5th LRIP Batch of F-35 JSF to be Awarded

Lockheed Martin (LMT), the prime contractor on the Joint Strike Fighter (JSF), and the U.S. Department of Defense have pretty much wrapped up negotiations for the latest batch of F-35 Joint Strike Fighter (JSF) production. This goal was to complete and award this by the end of 2012 and it looks like that will be met.

The FY13 order will be for 32 more of the advanced aircraft split between the 3 variants. The bulk, 22, are the Air Force’s Conventional / Take Off and Landing (CTOL) version. These are intended to replace the F-16 and A-10 platforms currently in use. Then there are 3 F-35B Short/Vertical (S/VTOL) for Marine Corps to meet the AV-8A mission and finally 7 F-35C carrier based aircraft for the Navy. Estimates for the cost of the aircraft along with engineering services and other money is in the $3.8 – 4 billion range.

The F-35 program remains several years behind original schedules and cost have increased greatly but much progress has been recently made. There are now over 150 aircraft delivered or in production with this order. They are supporting test and development along with training for pilots and ground crew.

Due to the high concurrency remaining with the program Lockheed will have to go back and modify many of the current production aircraft to the final standard after they are delivered. This is due to the much more T&E remaining for things like the advanced helmet, software and other parts of the aircraft. The F-35 continues to remain on track to be the most expensive defense acquisition program in history.

Photo from U.S. Navy Imagery’s flickr photostream.

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F-35 JSF News Roundup

The F-35 Joint Strike Fighter (JSF) is the largest defense acquisition program ever and it continues despite the budget uncertainty in the United States. If sequestration is implemented the program will most likely see across the board reductions in funding. This could lead to reduced production numbers and delays in the test and development program. The JSF while it is in low rate production is still facing concurrency as it moves toward a final design. The program is led by Lockheed Martin (LMT).

Some recent stories about the program include:

The new test plan for the program was reviewed by DoD leadership and did not win approval. There are major concerns with the pace of development for the new helmet the pilot wears that provides data directly to them rather then relying on their instruments.

Lockheed received a contract from the U.S. Navy worth over $200 million to begin implementing Israeli specific modifications to support that country’s buy of the aircraft.

In another move related to the foreign sales of the program Canada has hired KPMG to analyze the cost basis used by the government to award their contract for 65 F-35 to replace existing CF-18 fighters.

Despite all of this news the program continues with training, testing and development as Lockheed steadily delivers aircraft from the first 4 production batches. They also continue to work with the Government on the next buy.

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Netherlands Looks At Leaving F-35 Program

The Joint Strike Fighter (JSF) program led by prime contractor Lockheed Martin (LMT) was designed similar to the successful earlier F-16 aircraft. Different NATO and other allied nations would contribute towards the development and also the production to spread the costs and benefits of the advanced fighter. The Netherlands was one of those countries that did this with a commitment of R&D funding and ultimately having a plant that would support their and Italian aircraft deliveries.

Now driven by austerity and cuts to the budget the Netherlands’ Parliament voted on leaving the program. New elections will be held later this fall and by then the plan is to report on the costs to the country of abandoning participation.

For several years some representatives have expressed concerns with the growth of the unit cost of the aircraft and the delays to the schedule making it hard for the Dutch to buy the necessary amount of aircraft with the funding available. This vote just formalizes those concerns.

Even with the vote the program continues to move along. The Japanese military has gone ahead with their order. The U.S. has placed orders related to Lot VI and VII of the production while continuing to negotiate Lot V.

At the same time the cost growth experienced by the overall program is making all purchasers re-evaluate how many they may buy. Cuts to production orders will only further increase unit costs as there will be less aircraft to spread development funds over as well as reduce economies of scale. The situation where a program is stretched out and annual buys reduced is a common one in defense acquisition leading to higher unit and overall costs.

While the JSF has shown a great deal of improvement over the last four years it still has a long way to go and its final numbers will most likely be much lower then originally planned.

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More F-35 Work for Lockheed Martin

The Pentagon awarded Lockheed Martin (LMT), the prime contractor for the F-35 Joint Strike Fighter, another $237 million of work on the advanced aircraft program. This contract action is to add to the fourth low rate production batch some changes that have been developed over recent times. The F-35 program is very concurrent with testing and development ongoing while production is as well.

This means situations like this where aircraft already delivered or on the production line will be retrofitted with changes that have come out of the test program or experience flying the system. This concurrency is one of the reasons the program has suffered cost and schedule problems. At the same time it allows Lockheed to deliver aircraft to support training and testing and ultimately deployment.

Originally the contracts for production had been cost plus where the government was responsible for any increases in cost related to changing requirements or specifications. The most recent production one due to pressure to control cost has a cap above which Lockheed will be responsible for any additional costs.

Despite the fact that their line workers remain on strike for what is now approaching three weeks the company continues to work on the aircraft.

The F-35 program continues to be the most expensive defense acquisition program in history and recent moves to stretch out deliveries by several years will only add to that total cost.

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Despite F-35 Troubles Infrastructure Investments Continue

The F-35 Joint Strike Fighter (JSF) headed up by Lockheed Martin (LMT) is the largest defense acquisition program in history. It is facing a series of schedule delays and cost growth which is causing the Pentagon to buy less aircraft then originally planned and stretch out the deliveries. Many of the current customers are making noises about second thoughts due to these delays. Even so the program continues with test flights, production, development and the carrying out of other preparations.

This includes the issuance of a contract to build two hangers for the aircraft located at Marine Corps Air Station located in Yuma, AZ. This $70 million or more contract to Harper Construction will be for special buildings that are compliant with the F-35’s requirements. This includes special facilities to operate the logistics system being developed for the aircraft.

The Marines are currently planning on putting 6 squadrons of the aircraft at Yuma when fielding is complete and a further 6 squadrons at Mirimar MCAS near San Diego.

The F-35 like the F-22 Raptor fighter and B-2 bomber most likely utilizes construction materials to improve its “stealthiness”. This may mean it needs hangers adapted to the requirements for the maintenance and protection of those materials. This is probably why new ones must be built and old ones refurbished.

When the F-35 program is complete the U.S. will possess over two thousand of the advanced aircraft and allies another several hundred. That date right now is looking to be sometime in the 2030’s.

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Agile in Government: Can Agencies Make It Work? By Bill Damaré

September 27, 2011 by · Comment
Filed under: Editorial 

Agile in Government: Can Agencies Make It Work?

By Bill Damaré, Vice President, Government Markets

ESI International

In September 2010, Federal Bureau of Investigation Chief Information Officer (FBI CIO) Chad Fulgham took over management of the Sentinel case management system, one of government’s prime examples of a runaway major information technology (IT) project. After 10 years of development, more than $450 million invested and only two phases completed, Fulgham decided to switch to Agile development in order to buck the trend and complete the project by the end of fiscal year 2011.

Major IT projects within the government continue to be blamed for billions of wasted taxpayer dollars. With increased transparency in government, examples of failed projects, schedule lapses, technologies becoming obsolete before they are launched and cost overruns are more widely known. And then there are those projects that required years of heavy investments that never launched at all.

To ensure IT investments deliver benefits early and often, U.S. Chief Information Officer Vivek Kundra has made “modular” development one of the building blocks of his 25-point IT management reform plan which was launched just three months after Fulgham took the reins of Sentinel’s development. The adoption of a “modular approach with usable functionality delivered every six months” is one of three requirements for approving funding of major IT programs. To support modular development, the plan refers to creating a new IT budget model, revamping the process for justifying and monitoring IT investments, and implementing the right program management and acquisition practices.

Within a few days of this plan’s launch, the Department of Defense announced Section 804 of the 2010 National Defense Acquisition Act, which requires a new acquisition process for IT systems, including “early and continual involvement of the user; multiple, rapidly executed increments or releases of capability; successive prototyping to support an evolutionary approach; and modular, open-systems.” These approaches closely relate to the industry’s emerging best practice of Agile project management.

Many government project and program managers have seized upon the plan’s references to the modular approach as a prescription for Agile project management, which enables project teams to deliver working products or prototypes in increments for customer input that later feeds into succeeding iterations. But although frequent changes in requirements might make government programs seem good candidates for Agile, it is not a cure for all projects. It won’t work when:

The organization requires formal change management processes and extensive documentation
Projects have high regulatory compliance requirements
Projects have a team consisting of novice team members in key roles

· Customers/users have limited involvement

Just as important, agencies would need to institute significant changes to their management practices, processes and tools in order to move from a traditional waterfall to Agile development approach.

What can agencies do to prepare their people and the work environment for Agile?

The first step is for agencies to evaluate their portfolios and decide which projects are suited for Agile. The approach should be tested on a small innovation project from the portfolio or on smaller tasks within a traditional waterfall implementation. Next, agencies need to decide to what extent Agile will be applied on the first group of projects. Taking a hybrid, iterative approach can help agencies achieve better results while avoiding schedule delays and any other short-term negative consequences of a major change initiative.

The People Factor

Management and Governance

Regardless of the extent of an organization’s shift to Agile, people can and will pose the most formidable barriers to adoption. For this reason executive or senior management support is critical, along with a management style that puts more emphasis on leadership and collaboration than command and control. Managers accustomed to delivering unvarying results using consistent, set processes will likely resist the transition. Senior executives can preempt such resistance by promoting change as a necessity and dedicating resources to make that change possible. Agile should be positioned as essential and, therefore, a fundamental part of every IT professional’s job, not an additional duty.

The Team

Agile teams are integrated—and, ideally, co-located—project teams (IPTs) by definition. Members must possess the personality and work styles suited to self-governing, collaborative and adaptive teams. Unlike traditional project teams, Agile teams are led rather than managed by a project manager (PM).

The Agile PM’s primary role is to remove barriers that might impede the team from getting the job done. Each team member’s work is held up to scrutiny as members perform periodic peer reviews. Meetings take place each day to coordinate and communicate in a way that streamlines, if not obviates the need for, certain documentation. Everyone is accountable for the performance of the team and is similarly rewarded. Because success depends highly on the team’s expertise and familiarity with Agile methods, there is no room for amateurs, even when the agency takes a hybrid approach.

As an IPT, they must be attuned to the impact Agile will have on the supporting infrastructure—e.g., acquisition strategy, contractor award evaluation criteria, performance metrics put into quality assurance surveillance plans and the changing needs of the customer, also a key member of the team. Given such tight interdependence within an Agile team, adding and removing team members are often more difficult than in traditional program teams.

Mr. Kundra commented at a recent PMI® annual event that “…too many project managers are trained on paper only… This lack of hands-on training hinders our ability to manage large, complex projects.” Agile projects will be no exception if the new team members are certified but unqualified. Because most government teams will be new to Agile methods, they will need to learn the use of new tools, techniques and methods and a new vernacular.

Training should follow a learn-practice-perform format, providing adequate exposure to core concepts followed by hands-on workshops and coaching sessions to help teams apply what they’ve learned on actual projects in order to increase their mastery and confidence in the process. In addition to on- and off-site experts, other support options include such online resources as Webinars, templates, checklists and a repository of lessons learned.


Executives will need to initiate and facilitate dialogue with stakeholders to clearly understand requirements, limitations and risks before communicating the urgency of adopting an Agile approach. Once the organization shifts to Agile, stakeholders will likely miss the traditional milestones for making budgeting and staff decisions, and balk at their frequent, close involvement with the IPT’s activities.

However, most stakeholders will soon appreciate how their greater involvement translates to more control over how to prioritize features and where those priorities fit in the iteration and release schedule. They can ensure activities deliver customer value at each iteration, and better understand the impact new features will have on cost and schedule.

Process and Tools

The Agile approach requires a fast-paced work environment. Slow decision making, elaborate documentation and rigid processes will only undercut its benefits. Close, frequent collaboration and communication minimizes documentation and the use of artifacts, which in turn will have an impact on contract administration and the historic use of concrete acceptance factors. Although modular contracting is by no means new in government—in fact, Section 35 of 1996’s Clinger-Cohen Act stipulates agency heads should use modular contracting for major IT systems acquisitions—the process has had few adopters over the past 15 years.

Having the right tools in place at the outset will lower the risk of processes failing to meet customer needs. Whether the team is partly distributed or co-located, collaboration tools, which often include blogging and instant messaging capability, will go a long way to improve the effectiveness of intra-team interactions and knowledge sharing in an environment where lean thinking trumps details, documentation and artifacts are kept to a minimum, and deadlines are iterative. The same online library that helps make the shift to Agile will also help deliver program results.

Government CIOs and their teams are closely watching whether Sentinel can be transformed from a half-billion-dollar failure to one of federal IT’s success stories. By May 2011, 10,000 FBI employees were using Sentinel’s existing capabilities and a broader release is expected in September. The delivery is long overdue, as development of a next-generation case management system for the FBI had actually started in earnest back in 2001.

Whether Sentinel will succeed this time is no doubt a question on everyone’s mind. If funding for large IT programs is truly contingent upon taking a modular approach to program and project management, the more urgent question is, are other agencies ready for Agile?
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Department of Defense Not Really That Concerned with Boeing’s Costs for Tanker

At a recent public event the Undersecretary of Defense for Acquisition, Logistics & Technology, Ashton Carter, was asked about the projected cost increases for the KC-46A development. His response was that he, and OSD, are not really that worked up about the fact that Boeing (BA) may exceed the projected ceiling price of the contract.

In his eyes the U.S.’s liability is based on the $4.9 billion price. Boeing’s bid of $3.6 was a conscious business decision on their part. Some members of Congress, led by Senator John McCain (R-AZ), have raised concerns about the increase and the fact that the cost share structure of the contract obligates the U.S. to pay 60% of the first billion in increases.

There is also the idea that this situation would encourage contractors to submit low estimates for development contracts, or buy-in, with the goal of making up the difference in their production or by having the U.S. pay some of the overruns. McCain and the Senate Armed Services Committee (SASC) are also investigating the large cost increases in F-35 production that are requiring the U.S. to pay over $700 million as part of their cost share.

The idea that the Defense Department would accept this kind of business model is interesting. One of the criticisms of defense acquisition is this very point. In the late Sixties when Lockheed, now Lockheed Martin (LMT), did the same with the C-5 transport, although perhaps not deliberately, it is considered one of the examples of acquisition abuse and the program was almost cancelled. Now Carter is saying that as long as it involves a Firm Fixed Price Contract it is an acceptable practice.

This is just the beginning of the situation and Boeing certainly has the ability to not charge more then the ceiling price as they work the KC-46A development. Their current estimate of about $5.2 billion may be conservative and costs for the first 18 aircraft could be under $4.9 billion.

Senate Tries to Negotiate Next JSF Contract with Lockheed Martin

When a company signs any contract they spend a great deal of time negotiating it with the other party. This is true not only of defense contractors and the government but in any contract. The decision on terms and conditions as well as price may take several months. Now Lockheed Martin (LMT) may be forced to sign a contract for the Joint Strike Fighter (JSF) where the terms and conditions will be dictated by the U.S. Senate.

In the recent Defense Authorization bill passed out of the Senate Armed Services Committee (SASC) for the consideration of the full Senate specific conditions were levied on the JSF program’s next contract. This is fairly unprecedented but indicates how high the level of concern there is with the performance of the program for this new combat aircraft program led by Lockheed.

The Joint Strike Fighter is the largest defense acquisition program in the history of the world. It will buy thousands of modern, stealthy aircraft to replace the aging Eighties fleet of F-16, F/A-18 and A/V-8 aircraft used by the Air Force, Navy and Marine Corps. Many allied nations will also purchase it to replace their F-16 aircraft. The F-35 Lightning II JSF will be made in three variants and ultimately cost the U.S. billions to produce and sustain over the next forty years.

The program has a history of sustained cost and schedule increases as development and testing has turned out to be longer and more complicated then originally thought. Over the last three years the program has been re-baselined and redesigned to account for some of problems but still faces many challenges to achieve its scheduled timeline. Many in Congress, the media and the aviation community have become increasingly concerned about this cost growth and how it will ultimately affect the production and delivery of the aircraft.

Due to these concerns the SASC added two very specific provisions to the 2012 defense authorization bill relative to the JSF. The authorization bill combined with the appropriations bill from the Senate Appropriations Committee tell the Pentagon how much money they have to spend and how it should be spent. Once the bills are approved by the Senate they go to a conference committee with the House to produce the final bills.

These provisions require the next annual production contract for the F-35 to be a fixed priced one with Lockheed absorbing any cost increases over the contracted amount. (http://www.defensenews.com/story.php?i=6845494&c=air;%20budget;%20policy&s=TOP) This is rather unique contracting decision because at this stage in the life of a defense program there remains enough uncertainty that fixed prices are hard to define and agree on. That type of contract is more commonly used when the production line is fairly stable and little or no development effort remains. Lockheed is currently under a fixed price contract but it will received fees for good performance. The contract also has a provision that the maximum the government will pay is 120 percent of the target price.

The second requirement that Lockheed will have to absorb cost overruns is something that will be hard for the company to accept at this time. When a program is in the testing and development stage the Government and the contractor make an effort to share the risk. This means that cost increases due to delays or technical issues are spread between the two parties. In the current contract any cost over the 20% increase would be covered by Lockheed with the Government accepting the cost growth risk to that point. The Senate is proposing that the contractor accept all of the risk meaning Lockheed would begin losing profit immediately.

The JSF is entering into dangerous territory. There is beginning to be extreme concerns about the cost of the program especially when the U.S. budget is facing such pressure due to the needs to reduce the annual deficits. The 2012 budget will include almost $7 billion to buy 28 aircraft for the U.S. military. Some in Congress are now discussing alternatives to the program which would require a different aircraft or approach. Ending or scaling back the program would be huge blow to the U.S. military who are counting on the JSF to provide a major technical upgrade as well as replace many aging systems. The U.S. ended production of the F-22 their last most recent tactical aircraft program in 2009. If there is no JSF they would have to consider re-starting that production, upgrading existing aircraft or looking overseas for a new fighter.

At the same time it is unprecedented for Congress to wade into the minutiae of details in contract negotiation like this. Lockheed and the Defense Department must decide on the best contract vehicle to achieve the goals of the program. The program has issues but dictating to Lockheed a situation where there ability to make money which is their goal will make it difficult to award the contract. These provisions will make it more difficult to negotiate the next production contract potentially stretching out the program even more as well as setting a precedent that will make other companies think twice about beginning programs. There is a chance that competition will be reduced causing further price problems for the Pentagon.

Article first published as Lockheed Martin Now Negotiating Contracts with the United States Senate on Technorati.

Photo from ngotoh’s flickr photostream

JSF Continues to Make Progress While Troubles Swirl

The F-35 Joint Strike Fighter is a great many things. It is the largest defense acquisition program in U.S. history with total costs projected in the hundreds of billions. It is the future of military aviation for America and several of its Allies for the bulk of the next century. It is also moving slowly towards entering full production.

At a time when the power of modern combat aviation is being demonstrated over Libya through the use of some of the more advanced and newer systems in use by the U.S. and its European NATO allies in combat that is right now strictly using air assets the JSF continues its testing and development. Designed to replace the ubiquitous General Dynamics (GD) F-16 that forms the core of the United States Air Force as well as many NATO countries military it will also be used by Navy and Marine Corps off of aircraft carriers and as a new Vertical and Take Off/Landing (VTOL) aircraft. Because of this complexity the program headed up by Lockheed Martin (LMT) has suffered its share of delays and cost growth that have threatened its completion.

In its most recent report to Congress the Government Accountability Office (GAO) reports that software development especially is now seeing delays. Final completion of this key component is now expected to be at least three years late in 2015. Part of this is due to the slow build up of flight testing although the program has seen great strides in that effort in recent months. The concern of the GAO, Congress and the Pentagon is that delayed development and entry into production will require more money at a time when the defense budget and Federal spending as a whole is under pressure to be reduced due to the recent large deficits.

Even though the second Low Rate Initial Production (LRIP) aircraft has joined the test fleet it and the others had to be grounded due to a oil leak and generator failure. Work by the Joint Program Office (JPO) and contractors have led to seven of the fourteen existing aircraft being cleared to fly again but the two LRIP remain grounded as it is believed a newer generator design may have led to the problem. Again problems like this is why you do testing but it does add time to the schedule.

Northrop Grumman (NOC) who is one of the major sub-contractors on the program responsible for making large parts of the fuselage assembly continued their support by opening their integrated assembly line in California. This production facility utilizes technology developed for the auto industry and has automated tools for assembly and manufacture as well as moving sections around. It is hoped that the more efficient line will lower costs and increase production rates.

The JSF program is ambitious, costly and now necessary. The U.S. and its Allies need a modern aircraft to replace systems originally developed in the Seventies and built in the Eighties for a general war in Europe. The JSF is suffering development problems like so many other programs have in the past. These are multiplied due to the size of the program and the amount of money committed to it. If the JSF was to be canceled or scaled back another aircraft would have to be developed and produced eventually at a potential greater cost. The requirement will be there no matter what.

Photo from Sh4rp_i’s flickr photostream.

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U.S. Marine Corps Begins EFV Replacement Process – Updated

Update – Clarified to correct that the Amphibious Combat Vehicle (ACV) is the EFV replacement vice the MPC. The MPC is to be used on land to move infantry around.

In its 2012 budget request the Obama Administration continued its plan to overhaul defense acquisition by proposing the cancellation of the new amphibious assault vehicle for the U.S.M.C. The Expeditionary Fighting Vehicle (EFV) program led by General Dynamics (GD) was over budget and behind schedule.

Part of the problems the program faced was that the requirements were for a well armored vehicle that could move fast in water and on land. The EFV was really a modern Infantry Fighting Vehicle (IFV) that also had to travel across several miles of ocean under fire at high speed. These kind of requirements often cause issues with development and the EFV was a fairly aggressive program to begin with.

Congress has not necessarily been receptive to the idea of ending the program as it would represent yet another big ticket item ended with resulting job losses and millions of dollars seemingly not invested well. They are the final decision makers and it will be interesting to see how the final budget falls out next year with the pressures of trying to reduce spending but also to keep programs going.

Of course the Marines still need a replacement for their Seventies vintage AAV-7 they are currently using which is optimized for delivery of troops to shore but not for use as an armored transport on a battlefield threatened by the IED and mine such as the Marines faced in Iraq and continue to do so in Afghanistan. Because of this need in mid-February the government released a series of Request for Information (RFI) to begin the process again of rebuilding their vehicle fleet.

The RFI cover the gamut of upgrading the existing AAV with more power, armor and weapons to replacing the wheeled LAV used for reconnaissance and troop transport to the new version of the EFV. This is currently called the Amphibious Combat Vehicle (ACV) and mirrors many of the requirements that the EFV was trying to meet although the Marine Corps now says that the ability to move quickly across the water may be too expensive to pursue.

Hopefully some of the money spent on developing the EFV may also have bought things that can be used by the ACV program to expedite its development and delivery while lowering its costs. The situation is similar to the Army and the end of their Future Combat Systems (FCS) vehicle program. There remains a need and the Army had to start the Ground Combat Vehicle (GCV) program to get replacement for the M2 Bradley IFV.

Unless the U.S. is willing to forgo a large portion of the U.S.M.C.’s mission a modern amphibious assault vehicle is going to need to be developed and built. Let’s hope the ACV has a better result then the EFV did.

Photo from RDECOM flickr photostream.

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Republican House Successfully Cancels JSF Second Engine Where Previous Administrations Failed

As part of their continuing resolution providing funding for the Federal government for the rest of Fiscal Year 2011 the Republican led House of Representatives struck funding for the F136 engine planned for the Joint Strike Fighter (JSF) program. The overall bill includes several billion in cuts to the Defense Department as well as much more for Federal spending overall. The second engine is being developed by General Electric (GE) and Rolls-Royce (RR:LSE) while the primary one by Pratt & Whitney, a United Technology Company (UTC).

The idea of having a second source for this critical hardware as risk reduction is sound but for the last several years the Pentagon and Bush and Obama Administrations had requested no funding as it was felt an unnecessary program. Congress through its power over the budget kept funding in each year.

While the House has cut the funding there is still a chance that the Senate will leave it in and the final decision will be made in Conference. One of the primary arguments that occurs each year with budget deliberations is how many jobs would be lost if programs like this were ended. That of course is not supposed to be a rationale for defense spending but carries a lot of weight in Congress. Already stories such as this one “Cut engine wold have meant 200 new jobs in Terre Haute” will be appearing in newspapers, blogs and on TV stations across the U.S. today.

GE released a statement thanking their supporters but obviously turning their eyes to the Senate in an attempt to keep the program going. They wrote “While we are disappointed at the outcome, the debate to preserve competition will continue.” The company also pointed out that studies show that the competition between the engines would save billions over the life of the program.

The F-35 JSF is the largest defense acquisition program in U.S. history and has suffered from schedule delays and cost growth over the last decade. The aircraft will equip large parts of the U.S. Air Force, Navy and Marine Corps while also being used by U.S. Allies such as Great Britain, Canada, Australia, Norway and Holland among other countries. With the program’s cost increases the second engine has seen as an expensive luxury.

If the cancellation holds only as the program plays out will it be seen as a wise or premature move. If P&W supports the program effectively and the engine causes no delays or cost increases then the lack of a second source will not matter. If the opposite occurs then there will be finger pointing and recriminations.

Photo from Dysanovic’s Flickr photostream.

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Army’s Desire to Control Costs Reduces Competition with GCV

The U.S. Army‘s attempt to start the program to replace the M2 Bradley Infantry Fighting Vehicle (IFV) suffered a blow today when one of the four bidders on the original development effort withdrew from the new contest. The Army had canceled the original RFP and substituted a new one when the bids submitted exceeded cost and schedule goals. The Army also decided to re-think some of the requirements due to the large size and weight of the proposed solutions driven by the armored protection goals.

Advanced Defense Vehicle Systems (ADVS) announced yesterday that they would not participate in this latest attempt as the company expressed concerns with the lengthy development process. ADVS believes it is better suited for a more rapid development and production contract.

The Army released their new RFP in early December. In a bid to minimize cost and schedule growth the new plan is to use Firm Fixed Price (FFP) contracts for all parts of the program including the development of the new vehicle. In the past the use of FFP for development of new systems has proven difficult as the contractor must assume a great deal of risk especially if their are changes to requirements that might drive up development and test costs.

The decision to focus on containment of potential cost and schedule issues has reduced competition for this program. There are still three bidders left from the first round who so far seem willing to participate. While the Pentagon has focused on restructuring acquisition rules to try to minimize problems they also still want to maximize competition. The idea being that multiple companies participating would put downward price pressure on the other contractors. With all things related to defense acquisition there is no easy solution or way to reach a balance.

The plan for the new GCV is similar to what the Defense Department used for the Mine Resistant Ambush Protected – All Terrain Vehicle (MRAP-ATV) program two years ago. The MRAP-ATV was designed to be a lighter, more mobile MRAP for use in Afghanistan which has poorer terrain and roads then Iraq. Multiple teams submitted prototypes which were then down selected through testing and ultimately Oshkosh’s (OSK) design was chosen. Oshkosh so far has built several hundred of the vehicles and received billions in contracts from the Pentagon for the system.

The GCV is a more complicated system then the MRAP-ATV and while there are potential existing solutions to the requirements there would be significant development to meet the Army’s needs. ADVS felt that they were better suited to rapidly develop and procure a solution based on currently available vehicles rather then the Government’s desire for iterations of development and test.

The GCV itself arose out of the end of the Future Combat Systems (FCS) canceling by Secretary of Defense Robert Gates. The FCS would be a new family of wheeled vehicles to replace the heavy M1 Abrams tank and M2 force from the Eighties. It had suffered cost and schedule problems while not being optimized for the combat situation in Iraq and Afghanistan. Because there was still a need for a new vehicle the GCV was started.

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Indian Air Force Buys Bombs from the U.S.

One of the plans that U.S. and the European defense contractors are hoping will offset decline in business in their own countries due to budgetary pressures is to sell overseas. Asian, Middle Eastern and South American countries are expected to invest billions over the next few decades in their military. While the contracts won’t be as frequent or as large as the ones gained domestically they are still good business.

India has taken great strides in the past two years to reform its defense acquisition to allow greater competition from Western defense contractors. In the past the offset and investment requirements as well as regulations to encourage domestic growth made it hard for their market to gain much interest. Now India is trying to take advantage of the Western market to upgrade the overall technology of their military systems. India has signed deals with Boeing (BA) for P-8I Maritime Patrol Aircraft as well as considering the C-17 transport.

The biggest ongoing contract is for new fighters that has attracted competition from across the Globe with Boeing, Lockheed Martin (LMT), MiG, SAAB and the Rafale from France.

While these bigger deals percolate India has been signing some smaller ones. It was announced yesterday that Textron (TXT) will sell over five hundred aerial cluster bombs to the Indian Air Force. The contract was done as a Foreign Military Sale (FMS) from the United States government and is worth over $250 million.

While this represents only one percent of the company’s most recent quarterly revenue it is still welcome work.

If the U.S. defense budget does see serious decline it will be contracts like this that will help preserve the U.S. industrial base and keep companies going.

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U.S. Air Force Awards Raytheon $5 Million Defense Acquisition Challenge Contract — Press Release

U.S. Air Force Awards Raytheon $5 Million Defense Acquisition Challenge Contract

TUCSON, Ariz., Nov. 17, 2010 /PRNewswire/ — The U.S. Air Force awarded Raytheon Company (NYSE: RTN) a $5 million Defense Acquisition Challenge contract for the company’s Quiet Eyes Laser Turret Assembly (QELTA). Quiet Eyes is a key component of Raytheon’s Directed Infrared Countermeasures (DIRCM) aircraft protection system.

Through the DAC program, the Department of Defense awards development contracts to companies that offer technologies with cost-saving potential.

“Raytheon was selected for this award because of our history of providing the military with products on schedule and below cost,” said Mike Booen, Raytheon’s vice president of Advanced Security and Directed Energy Systems. “This is the second time Raytheon’s DIRCM technology was selected for a DAC award. Quiet Eyes is a mature system that is ready for integration aboard a wide range of fixed-wing aircraft.”

As part of the QELTA contract, Raytheon will demonstrate successful integration of its light-weight, low-cost, highly reliable Quiet Eyes turret with a rugged quantum cascade laser (QCL) for large fixed-wing aircraft. The QELTA contract period of performance is less than nine months.

Daylight Defense, a wholly owned subsidiary of Daylight Solutions, is the subcontractor providing the QCL system for the QELTA contract.

“Daylight’s QCL technology represents a significant advancement in laser capabilities and DIRCM system reliability,” said Booen.

Raytheon Company, with 2009 sales of $25 billion, is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. With a history of innovation spanning 88 years, Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. With headquarters in Waltham, Mass., Raytheon employs 75,000 people worldwide.

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Missile Defense Agency Starting Next Generation Sea Based Missile Contest

While the U.S. Defense budget is undergoing intense scrutiny as part of the attempts to control spending by the overall Federal government it still must continue to invest in upgraded and improved systems. One area that the U.S. has heavily invested the last two decades is in missile defense. The Missile Defense Agency (MDA) which evolved out of the original Ballistic Missile Defense Organization is responsible for managing this effort which includes all three services.

The Navy’s sea based system using a variant of the STANDARD Missile originally designed for anti-air warfare and the AEGIS weapon system mounted on cruisers and destroyers has proven very successful in tests and an operation where it “shot down” a satellite. The U.S. is currently exploring using this system in some form of land based application as well.

To counter future threats the MDA has begun a process to develop the next version of the missile to be used by this system. The Next Generation AEGIS Missile (NGAM) program has begun by receiving bids to start the concept definition and program planning phase which is one of the first steps in the acquisition process.

Reportedly Boeing (BA), Lockheed Martin (LMT) and Northrop Grumman (NOC) have all submitted proposals. Following current trends in U.S. defense acquisition policy one or more of these companies will receive small contracts to begin the development. This is what they have done with the program to develop the new radar for the ships as well earlier this year.

While the U.S. does have to look at defense spending overall and plan on reducing it as part of the process it still must continue to invest and develop new technologies and systems to counter improving threats. The use of competitions helps control costs by putting pressure on the defense contractors. It has also been proven that the careful investment of a little money in the beginning may save a great deal more in the long run.

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US Defense Acquisition Becomes Intelligent with FAR Online by Affinitext

November 4, 2010 by · Comment
Filed under: Syndicated Industry News 

NEW YORK–(BUSINESS WIRE)–Affinitext releases DFARS on FAR Online, a new service which is transforming the way businesses understand and comply with US Federal Acquisition Regulation (FAR) and Defense procurement requirements

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P-8A Maritime Patrol Aircraft Delivered to NAS Patuxent River to Start Test Program

Boeing (BA) has delivered the first P-8A Poseidon long range maritime patrol and anti-submarine aircraft to the U.S. Navy Patuxent River Naval Air Station to begin its test program. The P-8A when it reaches service in a few years will replace the P-3C Orion aircraft originally manufactured by Lockheed (LMT) that has been in service now for almost forty years.

The P-8A is based on the Boeing 737 twin engined air liner. A version, the P-8I, has also been purchased by India.

The larger, jet engine equipped P-8A will have a longer range, more time in the air and greater payload then the turboprop powered Orion. If all goes well with the program the Navy will receive their first Poseidon in 2013.

In the late Eighties the Navy attempted to develop the P-7 as a replacement for the P-3 but that program was canceled in the decade after as part of defense acquisition reforms under President Clinton. The P-8 program began just after the turn of the century and Boeing was awarded the development contract in 2004.

The Navy will receive two more test aircraft at Pax River this year. The aircraft is equipped with systems and electronics from Northrop Grumman (NOC), Raytheon (RTN) and GE Aviation (GE). The two engines are manufactured by CFM International.

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Defense Department Continues Criticism of Lockheed Martin’s EVMS System

Earned Value Measurement System (EVMS) is the way defense contractors measure their cost and schedule performance in reporting to the Defense Department on their contracts. The system tracks how money is being spent and schedule achieved against contract and work breakdown structures to provide management a way to show where cost overruns are occurring and schedule is slipping. In 2007 due to the problems with the Joint Strike Fighter (JSF) the Pentagon reviewed Lockheed Martin’s (LMT) internal system and found it wanting.

Now that the program is still experiencing cost and schedule problems that are manifesting themselves as major cost increases in the price per aircraft the Pentagon continues its criticism of the defense giants system. The failure of the company to bring them up to the standard required by the DoD is leading the Government to consider financial penalties by withholding payments due on a variety of contracts, not just only the JSF.

The EVMS system has become more important over the last twenty years as a primary tool to track program progress and accomplishment. One of the recent reforms of the Congress and Obama Administration for defense acquisition is even more focus on the use of it. Lockheed has supposedly until the end of the current month to submit a get well plan for their system or face the withhold of funds by the Government.

The JSF has seen major schedule delays that have helped contribute to the cost increase for the aircraft. If Lockheed’s internal EVMS does not work properly it is hard for the contractor and the Project Management Office to get a handle on these schedule and cost issues and even contribute to more cost and schedule problems. Lockheed has already lost some of their fee from the development and test phase of the program and the Government is threatening now to dock the payments for work done and not just profit.

The Pentagon is especially concerned with being able to estimate how much work remains on the program and the total cost. The defense budget will be under pressure for the next several years in the U.S. and with its Allies. This means that the greater cost of the aircraft may lead to a longer production run with smaller annual quantities further increasing prices and delaying the retirement of older aircraft nearing the end of their life.

Lockheed needs to meet the requirements of the Defense Department in this area as just one facet of their JSF get well plan. The program is too critical to the overall modernization of the U.S. and many of its Allie’s aviation forces. It needs to be done on time and within cost boundaries so that the necessary quantity of aircraft may be bought. If not the West could face a significant gap in its overall fighter and strike aircraft capability.

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Senior Executive Service Appointments

Senior Executive Service Appointments
June 8, 2010

Secretary of Defense Robert M. Gates announced the following Department of Defense Senior Executive Service appointments:

Marcia A. Case has been appointed to the Senior Executive Service and is assigned as associate director for military operations, Office of the Under Secretary of Defense (Comptroller), Washington, D.C. Case previously served as director for financial management, U.S. Marine Corps Systems Command, Quantico, Va.

Jose M. Gonzalez has been appointed to the Senior Executive Service and is assigned as deputy director, land warfare and munitions, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), Washington, D.C. Gonzalez previously served as a general engineer, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), Washington, D.C.

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Today in the Department of Defense, Wednesday, May 19, 2010

Today in the Department of Defense, Wednesday, May 19, 2010
May 18, 2010

Secretary of Defense Robert M. Gates will visit Peterson Air Force Base, Colo., today. He will address the change of command ceremony at the North American Aerospace Defense Command and U.S. Northern Command and welcome Vice Adm. James A. Winnefeld Jr. as its new commander. The change of command ceremony is at 9:45 a.m. MDT, in Hangar 1.

Deputy Secretary of Defense William J. Lynn hosts an honor cordon to welcome the President of the Republic of the Marshall Islands, His Excellency Jurelang Zedkaia to the Pentagon today at 11:30 a.m. EDT. The cordon will be held on the steps of the Pentagon River Entrance.

Director, Acquisition Resources and Analysis, Office of the Under Secretary of Defense Acquisition, Technology, and Logistics Nancy L. Spruill and Deputy Comptroller, Program/Budget John Roth testify at a hearing of the House Committee on Oversight and Reform on Defense Acquisition: One Year After Reform, at 10 a.m. EDT in room 2154, Rayburn House Office Building.

A National Capital Region Flyover of Arlington National Cemetery occurs at 11:05 a.m. EDT with one C-130.

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The Road To Hell In Defense Procurement Reform Is Paved With Good Intentions

May 1, 2010 by · Comment
Filed under: BNET, Syndicated Industry News 

Congress continues to make attempts to try and “reform” defense acquisition with the goal of doing things cheaper. Part of this…

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The Road To Hell In Defense Procurement Reform Is Paved With Good Intentions

April 30, 2010 by · Comment
Filed under: BNET, Syndicated Industry News 

Congress continues to make attempts to try and “reform” defense acquisition with the goal of doing things cheaper. Part of this latest bill rest on the assumption that the U.S. is under budgetary…

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Northrop Grumman Awarded U.S. General Services Administration Contract

February 26, 2010 by · Comment
Filed under: Syndicated Industry News 
Northrop Grumman Awarded U.S. General Services Administration Contract
February 26, 2010

HERNDON, Va. – The U.S. General Services Administration (GSA) has awarded Northrop Grumman Corporation (NYSE:NOC) a contract to provide integrated business, technical and programmatic support for management, execution and process refinement initiatives within the U.S. Department of Defense.

Under the terms of the five-year, $70 million GSA Mission-Oriented Business Integration Services - Integrated Title III Support program task order, Northrop Grumman will provide highly differentiated professional services and technical analytical support in conjunction with the Defense Production Act Title III, Defense-Wide Manufacturing Technology, Foreign Comparative Test, and Defense Acquisition Challenge Programs. These programs are managed by the Office of the Secretary of Defense.

Northrop Grumman was the prime contractor on the previous iteration of this task order, which was awarded in 2004, and will
primarily perform work in Dayton, Ohio, and Arlington, Va.

Northrop Grumman's teammates for the program include SENTEL Corporation and Tiburon Associates Inc., both of Alexandria, Va., and
General Dynamics Information Technology, Fairfax, Va.

"We believe that, as the incumbent, our tremendous support staff of highly experienced professionals and our demonstrated superior
past performance set us apart in this competition," said Chuck Walton, Northrop Grumman Technical Services program manager for the program. "We instill a performance culture at Northrop Grumman that is committed to excellence and generates the highest level of confidence from our valued customers across the globe."

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New RFP Released Today

The Air Force and Department of Defense acquisition officials briefed Congress and the press today on the new RFP for the KC-X. It had some slight changes from the draft release a few months ago. The key question is will Northrop bid this time around?

They won the last contract to have that thrown out on Boeing’s protest. Much more to come on this in the days ahead.

Editorial: Lightning Strike – F-35 program project head replacement: Part II

February 2, 2010 by · Comment
Filed under: Editorial, Syndicated Industry News 
Looking at the history of leadership of the JSF PEO yields the insight that four USAF officers have led the project versus two US Navy and 2 USMC Generals. This would suggest the odds are pretty high that the USAF will be next in the cockpit for the largest defense acquisition program in the Pentagon.

In addition the successor may well be thinking of his next role as the average 'life expectancy' of the JSF PEO is around 24 months - by service USAF (27 months), USN (24 months), USMC (19 months).

MajGen David R. Heinz, USMC (April 2009 - February 2010) = 10 months

Maj Gen Charles R. Davis, USAF (July 2006 - April 2009) = 33 months

RADM Steven L. Enewold, USN (June 2004 - July 2006) = 25 months

Maj Gen John L. Hudson, USAF (October 2001 - June 2004) = 32 months

Maj Gen Michael A. Hough, USMC (May 1999 - October 2001) = 29 months

Maj Gen Leslie F. Kenne, USAF (August 1997 - May 1999) = 21 months

RADM Craig E. Steidle, USN (August 1995 - August 1997) = 24 months

Maj Gen George K. Muellner, USAF (November 1993 - August 1995) = 21 months

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