1. 1 4 th Annual Defense Forum Breakfast Research, Development & Acquisition Strategies in Support of our Warfighters CAPT Harry Robinson Commanding Officer 12 MAR 2010

2. 2 OVERVIEW QDR 2010 Reducing Total Ownership Costs Rapid Acquisitions NAWCTSD Perceived Policy Trends

3. 3 2010 Quadrennial Defense Review Objectives: –Rebalance force capabilities –Further reform processes to better support warfighter’s urgent needs Balance Risk: –Prevail in today’s wars –Prevent and deter conflict –Prepare to defeat adversaries. Succeed in a wide range of contingencies. –Preserving and enhancing the all-volunteer force

4. 4 2010 Quadrennial Defense Review Replaces requirements for 2 Major Regional Conflicts with capability of conducting wide range of operations –Homeland defense, support to civil authorities –Deterrence and preparedness missions –Current conflicts –Future wars Focus Areas: –Rebalancing the force –Taking care of our people –Strengthening relationships –Reforming how we do business –Defense Risk Management Framework

5. 5 QDR-Reforming Business Current and projected future operations demand more agile, innovative, and streamlined processes and institutions Security Assistance How we buy Institutionalizing Rapid Acquisition Capability Strengthening the industrial base US export control system Crafting strategic approach to climate/energy

6. 6 QDR-Reforming How We Buy Improve program execution –More fixed price development contracts –Constrain requirements creep (Configuration Steering Boards) –Demonstrate critical technologies / competitive prototypes –Independent technology maturity certification –More disciplined system engineering –Conduct realistic integrated testing early –Link contract fee structures with contractor performance –Effective life cycle cost management using readiness- based sustainment strategies

7. 7 QDR-Institutionalizing Rapid Acquisition Capability Build agile, adaptive & innovative structures to rapidly field capabilities –Quickly ID emerging gaps –Adjust program / budgetary priorities Full scope effort –Decide what we need (requirements) –Provide adequate resources (programming & budgeting) –Assess alternatives, execute solution (acquisition)

8. 8 QDR-Strengthen Industrial Base Defense industry contracted around 20 th century platforms vice developing broad / flexible portfolio systems needed today Where appropriate DOD will rely on market forces to create, shape, sustain technology –Must be prepared to intervene when necessary to create / sustain competition, innovation, & essential industrial capabilities. – Establish requirements / pursue programs using entire spectrum of industrial base (defense, commercial, innovative technologies between) –Integrated / interagency approach, ID single point failures earlier

9. 9 Reduction in Total Ownership Costs (R-TOC) Sum of all financial resources necessary to organize, equip, train, sustain, and operate Invested $7.6M in FY09 to save $130M through FY13 CAIV is a process - a way to reduce costs TOC is a domain - a set of costs to be reduced TOC Reduction is a program - a set of processes to change: What we acquire, usually addressed by CAIV How we acquire or operate a system, addressed in a number of ways, in order to reduce cost

10. 10 R-TOC Approach

11. 11 R-TOC Way Ahead Reducing Total Ownership program in place –Establishing Baselines –Defining Specific Initiatives –Results Drive Ownership Cost Targets –Tracking Execution Programs that have gone to Milestone Decisions over the last year have Included major TOC reductions in their baselines Innovative Approaches Are Being Used –Support concepts –Technology insertion –Process improvement We have changed our “corporate” THINKING! Reducing ownership cost is a primary goal of every program manager.

12. 12 NAVAIR-Rapid Acquisition Capability Required to support exigent prototyping, response to requirements, and Irregular Warfare NAWCAD establishing sustainable and defendable rapid acquisition process including the pre-established requirements, funding, and contracting structure Stand-up interactive web based tools (i.e. Rapid Contracting Tool Box) to facilitate rapid prototyping acquisitions Evolve in terms of the number and scope of acquisition tools available, and will potentially include partnerships with other DoD/Federal agencies, academia and industry.

13. 13 NAWCTSD Perceived Policy Trends Increased emphasis on peer reviews –NAVAIR changes forthcoming with emphasis on competitive buys Source Selection Guidance –OSD Executive Steering Group and cross- service Joint Analysis Team –Mandatory OSD Guidance anticipated in the near term –Elimination of service/SYSCOM centric source selection guidance (4200.39B) Commercial Item Price Reasonableness Determinations

14. 14 NAWCTSD Perceived Policy Trends Emphasis on Competition in Contracting Improved requirements definition and acquisition planning Contractor accountability –Severely restricted use of other than fixed price contracting arrangements (compelling business case needed – developmental efforts) –“Objective” vice “Subjective” performance measures –Award Fee No rollover provisions or base/provisional fee Zero fee for less than satisfactory performance –Warranties coming back into vogue

15. 15 QUESTIONS

16. 16 QDR-Rebalance the Force Defend US and support civil authorities at home Succeed in COIN, stability, and CT ops Build security capacity of partner sates Deter/defeat aggression in anti-access environments Prevent proliferation, counter WMD Operate effectively in cybersapce

17. 17 QDR-Naval Forces Robust forward presence and power projection Add capacity for working with partner navies Sea based ballistic missile defense Force size –10-11 aircraft carriers / 10 carrier air wings –84-88 large surface combatants (21-32 BMD ships) –14-28 small surface combatants (+14 MCM ships) –29-31 amphibious ships –53-55 attack subs, 4 guided missile subs –126-171 ISR/EW land based aircraft

18. 18 QDR-Reforming Security Assistance Enduring need to build coalitions and help partners address indigenous challenges. Give combatant commanders tools for their theater campaign plans and assigned mission to build partner capacity. Need right tools pre-positioned rather than responding from scratch Requires comprehensive whole-of-government programs. Current patchwork of authorities with stovepiped approaches DOD as lead/supporting role Major stability to urgent train & equip partners facing security challenges

19. 19 QDR-Reforming Security Assistance DOD improve FMS requirements, definition, and procurement Identify capabilities to define requirements balance capabilities Avoid procurement contracting delays using Defense Coalition Acquisition Fund where US maintains inventory for common needed items DOD seeking authority to expedite support services for provision of training and equipment

20. 20 QDR-Reforming How We Buy Weapons System Acquisition Reform Act May 2009 –Strengthen oversight and accountability –Closely monitor weapons system purchase to ensure costs are controlled Strengthen front end of acquisition process. More early reviews Bolster cost analysis. More independence, modernize training, Improve contractor actual cost reporting

21. 21 QDR-Reforming How We Buy Major Problems: –New system requirements at far limit of current technological boundaries. Results in disappointing performance and chronic cost/schedule overrruns –DOD Acquisition workforce atrophied critical skills for effective oversight (Shortage 13% Army – 43% USAF. Add 20,000 by 2015) –Requirements definition often encourages reliance on overly optimistic cost estimates –Need for effective/efficient delivery of logistics in the field

22. 22 NAWCTSD Project ACQ-cel Status Update Design for Lean 6 . Reduce timeline from requirement receipt to contract award by 50% Developing High Level Value Streams for each of the 4 product lines. Real time metrics for input, process, & output Improve resource allocation 1 - Define 2 - Measure 3 - Explore Complete 4 - Develop Tollgate JAN 29 5 - Implement Objectives Start Feb 10

23. 23 Used: 92% Fielded Training Systems Support II (Ceiling $800M) Customers: CNAF, CNATRA, NAVSEA, CNATT, FMS, CNRFC, BUMED AUG 03 MAR 10 NAWCTSD Current MACs Used: 53% Training Systems Contract II (Ceiling $3B) Customers: PMA205, AIR 6.7, AIRLANT/PAC, NAVSEA AUG 11 APR 05 * Data provided is as of 1 November 2009 See Gov’t / Industry IPT brief on our website for information on follow on contracts