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AMRAAM Acquisition Excellence

Air-to-Air Joint Systems Program Office. AMRAAM Acquisition Excellence. I n t e g r i t y - S e r v i c e - E x c e l l e n c e. Col James S. Knox, Jr. Acting Program Director Air-to-Air JSPO. Vision 2000-2/12/02 (67254). 1. Overview. Background: Developed Vision 2000 in 1997

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AMRAAM Acquisition Excellence

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  1. Air-to-Air Joint Systems Program Office AMRAAMAcquisitionExcellence I n t e g r i t y - S e r v i c e - E x c e l l e n c e Col James S. Knox, Jr. Acting Program Director Air-to-Air JSPO Vision 2000-2/12/02 (67254) 1

  2. Overview • Background: Developed Vision 2000 in 1997 • Vision and Implementation • Results

  3. Background

  4. Background In 1997, AMRAAM Program Faced: • Extended Production Run • Small Annual US Procurements • Costly Infrastructure • At Low Quantities, Only 50% of Dollars Bought Missiles • Significant Mandated Manpower Reductions by FY00 • No Plan in Place • Loss of Competition From AMRAAM Producers • Raytheon Petitioned Government to Purchase Hughes Aircraft Company

  5. Air Force AMRAAM Total Procurement Cost Breakout $ Millions FY 89 90 91 92 93 94 95 96 97

  6. “Net Sales Booked” PRODUCTION PLUMMETED Net Sales Plummeted Business Plan

  7. Program Response In 1998, AMRAAM Program: • Supported Raytheon/Hughes Merger • Attained $50K Reduction in Hardware Price as a Condition • Teamed with Raytheon to Implement Commercial Business Practices • Saved 28% ($590M) of Procurement Funds • Reduced AF Manpower by 30% 2 Years Early • Over 75% of Dollars Now Buy Missiles • Established 10-Year Cost Control Strategy • Long-term Production Price Commitments From Raytheon Dependent on Stable FY Quantities and Approval of Planned Upgrade Program

  8. 200 Person SPO Competitive Producers ~ $700K AUPC 50% of 3020 to Contractor Complex Specs - Govt Control Govt Configuration Control/Mgmt Govt Tests/Analyses/Cross-Check 70 - 100 Person SPO Single Producer with TSPR ~ $500K AUPC > 80% to Contractor System Performance Spec - Only Govt Control Contractor Config Control/Mgmt Contractor Responsible for Product - “Combat Ready System” Vision 2000 1997 VISION 2000 Enablers: Single Producer Through Merger; Long Term Pricing Agreement (LTPA)

  9. LEADING CHANGEBy John Trotter 8 STAGE PROCESS 1. Establish Sense of Urgency 2. Create Guiding Coalition 3. Develop Vision and Strategy 4. Communicate Vision 5. Empower Broad-Based Action 6. Generate Short-Term Wins 7. Consolidate Gains and Produce More Change 8. Anchor New Approaches in the Culture

  10. Vision and Implementation

  11. VISION 2000: THE CORNERSTONES Development: 3 Workforce/Teaming: 4 Product Performance: SOLID FOUNDATION 2 Sustainment: Procurement: 1

  12. Total System Performance Responsibility (TSPR) Philosophy • The Contractor shall perform the tasks that he deems necessary and sufficient to develop, deliver, warrant, and support affordable combat capable and readily available weapons systems. • The Government defines and communicates performance requirements, provides requisite resources, supports a Long Term Pricing Strategy, and enables Contractor activities.

  13. CORNERSTONE #1:PROCUREMENT • Raytheon Manages/Verifies Product • Government Controls System Performance Specification • $400K Average Unit Procurement Cost (AUPC) • > 75% of Budget Buys Product • 70 Person Program Office - Enablers “Live” With Raytheon • Raytheon Responsible for “Combat Ready System”

  14. Task Destination - Contractor, Government, Boneyard DECISIONS DIRECTORS’ GROUP Ms. Judy Stokley, USAF SPD Mark Stenger, USN PD Chuck Anderson, Hughes Jim Wilson, Raytheon RECOMMENDATIONS TRI-PARTY PANEL USAF/USN/Hughes/Raytheon Deputy Directors Chief Engineers

  15. Task Destination Process User AF/Navy Government Oversight Advanced Technology Evaluate Per Ground Rules Allocate Functions Vision 2000 Aircraft AMRAAM SPO Intel Support Sustainment SEEK EAGLE Safety Assign Tasks Functions Contractor Test Define & Organize SPO Tasks 78 Functions 44 to Contractor, 3 to Boneyard, 31 Core Government 5 Transition Plans

  16. Cornerstone #2:Workforce/Teaming Team With Raytheon To Establish A Vital Organization And Workforce Commensurate With Our Vision 2000 • Fully Team With Raytheon - Ensure TSPR Success!! • Stand-Up Mirror Organizations 1 Jun 98 • Kick-Off Facilitated Training - Mid-Jun 98 • Fully Integrate US Navy and Air Logistics Centers • Establish and Maintain Common Goals and Objectives • Program Leadership and System Integration Groups • Trained Enablers In Place

  17. Congress OSD Service(s) Win-Win Business Arrangement Affordable, Combat Ready Products to Warfighters Stockholders, Corporate Construct, Profits, Marketing, Suppliers N U T O A C B C L A E Accountable Accountable Profits New Business Reputation Requirements Resources Reports Industry PM Govt PM Develop and Execute Win-Win Strategies In An Atmosphere of Teamwork and Trust

  18. AMRAAM Directors’ Goals For 2001 • Goal 1: Implement Next Generation Long-Term Pricing Agreement Champions: Len Iannuzzo (JSPO)/Frank Wyatt (Raytheon) • Goal 2: Successful Cost/Schedule/Performance Execution of P3I Phase 3 Program Champions: Lt. Col Ken Moran/Don Targoff • Goal 3: Support SIG Long-Term Portfolio Planning and Investment Options Champions: Aaron Brinson/Phil Gallagher • Goal 4: Meet or Exceed All Customer Production and System Performance Requirements Champions: Len Iannuzzo /Frank Wyatt • Goal 5: Support National Security Assistance Policy and Secure International Sales to Support the LTPA Champions: Carlton Taylor/Karen Crandall

  19. AMRAAM Directors’ Goals For 2001 • Goal 6: Meet or Exceed All Customers’ System Sustainment Requirements Champions: Maj Lisa Carney/Lt Col Schoeneman/Craig Lelicoff • Goal 7: Maximize AMRAAM Missile Production by Supporting Surface Launch Requirements With Domestic and International Customers Champions: Len Iannuzzo/Port McKinster • Goal 8: Effectively Support our AMRAAM Users’ Warfighting Requirements an Capabilities Through Test and Evaluation (T&E) Champions: Bob Guidry/Bill Laney • Goal 9: Document Aircraft Integration Issues and Migration Plans Champions: Aaron Brinson/Bill Laney

  20. Cornerstone #3:P3I Phase III EMD Characteristics • System Performance Specification Maps to ORD • Cost Plus Award Fee • AUPC Commitment Clause for Lots 16-21 • Contractor/Government Joint Factory Pricing Model • Contractor Responsible and Accountable With Government As Enabler • Acquisition Program Baseline to Promote Program Stability

  21. Long Term Price Control Strategy Long Term Pricing Agreement • FFP Lots 12-15 (FY98-01) • Contractor Develops TSPR Mindset AUPC Commitment • P3I Phase III EMD (FY99-03) • AUPC Commitment Lots 16-21 P3I Phase III CAIV For AUPC Commitment AUPC LTPA Lots 12-15 LOT 12 . . 15 16 . . . . 21 FY 98 . . 01 02 . . . . 07 Joint Factory Pricing Model (Deltas) P3I Phase III EMD 99 03

  22. Cornerstone #4: Sustainment • Raytheon Repairs Missiles, CFMREs, MBTS, CATMs, and Containers • Raytheon Monitors Performance of Fielded Systems and Feeds Corrective Actions into Development, Production, and Sustainment • Raytheon Honors 10 Year Bumper-to-Bumper Warranty and Manages Spares • Raytheon Executes Service Life Prediction Program (SLPP) • Raytheon, With Enablers, Closer to Warfighters

  23. Results

  24. TOTAL COST OF OWNERSHIP FY98 PB VERSUS FY00 POM Procurement RDT&E O&M FY98 PB FY00 POM 18% Less TCO 28% Less Procurement TY Dollars in Millions

  25. New Way Program Leadership Group Business Control Board Govt: Missile Performance Spec Contractor Self-oversight Profit Posture Over Several Years Contractor Meets Spend Plan/ Expenditures - GREEN Service Life Prediction Program Contractor and Government Invest in Improvements Contractor Owns Field Performance Contractor Maintains Availability for Warfighters Enablers, VTCs, and EDI Open Financial Books Old Way Staff Budget Control Board Govt: 370+ Spec Government Quality Inspectors Head-to-Head Competition Government Chronically Behind in Obligations/Expenditures Surveillance Government Only Invests in Improvements Government Monitors and Directs Contractor Government Mandates Repair Turnaround Time Government Reviews and CDRLs Little/No Insight Key Changes

  26. Problem Solving • We Will Have Problems • Solve Them Together With Industry • Fundamental First Question • What is the right thing to do? • Once You Know That, It’s a Matter of Finding a Way to Do It • Work with Your Industry Counterpart to Establish Clear Understanding. . .Don’t Count on the Contract “Lawyers are well aware that any contract, however well crafted, can be broken unless some smattering of ethics and goodwill remains on each side.”* *Rushworth M. Kidder

  27. Contracting’s Role In This Journey • Partnered With Industry to Write Flexible Contracts That Accommodate the Team Approach • Established Flexible Long Term Pricing Agreement (LTPA) Models (Quantity, Configuration and Responsive to Late FMS Sales) • Review-Discuss-Concur (RDC) • Performance Based Payment (PBP) on All FFP Contracts • Government Controls Missile Performance Specifications Only • Developed Alternate Disputes Resolution (ADR) Clause . . . Never Had to Use It • Exercise Options on Standalone Contracts • Contractor Self Oversight (CSO)

  28. Contracting’s Role In This Journey (Concluded) • Partnered With Industry to Write Flexible Contracts That Accommodate the Team Approach (Continued) • 10-year Bumper-to-Bumper Warranty • Roll Forward Warranty Accountability • Roll Forward GFP Accountability • Electronic Data Sharing • Multiple Production Lot Options • Raytheon in Charge of All Simulation Modeling, Testing, Tooling, Test Equipment, Spares and Parts Obsolescence • Partnered With DCM/DCAA on CSO in the Plant and Developing and Reviewing Early LTPA Models • Partnered with JSPO Establishing Highly Successful Enabler Role • Facilitating Communication • Not Directing the Contractor

  29. YA - The Cutting Edge • Trusting Partnership with Industry • Heart and Soul TSPR - Need to Rename This! • LTPA • PBP • PBA • Green Execution • Superior, Affordable Products That Get the Job Done Do Not Underestimate the Impact Your Creativity and Dedication Have!

  30. Back Ups

  31. Incremental Changes To AMRAAM Major Upgrade to Guidance Section Hardware/Software P3I Phase 3 AIM-120C7 Changes to Target Detection Device, Improved Software P3I Phase 2 AIM-120C6 AIM-120C4 AIM-120C5 P3I Phase 2 Upgrade to Control Section; Longer Rocket Motor P3I Phase 2 Improved Warhead; Improved Software Minor Hardware Upgrade to Guidance Section; Smaller Wings/Fins, Improved Software P3I Phase 1 AIM-120C3 AIM-120B Major Hardware Upgrade to Guidance Section; Annex G Software Upgrade Exploited Hardware Capabilities New Active Radar Missile AIM-120A 94 87 88 89 90 91 92 93 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 FY LOT AWARDS

  32. Contract Philosophy • “What”, Not “How” • Total System Perspective • Missile, Support Infrastructure, Support Items • Field Performance • Development, Production, Sustainment • Long Term Focus • Shared Risk • Program Objectives to Directly Support Warfighter • Prerequisite: Foundation of Performance, Mutual Trust

  33. Teaming • Insight, Not Oversight • Contractor “Self-governance” • In-plant Enablers • Assistance, Not “Watchers” • Measured by Value Added • Program Leadership Group • “Counterparts” Teamed Over Shared Goals • Integrate Program, Manage Risk • Win or Lose Together • Greatly Increased Communication • Shared Accountability for Success

  34. Mutual Trust • TSPR SOC (You Might Call it a SOO) • 2 1/2 Pages of Short Statements • Example: “The contractor shall perform quick-look review of AMRAAM firings, and identify and resolve anomalies. The contractor shall prioritize efforts to ensure issues with the greatest program impact are resolved as rapidly as practical.” • Change Control • Pre-TSPR: Govt Had Class I Change Control over 370 Specifications • Now: ~50 Page Missile Performance Spec - All Else Under Raytheon Control • 10-Year Bumper-to-Bumper Warranty - 2 paragraphs

  35. Unity of Purpose • Government/Industry Focus on Common Goals to Meet Interdependent Requirements: Warfighters’ Needs, Company’s Financial Health, Program’s Report Cards • Examples • Factory Testing • Depot Repair • Failure Analysis/Retrofit • Software Upgrades

  36. Lessons Learned • Nurture a Government/Industry Team • Common Vision and Goals • Win-Win Strategies • Establish Consolidated, Integrated Contract Packages • Avoid Fragmented Work Projects • Articulate Responsibilities and Accountabilities • Stand Firm Against Attackers • Use Compelling Data and Comprehensive Strategies • Learn to Look Steely-Eyed Into the Barrel of a Six Gun • “THIS IS THE WAY WE ARE GOING” and “NO” Are Powerful • Find Change Agents With Personal Courage

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