Space Acquisition Environment

Jeran Binning

V1.0 01 Sept 2016

jeranbinn@aol.com

619-417-2513

Key Factors Contributing to Space Acquisition Difficulties

• Four of the five selected DoD space programs we examined (SBIRS, GPS IIF, AEHF, and WGS) experienced major cost growth and schedule delays. The fifth program, GPS III, has seen some moderate cost growth, but it may be premature to judge its overall program performance.

• The four programs experienced major cost growth and schedule delays arising from difficulties in technology development, engineering, manufacturing, integration, parts quality, and obsolescence, which led to costly redesign, rework, and additional testing.

• These programs had implemented a high-risk acquisition approach that contributed to these difficulties and inefficiencies.

The high-risk acquisition approach was characterized by the following three types of risk:

high requirements risks: midstream changes in requirements and complex and ambitious requirements arising from multiple missions of equal priority on a single platform

high technical risks: introduction of immature technologies, inadequate testing and systems engineering, and overoptimistic assumptions about applicability of commercial practices and standards for military space systems

high programmatic risks: accelerating program schedules, changes in procurement quantities, and inefficient buying practices that caused long production gaps.

BENS Task Force

• FINDINGS

• The Task Force concludes that the process, not the product for the war fighter, has become the principal focus of the acquisition system.

Specific problems tormenting the system end-to-end include:

• requirements creep,

• funding instability,

• poor initial cost estimating,

• immature technology and

• the lack of flexibility to solve problems.

• These are compounded by the fact that many individuals with little or no accountability can profoundly impact funding, schedule, personnel assignments and administrative demands. Too often the problems that result are not uncovered until operational testing is underway—an activity that frequently overlaps the production tooling effort and thereby greatly increases the cost of correcting deficiencies.

Inexperienced leadership,

External interface complexity,

System complexity,

Incomplete requirements at Milestone B,

Immature technology,

and high reliance on new software.”39

39 Report of the Defense Science Board/Air Force Scientific Advisory Board Joint Task

Force on Acquisition of National Security Space Programs, May 2003. 8/16/2016 8

Common Causes of Cost and Schedule Growth for Large-Scale Systems

1. Immature Technology

2. Overzealous Advocacy

3. Lack of Corporate Roadmaps

4. Requirements Instability

5. Ineffective Acquisition Strategy and Contractual Practices

6. Unrealistic Program Baselines

7. Inadequate Systems Engineering

8. Inexperienced Workforce and High Turnover

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7. Inadequate Systems Engineering

What is it?

– Incomplete definition and processes to translate customer needs into a specific capability

Why does it occur?

– Decline in federal and industry systems engineering expertise which has led to an inexperienced government and contractor workforce

– Insufficient training and knowledge to decompose a system into its parts and address lower level risks that can significantly impact the total system

– Emphasis on building large, complex systems that satisfy all user requirements without a generating a cost/benefit evaluation

Study Comments

– The government and contractor “underestimated the complexity”

– That “clear tradeoffs among cost, schedule, risk, and requirements have not been well supported by rigorous upfront systems engineering”

– The “fact finding skill has atrophied. The government must know exactly what it wants – it must work system specs, interface control documents (ICDs), component specs in parallel with engineering development - including test verification (test is 40-60% of cost) to a mature state before RFP release. The seeds of failure are sown before RFP release.”

Increase Acquisition Stability:

1. Define and stabilize program requirements prior to program authority to proceed.

2. Seek legislative support for multi-year procurement authority.

3. Provide stable program funding: Secure multi-year funding and utilize block buys when appropriate.

4. Provide stability for strategic plans, enterprise architectures, consensus roadmaps and utilize Analysis of Alternatives to ensure defensible program plans.

Improved Contracting and Communication:

1. Government agencies should supplant traditional restricted, formal communications during contract competitions with an open industry dialogue prior to the release of Requests for Proposal.

2. Increase use of firm fixed price contracts for programs with multiple or block buys of identical items with no competition. Contract flexibility should be adjusted based on the contractors’ risk exposure.

3. Government should engage in active dialogue with industry to optimize the contract type (fixed price, cost plus, etc.) for the program application

prior to the competition.8/16/2016 13

FINDING (3-5) Decoupling technology maturation and

system development has been proven to reduce overall risk dramatically.

RECOMMENDATION 4-1

To ensure that technologies and operational requirements are well matched, the Air Force should create an environment that allows stakeholders—warfighters, laboratories, acquisition centers, and industry—to trade off technologies with operational requirements prior to Milestone B.

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▪ Block buy procurement of space vehicles, using fixed price contracts with reinvestment into competitive, government-directed R&D

▪ Reduces production breaks, lowers non-recurring engineering costs

▪ Enables economic order quantity savings of critical parts, lowering materiel costs

▪ Applies to satellite programs in production with stable requirements, such as AEHF and SBIRS

▪ Full funding provided over multiple years using advance appropriations

▪ Performance improvements incorporated incrementally via structured Capability and Affordability Improvement Program

▪ Promotes stability for critical industry engineering talent and second- and third-tier suppliers

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FINDING (3-5) Decoupling technology maturation and

system development has been proven to reduce overall risk dramatically.

RECOMMENDATION 4-1

To ensure that technologies and operational requirements are well matched, the Air Force should create an environment that allows stakeholders—warfighters, laboratories, acquisition centers, and industry—to trade off technologies with operational requirements prior to Milestone B.

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Increase Acquisition Stability:

1. Define and stabilize program requirements prior to program authority to proceed.

2. Seek legislative support for multi-year procurement authority.

3. Provide stable program funding: Secure multi-year funding and utilize block buys when appropriate.

4. Provide stability for strategic plans, enterprise architectures, consensus roadmaps and utilize Analysis of Alternatives to ensure defensible program plans.

Improved Contracting and Communication:

1. Government agencies should supplant traditional restricted, formal communications during contract competitions with an open industry dialogue prior to the release of Requests for Proposal.

2. Increase use of firm fixed price contracts for programs with multiple or block buys of identical items with no competition. Contract flexibility should be adjusted based on the contractors’ risk exposure.

3. Government should engage in active dialogue with industry to optimize the contract type (fixed price, cost plus, etc.) for the program application

prior to the competition.8/16/2016 27

There are opportunities for ways we authorize use of spectrum so hosted payloads could be more easily integrated into our architecture.

Then, there’s acquisition approaches. Going back to GPS, enabling commercial-like acquisition of satellites. We’ve made progress there.

WGS is operating in a unique manner and F-8 will double the capacity of the spacecraft and be 20 percent less expensive than the last block because we moved to this firm fixed price and a smaller oversight model.

If we can continue to push commercial procurement models, that’s another area of

improvement.

Bent Flyvbjerg

Nils Bruzelius

Werner Rothengatter

Improved Incentives: Public and Private Sector Accountability

Forecasting has it’s dark side. . . Indeed accurate forecasts may be counterproductive, whereas biased forecasts may be effective in competing for funds and securing go-ahead for construction.

“The most effective planner is sometimes the one who can cloak advocacy in the guise of scientific or technical rationality.” Wachs (1989: 477)

Flyvberg

Better forecasting techniques and appeals to ethics won’t do here; institutional change with a focus on transparency and accountability is necessary.

Bent Flyvbjerg, Nils Bruzelius and Werner Rothengatter, Cambridge University Press, 2003 argue there are two basic types of accountability that define liberal democracies:

(1) Public sector accountability through transparency and public control, and

(2) private sector accountability via competition and market control.

Break - Fix

Generally, megaproject planners and managers – and their organizations – do not know how to deliver successful megaprojects, or do not have the incentives to do so, and therefore such projects tend to "break" sooner or later, for instance when reality catches up with optimistic, or manipulated, estimates of schedule, costs, or benefits; and delays, cost overruns, etc. follow.

Projects are then often paused and reorganized – sometimes also refinanced – in an attempt to "fix" problems and deliver some version of the initially planned project with a semblance of success.

The Iron Law of Megaprojects

If, as the evidence indicates, approximately one out of ten megaprojects is on budget, one out of ten is on schedule, and one out of ten is on benefits, then approximately one in a thousand projects is a success, defined as on target for all three... This serves to illustrate what may be called the "iron law of megaprojects": Over budget, over time, over and over again (Flyvbjerg, 2011).5

Best practice is an outlier, average practice a disaster in this interesting and very costly area of management.

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For programs, there are:at least three sources of uncertainty—and,

thus, risk

The technical complexityThe attempt to bring multiple new technologies to fruition at the same point in time

The programmatic complexity of integrating software intensive systems

The absence of accurate cost information at the onset of major systems/ software programs

Best Project Management and Systems Engineering Practices

for Large-Scale Federal Acquisition Programs

Steven Meier, Ph.D., PMP27 January 2009

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The Pre-acquisition Checklist

Review and ensure all technologies are mature to a TRL of 6 and MRL 6 and do not require extensive rework to be integrated into the system

Review all program office personnel with a focus on length of tour and experience level to ensure experienced personnel will be available for a minimum of 4 years

Require a government approved requirements baseline which includes realistic inputs from users and mission partners following a cost/benefit analysis

A review of the number and detail of Key Performance Parameters (KPPs) and keep it to a maximum of 6 KPPs

Completed system and technology trades that cover performance, cost, and schedule, and complete an end-to-end program risk assessment

Completed system specification (A-Spec), CONOPS, SOW, SRD, and SEMP

Establish an end-to-end test guideline, including software description documents

Identify parts issues and establish dual sources if a part is on the critical path

Establish interface specifications for all hardware and software

Establish the acquisition strategy and contract vehicle with an appropriate incentive structure and use alpha contracting when appropriate

Establish a high confidence cost and schedule baseline with identified management reserve that links the integrated master schedule to the full lifecycle cost

Establish a comprehensive stakeholder communication plan that expedites the timely communication of accurate program information for the execution phase

Review the industrial base capability for completing the program by reviewing the prime, subcontractors, vendors, and suppliers for parts obsolescence and mission assurance

Best Project Management and Systems Engineering Practices

for Large-Scale Federal Acquisition ProgramsSteven Meier, Ph.D., PMP

27 January 2009