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Business Transformation Agency Hits the Ground Running

September 2006
By Henry S. Kenyon

Organization revamps military acquisitions, management processes—quickly.

A newly established government agency is helping the U.S. Defense Department transform the way it does business. The organization is charged with improving how the military tracks and valuates its many assets and how it purchases equipment. Reporting directly to Congress, the agency is mandated to meet tight deadlines and to maintain maximum transparency in its operations.

The goal of the Business Transformation Agency (BTA), Washington, D.C., is to turn the Defense Department into a more agile, responsive and modern organization. According to BTA head Paul A. Brinkley, deputy undersecretary of defense for business transformation, over the years the Defense Department has made many large-scale attempts to transform its business processes, management practices and systems. The latest effort was launched at the beginning of the President George W. Bush administration immediately prior to the September 11, 2001, terrorist attacks.

Brinkley notes that on September 10, 2001, Secretary of Defense Donald Rumsfeld gave a speech outlining the need to streamline the department’s business practices so that they were more flexible to accommodate the military’s advanced warfighting capabilities and to take advantage of the best practices in U.S. private industry. But everything changed the following day as the war on terrorism began and senior leadership turned its focus on immediate priorities.

However, in the following three years, the Defense Department did undertake a modernization effort. Known as the Business Management Modernization Program, its goal was to determine the state of the Defense Department’s global business operations. Brinkley explains that the department is roughly four times larger than the next largest industrial organization in the world. “When you talk about [Defense Department] business modernization, you talk about something that’s on an unprecedented scale. A lot of money was spent to get a baseline established—what are our business practices? What are the business processes used to support logistics, personnel management, financial management, installation management, and how many systems are in place that automate those processes?” he relates.

Brinkley, who has many years of private industry experience, took responsibility for business transformation immediately after the 2004 presidential election. He was given the green light to restructure the program and to focus on issues that were impediments to change. During the process, it became evident that an accountable, top-level organization was required to coordinate efforts. Brinkley observes that large corporations have personnel in key positions at the top of the organizations who are accountable for implementing its operations. “That was missing here in the DOD [Department of Defense]. The Business Transformation Agency was established to serve as the corporate headquarters function for implementing and driving business change that is DOD-wide in its scope,” he explains.

The department officially notified Congress of the BTA’s founding in October 2005. Although the agency began work soon after the implementation orders were signed, getting the various administrative processes coordinated took time, and it was not until February 2006 that it officially opened for business.

Since its launch, the BTA has implemented an enterprise transition plan across the Defense Department covering all of its business operations, ranging from departmentwide to service- and agency-specific. The plan outlines the department’s investments and what it intends to achieve in terms of business operations for those investments. The document established a series of six-month milestones to create an environment for continuous improvement. At the end of each period, a status report is presented to Congress describing investments, goals met and future initiatives. Where goals have not been achieved, the report describes what was missed and the steps being taken to resolve problems.

Brinkley explains that the enterprise transition plan established accountability to Congress and to the public as a baseline. He credits the plan with creating institutional discipline and accountability for the Defense Department’s transformation efforts. Although some requirements are specific to individual services and agencies, Brinkley notes that the BTA is responsible for implementing initiatives across the department.

The BTA has an implementation plan built around six priorities. The first objective is financial visibility, which is the ability to have instant access to the department’s financial status. “How much have we spent compared to budget? Where are we in terms of budget execution? Where is there an opportunity to allocate financial resources quickly to support mission requirements?” he relates.

Another priority is material visibility to track assets. “We should be able to see across all of the services—whether they’re in the Marine Corps or the Army—what are the assets that can be quickly brought to bear in support of the warfighting mission. Establishing data standards for those [assets] that are transparent to the entire department is material visibility,” he says.

The other four priorities are acquisition visibility, real property accountability, personnel visibility and common supplier engagement. This last area creates a single contact point between the Defense Department and industry that is designed to take advantage of and leverage relationships with commercial partners.

The agency’s first status report to Congress was delivered in March. Brinkley emphasizes that it met 75 percent of its transition plan milestones for its first six-month period. Missed goals were identified along with issues responsible for the delays and expectations for when goals would be on track. He explains that this process reflects the discipline the new agency creates. “Traditionally, you hear about projects that fail, but you hear about them as one-offs. You don’t get a collective sense of whether the overall effort is succeeding or on a path to success. The transition plan and the six-month updates create that discipline and a sense of urgency and expectation that things are getting better. These investments we’re making are resulting in tangible benefits either to the warfighting mission of the department or to our financial transparency,” he says.

One of the key goals the agency successfully reached in its first six months was a process called military equipment valuation in which the department established a baseline cost for all of its military assets. Brinkley explains that in a corporation, all large assets have a price value, which helps create financial “auditability” by determining the value of the equipment base. But the Defense Department and the federal government do not practice capital budgeting and instead expense major costs, so there is no book value for their assets. Creating a baseline was a staggering achievement because it encompasses all major platforms such as tanks, ships and aircraft. “Everything from the USS Ronald Reagan down to every truck didn’t have a book value. If somebody said, ‘How much is all this stuff worth?’ there is no financially auditable baseline that says our collective asset base has the following value and it’s depreciating at the following rate. This is a key bedrock element to creating an auditable financial process for the DOD,” he maintains.

Another goal that was achieved was deploying a handheld system for automated contracting. This capability allows commanders in the field to execute contracts with local suppliers via handheld devices, replacing paper-based methods. “This is an example of something that is much more focused and specific but very tangible in terms of its benefit to the warfighting mission of the department,” he says.

Despite these successes, the BTA failed to meet some of its goals. Brinkley places these misses into two categories. The first involves a set of efforts falling under federal       e-government initiatives, which are very large, complex programs designed to provide advanced capabilities for the entire government. Under the transition plan, the e-government initiatives covered a number of large enterprise systems for the Defense Department. He notes that many of the missed milestones were in this area.

The other category of difficulties involved efforts to streamline supply chains. “The supply chain for the DOD is huge and spread across a wide variety of organizations. From the time you contract and acquire an asset until the end of its life—when its passed through tiers of logistics and maintenance operations through the services and the Defense Logistics Agency—creating or setting milestones for adoption of material data standards has a huge number of interdependencies for different organizations that all have to execute some process or system improvement. So we missed quite a few of those [milestones] on the supply chain side,” he admits.

A key part of the BTA’s responsibility is supporting forces in the field. The agency established its Warfighter Support Office for this purpose. Brinkley notes that the office is in constant contact with the most forward-deployed units in theater. “A lot of our business processes and business systems are carried all the way forward to the very point of the spear,” he maintains.

The role of this office is to identify improvements in business processes and business systems that can best help support soldiers’ missions. These processes can include contracting, pay for wounded soldiers, material visibility and the ability of units to know where material to support their mission is located. “The warfighter is our customer. Just like in a company, you invest most of your effort in making life easy for your customer to do business with you. We want to make sure we’re investing to make the warfighter’s job easier,” Brinkley says.

The agency is involved in defining the Defense Department’s data standards and technologies embedded in the business enterprise architecture for all aspects of interoperability. Brinkley notes that the agency’s goal is to embed data standards in each weapons platform. The process of defining standards will allow industry to have input into developing these standards and products. He adds that the BTA is working directly with the services and the material command to develop these rules.

The BTA also plays a direct role in acquisition reform. One area where the Defense Department is investing significant amounts of funds is business systems acquisition. Brinkley notes that the agency has posted an enterprise risk assessment model on its Web site. This model is a mechanism to provide a more rapid and intensely focused review of business systems, resulting in a set of actions designed to get a system back on track. “To me, that’s a direct part of our overall acquisition reform initiative,” he says.

Almost every systems initiative outlined in the BTA transition plan is tied to an overarching business initiative. For example, the agency is heavily involved in automating personnel pay processes for military personnel and resourcing data across the Defense Department. Brinkley says that the systems initiatives all support other departmental efforts to improve decision making, management and resource allocation to support the warfighting mission.

In the short term, the agency is committed to meeting its six-month deadlines for delivering projects. Brinkley shares that the Government Accountability Office recently published a favorable report of the agency’s first six months. “These efforts have received a lot of negative attention in the past. The organization is starting to get a sense of its own success and a sense of accomplishment. In the short term, our goal is to resource, staff up this agency and put in place leaders with an obsession about demonstrating improvement on a six-month scale so that it becomes an unstoppable force in terms of having momentum behind it,” he says.

Brinkley hopes to leverage his short-term victories into long-term success. If this process is seen as delivering tangible value, warfighters and Congress will see it as being successful over the long term. “Things that are effective and deliver value tend to succeed and continue to get support,” he says.

Change is a major undertaking in an organization the size of the Defense Department. Brinkley observes that large corporations take many years to transform themselves. “It will take many years for the DOD to become a modern, agile, efficient, world-class organization. That will not happen on my watch. It won’t happen on my successor’s watch, and really we should not think it will ever happen because there’s not a static end state we’re going to reach and throw up our hands and say, ‘We’ve done it,’” he says.

A final challenge is creating the awareness within the government that the only way such improvement happens in the private sector is through continuous, steady, forward progress. Brinkley notes that this is not the way the government operates. Usually agencies think about requiring something and that at some point in time this thing will be complete, which is exactly opposite of the way the government needs to think. “We need to think in terms of steady, continuous improvement where everyone at every tier of the organization is held accountable for delivering what they say they’re going to deliver,” he explains.

 

Web Resources
Business Transformation Agency (BTA): www.dod.mil/bta/index.html
BTA report to Congress: Business Enterprise Architecture and Enterprise Transition Plan: www.dod.mil/dbt/products/architecture/bea_3_1_march_2006/bea_etp.html
Warfighter Support Office: www.dod.mil/bta/org_wso.html