The Weapons We Buy

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Work began on the F6F in 1941, and by 1943 it was operating in combat in the Pacific. The procurement system today’s contractors are forced to work under has become so complex and drawn out that the YF-17, designed in the early 1970s, won’t enter the fleet as the F-18 until the 1980s.

Tⁿ the

^0f ^efens

fr_0m weapon systems have differed markedly

bp.

Lqj- ^ ^c°urse of the past dozen years, Department m_aj_0r ^e‘^ense policies governing the acquisition of

o_eeri . ^0se m force previously. These changes have «_ta 'ⁿ.^the direction of greater formalization and Steai- ^ai2at*⁰ⁿ- There has also been a shift toward

ater

d_e[_ay"‘ Participation by industry and a tendency to lat_er ■^t^^le election of the winning contractor until th_e ^{lfl t}^^e procurement cycle than was the case in botlf³^' ^btis change in policy has brought with it ^Vantages and disadvantages.

°^SAR

!⁹bO_s

C and OMB Circular A-109: Until the

I\[_a ~ ’ ^when Secretary of Defense Robert S. Mc- (j_Uj_Si .^a tntroduced fundamental changes to the ac-

tess

^ltl0n process in the interests of “cost-effective-

“commonality” among services, each new cy_cj_e ^Weapon system followed its own procurement Or j ‘ ^°me new weapons were direct derivatives of ^erat_ecj ^r°^Vernents to existing ones and followed accel- le_Ct;- ^Schedules. Others could justify sole-source se- Stin ° ^s^ⁿS^^e contractor, with no competition), bj^i ^0t^^ers involved several major industrial teams in₀ ‘^8 f°r a contract. There was no interservice com­fy^ ,.^,t:y *ⁿ this process, and top-level coordination pr₀ “Cult. Typically, a single service laboratory or C_erite ^ernent agency, such as the Naval Ocean Systems ^0r the Naval Air Development Center, would

*H_a

Jor

perform the concept formulation and feasibility en­gineering functions, with funding support from its respective sponsor in Washington. If successful in obtaining development funds, the program office would carry out its own particular procurement pol­icies. Meanwhile, the sponsor would attempt to “keep the program sold” within DoD and Congress.

In 1969, DoD established the Defense System Ac­quisition Review Council (dsarc), consisting of high- level Department of Defense officials, both military and civilian. Each new major acquisition must be re­viewed four times by this council, dsarc “Zero” is an informal review that must be conducted before any funds can be committed to engineering development of a new system. It ensures that there is actually a service need for the new system (which is formalized in a document called the mission element need state­ment, or mens). This is followed by a concept for­mulation study competition conducted by a govern­ment procurement agency such as the Naval Sea Systems Command. Several industrial teams will pro­pose technical solutions and conduct preliminary feasibility studies to support their proposals. At DSARC I, generally two of the industrial teams (and their proposed concepts) are selected for evaluation during a demonstration/validation phase. Both teams then conduct hardware demonstration and concept validation tests under government supervision. At

YEAR

One

Demonstration/

Validation

Two                                         ▼ Three

dsarc ii, a single team is selected to enter full-scale engineering development of its concept. It will design and produce prototypes of its system for acceptability testing. At dsarc III, the production decision is made.

Office of Management and Budget Circular A-109 (commonly called A-109) is a policy instruction for­malizing the acquisition process described above and detailing the procedures and conduct of the compet­itive process. This policy has generated considerable controversy within DoD and industry. Three specific complaints have been leveled against it by industry: during the early phases, contractors are forced to de­liberately bid too low; it results in a greatly stretched acquisition process; and it greatly reduces the flow of technological data from government (which was ob­tained under other programs) to industry. Govern­ment opponents feel that it results in weapon systems that do not meet service needs and which are based on “old” technology by the time they are introduced into service use. Proponents of A-109 point out that it promotes equitable competition and therefore re­duces total cost to DoD.

Industry Complaints: The industrial contractors who have worked under the new system have several com­plaints against A-109. Specifically, they object to the issuing of very small government contracts (less than one million dollars, typically) to perform “concept formulation studies” of multi-billion dollar new weapon systems. Since the program is so important to the competing companies, each team must perform the most thorough study possible so as to be included in the next phase. Typically, contractors must spend three to five times the amount awarded under the contract in order to fully design their proposed system. A company spending only contract dollars will cer­tainly lose out. The Navy’s antisubmarine standoff weapon program is an excellent example of this. Four contractors were under contracts for less than one

h aS ^

million dollars each, and they spent as muc ^ times that last year. (Excerpts from a ^^etteIQffice McDonnell Douglas to the General Accounting ^ were recently published by the Washington Star. ^

letter, McDonnell Douglas claimed to have sp^ent than $5 million of its own money on the P^r0^j j_n- Most of these contractors had already supp°^r ternal concept-feasibility studies for several y^e^^S^j_th

Because of the formal review process associat¹

phaS'

e,

cofl'

the DSARCs between each procurement            ^

tractors are often forced to maintain their eng<u^ee .j

funds ^u

teams intact with company discretionary ^ _(S. a source selection decision is reached. (Losers ^ ^ pecially irritated by this.) This interim P^erl°

tal P^r°" wd

extend six months or more, stretching the to¹ _qC. gram by one to two years. The government

casionally try to issue interim “sustaining ^c°^nt

to competitors, but this money is highly ^vU

lnera'

.bl^e

that

.bk

to funding cuts. Further, industry compl^ainS program stretches make the program itself vu n to congressional critics wanting to cancel it- ^

Before A-109 was issued, industrial contractors

ens

art

worked directly with government engineers to _t the best technical product. Under a-109, £°^vej_uStry’

engineers are restricted in their contact with >ⁿ'

absolutely ^

and data must be passed formally (and ai uitably) via technical information libraries. E^ven^ data requested by a contractor are relevant only ^r j technical approach, the data must still be u , to all competitors. This generally discourag^eS^_c[,

ftb^e to h'^s

petitors fearful of disclosing their technical ^aPP^_sll|tS

from asking for any data at all. This in turn

in replicated effort and reduced technical q^u;

ality-

Government Opponents: Government officials opP

to the more onerous terms of A-109 argue

that

os&

tie*

ids

weapon systems are not as likely to meet servic^^j under its procedures. Whereas in the past- ^ agencies in direct contact with operational un^|tS

58

Proceedings

/ au^⁹'

•tnrnent agencies established explicit engineering cations to which contractors bid. Now, each

^ ^w'^th concept formulation, under A-109 the for ^St|^fl ^ ^contractors must conduct their own concept _cies ^atl°n, often without aid from government agen- ^^and virtually without exposure to suggestions gover°^^erat*°^na^ ^^{orces on} their needs. In the past, ^sPecifj,

contract , .                                                                     •

' ^{0r esta}blishes its own set of mission needs and

ob_tai_n ^techmcal specification. Contractors cannot gove"^{1 t}*^{1C d}‘^rect exposure to operational needs that ^s°nnel'^{tTlent a}S^enc‘^es typically have by virtue of per­il,, ^exchange programs and operational testing con- ^tted by these agenc.es.

Government opponents of A-109 also argue that lengthened programs associated with DSARC result in the use of technology which is older than need be by the time the new system is introduced to operational forces. Avionics systems are especially subject to this. Electronics packaging factors decrease by half every five years, and computing power available (and af­fordable) to field tactical systems has increased dra­matically. The A-109 acquisition process may take ten years to complete (this is fairly typical), while a similar sole-source acquisition could be completed in five to six years. An example of the increase in development time required for new weapons is tactical aircraft. World War II designs moved from concept to pro­duction in less than one year. The F-18 fighter, which is based on the YF-17, designed in the early 1970s, was first accepted for Navy development in 1975. It is not likely to join fleet squadrons until the early to mid-1980s. While much of the increase results from

The final two competitors in the Navy’s advanced lightweight torpedo program were the entries from McDonnell Douglas, left, and Honeywell, below. As a result of DSARC rules, the Navy was able to lend its technical expertise to the program only after ending the competition and picking the winner. This is hut one example among many of difficulties which have arisen in the U.S. weapon acquisition process since “reforms" were introduced in the 1960s.

technical complexity, much of it is also due to the change in procurement policies.

Government Proponents: High-level government of­ficials supporting A-109 point to studies that indicate that the competitive process saves the government money over the full lifetime of the system. Contractors are forced to compete on price and on demonstration of technical proficiency, rather than on the ability to write a good proposal. The government has had ex­tremely poor success with sole-source programs such as the Spruance (DD-963)-class destroyer. A single con­tractor, Litton, was selected early and wound up with major cost overruns which devastated budgets in later years and embarrassed DoD considerably. Losing com­petitors have occasionally accused winning contractors of “buying in’’—bidding a program at a much lower price than the company itself believes is reason­able—with the knowledge that the government will be forced to reimburse (“bail out”) the company for any cost overruns. This problem has been aggravated by the increasing use of “cost-plus” contracts (cost- plus-fixed-fee and cost-plus-award-fee). If costs are grossly underestimated, the government may reduce the award fee but generally must cover the cost over­run. These contracts are popular with industry, which feels that the government (and not the contractor) should accept the technical and cost risk of a high- technology program.

Another argument in favor of the A-109 process is that by maintaining several competing technical con­cepts through a demonstration phase, the technolog­ical spin-off to other programs is greater. Further, the government is better able to apply very high tech­nology. Typically, both a high technical risk concept and a low technical risk concept will be selected at DSARCI for the demonstration phase. Because the low- risk concept provides a cushion if the high-risk concept leads to technical difficulties and delays, total program risk is reduced while the potential payoff is increased.

Thus the major trade-offs involved in the A-109 pol­icy are as follows:

Factor                                          A-109

Case Histories: The advanced lightweight ^torP^e^_ (alwt) program provides some insight into the ^w° ings of A-109 procurement. Research and develop ^ on a torpedo to replace the Mark 46 began in the'e 1970s at the Navy laboratories. The Naval Un ^er^ Center (now part of the Naval Ocean Systems ^en in San Diego was the principal lab. Several new

pulsion technologies were developed, as was a

guidance system and several sonar array concept

‘ borator'^e>

and W

of

that time, it was envisioned that the Navy labora would perform much of the initial design an _{ bility test engineering, including the selection 0^

propulsion, guidance, and sonar processing ^SY^S1 Industry involvement would include a detailed prototype construction and testing, and produ , The impact of A-109 on the alwt prograi in 197 1 when the Navy was directed to inciu^u^|

was

dustry in the early design decisions. Four m .

teams competed during what was called the te ,j

ogy assessment phase: Honeywell/Garrett,

Douglas/General Electric, Gould/Hughes, and _£

inghouse. These teams were encouraged to incorp

the technology developed by the laboratories, b^ut

were not required to do so. Several of the ^tearn*j_nt,

select technology developed by the labs. At this P^

the laboratories’ role was limited to evaluatiaj^^,

competitors and regulating data flow to the m

teams. From the four competing teams, °j_eCt:ed

Donnell Douglas and Honeywell) were then ^se^ ^

for the demonstration phase, dsarc 1 app^r0'^^79.

program to enter the next phase, beginning ^,n ^jjy

What happened during this next phase is ^jol

clear. It appears that both industry teams ha _f.

technical problems, which apparently led to cost^ ^

runs and major schedule delays. In January ⁰

year, the government terminated its contract ^

McDonnell Douglas. It would seem that ^r^^e ^[jlf

was caught in the bind created by A-109—-it ^waS j,d^!

to help directly either of the two teams wit

technical problems as long as there was a comp^* ₀t

“•’Id ¹

It was concerned that the final product

The

meet service needs as well as originally planned^- threat has been improving rapidly in recent ycars^^

the introduction of “Alfa,” “Oscar,” and Typ

Cost

Schedule

Technical Quality Technical Spin-Off Service Needs

Industry Satisfaction Technical Age Program Control

Thought to be lower, but complex issue Much longer (lJ-2 times) Generally Higher Much Higher Not as well met as previously Quite Low Older (2—5 years)

Greater

classes of Soviet submarines), and a schedule

slipP^'

cap^a

file

forced a longer dependence on the older, less ^L“^r^j_th Mark 46 torpedo. By terminating its contract ^ one of the two teams, thus ending the c°mp^etl

the Navy would be able to assist directly the

rem^a,n

team with its technical problems (and red^llC'^e

tV

,tiv»'

overall cost of the program). Whatever the tion, the Navy has in fact eliminated one if* _fjg5 team, which should allow the Navy lab°^ra ^_{. greater freedom to work directly with Honey"'^e

_st‘⁹