By OTTO KREISHER
Otto Kreisher is the national security
reporter for Copley News Service.
Officials at the Navy's Program Executive
Office for Submarines (PEO SUB) had a serious problem. They had discovered that U.S.
submarines were losing some of their previous acoustic advantage against today's advanced
nuclear-powered and improved diesel-electric submarines--particularly during operations in
noisy littoral waters, according to Capt. Thomas O'Connor, PEO SUB's program manager for
submarine combat systems.
The Navy's growing difficulty in finding
opposing boats before being detected was not due to weakness in the sonar equipment,
O'Connor said. It was because improvements in the acoustic signal-processing computer
software, which took five years to develop and field through the military acquisition
system, could not keep up with global advances in submarine quieting. The solution was to
go to the commercial sector for a technological remedy, where computer-improvement cycles
average 18 months--and cost less. "We started in 1996, and already there is some
person on a submarine using the advanced system," O'Connor said.
That willingness to abandon traditional
processes in order to do things quicker and cheaper is the essence of the "revolution
in business affairs" (RBA), a dramatic change in acquisition, logistics, and
business-management practices that is sweeping the Navy and the rest of the Department of
Defense (DOD). PEO SUB, the Navy's acquisition office responsible for the design,
construction, and life-cycle support of both in-service and future-construction submarines
and submarine combat systems, is one of seven PEOs affiliated with the Naval Sea Systems
Command (NAVSEA). All have taken steps to exploit the potential benefits offered by
acquisition reform's RBA.
Although the revolution already had
started in some parts of the U.S. defense establishment, the RBA was energized and
institutionalized by Defense Secretary William S. Cohen's 1997 order launching the Defense
Reform Initiative.
Cohen's initiative was spurred by the
same factors that had driven PEO SUB's new approach to acoustic-processing improvements.
It had become clear that projected defense budgets would not allow the armed services to
maintain and upgrade their aging weapons and equipment and also buy the next generation of
improved systems. The dilemma, said Jacques S. Gansler, under secretary of defense for
acquisition and technology, is that "we have to maintain our short-term readiness ...
yet we have to provide for our long-term readiness by modernizing our forces."
But the increasing cost of maintaining
old equipment is consuming the money needed to buy the new gear--which would be more
reliable and cheaper to sustain--Gansler recently told a forum on RBA. "If we fail to
act now we will never come out of the death spiral of escalating maintenance costs and
deteriorating equipment," Gansler said.
Success on the
Battlefield
Several of the officials speaking at the
forum, sponsored in December by the Center for Naval Analyses (CNA), noted the sharp
contrast between the U.S. military's skills in operations and in management. Under
Secretary of De-fense John Hamre said that the armed services demand "a sense of
excellence in combat arms" but are "willing to accept wreckage" in support
functions. "We have begun to realize that our finest efforts are being held
back," Hamre said. "The challenge is to bring the same sense of excellence to
support."
Those words were echoed by Under
Secretary of the Navy Jerry MacArthur Hultin, who has made the RBA one of his top
priorities. "As good as our forces are, we have fallen behind on the business side in
[making] management more efficient," he said.
At the same forum, former Deputy
Secretary of Defense John White recalled that, when he helped to launch the business
reforms, "I considered RBA separate and separable" from the bold changes in
warfighting known as the "revolution in military affairs."
"I have come to recognize those two
things are inseparable," White continued. "We can't have a revolution in
military affairs unless we have a revolution in business affairs. ... We cannot have
success on the battlefield unless we have a fundamental change in the way we prepare and
support the forces," he added.
The reform drive already has produced
some significant successes. Gansler and others at the forum cited the Joint Air-to-Surface
Standoff Missile program, which reduced the initial estimated cost per missile from $1.6
million to a firm fixed price of only $259,000--including lifetime repairs--by adopting
commercial practices.
One Navy success story discussed at the
forum was about the commercial derivative-aircraft program, in which private firms provide
all maintenance and support services for 763 civilian-type transport and training aircraft
that the Navy flies. The outsourcing initiative has cut the cost per flight hour of the
commercial-derivative aircraft--while the cost of flying all other Navy planes has gone
up, program director Robert Kuzmick said. The savings amount to hundreds of millions of
dollars annually, but aircraft readiness has met or exceeded Navy standards, he said.
The Navy also reported success with a
combination of regionalization and privatizing of family-support services at its Norfolk
and San Diego naval complexes.
A CNA study concluded that the
combination of consolidation and competitive outsourcing of the family-service centers in
San Diego cut costs by 39 percent. A separate CNA study said a series of Navy
public/private competitions affecting a total of 29,000 jobs produced average cost
reductions of 29 percent, for estimated annual savings of $240 million.
In an interview, Hultin said that the
Navy plans to pursue public/private competitions aggressively, because the private sector
frequently can perform a business function "more effectively and at a lower price
than we can do it inside."A key target for privatization, Hultin said, is family
housing. Congress is reviewing a plan to have private contractors take over all of the
existing Navy housing in San Diego and to build 2,300 new units, he said. Hultin also
noted that a public/private competition "often results in the government side coming
up with new ideas to make it more effective. So we are a winner either way."
RBA: Time and Money
Budget pressure also was a factor in the
switch to commercial software for the acoustics processing program at PEO SUB, said
William M. Johnson, manager of the Acoustics Rapid COTS (commercial-off-the-shelf)
Insertion program in O'Connor's office. Other officials would have preferred to use
militarized equipment to maintain and improve the submarine sonar systems, Johnson said,
"but we found that the budget would not allow it."
The realization that they could make
improvements faster and cheaper by using COTS, instead of military procurement, produced a
change in mind-set as well as in process, Johnson said. "We did a lot more than just
put commercial gear on submarines. ... We really learned to leverage the commercial
sector," he said, by getting universities, private laboratories and small businesses
much more involved in developing concepts.
The new openness also led to getting the
Navy's active fleet more involved in the acoustics improvement process, Johnson said. Part
of the system actually was developed by sonar operators. "To me, that is the crowning
achievement of this. ... We really opened up the process," he said. "We have a
lot more options than we had before."
That view was echoed by Tom D. Eden,
special assistant for acquisition reform at NAVSEA, whose job is to find the best of the
new business practices and ensure they are being used throughout the command. Eden
considers that the most valuable aspect of current business reforms is the way the Navy is
approaching its work with industry. "It involves looking at a product in wholeness,
as industry has done--not just looking at the product at a moment in time ... but looking
at how we are going to support it," he said.
Program managers now are held accountable
for the entire life-cycle cost of their systems, which requires them to make trade-offs
between design specifications and efficient operations and maintenance. "This really
is radical," Eden said--using a term not normally associated with the Navy.
New Business
Opportunities
A similar explosion of innovation has
taken place at the Naval Space and Warfare Systems Command (SPAWAR), which is
headquartered in San Diego. As might be expected, the high-tech people at SPAWAR have
leaped enthusiastically into electronic commerce. A key step was creating a "business
opportunities" homepage for the command on the Internet that Capt. Jay Cohen, the
SPAWAR contracts director, said has already allowed "increased and improved
communications with both government and industry."
SPAWAR's homepage is part of the
Navy-wide Naval Electronic Commerce on Line (NECOL) system, created in compliance with a
Congressionally directed requirement for a single point of contact for contracts,
according to Debra Streufert, deputy program manager for NAVSEA's Electronic Acquisition
21 program. The system provides Internet links between the contracts homepages for DOD,
the Navy, and each of the separate Navy contracting entities.
According to Cohen, SPAWAR's homepage
allows the command to issue all of its contract solicitations electronically--no paper
copies are required. It also provides a forum for industry to ask questions and make
suggestions for all of the command's activities--creating a data link with other
government activities to allow for additional market research by contractors and U.S.
government alike. This aspect of the revolution in information technology has created an
extremely dynamic process that allows prospective vendors to learn about possible future
contract solicitations, obtain background information, and provide suggestions.
Contractors then may subscribe for additional information on a specific project--an e-mail
notice will alert subscribers when the contract is being offered.
That initiative responded to complaints
from industry that contractors had to know about new programs even before a contract is
advertised in Commerce Business Daily if they wanted to provide the best proposals
in the least time, said Sarah Lamade, Cohen's executive director for contracts.
NAVSEA has made a similar leap into
electronic commerce as part of the DOD-wide push for paperless procurement and accounting.
Although the services still are required to publish solicitations in Commerce Business
Daily for any contract above $25,000, posting the offerings on NECOL allows
contractors anywhere in the world to learn about them much more quickly. "They don't
have to wait for snail mail [conventional mail] to get to them," Streufert said.
In some cases, contractors also can
respond electronically to a request for proposals for Navy programs by downloading a form
from the NECOL system. The system saves time and money by eliminating the need to produce
and mail multiple paper copies of solicitations and contracts.
SPAWAR also is streamlining its contract
solicitation process, making greater use of oral presentations by contractors, instead of
massive paper proposals. "That really cuts down in procurement lead time," Cohen
said. SPAWAR has recorded a 77 percent cut in the time it takes to process procurements
worth over $1 million. The command also is taking advantage of regionalized support
functions in the San Diego area for obtaining services, buying supplies, and scheduling
deliveries.
COTS and Credit Cards
Each of the Navy's five systems commands
is expanding its reliance on COTS purchases for major supply and commercial services,
signing blanket purchase agreements and indefinite delivery contracts, and making greater
use of government credit cards. Hultin also emphasized the value of using credit cards for
smaller purchases, noting that it saves time and eliminates the need to execute legal
contracts, which can cost $100 each for even minor purchases. The net results are
reductions in time, money, and personnel involved in contract and support functions, he
said, and more Navy involvement with both suppliers and customers.
The Navy Department is using the RBA with
telling effect on some of its largest programs, including the LPD-17 San Antonio-class
amphibious transport dock ship, the DD-21 land-attack destroyer, and the Marine Corps'
Advanced Amphibious Assault Vehicle (AAAV), officials said.
Hultin and Gansler both cited the DD-21
as a model for how the acquisition reforms can ensure competition, provide a wide
flexibility in design, and build in life-cycle cost reductions. New procurement approaches
on the AAAV contract saved an estimated $156.0 million in production as well as $238.9
million in operations and support costs, while moving the projected IOC (initial
operational capability) ahead by four months, said Eileen Roberson, the Navy's acquisition
reform executive.
The Challenges of Change
Despite the Navy Department's aggressive
drive both for acquisition reform and for more outsourcing of support services, Hultin and
other officials recognize that there are limits to that effort. While encouraging
privatization of shore-based services, Hultin voiced concern for the need to sustain
ship-to-shore rotation opportunities for Navy enlisted personnel. A significant reduction
in uniformed billets ashore would greatly complicate career planning and shore-duty
opportunities for some enlisted ratings.
Gen. Terrence R. Dake, the assistant
commandant of the Marine Corps, also warned that excessive contracting out of support
services could "destroy the bond" between a commander and his troops. "If a
commander has no ability to affect that Marine's quality of life, we have lost
something," Dake said.
The Navy and Marine Corps also recognize
that some aspects of the revolution in business affairs pose new and serious challenges in
the areas of battle-systems interoperability and life-cycle maintenance support. These
concerns are most pertinent in the area of COTS systems and hardware as the Navy increases
its emphasis on implementation of the Network Centric Warfare doctrine. In the rush to
adopt new business practices, various officials said, it is worth recalling that the
government's past reliance on rigorous military specifications was based in part on the
hard lessons learned in actual combat. The NAVSEA, NAVAIR (Naval Aviation Systems
Command), and SPAWAR commanders all are mindful of the need to ensure that the products
they procure will operate across the Navy-Marine Corps team's entire operational
spectrum--with a means for timely repair and resupply during high-tempo global operations.
Nonetheless, today's revolution in
business affairs represents a demonstrated sea change in the way the Department of the
Navy plans to manage its acquisition programs and conduct its business in the future--with
real opportunities for increased efficiencies and continued savings both for the armed
services and for the U.S. taxpayer. |
