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Dave Ryan
Sector Vice President & General Manager
Civil Systems Division
Northrop Grumman Space Technology
August 5, 2008
Time: 8:30am – 9:30am
Emerging Challenges for a Changing Workforce
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Northrop Grumman Today• Comprehensive business portfolio to address the defense
and government markets– Unparalleled portfolio of advanced
technologies– One of top three defense contractors– Leading systems integrator– Largest military shipbuilder– Largest provider of airborne radar
and electronic warfare systems– One of three top IT providers to the
U.S. Government – One of three major contractors in
military and civil space, missile defense
• 120,000 employees• 50 states, 25 countries• Headquartered in Los Angeles, CA
$32 Billion in 2007 sales$32 Billion in 2007 sales
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Northrop Grumman Corporation
SpaceTechnology
ElectronicSystems
MissionSystems
Shipbuilding
InformationTechnology
IntegratedSystems
System-of-Systems Expertise Spans the Nation’s Defense and Intelligence Communities
TechnicalServices
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NGST: Robust Programs in Every Division
National Systems Division(NSD)
National Systems Division(NSD)
Military Systems Division(MSD)
Military Systems Division(MSD)Civil
Systems Division(CSD)
Civil Systems Division
(CSD)
Multiple Restricted Programs
Advanced Extremely High
Frequency (AEHF)
Space Tracking & Surveillance System (STSS)
National Polar-orbiting
Operational Environmental
Satellite System (NPOESS)
James Webb Space Telescope
(JWST)
Airborne Laser (ABL)
Lunar Crater Observation &
Sensing Satellite (LCROSS)
MissileSystems Division(MXD)
MissileSystems Division(MXD)
Missile Engineering
Center
ICBM Prime Integration Contract
Kinetic Energy Interceptor
Technology & Emerging
SystemsDivision(T&ESD)
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Civil Systems Division
Global Earth Observation System of Systems (GEOSS)
Geostationary Operational
Environmental Satellite
(GOES)-R
National Polar-orbiting
Operational Environmental
Satellite System (NPOESS)
James Webb Space Telescope
New Worlds Observer
• Exciting mix of on-going major acquisition developments and new competitive acquisitions.
• Provides numerous opportunities to engage in Contracting & Acquisition challenges facing Industry and Government
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Changing Demographics and Environment
• The Aging Workforce
• The Loss of Technical Talent
• Lack of Youth Interest in Science, Technology, Engineering and Mathematics (STEM)
• Fewer Engineers in Colleges and Entering Aerospace Industry
• Shrinking Aerospace Workforce and Industry Consolidation
Changes That Impact Contracting and AcquisitionChanges That Impact Contracting and Acquisition
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US Workforce General Statistics
• 43% of the US civilian workforce are eligible to retire in the next decade
• Fortune 500 expect to lose 50% of senior managers in the next 5 years
• By 2015 there will be a 15% decline in 35-55yr olds, while demand increases 25%
• In the next 10 years, 10 million jobs will open up for professionals, executives, technicians
Source: I4CP Institute for Corporate Productivity
Aerospace Industry Workforce Mirrors the U.S. PopulationAerospace Industry Workforce Mirrors the U.S. Population
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• U.S. Population Overall (2005 Data*)– Nexters (Millennials, Gen Y): 26.1%
• 1980-2000– Generation Xers: 17.6%
• 1960-1980– Baby Boomers: 25.6%
• 1943-1960– Veterans (Traditionalists): 14.9%
• 1922-1943
• U.S. Workforce Overall (2005 Data in Millions)– Nexters (Millennials, Gen Y): Just starting– Generation Xers: 60M– Baby Boomers: 76M– Veterans (Traditionalists): 27M
*Approximate %
U.S. Employee Population
Competition for the Best People is IntensifyingCompetition for the Best People is Intensifying
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Nominal Industry Population by Age Group
Large Segment of Experienced Workforce Ready to RetireLarge Segment of Experienced Workforce Ready to Retire
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Nominal Industry Population by Years of Service
Growing Pool of Young Workforce Requiring Training/LeadershipGrowing Pool of Young Workforce Requiring Training/Leadership
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Observed Government Management Challenge
Dramatic Demographic and Environment Shift for Government Dramatic Demographic and Environment Shift for Government
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0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1994 2005
# ofPrograms
# of Programs
# of Personnel # of
Personnel
Ind
ex
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Changing Industry & Government Demographics
• Hiring has brought young, inexperienced employees into the work force.– New viewpoints, motivations, values, work ethic,
communication modes, etc.• The combined affects on both Industry and the
Government has made it absolutely critical for us to retain our experienced employees– Available to train younger staff and provide program
leadership– Critical to the retention and development of these new
employees
Critical to Retain experienced and Younger EmployeesCritical to Retain experienced and Younger Employees
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Challenge to Contracting & Acquisition Community
By working together and recognizing the changing workforce demographics and environment:– We can ensure a strong industrial base, – Strong acquisition and contracting community and – Keep the nation's civil and military services at the forefront of
technology
• More critical now than ever for Industry & Government to:– Work collaboratively -- listen and learn from each other, respect
and share lessons learned with counterparts – Take the time to educate counterparts through joint training,
seminars, conferences, etc.
• Recognize and understand common objectives and Industry & Government needs to create “win-win” solutions
Opportune Time for Collaboration and InnovationOpportune Time for Collaboration and Innovation
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Initiate a Joint Human Capital Strategy
• Managing Talent — Both Government and Industry ensure a robust pipeline of current and future Contracting & Acquisition talent
• Developing Leaders — Both Government and Industry train effective leaders at all levels to understand Government and Industry needs & expectations
• Optimizing Work-Life — Both Government and Industry create flexible work options to help employees better meet both work and personal needs
• STEM Support for K-12 Education -- Both Government and Industry encourage Science, Technology, Engineering and Math programs, that will help ensure a future, competitive workforce
• Foster Community Relationships -- Both Government and Industry must support education and community outreach activities
Attract, Develop and Retain The Best Talent to Ensure Continued U.S. SuperiorityAttract, Develop and Retain The Best Talent to Ensure Continued U.S. Superiority
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Contract Fee Structures Aligned with the Current Environment
• Support shift from CPAF to CPIF/AF fee structures– Driven by GAO, Congressional and Public
Pressures• Objective contract fee determinations based on
defined criteria• Changing demographics support the move to greater
use objective fee criteria – As Younger Population Learns & Matures with
Experience– Continue Subjective Fee Criteria as appropriate
for Feedback on Management Priorities & Concerns
Better Linkage Between Risks, Incentives, Performance and ReturnsBetter Linkage Between Risks, Incentives, Performance and Returns
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Nominal Hybrid Fee Structure Example- Major System Development
• Award Fee 1.5% Subj• Cost Incentive Fee 2.5% Obj• Schedule Incentive Fee 3.5% Obj• Technical Incentive Fee 3.0% Obj• Fixed Fee 3.0% Obj• Total Fee 13.5%
Combo of Objective and Subjective Works to Incentivize Complex System DevelopmentsCombo of Objective and Subjective Works to Incentivize Complex System Developments
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Summary Contracting and Acquisition Communities of Industry
and Government need to focus on preparing younger people for future employment and leadership positions
We have the same challenges – Dramatic changes in our workforce and acquisition environment
We have the same objectives – Continued strong program execution and U.S. superiority
We Need To Work Together For Our Common SuccessWe Need To Work Together For Our Common Success
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