PEO Portfolio Metrics

Measure What Matters for Modern Capability Portfolios

The DoD must pivot from a program centric model to a portfolio model that delivers integrated suites of capabilities. One that leverages common platforms, enterprise services, and architectures to rapidly and iteratively deliver new capabilities to the Warfighters with greater interoperability, cybersecurity, and cost effectiveness. A model whereby Program Executive Officers (PEOs) and Program Management Offices (PMOs) leverage portfolio strategies, processes, and resources to acquire, integrate, and deliver capabilities with greater speed and mission impact. These portfolios would tap a broader array of traditional and non-traditional defense contractors fueling greater competition which decreases costs and increases novel solutions.

PEOs have the opportunity to be the rockstar linchpins of the acquisition enterprise.

This modern portfolio model requires a modern set of metrics. The DoD can no longer afford to manage by cost, schedule, and performance against fixed acquisition program baselines. The DoD needs to regrow its industrial base to harness American and allied innovation.

The PEOs, their operational customers, and other key stakeholders must first reflect on what they value and expect from a portfolio.

Potential PEO Portfolio Values

• Mission Impact - Are we delivering capabilities that enable operational commands to accomplish their mission with greater success and impact?

• Speed of Delivery - Are we regularly delivering capabilities in a timely manner to keep pace with changes to operations, threats, technologies, and budgets? Can we deliver a partial solution today and iterate instead of waiting for a perfect solution years later?

• Strong Industrial Base - Are we tapping a broad base of defense and technology companies, ensuring robust competition. Are we creating an environment where companies want to compete, can recruit top talent, and grow their businesses? Are small and non-traditional business with leading technical solutions involved? Are we partnering with and leveraging companies from allied nations?

• Harnessing Critical Technologies - Are we effectively exploiting leading tech from the defense and commercial sectors? Are we rapidly and effectively integrating the new tech into acquisition programs and fielded capabilities?

• Robust Acquisition Workforce - Do we have a wide range of engaged acquisition professionals with expertise and experience in technology and defense processes? Are we effectively developing and empowering them to innovate and deliver?

While the acquisition workforce and leaders are subject to extensive reporting on programs, initiatives, and organizations, there isn’t a common set of portfolio metrics for PEOs to share with Service and Department leadership, let alone Congress, GAO, and the public.

I’ve recommended in the past that each Service Acquisition Executive publish a robust annual report, building on recent Air Force Acquisition reports. It would be more effective to have the PEOs to publish annual reports online, with quarterly reports for internal audiences. As DoD continues to improve on its acquisition databases within the Services and department-wide, many of these metrics can be auto-generated.

Potential PEO Portfolio Metrics

Structure/Content

• Capability/Mission Areas - Each PEO often has a handful of subordinate organizations responsible for managing a sub-portfolio of capabilities.

• Programs/Capabilities - What are the current programs in the portfolio? What are the size/ACAT/ballpark acquisition cost? What are the types of programs/pathway? Ideally in time, DoD will break down the walls of programs and use the term “capabilities” to describe what is acquired and delivered.

• Customers? Who are the major operational commands the PEO is focused on delivering capabilities to? This can be within the Service, Combatant Commands, and/or International allies and partners. Who are the primary user groups the portfolio is serving (which some lose sight of at times)? Ideally there are portfolio engagement strategies with operational commanders and end-users.

Industrial Base

• What are the 10 companies in the portfolio with the largest contract obligations last FY? What are the trends over the last five years?

  • The PEOs should have this information readily available and meet with executives from these companies periodically to discuss progress, issues, and opportunities for improvement across all their contracts.

• What are the top 10 small and/or non-traditional businesses in the portfolio for contract obligations last FY? What are the trends over the last five years.

  • Again the PEO should meet with executives from these companies to discuss their contracts as well as understand their unique challenges, opportunities in doing business with the portfolio and work to address them.

• Comprehensive summaries of number of companies, size of companies, key contracts, location of primary work or company headquarters, distribution of portfolio obligations over the last year, and trends over the last five years.

• Percentage of contract dollars going to Big 5 Primes, other traditional defense contractors, non-traditional defense contractors, and small businesses. Show trends over the last few years.

• Competition summary of contract awards last year. How many were sole sourced, one bidder, two or more bidders? Breakout re-competes vs new work. Show trends over the last few years.

• Management costs. What % of the portfolio budget went to PMO costs to include military and civilian personnel, PMO support contractors, FFRDCs, and other management costs.

Technology Development

• Summaries of SBIR, APFIT, RDER, OT (including consortia), and related awards tied to the portfolio over the last year (#, $, by phase). Trends for last three years.

• Summaries of Defense S&T projects (#, $, type, source) that contributed to portfolio capabilities over the last few years from DARPA, Labs, FFRDCs, UARCs.

Future Opportunities

• Projected RDT&E and Procurement funding across the FYDP for all budgets that the PEO oversees. Broken out by sub-portfolios by FY.

• Identify funding $/% is likely committed to companies via existing contracts.

• Identify funding $/% is likely available for companies to compete for in the next few years. This is critically important for companies to focus their business, research, and efforts by understanding the total addressable market. If most of the portfolio’s funding is already locked up by prime contractors for existing acquisition programs, then it’s not worth the time, energy, and investments for new companies to pursue. If however there are ample opportunities to scale prototypes, experiments, and commercial solutions, the PEO can communicate a clear demand signal to entice greater competition for upcoming contracts.

Speed of Delivery

• What capabilities did the portfolio deliver to operational commands last year? This includes quantities of weapon systems, software releases, upgrades/retrofits, and other capabilities put in the hands of operators. What are the mission impacts of these deliveries (e.g., performance improvement over legacy systems, increased quantities, accelerated operational timelines, enable retirement of legacy systems)?

• What capabilities does the portfolio plan to deliver this year? In the next three years? Given the operational environment in INDOPACOM, this timeframe is of particular importance.

• For each program/capability in the portfolio, how many years/months will it take from “Idea to IOC”? This is measured from program initiation (MDD or equivalent to IOC. Include on a single table. Possibly add FOC too. The PEO and PMs should regularly review the programs with the longest timelines to identify any acceleration opportunities? Ideally portfolios should have robust roadmaps to show delivery timelines and quantities overlayed with legacy operational systems.

• Did/Will the program demonstrate an MVP or robust prototype to the users? What is the timeframe for this relative to the acquisition lifecycle? Will there be multiple MVPs, prototypes, or interim capabilities prior to IOC to enable users and testers to experiment with and provide feedback to shape designs and development?

• Schedule drivers. Summarize the range of months or % of acquisition time it takes to accomplish some of the biggest schedule drivers to include requirements documents, testing, contracting/source selection, development, and production. Identify and explore the edge cases to address portfolio issues or scale success.

Workforce

• Numbers within each of the six major acquisition career fields and years of acquisition experience. Trends of the last three years.

• Numbers who had career development opportunities to get involved in other programs, workshops, short courses (in-person/online) beyond DAU, and other opportunities beyond their standard “day jobs” over the last year. Include education with industry and related exchange programs.

• Publications and presentations. Summary of portfolio personnel who published articles, op-eds, reports, research, or presented at a conference or event beyond their program operations.

Summary

There are other metrics that a PEO portfolio could track and manage. The key is to enable data driven decisions in portfolio operations. The PEOs and the senior staffs should review them monthly, discuss them at least quarterly, and publicly report at least annually. They should shape leadership actions to continuously improve the portfolio’s mission impact.