within the army. One navy captain and one air force general were able to give me some really good independent advice and help me understand what acquisition had to offer, which helped steer me in that direction. That’s an inflection point in a lot of army officers’ careers: Sometimes they're advised to go back into the thing they know—their basic branch. So I was fortunate to have those mentors at that time.
I was also really fortunate when I first started doing acquisition, because I had somebody pull me into an important, complex, and challenging program that gave me an opportunity to see the breadth of what acquisition could offer. And although my background has been primarily program management, it gave me an opportunity to kind of look over the fence and see some of the important tasks that the contracting workforce had to deal with. Later I dealt intimately with the contracting process, although not as a contracting officer. I think those things together gave me the background that prepared me for my current position.
KC
A unique perspective, certainly, with program and contract management to support your career growth. We're going to change gears just a little bit and jump into some information that is on the DCMA website: an article titled “From the Factory Floor to the Front Line” that describes DCMA, first and foremost, as a product delivery organization. Certainly, when we think about traditional production, that means a lot, but today, when there’s a lot of rapidly changing technology involved, how do you think about it in that environment?
DB
DCMA takes a contract after the procuring contracting officer writes the contract and awards it and then administers that contract. And that administration includes product delivery. It includes contract administration and payment. It includes being the eyes and ears of both the war fighters and the taxpayers, making sure that the Department of Defense (DoD) gets what we pay for. Product delivery is an enormous part of that. When you’re looking at the product, you're making sure that it meets the contractual specifications. If it’s an aircraft, it means that we’re performing all those government flight representative duties and making sure that aircraft is safe before it's turned over to a service.
And it’s really about making sure that the contract and the delivered product are the same. I mean, you wouldn’t build a house and not have somebody come in and look inside the walls before you seal them up. That's what I think DCMA does for the department—it’s a critically important mission. Our goal is to ensure that product is both on time and of the quality that our war fighters deserve and our taxpayers paid for. I think the agency had a really strong focus on on-time delivery. I think that we did a great job in getting industry’s attention to say, “the timeliness and the delivery of our product matters.”
But it’s easy to get obsessed over that one metric. And what we don’t want to do is create a system that incentivizes the delivery of a product that meets schedule but might be sacrificing quality. So now we’re taking a more balanced approach. I've asked the team, when it comes to on-time delivery, to work the product delivery, don’t just work the on-time delivery metric.
KC
If you look back over the last 10 years, have you seen any changes in that approach where more technology buys are being brought into your portfolio?
DB
Not so much the technology buys themselves. We’re just kind of figuring out how we do that. DCMA has always had the capability to say, “Look at software and look at technology.” What I have noticed, especially over the course of my time as the director, is a lot of the promises of modern manufacturing. For instance, machines can be connected to deliver higher quality so that we’re monitoring quality amid production. And we’re all looking at the same data with machines that are connected and sharing data on production lines. I think that promise of modern manufacturing is now coming to the defense side in a more meaningful way.
I think those realities are now beginning to become a part of the way product is delivered to the DoD. Some levels of performance that we’re demanding can only be achieved with those advanced techniques. And it’s good to see some of those investments coming to bear. Advanced manufacturing is not just about 3D printing. 3D printing is an interesting technology. We’ve used it effectively for things like prototyping and rapidly creating things to accelerate development. But if you want to stamp out a large quantity of complex things that are made of metal and must perform in certain ways, you’re going to have to be really good at castings and forging and machining—drilling a lot of holes in metal and bringing those things together into a high-quality integrated product—which is done the same way every single time.
When I look back to my experience in combat vehicles, if you were to take a legacy combat vehicle in the army, and you want to change an armor kit from one vehicle to another, you can’t just take the armor kit off one and put it on another, because the tolerances are different. You’re going to have to adapt that armor kit for every single vehicle that it goes on. To get where we’re trying to go, we’re going to need a level of precision that would make that obsolete, so that every armor kit should fit every vehicle. And you shouldn’t be shimming a bunch of parts as you create the next generation of war fighting systems for our military.
KC
Certainly, that digital approach will be different for contract managers in the future. Switching gears a bit, let’s talk about your fiscal year (FY) 19–22 plan. It stated that it is critical for DCMA to hold industry more accountable for meeting contractual quality and on-time delivery requirements. What have you been able to accomplish in this area?
DB
A senior leader in the DoD used to have a sign over his door that read, “In God we trust; all others will bring data.” We’ve been focused on that data from across the range of contractors that we have. We’re not the defense contract monitoring agency; it’s not our job to just observe their performance and report it. It’s our job to be that feedback loop that helps them become better. And I think as we look at the level of on-time delivery, we’ve seen dramatic improvements, even in the face of a COVID-19 pandemic. And perhaps that on-time delivery would have suffered a whole lot more in the face of COVID-19 if we hadn’t been providing that feedback loop and helping to focus them on the delivery of the things that matter most to the DoD.
So those metrics have largely gone in a better direction. Looking forward, FY22 and FY23 will be interesting and really challenging times for the defense industry. With all the uncertainty about what ordering levels might be there, as the nation hopefully comes out of a COVID-19 environment, the demand for things like raw materials—in ship shortages and other things—is going to create a crush of demand. If we do not have vendors and companies that are really focused on their supply chain, we’re going to see those impacts both on supply chain and availability of employees. You already see so much competition for talent in the workplace today. So I think that's going to be the focus going forward.
If you go back to kind of Business 101, from MBA programs back in the 2000s, you’d hear people talk about customer intimacy. For companies to be successful, they needed to have very close relationships with their customers. And my message to the defense industry right now is if you want to be successful in this post-COVID-19 environment, I think you’re going to have to have supply chain intimacy, or you’re going to have to have those close relationships with the people who supply parts to your line so that you’re at the front of the line for those capabilities. I think we’re going to go from customer intimacy to supply chain intimacy for the rest of this decade.
KC
Second in that line of questioning around your strategic plan: The goal is to enhance lethality through on-time delivery of quality products. Could you discuss how you’ve been able to accomplish this during COVID-19? Clearly the supply chain conversation is coming up.
DB
We made a number of decisions during COVID-19 that helped a great deal. One of them was the early decision to allow the defense industry to continue to operate in the face of what otherwise had been some very strong COVID-19 restrictions. We learned early on in that process that where companies actually applied the guidelines from the Centers for Disease Control and Prevention (CDC), the level of COVID-19 spread in those facilities, even in high COVID-19 areas, was pretty limited. We weren’t seeing a lot of people getting sick at work because work was the one place where you could count on them actually following the guidelines from the CDC. And so largely the defense industry, with the support of the senior leadership of the DoD, operated through the pandemic. And as a result, there was significantly less impact than other industries, which had more trouble getting labor and materials to their line.
The second thing we did was allow for increased progress payments to the prime vendors, and then we monitored the flow down of those progress payments to their supply chain. When we looked at the impact to small businesses, it was frequently a lack of financing. The financial pressure that COVID-19 had placed on those companies, it was potentially causing them to be under stress. And so those higher-level progress payments flowed down through the supply chain. I think it mitigated an awful lot of risk on what would have otherwise been impacted programs.
The question now is, as we come out of COVID-19, how and when do we begin to roll back those higher levels of progress payments? They is a significant incentive that we in the government can use to demand performance as it occurs on a contract. When you’re already giving vendors 90 percent because of those rules, you’ve lost a lot of that incentive. I think eventually that pendulum is going to swing back, and we want to make sure we do that in a way that’s fair to those companies and maintains the health of those smaller companies down the supply chain.
KC
My final question about the strategic plan: Certainly, all of these goals are important, but I’d like to focus especially on your fifth goal, which is to enhance and strengthen the skills, readiness, and effectiveness of the total workforce. How does DCMA accomplish that? And what challenges are you facing there?
DB
At the end of the day, we deliver products, but those products are delivered by our people. Maintaining the right set of skills across the entire DCMA footprint, which is really from coast to coast and international, keeping those skills within the agency, attracting talent, I think is about setting a culture where people feel valued. It’s also about aggressively recruiting from across a wide range of communities that can bring unique diversity and skills to our workforce. We’ve been absolutely committed to that. We’ve been committed to partnering with organizations like NCMA and Defense Acquisition University for the training of our contracting workforce and technical skills.
We’ve stood up leadership training within DCMA that takes employees who otherwise may not ever move up to be supervisors and helps give them leadership skills. It is a culture of positive leadership that makes people want to come to work and want to become part of that organization.
I think we’re still missing out. And we watch very closely what our attrition is. Like any organization in the government, we’ve got folks who are eligible for retirement. Maintaining some of that senior skill, and communicating it to the next generation through both training and mentoring, is a key part of making sure that we keep those skills within the agency.
KC
Over the past year or two, there have been more examples of risks associated with cyber hacks. We all know how important cyber security is to national defense as well as to our economy. Can you tell us how DCMA is doing in the new protection efforts? And is there any insight or perspective on any coming restrictions or oversight?
DB
Take the security of the networks which support the defense industrial base—these are networks that are not run by the DoD but are run by the companies that participate in that industrial base. The security of those networks and their data and their intellectual property are in the company’s interest, as well as in the government and the national interest. We’ve always had clauses in our contract that required companies to take certain steps to secure their networks and their data. What we didn’t have was a process to validate and check and confirm that those clauses were being followed. And that gap was what led DCMA, prior to my arrival, to stand up what are called Defense Industrial Base Cybersecurity Assessment Center (DIBCAC) teams that have the ability to validate that companies are actually doing the things that their contracts require them to do with regard to cyber.
But there was a recognition that those teams are somewhat limited in scope and scale. And we can’t check everywhere with every one of the tens of thousands of contractors that have those cyber requirements. Frankly, we need them to secure their networks. I think that led us to an approach that was more analogous to some of the International Organization for Standardization (ISO) certifications, where we wanted to work with an independent body to establish a set of cyber standards that would become a contractual obligation in addition to the Defense Federal Acquisition Regulation (DFARS) clause or potentially instead of the DFARS clause for certain levels of cyber security. And that was the genesis of the Cybersecurity Maturity Model Certification (CMMC). We just don’t have the capacity to look at everybody. But if we could establish that capacity in an independent body, we would then have greater confidence that the levels of cyber security that are appropriate for defense data and for controlled unclassified information (CUI) are actually being protected as industry has promised.
Some have said that that is going to be a major increase in cost to these companies. A lot of companies were already doing the things necessary to secure their networks. I would hope, and in fact, I would expect that if they were already doing all of those things, the cost of something like CMMC should be quite modest, because it’s only the additional cost of the process itself and not of the certification process and not of actually standing up those cyber measures across their networks. But we’re going to continue to work hand in hand with the CMMC accreditation body and with the folks at Undersecretary of Defense for Acquisition and Sustainment, who’s my boss, as we roll out these new standards. We’re not going to let the cart get ahead of the horse. We’ve got to make sure that as we make these mandatory contractual requirements, we actually have the capacity for the accreditation body to perform those accreditations that folks are in place to do that.
I think we’re going to take a measured approach that’s informed by guidance from the new incoming administration. And so we’re continuing to kind of wait and see what that guidance is going to look like as people come on board. But the fundamentals of where we want to go on cyber are really not in question. It is absolutely critical that our companies protect themselves and their data and the government’s sensitive information. And we want to work together with the companies to ensure that they’re putting the appropriate technical measures in place.
KC
Let’s move on to a Government Accountability Office (GAO) report that addressed the challenges of the DoD obtaining cost and pricing data in particular, certainly the sole source spare part contracts. The GAO recommended increased tracking of these events. Would you comment on your view of the challenges and the GAO recommendation?
DB
We certainly concurred with the GAO recommendations. It is absolutely critical that contracting officers are able to reach a determination of fair and reasonable pricing. That’s true on sole source contracts, where we rely on data that’s provided from the vendors to be able to determine what fair and reasonable looks like. It’s also true for commercial items. And I know there’s been a lot of dialogue about the way we establish fair and reasonable pricing on commercial items, what constitutes a commercial item, and how we judge that to be the case and then the different processes and procedures we use for commercial item contracting. But the one thing that all those processes have in common is that when we’re done, we should be confident that we’re paying a fair and reasonable price—that we’re being good stewards of the taxpayers’ money. We want to be confident that we’ve reached that price based on either certified cost and pricing data provided under a FAR-based contracting process (under a sole source agreement) or, in the case of commercial items, we still need to be able to use commercial pricing in a meaningful way. For commercial items, fair and reasonable prices may need to rely on “other than certified cost and pricing data” particularly when there is not enough real commercial volume to establish that a price is fair and reasonable. And so, at the end of the day, are we confident we’re paying a fair price for a given item? Because, as a contracting professional, you don’t have to talk to somebody too long and tell them you do defense contracting before they bring up some examples of the government paying more than it should have for an item.
You hear the stories about the $1,500 toilet seats or hammers, right? Our job is to make sure we never pay those kinds of prices again. And we’ve demanded value for our customers and for the taxpayers. Because every dollar we save is not about making a contracting officer look good; it’s about carving out resources for other things that our soldiers and our airmen and marines and our sailors need to do their job. And so that's what drives us every day to get to fair and reasonable pricing.
KC
Our final question is really around having impact. What would you say to someone who is considering a career in this area? You certainly have been on the program side, you’ve been on the contracting side, and now you’re in a very powerful position. What would you say to someone who is looking at a career in our profession?
DB
There’s a lot of ways you can spend your working years. I lived a lot of years in Detroit with neighbors who were in the auto industry, and they had a lot of pride in what it meant to make automobiles in the United States. And I think that that pride was justified. When I think about motivating our employees to get them out of bed every morning, to do sometimes pretty complex technical, bureaucratic processes, I don’t have a hard time motivating them, because they ultimately understand the customer they’re working for. We’ve got the best job in the world, which is equipping the best war fighters in the world. So every time we see the parent or the brother or sister of a young service member, we can be confident that we’ve done everything we can to give them the things they need to fight and win on the battlefield, to give them the material, to give them the readiness, to give them the sustainment that they need to keep that covenant that we have with our service members.
It’s easy to get motivated to do. Just simply manufacturing something in the United States is very important. Then, being able to deliver that to the customers, who help deliver on our freedoms, and then keeping that covenant with that parent knowing that we’ve done everything we can to support that soldier or that airman or that marine, that sailor? That's a pretty easy thing to describe to your workforce. And I think it’s easy to attract people who want to contribute to that important mission. We’re not going to pay them what they would make in the commercial sector, but they’re going to have a clarity of mission and a community and an environment and an organization that they feel good about working for.
I mentioned it earlier that I don’t buy the $1,500 hammers. I think we get to be the people who make sure we just don’t do that ever again. And every time we can deliver savings, it’s dollars that can be used on something else that those war fighters need. I feel really strongly about this. We’ve got the data to show that if we spend $5 trillion, which is what our contract value is on items for our war fighters, without an organization like DCMA, ensuring timely delivery and quality, fair pricing, it would cost an awful lot more than the salaries of our men and women and all the costs associated with running this agency. So we feel pretty good that we don’t cost the DoD any money; we’re a multiplier for the delivery of capability. And it’s great to work for an organization where you can feel that good about our mission.
KC
General Bassett, thank you very much for helping us demonstrate how our profession can have great impact on all of us as Americans. And thank you for your time.
DB
Thanks so much.