Acquisition Criticality

Acquisition represents a process that is critical to the survival of commercial and defense enterprises alike. Despite this critical role, however, acquisition has long been subordinated to other processes with respect to executive attention, funding, innovation, and other key enterprise attributes. In the DoD, funding and prioritization arguments have relied on the "tooth vs. tail" metaphor. That is, under financial constraints, organizations give priority to combatants and weapons (the "teeth") over procurement, program management, and even logistics. Corporate America has also relied on this same argument. In the past, few corporations would hesitate to shift discretionary spending from Quality Assurance to Manufacturing, from Customer Service to Marketing, or from Purchasing to Research and Development (R&D).

Now, progressive firms are shifting their emphasis and priorities as they recognize the criticality of traditional "tail" processes. For example, industry discovered in the '80s that quality represents a critical performance factor, and that emphasizing quality can actually save cost and reduce cycle time. The need for change is particularly evident in R&D, the fundamental mechanism for new product and service development for the hierarchy (see Williamson 1985 for a comparison of markets and hierarchies). Drucker (1998) claims product innovations may take as long as fifty years to reach and affect the market. Such a lengthy period of time clearly limits a firm's agility, flexibility, and responsiveness to unforeseen changes in the environment and competitive arena (Porter 1985). Thus, we now observe strategic networks between organizations, decreased process cost and cycle time, increased flexibility and agility, and a host of other signals that radical change has indeed occurred.

Progressive firms have made radical changes in acquisition processes due to widespread supply-chain integration, just-in-time inventory practices, virtual organizations (Davidow and Malone 1992), electronic markets (Malone et al. 1987), mass customization (Pine et al. 1993), and other contemporary business practices. For example, the procurement focus has shifted away from short-term transactions and toward strategic relationships. Although price is still vitally important, it is no longer necessarily more so than capability, quality, reliability, and trustworthiness. In today's era of hypercompetition (D'Aveni 1994), global operations, and exploding information, progressive companies realize the environment has shifted abruptly and are effecting radical change where called for.

The DoD is also now recognizing acquisition's criticality, as evidenced by a new emphasis on commercial off-the-shelf (COTS) equipment and software, simplified regulations, and a preference for commercial specifications and standards (FASA 1994, FARA 1996). And the DoD acquisition regulation is modeled on "sound business practices" (Department of Defense 2001). Increasing partnerships with industry (see Cole 1997), less reliance on a shrinking defense-unique industrial base (Gansler 1998), process reengineering (Nissen 1997), electronic commerce, and other advanced initiatives are now occurring in the DoD (Bryan 1998) with much the same intensity as in industry a few years back. Indeed, realizing the importance of acquisition, a former Secretary of Defense challenged the acquisition workforce to effect a 50 percent reduction in the cycle time required to develop and field major weapon systems (Perry 1994). This represents a call for radical change of reengineering proportions (Hammer and Champy 1993).

The "tooth vs. tail" argument from above is clearly outdated. Regardless of the number and size of one's teeth, one can run only as fast and as long as one's tail allows. Notwithstanding the success in the Gulf War, for example, armored units were restrained by the logistical chain. Even the theater information systems were critically dependent on relationships with commercial vendors for equipment, software, and bandwidth in the region. A former Secretary of Defense recently acknowledged that acquisition (especially procurement and logistics) now limits battlefield information, mobility, and speed (Cohen 1997). Thus, in much the same way that the scope and pace of change have elevated acquisition to a level of strategic importance in industry, the acquisition process has become strategic to the military. This represents a radical concept for the DoD, a concept that calls for revolution in defense acquisition as well as in military affairs. To manage such radical organizational change, it is clear to the authors that simplistic, "quick-fix" approaches or recirculating old ideas under new labels will not suffice. Rather, substantial new acquisition knowledge is required, and it is required now.