Page 40

7

Findings and Recommendations

Based on the analysis in the foregoing chapters, the committee developed the five findings and six recommendations discussed below. The recommendations are discussed relative to the specific points in the statement of task at the end of this chapter. The committee's recommendations are directed primarily at the DOD management chain above the DOD Manufacturing Technology Program (ManTech). However, it sees an important role for the ManTech program in the overall strategy for ICMM and has included specific recommendations for ManTech.

The committee's recommendations are as follows:

  • 1. Vigorously pursue policy, incentives, and implementing guidelines for ICMM.
  • 2. Establish a commercial acquisition academy to augment training and education.
  • 3. Fund and execute additional rapid-response demonstration programs to build a broad base of experience with ICMM.
  • 4. Contract for life-cycle support and technology refreshment.
  • 5. Increase DOD and defense sector awareness of planned and emerging commercial technologies and capabilities.
  • 6. Invest in R&D to increase the compatibility of military operating environments and commercially produced components.

The committee believes that bolstering training and education is the highest



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 40
Page 40 7 Findings and Recommendations Based on the analysis in the foregoing chapters, the committee developed the five findings and six recommendations discussed below. The recommendations are discussed relative to the specific points in the statement of task at the end of this chapter. The committee's recommendations are directed primarily at the DOD management chain above the DOD Manufacturing Technology Program (ManTech). However, it sees an important role for the ManTech program in the overall strategy for ICMM and has included specific recommendations for ManTech. The committee's recommendations are as follows: 1. Vigorously pursue policy, incentives, and implementing guidelines for ICMM. 2. Establish a commercial acquisition academy to augment training and education. 3. Fund and execute additional rapid-response demonstration programs to build a broad base of experience with ICMM. 4. Contract for life-cycle support and technology refreshment. 5. Increase DOD and defense sector awareness of planned and emerging commercial technologies and capabilities. 6. Invest in R&D to increase the compatibility of military operating environments and commercially produced components. The committee believes that bolstering training and education is the highest

OCR for page 40
Page 41priority area. It recommends the establishment of a commercial acquisition academy within the Defense Acquisition University, the mission of which would be to create a knowledge base and an acquisition workforce steeped in commercial practice. The committee believes that this new institution could become the focal point for following through on the other findings and recommendations. Further details are presented in the section on recommendations, below. FINDINGS Finding 1. Defense systems integrators have the pivotal role in ICMM. With rare exceptions, major defense systems require a combination of system integration skill and military application domain expertise that can come only from the established defense contractor community. For this reason, the greatest opportunity for ICMM exists at the component and subsystem level. System integration of superior technologies into defense systems, including defense-unique and commercial technologies, is the edge that the U.S. defense industry can provide. ICMM offers defense prime contractors the same rewards and business potentials as commercial original equipment manufacturers (OEMs), but only if DOD changes acquisition practices identified as barriers, especially profit policies and provisions that bias make/buy decisions. Finding 2. Recent successes in ICMM show it can be done. Although ICMM is not yet a routine practice, numerous experiments and pilot programs and a few real acquisitions have demonstrated its viability. Further efforts are needed to institutionalize successful demonstration results. When motivated by competition, cost constraints, contract incentives, or performance needs, defense prime contractors are willing to outsource the production of subsystems and components to commercial manufacturers. Experiments, pilot programs, and actual acquisitions show that commercial manufacturers are willing to accept government contracts and subcontracts if ways are found to work through the barriers created by acquisition practice. Successful ICMM implementations exist in electronics, aircraft engines, submarine electronics, and aging avionics, but they represent only a small fraction of expenditures. These implementations show that Appropriate incentives can lead to substantial successes. It is important that ICMM become part of the normal course of business and that it not require government contracting personnel to make unprecedented determinations that a product or service is commercial or to take other actions that put their careers at risk.

OCR for page 40
Page 42 The acquisition system must become more willing to embrace changes proven in demonstration programs and to disseminate results and how-to documents. The ManTech program, with its unique statutory authorities, can be used for demonstration efforts in technology, business practices, and partnerships to realize a more efficient ICMM defense industrial base. However, the program is not now tasked or funded for this mission. Finding 3. Longstanding barriers must be removed to take full advantage of ICMM. Many of the barriers to ICMM are acquisition and business practices rather than technical incompatibilities. Recent legislative and policy changes provide the needed tools, but implementation has been uneven across programs. Key barriers that continue to inhibit ICMM include the following: Lack of a commercial knowledge base and an acquisition workforce (including contracting officers) that is steeped in commercial practice; Government acquisition provisions that commercial suppliers are unwilling to accept, including cost accounting, auditing, specialized specs and standards, procurement laws and socioeconomic provisions, and logistics practices; Government practices on intellectual property rights that are incompatible with commercial practice; Acquisition and upgrade cycle times that are drastically misaligned with commercial cycles, including lengthy test and evaluation and requalification requirements; A requirements process for new systems that is often incompatible with evolutionary commercial capabilities and development practices and that does not set cost requirements based on ICMM opportunities; A definition of a commercial product or service (FAR 2.101) that significantly constrains the ability to procure commercial R&D; A lack of effort on the part of DOD commands to fully implement FAR Part 12, Acquisition of Commercial Items; Failure to take full advantage of DFARS profit policy provisions on technology innovation—continued emphasis on investment in new facilities acts as a disincentive to commercial outsourcing; Lack of modular equipment architectures, such as modular open systems architecture (MOSA) and of methods for scheduling and funding periodic block upgrades throughout the product life cycle; and Lack of institutionalized solutions that program managers can routinely draw on to make ICMM solutions part of the normal course of business in DOD.

OCR for page 40
Page 43 Finding 4. Commercial trends make ICMM increasingly desirable in 2010 and beyond. Commercial industry trends that make ICMM increasingly desirable and feasible for 2010 and beyond include more outsourcing, more automated and flexible production facilities, rapid changeover to manufacture a wide variety of subsystems, and efficient utilization of facilities that make a broad mix of products. The envelope of technical capability in commercial manufacturing facilities is generally large enough to allow production of defense variants of commercial products. The committee finds that current DOD knowledge of commercial markets and products is inadequate for assessing emerging commercial products and capabilities and taking them into account in defense system plans and requirements. Defense contractors can help provide improved insight into the commercial base, but DOD needs its own (in-house or contracted) capability to be a smart buyer. Among the significant trends that will open possibilities for increased ICMM are the following: The emergence of a new $70 billion industry sector devoted to flexible electronics manufacturing services, with capabilities suited to small-lot custom manufacturing for defense applications involving digital, analog, and microelectromechanical subsystems (MEMS); Advances in the mechanical manufacturing domain in precision automated manufacturing for small lots, with greatly improved flexibility to accommodate on-demand manufacturing of defense items; Availability of technology for automated design, production, and in-line inspection and testing that, by 2010, will offer electromechanical and MEMS devices with a level of manufacturing flexibility and integration comparable to the production infrastructure for today's chips and boards; Commercial upgrades to aging avionics, a major opportunity for ICMM, because upgrading using mil-spec configurations is usually unaffordable and often impossible; and Advances in the ability to share digital product data and business data in supply chains, with new efficiencies in rapid-response manufacturing of the type needed by DOD. Finding 5. Current training does not equip DOD personnel to understand the commercial marketplace. The DOD acquisition workforce, including program management staff and contracting officers, does not have the necessary background to take full advantage of commercial capabilities. While it is well trained and has a high level of skill in the specialties of traditional defense acquisition, this workforce lacks

OCR for page 40
Page 44training on doing business in the commercial sector. Individual program managers cannot pioneer ICMM unless the supporting acquisition establishment understands how it works and actively supports its implementation. Training resources that can be leveraged for this purpose include the following: The Defense Acquisition University (DAU), DOD's primary source of training in acquisition, including the training of contracting officers. Annual throughput exceeds 40,000 students and is projected to remain at this level over the next several years. Private sector education and training, including government/industry personnel exchange programs. The Defense Systems Management College (DSMC), a component of DAU, the primary source of program management training. Training requirements for acquisition personnel are specified in law. DOD's Industrial College of the Armed Forces (ICAF), which—as part of its educational mission for DOD personnel—conducts studies to learn about industry practices and pass on the knowledge and experience. RECOMMENDATIONS Recommendation 1. Vigorously pursue policy, incentives, and implementing guidelines for ICMM. The Under Secretary of Defense (AT&L) should issue specific policy statements and implementing guidelines that remove barriers to the use of commercial products and processes, that provide metrics for commercial content in military systems, and that monitor implementation in milestone reviews. Implementing guidelines should specifically include the following: Source selection factors. All source selections should include evaluation factors for performance and cost trade-offs that explicitly assess use of commercially produced subsystems. These factors must carry sufficient weight to serve as a strong incentive for industry to optimize the use of commercial technologies and manufacturing capabilities. Profit policies. Weighted guidelines for DOD profit policy should be revised and/or implemented to reduce the reward for facilities investment and increase the reward for technology innovation, including integration of commercial technology. If these reward provisions are properly structured, DOD prime contractors will be motivated to do more commercial outsourcing. 1 Changing DOD profit policy in this manner will require 1While issues such as those of legacy infrastructure complicate these decisions, they should not be permitted to impact the affordability of future systems.

OCR for page 40
Page 45the endorsement of senior leadership, an aggressive training program for acquisition personnel, and follow-up to see that changes are implemented. Shared savings. For programs beyond Milestone B, contracts should provide the contractor a generous share of any savings attributable to design or production changes that implement ICMM. Intellectual property. Authority should be granted for acquisition research demonstration programs to use “other transactions” authority until legislation is available to enable commercial intellectual property and data rights practices. Particular emphasis should be placed on the robust implementation of the technology innovation provisions of DFARS 215.404–71–2. In addition, DOD should seek changes in intellectual property and data rights laws to align DOD practice with commercial practice, including negotiation of field-of-use rights and limiting technology exchange to specific contracts, people, and durations using commercial non-disclosure agreements. Commercial item determination. Program managers and contracting officers should be given flexible guidance on how to determine if products or services are commercial items under FAR Part 12. In parallel, DOD should seek waivers and, ultimately, a change to broaden the FAR definition of a commercial item to include all items produced on commercial lines, and it should launch demonstration programs to deal with the challenge of pricing commercial items. Metrics. Such metrics as commercial content based on bills of material should be developed, implemented, and tracked in a variety of demonstrations in each service. Request for Proposal (RFP) template. An RFP template should be established for the DOD Acquisition Desk Book. This template should be aimed at fostering a shared understanding of commercial design standards and rules for government and industry representatives. In addition, government and prime contractor representatives should be encouraged to participate in industry bodies that set design and manufacturing standards. Acquisition research. DOD's Acquisition Research Program should be used to develop additional tools to facilitate buying from the commercial sector. Two suggested areas would be the development of commercial pricing techniques and the harmonization of DOD and industry intellectual property (IP) requirements. Recommendation 2. Establish a commercial acquisition academy to augment training and education. A comprehensive training program to develop expertise in the commercial industrial base, with particular emphasis on acquisition of commercial technology, products, and services, should be established under the sponsorship of the

OCR for page 40
Page 46USD(AT&L) and the service acquisition executives. This program should be directed at program managers and other acquisition personnel, including contracting officers. Creating an acquisition workforce steeped in commercial practice is of such importance to ICMM that a commercial acquisition academy should be established within the DAU and dedicated to this objective. A commercial acquisition academy should: Use case studies and practical exercises to impart commercial best practices. Industry and industry associations, both defense and commercial, as well as business schools should all participate in curriculum development (including case studies) and should make staff available to augment regular faculty. Where possible, industry personnel should attend DAU courses, particularly those at the DSMC. Offer coursework that helps program managers (PMs) and contracting officers identify latitude in the existing legal and regulatory language that would allow procurement of products and services from the commercial sector. Recruit faculty with skills in commercial industry practices, especially in the areas of commercial pricing techniques and commercial intellectual property issues. Industry associations, retirees, and commercial industry should be involved in faculty recruitment. Train both program managers and contracting officers to overcome barriers that preclude commercial firms from doing business with DOD. This training would be aimed primarily at using existing legal and regulatory latitude to procure products and services from the commercial sector. Training in critical thinking and problem-solving skills should be a prerequisite for the level III certification of acquisition personnel. Subsequent training should emphasize business acumen as well as critical thinking and problem solving. Use a range of resources to carry out this training in commercial practices, including private sector training, involvement in professional societies that include commercial firms, and government-industry personnel exchange. Internet technologies should be fully exploited for sharing lessons learned and best practices. Use the industry studies program of the Industrial College of the Armed Forces (ICAF) to broaden DOD's knowledge of the commercial industrial base. The key results of these studies should be made part of the curriculum and should be made available to policy makers and acquisition personnel. Recommendation 3. Fund and execute additional rapid-response demonstration programs to build a broad base of experience with ICMM.

OCR for page 40
Page 47 The DOD acquisition and sustainment management chain—USD(AT&L), service acquisition executives, center commanders, and PEOs/PMs—should en-courage demonstration programs to build the base of experience needed for increased ICMM. This management chain should advocate, plan, program, budget, and protect the necessary resources for these demonstrations. It should Provide waivers, as needed, to experiment with commercial practices. Reexamine the present roles and missions of the Defense Production Act Titles I and III programs, including the Diminishing Manufacturing Sources and Industrial Base Analysis programs and processes, to ascertain their full potential for supporting a more robust transformation of the defense industrial base to an ICMM base. Focus and fund the DOD ManTech Program (and its service/DLA components) to exploit the full authority and latitude of ManTech's unique statutory mandate. ManTech should be aggressively employed to foster, execute, and transition significant demonstration projects with major ICMM implications to the DOD. Examples of specific projects include —Modeling-and-simulation-based ICMM “acquisition war games” undertaken in partnership with DAU, using authoritative experts as visiting professors and research fellows, as well as active or retired PMs and experts from industry and government. Provide early stimulus and support to the concept and formulation of a commercial acquisition academy; —Demonstration programs to fully explore and validate the optimum use of the commercial manufacturing base for military products; —Advanced ICMM technologies, including modeling and simulation tools and methods to faithfully represent the relationships between product design, commercial producibility, and life-cycle supportability; —Methods to achieve or approach six-sigma quality control on defense and commercial comanufacturing lines; and —Technologies and business and management practices that will enable affordable production of small lot sizes, the goal being an affordable lot size of one. Recommendation 4. Contract for life-cycle support and technology refreshment. For systems where commercially manufactured content is significant, DOD acquisition strategies should give total product responsibility to the system integrator for design, production, product support, and system availability, including responsibility for commercially based technology refreshment. The objective is to assure producible designs that can be supported with readily available compo-

OCR for page 40
Page 48nents where underlying commercial technology in systems and subsystems is progressing rapidly. To accomplish this, the USD(AT&L) should issue the following implementing guidelines: Use only performance specifications. Give configuration management authority to the contractor to redesign and replace failed products so long as DOD retains plug-and-play (i.e., form, fit, and function) interchangeability. Provide incentives for contractors to initiate technology refreshment as required to support the product. Plan to minimize costs and time for requalification except where necessary for safety. Use interface control documents and functional specifications to manage the contractor. Use multiyear production pricing curves and award term contracts that motivate the design and production of reliable systems and cost-effective sustainment. Plan and fund functional product improvements separately from product support. However, with configuration management authority, contractors should be able to initiate replacement or upgrade of components when it is less costly than continuing to repair the existing ones. Demonstrate and encourage lean manufacturing and just-in-time supply-chain practices. Recommendation 5. Increase DOD and defense sector awareness of planned and emerging commercial technologies and capabilities. USD(A&T) and service acqusition executives (SAEs) should develop programs to increase the insight that DOD and defense contractors have into emerging commercial products and planned technologies, to assess capabilities that will be available in time frames of military interest, and to use this information in defining requirements for acquisition and upgrade programs. These new insight programs should include Designating and training DOD personnel who will specialize in commercial market research and advising the acquisition community on emerging commercial products and production capabilities that DOD can leverage. Supplementing this in-house capability with access to commercial market research companies and their knowledge bases. Encouraging defense prime contractors to establish business relationships that give them insight into the proprietary plans of commercial partners and allow them to assess ICMM possibilities for emerging commercial technologies and planned production capabilities.

OCR for page 40
Page 49 Recommendation 6. Invest in R&D to increase the compatibility of military operating environments and commercially produced components. The Director of Defense Research and Engineering should establish a program to develop generally applicable solutions to mitigate the effects of differences between military operating environments and commercial operating environments. Examples of solutions are designs and manufacturing methods that harden commercial items to perform reliably in military environments (temperature, humidity, shock, vibration, and radiation) and weapons system features that isolate or buffer commercial components from such environments. Experience from commercial industry in applying commercial components in severe environments should be analyzed to determine their applicability to military systems. Implementation should include Analyses to identify classes of commercial subsystems and components that offer the needed performance potential but are incompatible with military operating environments. These analyses should identify opportunities for generally applicable solutions that would have broad impact across new acquisitions and upgrades. Particular emphasis should be placed on commercial components and subsystems for multifunctional sensors, battlefield robots, missile seekers, night vision equipment, and embedded computers. Funding for R&D programs to develop the needed solutions. Since the objective is to increase the use of the commercial industrial base, this mission could be assigned to the DOD ManTech program. DISCUSSION OF RECOMMENDATIONS This section briefly discusses the committee's recommendations as they relate to the items in the statement of task. Task 1. Identify advances in commercial technology and best practices that present opportunities for increased ICMM. Based on a review of studies forecasting advances in manufacturing processes expected by 2010, particularly the Integrated Manufacturing Technology Roadmapping Project (IMTI, 2000), the committee's assessment is that the advances in technology and practices most important to increasing opportunities for ICMM are in the following areas: Product design, definition, and data interchange; Systems for manufacturing planning and execution;

OCR for page 40
Page 50 Collaborative design techniques, especially those that bring subcontrac- tors into the process earlier; Enabling information infrastructure; Product modeling and simulation (including cost and producibility); Methods of assuring and improving quality; Test and evaluation; Design for product support and reduced life-cycle cost; and Integration planning and analysis. To take full advantage of these advances, DOD needs to be more actively involved in commercial standards development processes to ensure early consid-eration of the interfaces needed for defense applications. Commercial industry will generally not make changes to accommodate defense needs once standards are set. The most notable best practice is commercial industry's efforts to seek radi-cally new manufacturing sources for components, driven by pressure to reduce production costs. A new industry, flexible electronic manufacturing services (EMS) companies, is available for dual production (see Finding 4). This trend toward flexible EMS companies appears to be continuing, along with trends in CAD, robotics, and other technologies. It is difficult to predict the consequences of these powerful forces in 2010 and beyond. However, it appears that two distinct lines of evolving commercial manufacturing will be available by 2010: Horizontal (outsourced) manufacturing by high-tech companies, where efficiency is achieved by specialized facilities operating in multiple shifts, and Vertical (in-house) manufacturing, where competitive costs are achieved by highly automated, flexible manufacturing that allows a wider spectrum of assembly than specialized horizontal manufacturing. The committee believes that both capabilities will be available to the military once the barriers pointed out in this report have been dismantled. Task 2. Identify technology areas where rapid commercial advances could be leveraged. The trend toward increased miniaturization and integration of MOEMS will, by 2010, offer high-capital-investment facilities capable of making defense as well as commercial subsystems (see Finding 4). Task 3. Identify major weapon systems suitable for production by commercial enterprises.

OCR for page 40
Page 51 The committee finds that major weapon systems in 2010 and beyond will continue to be integrated, assembled into final products, and tested by defense prime contractors. However, virtually all defense systems have many opportunities for subsystems and components to be bought from commercial suppliers, either as COTS insertions or as custom-produced items (see Finding 4). While progress has been made with COTS end items and components, the opportunities for custom items using commercial production capabilities have not been well capitalized on. There is also a broad range of commercial practices that can be applied throughout the life cycle of virtually all military systems. Task 4. Identify barriers limiting ICMM. The committee finds that barriers were well defined in earlier studies and that most of the needed tools are available. Further implementation action is needed, and as described in Chapter 3, there is now a body of experience to build on.