A navigation and targeting system sorely needed by Air Force ground-attack fighters had rocky going in development. It is in production today, only because the Air Force had enough money and could buy enough time to stay with it through its technological troubles. Now, with much less money to go around, taking such pains with highly prized systems having big problems may be a thing of the past.
This point is made by John J. Welch, Jr., Assistant Secretary of the Air Force for Acquisition. His example is LANTIRN, the Low-Altitude Navigation and Targeting Infrared for Night system. It is designed to enable attack aircraft to find and hit ground targets at night and despite low cloud cover, a capability that they have never had and that may make all the difference in combat to come.
"I wonder if LANTIRN could have survived to be successful in today's environment," muses Mr. Welch in his measured way. "It was developed during a period of growing budgets. The Air Force could afford to have the patience to let it come together and show that it could be made to do what was expected of it.
"Today, the fact of life is that if we have a high-priority system in difficulty—financial, schedule, or performance—we are forced to judge it against others that we know we can afford, that are on schedule, and that are performing. It's hard now to make a judgment to save a program on the basis of its priority—the need for it—alone."
Mr. Welch also wonders "whether AMRAAM would have lived" through a time of tight budgets. Right from the start, the Air Force tagged the Advanced Medium-Range Air-to-Air Missile as a must-have weapon, one that would give fighters launch-and-leave capability for reversing the odds when outnumbered and for keeping safe distance from foes. But it was touch and go for AMRAAM through several years of turbulent development and testing, and the weapon may very well owe its survival to the beefier defense budgets of the recent past.
The leaner budgets now on and in store for the Pentagon simply mean, says Mr. Welch, that the Air Force "will have to buy less and accept the risk" in matching its force structure, weapons, and technologies with its strategy and missions for meeting present and future threats.
On an Even Keel?
All is not lost, though. On the plus side, he says, are signs that the executive and legislative branches of government may be coming to terms on the need to put defense spending on an even keel, which would be salutary in itself.
"The ingredients that are missing from what is otherwise a well-understood and well-structured acquisition process are financial stability and program stability," Mr. Welch declares. If defense spending is raised modestly but consistently each year, the Air Force, he says, "will have the opportunity to make sure that we really are procuring those things that are going to satisfy our needs to meet the threats in the time periods when the user commands will have those needs."
Mr. Welch, who is fifty-seven, became USAF's top boss of acquisition last November, succeeding Thomas E. Cooper and reporting to Secretary of the Air Force Edward C. Aldridge, Jr. His civilian post had gained ascendancy over the uniformed side of the Air Force acquisition hierarchy as a result of last year's reorganization of the command structure.
There is no longer a general-officer Deputy Chief of Staff for Research, Development, and Acquisition directly accountable to the Chief of Staff. That slot was shifted to civilian control and was renamed Principal Deputy for Acquisition. It is now manned by Lt. Gen. George L. Monahan.
The big budget crunch of late last year caught Mr. Welch coming in the door, but did not detract from his outlook. "For anyone with my background and experience, this has to be a great job," he says. "We have a good acquisition system, a new approach to acquisition as a matter of policy and law, lots of good things we're procuring to meet the Air Force's well-established needs, and good people who want to get it done."
His career has been in aerospace all the way. He was Senior Vice President of LTV Aerospace when he accepted the Air Force post. He left the corporation that he had joined, fresh out of the Massachusetts Institute of Technology, as a junior engineer in 1951, back when the firm was called Chance Vought. Through the years, he worked on a wide range of weapons programs, from aircraft to antisubmarine warfare. Missiles and space systems were his specialties at the point of his promotion in 1975 to corporate business-development leadership.
Mr. Welch's background goes well beyond the corporate world, however. He served as Chief Scientist of the Air Force in 1969-70 and has been a consultant to the Air Force Scientific Advisory Board, Air Force Systems Command, the Defense Science Board, the Army Science Board, and, on naval affairs, the National Academy of Sciences.
He has also been a member of the Defense Systems Management College Board of Visitors, the MIT Educational Council, and the Center for Strategic and International Studies, having specialized there on issues of technology transfer and emerging military technologies.
Making sure that those technologies keep on coming from a healthy, competitive defense industry is one of Mr. Welch's major goals. He is in harmony with Secretary Aldridge, who has warned that "we're on the road to destroying our industrial base" because of policies that require contractors to invest too heavily in too many development programs and that tend to discourage risky innovations that are "necessary to move our technology forward."
Says Mr. Welch: "The military marketplace has many of the features of the commercial marketplace, but it is different, because there are big winners and big losers. The relationships among the contractors, such as their teaming on major programs, are different today. Their return on investment is trending heavily in the negative direction, so the money that they have available to invest as a result of profits is being pressed."
The Air Force's Advanced Tactical Fighter program has brought the issue of contractor cost-sharing to the forefront of procurement concerns. The ATF program has a line up of US aerospace all-stars. Lockheed, Boeing, and General Dynamics are teamed against Northrop and McDonnell Douglas in competition to build the fighter. General Electric and Pratt & Whitney are competing to build the ATF engines. Westinghouse and Texas Instruments are teamed on the ATF radar. All are investing heavily in the winners-take-all program, and many have complained that their expenditures are eating them alive, will neutralize their ATF profits for years ahead if they come out winners, and will haunt them forever—perhaps destroy them—if they come out losers.
The Air Force is sympathetic, but also points out that the companies knew what they were getting into from the start.
"At the time that the ATF program started," says Mr. Welch, "it had the ingredients, and it has them today, of good competition in a very high-priority, long-term effort. The potential market [750 fighters] for industry was obviously a big one. But the Air Force knew that it would not have enough money to pursue the development program at the rate that it wanted to.
"So the Air Force sat down with the companies and put all those things on the table. It told them that it really wanted to go after the ATF, but would need their help. They said they would help and that they recognized the need for their investment.
"Now, after all is said and done, everyone is asking how it is all running out. If it doesn't run out well, if we drive people out of business and shrink our industrial base, we will not have the industrial competitiveness that we will need for the kinds of technology and systems that we'll have to have in the long run. So we shouldn't pursue a negative [acquisition] strategy."
The upshot of all this is another look, in an Air Force-industry study ordered up by Mr. Welch, at the ATF acquisition program.
"The ATF program happens to be the one we're focusing on," he says, "but the study is broader than the ATF. It is addressing what our acquisition strategy should be in order to ensure that we'll have a robust industrial base in the future. It signals that we understand both sides of the equation—investment and return on investment—in doing business with industry.
"Industry is, by definition, in free enterprise. It has certain requirements—and one is that a company has to have a return on investment if it's going to stay alive or is going to fulfill its obligations to stockholders."
Mr. Welch cautions against interpreting the current reexamination of Air Force acquisition as caving in to contractor complaints: "We're reminding them [the companies] that we were up front with what we had and what we wanted, that we have honored our commitments as to the size and the priority of the ATF program, and that they're in it."
Mr. Welch did not address the possibilities for reformation of procurement policy and practices that the study may explore. There are indications, though, that it will consider development contracts that guarantee contractors certain levels of return on investment if they in turn are willing to take commensurate risks and control costs.
Changes Are Afoot
Whatever comes to pass in the study, it is clear that changes in ways of doing business with industry are afoot not only in the Air Force but in the Department of Defense at large.
Dr. Robert B. Costello, who recently succeeded Richard Godwin as Under Secretary of Defense for Acquisition, has said that DoD must improve its relations with industry and must, by the same token, revitalize the defense industrial base. Dr. Costello is said to be attracted to incentive-type contracts that make it more worthwhile for contractors to restrain program costs.
Keeping costs under control is imperative in the ATF program. The Air Force's goal is to come up with an ATF no heavier than 50,000 pounds and costing no more than $35 million each—as measured by the value of the dollar in Fiscal Year 1985 and assuming the production of 750 aircraft at the rate of seventy-two per year, beginning in the mid-1990s.
Those weight and cost ceilings were set by Mr. Welch's predecessor, Dr. Cooper. It is no secret that the fighter community and the fighter R&D community regarded them as overly ambitious, but agreed to abide by them for the sake of getting the program under way. More and more, however, those ceilings are being called into question as the Air Force and its ATF contractors continue to chip away at the fighter's performance characteristics in order to contain the aircraft's cost and retain its planned production quantity.
On this issue, Mr. Welch declares that the Air Force "cannot and will not sacrifice" its requirement that the ATF be built as "a revolutionary air-superiority fighter that can do its job over the aggressor's territory. That is the user's requirement, and that's what's driving the program.
"But we're also realists. We know that if an airplane gets too big and heavy, it's going to cost too much money, and we won't be able to get sufficient numbers. We've got to have force structure as well as performance. Quantity of aircraft is an asset that can't be dismissed. We can trade off quantity and quality, but we must trade them off within the boundaries of force-structure requirements and performance requirements. Those requirements are well understood, and we will meet them."
Will the Air Force have to relent sooner or later and raise its weight-and-cost ceiling for the ATF? "That's a little hard to answer," replies Mr. Welch. "It was properly set as the kind of weight and the kind of dollars that would permit us to get the kind of force structure that was thought to be required. It's very real. Pounds are dollars, and flyaway dollars are the great denominator in determining force structure. The important thing is to achieve the characteristics for air superiority at a cost we can afford."
On the issue of contractor investment, the National Aerospace Plane program is another striking case in point where USAF is concerned.
General Dynamics, McDonnell Douglas, and Rockwell International were chosen last October as the finalists in competition to continue developing technologies for the hypersonic X-30 experimental aircraft that is scheduled to begin flying in the early to mid-1990s. Rockwell's Rocketdyne Division and Pratt & Whitney are competing in development of the highly advanced engines that will be required for the plane's hypersonic flight in air and space.
NASP program officials expect that by the time the X-30 takes to the air, the companies involved in the program will have spent up to half as much money on it as the government will have paid them to proceed.
In terms of contractor investment, "the NASP program is the opposite of the ATF program," Mr. Welch says. "The Air Force has not told the NASP contractors that it's a number-one operational priority program or that we know when NASP will go operational or how many we plan to build."
What it comes down to, he says, is that contractors should see for themselves that the NASP program is a good buy for their investment dollars even without any immediate promise of a big market: "If I were in industry and looking at that program, I would conclude that it must help my technology base and will help me be competitive in the future, or I wouldn't invest in it."
Nevertheless, the Air Force will do all it can to facilitate industry's investment in NASP technologies. The reason, says Mr. Welch, is that "we know that the Air Force must be out in front in getting an industrial base for hypersonic technologies so that we can be confident of being able to operate in the hypervelocity regime. That regime is certainly more interesting to the Air Force than it is to anyone else. We should be the leader in it, and the NASP program offers us the opportunity in the near term."
Managing the Risks
The NASP program is an extreme example of the technological riskiness of virtually all Air Force development programs—and on this score, Mr. Welch has words for critics of Air Force R&D and procurement management.
"Defense procurement requirements are different from others," he says. "We are asking for systems and applying technology to keep reaching out against very challenging threats. So we know up front that we have to take risks. Our job is to manage the risks, not to avoid them. Most times when we are criticized, it's because the critics don't
recognize that we're not in a risk-free business. If you want us to be free of risk, you will not have programs that will keep us the most admired and respected defense capability in the free world. People who are quick to jump on us should recognize that they were told of the risks, just as we were, at the outset.
"There is plenty of room for us to improve, and we are improving. But have we managed our risks well?
The answer is, 'Hell, yes, we have."
Over the past few years, the Pentagon has taken increasing heat from Congress over its management of electronic warfare systems acquisition, with special emphasis on the alleged jumble of programs for aircraft radar warning receivers (RWRs).
Last August, the General Accounting Office reported that the Air Force and the Navy were acquiring nine different RWRs for their tactical aircraft at a combined cost of more than $6.6 billion, that "none are common to both Air Force and Navy aircraft," and that "the services have not capitalized on several opportunities to develop common RWRs."
GAO's charges prompted the Office of the Secretary of Defense to launch a special program review (SPR) of the RWR situation last October that seems, at this writing, to be picking up steam under Secretary of Defense Frank C. Carlucci.
Mr. Welch cautions against "addressing the subject of radar warning receivers without recognizing that thousands of aircraft exist today—some bigger than others, some with newer systems, some with older systems, some required to perform in a high-threat environment, some in a low-threat environment, and some that will be with us for a longer time than others.
"To reject these facts of life in planning RWR procurements to meet all the needs would be to hold the real world hostage to the unachievable world—and maybe that's the way we're being asked to live."
In the EW context, the question of the adequacy of the defensive avionics on the B-IB bomber invariably comes up.
Says Mr. Welch: "We did a good job on the individual systems on the bomber, but we ran into difficulties when we wanted them all to work together. Today, the defensive system in the airplane can go to war—no question in our minds. Over time, we will get to the full capability that we want. The [defensive avionics] contractor was given a job to do, and he didn't do it. Now he is doing it."
Congress is putting heavy pressure on the Pentagon to devise a master plan for development and procurement of electronic warfare systems that would inevitably lead to a slew of joint-service EW programs under OSD management.
Mr. Welch indicates reservations about this, saying: "Where there are mutual needs across the services, you can end up with joint programs. But jointness is a result, not a goal, and it should not be predefined. To presume that it's a virtue unto itself is to cause anomalous decisions."
He leaves no doubt of his philosophical and practical opposition to centralizing the execution of the services' acquisition programs in the Office of the Secretary of Defense, a move that many in Congress favor and that seemed to be afoot in OSD for a time last year under Richard C. Godwin, then the Under Secretary of Defense for Acquisition.
The drift toward centralized acquisition created a rift between Mr. Godwin and the service Secretaries, who, with Secretary Aldridge in the forefront, managed to stem it. Mr. Godwin subsequently resigned, because he lacked the authority that he thought was due him in the congressionally mandated revamping of the Pentagon's procurement power structure.
Dr. Costello, who served under Mr. Godwin and then succeeded him, is believed to be less sensitive to the issue, but much remains to be seen.
Of centralized acquisition, Mr. Welch asserts: "I've seen it tried elsewhere, and it hasn't worked."
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