Leading Practices: Agency Acquisition Policies Could Better Implement Key Product Development Principles

Fast Facts

Together, the Departments of Defense and Homeland Security and NASA invest hundreds of billions of dollars each year to develop and deliver a wide range of systems, from stealth jets to lunar rovers.

Leading companies rely on certain principles to ensure product development success. But we found that these federal agencies aren't generally required to meet such principles. For example, DOD's policies don't require acquisition staff to consider dropping less urgent requirements to stay on schedule—a key development principle.

We recommended that the agencies create or update guidance to reflect key principles of product development.

Someone's hand pointing at a digital planning screen.

Highlights

Why This Matters

Each year, the Departments of Defense (DOD) and Homeland Security (DHS) and the National Aeronautics and Space Administration (NASA) together invest hundreds of billions of dollars to buy stealth jets, cutters and ships, and lunar rovers, among other things, all with complex software. However, GAO’s annual reviews of these agencies’ major acquisitions find they often take longer and spend more money than planned to deliver capabilities to users.

Key Takeaways

Leading companies take a disciplined approach to develop innovative products that satisfy their customers’ needs, and to deliver them to market on time and within planned costs. The 13 leading companies GAO interviewed perform similar activities when developing new products, such as iterative design in hardware and software development. These activities in the development process align with the four key principles that help project teams deliver innovative products to market quickly and efficiently (see figure). GAO found that the department-wide acquisition policies of DOD, DHS, and NASA implement some key product development principles. But, they have yet to fully implement others. This gap limits agencies from ensuring a consistent approach to developing and delivering products with speed and efficiency.

Leading Companies Use Four Key Principles for Product Development

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For example, leading companies focus on designing a minimum marketable product—one with the minimum capabilities needed for customers to recognize value. Leading companies also prioritize a project’s schedule: they release the features most critical to the customer and will off-ramp non-critical product features—an industry term for removing them from the current release—as necessary, in order to maintain schedule. Leading companies have mechanisms to solicit and implement feedback from customers early and often throughout development to ensure the product is relevant to customer needs, among other things.

Primary DOD, DHS, and NASA acquisition policies incorporate many aspects of the four key principles, to varying degrees. However, agencies miss opportunities for positive outcomes by not addressing some sub-principles in their policies.

DOD’s policies do not require all programs to consider off-ramping non-critical capabilities in order to achieve schedule, hindering programs’ best chance of maintaining time frames.
DHS’s policies do not require all programs to utilize modern design tools during hardware and software development, limiting consistent opportunities for programs to successfully improve revisions to the design.
NASA’s policies do not include mechanisms for programs to obtain and utilize product feedback from stakeholders or end users—such as astronauts using spacecraft or the science community benefiting from NASA projects—in order to identify challenges or new features to include in subsequent projects.

GAO previously found that other factors beyond policies can affect agency outcomes, including structural differences between government and private industry. However, GAO’s prior work also demonstrates that key principles from private industry can be thoughtfully applied to government acquisition to improve outcomes, even with the different cultures and incentives.

How GAO Did This Study

This report examines principles that guide leading companies’ product development efforts and the extent to which primary, department-wide DOD, DHS, and NASA acquisition policies reflect the companies’ key principles and result in similar outcomes. GAO identified the 13 leading product development companies based on rankings in well-recognized lists; interviewed company representatives; analyzed department-wide acquisition policies from DOD, DHS, and NASA; and interviewed agency officials. The report is the first product in a planned body of work. In future work, GAO will explore how government agencies can apply some of the key principles outlined in this report.

Recommendations

GAO is making nine recommendations to DOD, DHS, and NASA to update acquisition policies to fully implement key principles of product development. All three agencies concurred with our recommendations.

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Defense	The Secretary of Defense should ensure that the Under Secretary of Defense for Acquisition and Sustainment update DOD acquisition policies to fully implement the following principle throughout development: attaining a sound business case (Recommendation 1).	Open DOD concurred with our recommendation. In August 2022, the Under Secretary of Defense for Acquisition and Sustainment noted it would give full consideration to the further application of key product development principles when it next formally updates its overarching acquisition policy and the other individual pathways and functional acquisition policies, anticipated for completion by June 2024. We will continue to track DOD's progress in this area.
Department of Defense	The Secretary of Defense should ensure that the Under Secretary of Defense for Acquisition and Sustainment update DOD acquisition policies to fully implement the following principle throughout development: applying iterative design approaches (Recommendation 2).	Open DOD concurred with our recommendation. In August 2022, the Under Secretary of Defense for Acquisition and Sustainment noted it would give full consideration to the further application of key product development principles when it next formally updates its overarching acquisition policy and the other individual pathways and functional acquisition policies, anticipated for completion by June 2024. We will continue to track DOD's progress in this area.
Department of Defense	The Secretary of Defense should ensure that the Under Secretary of Defense for Acquisition and Sustainment update DOD acquisition policies to fully implement the following principle throughout development: off-ramping capabilities when needed to maintain schedule (Recommendation 3).	Open DOD concurred with our recommendation. In August 2022, the Under Secretary of Defense for Acquisition and Sustainment noted it would give full consideration to the further application of key product development principles when it next formally updates its overarching acquisition policy and the other individual pathways and functional acquisition policies, anticipated for completion by June 2024. We will continue to track DOD's progress in this area.
Department of Defense	The Secretary of Defense should ensure that the Under Secretary of Defense for Acquisition and Sustainment update DOD acquisition policies to fully implement the following principle throughout development: incorporating feedback from users of initial capabilities (Recommendation 4).	Open DOD concurred with our recommendation. In August 2022, the Under Secretary of Defense for Acquisition and Sustainment noted it would give full consideration to the further application of key product development principles when it next formally updates its overarching acquisition policy and the other individual pathways and functional acquisition policies, anticipated for completion by June 2024. We will continue to track DOD's progress in this area.
Department of Homeland Security	The Secretary of Homeland Security should ensure that the DHS Undersecretary for Management update DHS acquisition policies to fully implement the following principle throughout development: attaining a sound business case (Recommendation 5).	Open – Partially Addressed DHS concurred with our recommendation. In September 2022, DHS communicated that it will revise its policy to include language to fully address attaining a sound business case that is informed by research and collaboration with customers, such as by clarifying policy language that identifies possible circumstances where an entire program may be considered for termination. DHS also shared with us the draft revisions it is pursuing to its existing acquisition policies. We will continue to track DHS's potential implementation of policy changes and other progress in this area.
Department of Homeland Security	The Secretary of Homeland Security should ensure that the DHS Undersecretary for Management update DHS acquisition policies to fully implement the following principle throughout development: applying iterative design approaches (Recommendation 6).	Open – Partially Addressed DHS concurred with our recommendation. In September 2022, DHS communicated that it would revise its policy to encourage an incremental delivery approach for both hardware and software programs. DHS also shared with us the draft revisions it is pursuing to its existing acquisition policies. We will continue to track DHS's potential implementation of policy changes and other progress in this area.
Department of Homeland Security	The Secretary of Homeland Security should ensure that the DHS Undersecretary for Management update DHS acquisition policies to fully implement the following principle throughout development: off-ramping capabilities when needed to maintain schedule. (Recommendation 7).	Open – Partially Addressed DHS concurred with our recommendation. In September 2022, DHS communicated that it would revise its policy to clarify that, in addition to identifying necessary trade-offs to maintain affordability, the Component identifies trade-offs to implementing the program within the approved schedule or considering adjusting the scope. DHS also shared with us the draft revisions it is pursuing to its existing acquisition policies. We will continue to track DHS's potential implementation of policy changes and other progress in this area.
National Aeronautics and Space Administration	The NASA Administrator should ensure that the NASA Office of the Chief Engineer update NASA acquisition policies to fully implement the following principle throughout development: applying iterative design approaches (Recommendation 8).	Open NASA concurred with our recommendation. In August 2022, NASA communicated that a complete, iterative design approach is currently documented in its policy. However, NASA's policies do not fully implement the key principle to use an iterative design approach that results in minimum marketable products. As outlined in our report, NASA policy does not require the use of modern design tools during both hardware and software development or use iterative design and testing to identify a minimum product or initial capability that can inform subsequent efforts. NASA noted that the agency operates in a high-risk environment with a portfolio that consists primarily of unique, one-of-a-kind spaceflight projects.. However, leading companies we interviewed also operate in similar high-risk environments with unique products and successfully use feedback from initial capabilities to inform subsequent efforts. We will continue to monitor NASA's progress in this area.
National Aeronautics and Space Administration	The NASA Administrator should ensure that the NASA Office of the Chief Engineer update NASA acquisition policies to fully implement the following principle throughout development: incorporating feedback from users of initial capabilities (Recommendation 9).	Open NASA concurred with our recommendation. In August 2022, NASA communicated that that its policy is dedicated to collection and incorporation of feedback from users throughout the program and project life cycle, including initial capabilities. NASA further noted that stakeholders provide feedback throughout the project life cycle. However, its policies do not fully implement the key principle of collecting customer feedback to inform improvements. Specifically, NASA policies do not require programs to use feedback to identify challenges or to address features to include in subsequent projects. We will continue to track NASA's progress in this area.