27 August 2010

Military Realizes It Didn't Want What It Asked For

The United States Army has terminated its "Ground Combat Vehicle" competition (i.e. the program to build a next generation Bradley Infantry Fighting Vehicle) after in house Pentagon consultants looking at preliminary proposals for the vehicle realized that what the Army asked for in its "request for proposal" wasn't really what it wanted.

The vehicles defense contractors tried to come up with to meet the Army's requirements ended up looking like seventy ton Swiss Army knives, not because the contractors had poor designers, but because the Army had insisted that it do everything under the sun and have every imaginable feature without really understanding the consequences of making this kind of request.

The vehicles are supposed to enter service seven years after the contract is granted, which realistically means something more like a decade, and the Army's decision to change its requirements is expected to delay the program by about six months. So, realistically, the vehicles under the revised proposal will enter service sometime around the year 2021, by which time the designs submitted will be outdated anyway and the per vehicle cost will have soared beyond the initial contract price at rates far in excess of the inflation rate.

Overhauling the program now makes the Pentagon look stupid, but the decision to scale back the program will probably greatly reduce the odds that the program will later be canceled, reduce the extent to which the defense contractor that gets the program will deliver a vehicle behind schedule and reduce the magnitude of the inevitable price bloat that will take place. So, the decision to rethink the program now was a good one.

The perils of asking more than can be delivered, simply because the military wants a vehicle that can do everything, have been illustrated by the Marines' armored amphibious personnel carrier program Expeditionary Fighting Vehicle program, several program names removed, but no deployed vehicles subsequent to the original program. The program puts the Marines in a particular bind because the Corps has designed several ships and a military strategy around the vehicle without actually having something that works to fill that role. The Marines have plans to by 573 of the vehicles, but General Dynamics, which currently has the contract, still can't make a vehicle that works and are continuing to discover new problems (like vulnerability to IEDs) with the prototypes.

Unlike the Marines, the Army could simply buy an "Off The Shelf" design already in production to meet its needs with a more modern design than what it is using now. But, that would require it to use non-American defense contractors and to settle for a vehicle that they cannot claim even on day one is superior to the one used by any other military force in the world that has capabilities that weren't possible when the contract was begun using existing technology, both of which are standard Army expectations for any major military procurement program.

In a real pinch, the military can and will use off the shelf technology as it did in the MRAP program to obtain mine resistant vehicles for Iraq after it discerned that its own inventory wasn't up to the task, but it takes clear failure in an actively conducted war to force it to take that kind of step.

Meanwhile, the U.S. Navy is having trouble deciding which of two competing Littoral Combat Ship designs it likes best after having bought two of each towards a total buy of 55 ships, so it has decided to postpone the date it had set to make the decision. Lockheed Martin and General Dynamics have been pushing their competing designs since 2004. The latest delay by the Navy is accompanied by some changes in what the Navy is asking for in its contract, although the exact nature of the new requirements for the ships isn't entirely clear.

The main reason that the Air Force is missing out on the procurement mayhem this time around is that it already revised its air tanker program months ago in a similar drama, and is already neck deep in its behind schedule, over budget F-35 program so it doesn't have any new warplane contracts that it can revise at the moment.

A big part of the problem is also that the American military is committed ideologically to trying to fit defense procurement into a free market business equipment model, even though its programs have just one buyer, just a few companies that can compete, involve custom designed products with unproven technologies, and are conducted on a money is no object basis. These are not the circumstances, however, where ordinary big business manufacturing capitalism approaches work.

A long term contact, competing contractor model just doesn't appear to working all that well for the military in a time of rapid technological change. It may be that the United States simply needs to nationalize a large chunk of the defense industry so that it can design new weapons programs in a more flexible manner without butting up against the restrictions involved in bidding out long term contracts to build cutting edge technologies, without fattening the pockets of defense industry executives through its missteps.

In particular, perhaps the R&D function ought to be nationalized, and defense contracts ought to be limited to competitions to manufacture designs that have already been designed and prototyped by a federal government owned military R&D company. There could be competing designs, but they would all be in house productions, so they could more freely share insights with each other, with a common outcome being a "best of both worlds" design that incorporates the best features of competing concept systems with each other and has ongoing interaction between the members of the military who will use the systems and the in house government owned company design team that its developing the system all the way through the prototyping stage.

This would shift power from lawyers and Pentagon contracting bureaucrats in favor of engineers and project managers. Once prototypes were built and blue prints for building new systems were in place, bids from defense contractors that would mass produce the new systems could be compared on a much more apples to apples basis than under the current system where the design function resides with the manufacturing companies.

The sheer coolness of working for the company that designs new state of the art major weapons systems for the United States military, as opposed to working for companies that merely build what it comes up with, might also make it possible for a publicly owned military R&D company to attract top talent at a reasonable price, in much the way that it attracts special forces soldiers, astronauts and spies to do amazing tasks for modest salaries.

If you were a brilliant engineer, which would you rather do: Design the next generation airplane for $150,000 a year, or design the assembly line the builds the next generation airplane from some other guy's design for $500,000 a year?

The loyalty to the military's objectives that a government owned company would have would also make it easier for Congress to refrain from micromanaging the R&D process and trust it to use its engineers and senior managers to strike the best balance between what is possible and the needs of the military with a limited budget. The omnipresent concern that the profit motives of defense contractors are at cross purposes with the nation's national defense needs would evaporate.

This isn't as big of a leap as it may seem.

DARPA (the Defense Advanced Research Projects Agency) already does this to some extent, but is pretty much limited to pie in the sky, high risk, decades in the future ideas, rather than still cutting edge but larger scale and less speculative tasks like designing ships, tanks and airplanes.

Much of the nation's basic research is already conducted at publicly owned universities, and much of the rest of the nation's R&D is heavily subsidized with grants administered by government agencies on a non-market basis, with defense contract funding tailored to specific R&D programs, and with tax breaks. The literature of managing creative companies is vast. A major in house R&D project is how the most devastating military program ever conceived, the nuclear bomb, was invented. Europe's military planes are designed and built by a multi-government owned monopoly company.

Of course, no system would be flawless, and there would have to be some mechanism in place to encourage the R&D company to come up with designs that were feasible and affordable to mass produce. But, the current defense contracting mess seems to a great extent to be a case of excessive outsourcing to the point where there isn't enough in house engineering talent to even know how to ask for what the military really wants, because the process of making a request for proposal and the process of seeing what can be designed consistent with the laws of physics and economics turn out to be intimately intertwined with each other in practice.

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