The F-35 is the Pentagon's most expensive weapons program, and the Department relies on contractors to keep it performing as promised. But a new DOD Inspector General audit says the Department isn't consistently tracking or documenting that performance, leaving gaps that affect cost, schedule, and readiness. We'll look at what the auditors found and what DOD is doing about it with Chris DiPero, Supervisory Auditor and Program Director in the Department of Defense Office of the Inspector General. Mr. DiPero, it's great to have you on the show. Thank you. Appreciate the opportunity. Let's start at the top. What did this audit set out to examine when it comes to how the Defense Department provides oversight of the contractors on the F-35 program? Sure. The objective of our report was to assess the Department's oversight of Lockheed Martin's performance on the air radical sustainment contract. And that's the contract that the department uses to sustain sort of the global fleet of the Joint Strike Fighter aircraft across the world. It was important for us to start this project when we did because the department was in the middle of negotiations with Lockheed Martin. And we were hoping, you know, through our audit and through our findings and recommendations that we could provide some information to the department that they could consider or use during negotiations with Lockheed Martin or after the contract had already been signed. Maybe that's something that they can incorporate at a later date. Was there any history here that really raised a red flag that you were concerned about going into the audit? So there's been a lot of audit work, not just by the DOD IG, but General Accountability Office and other audit organizations about the Joint Strike Fighter. So there's always been a lot of oversight over this particular program. One of the reasons we got in when we did was the length of the negotiations that were taking place for that next sustainment contract. That signing had been delayed. There were a lot of negotiations going on with Lockheed Martin. So it sort of gave us an opening to get in early and, again, try to provide some information to the department that they could use or consider since it was still ongoing. So walk us through your findings. What really stuck out about how DOD monitors contract performance, especially in this program? So our overall finding was that the department did not adequately oversee Lockheed Martin's performance on the sustainment contract. And I want to point out, the program was monitoring performance by Lockheed Martin, but the reality was that they weren't always taking accountability or enforcing accountability on Lockheed Martin as it related to their performance. You know, there's just a couple of areas when we talk about oversight where we felt the department fell short. And one of those was having the right type of performance metrics and requirements in the contract. And when you have the right type of performance metrics in the contract, that allows you to better hold the contractor Lockheed Martin, in this case, accountable to those. So making sure you have the right type of performance metrics. And then the other part of that was making sure that you have the right type of structure and the right type of resources necessary to provide oversight over a contract. You know, it's as large and complex as this one is. Sounds like they were noticing where performance differed from the metrics, but not really doing anything about it. Yeah, certainly there were a lot of discussions. And so it wasn't, you know, it wasn't a case where nothing was being done. Certainly, there's things that the department would address with Lockheed Martin. But when it comes to the contract itself, we were sort of limited in what we could hold them accountable to based on what was or sometimes what was not in the contract. So a good example of that is in our report, we sort of lay out a history of the different types of performance metrics that were in contracts through the years. And early on, you might have had performance metrics that related more operationally up the availability of aircraft, the availability of fully mission capable aircraft. Over time, because of issues that they had enforcing some of those, they were ultimately taken out. And now it's really focused on primarily supply and how long it takes Blackie Martin to provide inventory and provide supply to the fleet. What's the real world consequences of that change in perspective in the contract and also the gaps that you noticed in oversight? Sure. So some of the real world impacts really comes down to planning, to budgeting and to operations. You know, one of the issues that we've had in terms of the operational performance metrics versus what's in the contract is that they aren't aligned. So Joint Strike Fighter customers, whether it's the Air Force, the Navy, other partner nations, they may have very specific operational requirements, again, related to how many aircraft are available and things like that. But that's not what Lockheed Martin is actually held accountable to. Again, with the current contract, they're held accountable to, in terms of performance metrics, certain aspects related to supply. There's a lot of requirements in this contract that for a lot of administrative things and reporting items. So there's a lot in there. But when you just sort of whittle it down to the accountability piece and how it relates to the real world, which is operations and the ability to fly missions, that's where we saw the disconnect. I'm speaking with Chris DiPero. He's Supervisory Auditor, Program Director, Department of Defense, Office of the Inspector General. Let's come back to the findings and perhaps get into a little bit of the recommendations. What should effective oversight look like in a program that's as large and complex as the F-35? Yeah, so again, as large and complex as the Joint Strike Fighter program is, you would hope that any type of oversight is comprehensive. And by that we would expect the program to utilize sort of all the resources available to it within the department So in addition to the Joint Program Office which is that the office that responsible for managing the Joint Strike Fighter you know they providing oversight It their contract. They have all the contractual responsibilities to provide oversight. There's other organizations within the department that also help, Defense Contract Management Agency, Defense Contract Audit Agency. So there's other organizations and resources that we would hope that they would incorporate and use, and they do in the case of this contract. When we talk about best practices, not just best practices, but regulations would tell you that for a large and complex contract such as this, that you really need to take time to tailor the oversight structure to make sure it's appropriate for the complexity that this program brings. And that way you ensure that you have the right type, not just structure, but the right type of resources to provide adequate oversight. And one of the issues that we discuss in our report is that the Joint Program Office didn't effectively utilize contracting officer representatives when overseeing Lockheed Martin's performance. And contracting officer representatives are sort of your eyes and ears on the ground. So they're representatives at the bases and that sort of sit with Lockheed Martin, wherever Lockheed Martin is providing some type of service. And so we go into detail on our report of how they could better utilize those contracting officers and do they have enough contracting officers, things of that nature, just to make sure that they have the appropriate amount of oversight. There's been a lot of attention recently on a new executive order that argues that the large defense primes are underperforming and not being held accountable. Do you think that the findings here reinforce those presuppositions or is it a narrower finding related specifically to the management of this program? So our report focused solely on the Joint Strike Fighter. So I wouldn't want to comment on sort of Lockheed Martin as a whole, because obviously they do provide a lot of services and a lot of different programs to the department. But I think our report does reflect some issues that we've identified in previous reports. You know, this contract is what's called a sole source contract. So that's where there's only one contractor that can provide the Joint Strike Fighter, and that's Lockheed Martin. And we see that with other programs, both large and small, where you have one contractor that they're the only player in the game that can provide you that asset. So in those types of environments, we've reported that it adds some complexities to the department, both in negotiations, because we can only deal with one supplier. There's not the opportunity for competition or to find other resources. In addition, we have some issues with enforcement. You know, if we're trying to enforce something and that contractor doesn't agree, they don't have to sign things. So obviously, that can create delays in contracting, can create delays in operations and things of that nature. So, you know, the sole source environment is obviously something that this program has exhibited and we've reported on in the past. The other is having the right performance metrics and requirements in the contract. And what we mean by that is any type of performance metric where you're going to hold the contractor accountable and then sometimes provide incentives to exceed and that those incentives can come in in a monetary fashion. So we'll pay contractor money to meet or exceed certain metrics. You want to make sure that one, they're measurable and that if you're using data from the contractor, which happens a lot in programs and as well as the Joint Strike Fighter, if you're using contractor provide a data that it's data that we can trust and rely on. Secondly, you want to make sure that those metrics are actually enforceable. And there's really not a lot of argument or wiggle room as to whether the contractor met it or not. And third, and this gets into what we were talking about operational performance requirements versus contractual, is you want to make sure the contract performance requirements actually support the requirements that the department is looking for. So if you ask the Air Force or the Navy, they're looking for how many aircraft am I going to have available. That's a requirement that they're focused on. That doesn't necessarily translate to what's in the contract. How has DOD responded to your recommendations? Yeah, so the department agreed with six of the seven recommendations we made in the report. So for the six recommendations that they agreed to, you know, they are taking efforts to implement things and work towards things such as a workforce study, as I mentioned before, related to the contracting officer representatives. In addition, we made a recommendation for them to better align the roles and responsibilities in the contract for those contracting officer representatives to what they're actually doing on the ground. Because we did sort of identify through interviews with those individuals that there was sometimes a disconnect on what they thought they needed to do versus what they're actually being required to do. And then one of the recommendations that we also made that they agreed to is really just enforcing requirements that are already in the contract. So, you know, we've identified requirements where just over time for probably a whole lot of different reasons, things weren't enforced, which the longer that went, the more issues it created, you know, to current day. There is one recommendation that they did not agree with, and that's our recommendation to include specific operational requirements in the contract. And so they didn't agree with that. In part, their response was that now that the contract is in place to go back and renegotiate some of these very specific operational requirements that it would lead to long delayed negotiations and could interrupt operations, things of that nature. So we are still waiting on some additional comments from the department related to that. But part of our response that included in the report is there are opportunities to sort of waive those requirements if necessary So there is an agreement that the Joint Program Office has with the JSF customers so all the partner nations, Air Force, Navy, Marine Corps, they all have their requirements. And there is an agreement that they signed with Joint Program Office that said, hey, we need these requirements in the contract. And so over time, they've learned that maybe it's not necessarily appropriate for all those to be in there. And there's a simple way to get out of it, and that's you issue a waiver. But that's something that they've not done yet. So that was simply our response is, you know, there are opportunities for you to sort of not comply with that appropriately. And that would be to get the waiver. What will you be watching to tell whether or not DOD's made progress against these issues? So we're going to be looking at some of the actions that the Joint Program Office takes regarding the contracts, any contract modifications or changes to the contracts that they were to make that would impact some of the recommendations we've made. There is some program documentation that we will be monitoring and getting copies of and requesting as they develop the workforce study plan. So as they develop those results, we'll look at those to see how they're implementing those. In addition, working with other oversight agencies, we're going to be following up on are they actually enforcing some of the requirements that are already in the contract and making sure that they're complying with that as well. I've been speaking with Chris DiPero. He's Supervisory Auditor, Program Director, Department of Defense, Office of the Inspector General. Thanks so much for sharing this update with us on this important program. Thank you. We'll post this interview at federalnewsnetwork.com slash Federal Drive. Listen to The Federal Drive on your schedule. Subscribe wherever you get your podcasts. in mission during times of public scrutiny and change. Hello, and welcome to the Lessons in Leadership podcast. I'm your host, Shane Canfield, CEO of WEPA. Today, I'm honored to be joined by Sean O'Keefe, former NASA administrator, former deputy director of the Office of Management and Budget, former secretary of the Navy, former comptroller and CFO of the Defense Department, and professor emeritus at Syracuse University's Maxwell School of Public Affairs. Welcome. Welcome and thank you for joining. Well, thank you, Shane. Delighted to be with you. Appreciate it very much. What first drew you into public service, and when was it evident to you that leadership was an important part of the roles you played? Well, I grew up around the public service. My dad was a career naval officer. He was a submariner, and we lived all over the place throughout the country. And as a result, I got an up-close and personal understanding through him as well as through all the folks he associated with and the environments he was working in, just what the extraordinary value is of public service and what is it that would motivate people to want to be engaged in it and to be really involving themselves in what is something larger than themselves. And the only place that that is really formulated properly is within the public sector and the public service that, again, is the beneficiary or the beneficiaries are the citizens of the nation, the community, and the region in which you live. Did you think about leadership early on, saying, I need to be a great leader, and therefore I'm going to learn how to do it? Or did you just naturally evolve into it? Any thoughts on that? I guess it evolved by the great good fortune of being a witness to several really extraordinary leaders, people who really did take the initiative to engage others in the task, to pull together and motivate folks to really contribute their very best to achieve an outcome. and I saw the value of that on multiple occasions and found that was the primary ingredient, the trait, the characteristic that needed to be exhibited is the fundamentals of leadership in moving everyone engaged towards a common objective. You have served under several presidents. Can you talk a little bit about that? Were there challenges to overcome or were you away from politics so you didn't get... Talk about that a little bit. How does it differ as you serve through a transition or does leadership stay the same? Oh, no. It's really critically important in transition cases, to be sure. But the two presidents that I served in their administrations were President George H.W. Bush and President George W. Bush in two different eras, obviously. But as a consequence, that was the closest I came to understanding the nature of the individuals who were in that leadership, ultimate leadership capacity, and their capability to motivate. Both of them were just extraordinarily inspiring people who motivated everybody to be part of the solution. But most importantly, they also had a capacity of really designating what something needed to be done. And you knew that they were perfectly prepared to do it themselves. And that made the task that much more achievable there were several different circumstances in understanding what the objectives of the senior leadership are all about. You've worked for different kinds of organizations, political administrations, and then government departments, agencies, and then private sector, and now academia. How does that affect your leadership style? Or do you find that leadership, the core tenets of leadership are applicable no matter what the organization you find yourself in and having to lead? It doesn't matter where you are, that the core leadership characteristics are the same? Are they different? Are you adapting? Well, there's a common myth in my judgment, and I'm probably the minority view of this in the academic field of public management. That common myth is that you can't apply the same principles in the public sector that you do in the private sector. I never found that to be an impediment. It was always a circumstance where strategy, the focus on the talent, people engaged, the process to going through decision making, the integrity imperative that must be there in order to demonstrate the absolute conviction of what's intended here, as well as the moral standing of what it is you're attempting to achieve, all those factors are very much the same. It's going to have its nuances, and there are very distinctive differentiators within those organizations and those sectors. But at the same time, those basic principles, those tenets, foundations of what make up organizations and organization theory in so many ways are fundamentally the same. And how you employ those may be slightly nuanced to match the condition, but they all are imperative in the same direction. A little bit of a different direction. You were part of the very first cohort of what is now Presidential Management Intern Program, later became the Presidential Management Fellows Program. What did that early experience teach you about leading within government? The Presidential Management Intern Program, as it started, was designed for just that purpose, a focus on public management, a focus on implementation. and its evolution over time has been extraordinary. It mystifies me why that has been the subject now of an executive order that has dismantled it. And it's absolutely unconscionable given the nature of the hundreds, thousands of people who've moved through that program in the course of the last nearly 50 years that have gone on in some cases to be, senior executives within the federal government. And in other cases, they've moved on to other kinds of pursuits. But even with that, even for those who have left the service, they walked away with an appreciation of what public service is all about, why it matters, and why this is so critical to get it right. Because by and large, the reason why these functions are delegated to the public sector is because no one else can do it. Usually that's the case. It takes that kind of focus of a public entity in order to achieve an outcome that frankly would not be achieved in other spheres. So as a result of that, it gave me an incredibly in-depth understanding of that process at a very early stage in my career that has lasted the entirety of that professional experience. A closing question, who has influenced your leadership style and what about their example stays with you? And that question can be cast broadly. So, you know, inside government, outside government, perhaps not government at all, somebody that you've met, reported to, been mentored by, a broad net. But when you think about broadly, when you think about who has influenced you, who comes to mind? I would have to say that the number one, hands down, greatest influence during the course of my life was my dad. He was an engineer, so everything was a calculated risk. I think I was probably 25 before I realized the answer was not to be found for everything in a slide rule, but that was his bent and his mindset. And he taught me how to think critically. And it really was one of the most extraordinary attributes. And he was an inspiring parent and mentor in so many ways. All the different things I've done throughout the course of his life, I had the opportunity through much of it to be able to consult with him on a variety of things. I always walked away with a more informed perspective. Ed was an extraordinary public servant in his own right. Well, Sean, thank you very much for sharing your insights and experiences. It has been a pleasure talking. I'm delighted to be with you, Shane. Thank you so much for doing this. And this is Shane Canfield, CEO of WEPA, reminding you to empower your team and embrace challenges. Until the next time on Lessons in Leadership. Find the full podcast and future episodes of Lessons in Leadership on the Federal News Network app and anywhere you enjoy your podcasts.
