Open Architecture Summit Open Architecture or Open Acquisition 18 November 2010

1. Open Architecture SummitOpen Architecture or Open Acquisition18 November 2010 Mr Robert F. Hogue CEO, In-Depth Engineering Bob.Hogue@In-Deptheng.com 703-592-1860

2. We’ve been working ‘Open’ for a long time… On 29 November, 1994, the Honorable Paul G. Kaminski, Under Secretary of Defense for Acquisition and Technology, directed Acquisition Executives in the Department of Defense to use "open systems" specifications and standards (electrical, mechanical, thermal) for acquisition of all weapon systems electronics to the greatest extent practical.Payoffs were to include (1) Lower life cycle cost for weapon systems, (2) Better performing systems with greater interoperability , (3) Technology transparency for rapid upgrades, (4) Improved interoperability for joint warfighting, (5) Closer cooperation between commercial and military electronics industries 16 Years Have Passed Budgets are declining. What Happened?

3. We’re All-In • When we made the decision to migrate to COTS hardware, we made a de facto decision to join the COTS software tempo • Huge COTS Dividend • Riding Wave of COTS Hardware • Able to implement much more capable designs • We already saved the hardware money • Where is the savings in software? • Open Architecture was envisioned as a way to manage the system impacts and updates in software • We’ve spent 10 years focused on the technical understanding of Open Architecture

4. It’s a Team Sport No Small Business Can Compete with ‘Toyota’…

5. Cultivating a New Business Model • Industry (and Government) look at Toyota as a model for quality and performance • Toyota doesn’t build the entire vehicle in-house • They purchase components : creates excellence and costs less • Buy best of breed • More opportunities for competition • The acquisition process at Toyota drives a modular system design – providing a framework for open acquisition Toyota looks for a mutually beneficial transaction with any vendor whose technology and management are excellent Toyota seeks to establish long-term business relationship with mutual trust • DOD is Buying The Car…

6. Open Acquisition • Open Acquisition requires execution of the ‘Toyota’ model • Opportunities for reuse occur at the component level • The way we acquire systems today doesn’t permit transparency at that level RFP typically at this level No motivation for prime to subcontract for major hw or software component Unless directed by the acquisition process ToyotaAPB looks for a mutually beneficial transaction with any vendor whose technology and management are excellent Toyota APB seeks to establish long-term business relationship with mutual trust System Major Interfaces Major Interfaces SC BF SP DP DSP Major Interfaces Major Interfaces Open Acquisition Pushes Prime to Modularize the Design and Subcontract Substantive Work to Focused Subcontractors

7. Ooooh, good start… Noting the intent expressed above and the Small business participation goals as identified in the Small Business Subcontracting Incentive Fee clause in Section B, large business Offerors shall describe the extent to which they have planned of the total contract value to be accomplished by small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, women-owned small business concerns, and historically black colleges and universities and minority institutions for the performance of this effort. Additionally, the Offeror shall describe its plan to achieve goals identified in the Small Business Subcontracting Incentive Fee clause in Section B. The Offeror shall provide sufficient information to demonstrate that the tasks assigned to the aforementioned businesses and institutions are meaningful, technical, and/or sustainable. In other words, they will be performing technical functions important to the overall success of the program and also broaden the subcontractors’ technical capabilities. The Offeror shall describe its management approach for enhancing the technical capabilities of the above entities. Of special interest is the amount and type of work to be performed by the subcontractors. The Offeror shall include a list of the component(s)/effort(s) to be provided by these subcontractors. The Offeror shall explain the reasons for and advantages of selecting particular subcontractors. Offerors shall specifically identify the businesses being proposed to meet the goals identified in this section and the efforts they will be performing. 4.2.1.5 Section 1.4 Subcontractor Management The Offeror shall discuss how it will manage its subcontractors to ensure their products are delivered on time and within budget, and are of sufficient quality to enable the Offeror to meet all contractual requirements. The Offeror shall discuss its approach toward Subcontracting and its relationship toward achieving the overall objectives of the resultant contract, specifically as it relates to the technical performance attributes for the System, the Advanced Processing Build and collaborative development environment. The Offeror should limit planned subcontracting to specific program/system or functional expertise or otherwise technically meaningful and sustainable work requirements under the resultant contract. Discussion should include contractual arrangements, qualification requirements, selection process(es), contingency plans, and management interactions. It should be noted: the Government views subcontractor arrangements with a certain amount of risk. Prime/Subcontractor “guaranteed work share” arrangements could potentially hinder performance over the course of the period of performance with the uncertainties evolving through advanced development. Small business participation goals as identified in the Small Business Subcontracting Incentive Fee clause in Section B

8. Ahhh, Sounds great… Noting the intent expressed above and the Small business participation goals as identified in the Small Business Subcontracting Incentive Fee clause in Section B, large business Offerors shall describe the extent to which they have planned of the total contract value to be accomplished by small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, women-owned small business concerns, and historically black colleges and universities and minority institutions for the performance of this effort. Additionally, the Offeror shall describe its plan to achieve goals identified in the Small Business Subcontracting Incentive Fee clause in Section B. The Offeror shall provide sufficient information to demonstrate that the tasks assigned to the aforementioned businesses and institutions are meaningful, technical, and/or sustainable. In other words, they will be performing technical functions important to the overall success of the program and also broaden the subcontractors’ technical capabilities. The Offeror shall describe its management approach for enhancing the technical capabilities of the above entities. Of special interest is the amount and type of work to be performed by the subcontractors. The Offeror shall include a list of the component(s)/effort(s) to be provided by these subcontractors. The Offeror shall explain the reasons for and advantages of selecting particular subcontractors. Offerors shall specifically identify the businesses being proposed to meet the goals identified in this section and the efforts they will be performing. 4.2.1.5 Section 1.4 Subcontractor Management The Offeror shall discuss how it will manage its subcontractors to ensure their products are delivered on time and within budget, and are of sufficient quality to enable the Offeror to meet all contractual requirements. The Offeror shall discuss its approach toward Subcontracting and its relationship toward achieving the overall objectives of the resultant contract, specifically as it relates to the technical performance attributes for the System, the Advanced Processing Build and collaborative development environment. The Offeror should limit planned subcontracting to specific program/system or functional expertise or otherwise technically meaningful and sustainable work requirements under the resultant contract. Discussion should include contractual arrangements, qualification requirements, selection process(es), contingency plans, and management interactions. It should be noted: the Government views subcontractor arrangements with a certain amount of risk. Prime/Subcontractor “guaranteed work share” arrangements could potentially hinder performance over the course of the period of performance with the uncertainties evolving through advanced development. demonstrate that the tasks assigned to the aforementioned businesses and institutions are meaningful, technical, and/or sustainable

9. Huh? Noting the intent expressed above and the Small business participation goals as identified in the Small Business Subcontracting Incentive Fee clause in Section B,large business Offerors shall describe the extent to which they have planned of the total contract value to be accomplished by small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, women-owned small business concerns, and historically black colleges and universities and minority institutions for the performance of this effort. Additionally, the Offeror shall describe its plan to achieve goals identified in the Small Business Subcontracting Incentive Fee clause in Section B. The Offeror shall provide sufficient information to demonstrate that the tasks assigned to the aforementioned businesses and institutions are meaningful, technical, and/or sustainable. In other words, they will be performing technical functions important to the overall success of the program and also broaden the subcontractors’ technical capabilities. The Offeror shall describe its management approach for enhancing the technical capabilities of the above entities. Of special interest is the amount and type of work to be performed by the subcontractors. The Offeror shall include a list of the component(s)/effort(s) to be provided by these subcontractors. The Offeror shall explain the reasons for and advantages of selecting particular subcontractors. Offerors shall specifically identify the businesses being proposed to meet the goals identified in this section and the efforts they will be performing. 4.2.1.5 Section 1.4 Subcontractor Management The Offeror shall discuss how it will manage its subcontractors to ensure their products are delivered on time and within budget, and are of sufficient quality to enable the Offeror to meet all contractual requirements. The Offeror shall discuss its approach toward Subcontracting and its relationship toward achieving the overall objectives of the resultant contract, specifically as it relates to the technical performance attributes for the System, the Advanced Processing Build and collaborative development environment. The Offeror should limit planned subcontracting to specific program/system or functional expertise or otherwise technically meaningful and sustainable work requirements under the resultant contract. Discussion should include contractual arrangements, qualification requirements, selection process(es), contingency plans, and management interactions. It should be noted: the Government views subcontractor arrangements with a certain amount of risk. Prime/Subcontractor “guaranteed work share” arrangementscould potentially hinder performance over the course of the period of performance with the uncertainties evolving through advanced development. It should be noted: the Government views subcontractor arrangements with a certain amount of risk. Prime/Subcontractor “guaranteed work share” arrangements could potentially hinder performance…

10. Teaming Agreements • ‘Risk’ words in RFP operationally eliminate meaningful, substantive teaming arrangements • No known FAR or DFAR reference • RFP could require submission of Teaming Agreements • Demonstrate commitment to this approach • Become binding as part of the contract • Arguments about risk are spurious • FAR and DFAR clauses flow down to the subcontract • Same tools used to manage prime can be used to manage subcontractor • Prime owns the risk mitigation Sustained, Meaningful Relationships

11. Intellectual Property • RFP utilizes standard DFAR IP Clauses • Defines Relationship between Government and Prime • Based upon party with financial investment. • All DFAR Clauses flow down to the subcontractor • This is fine… • RFP is silent on IP relationship between Prime and Subcontractor • Different IP relationship with the Government and the Prime • Subcontractor needs ability to bid derivative work to other customers • Subcontractor needs to avoid direct competition from the Prime • Acquisition Community ‘undertrained’ in IP law and contract practices • Defense Acquisition University lacks courses in IP • DAWIA certification may be an option IP

12. Summary • DOD has sought openness for a long time • We transitioned to COTS HW • We are now ‘All In’ For Open • Software savings and reuse are elusive • Open Acquisition coupled with Open Architecture are integral • Excellence • Cost Reduction • OA (any) requires change to Acquisition Process • (RFP) needs to include requirements that Prime Contractor : • meaningfully partition effort • document subcontractor workshare as part of the bid; binding at award • Stipulate B2B (subcontract) IP rights in addition to existing B2G IP Assertion Clauses • Government needs to actively evaluate/oversee IP relationship between Prime and Subcontractor as part of competition Government Challenge