The Trailing Edge Technology Business Model

A paradigm shift is required for the acquisition and product support of COTS configured weapon systems.

Over the last several years there has been a marked increase in the use of Commercial-Off-The-Shelf (COTS) components in configuring new weapon systems. This initiative has been driven by Commanders in-theater requiring the rapid fielding of new weapon systems to fight a new type of enemy.

The traditional approach of sourcing components that are Developmental Items has been recognized by Program Manager (PM) Offices as being much too lengthy to meet the urgent needs for most new weapon systems; our Special Forces commands have been the most aggressive in using COTS based weapon systems. COTS items have been identified as the solution to field a weapon system quickly and relatively inexpensively.

System integration efforts are typically higher for COTS based systems compared to those of Development Item based systems, but due to the materially lower unit costs of COTS items, the overall weapon system is often an attractive value proposition to the PM Office.

Note that there is also a macro-issue that is driving greater use of COTS items; the commercial market dwarfs that of the defense community and contractors have been more and more “forced” to look for COTS solutions for their customers. In 1980 US defense costs were approximately 10 percent of GDP.

By 2000 it had dropped to about 3.2 percent and now is at about 3.8 percent due to our current conflict in Southwest Asia. It is estimated that in five years, due to the reduction in the current conflict and a continually growing economy, defense expenditures may fall below 3.2 percent. From all indications, COTS items will come to dominate most US defense weapon system acquisition programs.

The majority of PM Offices, working closely with contractors, have been very effective in providing field commanders with COTS based solutions. The PM’s track record in being efficient in dealing with the upgrading of COTS products, as well as in dealing with the product support of a system, has been at a lower level of performance compared to that of acquiring the system.

Joint PM Offices have been the most challenged in dealing with these shortcomings. The Congressional passage of the Weapon System Acquisition Reform Act (WSARA) of 2009 is direct result of attempting to address these cost overrun issues.

Note that as a result of an abundance of supplemental funds to pay for system acquisition, as well as for paying for a good part of the product support processes employed during the early years of a fielded system, most PM Offices have had little pushback from leadership regarding the often unfavorable variance from planned Total Ownership Cost (TOC); a good fitness report for an O5/O6 is still being primarily driven by the effectiveness of fielding a new weapon system.

As supplemental funds begin to decrease in the next one to three years, due to many reasons, many of the acquisition/product support business models crafted by the PM Offices will begin to be severely challenged due to a reduction in the amount of funds that a PM Office is able to utilize to deal with “problems;” system availability levels will decrease and product support costs will increase. Unfortunately, the PM who had crafted the business model for the COTS based system will have long been gone, leaving the current PM and Product Support Manager/ILS Lead in the PM Office to cope with multiple challenges.

Vice Admiral Mark Edwards, Deputy of Naval Operations for Communications Networks (N6) in April 2008 stated below his opinion regarding the promise of COTS technology and the reality of the acquisition and product support processes.

“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.

The important point that the Admiral was making is that our men and women in uniform are often technology savvy for COTS items; it is what they use as consumers on a day-to-day basis. Think PC, think router, think cellular phone and think GPS. Young adults, the majority of military personnel, have been conditioned as consumers to replace their technology every one to two years.

When members of our volunteer military see COTS technology, which they know is three to seven years-old, they can easily feel that they have been “betrayed” in not being provided with the latest and greatest technology to fight our enemies. As for Developmental Items, our soldiers have had none or very little experience as a consumer and cannot equate whether an item is in fact state-of-the-art.

Note that Al-Qaeda can cruise the internet for new COTS technology, place an order with a credit card and have it delivered via DHL to their country of choice within 48 hours. It is not hard to see why our Warfighters are confused as to understanding why our PM Offices cannot have similar flexibility.

Ron Giuntini

Note: A related webinar: Success with COTS Components: How to Estimate the Costs of COTS Items During the Product Support Stage of a Weapon System Lifecycle will be conducted by the author of this article Ron Giuntini, you will not want to miss his Success with COTS components webinar, taking place August 17th, 2010.

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