8
Conclusions and Recommendations

MUNITIONS MANUFACTURING POLICY

The Department of Defense’s (DoD’s) current replenishment policy stipulates that (1) the munitions stockpile must meet peacetime needs, (2) The munitions stockpile must support two near-simultaneous major regional conflicts, and (3) the munitions manufacturing base must be capable of replenishing the stockpile within 3 years. The policy assumes that the organic munitions base will meet peacetime needs and that a large portion of stockpile replenishment following conflicts will be performed by commercial firms that are under contract to operate dual-use facilities with munitions manufacturing capability. In the event that stockpiles are severely depleted, it is assumed that the “cold base” can be reactivated quickly for munitions production.

Conclusion: The concept of idling factories full of precision machines and laying off highly skilled people, often in munitions-specific fields, with the expectation of quick startup at an unknown time in the future makes the creation of a truly effective replenishment strategy extremely challenging.

Conclusion: Based on briefings and documents available to the committee, many of the Army’s munitions manufacturing facilities are obsolete.

MUNITIONS INDUSTRY CAPABILITIES

Modernization of Munitions Industrial Base

Several previous studies (GAO 1996b; PNNL 1997; NDU 1996, 1997, 1998) have documented in detail the current state of the U.S. munitions industrial base. Major problems identified in this and previous studies are:

  • Extensive obsolescence of manufacturing equipment and processes,

  • Problems in the quality control of processes,

  • Scarcity of machine tool numerical controllers,



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Munitions Manufacturing: A Call for Modernization 8 Conclusions and Recommendations MUNITIONS MANUFACTURING POLICY The Department of Defense’s (DoD’s) current replenishment policy stipulates that (1) the munitions stockpile must meet peacetime needs, (2) The munitions stockpile must support two near-simultaneous major regional conflicts, and (3) the munitions manufacturing base must be capable of replenishing the stockpile within 3 years. The policy assumes that the organic munitions base will meet peacetime needs and that a large portion of stockpile replenishment following conflicts will be performed by commercial firms that are under contract to operate dual-use facilities with munitions manufacturing capability. In the event that stockpiles are severely depleted, it is assumed that the “cold base” can be reactivated quickly for munitions production. Conclusion: The concept of idling factories full of precision machines and laying off highly skilled people, often in munitions-specific fields, with the expectation of quick startup at an unknown time in the future makes the creation of a truly effective replenishment strategy extremely challenging. Conclusion: Based on briefings and documents available to the committee, many of the Army’s munitions manufacturing facilities are obsolete. MUNITIONS INDUSTRY CAPABILITIES Modernization of Munitions Industrial Base Several previous studies (GAO 1996b; PNNL 1997; NDU 1996, 1997, 1998) have documented in detail the current state of the U.S. munitions industrial base. Major problems identified in this and previous studies are: Extensive obsolescence of manufacturing equipment and processes, Problems in the quality control of processes, Scarcity of machine tool numerical controllers,

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Munitions Manufacturing: A Call for Modernization Legacy of a sequential (as opposed to concurrent) product realization framework, Lack of use of information technology, Lack of modern skills and knowledge among the workforce, Huge overheads associated with idle and underutilized facilities, Lack of a modern supply chain concept for the munitions enterprise, Lack of in-house technological experts in modern manufacturing techniques and database management, and Need to sustain critical technologies and skill sets that are not likely to have self-supporting commercial uses. Conclusion: The Army has not followed the accepted commercial business practice of investing continuously to keep its munitions manufacturing infrastructure (facilities, equipment, and workforce) reasonably up-to-date. The problems addressed by the Totally Integrated Munitions Enterprise (TIME) program are real and the munitions industry needs to change to address them. There are tremendous opportunities through application of modern commercial business practices and commercial-off-the shelf (COTS) technologies to reduce costs in the munitions industry while substantially improving its responsiveness to the nation’s needs. The DoD must provide clear overall guidance to ManTech and the TIME program in this regard. Strong leadership from the Army ManTech program office is required to create a unified plan for addressing the near-term and long-term needs of the munitions industry, as well as detailed, short-term plans for developing and implementing technologies, agreements, workforce training, and other actions to address the most pressing near-term needs. The committee has concluded that the U.S. munitions enterprise needs to undergo a thorough modernization of its organic base. The committee’s recommendations follow logically from this conclusion. The committee recognizes that Congress and DoD are faced with a complex challenge. Factors contributing to this complexity include the following: A period of limited perceived conventional warfare threat to U.S. interests but increasing threats of terrorism and regional conflicts, A large stockpile of increasingly obsolete conventional munitions that is expensive to maintain and manage, Tight budget limitations within DoD, and Advances in electronics and the possibility that revolutionary improvements in energetics may make a large portion of our conventional weapons obsolete. In view of these factors, it is difficult to determine the level of resources that should be directed toward modernizing conventional “dumb” munitions facilities. However, with smart munitions playing an ever more prominent role in U.S. defense capabilities, the committee believes that it is essential that the industry

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Munitions Manufacturing: A Call for Modernization segments producing smart munitions be kept thoroughly up-to-date with proven COTS technologies. While the committee recognizes that important differences exist between commercial and defense manufacturing requirements, the urgency for modernization of munitions manufacturing to at least the current level of commercial practice in a time of cost containment offers no course other than adoption and adaptation of COTS technology. Conclusion: The committee agrees with DoD’s strategy for achieving greater efficiency in munitions procurement, as stipulated in a policy letter from the Honorable Paul J.Hoeper, Assistant Secretary of the Army (Hoeper 1998b). The major elements of the strategy are as follows: (1) manage ammunition using DoD’s life-cycle acquisition process, (2) use acquisition reform initiatives to stabilize the business environment and provide incentives for private investment in the production base, and (3) rely on the private sector to create and sustain ammunition production assets in response to production and replenishment contracts. The letter also states that the Army should, to the maximum extent feasible, transition government-owned ammunition production assets to the private sector while preserving the ability to conduct explosives handling operations safely. Private Sector Production Recommendation: The committee recommends that the Army transfer production requirements to the private sector wherever possible, thereby limiting the resources needed to upgrade or replace production equipment and systems in government-owned/government-operated (GOGO) facilities that have become obsolete. If needed in case of conflict, modernization of the required GOGO facilities will offer substantial payback to taxpayers in responsiveness, cost savings, and ability to transition new generation munitions to production. Recommendation: For those requirements that must remain in the organic (GOGO) base, the Army should upgrade its production equipment and processes to make them compatible with those currently used by commercial industry, so that outsourcing for stockpile replenishment becomes a viable option. This will require modification of many production processes. TECHNICAL AND PROGRAM APPROACHES Given the relatively primitive state of munitions acquisition, manufacturing, replenishment capabilities, and product realization and the severely limited defense budgets available for modernization of the munitions

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Munitions Manufacturing: A Call for Modernization industry, the TIME program, in general, cannot and should not be a leader in manufacturing technology. Commercial industry is moving rapidly to develop effective tools to meet most of the needs of the TIME program. Technology gaps will appear primarily as they relate to military-specific TIME requirements; the committee saw no such gaps. It is in the gaps that TIME will need to make a technological contribution. It is important for TIME to work continuously to identify and resolve military-specific technology gaps when and if they are discerned. Conclusion: The key element from a strategic point-of-view is integrated design and manufacturing. TIME should balance its emphasis between shop floor activities and the design environment. Modernizing the munitions industry presents a complex problem that includes a combination of management, political, economic, and cultural (i.e., people) issues, not just technical issues. Yet, the TIME program was set up to focus almost exclusively on the technical aspects of the problem. An integrated, multifaceted approach is required to address the problems of the munitions industrial base successfully and cost-effectively. Therefore, the scope and funding of TIME should be expanded to meet this compelling national need. The committee recognizes that the perceived need for munitions manufacturing capabilities changes with evolving perceptions of threats to the security of the United States. The committee also recognizes limitations in the defense budget for conventional munitions and the advantages of postponing implementation of modern enterprise integration technologies if conventional munitions capabilities may not be called upon in the foreseeable future. However, the committee also believes that it is important to recognize the low levels of investment in the munitions industry in the past several decades, the challenges and length of time required to implement many of these changes, and the substantial benefits that have accrued to commercial industries from their investments in these capabilities. Commercial industries, in many cases, have found themselves at the “bleeding edge” of many of these technologies, expended great effort to get them debugged, and found cost-effective ways to implement them. This process is likely to continue in the future, with great potential benefit to the munitions industry and the taxpayer from this substantial investment by commercial industries. Recommendation: The Army should follow the practice of acquiring state-of-the-market, commercially available technologies whenever possible. It should not engage in developing technologies, with the possible exception of specific technologies clearly determined to be DoD-unique, urgently needed, and lying on the critical path toward modernization.

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Munitions Manufacturing: A Call for Modernization Recommendation: As part of its upgrade, TIME needs to develop a long-term strategic plan that conforms with DoD plans and munitions industry needs and that clearly shows ownership, responsibility, and accountability. The TIME program needs to reset its direction and objectives by taking a bottom-up analysis approach to both new product introduction and replenishment capacity management. It then needs to develop a short-term implementation plan with measurable goals and objectives. Furthermore, it should do the following: Establish a clear statement of vision, mission, and goals and communicate this information throughout the Department of the Army. Tie the responsibility of each organization and participant to the realization of that vision and establish a leadership structure to make the vision come alive. Continue the process of benchmarking against commercial industry. This is a moving target. Potential showstoppers today may be solved by commercial industry tomorrow. Continue the process of demonstration projects for the transfer of technological capability and incorporate a long-term plan to reach specific goals. Implement CAD/CAM/CAE systems and appropriate employee training. Ensure that the designs and manufacturing processes for all munitions are implemented in computer-aided design/computer-aided manufacturing/computer-aided engineering (CAD/CAM/CAE). Prioritize needs and opportunities in conformance with the architecture and begin to implement the pieces with the highest paybacks. Recommendation: In accordance with the architecture proposed by TIME, the entire acquisition process for munitions, from ordering to payment, should be automated and integrated into one loosely coupled, unified enterprise system. This includes the processes utilized by the entire munitions supply chain. Largely, the COTS technology to achieve this vision is available today. TIME is correctly focusing on the overarching framework for integrating the various elements of the product realization process into an enterprise system using today’s COTS technology. What remains to be developed are the process of integration, the infrastructure, and the rules governing that process. Conclusion: The committee believes that the TIME program is developing an approach to an integrated enterprise that may offer potential for other DoD manufacturing enterprises. TIME is correctly planning to regularly reassess the technological framework that it is using to meet its goals and to update its framework relative to the realities and opportunities of changing industry norms and evolving national

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Munitions Manufacturing: A Call for Modernization priorities. In other words, TIME should correctly be viewed not as a final destination but rather as a journey. Recommendation: DoD, through the TIME program, should carefully and thoroughly analyze the opportunities for cost and inventory reduction that may be available through utilization of proven commercial industry techniques for integration of supply chains. Recommendation: The TIME program should regularly review its goals and objectives, as well as its technology path for achieving those objectives, so that it can avail itself of the latest appropriate, well-proven COTS technologies. Recommendation: It is strongly recommended that the Army Materiel Command establish a standing peer review committee to provide oversight and guidance to the TIME program. The committee should report to Army managers at a level with both budget development authority for the TIME program and overall responsibility for management of munitions. The committee should conduct an annual review of the TIME program, assess progress, and provide guidance on future directions. The committee should consist of a mixture of experts from industry, academia, consultants, and the controls industry. Finding: The government munitions industry is certainly in need of rehabilitation and upgrading to ensure its readiness to meet the nation’s warfighting requirements. Substantial improvements can be made merely by implementing COTS technologies, exercising the equipment to make sure that it works, and then storing the equipment in a manner that prevents degradation. The magnitude of these basic needs, combined with limitations in the defense budget, should preclude government-sponsored development and implementation of leading-edge technologies in the conventional munitions industry unless there are compelling national security needs that cannot be met by COTS technologies. Some of the leading-edge technologies identified by TIME may require large investments over several years and appear to offer only marginal potential improvements when compared with up-to-date COTS technologies. The committee believes that dramatic strides will continue to be made during the next few years in the commercial development of machine controls, communications and networking capabilities, modeling and simulation technologies, CAD/CAM/CAE systems, enterprise and supply chain integration systems, and the means for enhanced interoperability of these capabilities. Given the lack of a clearly identified, urgent threat to U.S. national security that requires government investment in these capabilities, it appears to the committee that TIME should (1) cease all development efforts, (2) monitor commercial process and modify architectures accordingly, and (3) begin only limited

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Munitions Manufacturing: A Call for Modernization implementation in the conventional munitions industry based on well-defined priorities. In addition, the committee believes that research efforts should continue in the design and development of smart munitions and advanced energetics, especially through the demonstration and validation phase and perhaps into low-rate initial production. As these advanced weapons become increasingly feasible, the need for improved capabilities to produce conventional munitions will continue to decline. Thus, the highest return to the taxpayer in implementing TIME-identified technologies may be in applying today’s COTS technologies to enabling rapid realization and scale-up, if needed, of these advanced munitions. Conclusion. The heavy focus of the TIME program on Open Modular Architecture Controllers (OMACs) has consumed resources needed for other important dimensions of TIME. TIME should divest its work on OMACs and consider their use only when they are available as well-proven commercial products that exceed the performance of other commercial controllers. PROGRAM PLAN AND SCHEDULE Based on the information provided to the committee, there was no financial justification done on either the overall TIME program or the individual subprojects. This is significantly below commercial industry standards, where such analysis is the main tool used to prioritize development projects. Without this kind of criteria, work with poor return-on-investment and low value to the organization’s mission may increase project costs. In terms of detailed scheduling, the TIME program appears to plan only major milestones. While this is a good feedback mechanism to measure progress, it is unsatisfactory planning by industry standards. In an industrial environment, it is considered essential to manage the project to the original delivery dates to enable the promised return-on-investment. Delays nearly always result in budget increases, and a delayed completion means delayed financial benefits. In a project of this size, it is not unusual for several things to go wrong. Industry-standard project management typically has several contingencies built into the project plan to make it possible to encounter problems and still recover. The committee has seen no such contingency planning. For instance, it can almost be guaranteed that the first introduction of new technology into manufacturing will reveal unanticipated problems that will interrupt production. In commercial industry, as in munitions manufacturing, production commitments must be met. For this reason, commercial industry always has a back-up plan. The committee was not told of a back-up plan to assure that munitions production commitments will survive the expected problems of new technology introduction. Because some of the factories involved are operating at well below their capacity and can easily produce extra product, the committee anticipates that careful planning can readily minimize

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Munitions Manufacturing: A Call for Modernization such disruptions to regular munitions production. However, the TIME program should study and avail itself of the lessons being learned (often the hard way) in commercial industry, regarding, for instance, the massive difficulties that have been encountered by numerous corporations as they attempt to implement complex enterprise resource planning and supply chain integration systems. Recommendation: The TIME implementation plan should include detailed contingencies for unforeseen disruptions in routine munitions production caused by the introduction of new technologies. Conclusion: To completely implement all aspects of the TIME program and keep the integrated enterprise fully up-to-date would involve huge expenditures, well beyond what is justified in today’s threat environment. However, substantial, prudent, prioritized investments can result in substantial increases in U.S. defense capabilities and cost savings to U.S. taxpayers. The interconnections between computer systems at the various suppliers and manufacturing facilities will make up a significant part of the TIME program’s cost. Recommendation. The TIME program should perform appropriate cost-benefit analyses for each system interconnection for purposes of creating a cost-effective system and to establish priorities for required interconnections. The committee believes that as a result of the funding of the program directly by Congress, rather than as part of the internal DoD and Army budget processes, Congress and the Army have provided little specific guidance and oversight for the TIME program. As such, the flow of funds and program accountability are outside the normal chain of command. While this funding indicates the interest of Congress in munitions modernization, it appears that the method of funding has resulted in many of the activities of the program being only loosely coupled with the most pressing needs of the munitions industry. Neither DoD nor the Army feels a sense of ownership. The basic objectives of TIME cannot be achieved following the current path and within the currently allotted budget. TIME is an effort that is substantially larger and more challenging than those typically undertaken in industry. Yet its budget for early phases of such a program is far less than those typically allotted by commercial industry. Recommendation: The TIME program should be reconstituted and built into a DoD/Army initiative to be pursued over the next decade. It should be adequately and consistently funded through the formal DoD and Army chain of command, not built on funding that cannot be counted on to continue and that compromises

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Munitions Manufacturing: A Call for Modernization the attempts of program managers to do what is needed for the program. DoD and the Army must assume ownership of TIME if the program is to be successful. It was beyond the scope of the committee’s charge to consider fundamentally different strategies for meeting future production requirements for conventional munitions. However, such strategies may offer the most efficient means for future munitions production. It could be argued, for example, that an industrial base should be designed primarily for production of precision-guided munitions, while also supporting production of conventional munitions. Recommendation: A high-level Army/DoD study should be undertaken to determine the most effective strategy for meeting future requirements of conventional munitions production. Reasonable alternatives should be identified and evaluated.