Air university

One of the propositions Collins builds is that people are the most important asset in the organization. Ensuring that their work fit their skill levels (getting the right people on the right bus) is the difference between being a good company and a great one. Collins claims that effective leaders are more “plow horse than show horse.” This means that effective leaders forgo the celebrity status available to many who lead major corporations. Level-5 leaders pass the credit and take on the blame for how their organizations perform. In this paper, I have argued that effective leaders like Mr. Little, Mr. Dillow, Mr. Avila, Colonel (Col) McClendon, Mr. Jaspering, Mr. Wingfield, and Mr. Wasylczyk, just to name a few, embodied these principals and built teams that led to the success of their programs. Another concept Collins encourages is that leaders must confront the brutal truth about what their organizationa are able to achieve. He offers the concept if being a “hedgehog”; organizations should decide what they are good at and rally around the one common denominator that makes them successful¹⁸⁸

It is not often that a 4-star general or equivalent wants their name tied to any major acquisition program, especially if it is highlighted for a Nunn-McCurdy violation. Furthermore, what organization would open itself to more scrutiny? However, done correctly, 4-star sponsorship can ensure the right people are put on the right seat on the right bus going in the right direction. The 4-star champion needs to pick one of the three legs of acquisition--cost, schedule, or technical performance to focus on.

As Chief of Staff of the Air Force (CSAF), General Merrill McPeak championed JDAM. Through his tutelage, General Joseph Ralston (former Director for U.S. Air Force Operational Requirements) hand-picked Terry Little as the first Joint Program Office (JPO) JDAM Program Manager (PM). In Mr. Little’s first meeting with General McPeak, it was clear that cost was the number one priority. Eventually, JDAM came in well under cost and was one of the heroes of Operation Allied Force. Likewise as CSAF, General John Jumper championed SDB. Although he wanted a small bomb to fit within the F-22 bay doors, it was clear that schedule was most important when he met with Lynda Rutledge, the Miniature Munitions PM. Eventually, Col McClendon was hand-picked as the first official SDB PM to lead the charge of “RAA (Required Assets Available) in 4QFY06.” After much convincing by Steve Wingfield, a Boeing business development manager, Laser JDAM’s champion was Lieutenant General (Lt Gen) Walter Buchanan, Commander, U.S. Central Command (CENTCOM) Air Forces. Lt Gen Buchanan’s priority was technical performance against a 40 mile per hour target. Likewise, the FLM Joint Capability Technology Demonstration’s champion was the Secretary of the Air Force, Michael Wynne. Although CSAF Wynne was already convinced technically that FLM was achievable, it took the Air Force Research Laboratory, the Systems Project Office, and Mike Wasylczyk, Boeing’s FLM PM, to drive the schedule to deliver residual weapons early to the warfighter.

#2: Choose “glass breakers” to lead development programs.

Although Collins does not specifically call Level-5 leaders “glass breakers,” there are similarities to the hedgehog concept—having faith in a philosophy and empowering the team. On both sides of the aisle, the military’s and Boeing’s program offices did not choose “glass breakers”, they chose change agents for their PMs. Those particular PMs rewrote the rule book by doing what was best for the warfighter and not their career. A case in point--where are these folks now? Maybe one is infamous. What is not said in a 2007 Management Journal about change agents say they tend to “get buried” after the organization is transformed.¹⁸⁹

As the JPO JDAM PM, Mr. Little was a hedgehog about using commercial practices and parts that met commercial specifications to get the JDAM under the expected Average Unit Procurement Price (AUPP) set by General McPeak. Mr. Little used the DAPP license to practically self approve waivers to Federal Acquisition Regulations (FARs) and Truth in Negotiation Act (TINA) to reduce documentation, overall level of effort, and give contractors Class II configuration control. Mr. Little comes closest to being infamous as the National Aeronautics and Space Administration’s Academy Sharing Knowledge describes him as “a nonconformist, even a renegade, and to some people, it's downright amazing he has thrived for as long as he has working for the government, let alone the DoD.”¹⁹⁰ After JDAM, he ran the Joint Air to Surface Standoff Missile program. Following his retirement from the Missile Defense Agency, he testified in front of the House Armed Services Committee about DoD Acquisition Reform no less. Mr. Little said:

The most important factor in deciding how much oversight and review a program should have is who the program manager is. In short, my job (as a program manager) was not to manage the program, but to lead it. …I have had much more experience than my peers. Program Management will always be as much art as it is science. …I was unwilling to commit to concrete cost, schedule, and performance until I had enough information to do so. …(in regards to JDAM) We managed cost as if it were a technical requirement.¹⁹¹

On the contractor side, Charlie Dillow, McDonnell Douglas’ (MD’s) JDAM PM, was a change agent in guiding the integrated product teams (IPTs) to design in affordability as opposed to a Cadillac of a weapon. There may not as many publicized articles on Charlie Dillow as there are on Mr. Little, but Mr. Dillow lives on a comfortable retirement provided by Boeing. Carl Avila, who followed Mr. Dillow, did the unexpected and compromised a year long dispute instead of going to court with his Systems Program Office (SPO) counterpart over who was going to pay for a disputed requirements change on JDAM. After his PM tour, Mr. Avila became Boeing’s Advanced Weapons PM. Lt Gen Kadish lived through a similar event when he compromised with Boeing’s Don Koslowski over $2.5 billion in claims over the C-17 program.¹⁹³

Another example of a leader being innovative within the framework of the DoD acquisition process was Col McClendon, the SPO SDB PM. He believed he had the license as a Pathfinder program to rewrite the DoD approved rules in the Single Acquisition Management Plan (SAMP). The SAMP allowed deviation from the Berry Amendment, FARs, and from certain Defense, Air Force, and Air Force Material Command regulations. The SAMP also encouraged commercial practices and purposely avoided use of military standards for testing. After meeting “RAA in 4QFY06,” Col McClendon retired knowing he would not make Brigadier General. On the other side of the aisle, Dan Jaspering, the Boeing SDB PM, implemented his “Go-Fast” plan with a hand-picked team. He led SDB to full rate production and was promoted to Director of Direct Attack, responsible for all JDAM and SDB programs.

If there were not any glass breakers in the derivative programs, there were certainly a couple of door beaters. Steve Wingfield beat on many doors from the warfighters to Lt Gen Buchanan to convince them of the need for Laser JDAMs. Mike Wasylczyk, known for his Trunk Monkey Certified testing methods in SDB-I, brought FLM from a JCTD to a Milestone C decision for low rate initial production (LRIP). For SDB-II, it is too early to judge who will step up and lead that program to the next successful level.

Collins’ concept “putting the right people on the right bus” is all about building teams fro success. He suggests leaders encourage and listen to ideas from anyone chosen to be on the team who share similar values and philosophies, but who might have a different perspective or approach to help the team reach the same goal. Once the team is formed and trained, however, the team must be empowered to make decisions and monitored only so that decisions are made in a timely manner.

The JDAM and SDB programs had integrated product teams (IPTs) that consisted of military program office, prime contractor, and supplier personnel. Each program has numerous IPTs, indeed, as many teams as subsystems in each weapon. As Lt Gen Kadish said, “The most important way to stay funded as an acquisition program is information.”¹⁹⁴ Communicating up and down the chain of command may be natural, but as organizations become more flat and matrixed, communicating across functional stovepipes is a positive synergy in organizational behavior that is just starting to be realized. Lt Gen Kadish stated again that, “95 percent of all problems in any program derive from some form of poor communication.”¹⁹⁵ Both programs had IPTs during the competition phase and each competing company had at least one military program office “helper” who became “native” in that a “helper” was supposed to assist their contractor understand the requirements and help them to win! Once the “rolling down-selection” was made, the JPO and SPO assisted the IPTs in design, flight testing, configuration changes, and trouble shooting. The only caution with IPTs is to not let them get too big or immobile due to bureaucratic inertia. Eventually, PMs have to make the call and avoid analysis paralysis.

The JDAM program formed working IPTs that included test, logistic, contracts, and finance functionals from the Office of the Secretary of Defense (OSD) to draft, review, and approve a SAMP that validated Mr. Little’s FAR and TINA waivers. Eventually the test IPTs formed the concept of seamless verification that brought both developmental and operational test personnel to the table to plan and leverage off each other. Furthermore, JDAM formed executive IPTs made up of supplier vice-presidents to resolve any issues and present one voice for the working IPTs. Besides forming these usual IPTs, the SDB program formed temporary IPTs in the Pentagon, called Camp McClendon in honor of Col McClendon, for the sole purpose of educating staffers right before critical Milestone decisions. Well into successful production, JDAM and SDB continued the IPT construct.

In terms of empowerment, both of the JDAM competing company’s design IPTs eventually came to the realization that government furnished equipment (GFE) was less cost effective than using COTS. Martin-Marietta (MM), in particular, annoyed some at the Navy for using a commercially proposed injection molded fin tail kit instead of standard metal fin tail kit. Terry Little allowed MM to override the Navy’s objection in order to lower AUPP. Likewise, Col McClendon supported the creative Trunk Monkey Certified testing methods of the SDB test IPT.

DoD and Congress certainly have enough checks and balances over the acquisition system of systems. Although this recommendation does not endorse more oversight from DoD over prime contractors, it is critical with most prime contractors acting as systems integrators to verify and coach their suppliers to success.

To motivate and build trust among suppliers, the JDAM MD executive IPTs decided that each company must sign non-disclosure agreements with one another. This inspired Rockwell-Collins to step up to requalify a Global Positioning System (GPS) antenna for MD’s GPS receiver motivated the rest of the MD supply chain to rally around reducing MD’s AUPP.

Boeing took a particular interest in Sargent Fletcher (SFI) to build the Bomb Rack Unit (BRU)-61. In fact, Boeing sold the BRU-61 design rights to SFI. When SFI was struggling with their sub-suppliers, Boeing and the SPO mentored and provided coaching to get them back on track. Boeing values their suppliers, so they motivate them with a tiered system of gold, silver, and bronze ratings which incorporate perks like multi-year and non-compete contracts.

Although the aerospace defense industry averages only single digit margins, many in the military perceive traditional contractors as greedy. When building high volume and/or highly complex systems, the cost becomes staggering. However, instead of building “Cadillac’s,” traditional aerospace defense contractors have evolved into building the best value product. To make a return on share holders’ investments, companies have become “hedgehogs” as systems integrators to save costs in order to be competitive. But who should the government choose?

The source selection process is very difficult and DoD tries to be fair and impartial to avoid any protests to the Government Accountability Organization. Both JDAM and SDB went through rigorous and demanding requirements to conduct fair and open competitions. JDAM instituted a rolling down-select process that allowed interim feedbacks to the each competing contractor and allowed them to improve. Military program office “helpers” were assigned to each contractor as a liaison to help their team win. SDB-I took the rolling down-select one step further and emphasized proof and not promises. In SDB-II, rolling down-selects evolved into a risk reduction competition. In rolling down-selects, the government can terminate a competitor, but in a risk reduction competition, both competitors compete until a source selection is made, preferably choosing between a couple of prototypes and proven hardware. Lt Gen Kadish touts:

The single most powerful determinant of success in any program is how good your contractor is. Choose wisely, then work hard to help them succeed. In contrast, a good SPO and a weak contractor will make life tough. On the contrary, a good contractor can make a mediocre SPO look like heroes.”¹⁹⁶
#6: Embrace price-based acquisition, incentivize behavior, and insure with warranties.

After Boeing won the initial JDAM and SDB production contracts, securing subsequent contracts was not automatic for Boeing. The company faced scrutiny and had to continually convince the acquisition community that they were not making an unfair amount of money (Boeing’s reputation suffered from the convictions of Mike Sears, a Boeing executive, and Darlene Druyun, the Air Force’s top acquisition official in 2004). Boeing’s strategy was like any other commercial practice. They offered an initially low AUPP and a relatively flat procurement price commitment curve (PPCC) for the upcoming years. In return to accepting the offer, the military program offices wanted a warranty on the weapons. This made Boeing design in reliability from the start, but it also incentivized Boeing to avoid obsolescence and lower cost through planned technical insertions. Over time, this is how Boeing will recoup their investments. If Boeing had not met the promised PPCC, penalties would have been administered that began with more oversight and ended with the loss of configuration control.

Besides the carrot and stick incentives for meeting PPCC, other incentives were cleverly put in place for derivative contracts like the Mark (Mk)-82 JDAM, SDB, and FLM. Award fees became more like insurance and behavior outcomes were incentivized. There were award fees for delivering the new Mk-82 JDAM on time and under cost, for keeping the SDB configuration stable, and for FLM to conduct flight tests on time—all resulting in successful outcomes and increased profit for Boeing shareholders. If defensive contractors failed to make money, those in the industry would close or move to another line of work. The government needs to recognize that firms like Boeing have shareholders who expect to make profits. Examining a firm’s profit margins offers one method to evaluate how much the company makes—the aerospace defense industry happens to have the lowest margins in the industry as represented in Figure 6.1. In relation to fees, the government should simply give a reasonable opportunity to earn the standard 15 percent restaurant tip!


Figure 6.1 Industry Margin Comparisons¹⁹⁷

Discipline and Execution

Unattainable requirements and a simple lack of execution are two major reasons defense acquisition programs become Nunn-McCurdy violations. . Collins argues that companies should drive home their hedgehog philosophies; they must impart a culture of fanatical discipline. In the end it comes down to organizations maintaining their “Wall”. If programs employed Collins’ suggestion, violations may be avoided.

Steve Goo, Boeing Vice-President for Program Management, once said that programs suffering from requirements creep, “It usually starts with the Request for Proposal, the requirements are usually understated. If the services wrote what they actually needed, they would never be able to afford it.”¹⁹⁸

JDAM and SDB had relatively few Key Performance Parameters (KPPs). They let the IPTs figure out how to accomplish them. Other technical parameters were left open to negotiation in order to meet price, in the case of JDAM, and schedule, in the case of SDB. In fact, to meet schedule SDB gave award fees to Boeing to keep the first three production lot configurations the same in order to meet schedule. However, modification to SDB parts did take place for actual cost and performance improvement, but with Class-II change authority,

#8: Maintain a disciplined battle rhythm and your organizational wall!

It could be well argued that Mr. Little, the original JPO JDAM PM, took a fanatical, disciplined approach when applying commercial practices to the basic strategy of procuring an affordable weapons tail kit. In turn, Mr. Dillow, Boeing’s first JDAM PM, empowered his IPTs and passed down cost objectives to each of them —and held them to it. The discipline of their strategies worked but the question became whether they were repeatable. The answer to that question become evident during the SDB program when Mr. Jaspering, Boeing’s first SDB PM, established a consistent battle rhythm for scheduled meetings. At that point the repeatability of the strategy was recognized as a best practice. If not to accomplish a specific task, the fact that, at first, forced communication evolved into natural communication which in turn built trust and in the end formed relationships, the model worked. When accomplishing a specific task, Mr. Jaspering made sure the request was within scope of the project. To end this series of recommendations in a most appropriate way, below is a discourse on how to protect an organization’s wall:

Acquisition programs fail because cost, schedule, and performance expectations were not met, especially in the development phase. PMs need to know if they are a staff based or task based organization. Most contractor acquisition organizations are tasked based evident by IPTs and their military counterparts are more staff based. If program managers realize that their organizations are indeed tasked based, then they need to understand the difficulty level and the margin available in their programs, instill disciplined systems engineering, and never, ever manage a task based organization as if it were a staff based. How should program managers protect their wall, or in other words, protect their organizations from unplanned or unfunded tasks? Keep the team focused on executing the plan faster and better. Prevent unplanned tasks from coming through the wall. Avoid the urge to squeeze in unplanned tasks. If unplanned tasks must come through the wall to help out the warfighter, simply require a Budget Change Request to accept new funding, reallocate management reserve, or delete other planned work …OR consciously overrun.¹⁹⁹

Translation for Bigger Programs

With the zeal to build network centric systems to conduct warfare, one of the arguments against the previous eight recommendations might be that apples to oranges cannot be compared—i.e. the scope of the project and the size of the organization. Developing 25,000 to 180,000 weapons at $15,000 to $1 million per is much different than producing 200-4,000 tanks or aircraft at $1 to $100 million per, yet most of the recommendations are repeatable. Having a champion, picking a priority, selecting the right PM, conducting transparent competitions, and embracing price-based acquisition should be applicable to very large programs. On the other hand, building IPTs in a very large program runs the risk of becoming yet another unmanageable bureaucracy. Furthermore, large programs like the Future Combat System (FCS) and the Joint Strike Fighter (JSF) have so many KPPs to meet; it is a wonder that any can be met. FCS has so mnay products and the JSF had to satisfy requirements from three separate services in almost three different operating environments. Finally, in an effort to help any acquisition program determine what type of organization it is, Figure 6.1 offers an acquisition comparison spectrum.

In summary, acquisition programs trying to transform need support from the highest levels. This champion must be willing to stick out his or her neck to logically pick a priority the program must focus on. Furthermore, the champion needs to be comfortable to approve a PM who is a strong decision maker and who stands more for service than about self. The PM has to throw out the rule book in the most overt way, and ask for any and every waiver that does not broche on fraud and waste or violate ethics, to get the job done. This same “glass breaking” PM also needs to have a softer side in building and empowering IPTs that believe in what he or she believes, yet avoid getting bogged down. Choose suppliers willing to build long term partnerships, but never assume everything will always be perfect once you do—motivate, trust, verify, coach, reward. For source selection, transparency offers feedback and competition of prototypes buys down risk when transitioning to production. Allow defense contractors to make a fair buck--treat incentives as tips for desired behavior. Although spiral development is useful, make sure the basic requirements do not creep. Not knowing the desired scope of the project kills expectations and eventually the program itself. Finally, successful acquisition programs come down to contractor execution. They must take a prodding approach, maintain a disciplined battle rhythm of meetings, test early and often, and avoid being distracted when unplanned requests are attacking their organizational wall.

McNaugher, Thomas L. New Weapons, Old Politics: America's Military Procurement Muddle,

1989, Brookings Institution Press, ISBN 0815756259.
Acts / Directives

Department of Defense Directive 5000.1. “The Defense Acquisition System.” Defense

Truth in Negations Act, Office of the Under Secretary of Defense for Acquisition, Technology,