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Aviation Week EngineeringLeadership Notes

White Paper

Mike MechamWith Knowledge Partner Booz Allen Hamilton

November 9, 2012Huntsville, AL

KNOWLEDGE PARTNER



www.aviationweek.com

AviAtion Week

engineering

LeAdership

notes

White Paper

Mike MechamWith Knowledge PartnerBooz Allen HamiltonNovember 9, 2012Huntsville, AL

KNOWLEDGE PARTNER

With the outcome of the presidential election fresh in their minds and the prospects ofbudget cuts looming, senior industry and government engineers and executives at ourHuntsville Leadership Breakfast stepped back for a few minutes to consider the big pic-ture of the overlapping responsibilities and goals of original equipment manufacturers(OEMs), engineering service companies and government contract offices.

There were two roundtable discussion groups with a total of 23 participants, including

the hosts. The day’s discussions focused on Defense Department strategies relative toorganic growth, supporting and encouraging competition among suppliers, and improving program controls and efficiencies to reduce costs. The participants discussed thesesubjects from their experience with Army aviation.

The first panel’s main topic was what strategy is best for the Defense Departmentto think about weapons development, modernization and sustainment and whatis the best way for the department to engage industry in pursuit of that strategy?

Findings:

• The DOD tends to think of fleet modernization and platform development in distinctive phases: a) the current fleet; b) current fleet modernization; and c) new pro-grams. This approach is often at odds with good planning for sustainment.

• If sustainment is viewed in a horizontal time scale it involves two parallel phases oa weapons system’s lifespan: fielding with the current fleet and a subsequent fleetmodernization effort. The third time scale is development of a new program, mostcommonly undertaken even as the current fleet usage is undergoing modernization

Sustainment is carried vertically from the current fleet operations into fleet mod-ernization. Similarly, technology insertion is carried from fleet modernization intonew programs. The problem is that sustainment and tech inserts are stovepipes. Bothneed to be part of a larger lifecycle planning process that begins with the fielding othe system by the current fleet, carries through the system’s planned modernizationprocess and is part of the planning and development phase of the system’s successorPlanning for sustainment needs to emerge in the original year of execution, not as anadd-on later when maintenance/repair events require sustained attention.

•Modernization is usually cast as a second act for a weapons system. But budget realitiesmean the Army must carry weapons systems far beyond their originally planned end-of-life, which underscores the need for planning for modernization in initial design.

•Determining the operational capabilities of weapons systems on the battlefield is difficult and follow-through often lags, usually because of budget cuts. Unmanned aerial vehicles are a good example. The early assumption was that they would increase thecapabilities and operational efficiency of the war fighter for the next 20 years. Butfunding deficiencies are preventing developmental follow-ons from being undertaken

• Tech insertion presents its own challenges. Having the “latest and greatest” for many

platforms has to be considered against the realities of decreasing resources. Cross-pollination between industry and the government is one solution for evaluatingrisks and opportunities when pursuing technology development.

• An early assessment of the growth potential of new platforms is important. TheRAH-66 Comanche was cited as an example of a platform with rising developmentcosts that committed the sin of not offering good growth potential. It had wrungout all the technology currently available. This shows why it is important for thereto be good communications among the government, contracting and research anddevelopment (R&D) communities so technology development opportunities andbarriers are well understood.




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•Legal and competitive limits become roadblocks to the very government and manufacturing interaction needed to promote technology development. Europeans andothers abroad enjoy closer government-industry interaction. They also do not operate with the same ITAR restrictions as their U.S. counterparts. U.S. aerospace anddefense (A&D) manufacturers would like the same freedom to collaborate but facea high hurdle getting there because of anti-trust regulations.

• The government is not doing a good job of linking operational requirements toscience and technology research. Linkage restraints include legal and competitivelimitations imposed on government-industry interaction that end up short changingplatform development. In this regard, communications between government andindustry are too often reactive to issues that arise rather than proactive for solvingproblems or advancing platform development and sustainability.

• The commercial off-the-shelf (COTS) model is advanced for its presumed budgetsavings, which are intended to shorten development schedules and reduce costs. Buthe fact that few commercial items readily lend themselves to weapons systems raisesthe question of whether either of these goals can effectively be achieved except ina few cases. For instance, small gas turbine engines may well be suited for the civil-to-military transition. But once power demands raise the realities of military opera-tions, with their harsher operating environments and demand for higher operatingtemperatures, means that what started out as COTS ends up being redesigned atgreat cost. Similarly, military and commercial helicopters operate in different environments and have different crash sustainability requirements. It is difficult, at bestto adopt the COTS model.

• The emphasis on COTS underscores the broader concern that Army aviation is noretaining its share of science and technology funding. Funding that should be re-served for consistent science and technology investment is siphoned off to cover other programs’s budgets. So aviation is a bill payer rather than a source of innovation

Similarly, the Army tends to borrow funding from its biggest R&D programs in or-der to sustain lower-priority efforts to keep every program alive. The result is costlystretch-outs for the main programs. The better solution would be to set priorities for what is affordable.

• The greatest concern about the first panel’s finding was the question of DODstrategy for sustaining its industrial base and the organic knowledge/skillsets of its depot organizations. Depots require healthy engineering staffs. Buthuge investments are required to sustain those staffs.

• The DOD needs the involvement of OEMs. At a small scale, DOD developmenagencies can innovate. But carrying that innovation to a large-scale effort is verydifficult without the early involvement of OEMs and major suppliers, because theybring design, material and manufacturing expertise that is essential if developmentprograms are to have good sustainability and be cost-effective.

The Defense Department does not have an effective avenue for reaching out to smalsuppliers to tap their specific areas of expertise. But most importantly, the DefenseDepartment needs to connect with non-traditional manufacturing and engineeringsources, who hold great promise, especially in providing computing/Internet/elec-tronics solutions. But non-OEMS are either not sought out or discouraged by theDOD’s procurement requirements. As a result, they are often not even aware thatthey might be able to participate in defense programs.




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The second panel’s focus was on strategies that are most effective for improvingprogram controls and reducing costs.

Findings:

• When government and industry partner together, sustainment and modernizationare well executed. But constrained resources are weakening this partnership.

• In addition, the partnership needs to be maintained throughout a system’s lifecycle The decision to do this must be part of the program’s baseline. But such careful planning is often a victim of constrained resources.

•Performance Based Logistics is not living up to its promise of providing industry with incentives to extend the life of parts and components. That fail-ure was singled out as one of the biggest “must-fix” issues discussed in thepanel’s report.

The chief systems engineer for the Army is taking on PBL, but the subject cannotbe isolated to that office alone. It needs to be pursued vigorously across the board,because the Army’s organizational structure defeats the purpose of PBL; resources are

allocated through different offices. As a result, it becomes a challenge to work acrossorganizational lines to sustain support. The Army tried to address this long-runninginefficiency with the Kiowa, but with middling success.

• The DOD must get involved in driving efficiencies from the resources standpointincluding better linkages between program staffs.

• The development of leaders for integrated product teams (IPT) is the best strategyfor addressing the PBL issue. This “King IPT” approach will allow the leaders to lookacross an entire portfolio to establish priorities and common touch points.

• A Program Manager Integrator for systems engineering would be an especially usefuKing IPT. Their big task will be to consolidate program requirements efficiently from

development through sustainment.

• The second big issue that participants noted in Panel Two’s discussion was itsemphasis on the unintended consequences that acquisition statutes are having

The Army is seeing a reduction in its experienced acquisition workforce. Lowest Price Technically Acceptable (LPTA) requirements are not allowing industry to help withdevelopment and design.

•Contractors are spending too much time meeting acquisition requirements, in partbecause the acquisition decision chain seems to be set up so that no one has to makea decision.

• The acquisition and industry communities need to be able to partner on developing

requirements to drive down development costs and increase sustainability.

• Intellectual property and data rights issues continue to be major headaches for pro-gram leaders, because OEMs guard them. Data rights need to be built into the acquisition strategy up front.

•Contractors are bracing for sustainment to be squeezed by budget constraints, largely because of the need to sustain personnel budgets. The result will be that as pro-grams reach development, and sustainment issues arise, it will be too late to addressthis cost squeeze because there will be no money to pay for the sustainment effort.Better focus on sustainment during the requirement development phase is the bessolution. Too many systems are being built for platforms that are not yet fielded with the assumption that they will work as advertised.




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Conclusions:

A number of themes and key positions played out in the discussions at the two tables The lack of success of Performance Based Logistics and the unintended consequences oacquisition statutes rose to the top of the list of “problems.” But a close look at many othe concerns — such as the need to build data rights into acquisition strategy up front

the impact of budget constraints on Army modernization programs, and insertion of themost modern technology into existing programs in a resource-constrained environmen— all point to a need for greatly improved communications between government andindustry.

Companies need to be more aware of emerging requirements and the technological ad vances that drive those requirements to make more informed investment decisions.

At the same time, government needs to become more educated about the intellectuacapital that is vital to the health of the aerospace and defense sector and how companiesderive the greatest value from its talent pool. Government also needs to foster greatercompetition and innovation to address modernization shortfalls.

Booz Allen Hamilton has been at the forefront of strategy and technologyconsulting for nearly a century. Today, Booz Allen is a leading provider ofmanagement and technology consulting services to the US government indefense, intelligence, and civil markets, and to major corporations, institutions,

and not-for-profit organizations. In the commercial sector, the firm focuseson leveraging its existing expertise for clients in the financial services, health-care, and energy markets, and to international clients in the Middle East.Booz Allen offers clients deep functional knowledge spanning strategy andorganization, engineering and operations, technology, and analytics—which itcombines with specialized expertise in clients’ mission and domain areas tohelp solve their toughest problems.

The firm’s management consulting heritage is the basis for its unique collab-orative culture and operating model, enabling Booz Allen to anticipate needsand opportunities, rapidly deploy talent and resources, and deliver enduringresults. By combining a consultant’s problem-solving orientation with deeptechnical knowledge and strong execution, Booz Allen helps clients achieve

success in their most critical missions—as evidenced by the firm’s manyclient relationships that span decades. Booz Allen helps shape thinking andprepare for future developments in areas of national importance, includingcybersecurity, homeland security, healthcare, and information technology.

Booz Allen is headquartered in McLean, Virginia, employs approximately25,000 people, and had revenue of $5.86 billion for the 12 months endedMarch 31, 2012. Fortune has named Booz Allen one of its “100 Best Compa-nies to Work For” for eight consecutive years. Working Mother has rankedthe firm among its “100 Best Companies for Working Mothers” annually since1999. More information is available at www.boozallen.com. (NYSE: BAH)

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