IDGA Irregular Warfare COTS Deck


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Giuntini & Co. presentation at the 1st annual IDGA Irregular Warfare conference from May 2010. Presentation focuses on COTS products used in military equipment.

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IDGA Irregular Warfare COTS Deck

  1. 1. Trailing Edge Technology Solutions: A paradigm shift for the design and support of COTS products employed in COIN operations By Ron Giuntini Principal, Giuntini & Company, Inc. IDGA Irregular Warfare Conference Monday, May 25, 2010 ©G&C 2010 1
  2. 2. Presentation Outline • What Are Commercial Off The Shelf (COTS) Products • Overview Of COTS Products Employed In Weapon Systems • COTS Versus Developmental Products • Trailing Edge Technology Concept ©G&C 2010 2
  3. 3. What Are Commercial Off The Shelf (COTS) Products • “Commercial item” as defined in FAR Part 12; provides framework for buying products under Federal Acquisition Streamlining Act • The overall goal is to fill DoD requirements whenever practical by using products whose design and configuration control is driven by the commercial market, rather than employing products that are designed specifically for the military; referred to as Developmental Items (DI) • COTS products can also be referred to as Non-Developmental Items (NDI), or Government Off The Shelf (GOTS) where a specific COTS product is utilized in several systems ©G&C 2010 3
  4. 4. What Are Commercial Off The Shelf (COTS) Products COTS Legacy Program/ COTS Product Product A Oversight Manager Manager DI Product B Program Manager GFE A Executive DI Product Office C Manager DI Product E D Manager Program /System Manager COTS Evolving Program COTS Product Manager A /System Rapid Fielding Initiative Manager COTS Product Manager B E Program COTS Product Executive C Office Manager GFE D System Of Record DI Product Manager D Program/ Product Oversight Manager ©G&C 2010 4
  5. 5. Examples Of COTS Products Currently Employed By The Services • Communications & data • Computers/servers (Dell, HP, IBM) • Data storage (EMC) • Routers (Cisco) • PDAs (Palm, Blackberry) • Non-embedded software (Microsoft) • Displays (Trans-Lux, Panasonic) • GPS (Garmin, Magellan) • Training simulators (Rockwell Collins, CAE) • MRAP (Navistar wheelbase) • Fixed-wing special purpose aircraft (Gulfstream, Beech. Cessna. Boeing) • Off-road construction vehicles (Caterpillar, Terex) • Nuclear, biological & chemical sensors (Smith Industries) COTS Products Becoming A Platform For DI ©G&C 2010 5
  6. 6. COTS Versus Developmental Products Product Source Type Comparison Element COTS Developmental Acquisition Made-To-Stock or Assemble-To-Order; from Cycle Time immediate to a few weeks delivery. Provides Made-To-Order; with many For ability to be extremely quick in reacting to design configuration changes, Warfighter operational changes required to fight our can take years for delivery System enemies Delivery Joint Capabilities Integration and Development System (JCIDS) deliberately emphasizes analysis and risk avoidance at the expense of speed. JCIDS normally takes five to nine years, depending on the complexity, from the time a new system is requested, until a solution is delivered. Col. Timothy Chyma, US Army Acquisition Corps, at 2010 Brookings Institute meeting ©G&C 2010 6
  7. 7. COTS Versus Developmental Products More from Col. Timothy Chyma on acquisition speed “By comparison, the Army’s Rapid Equipping Force (REF) can turn out systems in 7 to 15 months; it can do this because it is small, has access to funding within the same year it wants to make a purchase, and most importantly it interacts directly with the units in the field so it understands their needs far better than the traditional procurement administrator. REF is something the Army should embrace in its long- term modernization programs.” ….many of the products employed are COTS The Army’s Training and Doctrine Command (TRADOC), released in 2010 a planning document, “Operational Adaptability: Operating Under Conditions of Uncertainty and Complexity in an Era of Persistent Conflict-2016 to 2028,” authored by Brig. Gen. H.R. McMaster. “We wanted to emphasize the continuous interactions with an adaptive adversary, the need to have those qualities of operational adaptability…innovating to seize and retain that adaptive initiative.”…again COTS products will play a key role ©G&C 2010 7
  8. 8. COTS Versus Developmental Products Product Source Type Comparison Element COTS Developmental High capability relative to cost, due to High cost due to amortization amortization over large population of R&D and of development costs over Unit Cost CPI initiatives (Lean, TQM, Six Sigma); though small production population, COTS integration costs can be high as well as high indirect costs "The private sector has flattened and streamlined the middle and upper echelons of its organization charts, yet the Defense Department continues to maintain a top- heavy hierarchy that more reflects 20th Century headquarters superstructure than 21st Century realities,“ Secretary Gates "Given America's difficult economic circumstances and parlous fiscal condition, military spending on things large and small can and should expect closer, harsher scrutiny. The gusher has been turned off, and will stay off for a good period of time.“ Secretary Gates, 2010 Low-cost COTS products, “frugally engineered,” bundled together as a weapon system, will be more cost attractive than the employment of high tech systems ©G&C 2010 8
  9. 9. COTS Versus Developmental Products Product Source Type Comparison Element COTS Developmental Large population using product, with extensive The less reliable the product, warranty feedback. OEM warranty costs are 3- the greater the revenue 6% of acquisition value of new products; high generated during the Product incentive to improve reliability…less Support lifecycle stage. MTBF Reliability failures=higher profits…median OEM Profit analysis after initial ILS After Taxes (PAT) is only 7%, thus warranty studies performed during costs can have material impact on development stage are rarely shareholders revisited. Readily available, at no additional cost in Technical Cumbersome and expensive multiple medias; extensiveness often driven by Documen- to maintain over life of consumer/safety regulation. Also changes tation product tightly managed due to liability issues ©G&C 2010 9
  10. 10. COTS Versus Developmental Products Product Source Type Comparison Element COTS Developmental Field Very expensive; in theatre Service Available on a global basis, even in/close to $400-500,000/year per Represen- combat theatres. 24/7 coverage provided either contractor FSR. Government tatives on-site or via call/web FSR out of LCMC can be (FSRs) $250-350,000 per year Extensive development for User friendly products require little training MOS training school and OJT Training through training schools and OJT due to learning curve and turnover With roll-up of Defense industry, DoD confronted with “too big to fail” There are usually 3-4 global highly competitive situation; often only two Supplier OEMs for any category of products; all are contractors able to compete; Base highly capitalized and provide products to large there profits are virtually the customer base same, which means that they have the same business models…which can be good or bad ©G&C 2010 10
  11. 11. COTS Versus Developmental Products Product Source Type Comparison Element COTS Developmental Large R&D (4.5% of sales Caterpillar, 7% HP, Due to long development Technology 16% Intel) and product tested with large cycle, maturity is a Maturity population feedback constantly moving target A minority of # of weapon systems deployed are Technology 1970 Defense/Business/Consumer tech hierarchy; required to be “bleeding Level 2010 Consumer/Business/Defense tech hierarchy edge,” though they can be the majority of acquisition $$$ “We pursue technologies. They are not necessarily the most advanced, but they are the most useful,” Adm. Eric Olson, Commander, Special Operations Command (SOCOM) in 2010 COTS products are very sophisticated/complex due to safety, regulatory and consumer demands/requirements •A luxury auto has 100 million lines of embedded software code •A Mercedes navigational system has 20 million lines •A Ford car has 10 million lines •A F-35 has 5.7 million lines •A F-22 has 1.7 million lines ©G&C 2010 11
  12. 12. COTS Versus Developmental Products Product Source Type Comparison Element COTS Developmental Interface Often isolated from best With practices because of a Enabler to stay current with rapidly evolving Commercial contractor’s business model consumer/commercial market Best of more is more; cost-plus Practices contracts Entry level soldiers have used many of the Technology products in their civilian lives leading to high Often not user friendly Familiarity levels of productivity in missions employing features these products “We have young folks today who are very experienced with gaming, and they’re not going to be impressed if we have simulations with pop-up targets. They expect training systems to stack up with the latest Xbox or PlayStation products.” USMC General James N. Mattis, Commander of US Joint Forces Command, at 2010 Defense GameTech Users’ Conference ©G&C 2010 12
  13. 13. COTS Versus Developmental Products • "Millennium sailors were born with laptops in their hands...but when we get them into the Fleet, the disconnect between what they were promised and what they find will be profoundly disappointing--a veritable bait-and-switch scheme. They will discover that our "leading-edge-off-the-shelf" and "state-of-the-art" technology is at best ancient.... The two-way communication bandwidth of a single BlackBerry is three times greater than the bandwidth of the entire Arleigh Burke destroyer. Looked at another way, the Navy's most modern in-service multi-mission warship has only five percent of the bandwidth we have in our home Internet connection.... By the time it gets to the people who need it, it is already out of date.” Vice Admiral Mark Edwards, Deputy of Naval Operations for Communications Networks (N6) in April 2008 ©G&C 2010 13
  14. 14. COTS Versus Developmental Products Product Source Type Comparison Element COTS Developmental Integration Of US management skills in integrating COTS Multiple products into a solution is a unique strength Same as COTS Products Into A of U.S.; difficult for our enemies to Solution duplicate with same COTS products Often unique configuration Rapidly changes to reconfigured product Configuration that may have some open platform through open architecture; Architecture architecture; but currently software and hardware small minority of products Can focus on specific mission Design No power to make changes to designs; requirements to optimize Influence military purchases are often <1% of sales mission effectiveness ©G&C 2010 14
  15. 15. COTS Versus Developmental Products Product Source Type Comparison Element COTS Developmental Diminishing Manufacturing With relatively short product lifecycles, Can also be a challenge when Sources, supply chain challenges can often occur a product is out-of- Materiel sooner than later; big issue is electronic production and DoD funding Shortages products where lifecycles are only 2-5 years is erratic (DMSMS) Organic Life No National Stock Number (NSN) assigned Cycle to COTS products; little Item/Commodity Infrastructure established to Management Manager planning, nor depot repair for support product; often more Command reparables. Often dependent on Contractor efficient, but can be less (LCMC) Logistics Support (CLS); no tight oversight, effective than COTS CLS Support resulting in many issues CECOM has created a Common Hardware System (CHS) Program Office, as well as Software Engineering Center (SEC)/Post Production Software Support (PPSS) for dealing with selective COTS products ©G&C 2010 15
  16. 16. COTS Versus Developmental Products Product Source Type Comparison Element COTS Developmental Major “misallocation” of supplemental, acquisition and O&S/M money in order to rapidly field systems “outside” of normal Usually “cleaner” demarcation Funding LCMC processes; PM Offices often “own” between acquisition funds COTS products into Product Support and O&S/M funds lifecycle stage. Many times COTS are not part of system of record Same access; global internet and Enemy Access distribution enables rapid acquisition to use Not accessible against our Warfighters With Joint Programs, the management of COTS is often very challenging ©G&C 2010 16
  17. 17. COTS Versus Developmental Products Product Source Type Comparison Element COTS Developmental Can be very cumbersome to obtain COTS Importation Or products with dual use into US, or export Rules much more black and Exportation US products to our allies; lots of inter- white governmental agency squabbling Wide range of environmental driven design features not included; temperature ranges, sand, humidity and others have smaller OPTEMPO range than experienced by military. Though Can be designed to adapt to Adaptability new niche products being produced by any foreseen environment OEMs for “severe” use (i.e. Panasonic ToughBook and Extreme Adventures employment) ©G&C 2010 17
  18. 18. COTS Versus Developmental Products Product Source Type Comparison Product Source Type Comparison # Element COTS DI # Element COTS DI 1 Unit Cost + - 13 Design Influence - + 2 Reliability + - Diminishing Manufacturing Technical 14 Sources, Materiel Shortages - + 3 + - Documentation (DMSMS) Field Service 4 + - Organic Life Cycle Representatives (FSRs) 15 Management Command - + 5 Training + - (LCMC) Support 6 Supplier Base + - 16 Funding - + 7 Technology Maturity + - 17 Enemy Access - + 8 Technology Level + - 18 Importation Or Exportation - + Interface With 19 OPTEMPO Adaptability - + 9 Commercial Best + - Practices 10 Technology Familiarity + - COTS products have Integration Of Multiple many more favorable attributes 11 + - Products Into A Solution as compared to Configuration Development Items (DI) 12 + - Architecture ©G&C 2010 18
  19. 19. Overview Of Weapon Systems & COTS Products Overview Element 1980 2000 2010 2015 Impact Upon DoD estimate Less funding available, as DoD overall spending 10.0% 3.2% 4.0% 3.3% well as less impact on as a % of GDP overall economy DoD weapon system acquisition spending as a % of all US 18.0% 8.0% 15.0% 10.0% Less influence upon OEMs capital goods investment Estimated COTS Recognize need to shift to spending as a % of COTS; DoD less than 1% <1.0% 1.0% 2-5% 5-10% overall DoD weapon of OEM product demand in system acquisition $$ 2015 Estimated fast-track Fully embracing COTS equipping COTS 1.0% 5.0% 25-35% 30-50% whenever possible spending $$ % ©G&C 2010 19
  20. 20. The Trailing Edge Technology Concept For COTS Products The trends are favorable for COTS products, but the military Acquisition organizations must become “smarter” on how they integrate COTS products…introducing “Trailing Edge Technology;” a concept to be employed by Program Manager Offices in the design/ production and product support stages of the lifecycle of weapon systems Product Support Processes (at field/line or at depot) Hi 1. Correct after unplanned failure 2. Correct before planned failure 3. Reset after Product Product Support Stage deployment Population & 4. Improve reliability 5. Assure capability Product Operate Stage 6. Evolve technology 7. Repair catastrophic Product damage Retirement 8. Store short/long Stage Product term Product Initial Redistribute Distribution Stage Lo Stage Product Requirements, Product Production Stage Product Out-Of-Production Stage Design & Development Stages = Total Product Lifetime ©G&C 2010 20
  21. 21. The Trailing Edge Technology Concept For COTS Products: Value Proposition • !Frequency of failures through piggybacking upon continual reliability improvements by OEM • ! Duration of product support processes, and in turn " materiel availability, through improved maintainer/tech worker productivity due to piggybacking upon OEM continual improvements on: ! TOC & • Technical documentation " Mission Effectiveness • Design-For-Maintainability • Training tools • " Familiarity of products through programmed upgrades • ! DMSMS issues through programmed upgrades • #/" Capabilities through programmed upgrades; The military can not fall behind what our enemies can readily acquire Some savings would be off-set by higher integration cost for programs ©G&C 2010 21
  22. 22. The Trailing Edge Technology Concept For COTS Products: Design/Production • COTS items selected in the design process and employed during the production process would be in a not-new condition: • Repaired, refurbished, or overhaul conditions; this type of acquisition has been done before • Resulting from a lease return or warranty return to a supplier. • COTS products can lose as much as 75% of their value within 18 months after being produced, thus a $1,000 computer is worth about $250 after 18 months. ©G&C 2010 22
  23. 23. The Trailing Edge Technology Concept For COTS Products: Design/Production • The proposed concept is to: • Acquire 18 month old not-new COTS products for $.25 on the dollar of the new condition acquisition cost during the production stage • Take the “extra”$.75 and use it for future not-new condition programmed upgrades to be performed every 18 months The following is the series of actions comparing to the legacy approach for managing COTS based systems versus that of a new business model (they are for illustration purposes; each COTS product will have different ROIs for this concept Programmed upgrades can occur at a depot or in the field/line as a Like-Kind Exchange ©G&C 2010 23
  24. 24. The Trailing Edge Technology Concept For COTS Products: Design/Production Cumulative Acquisition $$$ $2000 A A $1500 A A $1000 A COTS (A)cquisition Date A $500 A A $0 Trailing Edge P P P P P P P P COTS (P)roduction Date 7/08 1/10 7/11 1/13 7/14 1/16 7/17 1/19 7/20 $2000 A COTS (A)cquisition Date $1000 A Legacy P P COTS (P)roduction Date 7/08 1/10 7/11 1/13 7/14 1/16 7/17 1/19 7/20 Legacy Programmed Upgrade Every 6 Years. Average Trailing Edge is 3.75 years “younger than Legacy” ©G&C 2010 24
  25. 25. The Trailing Edge Technology Concept For COTS Products: Product Support 03-10 Failed COTS Reparable LRU, 07-06 Production Date Like-Kind Current Replacement Value (CRV) $1,000 Cost Of Repair $400 Legacy Approach Trailing Edge Approach BER/Washout rate 65% or BER/Washout rate 25% or $250; $650; repair within limits for repair outside limits for retention retention and disposed Simplified; 09-08 date of LRU production, Repaired and forwarded to typical Like- Kind acquired for $250 in a repaired maintainer for installation Exchange condition, and forwarded to employed maintainer for installation COTS Reparable LRU 18 COTS Reparable LRU 48 months old production date months old production date with cost of $250 with cost of $400 ©G&C 2010 25
  26. 26. The Trailing Edge Technology Concept For COTS Products: Product Support This concept can be adapted to a Performance Based Logistics/Outcome-Based Product Support Business Model •Contractor can be provided with a fee for executing concept •Contractor can work with depot under a Public Private Partnership (PPP) to execute concept •A Product Support Integrator (PSI) and a Product Support Manager (PSM) must work closely together to assure that the initiative is meeting the Warfighter requirements and favorably impacting TOC ©G&C 2010 26
  27. 27. Conclusions • COTS products are playing a much larger role in the design of weapon systems • DoD leadership should continue to think out-of-box in order to assure that our Warfighters have continuous access and support of the COTS products that they require in order to defeat our enemies; the Trailing Edge Technology business model is one way to help them lead that initiative ©G&C 2010 27
  28. 28. Questions? Ron Giuntini, Principal 570.523.0992 ©G&C 2010 28