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Defense Acquisition

By Stanley Orman & Eugene Fox

There are few defense topics that are more contentious than the spiraling costs of developing new equipment. Even those who pay little or no attention to defense issues are made aware by prominent headlines of the cost over-runs of major defense programs. Every incoming Secretary of Defense within living memory has vowed to introduce tighter control of costs, but the problems persist. The factors contributing to these well-documented problems are multifold, and the major contributors are reviewed herein to illustrate why eliminating them has proven to be so difficult.

By its’ nature defense equipment is highly specialized, not just because it has to perform in very hostile environments, but because the items may be stored for many years before being expected to behave precisely as specified when new. Normal commercial products cannot meet this very high standard, which is why so much defense equipment has to be specific for purpose.

Despite this well-proven concept of specialized acquisition, in an effort to economize there have been attempts to use commercial components when these appear to fit the requirements. The program has been referred to as COTS, commercial-off-the-shelf. Problems arise in several ways with this approach, the most prominent of which are lack of long-term support by the commercial vendor, and lack of assurance of the quality of the original supply. Experienced program managers insist on comprehensive testing and proving of components before they leave the manufacturer, and further testing of subsystems when the components are incorporated into a design. This is not normal procedure for commercial material, and the lack of such proving has led to failure of defense systems in final approval trials and possibly also in service.

The history of warfare is a catalogue of the changing dominance between offense and defense. New capabilities or tactics are devised that dominate for a period and are then subject to the inevitable advance of another technology that overcomes the advantage that appeared to be permanent but is seldom more than transitory. Thus defense departments are always seeking the next advance that will enable them to enhance the security of their nation.

The need for improvements in capabilities often results in a conflict between those who favor an evolutionary as opposed to a revolutionary approach to the work. The evolutionists try to capitalize on the experience and training that has accompanied equipment that is already in use while making marginal improvements. This approach clearly involves less risk and lower costs, but the level of enhancement is similarly lower.

In contrast a revolutionary change attempts to make significantly greater improvements by using emerging technology that promises major enhancements provided the early work can be engineered into a reliable system. The greater the enhancement sought, the greater the risk and the accompanying likelihood of cost growth.

Traditionally scientists and engineers within defense departments propose programs to meet new military requirements by the use of emerging technology. Because the technology is new rather than well proven, the work generally starts as a comparatively low priced research program. Successful programs proceed to a more highly funded pre-feasibility study to assess the likely functionality of the capability being developed, and then move on through feasibility to full development.

The scientists and engineers involved are by nature and training achievement oriented. Initially they will provide optimistic forecasts of the cost and timescale of new programs. This is not because they are unaware of the problems that inevitably are encountered in developing a new capability, but because it is their job to overcome these problems, and they are confidant in their ability. Thus initial forecasts usually underestimate the risk and thus the timescale and the cost of meeting a technical target. This is less important in the pre-feasibility stage when the resources are relatively small, but an underestimate of risk factors becomes far more costly in the later stages of large complex programs..

Another factor affecting initial estimates is the knowledge that new programs are always competing for resources with ongoing activities and with other new starts. The tendency is to low-ball the projected cost to get the work started. Once underway if the costs rise but if the work shows significant promise the scientists and engineers involved will lobby hard to keep the program going. It is at this point that the real conflicts arise in any bureaucratic organization. Following the expenditure of significant sums on feasibility studies there is an inbuilt tendency to continue with the program to avoid criticism of wasted resources. Thus the administrators who approved the initial expenditures are now more inclined to support the continuation, even though the risks of further cost growth may remain. This pressure to continue with a program that may be subject to cost growth is further complicated by political issues. This is particularly relevant in America where congressional members who strive to secure work for their own districts dominate the choice of location of programs. Once work has been secured House and Senate members will use every device to keep the program going.

Other factors intruding at this stage include performance creep. Several years may have elapsed by the time a major project enters full development, and new technologies may have appeared that seem to offer yet greater improvement in projected performance. It takes a very strong project manager to resist the temptation of modifying the requirements to incorporate late emerging enhancements. This tug-of-war between contractors offering tempting but expensive enhancements, and project managers attempting to complete a development on time and to cost is a regular feature of major projects and a significant contributor to cost over-runs.

The real conflict in any large bureaucratic organization, and there are few larger than DOD, is that the cost and timescale of any new program has to be minimized if it is to get supported initially. The competition for new starts is fierce, and a program with a high start-up cost will not find favor. As a result the whole organization is accustomed to minimizing both the risk and the cost of new starts, in the expectation that some initial technical success will lead to further support despite the inevitable cost increases that will follow.

Another factor that operates to proceed with a program despite spiraling cost and timescale is the reluctance of those that have supported it in the past to accept that their advice may have been wrong. In a hierarchal organization there are strong pressures on staff to remain team players, and this often means avoiding passing unpleasant information to more senior officers. We have personal experience of information being withheld because government ministers or three or four star military officers, have previously been given assurances of success of an important milestone on the way to completion of a project. Unfortunately it is easier to keep silent and allow program dates to slip and costs to rise rather than face unpleasant truths.

The quality and experience of program managers is the best way of avoiding many of the problems outlined above that lead to cost and time over-runs; but sadly few defense departments view acquisition as a career development path for high flying individuals. Those destined for senior posts in the Services or the Civil Service may spend a short time in acquisition as a career broadening experience, but few spend long enough to acquire the confidence or the experience to withstand the multi pressures to which they are exposed. As a result most complex long-running programs tend to be controlled by contractor staff rather than the government managers who cycle through every two or three years.

Although we remain strong supporters of the concept of missile defense, a program that provides alternatives to instant retribution for an unexpected missile attack, the progress of that program, which was undoubtedly evolutionary provides a prime example of the factors outlined above. President Reagan initiated the Strategic Defense Initiative, SDI without the normal prolonged review that precedes new starts. The announcement led to the establishment of three separate study groups to examine the feasibility, and the broader implications of a missile defense program. However because of the personal involvement of the President it is doubtful that any such study could have reported adversely.

Despite worldwide criticism of the concept that followed the President’s speech, an SDI Organization was established and that has morphed over the years into the Ballistic Missile Defense Organization and then to the Missile Defense Agency. There is no doubt that Presidential prestige ensured survival of the program during the early years when it was recognized that the president’s initial objective could not be met. The original objective could be summarized in the following extract from President Reagan’s speech.

“What if free people could live secure in the knowledge that their security did not rest upon the threat of instant US retaliation to deter a Soviet attack, that we could intercept and destroy strategic ballistic missiles before they reached our own soil or that of our allies.”

The SDIO undertook initial research that showed the early hope that speed-of-light directed energy systems could be developed for intercepting attacking warheads was not yet achievable. Nonetheless Prime Minister Thatcher of the UK having recognized the broader implications of strategic defense gave her support to the fledgling program. This support was reinforced by the claims that Patriot interceptors had been effective in destroying SCUD missiles attacking Israel during the 1991 Iraq war. As a result of these and other factors Missile Defense had become a firmly established program by the time President Bush (41) replaced President Reagan. The emphasis of the program then switched to defending against smaller raids of shorter and intermediate range missiles, leading eventually to the deployment of a limited defense in Alaska and Vandenberg AFB, and a projected defense in Europe.

Twenty-eight years after the program was first proposed over $150B has been spent by SDIO/BMD/MDA, yet the initial objectives are still unachievable. The system currently deployed to defend the US might only be capable of intercepting a limited attack of ten or so relatively unsophisticated missiles. While this represents the considerable achievement of destroying a warhead traveling at some 22,000 ft/sec, it still might be viewed as a very limited return for the expenditure of $150B.

On the credit side however during the early stages of the program the first Director of SDIO Lt. Gen, James Abrahamson, recognizing the difficulty of meeting the original requirements bravely took on the added but somewhat simpler task of intercepting tactical missiles of shorter ranges. Abrahamson recognized he could demonstrate successful interceptions of these slower missiles and thus preserve the program. This led to several advances in use today including the naval-based systems on Aegis cruisers and the successful development of hit-to-kill technology used in Patriot advanced capability-3. The latter enables defensive missiles to destroy incoming missiles without the use of an explosive warhead.

On the broader political scene, it is now recognized that the original SDI program contributed significantly to the fall of the former Soviet Union. In that sense many will claim that the expenditure was well worthwhile to end the Cold War without the outbreak of hostilities. Even though this result was an unforeseen bi-product by most observers, it was in keeping with President Reagan’s basic thesis that the Soviets could not compete with American technology advances.

In reality the ballistic missile defense program was initiated because of strong Presidential support, and because of that strong support no-one even considered telling the President the development could not meet his expectations in the foreseeable future. BMD grew in importance because of over-inflated claims of effectiveness of Patriot during the first Iraq war, and after that it achieved a rate of spend too large to stop the program. In fairness once the program demonstrated an ability to intercept a limited raid of relatively unsophisticated attacking missiles, the Soviet Union had collapsed and the Cold War had ended.

The capability then being developed more closely resembled the need to provide protection against the type of attack that emerging nations such as North Korea, Iran or even a terrorist group could mount. No other nation possessed the thousands of missiles that the Soviets had in their inventory and that the initial program had been started to try to counter. Ironically the Russian President is now protesting the proposed deployment of a European missile defense capable only of intercepting a limited attack. The initial expectation of being able to intercept the type of raid that Russia could still mount has failed, but even the limited success of the program is enough to ruffle Russian/American relations.

One way and another BMD provides a good illustration of how a program can continue to grow without meeting the original objectives, become so established that it cannot be stopped, and then having been transformed into something far less effective than originally envisaged remains contentious both nationally and internationally. Defense issues are seldom simple or straightforward.

Dr. Stanley Orman is the former Deputy Director of UK Atomic Weapons Research Establishment and Director General of UK SDI Participation Organization.

MGEN. Eugene Fox, USA (Ret.) is the former Deputy Director of SDIO and Army Program Manager of Missile Defense.