[This article was first published in Army Sustainment Professional Bulletin, which was then called Army Logistician, volume 2, number 5 (September–October 1970), pages 4–7, 39.
The text is reproduced as faithfully as possible to enable searchability. To view any images and charts in the article, refer to the issue itself, available on DVIDS and the bulletin’s archives at asu.army.mil/alog/.]
PUBLIC SCRUTINY is being focused on military spending more intensely now than at any time in our country’s history. As a result the Department of Defense (DOD) is facing strong pressure to reduce personnel strengths and spending. The Armed Forces are being required to reduce their force structures while still heavily engaged in hostilities in Vietnam. Such is the environment of the government contracting marketplace in 1970.
The Army Materiel Command (AMC) faces a challenge to “do more with less.” The Army Materiel Command has translated this challenge into an opportunity with the recently developed “Program for the Refinement of the Materiel Acquisition Process”—PROMAP-70. The program focuses sharp attention on the problems associated with weapon system acquisition.
In the past the Army frequently failed to receive what had been asked for from industry, and it often paid too much for what it received. The fault does not lie exclusively either with the government or industry. In many cases, the Army failed to adequately analyze and define its requirements for industry, while contractors failed to control their resources adequately. Both the Army and industry were excessively optimistic in estimating project costs.
In mid-1969, Assistant Secretary of Defense David Packard sent a memorandum to the Secretaries of the Army, Navy, and Air Force outlining five general problem areas in the services’ acquisition management that need improvement. They are—
• Excessive optimism in cost estimates.
• Control of changes in on-going programs.
• Comprehensive assessment of risk before system development.
• Use of competitive prototypes in developments.
• Concurrent development, test, and evaluation.
PROMAP-70 is thus and outgrowth of this DOD memorandum and the Secretary of the Army's guidance for implementing Secretary Packard's recommendations. The primary objective of PROMAP is to get people to do things better in acquisition management. Emphasis is being placed on concrete payoffs rather than on the number of new procedures and regulations that will be published. The Army's materiel acquisition process will be looked at on a before-and-after basis in an attempt to measure improvements to the overall system. The five problem areas noted in Secretary Packard's memorandum have been divided into some 53 manageable tasks. A senior staff member in AMC heads a task force to manage these tasks.
PROMAP Approach
Objectives of PROMAP-70 would probably not be met if a study of the acquisition process were made by a high level headquarters and recommendations were passed down the command chain in the form of new procedures and directives in the conventional fashion. It is doubtful that the operating levels would be compelled to do things differently if this approach were taken. PROMAP-70 uses the existing command and staff relationships between the Secretary of the Army, the Army Chief of Staff, and the Commanding General, U.S. Army Materiel Command. The AMC operating levels are developing the major part of the program since major subordinate commands and separate program managers assign task directors to applicable tasks. The people who are implementing the changes are the ones involved in determining what needs to be changed.
The AMC major subordinate commands are responsible for the grass roots development and implementation of PROMAP-70. The eight commodity commands are the Missile Command at Huntsville, Alabama; the Munitions Command at Dover, New Jersey; the Aviation Command and the Mobility Equipment Command both at St. Louis, Missouri; the Weapons Command at Rock Island, Illinois; the Electronics Command at Fort Monmouth, New Jersey; the Tank Automotive Command at Warren, Michigan; and the Test and Evaluation Command at Aberdeen Proving Ground, Maryland. Each of these organizations is developing all the PROMAP tasks which apply to their respective commands. With most of the tasks, the commodity commands must coordinate their efforts so that an overall AMC position is established that is applicable throughout the Army. In many instances the commands are working with industry representatives to develop acquisition methods that will enhance the business-government contracting interface.
The best way to describe exactly what the tasks entail is to look at each of the five DOD-designated problem areas. Each of the five areas will be discussed in their relationship to PROMAP-70.
PROBLEM: Excessive optimism in cost estimates. Government statistics indicate that the largest single cause of cost growth in materiel acquisition is overoptimism in cost estimates for major weapon systems. Much of the overoptimism results from the tremendous competition for programs among contractors. In some cases it is also a product, within the services, of competition between programs for limited financial resources.
One way to change overoptimism in cost estimates within industry is to impress firmly on defense contractors the need for cost realism in their proposals, because it is a major factor considered by the government in source selection. Such a procedure, in turn, will require that the government make a marked improvement in its cost estimating and validating capability. It must insure that these capabilities are fully and effectively applied by the source selection authority.
Nine of the fifty-three PROMAP-70 tasks entail methods that are designed to improve cost estimates. Models to improve the documentation and cost estimating methodology are being developed so that the Army can arrive at independent, realistic forecasts before committing to a course of action. Should-cost estimates are now made independent of contractor estimates in an effort not only to enhance the Army's negotiating position but also to point up ways in which contractor operations can be improved. PROMAP establishes milestones during the acquisition cycle of programs at which time a consolidated recomputation of the cost estimate is made. If at any time the cost estimate exceeds a pre-established threshold, an in-depth appraisal of the program risks and status will follow.
PROBLEM: Control of changes in on-going programs. Another major contributor to cost growth is changes made in a program during both the development phase and the production phase.
Improvements in this area can be achieved in two ways. First, by defining more thoroughly what is really needed in a system before full-scale development. Second, by vigorous review and elimination of the “goldplating” features that so often creep into these systems as they proceed from development through production.
The greatest cost impact of changes is from unpriced change orders, since the cost is not negotiated during performance. While the ideal solution would be to prohibit any unpriced changes, this is not practical in the majority of cases. PROMAP tasks, therefore, seek to increase control over the approval of changes and to insure that their total system impact is evaluated. A Configuration Control Review Board is being established at AMC Headquarters to insure adequate evaluation of major engineering change proposals. A Change Control Center is also being established at the Electronics Command as a pilot test to determine desirability of its application throughout AMC. This center will evaluate proposed engineering changes in terms of cost, schedule, and technical impact and will provide command level visibility to all changes.
One PROMAP task is designed to identify each overage change order in excess of $10,000 to determine the cause of delay and to establish, in coordination with the commodity commands, a realistic, time-phase completion plan.
PROBLEM: Comprehensive assessment of risk before system development. The need here is to identify the risks associated with major programs and to do a thorough job in completing prerequisites to contract definition. Failure to do this will necessitate stopping in the middle of a large development effort, going back, and accomplishing work that should have been done beforehand, with the accompanying disruption of schedule and increase in program cost.
Risk analyses should be made in the qualitative materiel requirement/qualitative materiel development objectives phase and during each succeeding phase of the acquisition process—contract definition, source selection, engineering development, and production.
One PROMAP-70 task has been designed to use prototype demonstration when feasible to analyze technical risk. Another task is to conduct reviews of risk and technical achievement periodically throughout the life of the contracts for a system. Still another will establish a procedure to back up the development of high risk components by concurrent development of less sophisticated, low risk components. The idea behind all these efforts is to isolate the principal unknowns associated with a program, to develop a risk profile based on the unknowns, and to evaluate the alternative courses of action to offset the risk involved.
Analysis of risk ties in closely with excessive optimism in cost estimates, since realistic cost forecasts must explicitly account for the probability that the system will cost more (and in some cases less) than the best estimate because of technical uncertainties. Since the Army cannot rely exclusively on its initial assessment of risk, a developing agency will be designated by AMC for review of each major program and to provide for reevaluation of risks as the program progresses.
PROBLEM: Use of competitive prototypes in development. In general, it is felt that the Army will benefit by increasing dependence on hardware demonstration and competition with some corresponding reduction in dependence on paper analysis. This must be done with the realization that different systems will react differently to this treatment. Competitive hardware demonstration should help insure that feasibility studies are sound, the system is reasonably well defined, and that cost proposals are credible—all before the Army commits itself to full-scale development.
Analysis of prototype costs will also result in an improved ability to detect any attempts on the part of the contractor to buy in. While competitive prototype demonstration will result in some increase in research and development costs in the contract definition phase, it will also result in briefer engineering development, fewer engineering changes during production, and fewer contingencies in the contractor's price.
PROMAP-70 tasks will apply this expanded contract definition to three forthcoming procurements—Armored Reconnaissance Scout Vehicle (ARSV), Mechanized Infantry Combat Vehicle (MICV), and Vehicle Rapid Fire System Successor (BUSHMASTER). Competitive contractors, after submitting a preliminary proposal for engineering development and production, will supply prototyes for evaluation. Based on the results of the prototype tests and any required technical guidance, the contractors will submit revised proposals for development and production. The source selection authorities will consider both the revised proposals and the results of prototype testing in awarding the contract. In those cases where prototypes of the entire system are not needed or are too costly, the Army will conduct competitive tests only of prototypes of critical major components.
PROBLEM: Concurrent development rest and evaluation. The aim here is to improve the amount and quality of test and evaluation performed on a developmental weapon system before the commitment of significant resources to production.
PROMAP is developing a plan for changes in this area based on—
• A clear designation of responsibility and capability to review and monitor testing and test planning activities.
• A system for insuring objectivity in the reporting and reviewing of test results throughout the Army.
• A procedure for providing accurate, objective summaries and key data to all interested agencies particularly in connection with in-process reviews and major milestone reviews.
• A policy which will extend test and evaluation to product improvement programs as appropriate.
• An assurance of involvement in the test process by user representatives, at as early a date as practical before substantial production decisions are made.
The Army intends to compartmentalize more clearly the development and production phases of new weapon systems acquisition. To provide a more orderly and controlled transition, the Army will make use of production options in engineering development contracts with the production decision keyed to major milestone reviews, such as a review at completion of engineer and service tests.
To insure that maintaining such contractor effort does not influence a hasty decision to produce, a priced option that permits deferring the production decision, incrementally, up to one year after the engineering test service test milestone will be included in the development contract.
PROMAP will apply this technique to the development programs for several major weapons systems in order to evaluate their effectiveness and cost.
PROMAP-70 is an ambitious program designed to get large numbers of people to change operating methods and improve the overall materiel acquisition process. It is AMC’s implementation of the Secretary of the Army’s plan to improve the acquisition process. As such, it is an excellent opportunity for the Army to do “more with less” in the decade of the seventies.
Major General Paul A. Feyereisen is the Deputy Commanding General for Materiel Acquisition, U.S. Army Materiel Command, Washington, D.C. Since becoming one of the Army's youngest lieutenant colonels, at age 25, General Feyereisen has served in some of the Army's most challenging command and management positions. He is a graduate of the University of Minnesota, Harvard University's School of Business Administration, and the National War College.
| Date Taken: | 12.19.2024 |
| Date Posted: | 12.19.2024 16:35 |
| Story ID: | 488030 |
| Location: | US |
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