Public Administration Select Committee - Minutes of EvidenceHC 123

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Oral Evidence

Taken before the Public Administration Committee

on Monday 18 March 2013

Members present:

Mr Bernard Jenkin (Chair)

Alun Cairns

Paul Flynn

Kelvin Hopkins

Greg Mulholland

Mr Steve Reed

Lindsay Roy

________________

Examination of Witness

Witness: Lieutenant Colonel Dan Ward, Duty Acquisitions Officer, US Air Force, gave evidence.

[This evidence was taken by video conference]

Q390Chair: Welcome to this session of our inquiry into cross-governmental procurement. I wonder whether our witness could identify himself for the record, please.

Lieutenant Colonel Ward: I am Lieutenant Colonel Dan Ward, United States Air Force, currently stationed at Hanscom Air Force Base just outside of Boston, Massachusetts.

Q391Chair: I understand you now have some role in the Federal Government on procurement.

Lieutenant Colonel Ward: Yes, sir. I was contacted by the White House Office of Science and Technology Policy. They were interested in some of my ideas about acquisition and procurement reform. They have asked me to come in and work with them to help reduce the amount of time and money we spend on building new technologies. That assignment is still being developed and I am not there yet, but I am heading in that direction.

Q392Chair: Thank you very much indeed. Could you start by giving us a thumbnail sketch of what your concept of procurement actually is and how you arrived at it?

Lieutenant Colonel Ward: The concept goes by the name FIST, which stands for Fast, Inexpensive, Simple and Tiny, and the basic concept or premise is that military technology does not have to cost so much and take so long and be so complicated. I coined the term in 2004 and since that time I have been studying it, experimenting with it, implementing it and teaching it. The origin of it is basically research into the most effective, most impactful military weapon systems and military technology systems of all types, as well as NASA’s space programme and commercial industry projects. My findings are that reducing the cost, schedule and complexity of a system tends to not only give us good programmatic outcomes-meaning we deliver on time and on budget-but also good operational outcomes, meaning the system performs well and it does all of the things it is supposed to do. That is FIST in a nutshell.

Q393Chair: You have drawn up a graph, which is in our briefing, that shows the relationship between effectiveness of outcomes and other metrics. To what extent is this based on real data, or is this just an intuitive curve you have drawn?

Lieutenant Colonel Ward: Is the curve you are talking about the one from the Standish Group data that shows success rate versus budget and schedule and that?

Q394Chair: This is the graph titled "FIST at 5. Looking back, Looking ahead", from your own paper dated May/June 2011.

Lieutenant Colonel Ward: Yes, okay. That graph is from actual data. They were collected by a programme management research group here in the Boston area called the Standish Group, and they looked at a number of IT programmes over a five-year period. Their data were specifically looking at IT systems, and their findings, as you see there, show a curve of diminishing returns as we spend more time, more money and use larger teams of people developing systems. The likelihood of success goes down dramatically.

To caveat that slightly, their definition of success is to deliver on time and on budget all the features and functions as originally envisioned. One of the critiques of their data is that what they are really measuring is estimation accuracy: how accurate are you at predicting the cost and schedule? This is a fair critique, but also shows that the more time, money and people we put on a project, the less likely our estimates are to be accurate. That lower percentage success rate does not mean that they did not deliver anything; it just means that what they did deliver was over budget, over cost and did not do everything it said it was going to do.

Q395Chair: So, this is just IT. Can we read across to other sectors and other categories of procurement? How do you respond to the criticism that this is a very attractive and simple concept you have here, but it is much too simple to deal with really complicated things?

Lieutenant Colonel Ward: The data they collected on that particular study do correlate with other categories of technology. We have done studies looking at NASA’s experience with spacecraft to include some very high-tech, very challenging missions that they were able to accomplish with a constrained schedule and a constrained budget. It certainly does correlate beyond the IT realm, but those data are measured data and not predictive data, so they are the findings they made when they looked at a particular set of some 280 different IT projects.

A more recent example of a very complex system that basically used the FIST approach is the US Navy’s Virginia-class submarine programme. I like this example for several reasons. One of them is that I was contacted by them back in 2004, and they said they had read some of my stuff and were using some of my ideas, so I have a personal connection, although I do not claim much credit for their success. The USS Mississippi was delivered a year early and $60 million under budget, and that is for a nuclear-powered submarine. Their approach was very much in line with this pattern of decision-making we call FIST.

They streamlined and simplified their processes, they streamlined and simplified their technical architectures, and they took a large, complex system and broke it down into a small number of discrete modules, which simplified the interfaces, so, again, they had technical pieces of this puzzle and programmatic pieces of this puzzle. The way they defined their process was all in line with this as well. Ultimately, what they were trying to do was truly reward, encourage and incentivise speed, thrift, simplicity and restraint.

The USS Mississippi was a year early, $60 million under budget, and the USS New Hampshire, the one before that, was eight months early and $54 million under budget. Additionally, the USS New Mexico was four months early. This is very much a pattern and, as time goes on, each one gets delivered even earlier and even less expensively. You can certainly do this on something as large as a nuclear-powered sub.

Q396Chair: Can you just describe what you mean by speed, thrift, simplicity and restraint? Can you just run through this list?

Lieutenant Colonel Ward: Absolutely. FIST stands for Fast, Inexpensive, Simple and Tiny, and I talked about these four cardinal virtues of FIST: speed, thrift, simplicity and restraint. Basically, what we are trying to do with FIST is hold up these as our "guidestones", so that when we come to a decision point-where we are trying to make a decision or solve a problem-we want to move in the direction of the faster approach, rather than the slower approach; we want to value speed. With the less expensive approach versus the more expensive approach, we want to value thrift. It is the same with simplicity and restraint.

There is a caveat to all of this. I like to point out that in the famous Greek race the tortoise was faster than the hare because he got to the finish line first, so we are not talking about the superficial pursuit of speed. We do not want to turn speed into an objective all of its own; we look at speed as a tool that helps us achieve our objective, which is to deliver an affordable system that is ready when we need it and works when we use it. Does that answer that question?

Q397Chair: Yes, very helpfully. I am interested in the phrase you used earlier, which is, "This is a pattern of thinking; it is not a process. It is a pattern of thinking." What do you mean by that?

Lieutenant Colonel Ward: We put a lot of effort into redesigning our acquisition processes here in the States in the Air Force and the Department of Defense. The data suggest that rewriting the process and redesigning the process has not provided the types of positive results that we would like to see. The reports that are talking about current problems sound a lot like reports that we had on problems from 30 years ago. Today, the reports even reference that. They say, "We could have written this report using all the same words from 30 years ago."

The process is more of a symptom than a cause of our problems. The process says we have to do certain things, but it is the underlying decision-making tendencies and preferences that shape how we execute our processes and how we make those decisions. If we go to the next level down, we look at whether we value complexity or simplicity. Do we value speed or do we value taking a long amount of time? One of the examples I like to point to is the F-16 Falcon, which is a fighter jet, and the request for proposal for that was 21 pages long. The F-15 fighter jet, which was right around the same time, had a 250-page request for proposal. Nothing in the process or the policy required either a short RFP or a long RFP, but by choosing to do the short one, it helped focus their requirements, they got a contract much faster and, by some calculations, the F-16 was developed in half the time at half the cost of the F-15. You can get both done under the same regulatory environment, but the difference is that the F-16 team values speed, thrift, simplicity and restraint.

Q398Lindsay Roy: Good morning, Dan. Can you tell us how, initially, you managed to convince your colleagues to take on board this transformational change?

Lieutenant Colonel Ward: That is a great question. I am not sure to what extent I have convinced everyone, but what I found is that different people tend to be convinced by different things. Some people want to see data, some people want to hear stories, some people want to laugh and other people do not want it to be funny at all. What I have tried to do is come at it through a variety of different channels. I do have an engineering background. I am an electrical engineer; I have an undergraduate degree and my most recent Masters is in Systems Engineering. So I speak engineer, and I have got plenty of graphs, numbers and figures and things like that. I have also published a number of superhero comics and science fiction stories that explore some of these principles and practices, and I use that as a way to capture people’s imagination and talk about what can be done.

I use a lot of concrete examples. Some, individually, they look at and go, "Oh." When you put them all together, you get a fairly large portfolio. We can show that this has been done in the past. We can show examples of it being done actively today, such as with the Virginia-class submarine. Really, I have a multi-pronged strategy: some stories, some data, some fiction and some non-fiction. I get some comic books. Again, this is all just to try to cut through the clutter and get people’s attention and get them thinking about this. I do a fair amount of sitting down with individuals and sitting around a conference room with programme directors and asking, "How do we take these principles, these practices-heuristics-and apply them within the specific context of any given project?" That is my approach so far.

Q399Lindsay Roy: Would a strong evidence-based and can-do approach sum it up?

Lieutenant Colonel Ward: Absolutely. Yes, it is very much evidence-based. What I am trying to show is that when we have done this, it has generally worked, and when we have done our best work, it has generally been following this pattern. Then we look at failed instances of both-when we did the opposite, how that worked out. We also look at when we applied the FIST approach and it failed, and we ask what that failure was like. We are really looking across the whole spectrum and again, everything from case studies and academic papers to charts, graphs, data, figures and things like that.

Q400Chair: Can you give an example of where FIST did not succeed and why you think it did not succeed?

Lieutenant Colonel Ward: Sure. I would say that programmes tend to fail in one of two ways: either they fail epic or they fail optimal. An epic fail is one that costs us a lot and teaches us a little, and an optimal failure costs us a little and teaches us a lot. For example, with NASA’s "faster, better, cheaper" initiative in the ’90s, they launched 16 missions under this umbrella, all very much in line with the FIST approach, where they valued speed, thrift, simplicity and restraint. In the first seven years, nine out of those 10 missions succeeded wildly. In 1999, four of them failed, and when those missions failed, one of the dynamics was that they had reduced their cost and the schedule more than they had reduced the complexity. That was a learning point for them, where they realised, "Oh gosh, we need to also reduce the complexity as well as spending less time and less money."

Generally, the root cause of the failure was engineering mistakes, communication problems and management mistakes. These flaws and these causes are not ubiquitous across the FIST method and they are not unique to the FIST method. These are the types of errors that will pop up under any method. Communications will break down, we will make a rounding error or we will use metric units instead of standard units and end up tumbling out of orbit.

These things happen, but the nice thing is that when a FIST programme fails, it tends to fail optimal. We have constrained our losses. Like I say, at the time, we were able to witness, first hand, the decisions that I made early on; I am still around on the programme to see how they worked out and I can learn from those opportunities. I can give some specific examples of a concrete project, but that is generally how FIST fails.

Q401Chair: Can you give the specifics, please?

Lieutenant Colonel Ward: One that people point to a lot is the Clark satellite programme. Clark is a remote-imaging satellite and it was cancelled when its cost growth exceeded 15%. That was a contractually established threshold, and the cancellation did not come as a surprise to anybody-to either the NASA work force or the contractor. They knew it was coming and they said, "Oh gosh, we cannot get the costs under control, so we are going to cancel that programme." Clark was considered a failure. You could also argue that it was a success of the method, because we stopped the haemorrhaging-we stopped the losses before too much time and money had been spent.

Lewis and Clark were a paired set of satellites, and the Lewis satellite is the satellite that was launched. Because of an error in calculation, it was inserted into the wrong orbit and ended up tumbling into the atmosphere and burning up. Lewis and Clark were "faster, better, cheaper" satellites, both very compatible with the FIST approach. Neither of them succeeded; they both failed for different reasons. While the Lewis one failed, it is not clear that had they spent more time and money, they would have necessarily caught that mistake. That is an important thing to consider.

Q402Chair: Finally, very briefly, before we move on, why do you think Governments are so slow in taking up this pattern of behaviour?

Lieutenant Colonel Ward: That is a great question. It is interesting that we have adopted this pattern of decision-making when we have to. I hear oftentimes in hallway conversations or in news reports and headlines that people make the statement, "We must now be efficient." Oftentimes, we have some head shaking as if it is unfortunate that, sadly, we have to be efficient now, but we do. Part of that is we tend to equate complexity with sophistication; we say that if you have a very complex system, it must be a very good system, and that applies both to our processes and our organisations, as well as our technical systems. We tend to have this idea that you get what you pay for, so you have to pay a lot in order to get a lot. We are reluctant to not pay as much, because we are afraid that we will get less if we pay less. To a certain extent that is true, but sometimes you can pay a lot and get nothing at all, because we have increased the complexity to such a point that the system just will not work.

The other thing is we have equated managing large budgets with prestige. It is better for your career, oftentimes, to manage a $1 billion programme than it is to manage a $100,000 programme, because it just shows professional growth by managing more and more money and managing bigger and bigger dollar figures-or pick your currency. Part of it is the way we view large budgets, long schedules and high degrees of complexity. Also, we have the opportunity to look at rapid delivery and rapid innovation, and delivering things on a shoestring. We have the opportunity to say, "That’s what constitutes goodness, that’s what constitutes professional growth." If we so choose, we can certainly say, "You managed a $1 million programme last year. Let’s see what you can do next year with half that money, because that would really demonstrate professional growth and professional competence." But in large part it is the incentives we have established, and the way we tend to view spending a lot of money as a sign of goodness and maturity.

Q403Kelvin Hopkins: Good afternoon, Dan. You have answered the first part of my question already, which was about the extent to which procurement failures are down to mindset. You talked about mindset, but there is also a possible tendency towards risk aversion when dealing with public money. Would you like to comment on that as well?

Lieutenant Colonel Ward: Absolutely. When we talk about risk, we need to make sure we do what I call "all the math", and here is what I mean by "all the math": as we saw in that chart that I mentioned before, the chances of success on any individual project go up when we spend less time and less money. When we constrain our schedule and constrain our budget, the likelihood of delivering on time and on budget, with all the features and functions that we have asked for, is increased. That likelihood of delivering on time and on budget is never going to be 100, so any given approach is going to have a certain amount of losses-a certain amount of failures. It is important that we calculate our failures correctly. So, to use the NASA data, they launched 16 missions, of which only 10 succeeded. Ten out of 16 is about a 62% success rate. Somebody did that math and said, "Okay, we’re not succeeding often enough and 62% is too low. We need to jettison this approach."

There is another way of calculating that figure, and that is to consider that for the 16 missions we launched under "faster, better, cheaper", the total cost for all 16 was less than the cost of the Cassini mission to Saturn. That means we got 16 missions for the price of one. Only 10 of them succeeded-fine; we have 10 successful missions for the price of one. We also got six failures, and there is a political price that you pay when you have a prominent failure like that, and NASA’s failures tend to be fairly prominent-when something explodes in the atmosphere or burns up in orbit, it makes the news. However, 10 for the price of one is a really good deal. Even if it had been two successes for the price of one, that is still a good return on our investment.

That is the type of story you need to be able to tell, and it is a very honest story-it is not trying to spin the facts. It is saying, "Hey, for the amount of money we put in, we got twice as much success as had we done it some other way." That is the key, in that there is no limit to the number of times we can try; there is only a limit to the amount of money we can spend. Therefore, we ought to be measuring our success in terms of how much money we spend versus how many attempts we make.

Again, when we talk about risk, does the FIST approach fail more often? Yes and no. Yes, it fails more often because you have a large portfolio of projects, so over any given amount of time-let us say we do 10 projects over this time period-four of them fail. Well, we had four failures over that time period, whereas on the more traditional approach-if we only did one project over that same time period for the same amount of money and it failed- that was only one failure but it was all our money that failed. That is really the math we should be doing.

Q404Kelvin Hopkins: I do not know if this is correct, but it strikes me that building in the risk aversion at the beginning with a very expensive specification is the mistake. The correct place to save money is at the operational production level, to make sure that things are being done efficiently at the level of production. That is a more sensible way of being risk averse with public money.

Lieutenant Colonel Ward: I agree. That is absolutely true, and most programmes fail at the beginning and we just do not know about it until the end. We set the seeds of success or failure early on, and by constraining the costs, schedule and complexity we really do increase the likelihood of projects succeeding.

Kelvin Hopkins: I should say that 40 years ago I worked in the aircraft industry, so I saw some of this at the front line, so to speak. Thank you.

Q405Mr Reed: You have spoken to us mostly about the defence sector. Do you think FIST is applicable for procurement right across the public sector?

Lieutenant Colonel Ward: I think it is. I always like to say that FIST has no monopoly and no guarantee. It is possible to do this and have it go badly, and there are other ways to do good work. As a military man, most of my examples tend to be military examples because most of my audiences tend to be military audiences, but I do have a fair amount of commercial research data, with the Standish Group’s data being some of the more prominent data. Yes, this approach certainly not only can work but does work in industry, and many of the lessons in heuristics and tools and practices that I talked about are borrowed from industry. By way of example, General Electric came up with an electrocardiogram machine called the Mac 400. Generally, an ECG is going to cost you upwards of $2,000, but this one weighs in at $800, which is less than half the price. It is a very simplified design. It is portable. It was designed for use in some rural parts of India, so the little printer that prints out the results of the electrocardiograph test began life as a printer in a train station’s ticket booth. They took something that normally would have printed out tickets and said, "Hey, we can modify this slightly and we can use it to print out the results of an ECG." Typically, an ECG is going to have a lot of buttons; this one has six. They simplified the architecture, they used very simple, robust, proven components, and they put together a system that is really having a huge impact on the market in rural India. It is going to have medical opportunities and apply to transportation systems. The short answer to your question, sir, is yes-this certainly has application well beyond the Department of Defense.

Q406Mr Reed: Thank you for that, Dan-that is a great example as well. Looking at how you could apply FIST across the public sector outside the military and defence, are there particular challenges that you would envisage in trying to do that?

Lieutenant Colonel Ward: Yes. I have to plead a little bit of ignorance in terms of what the details of some of those challenges would be. I suspect they would be similar to the challenges that we face within the Department of Defense, and the first one is to cut through the clutter to get people’s attention and have them oriented so they say, "Okay, this is something we need to consider, reflect on and experiment with." The reason I like this FIST approach, other than the fact that I came up with it, is that it offers an iconic image and a catchy acronym. From a leadership perspective, when we are casting a vision and saying, "This is the direction we want to go in," we are not just providing our work force with a list of 37 different sub-initiatives: "Okay, now go do all these hundreds of things." We are saying, "We’re going to rally around FIST." You can put it on a T-shirt and you can put it on a sticker. Actually, I have a little FIST sticker on my calendar. It is engaging and people can say, "What is this FIST thing?" If we can use this to cast that vision, rally the troops and give them the guiding star and the touchstone, that helps overcome that first hurdle.

The second piece is that FIST is pretty well documented. There is a lot of training material and it is just a matter of getting that training material adopted into whatever training pipeline any given organisation has. I know what the training pipeline is on my side, especially within the Air Force and I presume the public sector would have a similar training pipeline. Again, it is about getting people’s attention and integrating the things into the training.

The third piece is metrics-the measurements that we make. Sometimes we are not even tracking how much time we spend on projects; other times we are measuring the wrong things or we only measure the obvious things but miss the important things. There is therefore a set of very precise FIST-related or FIST-friendly metrics, and as you move from one context to another and put it in transportation or energy or whatever, you will probably have to change them up a bit. If we align our measurements to determine to what extent we are moving in the direction of speed, thrift, simplicity and restraint, that would go a long way towards encouraging this sort of thing.

Q407Chair: I cannot resist, just before we move on, asking you to tell us very briefly about the supercomputer in DoD.

Lieutenant Colonel Ward: Absolutely. In December 2010, the Air Force research lab, which is in a tiny little place called Rome, New York, and is dear to my heart-I was stationed there for a couple of years-cut the ribbon on the fastest supercomputer in the entire Department of Defense. It cruises along at 500 teraflops. I do not think we have come up with anything faster, at least within the DoD: 500 teraflops is very fast and stands for Floating-point Operations Per Second.

What is interesting about this is that it was developed for one-tenth the cost of a comparable supercomputer. When it is operating, it uses 10% of the electricity of a typical supercomputer or a comparable supercomputer of that speed. What is particularly interesting is that they built it out of 1,760 PlayStation 3s. It is a collected conglomeration of games consoles, but it is not a game. It is the fastest supercomputer in the Department of Defense.

We cannot always build every system out of old PS3s. Certainly there will be instances when we can do that or do something similar, but that is not always going to be the case. It is called the Condor Cluster, if you want to Google it later and read more about it. What is striking about that story is that somebody set out on day one to say, "How do we reduce the cost, the complexity and the amount of time we spend building a supercomputer? Can we do this faster? Can we constrain our costs?" The answer, clearly, was yes. I like to point to that as an example of what can be done when we set a meaningful goal and we put a little bit of creativity behind it.

Chair: Thank you very much indeed. We will look into the Condor Cluster.

Q408Paul Flynn: I have been absorbed by your splendid publication "The Comic Guide to Improving Defense Acquisitions". I showed my colleagues one of the illustrations in it that will bring the whole thing home, and that is the caption for this. "If I make PowerPoint charts, well … you get the picture," and there is the PowerPoint chart, many of which we have been subjected to throughout our careers. There are two bits to my question. Do you think that communicating with those who make these important decisions, like politicians and many others, on the level at which we communicate with an eight-year-old child is the best way of getting across information? Do you think that the idea of complexity as a way of communicating information is designed to convince the hearer that they are incapable of understanding the complexity and then become supine and passive, and will accept anything that is put forward, however expensive?

Lieutenant Colonel Ward: Yes, there is a lot in that question, and first, just as a general response, yes. It scares me to think that we create our weapons systems the same way we create our PowerPoint, because our PowerPoint, oftentimes, is very complex, dense and convoluted. As you alluded to, oftentimes, the only messages that our charts convey is, "I’ve got a very expensive, complex system. I have a lot of moving pieces." People will stand up and say, "Here’s a chart. I know you can’t read it. I know it’s not clear. You can’t understand it." That does convey something. The meta-message is, "Trust me, I’m very smart. I must be very smart because I created this very complex diagram." In fact, high levels of complexity like that tend to communicate less, rather than more. I am a big fan of a book called "Presentation Zen" by Garr Reynolds, and his approach is very much about simple, clear and to-the-point communication. We would all be better off if we had more of that type of approach going on than the typical standard practice of very dense charts.

Q409Paul Flynn: On the question of a different set of skills and capabilities that are required for FIST among civil servants, do you think that this is likely to happen? Do you think they are ready to understand that simplicity is best and FIST is best?

Lieutenant Colonel Ward: The case can certainly be made. Part of the trick with FIST is that you do not want to just spring FIST on somebody and say, "Hey, this is what we’re going to do. Just trust me." It is about having a conversation and it is about sitting down. Different people will be convinced by different things, so we can sit down and look at the data, sit down and look at some stories, sit down and look at a portfolio or sit down and read the comic, and say, "Now, you tell me, which is going to communicate these principles and ideas best: the comic guide that you have there or a 300-page report that goes into all the details and stuff?" By having that conversation and demonstrating it, it is very possible to come to a common understanding that we really are better off with a simpler approach to our communication; that communicates more, rather than less.

Q410Paul Flynn: Could you tell us about the $800 toilet seat and how you intend to evangelise to rescue the sinners from the seven deadly sins of procurement?

Lieutenant Colonel Ward: I am not sure the press ever got the headlines right on the $800 toilet seat, but they certainly got the gist of the message. We have very specialised needs. The $800 toilet seat, for example, was not the same type of toilet seat you can buy at the local hardware store. They had very specific, rigorous requirements that they needed to satisfy.

Were all those requirements fully necessary and justifiable? It is beyond the scope of my education to say so exactly in that instance, but, as a general rule, I would speculate it was probably over-engineered and it was probably overdesigned. Part of the story is just the way we have allocated the costs; because we have such a very complex system, we tend to allocate costs in funny ways that do not always align with the true cost of the thing, so maybe it was overstated. By spending less time and less money and less complexity on things, we get a more accurate account of what things really do cost, and we will be able to tell whether or not we are heading in the direction of an $800 toilet seat.

Q411Paul Flynn: Seven deadly sins?

Lieutenant Colonel Ward: Right, I do recall writing that, but I am not sure I could list them off the top of my head. I am sure they included things like complacency, complexity-I do not know if you have the list in front of you.

Chair: Can I just read them out? They are complacency, cynicism, complexity, fear, selfishness, apathy and sloth. Do you really think that public officials are afflicted with all these seven deadly sins?

Lieutenant Colonel Ward: No more so than any other human. The gist of all this is that if our reform efforts require us to rewrite human nature, our reform efforts are going to fail. We have to establish reform efforts that take into account human nature being what it is. Human nature is not going to change any time soon. What we can do, though, is offer and identify the specific virtues that we want to pursue and reward and encourage. We can define them. We can hold them up as exemplars. We can measure our progress towards them and use them to shape the metrics we use. We can encourage, reward and facilitate them. We can foster them. We are never going to get there perfectly, and if we require perfect people to lead our projects, then we are not going to have anybody to lead our projects. Given that they exist, we are trying to offer some virtues that will help counter-balance these human tendencies.

Q412Greg Mulholland: Good afternoon, Lieutenant Colonel Ward-or good morning, in your time zone. I would like to ask you a pretty simple question, if I may. One of the things that is striking about the results that the FIST project has had is that it has not only delivered things under budget, but delivered them more quickly, whereas you might well expect such an initiative to take longer to get to the right result and therefore save money. Is there a correlation there in terms of doing something that actually leads to it being delivered more efficiently, which means it is delivered more quickly, as well as being cost-effective? If so, can you say what really is at the heart of that to achieve both those things at once, which seems almost too good to be true?

Lieutenant Colonel Ward: Sure, let me just give you a couple of pieces on that. Like I say, the FIST concept is one idea and not four. There are four pieces to it, but it really is, fundamentally, a single idea. We often talk about something called "the iron triangle" in my business, which is "cost, schedule and performance: pick two". We set these scenarios where you can have it fast, good or cheap, but not all of them-maybe two of those three, but not all three.

My research indicates that that tends to be a self-fulfilling prophecy. We say, "Okay, I want to be fast and I want to be cheap, but it doesn’t have to be that good," and then we build something that is fast and cheap, but not very good. Had we set out to pursue all three, from day one, it is possible to simultaneously make improvements in all three dimensions. Howard E McCurdy’s book "Faster, Better, Cheaper" makes the case that it is possible to simultaneously improve the cost, schedule and performance of a technology system. Because time is money and it costs money to spend time, and over more time we are going to have to pay more money, there is a direct relationship between reducing the schedule and reducing the budget. The other piece of it is that when we constrain our schedule and our budget, that forces us to think creatively and to explore some alternative approaches. There have been instances, certainly, when we have said, "Hey, we need to be fast-spend as much money as you need," or, "Hey, we need to be cheap-take as much time as you need." Again, those end up being self-fulfilling prophecies. However, when we say, "It’s got to be fast and we don’t have any time and we don’t have any money and you got to keep it simple," our engineers, our technologists and our programme managers tend to rise to the occasion.

None of this is easy; it takes a significant amount of talent and subject-matter expertise to pull something like this off. I certainly do not want to come across as saying, "Oh, anybody can do this. You can be a FIST master with no real effort." With some subject-matter expertise and with some experience, it certainly is possible to do this, but it does require talent. The nice thing is that this approach increases our talent pool, and it does that by giving a large number of people more experience over a larger number of projects. If I see a project from start to finish, and another project from start to finish, and I continue to live through a series of projects from start to finish over a short period of time, that lets me as a practitioner learn more, gets me more experience and makes me better, overall.

Q413Lindsay Roy: Dan, your benchmark is a 70% principle, in which the focus is on adequacy rather than perfection. Is that synonymous with "good enough" and "fit for purpose"?

Lieutenant Colonel Ward: It is synonymous with "good enough", and I would like to caveat that "good enough" just slightly. One of the things I talked to was the 70% solution versus the 100% solution. We have a list of requirements that our technology has to accomplish or features it has to provide. We will call that list the 100% solution. Generally grouped, along with requirements, are what we call "desires"-things that we would like to have but really are not essential. In framing a project, oftentimes you can nail it down to the three most important things it needs to do-things Nos. 1, 2 and 3-and things Nos. 4 through 10 are "nice to haves". We try to focus on that 70%/80% of core functionality-the stuff that really matters-and not be too distracted by spending a lot of time and money on the extra features and "desires". Most likely, you want the system to be really good at those two or three things in that 70%. When I say "good enough", I do not mean that its performance in that individual area is not necessarily good. The Condor Cluster really is the fastest supercomputer in the entire Department of Defense. Are there features and functions that they did not incorporate into that system? Undoubtedly. For the 70% capability it provides, it is world class. There are other capabilities that it does not include and that are not part of that architecture, and that is okay because it is so darn good at the thing that it really needs to do.

Q414Lindsay Roy: Are there procurements or cases that require a 90% or a 100% functionality?

Lieutenant Colonel Ward: Sure. I use 70% and 80% interchangeably, just as a notional reference to some partial functionality. The idea with the 100% solution is that the last 20% tends to take up 80% of your time and 80% of the cost and causes 80% of the delays. Aiming for that 100% solution causes delays; those are the delays that trigger further delays, and then you enter that death spiral where you are just throwing more and more piles of money at a system trying to catch up, and you never quite do.

Q415Lindsay Roy: Are there any procurements that require nearer that 90% to 100%?

Lieutenant Colonel Ward: Absolutely, there are. Like I say, the FIST approach has no monopoly and no guarantee. We certainly have cases. The F-15 might be an example; we spent about twice as much as the F-16 and got a really good airplane out of it. It was good work, a good plane and a good system and we got a lot of use out of that. You can do it that way. My point with FIST is that you can also do it the other way-we can also constrain our schedule, constrain our cost and still get a really good outcome. Given the choice between those two, we are better off spending less time and less money to get a really good outcome, versus spending more time and more money to get a comparably good outcome.

Q416Paul Flynn: You have cardinal virtues and you have deadly sins. Is FIST about to become a religion with you as its pope?

Lieutenant Colonel Ward: We are still waiting for the white smoke, sir. A friend in the Pentagon did send me an email recently saying that he was talking about FIST with some other true believers, so there were jokes about shaving heads and wearing robes. However, there is no intent of creating and observing a religious system here.

Q417Chair: Can I just round off with one or two very brief questions? I want to be very clear that FIST is not a process; it is a way of thinking. It is what you call a pattern of thinking. Whatever process you have got, just getting into this psychology makes things easier. Is that your philosophy?

Lieutenant Colonel Ward: Yes, absolutely. You can do this within any process. You can also do it to the process. We can use the FIST principles and tools and streamline, simplify and accelerate our process. That does not need to be the first step. You can certainly do it under any given legislative or regulatory environment.

Q418Chair: You talked about the advantage with FIST being that you could do lots of projects that you see through from beginning to end. Apply that to the Virginia-class submarine, for example-that was quite a big, long programme. We have what we call "senior responsible owners", which is having the guy who starts the project off being there responsible for the implementation of the project to the finish and seeing a big project through from beginning to end. Having a single individual who is held accountable for the outcome of that project from its very inception is a very important component.

Lieutenant Colonel Ward: It is and, to be honest, I cannot say for sure if the leadership on the Virginia subs was completely consistent from beginning to end. It helps a lot if you can do that and some data that I have seen say that over a 37-month programme, typically a programme manager stays on board for 18 months. That is three programme managers in a little over three years, which is a lot of turnover. Context is key here. The Virginia-class sub is probably the fastest, simplest, least-expensive nuclear-powered submarine that you are likely to find anytime soon. While we may not have reduced leadership turnover to zero, we have certainly minimised leadership turnover. The reason that we started the Virginia-class sub was because the Sea Wolf sub, the previous system, had been cancelled after having spent a lot of time and a lot of money-I do not have the figures off the top of my head. That pattern seems to be fairly common where we have a programme that says we are building something really complex, really expensive and we are spending a lot of time and money on it. It completely fell apart; it was not going to work and we cancelled it, but the need persisted. We still have the need now; we have no time or money left. We need to put together something really quickly, and that environment tends to lead to some really positive outcomes. Certainly that is the case with the Virginia-class subs.

Q419Chair: Where you were on the submarines, I think we are on airborne maritime reconnaissance, except we have not got any money at all. What do you think is the utility of the FIST approach when budgets are very squeezed, everybody is downsizing and nobody wants to spend any money at all? Is it much help in this environment?

Lieutenant Colonel Ward: It is. There seems to be more openness to this type of approach, or at least to look at the data to consider the principles, when times are tight. There is a fair amount of research that says military innovation in particular, and technology innovation in general, tends to happen in times of small budgets in the inter-war period, when we are not actively throwing buckets and buckets of money at large conflicts. There are a number of dynamics as to why that happens, but it definitely correlates. I cannot say you can do it with zero dollars or zero pounds, but you can certainly do it with very small amounts of money.

For example, I just recently put together a toy hovercraft for my kids-and for me-to play with. We built it out of spare parts that we had lying around the house. It cost me $1.50 for a bag of latex balloons-I think there were 10 balloons-so it was maybe 15 cents for the balloon. What we made it out of was a used CD from some old software that we did not need anymore and a nozzle from the top of a soap bottle. You glue the one on top of the other over the hole, inflate the balloon, put it on top and it creates a little cushion of air. If you started off on day one-build me a do-it-yourself hovercraft toy that teaches a science lesson about friction-we could have spent a lot of time and money designing something like that and building it. Instead, when we had no time and no money, we were able to come up with a zero-cost way of doing this just using stuff we found around the house.

The lesson there is that, as a general rule, we always have access to resources beyond the obvious. We always have access to resources that we were not aware of at first glance. A more concrete example would be that I was talking to the lieutenant here recently and he said he was going to be doing some test flights, and he only had seven test flights and it was not going to give him enough hours in the air to accomplish all his tests. He was really in trouble as there simply were not enough hours in the test. As we talked, we found out that, in addition to these seven test flights, there was actually a "flight 0", and "flight 0" was two flights, so now we had nine flights to work with, instead of just seven, and these two "flight 0s" were both happening before "flight 1". Not only did we add time, but we added time to the beginning of the schedule and not to the end of the schedule. That seems to happen quite a lot, where we find small amounts of resources that are available to tap into, but we often do not find them until we are up against the wall and we begin looking for them. I offer that as somewhat anecdotal, but that is a fairly common pattern: we find these resources when we start looking for them.

Q420Chair: Lieutenant-Colonel Ward, thank you very much for giving us your time. Would you also thank the people who have given you that room and allowed us some extra time? We are extremely grateful to them. We are very grateful for your written and oral evidence and I hope you will be pleased with what we put in our report, and we will make sure you get a copy of it. Thank you very much indeed. All the very best.

Lieutenant Colonel Ward: Certainly. Thank you, it was such a pleasure to spend some time with you all. Thank you for the opportunity to contribute whatever I can, and I look forward to seeing the final report. Thank you all.

Chair: Maybe we will see the US Air Force deploying on balloon-driven CDs. Thank you very much indeed.