Space Acquisition - Air Force Space Command

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Space Acquisition Firth Principles Dr. Robert L. Butterworth Chief, Strategic Planning, Policy, and Doctrine Air Force Space Command Peterson AFB, Colorado ainting the Forth” refers to painting and upkeep on the “Pbridge over the Firth of Forth and is a British analog to the American expression, “painting the Golden Gate bridge;” both refer to jobs that are always continuing and never completed. For national security space, the analog is “acquisition reform,” a lag function of difficulties in performance, budget, and schedule arising from specific concatenations of budgets, programs, politics, technology, and people. Because these circumstances change from program to program, reform efforts, while essential, can never completely anticipate the difficulties of current and future programs, and in practice they recur, on average, about every two and a half years. The classic analysis is the 1971 directive from David Packard, which offered a deceptively simple recipe for success: good people properly organized to achieve smart priorities, with three major decision points: program initiation, beginning of full-scale development, and production and deployment. 1 Packard, of course, well knew the complex second-order relationships underlying this recipe: Industry does the heavy lifting, and government policy, particularly through acquisition, shapes industry, frequently in unanticipated and unintended ways. Instances where yesterday’s reforms created today’s difficulties are not unknown. Proper Organization National security space programs were spared many of these complexities until about twenty years ago. Some twenty years before that, the National Reconnaissance Office (NRO), shielded by special security barriers from programmatic competition and intrusive oversight, had evolved from its troubled infancy into a system of managed competition that produced the important “National Technical Means” (though not without failures, delays, and overruns of roughly twenty to thirty percent). The difficult part, of course, was management of the competition. It was done well initially, first by Dr. Alexander H. Flax and then by Dr. John L. McLucas. But over time, the competition ineluctably involved less the industrial base and more the program headquarters staffs, with acquisition decisions turning less on engineering judgments about design and fabrication and more on programmatic and budgetary politics. The approach finally cratered in the mid-1980s, triggering a flight to bureaucratize management and the first of several attempts to improve acquisition by restructuring work along centralized “functional” lines. A few years later (1991) saw the first protest of an NRO acquisition award (the protest was sustained), and soon thereafter revelations about NRO finances brought sharply increased legislative oversight. By the mid-1990s, despite continuing special authori- ties, national security space programs were fully enmeshed in the acquisition challenges entangling many other defense programs. Those challenges were greatly magnified by the end of the Cold War and resulting expectations that national security budgets would shrink. Acquisition reform then focused on ways to preserve capability in the face of lower budgets, emphasizing an industrial policy whereby the government sought to use defense investments to foster research and development activities that would find commercial applications and so help the defense budget buy more with less. The challenge of the day, as described by the head of General Dynamics, was to achieve the “realignment of public and private sector roles in the production and support of our nation’s weapon systems.” 2 The hope was that defense goods and services in general and space activities in particular would no longer be entirely separate from the rest of the economy at large. 3 Defense needs would therefore be underwritten in several ways by commercial operations. Unit prices would be lower, overhead cost allocations would be lower, and modernization could take advantage of market-driven and market-financed innovations. Commercial markets and defense programs could be bound ever more tightly together. 4 The effort was pursued vigorously and it fell flat, the results serving principally as reminders of the differences between government and commercial entities and confirming that the defense department rarely understands its commercial partners. The industrial base for national security space effectively consists of an oligopoly serving a monopsonistic purchaser, selling products that have not previously been designed and/or for which there is no production experience, at prices for which there is little precedent. Typically the seller must meet an intense initial demand, following which the market virtually disappears. Sellers are funded by programs that change unpredictably and can be canceled suddenly. Their ultimate profitability might not be known for a decade. They grow apart from commercial companies (or from commercial elements of their own companies) in dozens of ways, resulting from several influences: • Acquisition laws, regulations, and culture. • The culture of public sector acquisition organizations. • The ways in which standards and specifications are developed and maintained. • The aspects of military technologies, products, and services for which there is no commercial counterpart. • The need to produce orders in commercially uneconomical quantities. • The emphasis on performance and quality over cost. • The need to protect classified information. • The requirement to implement a variety of public policies (buy American, equal employment, depressed area assistance, prevailing wage, environmental, etc.). • The lack of market-derived information for decisions about design, cost, and performance. There is no doubt that governmental policy can make a big 29 High Frontier
difference: public policy created the space industrial base and strongly influences its development. But it cannot make all the difference that was desired, and evidently it made some differences that were not desired. As reported by the Young panel in 2003, space acquisition suffered from systemic pathologies: • “Cost has replaced mission success as the primary driver in management acquisition processes, resulting in excessive technical and schedule risk.” • “The space acquisition system is strongly biased to produce unrealistically low cost estimates throughout the acquisition process. These estimates lead to unrealistic budgets and unexecutable programs.” • “Government capabilities to lead and manage the acquisition process have seriously eroded.” • “While the space industrial base is adequate to support current programs, long-term concerns exist. A continuous flow of new programs—cautiously selected—is required to maintain a robust space industry. Without such a flow, we risk not only our workforce, but also critical national capabilities in the payload and sensor areas.” 5 By then, Mr. Peter B. Teets, undersecretary of the Air Force and director of the NRO, was preparing a revised acquisition process for national security space (figure 1). The new process was a recognizable modification of the three major decision points recommended by Packard (program initiation, beginning of fullscale development, and production and deployment). But these new procedures could only help with one of the primary ingredients in Packard’s recipe—clearly defined responsibilities. Rational Priorities A second Packard ingredient—establishing rational priorities—would be supplied by implementing commercial best practices, according to some reformers, notably the General Accountability Office (GAO). In this view, acquisition should be undertaken only with proven technologies, 6 should be separated from technology development, 7 and should reflect an “enterprise-wide portfolio management approach … that integrates the assessment and determination of warfighting needs with available resources and cuts across the services by functional or capability area.” 8 Here again, the consequences of the salient differences between Department of Defense (DoD) and commercial entities appear heavily understated (and some of GAO’s central contentions might be more accounting tricks than the results of analysis). For several reasons, the metrics and methods appropriate to commercial activities seem ill-suited to the national security space enterprise, in which: • Innovation can be encouraged—but not well managed. The acquisition of national security space systems primarily concerns the development of applied innovations, which cannot be assigned to a separate work group and which require unique evaluation methods. Figure 1. NSS Acquisition Policy 03-01, currently in force as Interim National Security Space Guidance. • There is no “return on investment” for the government, or at least none comparable to the concept used in businesses: many of the measures used to evaluate alternatives courses of action for commercially (profit, amortization, earnings per share) are not meaningful in governmental operations. • There is no penalty for being late and over budget, if the satellite is launched and works well. Mission success trumps all shortcomings, and so the promise of performance overweighs objective cost estimates. • We have never flown unused capability; innovation and unanticipated applications continue long after launch. • We are analytically deficient. The integration of space across full-spectrum military capabilities presents analytic complexities that the standard conceptual tools for evaluation cannot capture (figure 2). 9 Yet even though commercial investment logics are not applicable, the underlying theme is right on the mark: successful acquisition hangs on the decision about what to acquire. Recently reform attention has turned to procedures that could help make better decisions. Initiatives by the undersecretary for acquisition, technology, and logistics have aimed to improve the process by mandating a careful canvassing of needs, resources, and options at an early stage, and, once the decision is made, to prohibit Figure 2. The Changing Nature of National Security Space. High Frontier 30
Page 1 and 2: INSIDE: Air Force Space Acquisitio
Page 3 and 4: Introduction General C. Robert Kehl
Page 5 and 6: Operationally Responsive Space In a
Page 7 and 8: From a technical perspective, the n
Page 9 and 10: per CJCSI 3170.01, is no more than
Page 11 and 12: Space Acquisition: Space and Missil
Page 15 and 16: years late to need). It was also on
Page 17 and 18: ooks, guides, and deliverable data.
Page 21 and 22: By relentlessly pursuing continuous
Page 25 and 26: Figure 2. Template knowledge points
Page 27 and 28: The primary focus will be to levera
Page 29: e hosted on the SIV, now referred t
Page 33 and 34: Space Acquisition Regaining Credibi
Page 35 and 36: tions. The 526 ICBMSG provides sing
Page 37 and 38: and acquisition of space systems; e
Page 39 and 40: curement practices that had ever be
Page 41 and 42: sume that if this old computer is e
Page 43 and 44: A Brief Example of the Value-Centri
Page 45 and 46: Space Acquisition The Cyberspace-De
Page 47 and 48: These observations all involve the
Page 49 and 50: the same capabilities within a larg
Page 51 and 52: Space Acquisition Is Acquiring Spac
Page 53 and 54: • Give up on trying to get a good
Page 55 and 56: • Establish quality program basel
Page 57 and 58: Imagery Architecture (FIA) programs
Page 59 and 60: 2. Execute, or suffer execution. As
Page 61 and 62: ments are achieved. That said, mana
Page 63 and 64: losing. As our nation has garnered
Page 65 and 66: to the point; measurable; and empow
Page 67 and 68: Legislative Perspective Weapon Syst
Page 69 and 70: AFSPC and its acquisition arm at Sp
Page 71 and 72: Book Review Arms and Innovation: En

Space Acquisition - Air Force Space Command

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