AW&ST: The Development Clock Is Ticking For Defense Contractors

An interesting idea... Requirements creep is the biggest cost multiplier of any program. However, technology development is right up there.

The Development Clock Is Ticking For Defense Contractors
Aviation Week & Space Technology 02/13/06
author: Bill Lay
author: Charles Beard

Defense contractors soon may have to think about time.

Moving to a development process that is driven by time rather than requirements is one of the major recommendations in the U.S. Defense Acquisition Performance Assessment Group's executive report, the study chartered by Deputy Defense Secretary Gordon England and chaired by retired Air Force Lt. Gen. Ronald Kadish. Acquisition strategy and procurement would be governed by "time-certain development," which means fielding useful military capability within six years of the decision to purchase.

This recommendation, if implemented, would radically change how Defense Dept. procurement officers and contractors do business. As a result, defense executives would have to rethink their models for innovation and profits.

Defense procurement currently considers three variables --requirements, money and time--but focuses primarily on the first variable. The government develops a list of requirements, and contractors keep development products in their shops for long periods as they try to meet the requirements. Long development times typically lead to cycles of technology obsolescence, requirements changes and further delays. The contractor rarely has to rebid over long periods, can fund the transition from technology to product during procurement and has the luxury of creating something entirely new with each design.

Recent efforts to rein in the creeping scope of requirements have not led to more rapid deployment of new weapon systems. And the government has not made a large-scale effort to solve the problem through program spending caps.

Hence the move to focus on time. Such efforts have cropped up before, during war situations, when the Pentagon puts the word out: "What do we have on the shelf that we could get to the field in six months?" And that has proven effective for situations such as deployment of UAV technology in Bosnia and Afghanistan.

Some observers argue that a time-driven process would lead to more incremental innovations and impair development of disruptive and new-platform products. But experience shows this is not the case, if managed well. Many innovative companies in commercial sectors try to maintain a careful balance on product line plans, with roughly 40% of development spending going to derivatives, 30% to platforms, 15% to breakthroughs and 15% to support existing products.

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