DEFENSE ACQUISITION PILOT PROGRAMS FORECAST COST/SCHEDULE SAVINGS OF UP TO 50 PERCENT FROM ACQUISITION REFORM
The Under Secretary of Defense (Acquisition and Technology) recently reported
significant progress by the Defense Acquisition Pilot Programs (DAPPs) in
implementing regulatory and statutory acquisition reforms and in achieving
significant cost and schedule benefits of up to 50 percent. The five programs,
nominated as pilots by DoD in December 1994 and designated under the provisions
of the Federal Acquisition Streamlining Act of 1994 (FASA `94), are the Joint
Direct Attack Munitions (JDAM), Fire Support Combined Arms Tactical Trainer
(FSCATT), Joint Primary Aircraft Training Systems (JPATS), Commercial
Derivative Engine (CDE) and Aircraft (CDA), the Non-Developmental Airlift
Aircraft (NDAA). These pilot programs serve as vanguards in implementing
innovative commercial practices in DoD acquisition.
The DAPPs are assisted by the DoD Pilot Program Consulting Group (PPCG) on
metrics, which is chaired by the office of the deputy under secretary of
Defense (Acquisition Reform) and other representatives from DoD and the
component services. The PPCG was tasked to assist the DAPPs in evaluating the
benefits of approved regulatory and statutory relief, through the development
of focused metrics and appropriate baselines. In its 1995 report, the PPCG
reported significant gains in efficiencies as a result of an order of magnitude
reductions in the use of military standards, contract data requirements,
solicitation length and complexity, and source selection cycle time, that were
enabled by regulatory implementation of FASA `94.
For the most part, the DAPPs report significant cost and schedule improvements
due to these reform initiatives. The JDAM program, for example, projects a 34
percent reduction in development time and a unit cost savings of over 50
percent with an associated total production cost avoidance of $2.9 billion.
The JDAM program office attributes these dramatic savings to the
commercial-style environment created by FASA `94. The JDAM program manager
capitalized on the "commercial environment" to procure proven technology with
reduced oversight (an average 85 percent reduction in in-plant oversight) and
streamlined procurement documentation (29 data requirements and a two-page
statement of work with only interface specifications and no military
standards).
The Army's FSCATT also reports significant cost and schedule benefits
associated with acquisition reform. FSCATT's streamlined procurement efforts
completely eliminated unique military standards, while reducing data
requirements from 56 to seven. This focused streamlining, enabled by FASA `94,
slashed in-house source selection hours by 30 percent, reduced development time
by 33 percent, trimmed development costs by 34 percent, and reduced the
projected total contract price by 13.5 percent. FSCATT's innovative,
commercial-style milestone billing is expected to significantly reduce contract
administration costs.
The benefits of acquisition streamlining are also extending to DoD aircraft
programs as evidenced by the JPATS. The JPATS will replace the Air Force T-37
and Navy T-34 aircraft for use in training entry-level student pilots. JPATS
acquisition reform efforts enabled a 50 percent reduction in military standards
and a 60 percent reduction in contract data requirements. These efforts
resulted in a reported 12 percent reduction in development time and a 50
percent savings in program office staffing. Specific contract dollar savings
are expected to be announced, following GAO protest resolution and final
contract award.
The DoD also demonstrated the benefits of acquisition reform in the key mission
area of airlift aircraft through two pilot programs: the CDE and CDA (the
NDAA). The CDE program provides the Pratt and Whitney F-117 engine as the
power plant for the C-17A. By employing a commercial engine from an ongoing
program, the Air Force completely avoided the development costs typically
incurred on a military-unique engine, gained access to competitive commercial
production prices, and reduced support costs through commercial logistics
support provisions. Furthermore, the Air Force reports a significant reduction
in program office staffing and an $88 million savings due to the CDE multiyear
production contract.
Similarly, the NDAA was intended to be a "commercial" alternative or supplement
to the C-17. The NDAA program involved no military standards, employed
commercial warranties and technical manuals, and relied upon FAA standards and
certification. The NDAA program office estimates a 25 to 50 percent cost
reduction in proposal costs and an 18 to 30 percent cost avoidance in contract
administration costs from reducing government unique contract clauses. As
such, the streamlined NDAA program served as a viable competitive alternative
to the previously-troubled McDonnell Douglas C-17. McDonnell Douglas quickly
responded to the NDAA competition (and DoD should-cost efforts) by aggressively
attacking cost reductions, resulting in a 25 percent reduction in projected
C-17 costs. The recent milestone decisions to purchase 80 additional C-17s, in
lieu of the NDAA, reflects the benefits of the commercial-style NDAA
competition that prompted the C-17 program improvements resulting in a combined
program savings estimate of approximately $4.4 billion, of which 1.7$ billion
is directly attributable to the NDAA competition. In addition, a further $896
million savings is anticipated as a result of a proposed C-17 multiyear
procurement.
The DAPP efforts continue to evolve as the programs proceed through their
acquisition cycles. As the DoD completes full regulatory implementation of
FASA `94, the DAPPs will provide quantitative results, insights, and lessons
learned that are necessary for DoD to fully capitalize on the reformed Defense
acquisition process of the future.
